Trane Technologies 2020 Annual Report 2021 Notice and Proxy Statement Bold Action for a Sustainable Future2020 Annual Report2021 Notice and Proxy Statement We are committed to using environmentally conscious print practices.©2021 Trane TechnologiesAbout Trane TechnologiesTrane Technologies is a global climate innovator. Through our strategic brands Trane and Thermo King, and our environmentally responsible portfolio of products and services, we bring efficient and sustainable climate solutions to buildings, homes and transportation.www.tranetechnologies.com381892_TT_2020AR_Cover_8.25x10.75_FINAL2_040621.indd 1-34/7/21 3:13 AM At Trane Technologies, we boldly
challenge what’s possible for a
sustainable world.
We innovate. We are climate innovators with the courage to take bold action toward a sustainable future.
We act with urgency to deliver sustainable solutions for our customers and enhance the well-being
of our employees, communities and planet. Our strategic brands Trane and Thermo King create and deliver
market-leading sustainable and efficient climate solutions for buildings, homes and transportation.
We solve. Boldly challenging what’s possible for a sustainable world means starting with everyday actions
that, together, help create a better planet for generations to come. We continuously improve and through
our strategic brands, we scale technology, innovation and sustainability strategies to deliver market-leading
solutions that will shape the future of our world.
We uplift. It is our responsibility to lead the change we want to see in our business, industry and world.
Guided by our leadership principles, our teams focus on building a diverse workforce, cultivating inclusiveness
and creating opportunity for all. In our communities, we build sustainable futures for under-represented
groups through education and pathways to green and STEM careers.
OUR LEADERSHIP PRINCIPLES
Work today for a sustainable tomorrow.
Dare to do things differently.
Keep customers at the heart of all we do.
Own our actions and decisions.
Include and uplift one another.
Do what’s right, always.
E
W
Make better happen.
LEADERSHIP RECOGNITION
We’re proud of our legacy of sustainability leadership and honored to continue the tradition of highly regarded
ESG performance in our first year as Trane Technologies.
10TH
CONSECUTIVE
YEAR
6TH
CONSECUTIVE
YEAR
8TH
CONSECUTIVE
YEAR
RANKED
#85
GLOBALLY
CLIMATE
RANKING
OF A-
7TH
PERCENTILE
GLOBALLY
This integrated annual report and the 2020 online ESG
Report at www.tranetechnologies.com/sustainability-reports
is produced in accordance with the G4 framework
established by the Global Reporting Initiative (GRI) and
reports on our financial and non-financial performance
for the 2020 fiscal year. For more information on GRI,
please visit www.globalreporting.org. To ensure the quality
of our environmental, health and safety data, we assure
selected data with a third-party provider. The results of this
assurance can be found in our 2020 ESG Report at
www.tranetechnologies.com/sustainability-reports. At the
time of publication, assurance of our environmental and
safety data from operations was not yet complete and the
data presented in this document is subject to change.
This annual report, including the letter to shareholders,
contains “forward-looking statements,” which are statements
that are not historical facts, including our ability to address
environmental and social challenges, the future success
of our operational excellence initiatives, our future financial
performance, our growth, market opportunities and our
positioning in and the performance of the markets in
which we operate. These statements are based on currently
available information and our current assumptions,
expectations and projections about future events. While
we believe that our assumptions, expectations and projections
are reasonable in view of the currently available information,
you are cautioned not to place undue dependence on our
forward-looking statements. Forward-looking statements speak
only as of the date they are made and are not guarantees
of future performance. They are subject to future events, risks
and uncertainties—many of which are beyond our control—
as well as potentially inaccurate assumptions that could cause
actual results to differ materially from our expectations and
projections. You are advised to review the factors described
under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Conditions and Results
of Operations” in our Form 10-K for the fiscal year ended
December 31, 2020, and any further disclosures we make
on related subjects in materials we file with or furnish to the
SEC. We do not undertake any obligation to update any
Annual General Meeting
The company’s 2020 Annual Report on Form
10-K as filed with the United States Securities and
Exchange Commission, and other company
information, is available through Trane Technologies’
website, www.tranetechnologies.com. Securities
analysts, portfolio managers and representatives
of institutional investors seeking information about
Thursday, June 3, 2021 at 8:00 a.m. EDT
the company should contact:
Shane Lawrence
Director, Investor Relations
704-655-5651
Date and Time
Location
Trane Technologies plc
800-C Beaty Street
Davidson, NC 28036
Ireland
Shareholders in Ireland may
participate in the Annual
General Meeting remotely on
June 3, 2021 at 1:00 pm
(Dublin time) telephonically
at the Arthur Cox Building,
Ten Earlsfort Terrace, Dublin 2,
D02 T380, Ireland.
See “Information Concerning
Voting and Solicitation” of the proxy
statement for furtherinformation
on participating in the Annual
General Meeting.
Computershare
Telephone Inquiries: 866-229-8405
Website: www.computershare.com/Investor
Address shareholder inquiries with standard priority:
Computershare
PO BOX 505000
Louisville, KY 40233-5000
Address shareholder inquiries with overnight priority:
Computershare
462 South 4th Street Suite 1600
Louisville, KY 40202
Transfer Agent and Registrar
forward-looking statements.
381892_TT_2020AR_Cover_8.25x10.75_FINAL2_040621.indd 4-6
4/7/21 3:13 AM
ENVIRONMENT, SOCIAL AND GOVERNANCE PERFORMANCE AT TRANE TECHNOLOGIES
Commitment and Results
2030 COMMITMENTS
Gigaton
Challenge
Leading
by Example
Opportunity
for All
• Reduce customer carbon
footprint by one gigaton
(or 1 billion metric tons of CO2e)
• Achieve carbon neutral
operations
• Achieve workforce diversity
reflective of our communities
• Reach zero waste disposed
• Achieve gender parity in
• Design systems for circularity
of in landfills
leadership roles
• Increase access to heating,
• Achieve net positive water use
• Maintain world-class safety
cooling and fresh food
in water-stressed locations
metrics
• Achieve 10% absolute reduction
in energy consumption
2020 ESG HIGHLIGHTS
Environment1
Greenhouse Gas Emissions
54,681 metric tons of CO2e
reduced from our operations
7.7 million metric tons of CO2e
reduced from our customers’
carbon footprint
Renewable Energy
39% of electricity demand met
with renewables
Water
23% decrease in water use in
water-stressed regions, with
3% decrease in water use overall
Circularity
22+ tons of CO2e saved in
emissions from returnable
packaging projects
1Reductions compared to 2019 baseline
Social
Gender Parity
25% of total workforce were
women in 2020 and 21.7%
of leadership positions were
held by women
Supplier Diversity
$380.4 million in goods and
services spent on diverse-owned
businesses
Employee Safety
30% reduction in lost-time
incident rate (LTIR) and 8%
reduction in total recordable
incident rate (TRIR)
Employee Support
$1.4M awarded to employees
through the Helping Hand Fund
as part of COVID-19 pandemic
relief
• Provide market-competitive
wages and benefits, and
leading wellness offerings
for global workforce
• Invest $100 million in building
sustainable futures for
under-represented students
• Dedicate 500,000 employee
volunteer hours in our
communities
Governance
Ethics & Risk Management
1,500 suppliers audited for
sustainability and business risks
through On-Site Assessment
(OSA) audits over three years
0 suppliers identified as having
significant actual or potential
negative environmental impacts
100% direct material spend
assessed for risk quarterly
Board Diversity
5 of 13 directors or 39%
are women
2 of 13 directors or 15% are
racially or ethnically diverse
2020 ANNUAL REPORT
1
Today, bold action
and innovation.
Tomorrow, a more
sustainable world for
future generations.
2020 LETTER TO OUR SHAREHOLDERS
Dear Shareholder,
We launched Trane Technologies in early 2020 clearly aligned around one purpose:
to boldly challenge what’s possible for a sustainable world. We were then quickly
met with extraordinary circumstances. We put our purpose into action from the
start—taking immediate steps to take care of each other and to continue serving
the essential needs of our customers and the world.
Even as we responded to the uncertainty caused by the global pandemic, we
leveraged our strong financial position and continued to invest in our businesses.
We simplified, streamlined and focused our organization as a global climate
innovator. We engaged team members from around the world in developing new Leadership Principles,
which define what we value most.
LEADING IN A CHANGING WORLD
As the pandemic intensified, we recreated every facet of our production lines to keep our people safe.
We prioritized the essential needs of our customers, including hospitals, warehouses, data centers and schools.
We brought decades of experience in indoor environmental quality to the forefront with ready-now solutions,
new innovation and the launch of our Center for Healthy and Efficient Spaces.
We also continued to partner with pharmaceutical companies, logistics providers, food producers and
grocers on end-to-end cold chain transport and storage. When we learned of vaccines in development
that required even colder solutions—negative 70 degrees Celsius—we leveraged our new ultra-cold
Super Freezer. This product, along with our wide range of other cold chain solutions, continues to support
safe and efficient distribution and storage of the vaccine and other perishables around the world.
BOLD ACTION AND INNOVATION
These emerging needs only amplified the importance of our long-term sustainability strategy. Climate
change is adversely affecting weather events, air quality and human health, with a disproportionate
impact on those who suffer from socioeconomic inequalities. With 15% of the world’s carbon emissions
coming from heating and cooling buildings and another 10% from global food loss, we are in a leadership
position to be the change.
We have put a stake in the ground with aggressive 2030 commitments, including our Gigaton Challenge,
which commits to eliminating one gigaton of carbon emissions from our customers’ footprints. We also
have committed to carbon neutral operations, gender parity in leadership, and workforce diversity reflective
of our communities. We are uniquely positioned to provide innovative solutions that deliver on these
commitments and accelerate the world’s progress.
2020 ANNUAL REPORT
2
We launched more than 50 new solutions in 2020 to do just that. In transport refrigeration, our new
Advancer trailer unit cools faster, requires 30% less fuel per trip and uses 60% less energy to manufacture.
And, the new Sintesis Balance, a fully electric HVAC unit, offers zero emission heating and cooling
when paired with a renewable energy source. We continue to accelerate digital connectedness to enhance
system performance and energy efficiency, reaching more than 20,000 connected buildings and over
1 million pieces of connected equipment in 2020.
STRONG PERFORMANCE CULTURE
We delivered resilient financial performance in a challenging year, demonstrating the strength of our
sustainability strategy. Strong execution, transformation actions and cost-containment enabled us to
expand profitability on a modest revenue decline. Revenue was $12.5 billion, and adjusted EBITDA margins
expanded by 20 basis points, delivering exceptional free cash flow* of $1.7 billion, or 158% of adjusted net
earnings* and $507 million in dividends.
*
Underlying our strong financials is an operational flywheel, where relentless, high levels of business
reinvestment enable continuous outperformance over the long-term. In 2020, we added significant fuel
to this flywheel by reimagining the company. Our business transformation will deliver $300 million in
annualized savings by 2023, which fundamentally improves our cost structure and our margin profile,
while enabling us to accelerate investment in market-leading innovation to further outgrow our end
markets—consistently. As a climate innovator with a focused sustainability strategy, outstanding cash
flow generation, and balanced capital deployment, we are well positioned to continue delivering long-term
value to our shareholders.
“
As a climate innovator with a focused sustainability strategy,
outstanding cash flow generation, and balanced capital deployment,
we are well positioned to continue delivering long-term value
to our shareholders.”
OPTIMISTIC FUTURE
At Trane Technologies, we want to create a better world. We are challenging the status quo and
taking decisive action now to create a sustainable future where communities thrive, where equality
is foundational, and where the environment is protected for future generations.
It’s this type of passion and purpose that sets Trane Technologies apart, and is how we will change
the industry, and ultimately change the world.
Thank you for joining us. Please stay safe.
Michael W. Lamach
Chairman and CEO
*These are non-GAAP financial measures. Reconciliation of non-GAAP financial measures can be found preceding the 2021 Notice and Proxy Statement.
2020 ANNUAL REPORT
3
2020 FINANCIAL PERFORMANCE DATA
2020 Financial Performance
-5%
Organic Revenue
Growth*
+20 bps
Adjusted EBITDA
Margin Expansion*
-8%
Adjusted
Continuing EPS
Growth*
158%
Free Cash Flow
Conversion*
34.5%
Cash Flow Return
on Invested Capital
(CROIC)*
BALANCED CAPITAL DEPLOYMENT
$507M
Dividends
Asia
9%
EMEA
13%
$250M
$183M
$146M
$300M
Share Repurchases Acquisitions
CapEx
Debt Retirement
2020
REVENUE
by Segment
Aftermarket
33%
2020
REVENUE
by Stream
Americas
78%
Equipment
67%
9%
7%
-5%
14.6%
15.2%
15.4%
$4.15
$4.86
$4.46
82%
115%
158%
2018
2019
2020
2018
2019
2020
2018
2019
2020
2018
2019
2020
Organic Revenue
Growth
Adjusted EBITDA
Margin
Adjusted Continuing
Earnings Per Share
Free Cash Flow
Conversion
SHAREHOLDER RETURNS
Trane Technologies
S&P 500
S&P 500 Industrials Index
$100
$373 / 273%
$203 / 103%
$179 / 79%
2015
2016
2017
2018
2019
2020
*These are non-GAAP financial measures. Reconciliation of non-GAAP financial measures can be found preceding the 2021 Notice and Proxy Statement.
2020 ANNUAL REPORT
4
NON-FINANCIAL STATEMENTS EUROPEAN UNION DIRECTIVE
Introduction
The information below, and the policies and related content elsewhere in this report, describes the performance and impact of
Trane Technologies plc (formerly known as Ingersoll-Rand plc), a public limited company incorporated in Ireland in 2009, through the
environmental, social, human rights and business practices we work to uphold.
The European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations
2017 (S.I. 360/2017) (as amended) (the “2017 Regulations”) require us to disclose certain non-financial information in the Directors’
Report (the “Irish Directors’ Report”) accompanying our Irish statutory financial statements. For the purposes of the 2017 Regulations,
the sections entitled Description of Business Model, Environmental Matters, Employee Matters, Social Matters, Human Rights, and
Anti-Corruption and Anti-Bribery set out below are incorporated by reference into the Irish Directors’ Report.
Our 2020 Annual Report and ESG Report also provide information that may be relevant to investors in assessing sustainability commitments
and achievements but, except as expressly provided above, the 2020 Annual Report and ESG Report are not incorporated by reference into
the Irish Directors’ Report. Copies of this 2020 Annual Report and ESG Report can be accessed at www.TraneTechnologies.com.
Description of Business Model
We are a global climate innovator that brings efficient and sustainable climate solutions to buildings, homes and transportation
driven by strategic brands Trane and Thermo King and an environmentally responsible portfolio of products and services.
In 2020, we generated revenue and cash primarily through the design, manufacture, sale and service of a diverse portfolio of climate control
products and services for Heating, Ventilation and Air Conditioning (HVAC) and transport solutions. We are focused on growth by increasing our
recurring revenue stream from parts, service, controls, used equipment and rentals; improving the efficiencies and capabilities of our operations
and products and services for our customers; and applying operational excellence strategies to improve our earnings and cash flow.
Environmental Matters
Approach Our commitment to sustainability extends to the environmental impacts of our people, operations, and products and
services. From the efficiency of our buildings to our progress in managing energy, water and waste, we are focused on reducing our
impact on the environment and embedding sustainability throughout our businesses. We engage with key stakeholders to identify
the most material sustainability-related matters and metrics for operations strategy as well as public disclosure. We also look at
these material topics through the lens of a value chain assessment that we perform. These commitments are embedded in an
Environment, Health and Safety (“EHS”) Policy that defines our stakeholders, our roles and responsibilities, and our goals and targets
with respect to EHS matters and our Business Partner Code of Conduct (“BPCoC”).
Due diligence processes We have a vital role to play in mitigating global climate change by reducing our environmental impact. This
responsibility begins by setting specific and measurable climate commitments and working to achieve these goals. We also work to
systematically ensure that our suppliers share our values and adhere to our standards as specified in our BPCoC. Suppliers must have an
effective environmental policy and conduct their operations in a way that protects the environment. They must also obtain and keep current
all required environmental permits and meet all applicable environmental rules, regulations and laws in the countries where they operate.
Policy outcomes / Key Performance Indicators Our global Climate Commitment is the foundation of our efforts to increase energy
efficiency and reduce the greenhouse gas emissions related to our operations and products. Our Center for Energy Efficiency
and Sustainability (CEES) helps our customers and our company leverage best practices in sustainability. It is a strategic business
catalyst that helps us understand the benefits that sustainability can have in growing our company and reducing our operational
footprint, while helping increase the pace of sustainable innovation.
Our energy consumption from fuels and electricity totaled 2.8 billion kilojoules in 2020. Greenhouse gases emitted indirectly through
the use of electricity, and directly, through the burning of fuels or emissions of refrigerants, totaled 420,050 metric tons of CO2e.
• Absolute energy consumption in 2020 – 2,644,944,325,551Btu (equivalent to 775,157 MWh; 2.8 billion kilojoules)
• Absolute Scope 1 and 2 emissions in 2020 – 420,050 metric tons CO2e in 2020
Employee Matters
Approach As a global organization that employs approximately 37,000 people, we are committed to building a diverse workforce and
an inclusive environment in which people of all backgrounds are treated with equality and respect. We work to ensure we provide a
safe, secure workplace that supports employee well-being and productivity. Investing in our associates and creating a culture where
they feel engaged and included is key to unleashing the power of their innovation and creativity. We have a number of policies
to formalize our commitments to our employees and communities including our EHS Policy that addresses employee health and
safety among other matters. In addition our Global Human Rights Policy, U.S. Equal Employment Opportunity Policy, and our Policy
Prohibiting Harassment or Discrimination are made available to our employees worldwide and affirm these commitments.
Due diligence processes To reinforce our commitment to cultivate a diverse and inclusive workplace, we were the first company
in our industry to enter the Paradigm for Parity Coalition, a pledge to bring gender parity to our corporate leadership structure by
2030. We also provide anti-harassment training to all salaried employees and make clear policies available to employees worldwide.
Creating and sustaining a safety-focused, zero-incident culture is a priority. We communicate our safety expectations through
quarterly CEO town hall meetings and monthly EHS meetings at the facility and service-organization levels.
Policy outcomes / Key Performance Indicators Consistently high annual employee engagement scores demonstrate that we are
creating an environment where our people are learning, thriving and expanding their capabilities. We offer a range of learning
experiences for managers and employees to expand our culture of inclusion. Our Bridging Connections sessions create an
opportunity for employees to speak openly about topics such as race, gender, ethnicity and sexual orientation, and address issues
related to unconscious bias. Our growing number of employee resource groups serve as a foundation to discuss these topics at a
deeper level and to engage in the learning and training critical to building a stronger company.
• 25.3% of global workforce are women
• 21.7% of leadership positions are held by women
• 90% participation rate in annual employee engagement survey
• World-class employee engagement score
Social Matters
Approach Through a variety of social sustainability initiatives, we seek to engage directly with the communities where our associates
live and work, which helps to create shared value and engage our worldwide team in the mission and purpose of the company. Our
commitment to social sustainability is also expressed through our supplier diversity program.
Our most prominent community initiatives include our Glocal (global + local) program that encourages our employees to partner with local
nonprofits and community organizations to advance our social sustainability efforts and nurture authentic engagement. We are taking action
on specific social and environmental imperatives that create shared value, result in sustained customer and employee loyalty, and improve
the communities where we have business operations. These actions include increasing female representation in the fields of science,
technology, engineering and math, addressing nutrition and food waste reduction and supporting housing and shelter needs. Our supplier
diversity program embraces suppliers whose ownership is primarily minorities, women, veterans, LGBTQ individuals or people with disabilities.
Due diligence processes We track employee and community engagement data including the hours and number of volunteers who
participate in community or sustainability initiatives. We use a 7-step strategic sourcing process that includes a Supplier Diversity
Matrix, which enables us to avoid using price as the primary driver for supplier selection.
Policy outcomes / Key Performance Indicators Implementing Glocal and our supplier diversity program has contributed to increases
in global contributions as measured by the number of associates who have participated in community or sustainability initiatives, the
total number of hours volunteered and the dollar value of philanthropic giving.
• $380.4 million in purchased goods and services from diverse-owned businesses
• $10,933,910 million in total philanthropic giving
• 49% of employees globally participated in virtual community or sustainability initiatives
Human Rights
Approach We believe in fundamental standards that support our commitment to our employees, our business partners, our
customers and our communities. We have adopted a number of policies that underline our commitment to human rights.
Our Global Human Rights Policy aligns with basic working conditions and human rights concepts advanced by international
organizations such as the International Labor Organization and the United Nations. Our Modern Slavery and Human Trafficking
Statement outlines our commitment to taking steps to ensure that human trafficking and forced labor is not taking place in our
supply chain or business. Our BPCoC prohibits human trafficking, including forced or child labor.
Due diligence processes We engage in reasonable due diligence and screening of customers and distributors to ensure
compliance with laws that regulate international trade. We also established a Global Procurement Sustainability Council to work with
suppliers on improving conditions and addressing non-compliances.
In 2020, we used our supplier risk assessment process to review the environmental, social and governance practices of our
suppliers, including human rights. We worked with suppliers on improving conditions and all were found to be in compliance.
Policy outcomes Our Global Human Rights Policy is communicated to employees through our Code of Conduct training. As part of
our annual compliance training, we have implemented a full training course dedicated to anti-human trafficking.
Anti-Corruption and Anti-Bribery
Approach We are proud of our strong business ethics and sustainable business practices, and our values centered in integrity, respect,
teamwork, innovation and courage. Our values, ethics and commitment to sustainability are core to how we operate and serve customers.
Our BPCoC applies to all entities doing business with us and communicates our expectations that our business partners will practice
the highest legal, moral and ethical standards when conducting our affairs.
Due diligence processes Business partners and service providers are risk-rated and vetted with higher risk third parties undergoing
enhanced compliance due diligence. We leverage the services of a third-party vendor to conduct compliance screenings from
thousands of global public records databases.
Policy outcomes Salaried employees receive role-based, online compliance training every year. In 2020, 100% of U.S. salaried
employees received anti-corruption training.
RECONCILIATION OF GAAP TO NON-GAAP
ADJUSTED EBITDA
($ IN MILLIONS)
UNAUDITED
Total Company
Net revenues
Operating Income
Restructuring/Other
Adjusted Operating Income
Depreciation and Amortization
Other Income/(Expense), net
Adjusted EBITDA
For the year ended
December 31, 2020
For the year ended
December 31, 2019
As Reported
Margin
As Reported
Margin
$ 12,454.7
$ 1,532.8
107.8
$ 1,640.6
294.3
(16.6)
12.3%
0.9%
13.2%
2.4%
(0.2%)
$ 13,075.9
$ 1,670.1
52.6
$ 1,722.7
288.8
(28.4)
12.8%
0.4%
13.2%
2.2%
(0.2%)
$ 1,918.3
15.4%
$ 1,983.1
15.2%
ADJUSTED EBITDA / NET EARNINGS RECONCILIATION
($ IN MILLIONS)
UNAUDITED
Adjusted EBITDA
Less: items to reconcile adjusted EBITDA to net earnings attributable to
Trane Technologies plc
Depreciation and amortization
Interest expense
Benefit (provision) for income taxes
Restructuring
Transformation costs
Legacy legal liability adjustment
Gain from deconsolidation of certain entities under Chapter 11
Gain on M&A transaction
Discontinued operations, net of tax
Net earnings from continuing operations attributable to noncontrolling interests
Net earnings from discontinued operations attributable to noncontrolling interest
Year ended
December 31, 2020
Year ended
December 31, 2019
$1,918.3
$1,983.1
(294.3)
(248.7)
(296.8)
(75.7)
(32.1)
17.4
0.9
2.4
(121.4)
(14.2)
(0.9)
(288.8)
(242.8)
(238.6)
(52.6)
—
—
—
—
268.2
(15.2)
(2.4)
Net earnings (loss) attributable to Trane Technologies plc
$ 854.9
$1,410.9
FREE CASH FLOW
($ IN MILLIONS)
UNAUDITED
Cash flow provided by continuing operating activities
Capital expenditures
Cash payments for restructuring
Transformation costs paid
Free cash flow
Adjusted earnings from continuing operations attributable to Trane Technologies plc
Free cash flow as a percent of adjusted net earnings (Free cash flow conversion)
RECONCILIATION OF GAAP TO NON-GAAP
Year ended
December 31, 2020
Year ended
December 31, 2019
$1,766.2
(146.2)
68.9
25.4
$1,714.3
$1,083.4
158%
$1,523.7
(205.4)
45.3
4.3
$1,367.9
$1,188.7
115%
(In millions, except per
share amounts)
Net revenues
Operating income
Operating margin
Earnings from continuing
operations before
income taxes
Provision for income taxes
Tax rate
Earnings from continuing
operations attributable to
Trane Technologies plc
Diluted earnings per
common share
Continuing operations
Weighted-average
number of common
shares outstanding
Diluted
Detail of Adjustments:
(a) Restructuring costs
(COGS & SG&A)
(b) Transformation
costs (SG&A)
(c) Legacy legal liability
adjustment
(d) Gain from
deconsolidation of
certain entities under
Chapter 11
(e) Gain on M&A
transaction
For the year ended December 31, 2020
For the year ended December 31, 2019
As Reported Adjustments
As Adjusted As Reported
Adjustments
As Adjusted
$ 12,454.7
$
—
$ 12,454.7
$ 13,075.9
$ —
$ 13,075.9
1,532.8
12.3%
107.8 (a,b)
1,640.6
1,670.1
52.6 (a)
13.2%
12.8%
1,722.7
13.2%
1,288.2
87.1 (a,b,c,d,e)
1,375.3
1,398.9
52.6 (a)
1,451.5
(296.8)
23.0%
19.1 (f,g)
(277.7)
20.2%
(238.6)
17.1%
(9.0) (f,g)
(247.6)
17.1%
$
977.2
$ 106.2 (h)
$ 1,083.4
$ 1,145.1
$ 43.6 (h)
$ 1,188.7
$
4.02
$ 0.44
$
4.46
$
4.69
$ 0.17
$
4.86
243.1
—
243.1
244.4
—
244.4
75.7
32.1
(17.4)
(0.9)
(2.4)
52.6
—
—
—
—
(In millions, except per
share amounts)
For the year ended December 31, 2020
For the year ended December 31, 2019
As Reported Adjustments
As Adjusted As Reported
Adjustments
As Adjusted
(f) Tax impact of
adjustments (a,b,c,d,e)
(g) Separation-related
tax costs
(h) Impact of adjustments
on earnings from
continuing operations
attributable to Trane
Technologies plc
Pre-tax impact of
adjustments on cost of
goods sold
Pre-tax impact of
adjustments on selling &
administrative expenses
Pre-tax impact of
adjustments on
operating income
(22.0)
41.1
$ 106.2
24.1
83.7
$ 107.8
(9.6)
0.6
$ 43.6
37.3
15.3
$ 52.6
The Company reports its financial results in accordance with generally accepted accounting principles in the United States (GAAP).
This supplemental schedule provides non-GAAP financial information and a quantitative reconciliation of the difference between the
non-GAAP financial measures and the financial measures calculated and reported in accordance with GAAP.
The non-GAAP financial measures should be considered supplemental to, not a substitute for or superior to, financial measures
calculated in accordance with GAAP. They have limitations in that they do not reflect all of the costs associated with the operations
of our businesses as determined in accordance with GAAP. In addition, these measures may not be comparable to non-GAAP
financial measures reported by other companies.
As a result, one should not consider these measures in isolation or as a substitute for our results reported under GAAP. We
compensate for these limitations by analyzing results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP
results and providing reconciliations from GAAP results to non-GAAP results.
*Non-GAAP measures definitions
Organic bookings are defined as reported orders in the current period adjusted for the impact of currency and acquisitions.
Organic revenue is defined as GAAP net revenues adjusted for the impact of currency and acquisitions.
Currency impacts on net revenues and bookings are measured by applying the prior year’s foreign currency exchange rates to the
current period’s net revenues and bookings reported in local currency. This measure allows for a direct comparison of operating
results excluding the year-over-year impact of foreign currency translation.
Adjusted operating income in 2020 is defined as GAAP operating income plus restructuring costs and transformation costs.
Adjusted operating income in 2019 is defined as GAAP operating income plus restructuring costs.
Adjusted operating income margin is defined as the ratio of adjusted operating income divided by net revenues
Adjusted earnings from continuing operations attributable to Trane Technologies plc (Adjusted net earnings) in 2020 is defined
as GAAP earnings from continuing operations attributable to Trane Technologies plc plus restructuring cost and transformation
costs less the legacy legal liability adjustment, the gain on deconsolidation of certain entities under Charter 11 and the gain on M&A
transaction, net of tax impacts plus separation-related tax adjustments. In 2019 Adjusted net earnings is defined as GAAP earnings
from continuing operations attributable to Trane Technologies plc plus restructuring cost, net of tax impacts plus separation-related
tax costs.
Adjusted continuing EPS in 2020 is defined as GAAP continuing EPS plus restructuring costs and transformation costs less the
legacy legal liability adjustment, the gain on deconsolidation of certain entities under Charter 11 and the gain on M&A transaction,
net of tax impacts plus separation-related tax adjustments. In 2019 Adjusted continuing EPS is defined as GAAP continuing EPS plus
restructuring costs, net of tax impacts, plus separation-related tax costs.
Adjusted EBITDA in 2020 is defined as adjusted operating income plus depreciation and amortization expense plus or minus other
income / (expense), net less the legacy legal liability adjustment, the gain on deconsolidation of certain entities under Chapter 11 and
the gain on M&A transaction. Adjusted EBITDA in 2019 is defined as adjusted operating income plus depreciation and amortization
expense plus or minus other income / (expense), net.
Adjusted EBITDA margin is defined as the ratio of adjusted EBITDA divided by net revenues
Free cash flow in 2020 and 2019 is defined as net cash provided by (used in) continuing operating activities, less capital
expenditures, plus cash payments for restructuring costs and transformation costs.
Cash Flow Return on Invested Capital (CROIC) is defined as Free cash flow divided by Invested Capital (Gross property, plant and
equipment plus accounts and notes receivable, net and inventories less accounts payable)
Please refer to the reconciliation tables included in our historical press releases and other information available on our website for
additional information relating to historical non-GAAP measures.
2021
Notice and
Proxy Statement
A Letter from Our Board of Directors on
the Urgency of Sustainability
Dear Fellow Shareholders:
Urgent global issues demand visionary leadership. As the Trane Technologies Board of Directors, we are committed to bold action
as the world contends with unprecedented challenges. Environmental, social and governance (“ESG”) leadership is central to the
Trane Technologies business strategy, and a core element of both the company’s management routines and the Board’s ongoing
governance processes.
Climate change is accelerating at a rapid rate, urbanization is dramatically reshaping our communities, and natural resources are
more constrained than ever before. Trane Technologies excels where these global megatrends and our unique capabilities intersect.
Having achieved our aggressive 2020 ESG targets—two years early—we embarked on our 2030 Commitments to ensure that every
major facet of our business – from operations to supply chain, innovation and product development, employee and community
development, and governance – is prepared for the next decade. This includes the Gigaton Challenge, a commitment to reduce
one gigaton of carbon emissions from our customers’ footprints, as well as commitments to achieve carbon neutral operations, zero
waste to landfill, gender parity in leadership and workforce diversity reflective of our communities. These commitments address
some of our industry’s – and the world’s – biggest challenges.
ESG is embedded in our strategy and in the market opportunities that we pursue. Each key business decision is considered through
an ESG lens – assessing the long-term value to society. Our Sustainability, Corporate Governance and Nominating Committee
charter reflects the significant focus we have on ESG processes, and how the company’s ESG practices benefit from board
knowledge and experience. In addition, the Technology and Innovation Committee provides input to management on strategies and
innovations aimed at furthering our sustainability commitments, including the dramatic reduction of our company’s and customers’
carbon footprints. In addition, our Compensation Committee looks for opportunities to tie our strategies to executive incentives.
Beginning in 2021 our executive incentive compensation will include environmental sustainability and diversity goals.
Looking ahead, the need for business leadership on ESG-related issues has never been greater. Our 2030 commitments will
challenge us to lead by example, collaborate with our customers to drive sustainable innovation, and create opportunity for all in
our workplace and communities. The timelines of our commitments are aligned with the timelines of the United Nations Sustainable
Development Goals (UN SDGs) to ensure we’re contributing to the collective actions needed to drive global, sustainable progress.
From the top of our organization, and throughout every facet of our business, we hold ourselves to the highest standards of
ethical conduct, and that means doing what is right for our business, for our people, for the environment, and for society. Our ESG
performance is evident in a comprehensive framework of transparent reporting and disclosures.
Trane Technologies’ actions are predicated on a strong belief that one company can change an industry, and one industry can
change the world. That’s why we are aligned around one central purpose: to boldly challenge what’s possible for a sustainable world.
Sincerely,
KIRK E. ARNOLD
ANN C. BERZIN
JOHN BRUTON
JARED L. COHON
GARY D. FORSEE
LINDA P. HUDSON
MICHAEL W. LAMACH
MYLES P. LEE
APRIL MILLER BOISE
KAREN B. PEETZ
JOHN P. SURMA
RICHARD J. SWIFT
TONY L. WHITE
1
2021 Proxy Statement Notice of 2021 Annual General Meeting
of Shareholders
Voting Items
Date and Time
Proposals To Be Voted
1.
To elect 12 directors for a period of one year
2.
3.
4.
5.
6.
To give advisory approval of the compensation
of the Company’s Named Executive Officers
To approve the appointment of
PricewaterhouseCoopers LLP as independent
auditors of the Company and authorize the
Audit Committee of the Board of Directors to
set the auditors’ remuneration
To renew the existing authority of the directors
of the Company to issue shares
To renew the existing authority of the
directors of the Company to issue shares for
cash without first offering shares to existing
shareholders (Special Resolution)
To determine the price range at which the
Company can re-allot shares that it holds as
treasury shares (Special Resolution)
Board Vote
Recommendation
For Further
Details
“FOR” each
director nominee
“FOR”
“FOR”
“FOR”
“FOR”
Page 13
Page 20
Page 20
Page 22
Page 23
“FOR”
Page 24
Shareholders will also conduct such other business properly brought before
the meeting.
By Order of the Board of Directors,
EVAN M. TURTZ
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
Attending the Meeting
If you are a shareholder who is entitled to attend and vote, then you are entitled to
appoint a proxy or proxies to attend and vote on your behalf. A proxy is not required to
be a shareholder in the Company. If you wish to appoint as proxy any person other than
the individuals specified on the proxy card, please contact the Company Secretary at
our registered office.
Important Notice regarding the availability of proxy materials for the Annual General
Meeting of Shareholders to be held on June 3, 2021.
The Annual Report and Proxy Statement are available at www.proxyvote.com.
The Notice of Internet Availability of Proxy Materials or this Notice of 2021 Annual
General Meeting of Shareholders, the Proxy Statement and the Annual Report are first
being mailed to shareholders on or about April 23, 2021.
2022 Annual Meeting
Deadline for shareholder proposals for inclusion in the proxy statement:
December 24, 2021
Deadline for business proposals and nominations for director: March 5, 2022
June 3, 2021 (Thursday)
8:00 a.m. EDT
Location
Trane Technologies plc
800-C Beaty Street
Davidson, NC 28036
Shareholders in Ireland may
participate in the Annual General
Meeting remotely on June 3,
2021 at 1:00 p.m. (Dublin time)
telephonically at the Arthur Cox
Building, Ten Earlsfort Terrace,
Dublin 2, D02 T380, Ireland. See
“Information Concerning Voting
and Solicitation” of the proxy
statement for further information
on participating in the Annual
General Meeting.
Who Can Vote
Only shareholders of record
as of the close of business on
April 8, 2021, are entitled to
receive notice of and to vote at
the Annual General Meeting.
How to Vote
Whether or not you plan to attend
the meeting, please provide your
proxy by either using the Internet or
telephone as further explained in the
accompanying proxy statement or
filling in, signing, dating, and promptly
mailing a proxy card.
By Telephone
In the U.S. or Canada, you
can vote your shares by
submitting your proxy toll-free
by calling 1-800-690-6903.
By Internet
You can vote your shares
online at www.proxyvote.com.
By Mail
You can vote by mail by
marking, dating, and signing
your proxy card or voting
instruction form and returning it
in the postage-paid envelope.
2
Table of Contents
A Letter from Our Board of Directors on the Urgency
of Sustainability
Notice of 2021 Annual General Meeting of Shareholders
Trane Technologies 2020 Performance Highlights
Proxy Voting Roadmap
Proposals Requiring Your Vote
Item 1. Election of Directors
Item 2. Advisory Approval of the Compensation of
Our Named Executive Officers
Item 3. Approval of Appointment of
Independent Auditors
Item 4. Renewal of the Directors’ Existing Authority to
Issue Shares
Item 5. Renewal of the Directors’ Existing Authority to
Issue Shares for Cash Without First Offering Shares to
Existing Shareholders
Item 6. Determine the Price at which the Company
Can Re-Allot Shares Held as Treasury Shares
Corporate Governance
Corporate Governance Guidelines
Role of the Board of Directors
Board Responsibilities
Board Leadership Structure
Board Risk Oversight
Director Compensation and Share Ownership
Board Committees
Board Diversity
Board Advisors
Executive Sessions
Board and Board Committee Performance Evaluation
Director Orientation and Education
Director Retirement
Director Independence
Communications with Directors
Management Succession Planning
Code of Conduct
Anti-Hedging Policy and Other Restrictions
Investor Outreach
Sustainability
Committees of the Board and Attendance
Compensation Committee Interlocks and
Insider Participation
1
2
4
7
13
13
20
20
22
23
24
25
25
25
25
25
27
29
29
29
29
29
29
29
30
30
30
30
31
31
31
31
32
35
Compensation of Directors
Director Compensation
Share Ownership Requirement
2020 Director Compensation
Compensation Discussion and Analysis
I. Executive Summary
II. Compensation Philosophy and Design Principles
III. Factors Considered in the Determination of Target
Total Direct Compensation
IV. Role of the Committee, Independent Advisor and
Committee Actions
V. Compensation Program Descriptions and
Compensation Decisions
VI. Other Compensation and Tax Matters
Compensation Committee Report
Executive Compensation
Summary Compensation Table
2020 Grants of Plan-Based Awards
Outstanding Equity Awards at December 31, 2020
2020 Option Exercises and Stock Vested
2020 Pension Benefits
2020 Nonqualified Deferred Compensation
Post-Employment Benefits
2020 Post-Employment Benefits Table
CEO Pay Ratio
Equity Compensation Plan Information
Information Concerning Voting and Solicitation
Security Ownership of Certain Beneficial Owners
and Management
Certain Relationships and Related Person Transactions
Delinquent Section 16(a) Reports
Shareholder Proposals and Nominations
Householding
36
36
37
37
39
39
43
44
45
46
52
55
56
56
58
61
62
62
64
65
68
70
70
71
74
76
76
77
78
3
2021 Proxy Statement Trane Technologies 2020 Performance Highlights
FINANCIAL PERFORMANCE HIGHLIGHTS
Annual Revenue
$12.45
BILLION
Adjusted EBITDA(1)
$1.92
BILLION
Decrease of 4.8% from 2019
Decrease of 3.3% from 2019
Adjusted EBITDA Margin(1)
15.4%
Increase of 0.2 percentage points over 2019
Free Cash Flow
$1.71
BILLION
Increase of 25.3% from 2019
NON-FINANCIAL PERFORMANCE HIGHLIGHTS
Business
• Successfully completed our Reverse Morris Trust (“RMT”) transaction whereby the Company separated its former
Industrial segment, which was combined with Gardner Denver Holdings, Inc. and launched Trane Technologies, a
focused climate innovation company.
• For the eighth consecutive year, recognized by Fortune Magazine as one of the world’s most-admired companies.
Human Capital Management
• Renewed our membership in the CEO Action for Diversity and Inclusion pledge, focusing on our commitment to
advance diversity and inclusion in the workplace.
• Renewed our commitment to the Paradigm for Parity Coalition, a pledge to bring gender parity to our corporate
leadership structure by 2030. We were the first in our industry to enter the coalition.
• Became a founding Member of the OneTen coalition, committed to hiring, retaining and advancing one million Black
Americans over the next ten years.
Sustainability
• We met our 2020 sustainability commitments that were set in 2013 in 2018, two years early, and announced bold 2030
sustainability commitments in 2019.
• We are one of 615 companies worldwide with science-based targets and one of only 47 companies to have its targets
verified by SBTi twice (once in 2014 and again in early 2021).
• Listed on the Dow Jones Sustainability North America Index for 10 consecutive years.
For more information regarding our 2020 Financial and Non-Financial Performance, please see Compensation Discussion and
Analysis contained in this Proxy Statement.
For more information regarding the Company’s commitment to leadership in environmental, social and governance matters and our
achievements in these areas, please also see our 2020 Annual Report to Shareholders included in these proxy materials and our
2020 ESG Report available on our website located at www.tranetechnologies.com under the heading “Sustainability.”
(1) We report our financial results in our annual report on Form 10-K and our quarterly reports on Form 10-Q in accordance with United States generally
accepted accounting principles (“GAAP”). Our financial results described above for Adjusted EBITDA and Adjusted EBITDA Margin have been adjusted to
exclude the impact of certain non-routine and other items as described in our earnings releases and are non-GAAP financial measures. These metrics and
the related performance targets and results are relevant only to our executive compensation program and should not be used or applied in other contexts.
For a description of how the metrics above are calculated from our GAAP financial statements, please see “Annual Incentive Matrix (“AIM”) - Determination of
Payout” with respect to AIM payments and “Long Term Incentive Program (‘LTI’) – 2018 - 2020 Performance Share Units Payout” with respect to Performance
Share Program (“PSP”) awards.
4
2020 PERFORMANCE HIGHLIGHTS
Sustainability at Trane Technologies
At Trane Technologies, sustainability is core to who we are. Our commitment extends to the environmental and social impacts of our
operations, products and services, and workplace.
Here is an overview of our 2030 Sustainability Commitments and our progress against them.
THE GIGATON CHALLENGE
LEADING BY EXAMPLE
OPPORTUNITY FOR ALL
We’re reducing one gigaton – one
billion metric tons – of carbon
emissions (CO2e) from our customers’
footprint by 2030.
How We’ll Do It
We’re innovating clean technologies,
advancing system level
energy-efficiency, reducing global
food loss and transitioning to
next-generation refrigerants.
Our Progress in 2020
7.7 million
metric tons of CO2e reduced from
our customer’s carbon footprint
equivalent to the annual output of
1,662
wind turbines
We’re reimagining our supply chain
and operations to have a restorative
impact on the environment.
How We’ll Do It
We’re working to achieve carbon
neutral operations, zero waste to
landfills, and net positive water use,
and reduce absolute energy use by
10 percent.
We’re uplifting our culture and
communities through an inclusive
approach and a focus on education
and career development.
How We’ll Do It
We’ll achieve workforce diversity
reflective of our communities, gender
parity in leadership roles, and create
pathways to green and STEM careers.
Our Progress in 2020
Our Progress in 2020
23%
total reduction in water use in
water-stressed regions
39%
39% of electricity demand met with
renewables
21.7%
of leadership positions held by women
$380.4 million
in goods and services spent on
diverse-owned businesses
Supporting Employees and Customers during COVID-19
As the coronavirus pandemic took hold, Trane Technologies took quick and deliberate action to care for the health and safety of our
people, serve the essential needs of our customers, and maintain balanced attention on the Company’s short-term performance and
long-term business strategy.
TAKING CARE OF OUR PEOPLE
We immediately invested in safety measures and personal protective equipment to continue operating our facilities, manufacturing
plants and services with comprehensive safety protocols. To preserve jobs, we took cost management actions including delay of
base salary merit increases and furloughs in select markets. We enhanced benefits and support resources to care for our people
and their families who were affected by COVID-19 in many ways. Through it all, we maintained strong employee engagement – with
2020 scores that improved relative to 2019 and are in the top quartile of companies globally. To support our people during the
pandemic, we:
• Accelerated the rollout of our global Employee Assistance Program (EAP).
• Provided frequent communications and webinars on topics including mental health, childcare, and education. Provided back-up
care and working parent resource enhancements in the U.S.
• Amended our U.S. medical plans to cover COVID-19 testing and telehealth visits at no cost to employees.
• Modified our Short-Term Disability Plan to eliminate the previous waiting period, ensuring benefits begin on first day of absence for
COVID-related illness or required quarantine.
• Accelerated our “Future of Work” initiative to create revised Flex Time and Flex Place policies and resources that vary by type of role.
• Provided $1.4 million in grants to 1,083 employees experiencing hardship due to COVID-19 through the Helping Hand employee
relief fund.
5
2020 PERFORMANCE HIGHLIGHTS2021 Proxy Statement INNOVATING TO SERVE CUSTOMERS
Our teams took an agile approach to serving the needs of our customers through this challenging time, prioritizing the needs
of essential customers, innovating to meet evolving needs, and bringing experts and new partners to the table to advance
market-leading solutions. To support our customers through the pandemic, we:
• Focused immediately on serving essential customers in healthcare, hospitals, laboratories and data centers with indoor
environmental quality solutions to remove pathogens from the air and support isolation rooms and other specific needs.
• Introduced a new suite of services to support commercial building owners and operators including a comprehensive Indoor Air
Quality Assessment, an Energy Checkup to ensure efficiency and Remote Services to enable remote system diagnosis, service
and monitoring.
• Launched the Center for Healthy and Efficient Spaces and convened a team of global experts to accelerate innovation and
advocacy on indoor environments.
• Partnered with technology companies like Synexis to bring market-leading innovation to customers to reduce pathogens in air and
on surfaces.
• Expanded our portfolio of refrigerated transport solutions to safely and efficiently move refrigerated foods and medicines in
communities around the world as e-commerce and home delivery expanded.
• Launched new cold storage and transport solutions to meet the needs of pharmaceutical and transport companies engaged in
vaccine distribution, including a Super Freezer that can maintain temperatures as low as -70 degrees Celsius.
6
2020 PERFORMANCE HIGHLIGHTS Proxy Voting Roadmap
This summary highlights information contained elsewhere in this Proxy Statement. For more complete information about these topics,
please review Trane Technologies plc’s Annual Report on Form 10-K and the entire Proxy Statement.
ITEM
Election of Directors
1
• Eleven out of 12 Director nominees are independent.
• The Board of Directors is nominating five female directors, one
Black director, one Hispanic director and two non-U.S. directors out
of a total of 12 directors.
• The tenure and experience of our directors is varied, which brings
varying perspectives to our Board functionality.
The Board of Directors
recommends a vote “FOR”
the directors nominated for
election.
See page 13 for further
information
Director Nominees
Name/Occupation
Kirk E. Arnold
Executive in Residence of General Catalyst
Former Chief Executive Officer, Data Intensity
Ann C. Berzin
Former Chairman and CEO of Financial Guaranty
Insurance Company
John Bruton
Former Prime Minister of the Republic of Ireland and
Former European Union Commission Head of Delegation
to the United States
Jared L. Cohon
President Emeritus of Carnegie Mellon University,
University Professor of Civil and Environmental
Engineering and of Engineering and Public Policy
Gary D. Forsee
Former President of University of Missouri System and
Former Chairman of the Board and Chief Executive Officer
of Sprint Nextel Corporation
Linda P. Hudson
Founder and Former Chairman and CEO of The Cardea
Group and Former President and CEO of BAE Systems, Inc.
Michael W. Lamach
Chairman and CEO of Trane Technologies plc
Myles P. Lee
Former Director and CEO of CRH plc
April Miller Boise
Executive Vice President and General Counsel of
Eaton Corporation plc
Karen B. Peetz
Chief Administrative Officer of Citigroup Inc.
John P. Surma
Retired Chairman and CEO of United States
Steel Corporation
Independent Other Current Public Boards
A
C
S
F
T
E
Trane Technologies
Committees
Director
since
2018
Age
61
YES
• Ingersoll Rand Inc.
• Thomson Reuters
• Epiphany Technology
• Exelon Corporation
• Baltimore Gas & Electric Company M
Acquisition Corp.
M M
M
C
M
69
2001
YES
73
2010
YES
73
2008
YES
• Unisys
71
2007
YES
• Ingersoll Rand Inc.
70
2015
YES
57
67
52
65
66
2010
2015
2020
2018
2013
NO
YES
YES
YES
YES
• Bank of America
• TPI Composites, Inc.
• PPG Industries, Inc.
• Babcock International Group plc
• UDG Healthcare plc
• Marathon Petroleum Corporation
• MPLX LP (a publicly traded
subsidiary of Marathon
Petroleum Corporation)
• Public Service Enterprise Group
• CVS Health Corporation
• Ingersoll Rand Inc.
M
M M
M M
C
M C
M M
M M
M
C
M
M
M
M
M
M
M
C
C M
M M
Tony L. White
Former Chairman, President and CEO of Applied
Biosystems Inc.
74
1997
YES
A Audit Committee
F Finance Committee
C Compensation Committee
T Technology and Innovation Committee
S Sustainability, Corporate Governance & Nominating Committee
E Executive Committee
C Chair
M Member
7
2021 Proxy Statement Board Diversity
The Company’s policy on Board diversity relates to the selection of nominees for the Board of Directors. In selecting a nominee for
the Board, the Sustainability, Corporate Governance and Nominating Committee considers the skills, expertise and background
that would complement the existing Board and ensure that its members are of sufficiently diverse and independent backgrounds,
recognizing that the Company’s businesses and operations are diverse and global in nature. The Board of Directors is nominating
five female directors (Ms. Arnold, Ms. Berzin, Ms. Hudson, Ms. Miller Boise and Ms. Peetz), one Hispanic director (Mr. White), one Black
director (Ms. Miller Boise) and two international directors who are Irish citizens (Mr. Bruton and Mr. Lee) out of a total of 12 directors.
Two of our current directors (Mr. Swift and Mr. Bruton) have veteran status. In addition, the tenure and experience of our directors is
varied, which brings varying perspectives to our Board functionality.
GENDER
RACE AND ETHNICITY
NATIONALITY
42%
17%
17%
Female Directors
Racially and Ethnically
Diverse Directors
International
Representation
BOARD SKILLS AND EXPERIENCE
BOARD SIZE AND
INDEPENDENCE
11 out of 12 Director
Nominees are
Independent
l
d
o
n
r
A
n
i
z
r
e
B
n
o
t
u
r
B
n
o
h
o
C
e
e
s
r
o
F
n
o
s
d
u
H
h
c
a
m
a
L
e
e
L
i
e
s
o
B
r
e
l
l
i
M
z
t
e
e
P
a
m
r
u
S
e
t
i
h
W
$ Financial Expert
$
$
$
$
Finance/Capital Allocation
Global Experience
Technology/Engineering
Marketing/Digital
Services
Human Resources/Compensation
IT/Cybersecurity/Data Management
!
Risk Management/Mitigation
ESG/Sustainability
Chair/CEO/Business Head
Industrial/Manufacturing
Academia/Education
Government/Public Policy
$
Financial Services
S
L
L
K
S
I
I
E
C
N
E
R
E
P
X
E
8
PROXY VOTING ROADMAP
Director Nomination Process
The Sustainability, Corporate Governance and Nominating Committee identifies individuals qualified to become directors and
recommends the candidates for all directorships.
1 BOARD COMPOSITION ASSESSMENT
The Sustainability, Corporate Governance and Nominating Committee reviews the composition of the full Board to identify
the qualifications and areas of expertise needed to further enhance the composition of the Board.
2 BOARD RECOMMENDATION
The Sustainability, Corporate Governance and Nominating Committee makes recommendations to the Board concerning
the appropriate size and needs of the Board including recommendations based on reviews of diversity and the board’s
skill and experience matrix.
3 IDENTIFICATION OF CANDIDATES
The Sustainability, Corporate Governance and Nominating Committee with the assistance of management identifies
candidates with those qualifications. The board has used a third party search firm for all searches in the last five years and
has included a diverse slate of candidates from a gender diversity and racial and ethnic diversity perspective. The Board
intends to continue to include diverse candidates from a gender diversity and racial and ethnic diversity perspective in
each board member search that it conducts.
In considering candidates, the Sustainability, Corporate Governance and Nominating Committee will take into account all
factors it considers appropriate, including breadth of experience, understanding of business and financial issues, ability
to exercise sound judgment, diversity, leadership, and achievements and experience in matters affecting business and
industry. The Sustainability, Corporate Governance and Nominating Committee considers the entirety of each candidate’s
credentials and believes that at a minimum each nominee should satisfy the following criteria: highest character and
integrity, experience and understanding of strategy and policy-setting, sufficient time to devote to Board matters, and no
conflict of interest that would interfere with performance as a director.
Shareholders may recommend candidates for consideration for Board membership by sending the recommendation to
the Sustainability, Corporate Governance and Nominating Committee, in care of the Secretary of the Company. Candidates
recommended by shareholders are evaluated in the same manner as director candidates identified by any other means.
Corporate Governance Highlights
The Company upholds the highest standards of corporate governance including:
• Substantial majority of independent director
nominees (11 of 12)
• Annual election of directors
• Majority vote for directors
• Independent Lead Director
• Board oversight of risk management
• Succession planning at all management levels, including
for Board and CEO
• Annual Board and committee self-assessments
• Executive sessions of non-management directors
• Continuing director education
• Executive and director stock ownership guidelines
• Board oversight of enterprise-wide sustainability program
and strategy
9
PROXY VOTING ROADMAP2021 Proxy Statement ITEM
2
Advisory Approval of the Compensation
of Our Named Executive Officers
The Board of Directors
recommends a vote FOR
this item.
• Our Compensation Committee has adopted executive
compensation programs with a strong link between pay and
achievement of short and long-term Company goals.
• Shareholders voted 91% in favor of the company’s Advisory
Approval of the Compensation of our NEOs at our 2020 Annual
General Meeting.
See page 20 for further
information
Executive Compensation Highlights
The Compensation Committee (the “Committee”) is guided by executive compensation principles that shape the executive
compensation programs that the Committee adopts to execute on the Company’s strategies and goals.
Executive Compensation Principles
Our executive compensation programs are based on the following principles:
(i) business strategy alignment
(iii) mix of short and long-term incentives
(v) shareholder alignment
(ii) pay for performance
(iv) internal parity
(vi) market competitiveness
Executive Compensation Program Overview
The Committee has adopted executive compensation programs with a strong link between pay and performance and the
achievement of short-term and long-term Company goals. The primary elements of the executive compensation programs are
base salary, Annual Incentive Matrix (“AIM”) and long-term incentives (“LTI”). The Committee places significant emphasis on variable
compensation (AIM and LTI) so that a substantial percentage of the six NEO’s target total direct compensation (“TDC”) is contingent
on the successful achievement of the Company’s short-term and long-term performance goals.
Pay for Performance
A strong pay for performance culture is paramount to our success. As a result, each executive’s target total direct compensation
(“TDC”) is tied to Company, business and individual performance against set goals. Company and business performance are
measured against pre-established financial, operational and strategic objectives as set by the Committee. Individual performance
is measured against pre-established individual goals as well as demonstrated leadership competencies and behaviors consistent
with our leadership principles. In addition, a portion of the long-term incentive is earned based on Company cash flow return on
invested capital (“CROIC”) and shareholder value performance relative to peer companies. Over 90% of our CEO’s total direct
compensation was performance based compensation in 2020 and over 78% of our other NEO’s average total direct compensation
was performance based compensation in 2020 – pay that is subject to risk depending on our Company’s performance.
10
PROXY VOTING ROADMAP 2020 Executive Compensation
The summary below shows the 2020 compensation for our CEO and other NEOs, as required to be reported in the Summary
Compensation Table pursuant to U.S. Securities and Exchange Commission (“SEC”) rules. Please see the notes accompanying the
Summary Compensation Table for further information.
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(1)
All Other
Compensation
($)
Total
($)
1,410,000 500,000 9,262,869 2,500,012
2,397,000
11,591,666
445,939 28,107,486
642,742 150,000 1,667,489
450,012
680,000
445,140
88,607 4,123,990
850,000 150,000 2,408,938
650,009
850,000
3,735,597
119,679 8,764,223
691,250 200,000 1,556,448
420,004
603,500
2,547,784
100,288 6,119,274
575,000 150,000 1,389,663
375,008
501,500
814,644
77,655 3,883,470
196,686 200,000
298
—
194,809
628,837
159,471 1,380,101
Name and
Principal Position
M. W. Lamach
Chairman and Chief
Executive Officer
C. J. Kuehn
Senior Vice President and
Chief Financial Officer
D. S. Regnery
President and Chief
Operating Officer
M. J. Avedon
Executive Vice President,
Chief Human Resources,
Marketing and
Communications Officer
P. A. Camuti
Executive Vice President
and Chief Technology and
Strategy Officer
S. K. Carter(2)
Former Senior
Vice President and
Chief Financial Officer
(1) Amounts reported in this column reflect the aggregate increase in the actuarial present value of the benefits under the qualified Trane Technologies
Pension Plan Number One, the Trane Technologies Supplemental Pension Plan, the Trane Technologies Supplemental Pension Plan II, the Key Management
Supplemental Pension program and the Elected Officer Supplemental Pension program, as applicable. The change in pension benefits value is attributable
to the additional year of service and age, the annual AIM award and any annual salary increase. Other external factors, outside the influence of the plan
design, also impact the values shown in this column. Examples of these factors include changes to mortality tables as well as interest and discount rates.
For all the NEOs, the amounts in this column for 2020 were impacted by decreasing lump sum interest rates (down from 2.25% to 1.00%) and discount rates
(down from 2.96% to 2.08%) which cause the value of the lump sum distribution under the EOSP and the KMP to increase. For Mr. Lamach, the majority of the
change in the pension value is due to these required actuarial valuation changes.
(2) Ms. Carter retired on April 1, 2020.
See Compensation Discussion and Analysis for more information about our Committee’s executive compensation principles, the
programs the Committee has adopted and the decisions that the Committee made during 2020.
11
PROXY VOTING ROADMAP2021 Proxy Statement ITEM
3
Approval of Appointment of
Independent Auditors
• The Audit Committee engages in an annual evaluation
of the qualifications, performance and independence of
PricewaterhouseCoopers LLP (“PwC”).
• Both by virtue of its familiarity with the Company’s affairs and its
professional competencies and resources, PwC is considered best
qualified to perform this important function.
• The Audit Committee and the Board believe that the continued
retention of PwC to serve as our independent external auditors is in
the best interests of the Company and its investors.
Renewal of the Directors’ Existing
Authority to Issue Shares
• The Board of Directors’ authority to issue shares under Irish law is
fundamental to our business.
• Granting the Board this authority is a routine matter for public
companies incorporated in Ireland.
Renewal of the Directors’ Existing
Authority to Issue Shares for Cash
without First Offering Shares to
Existing Shareholders
• The Board of Directors’ authority to issue shares for cash without
first offering shares to existing shareholders is fundamental to
our business.
• Granting the Board this authority is a routine matter for public
companies incorporated in Ireland.
• As required under Irish law, this proposal requires the affirmative
vote of at least 75% of the votes cast.
Determine the Price at which the
Company Can Re-Allot Shares Held
as Treasury Shares
• From time to time the Company may acquire ordinary shares and
hold them as treasury shares.
• The Company may re-allot such treasury shares, and under Irish law,
our shareholders must authorize the price range at which we may
re-allot shares held in treasury.
• As required under Irish law, this proposal requires the affirmative
vote of at least 75% of the votes cast.
ITEM
4
ITEM
5
ITEM
6
12
The Board of Directors
recommends a vote “FOR”
this item.
See page 20 for further
information
The Board of Directors
recommends a vote “FOR”
this item.
See page 22 for further
information
The Board of Directors
recommends a vote “FOR”
this item.
See page 23 for further
information
The Board of Directors
recommends a vote “FOR”
this item.
See page 24 for further
information
PROXY VOTING ROADMAP Proposals Requiring Your Vote
In this Proxy Statement, “Trane Technologies,” the “Company,” “we,” “us” and “our” refer to Trane Technologies plc, an Irish public
limited company. This Proxy Statement and the enclosed proxy card, or the Notice of Internet Availability of Proxy Materials, are first
being mailed to shareholders of record on April 8, 2021 (the “Record Date”) on or about April 23, 2021.
The Board of Directors
recommends a vote “FOR”
the directors nominated for
election listed below.
ITEM
Election of Directors
1
The Company uses a majority of votes cast standard for the election
of directors. A majority of the votes cast means that the number of
votes cast “for” a director nominee must exceed the number of votes
cast “against” that director nominee. Each director of the Company
is being nominated for election for a one-year term beginning at the
end of the 2021 Annual General Meeting of Shareholders to be held on
June 3, 2021 (the “Annual General Meeting”) and expiring at the end of
the 2022 Annual General Meeting of Shareholders. Under our Articles
of Association, if a director is not re-elected in a director election, the
director shall retire at the close or adjournment of the Annual General
Meeting. Mr. Swift is retiring at the 2021 Annual General Meeting
due to reaching retirement age in accordance with our Corporate
Governance Guidelines.
Nominees for Director
Kirk E. Arnold
Independent Director
Age 61
Director since 2018
Committees
Compensation
Sustainability, Corporate
Governance & Nominating
Technology and Innovation
Principal Occupation
• Executive in Residence of General Catalyst, a venture capital firm backing entrepreneurs,
from September 2018–Present.
• Chief Executive Officer of Data Intensity from 2013 to 2017.
Other Directorships Held in the Past Five Years
• EnerNoc, Inc.
Current Public Directorships
• Ingersoll Rand Inc.
• Thomson Reuters
• Epiphany Technology Acquisition Corp.
Other Activities
• Director of The Predictive Index
• Director of Baypath University
• Director of UP Education Network
Skills and Experience
Technology/
Engineering
!
Risk Management/
Mitigation
Marketing/
Digital
ESG /
Sustainability
Services
IT/Cybersecurity/
Data Management
Chair/CEO/
Business Head
Academia/
Education
Nominee Highlights
Ms. Arnold’s vast experience in technology and service leadership brings critical insight to the
Company’s operations, digital analytics, and technologies. Ms. Arnold has served in executive
positions throughout the technology industry including as COO at Avid, a technology provider
to the media industry, and CEO and President of Keane, Inc., then a publicly traded billion-
dollar global services provider. Ms. Arnold has also held senior leadership roles at Computer
Sciences Corporation, Fidelity Investments and IBM. Ms. Arnold’s active participation in the
technology and business community provides the Company ongoing insight into digital
marketing and technology related issues.
13
2021 Proxy Statement Principal Occupation
• Chairman and Chief Executive Officer of Financial Guaranty Insurance Company (insurer of
municipal bonds and structured finance obligations), a subsidiary of General Electric Capital
Corporation, from 1992 to 2001.
Ann C. Berzin
Independent Director
Age 69
Director since 2001
Committees
Audit
Finance (Chair)
Executive
Current Public Directorships
• Exelon Corporation
• Baltimore Gas & Electric Company
Other Activities
• University of Chicago College Advisory
Council
Skills and Experience
$ Financial
Expert
Chair/CEO/
Business Head
$
$
$
$
$
Finance/Capital
Allocation
Financial Services
Other Directorships Held in the Past Five Years
• None
Global
Experience
!
Risk Management/
Mitigation
Nominee Highlights
Ms. Berzin’s extensive experience in finance at a global diversified industrial firm and her
expertise in complex investment and financial products and services bring critical insight to
the Company’s financial affairs, including its borrowings, capitalization, and liquidity. In addition,
Ms. Berzin’s relationships across the global financial community strengthen the Company’s
access to capital markets. Her board memberships provide deep understanding of trends in the
energy sector, which presents ongoing opportunities and challenges for the Company.
Principal Occupation
• European Union Commission Head of Delegation to the United States from 2004 to 2009.
• Prime Minister of the Republic of Ireland from 1994 to 1997.
Current Public Directorships
• None
Other Directorships Held in the Past Five Years
• None
Other Activities
• Irish Institute for International and
European Affairs
• Irish Diaspora Loan Fund Public Limited
Company
• PIMCO Global Advisors (Ireland) Limited
• PIMCO Funds: Global Investors Series plc
• PIMCO Select Funds plc
Skills and Experience
• PIMCO Fixed Income Source ETFs plc
• PIMCO Funds Ireland plc
• PIMCO Specialty Funds Ireland plc
• Terebellum
• Co-Operation Ireland
• Centre for European Policy
• Public Oversight Committee of Deloitte in Ireland
$
$
$
$
$
Finance/Capital
Allocation
Global
Experience
!
Risk Management/
Mitigation
Government/
Public Policy
Financial
Services
Nominee Highlights
Mr. Bruton’s long and successful career of public service on behalf of Ireland and Europe
provides extraordinary insight into critical regional and global economic, social and political
issues, all of which directly influence the successful execution of the Company’s strategic plan.
In particular, Mr. Bruton’s leadership role in transforming Ireland into one of the world’s leading
economies during his tenure, as well as in preparing the governing document for managing
the Euro, lend substantial authority to the Company’s economic and financial oversight.
John Bruton
Independent Director
Age 73
Director since 2010
Committees
Audit
Finance
Technology and Innovation
14
PROPOSALS REQUIRING YOUR VOTE Jared L. Cohon
Independent Director
Age 73
Director since 2008
Committees
Compensation
Sustainability, Corporate
Governance and
Nominating
Technology and Innovation
(Chair)
Principal Occupation
• President Emeritus at Carnegie Mellon University, President of Carnegie Mellon University from
1997-2013 and also appointed University Professor of Civil and Environmental Engineering /
Engineering and Public Policy.
Current Public Directorships
• Unisys
Other Activities
• BNY Mellon Foundation, Trustee
• Carnegie Corporation, Trustee
• Center for Responsible Shale Gas
Development, Director and Chair
Other Directorships Held in the Past Five Years
• Lexmark, Inc.
• Health Effects Institute, Director
• Heinz Endowments, Trustee
• Hillman Family Foundations, Trustee
Skills and Experience
Global
Experience
Chair/CEO/
Business Head
Technology/
Engineering
!
Risk Management/
Mitigation
ESG /
Sustainability
Academia/
Education
Government/
Public Policy
Nominee Highlights
Dr. Cohon’s extensive career in academics, including 16 years as president of an institution
known throughout the world for its leadership in the fields of computer science and
engineering, offers the Company tremendous insight into the latest developments in areas
critical to commercial innovation and manufacturing process improvement. A member of the
National Academy of Engineering, Dr. Cohon is a recognized authority on environmental and
water resources systems analysis and management. As such, Dr. Cohon also brings unique
perspectives on sustainable business practices, both within our own operations and on behalf
of our customers and communities. In 2008 and 2009, at the request of Congress, Dr. Cohon
chaired the National Research Council Committee that produced the report, “Hidden Costs
of Energy: Unpriced Consequences of Energy Production and Use.” In 2014, Dr. Cohon was
appointed co-chair of the Congressionally-mandated Commission to review and evaluate the
National Energy Laboratories. He currently serves as Chair of the National Academies’ Board
on Energy and Environmental Systems. Finally, Dr. Cohon’s more than nine years of service
as a member of Trane Inc.’s (formerly American Standard) board of directors provides critical
insight into that part of the Company’s business.
15
PROPOSALS REQUIRING YOUR VOTE2021 Proxy Statement Principal Occupation
• President, University of Missouri System from 2008 to 2011.
• Chairman of the Board (from 2006 to 2007) and Chief Executive Officer (from 2005 to 2007) of
Sprint Nextel Corporation (a telecommunications company).
Current Public Directorships
• Ingersoll Rand Inc.
Skills and Experience
Other Directorships Held in the Past Five Years
• DST Systems Inc.
• Evergy, Inc.
$ Financial Expert
Global Experience
Human Resources/
Compensation
!
Risk Management/
Mitigation
Technology/
Engineering
ESG /
Sustainability
Services
Chair/CEO/
Business Head
Academia/
Education
Nominee Highlights
In addition to his broad operational and financial expertise, Mr. Forsee’s experience
as chairman and chief executive officer with one of the largest U.S. firms in the global
telecommunications industry offers a deep understanding of the challenges and opportunities
within markets experiencing significant technology-driven change. His role as president of a
major university system provides insight into the Company’s talent development initiatives,
which remain a critical enabler of the Company’s long-term success. Mr. Forsee’s experience
serving on the board of an energy services utility also benefits the Company as it seeks to
achieve more energy-efficient operations and customer solutions.
Principal Occupation
• Founder and Former Chairman and Chief Executive Officer of The Cardea Group, a business
management consulting firm she founded in 2014 and sold in 2020.
• Former President and Chief Executive Officer of BAE Systems, Inc. from 2009-2014.
Current Directorships
• Bank of America
• TPI Composites, Inc.
Other Activities
• Director, University of Florida Foundation
Other Directorships Held in the Past Five Years
• The Southern Company
Inc. and the University of Florida
Engineering Leadership Institute
• Advisory Board, the Angeleno Group
Skills and Experience
$ Financial Expert
Global Experience
IT/Cybersecurity/
Data Management
Industrial/
Manufacturing
Risk Management/
Mitigation
Financial Services
!
$
Technology/
Engineering
ESG /
Sustainability
Human
Resources/
Compensation
Chair/CEO/
Business Head
Nominee Highlights
Ms. Hudson’s prior role as President and CEO of BAE Systems and her extensive experience
in the defense and engineering sectors provides the Company with strong operational insight
and understanding of matters crucial to the Company’s business. Prior to becoming CEO
of BAE Systems, Ms. Hudson was president of BAE Systems’ Land & Armaments operating
group, the world’s largest military vehicle and equipment business. A member of the National
Academy of Engineering, Ms. Hudson is a recognized authority on industrial, manufacturing
and operational systems. In addition, Ms. Hudson has broad experience in strategic planning
and risk management in complex business environments.
Gary D. Forsee
Independent Director
Age 71
Director since 2007
Committees
Compensation
Sustainability, Corporate
Governance and
Nominating (Chair)
Executive, Technology
and Innovation
Linda P. Hudson
Independent Director
Age 70
Director since 2015
Committees
Compensation
Sustainability, Corporate
Governance and
Nominating
Technology and Innovation
16
PROPOSALS REQUIRING YOUR VOTE Michael W. Lamach
Chairman and CEO
Age 57
Director since 2010
Committees
Executive (Chair)
Myles P. Lee
Independent Director
Age 67
Director since 2015
Committees
Audit
Finance
Principal Occupation
• Chairman of the Company since June 2010.
• Chief Executive Officer of the Company since February 2010.
Other Directorships Held in the Past Five Years
• None
Current Directorships
• PPG Industries, Inc.
Other Activities
• Chair of the Board of the National
Association of Manufacturers
• Member of the Business Council
• Duke University Board of Visitors
Skills and Experience
$ Financial Expert
$
$
$
$
Finance/Capital
Allocation
Global
Experience
Services
Human Resources/
Compensation
!
Risk Management/
Mitigation
Technology/
Engineering
ESG /
Sustainability
Chair/CEO/
Business Head
Industrial/
Manufacturing
Nominee Highlights
Mr. Lamach’s extensive career of successfully leading global businesses, including seventeen
years with the Company, brings significant experience and expertise to the Company’s
management and governance. His 36 years of business leadership encompass global
industrial systems, controls, security and HVAC systems businesses, representing a broad
and diverse range of products and services, markets, channels, applied technologies and
operational profiles. In his current role of Chairman and Chief Executive Officer, he led the
successful RMT transaction whereby the Company separated its former Industrial segment,
which was combined with Gardner Denver Holdings, Inc. Mr. Lamach has been instrumental in
driving growth and operational excellence initiatives across the Company’s global operations.
Principal Occupation
• Director (from 2003 to 2013) and Chief Executive Officer (from 2009 to 2013) of CRH plc
Current Public Directorships
• Babcock International Group plc
• UDG Healthcare plc
Other Activities
• Director, St. Vincent’s Healthcare Group
Skills and Experience
Other Directorships Held in the Past Five Years
• None
$ Financial Expert
$
$
$
$
Finance/Capital
Allocation
Global
Experience
!
Risk Management/
Mitigation
Chair/CEO/
Business Head
Industrial/
Manufacturing
Nominee Highlights
Mr. Lee’s experience as the former head of the largest public or private company in Ireland
provides strategic and practical judgment to critical elements of the Company’s growth and
productivity strategies, expertise in Irish governance matters and significant insight into the
building and construction sector. In addition, Mr. Lee’s previous service as Finance Director
and General Manager of Finance of CRH plc and in a professional accountancy practice
provides valuable financial expertise to the Company.
17
PROPOSALS REQUIRING YOUR VOTE2021 Proxy Statement April Miller Boise
Independent Director
Age 52
Director since 2020
Committees
Audit
Finance
Principal Occupation
• Executive Vice President and General Counsel of Eaton Corporation plc from
January 2020-Present.
• Senior Vice President, General Counsel / Chief Legal Officer of Meritor from
August 2016-December 2019.
Current Public Directorships
• None
Other Activities
• Trustee, Cleveland Clinic
• Director, City Club of Cleveland
Skills and Experience
Other Directorships Held in the Past Five Years
• Federal Home Loan Bank, Cincinnati
Global
Experience
ESG /
Sustainability
Human Resources/
Compensation
IT/Cybersecurity/
Data Management
!
Risk Management/
Mitigation
Industrial/
Manufacturing
Government/
Public Policy
Nominee Highlights
Ms. Miller Boise adds valuable perspective as we execute our climate-focused strategy and
expand our global leadership in sustainability. She brings extensive experience in business
strategy, strategic transactions and international growth, in addition to her deep background in
corporate governance and inclusive talent management. In particular, Ms. Miller Boise’s experience
working with companies in relevant industries across the global manufacturing arena including
automotive, electrical products and services, commercial transportation, and oil and gas brings
relevant insight regarding the manufacturing industry and dynamic end markets around the world.
Principal Occupation
• Chief Administrative Officer of Citigroup Inc.
• Former President of BNY Mellon from 2013-2016.
Karen B. Peetz
Independent Director
Age 65
Director since 2018
Committees
Technology and Innovation
Current Public Directorships
• None
Other Activities
• Director, The Guardian Life Insurance
Company of America
• Trustee, John Hopkins University and
Medicine
• Director, Global Lyme Alliance
Skills and Experience
Other Directorships Held in the Past Five Years
• Wells Fargo & Company
• SunCoke Energy
$ Financial Expert
$
$
$
$
Finance/Capital
Allocation
Global
Experience
Human Resources/
Compensation
!
Risk Management/
Mitigation
ESG /
Sustainability
Chair/CEO/
Business Head
$
Financial Services
Nominee Highlights
Ms. Peetz adds deep financial and operational leadership experience in complex, global
markets to the Board. In particular, Ms. Peetz’s experience serving as president of one of the
world’s largest custodian banks and asset servicing companies and Chief Administrative Officer
of one of the leading global banks brings critical insight to the Company’s financial affairs,
including its borrowings, capitalization, and liquidity as well as financial management and risk
management. Ms. Peetz also has extensive experience leading with respect to governance and
corporate responsibility matters that complement the Company’s commitment to these issues.
18
PROPOSALS REQUIRING YOUR VOTE John P. Surma
Independent Director
Age 66
Director since 2013
Committees
Audit (Chair)
Finance
Executive
Tony L. White
Independent Director
Age 74
Director since 1997
Committees
Compensation (Chair)
Sustainability, Corporate
Governance and Nominating
Executive
Technology and Innovation
Principal Occupation
• Chairman (from 2006-2013) and Chief Executive Officer (from 2004-2013) of United States
Steel Corporation (a steel manufacturing company).
Other Directorships Held in the Past Five Years
• Concho Resources Inc.
Current Public Directorships
• Marathon Petroleum Corporation
• MPLX LP (a publicly traded subsidiary of
Marathon Petroleum Corporation)
• Public Service Enterprise Group
Other Activities
• Director, UPMC
Skills and Experience
$ Financial Expert
$
$
$
$
Finance/Capital
Allocation
Global
Experience
Services
!
Risk Management/
Mitigation
ESG /
Sustainability
Chair/CEO/
Business Head
Industrial/
Manufacturing
Government/Public
Policy
Nominee Highlights
Mr. Surma’s experience as the former chairman and chief executive officer of a large industrial
company provides significant and direct expertise across all aspects of the Company’s
operational and financial affairs. In particular, Mr. Surma’s financial experience, having
previously served as the chief financial officer of United States Steel Corporation and as a
partner of the audit firm PricewaterhouseCoopers LLP, provides the Board with valuable insight
into financial reporting and accounting oversight of a public company. Mr. Surma’s board
memberships and other activities provide the Board an understanding of developments in the
energy sector as the Company seeks to develop more energy-efficient operations and insight
into national and international business and trade policy that could impact the Company.
Principal Occupation
• Chairman, President and Chief Executive Officer of Applied Biosystems Inc. (a developer,
manufacturer and marketer of life science systems and genomic information products) from
1995 until his retirement in 2008.
Current Directorships
• CVS Health Corporation
• Ingersoll Rand Inc.
Skills and Experience
$ Financial Expert
Other Directorships Held in the Past Five Years
• C.R. Bard, Inc.
Global
Experience
Marketing/
Digital
Human Resources/
Compensation
!
Risk Management/
Mitigation
Chair/CEO/
Business Head
Industrial/
Manufacturing
Nominee Highlights
Mr. White’s extensive management experience, including 13 years as chairman and chief
executive officer of an advanced-technology life sciences firm, provides substantial expertise
and guidance across all aspects of the Company’s operational and financial affairs. In
particular, Mr. White’s leadership of an organization whose success was directly connected to
innovation and applied technologies aligns with the Company’s focus on innovation as a key
source of growth. The Company benefits from Mr. White’s experience and board memberships
focusing on developments related to biotechnology and healthcare delivery systems which
offer instructive process methodologies to accelerate our innovation efforts.
19
PROPOSALS REQUIRING YOUR VOTE2021 Proxy Statement ITEM
2
Advisory Approval of the
Compensation of Our Named
Executive Officers
The Board of Directors recommends
a vote FOR advisory approval of
the compensation of our Named
Executive Officers as disclosed in the
Compensation Discussion and Analysis,
the compensation tables, and the
related disclosure contained in this
proxy statement.
The Company is presenting the following proposal, commonly known as a “Say-on-Pay” proposal, which gives you as a shareholder
the opportunity to endorse or not endorse our compensation program for Named Executive Officers by voting for or against the
following resolution:
“RESOLVED, that the shareholders approve the compensation of the Company’s Named Executive Officers, as disclosed in the
Compensation Discussion and Analysis, the compensation tables, and the related disclosure contained in the Company’s proxy statement.”
While our Board of Directors intends to carefully consider the shareholder vote resulting from the proposal, the final vote will not be
binding on us and is advisory in nature.
In considering your vote, please be advised that our compensation program for Named Executive Officers is guided by our design
principles, as described in the Compensation Discussion and Analysis section of this Proxy Statement:
(i) business strategy alignment
(iii) mix of short and long-term incentives
(v) shareholder alignment
(ii) pay for performance
(iv) internal parity
(vi) market competitiveness
By following these design principles, we believe that our compensation program for Named Executive Officers is strongly aligned
with the long-term interests of our shareholders.
Approval of Appointment of
Independent Auditors
ITEM
3
The Board of Directors recommends a
vote FOR the proposal to approve the
appointment of PwC as independent
auditors of the Company and to
authorize the Audit Committee of
the Board of Directors to set the
auditors’ remuneration.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent
external audit firm retained to audit the Company’s financial statements and internal controls over financial reporting. In executing
its responsibilities, the Audit Committee engages in an annual evaluation of the qualifications, performance and independence of
PricewaterhouseCoopers LLP (“PwC”). In assessing independence, the Committee reviews the fees paid, including those related
to non-audit services. The Audit Committee has sole authority to approve all engagement fees to be paid to PwC. The Audit
Committee regularly meets with the lead audit partner without members of management present, and in executive session with only
the Audit Committee members present, which provides the opportunity for continuous assessment of the firm’s effectiveness and
independence and for consideration of rotating audit firms.
In addition, as part of its normal cadence, the Audit Committee considers whether there should be a regular rotation of the independent
registered public accounting firm. The Audit Committee ensures that the mandated rotation of PwC’s lead engagement partner occurs
routinely and the Audit Committee and its Chairman are directly involved in the selection of PwC’s lead engagement partner.
The Audit Committee has recommended that shareholders approve the appointment of PwC as our independent auditors for
the fiscal year ending December 31, 2021, and authorize the Audit Committee of our Board of Directors to set the independent
auditors’ remuneration.
PwC has been acting continuously as our independent auditors for over one hundred years and, both by virtue of its familiarity
with the Company’s affairs and its professional competencies and resources, is considered best qualified to perform this important
function. The Audit Committee and the Board believe that the continued retention of PwC to serve as our independent external
auditors is in the best interests of the Company and its investors.
Representatives of PwC will be present at the Annual General Meeting and will be available to respond to appropriate questions.
They will have an opportunity to make a statement if they so desire.
20
PROPOSALS REQUIRING YOUR VOTE Audit Committee Report
While management has the primary responsibility for the financial statements and the financial reporting process, including the
system of internal controls, the Audit Committee reviews the Company’s audited financial statements and financial reporting
process on behalf of the Board of Directors. The independent auditors are responsible for performing an independent audit of
the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (the “PCAOB”) and to issue a report thereon. The Audit Committee monitors those processes. In this context,
the Audit Committee has met and held discussions with management and the independent auditors regarding the fair and
complete presentation of the Company’s results. The Audit Committee has discussed significant accounting policies applied by the
Company in its financial statements, as well as alternative treatments. Management has represented to the Audit Committee that
the Company’s consolidated financial statements were prepared in accordance with United States generally accepted accounting
principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the
independent auditors. The Audit Committee also discussed with the independent auditors the matters required to be discussed by
Auditing Standard No. 16, “Communications with Audit Committees” issued by the PCAOB.
In addition, the Audit Committee has received and reviewed the written disclosures and the letter from PwC required by the PCAOB
regarding PwC’s communications with the Audit Committee concerning independence and discussed with PwC the auditors’
independence from the Company and its management in connection with the matters stated therein. The Audit Committee also
considered whether the independent auditors’ provision of non-audit services to the Company is compatible with the auditors’
independence. The Audit Committee has concluded that the independent auditors are independent from the Company and
its management.
The Audit Committee discussed with the Company’s internal and independent auditors the overall scope and plans for their
respective audits. The Audit Committee meets separately with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, the evaluations of the Company’s internal controls and the overall quality of the
Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the
Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2020 (“2020 Form 10-K”), for filing with the Securities and Exchange Commission (the “SEC”). The Audit
Committee has selected PwC, subject to shareholder approval, as the Company’s independent auditors for the fiscal year ending
December 31, 2021.
AUDIT COMMITTEE
John P. Surma (Chair)
Ann C. Berzin
John Bruton
Myles P. Lee
April Miller Boise
Richard J. Swift
21
PROPOSALS REQUIRING YOUR VOTE2021 Proxy Statement Fees of the Independent Auditors
The following table shows the fees paid or accrued by the Company for audit and other services provided by PwC for the fiscal
years ended December 31, 2020 and 2019:
Audit Fees(a)
Audit-Related Fees(b)
Tax Fees(c)
All Other Fees(d)
Total
2020
($)
2019
($)
10,568,000
12,751,000
67,000
7,556,000
6,062,000
7,814,000
9,000
38,000
16,706,000
28,159,000
(a) Audit Fees for the fiscal years ended December 31, 2020 and 2019, respectively, were for professional services rendered for the audits of the Company’s
annual consolidated financial statements and its internal controls over financial reporting, including quarterly reviews, statutory audits, issuance of consents,
review of documents filed with the SEC and comfort letter preparation.
(b) Audit-Related Fees consist of assurance services that are related to performing the audit and review of certain financial statements including employee
benefit plan audits. Audit Related Fees for the fiscal year ended December 31, 2019 include employee benefit plan audits and carve out audits related to the
Company’s RMT transaction with Gardner Denver Holdings, Inc.
(c) Tax Fees for the fiscal year ended December 31, 2020 and 2019 include consulting and compliance services in the U.S. and non-U.S. locations and tax
consulting services relating to the RMT transaction.
(d) All Other Fees for the fiscal year ended December 31, 2020 and 2019 included license fees for technical accounting software.
The Audit Committee has adopted policies and procedures which require that the Audit Committee pre-approve all non-audit services
that may be provided to the Company by its independent auditors. The policy: (i) provides for pre-approval of an annual budget for
each type of service; (ii) requires Audit Committee approval of specific projects if not included in the approved budget; and (iii) requires
Audit Committee approval if the forecast of expenditures exceeds the approved budget on any type of service. The Audit Committee
pre-approved all of the services described under “Audit-Related Fees,” “Tax Fees” and “All Other Fees.” The Audit Committee has
determined that the provision of all such non-audit services is compatible with maintaining the independence of PwC.
ITEM
4
Renewal of the Directors’
Existing Authority to
Issue Shares
The Board of Directors recommends
that you vote FOR renewing the
Directors’ authority to issue shares.
Under Irish law, directors of an Irish public limited company must have authority from its shareholders to issue any shares, including shares
which are part of the company’s authorized but unissued share capital. Our shareholders provided the Directors with this authorization
at our 2020 annual general meeting on June 4, 2020 for a period of 18 months. Because this share authorization period will expire in
December 2021, we are presenting this proposal to renew the Directors’ authority to issue our authorized shares on the terms set forth below.
We are seeking approval to authorize our Board of Directors to issue up to 33% of our issued ordinary share capital as of April 8, 2021
(the latest practicable date before this proxy statement), for a period expiring 18 months from the passing of this resolution, unless
renewed, varied or revoked.
Granting the Board of Directors this authority is a routine matter for public companies incorporated in Ireland and is consistent with Irish
market practice. This authority is fundamental to our business and enables us to issue shares, including in connection with our equity
compensation plans (where required) and, if applicable, funding acquisitions and raising capital. We are not asking you to approve an
increase in our authorized share capital or to approve a specific issuance of shares. Instead, approval of this proposal will only grant
the Board of Directors the authority to issue shares that are already authorized under our articles of association upon the terms below.
In addition, we note that, because we are a NYSE-listed company, our shareholders continue to benefit from the protections afforded
to them under the rules and regulations of the NYSE and the SEC, including those rules that limit our ability to issue shares in specified
circumstances. Furthermore, we note that this authorization is required as a matter of Irish law and is not otherwise required for other
non-Irish companies listed on the NYSE with whom we compete. Renewal of the Directors’ existing authority to issue shares is fully
consistent with NYSE rules and listing standards and with U.S. capital markets practice and governance standards.
22
PROPOSALS REQUIRING YOUR VOTE As required under Irish law, the resolution in respect of this proposal is an ordinary resolution that requires the affirmative vote of a
simple majority of the votes cast.
The text of this resolution is as follows:
“That the Directors be and are hereby generally and unconditionally authorized with effect from the passing of this resolution to
exercise all powers of the Company to allot relevant securities (within the meaning of Section 1021 of the Companies Act 2014) up to an
aggregate nominal amount of $89,989,448 (89,989,448 shares) (being equivalent to approximately 33% of the aggregate nominal value
of the issued ordinary share capital of the Company as of April 8, 2021 (the latest practicable date before this proxy statement)), and
the authority conferred by this resolution shall expire 18 months from the passing of this resolution, unless previously renewed, varied
or revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or might
require any such securities to be allotted after this authority has expired, and in that case, the Directors may allot relevant securities in
pursuance of any such offer or agreement as if the authority conferred hereby had not expired.”
ITEM
5
Renewal of the Directors’ Existing
Authority to Issue Shares for Cash
Without First Offering Shares to
Existing Shareholders
The Board of Directors recommends
that you vote FOR renewing the
Directors’ authority to issue shares for
cash without first offering shares to
existing shareholders.
Under Irish law, unless otherwise authorized, when an Irish public limited company issues shares for cash, it is required first to offer those
shares on the same or more favorable terms to existing shareholders of the company on a pro-rata basis (commonly referred to as the
statutory pre-emption right). Our shareholders provided the Directors with this authorization at our 2020 annual general meeting on June 4,
2020 for a period of 18 months. Because this share authorization period will expire in December 2021, we are presenting this proposal to
renew the Directors’ authority to opt-out of the pre-emption right on the terms set forth below.
We are seeking approval to authorize our Board of Directors to opt out of the statutory pre-emption rights provision in the event of (1) the
issuance of shares for cash in connection with any rights issue and (2) any other issuance of shares for cash, if the issuance is limited to up
to 5% of our issued ordinary share capital as of April 8, 2021 (the latest practicable date before this proxy statement), for a period expiring 18
months from the passing of this resolution, unless renewed, varied or revoked.
Granting the Board of Directors this authority is a routine matter for public companies incorporated in Ireland and is consistent with
Irish market practice. Similar to the authorization sought for Item 4, this authority is fundamental to our business and enables us to
issue shares under our equity compensation plans (where required) and if applicable, will facilitate our ability to fund acquisitions
and otherwise raise capital. We are not asking you to approve an increase in our authorized share capital. Instead, approval of this
proposal will only grant the Board of Directors the authority to issue shares in the manner already permitted under our articles of
association upon the terms below. Without this authorization, in each case where we issue shares for cash, we would first have
to offer those shares on the same or more favorable terms to all of our existing shareholders. This requirement could undermine
the operation of our compensation plans and cause delays in the completion of acquisitions and capital raising for our business.
Furthermore, we note that this authorization is required as a matter of Irish law and is not otherwise required for other non-Irish
companies listed on the NYSE with whom we compete. Renewal of the Directors’ existing authorization to opt out of the statutory
pre-emption rights as described above is fully consistent with NYSE rules and listing standards and with U.S. capital markets practice
and governance standards.
As required under Irish law, the resolution in respect of this proposal is a special resolution that requires the affirmative vote of at least 75%
of the votes cast.
The text of the resolution in respect of this proposal is as follows:
“As a special resolution, that, subject to the passing of the resolution in respect of Item 4 as set out above and with effect from
the passing of this resolution, the Directors be and are hereby empowered pursuant to Section 1023 of the Companies Act 2014
to allot equity securities (as defined in Section 1023 of that Act) for cash, pursuant to the authority conferred by Item 5 as if
subsection (1) of Section 1022 did not apply to any such allotment, provided that this power shall be limited to:
a.
the allotment of equity securities in connection with a rights issue in favor of the holders of ordinary shares (including rights to
subscribe for, or convert into, ordinary shares) where the equity securities respectively attributable to the interests of such
holders are proportional (as nearly as may be) to the respective numbers of ordinary shares held by them (but subject to
such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with fractional entitlements
that would otherwise arise, or with legal or practical problems under the laws of, or the requirements of any recognized
regulatory body or any stock exchange in, any territory, or otherwise); and
23
PROPOSALS REQUIRING YOUR VOTE2021 Proxy Statement b. the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal value of
$13,180,219 (13,180,219 shares) (being equivalent to approximately 5% of the aggregate nominal value of the issued ordinary
share capital of the Company as of April 8, 2021 (the latest practicable date before this proxy statement)) and the authority
conferred by this resolution shall expire 18 months from the passing of this resolution, unless previously renewed, varied or
revoked; provided that the Company may make an offer or agreement before the expiry of this authority, which would or
might require any such securities to be allotted after this authority has expired, and in that case, the Directors may allot equity
securities in pursuance of any such offer or agreement as if the authority conferred hereby had not expired.”
ITEM
6
Determine the Price at which the
Company Can Re-Allot Shares
Held as Treasury Shares
The Board of Directors recommends
that shareholders vote FOR the
proposal to determine the price at
which the Company can re-allot shares
held as treasury shares.
Our open-market share repurchases (redemptions) and other share buyback activities may result in ordinary shares being acquired
and held by the Company as treasury shares. We may reissue treasury shares that we acquire through our various share buyback
activities including in connection with our executive compensation program and our director programs.
Under Irish law, our shareholders must authorize the price range at which we may re-allot any shares held in treasury. In this
proposal, that price range is expressed as a minimum and maximum percentage of the closing market price of our ordinary shares
on the NYSE the day preceding the day on which the relevant share is re-allotted. Under Irish law, this authorization expires 18
months after its passing unless renewed.
The authority being sought from shareholders provides that the minimum and maximum prices at which an ordinary share held in
treasury may be re-allotted are 95% and 120%, respectively, of the closing market price of the ordinary shares on the NYSE the day
preceding the day on which the relevant share is re-issued, except as described below with respect to obligations under employee
share schemes, which may be at a minimum price of nominal value. Any re-allotment of treasury shares will be at price levels that the
Board considers in the best interests of our shareholders.
As required under Irish law, the resolution in respect of this proposal is a special resolution that requires the affirmative vote of at
least 75% of the votes cast.
The text of the resolution in respect of this proposal is as follows:
“As a special resolution, that the re-allotment price range at which any treasury shares held by the Company may be re-allotted
shall be as follows:
a. the maximum price at which such treasury share may be re-allotted shall be an amount equal to 120% of the “market
price”; and
b. the minimum price at which a treasury share may be re-allotted shall be the nominal value of the share where such a share is
required to satisfy an obligation under an employee share scheme or any option schemes operated by the Company or, in all
other cases, an amount equal to 95% of the “market price”; and
c. for the purposes of this resolution, the “market price” shall mean the closing market price of the ordinary shares on the NYSE
the day preceding the day on which the relevant share is re-allotted.
FURTHER, that this authority to re-allot treasury shares shall expire at 18 months from the date of the passing of this resolution
unless previously varied or renewed in accordance with the provisions of Sections 109 and 1078 of the Companies Act 2014.”
24
PROPOSALS REQUIRING YOUR VOTE Corporate Governance
Corporate Governance Guidelines
Our Corporate Governance Guidelines, together with the charters of the various Board committees, provide a framework for the
corporate governance of the Company. The following is a summary of our Corporate Governance Guidelines and practices. A copy
of our Corporate Governance Guidelines, as well as the charters of each of our Board committees, are available on our website at
www.tranetechnologies.com under the heading “Company – Corporate Governance.”
Role of the Board of Directors
The Company’s business is managed under the direction of the Board of Directors. The role of the Board of Directors is to oversee
the management and governance of the Company and monitor senior management’s performance.
Board Responsibilities
The Board of Directors’ core responsibilities include:
• appointing, monitoring, evaluating and compensating senior management;
• assuring that management succession planning is adequate;
• reviewing the Company’s financial controls and reporting systems;
• overseeing the Company’s management of enterprise risk;
• reviewing the Company’s ethical standards and legal compliance programs and procedures; and
• evaluating the performance of the Board of Directors, Board committees and individual directors.
Board Leadership Structure
The positions of Chairman of the Board and CEO at the Company are held by the same person, except in unusual circumstances,
such as during a CEO transition. This structure has worked well for the Company. It is the Board of Directors’ view that the Company’s
corporate governance principles, the quality, stature and substantive business knowledge of the members of the Board, as well
as the Board’s culture of open communication with the CEO and senior management are conducive to Board effectiveness with a
combined Chairman and CEO position.
In addition, the Board of Directors has a strong, independent Lead Director and it believes this role adequately addresses the
need for independent leadership and an organizational structure for the independent directors. The Board of Directors appoints
a Lead Director from among the Board’s independent directors. The Lead Director coordinates the activities of all of the Board’s
independent directors. The Lead Director is the principal liaison with the CEO and ensures that the Board of Directors has an
open, trustful relationship with the Company’s senior management team. In addition to the duties of all directors, as set forth in the
Company’s Governance Guidelines, the specific responsibilities of the Lead Director are as follows:
• Chair the meetings of the independent directors;
• Ensure the full participation and engagement of all Board members in deliberations;
• Lead the Board of Directors in all deliberations involving the CEO’s employment, including hiring, contract negotiations,
performance evaluations, and dismissal and serve as a liaison between the Compensation Committee and the full Board with
respect to CEO pay;
• Counsel the CEO on issues of interest/concern to directors including majority and minority viewpoints and encourage all directors
to engage the CEO with their interests and concerns;
• Work with the CEO to develop an appropriate schedule of Board meetings and approve such schedule, to ensure that the
directors have sufficient time for discussion of all agenda items, while not interfering with the flow of Company operations;
• Work with the CEO and Committee Chairs to develop the Board and Committee agendas and approve the final agendas;
25
2021 Proxy Statement • Keep abreast of key Company activities and advise the CEO as to the quality, quantity and timeliness of the flow of information
from Company management that is necessary for the directors to effectively and responsibly perform their duties; although
Company management is responsible for the preparation of materials for the Board of Directors, the Lead Director will approve
information provided to the Board and may specifically request the inclusion of certain material;
• Engage consultants who report directly to the Board of Directors and assist in recommending consultants that work directly for
Board Committees;
• Work in conjunction with the Sustainability, Corporate Governance and Nominating Committee in compliance with Sustainability,
Corporate Governance and Nominating Committee processes to interview all Board candidates and make recommendations to
the Board of Directors;
• Provide oversight and act as a liaison between management and the Board with respect to succession of the CEO and lead the
Board in an annual review of Board and CEO succession plans;
• Assist the Board of Directors and Company officers in assuring compliance with and implementation of the Company’s
Governance Guidelines; work in conjunction with the Sustainability, Corporate Governance and Nominating Committee to
recommend revisions to the Governance Guidelines;
• Call, coordinate and develop the agenda for and chair executive sessions of the Board’s independent directors; act as principal
liaison between the independent directors and the CEO;
• Work in conjunction with the Sustainability, Corporate Governance and Nominating Committee to identify for appointment the
members of the various Board Committees, as well as selection of the Committee chairs;
• Be available for consultation and direct communication with major shareholders;
• Make a commitment to serve in the role of Lead Director for a minimum of three years; and
• Help set the tone for the highest standards of ethics and integrity.
Mr. Forsee will be the Company’s Lead Director effective as of the Annual General Meeting, succeeding Mr. Swift who will retire from
the board.
26
CORPORATE GOVERNANCE Board Risk Oversight
The Board of Directors has oversight responsibility of the processes established to report and monitor systems for material risks
applicable to the Company. The Board of Directors has delegated to its various committees the oversight of risk management
practices for categories of risk relevant to their functions.
BOARD OF DIRECTORS
• The Board of Directors focuses on the Company’s general risk management strategy and the most significant risks facing the
Company and ensures that appropriate risk mitigation strategies are implemented by management.
• The full Board has oversight of strategic Human Capital Management risks and opportunities including succession planning,
diversity and inclusion, employee engagement, employee health and safety, and development.
• The Board regularly receives reports from each Committee as to risk oversight within their areas of responsibility.
Audit Committee
Compensation Committee
BOARD COMMITTEES
• Oversees risks associated with the Company’s systems
of disclosure controls and internal controls over financial
reporting, as well as the Company’s compliance with
legal and regulatory requirements.
• Oversees the Company’s cybersecurity programs and
risks, including board level oversight for management’s
actions with respect to:
(1) the practices, procedures, and controls to identify,
assess, and manage its key cybersecurity programs
and risks;
• Considers risks related to the attraction and retention of
talent and risks related to the design of compensation
programs and arrangements.
Sustainability, Corporate Governance and Nominating
Committee
• Oversees risks associated with board succession,
conflicts of interest, corporate governance
and sustainability.
(2) the protection, confidentiality, integrity, and availability
Finance Committee
of the Company’s digital information, intellectual
property, and compliance-protected data through
the associated networks as it relates to connected
networks, suppliers, employees, and channel
partners; and
(3) the protection and privacy of data related to our
customers.
• Oversees risks associated with foreign exchange,
insurance, liquidity, credit and debt.
MANAGEMENT
• Identification, assessment, and management of risks through the Company’s Enterprise Risk Management program and
Committee.
• The Enterprise Risk Management program and Committee is responsible for identifying and managing strategic risks within
the Company’s risk appetite and providing reasonable assurance regarding the achievement of these objectives.
• Risks are prioritized based upon potential impact, likelihood and vulnerability, an owner is assigned to each risk area to
develop a risk mitigation strategy and key risk indicators are utilized to track progress against these objectives. The risk
universe is reviewed regularly to ensure the Company is addressing any potential changes in the risk landscape.
• The Company has appointed the Chief Financial Officer (“CFO”) as its Chief Risk Officer, and in that role, the Chief Risk Officer
periodically reports on risk management policies and practices to the relevant Board Committee or to the full Board so that
any decisions can be made as to any required changes in the Company’s risk management and mitigation strategies or in the
Board’s oversight of these. The Chief Risk Officer also reports on specific risks and risk mitigation action plans, including risk
indicators to track progress.
27
CORPORATE GOVERNANCE2021 Proxy Statement SPOTLIGHT: RISK OVERSIGHT
Business Strategy
One of the primary responsibilities of the Board of Directors is to
review and monitor implementation of management’s strategic
plans. Our Directors have deep experience and expertise in
strategic planning and execution and use their experience to
engage in active dialogue with management. The Board of
Directors evaluates strategic plans through regular discussions
as part of Board meetings and during strategic planning sessions
dedicated to these topics.
Compensation
As part of its oversight of the Company’s executive compensation
program, the Compensation Committee considers the
impact of the Company’s executive compensation program
and the incentives created by the compensation awards
that it administers on the Company’s risk profile. In addition,
the Company reviews all of its compensation policies and
procedures, including the incentives that they create and
factors that may reduce the likelihood of excessive risk taking,
to determine whether they present a significant risk to the
Company. Based on this review, the Company has concluded that
its compensation policies and procedures are not reasonably
likely to have a material adverse effect on the Company.
Environmental, Social and Governance Matters
The Sustainability Corporate Governance and Nominating
Committee of our Board of Directors oversees risks associated
with corporate governance and sustainability, including
the development and implementation of policies relating
to environmental, social and governance (“ESG”) issues.
The Sustainability, Corporate Governance and Nominating
Committee also monitors the Company’s performance
against its sustainability and ESG objectives including the
impacts of climate change. The Sustainability, Corporate
Governance and Nominating Committee also evaluates social
and environmental trends and issues in connection with the
Company’s business activities and makes recommendations to
the Board regarding those trends and issues.
Cybersecurity
Our Cybersecurity strategy is overseen by the Audit
Committee of our Board of Directors (comprised of all
independent directors) and directed by our Chief Information
Officer. Our cybersecurity strategy, programs and policies are
designed to protect the company’s most important information
and technology assets from an ever-evolving landscape of
threats. Our Audit Committee:
• Maintains appropriate oversight of the Company’s IT
Cybersecurity Governance, Strategy, and Compliance
• Oversees Management’s implementation of cybersecurity
programs and risk policies and procedures and oversee
management’s actions to ensure their effectiveness in
maintaining the integrity of the Company’s electronic
systems and facilities.
• Oversees the Company’s efforts to comply with regulatory
requirements relating to the matters, including but not
limited to the implementation of any remediation or other
measures in response to regulatory findings.
Senior management briefs the Audit Committee regarding
cybersecurity at least three times per year, and reports to the
Board on a regular basis. We have cybersecurity insurance
and we regularly review our policy and levels of coverage
based on current risks. All salaried employees complete an
annual cybersecurity training program, where specific threats
and scenarios are highlighted, based on our analysis of current
risks to the organization.
28
CORPORATE GOVERNANCE Director Compensation and Share Ownership
It is the policy of the Board of Directors that directors’ fees be the sole compensation received from the Company by any non-
employee director. The Company has a share ownership requirement of five times the annual cash retainer paid to the directors.
A director cannot sell any shares of Company stock until he or she attains such level of ownership and any sale thereafter cannot
reduce the total number of holdings below the required ownership level. A director is required to retain this minimum level of
Company share ownership until his or her resignation or retirement from the Board.
Board Committees
The Board of Directors has the following committees: Audit Committee, Compensation Committee, Sustainability, Corporate
Governance and Nominating Committee, Finance Committee, Technology and Innovation Committee and Executive Committee.
The Board of Directors consists of a substantial majority of independent, non-employee directors. Only non-employee directors
serve on the Audit, Compensation, Sustainability, Corporate Governance and Nominating, Finance and Technology and Innovation
Committees. The Board of Directors has determined that each member of each of these committees is “independent” as defined in
the NYSE listing standards and the Company’s Guidelines for Determining Independence of Directors. Chairpersons and members
of these five committees are rotated periodically, as appropriate. The Chairman, who is also the CEO, serves on the Company’s
Executive Committee and is Chairperson of such Committee. The remainder of the Executive Committee is comprised of the
Lead Director and the non-employee director Chairpersons of the Audit, Compensation, Sustainability, Corporate Governance and
Nominating and Finance Committees. Committee memberships and chairs are rotated periodically.
Board Diversity
The Company’s policy on Board diversity relates to the selection of nominees for the Board of Directors. In selecting a nominee for
the Board, the Sustainability, Corporate Governance and Nominating Committee considers the skills, expertise and background
that would complement the existing Board and ensure that its members are of sufficiently diverse and independent backgrounds,
recognizing that the Company’s businesses and operations are diverse and global in nature. The Board of Directors is nominating
five female directors (Ms. Arnold, Ms. Berzin, Ms. Hudson, Ms. Miller Boise and Ms. Peetz), one Hispanic director (Mr. White), one Black
director (Ms. Miller Boise) and two international directors who are Irish citizens (Mr. Bruton and Mr. Lee) out of a total of 12 directors.
Two of our current directors (Mr. Swift and Mr. Bruton) have veteran status. In addition, the tenure and experience of our directors is
varied, which brings varying perspectives to our Board functionality.
Board Advisors
The Board of Directors and its committees may, under their respective charters, retain their own advisors to carry out their
responsibilities.
Executive Sessions
The Company’s independent directors meet privately in regularly scheduled executive sessions, without management present, to
consider such matters as the independent directors deem appropriate. These executive sessions are required to be held no less
than twice each year.
Board and Board Committee Performance Evaluation
The Sustainability, Corporate Governance and Nominating Committee assists the Board in evaluating its performance and the
performance of the Board committees. Each committee also conducts an annual self-evaluation. The effectiveness of individual
directors is considered each year when the directors stand for re-nomination.
Director Orientation and Education
The Company has developed an orientation program for new directors and provides continuing education for all directors. In
addition, the directors are given full access to management and corporate staff as a means of providing additional information.
29
CORPORATE GOVERNANCE2021 Proxy Statement Director Retirement
It is the policy of the Board of Directors that each non-employee director must retire at the annual general meeting immediately
following their 75th birthday. Directors who change the occupation they held when initially elected must offer to resign from the
Board of Directors. At that time, the Sustainability, Corporate Governance and Nominating Committee reviews the continued
appropriateness of Board membership under the new circumstances and makes a recommendation to the Board of Directors.
Employee directors, including the CEO, must retire from the Board of Directors at the time of a change in their status as an officer of
the Company, unless the policy is waived by the Board.
Director Independence
The Board of Directors has determined that all of our current directors and director nominees, except Mr. Lamach, who is an
employee of the Company, are independent under the standards set forth in Exhibit I to our Corporate Governance Guidelines,
which are consistent with the NYSE listing standards. In determining the independence of directors, the Board evaluated transactions
between the Company and entities with which directors were affiliated that occurred in the ordinary course of business and that
were provided on the same terms and conditions available to other customers. Since June 2020, Ms. Peetz has served as chief
administrative officer of Citigroup Inc. Citigroup or affiliates of Citigroup (“Citigroup”) have acted as Joint Lead Arranger, Joint
Bookrunner and Syndication Agent in connection with our 2020 refinancing of our $1 billion revolving credit facility and with respect
to our $1 billion revolving credit facility entered into in April 2018. As agent and lender, Citigroup provides other services under these
facilities. There were no amounts outstanding under these facilities as of December 31, 2020. Citigroup was paid an arrangement
fee of $250,000 in connection with the 2020 refinancing and approximately $668,000 in connection with portfolio management fees
relating to upfront and undrawn fees on these facilities. In addition, Citigroup provides certain currency exchange and derivatives
services to the Company, which totaled approximately $850,000 during the fiscal year ended December 31, 2020 and certain treasury
and trade solutions relating to cash/bank transactions and trade activity, which totaled approximately $935,000 during the fiscal year
ended December 31, 2020. Our credit facilities were entered into in the ordinary course of business, were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to
the lender and did not involve more than the normal risk at the time for comparable loans with persons not related to the lender and
did not involve more than the normal risk of collectability or present other unfavorable features. Our other transactions with Citigroup
were made in the ordinary course of business on standard terms and conditions. Ms. Peetz does not personally participate in or
benefit from any aspect of our relationship with Citigroup.
A copy of Exhibit I to our Corporate Governance Guidelines is available on our website, www.tranetechnologies.com, under the
heading “Company—Corporate Governance.”
Communications with Directors
Shareholders and other interested parties wishing to communicate with the Board of Directors, the non-employee directors or any
individual director (including our Lead Director and Compensation Committee Chair) may do so either by sending a communication
to the Board and/or a particular Board member, in care of the Secretary of the Company, or by e-mail at board@tranetechnologies.
com. Depending upon the nature of the communication and to whom it is directed, the Secretary will: (a) forward the communication
to the appropriate director or directors; (b) forward the communication to the relevant department within the Company; or (c)
attempt to handle the matter directly (for example, a communication dealing with a share ownership matter).
Management Succession Planning
Our Board of Directors believes that ensuring leadership continuity and strong management capabilities exist to effectively carry out
the Company’s strategy and are critical responsibilities of the Board. The Board collaborates with the CEO and the Executive Vice
President, Human Resources on the succession planning process, including establishing selection criteria that reflect our business
strategies, identifying and developing internal candidates. The Board also ensures there are successors available for key positions in
the normal course of business and for emergency situations.
The full Board formally reviews, at least annually, the plans for development, retention and replacement of key executives, and most
importantly the CEO. In addition, management succession for key leadership positions is discussed regularly by the directors in
Board meetings and in executive sessions of the Board of Directors. Directors become familiar with potential successors for key
leadership positions through various means including regular talent reviews, presentations to the Board, and informal meetings.
30
CORPORATE GOVERNANCE Code of Conduct
The Company has adopted a worldwide Code of Conduct, applicable to all employees, directors and officers, including our CEO,
our CFO and our Chief Accounting Officer. The Code of Conduct meets the requirements of a “code of ethics” as defined by Item
406 of Regulation S-K, as well as the requirements of a “code of business conduct and ethics” under the NYSE listing standards. The
Code of Conduct covers topics including, but not limited to, conflicts of interest, confidentiality of information, and compliance with
laws and regulations. A copy of the Code of Conduct is available on our website located at www.tranetechnologies.com under the
heading “Company—Corporate Governance.” Amendments to, or waivers of the provisions of, the Code of Conduct, if any, made with
respect to any of our directors and executive officers will be posted on our website.
Anti-Hedging Policy and Other Restrictions
The Company prohibits its directors and executive officers from (i) purchasing any financial instruments designed to hedge or offset
any decrease in the market value of Company securities, (ii) engaging in any form of short-term speculative trading in Company
securities and (iii) holding Company securities in a margin account or pledging Company securities as collateral for a loan.
Investor Outreach
We believe it is important to understand our shareholders and their concerns and questions about our Company. During 2020, we
met with a significant number of our major shareholders and with prospective shareholders to answer questions about our Company
and to learn about issues that are important to them.
Sustainability
At Trane Technologies, sustainability is core to who we are. Through the leadership of our chairman and CEO and senior leaders, we
have embedded sustainability into every aspect of how we operate and help our customers succeed. Our approach and initiatives
are guided by an external Advisory Council on Sustainability and regularly reviewed by our Enterprise Leadership Team and Board
of Directors. Day-to-day, our Center for Efficiency and Sustainability (CEES) team surveys the market landscape, continually bringing
new ideas and requirements forward. This team is also responsible for tracking and disclosing our progress.
For more information regarding our Company’s commitment to leadership in environmental, social and governance matters and our
achievements in these areas, please also see A Letter from Our Board of Directors on the Urgency of Sustainability at the beginning
of this proxy statement, our 2020 Annual Report to Shareholders included in these proxy materials and our 2020 ESG Report
available on our website located at www.tranetechnologies.com under the heading “Sustainability.” For more information regarding
our achievements in environmental, social and governance matters, please see “Other Recent Achievements” in the Executive
Summary to our Compensation Discussion and Analysis.
31
CORPORATE GOVERNANCE2021 Proxy Statement Committees of the Board and Attendance
Key Functions
• Review annual audited and quarterly financial statements, as well as the Company’s
disclosures under “Management’s Discussion and Analysis of Financial Conditions and
Results of Operations,” with management and the independent auditors.
• Obtain and review periodic reports, at least annually, from management assessing the
effectiveness of the Company’s internal controls and procedures for financial reporting.
• Review the Company’s processes to assure compliance with all applicable laws, regulations
and corporate policy.
• Recommend the public accounting firm to be proposed for appointment by the shareholders
as our independent auditors and review the performance of the independent auditors.
• Review the scope of the audit and the findings and approve the fees of the independent
auditors.
• Approve in advance, subject to and in accordance with applicable laws and regulations,
permitted audit and non-audit services to be performed by the independent auditors.
• Satisfy itself as to the independence of the independent auditors and ensure receipt of their
annual independence statement.
• Discuss with management and the independent auditors the Company’s policies with
respect to risk assessment and risk management, including the review and approval of a
risk-based audit plan.
• Oversee the Company’s cybersecurity programs and risks.
The Board of Directors has determined that each member of the Audit Committee is
“independent” for the purposes of the applicable rules and regulations of the SEC, as
defined in the NYSE listing standards and the Company’s Corporate Governance Guidelines,
and has determined that all members other than two meet the qualifications of an “audit
committee financial expert,” as that term is defined by rules of the SEC. In addition, each
member of the Audit Committee qualifies as an independent director, meets the financial
literacy and independence requirements of the Securities & Exchange Commission
(the “SEC”) and the NYSE applicable to audit committee members and possesses the
requisite competence in accounting or auditing in satisfaction of the requirements for audit
committees prescribed by the Companies Act 2014.
A copy of the charter of the Audit Committee is available on our website,
www.tranetechnologies.com, under the heading “Company—Corporate Governance – Board
Committees and Charters.”
Audit Committee
Meetings in 2020: 9
Members
John P. Surma (Chair)
Ann C. Berzin
John Bruton
Myles P. Lee
April Miller Boise
Richard J. Swift
32
CORPORATE GOVERNANCE Compensation
Committee
Meetings in 2020: 5
Members
Tony L. White (Chair)
Kirk E. Arnold
Jared L. Cohon
Gary D. Forsee
Linda P. Hudson
Sustainability,
Corporate
Governance
and Nominating
Committee
Meetings in 2020: 5
Members
Gary D. Forsee (Chair)
Kirk E. Arnold
Jared L. Cohon
Linda P. Hudson
Tony L. White
Key Functions
• Establish our executive compensation strategies, policies and programs.
• Review and approve the goals and objectives relevant to the compensation of the Chief
Executive Officer, evaluate the Chief Executive Officer’s performance against those goals and
objectives and set the Chief Executive Officer’s compensation level based on this evaluation.
The Compensation Committee Chair presents all compensation decisions pertaining to the
Chief Executive Officer to the full Board of Directors (other than Michael W. Lamach).
• Approve compensation of all other elected officers.
• Review and approve executive compensation and benefit programs.
• Administer the Company’s equity compensation plans.
• Review and recommend significant changes in principal employee benefit programs.
• Approve and oversee Compensation Committee consultants.
For a discussion concerning the processes and procedures for determining NEO and director
compensation and the role of executive officers and compensation consultants in determining
or recommending the amount or form of compensation, see “Compensation Discussion and
Analysis” and “Compensation of Directors,” respectively. The Board of Directors has determined
that each member of the Compensation Committee is “independent” as defined in the NYSE
listing standards and the Company’s Corporate Governance Guidelines. In addition, the Board
of Directors has determined that each member of the Compensation Committee qualifies as
a “Non-Employee Director” within the meaning of Rule 16b-3 of the Securities Exchange Act
of 1934.
A copy of the charter of the Compensation Committee is available on our website,
www.tranetechnologies.com, under the heading “Company—Corporate Governance – Board
Committees and Charters.”
Key Functions
• Identify individuals qualified to become directors and recommend the candidates for
all directorships.
• Recommend individuals for election as officers.
• Oversee the Company’s sustainability efforts including the development and implementation
of policies relating to environmental, social and governance issues.
• Monitor the Company’s performance against its sustainability and ESG objectives including
the impacts of climate change.
• Review the Company’s Corporate Governance Guidelines and make recommendations
for changes.
• Consider questions of independence of directors and possible conflicts of interest of
directors as well as executive officers.
• Take a leadership role in shaping the sustainability efforts and corporate governance of
the Company.
The Board of Directors has determined that each member of the Sustainability, Corporate
Governance and Nominating Committee is “independent” as defined in the NYSE listing
standards and the Company’s Corporate Governance Guidelines.
A copy of the charter of the Sustainability, Corporate Governance and Nominating
Committee is available on our website, www.tranetechnologies.com, under the heading
“Company—Corporate Governance – Board Committees and Charters.”
33
CORPORATE GOVERNANCE2021 Proxy Statement Key Functions
• Consider and recommend for approval by the Board of Directors (a) issuances of equity
and/or debt securities; or (b) authorizations for other financing transactions, including bank
credit facilities.
• Consider and recommend for approval by the Board of Directors the repurchase of the
Company’s shares.
• Review cash management policies.
• Review periodic reports of the investment performance of the Company’s employee
benefit plans.
• Consider and recommend for approval by the Board of Directors the Company’s external
dividend policy.
• Consider and approve the Company’s financial risk management activities, including the
areas of foreign exchange, commodities, and interest rate exposures, insurance programs
and customer financing risks.
The Board of Directors has determined that each member of the Finance Committee is
“independent” as defined in the NYSE listing standards and the Company’s Corporate
Governance Guidelines.
A copy of the charter of the Finance Committee is available on our website,
www.tranetechnologies.com, under the heading “Company—Corporate Governance – Board
Committees and Charters.”
Key Functions
• Aid the Board in handling matters which, in the opinion of the Chairman of the Board or Lead
Director, should not be postponed until the next scheduled meeting of the Board (except as
limited by the charter of the Executive Committee).
The Board of Directors has determined that each member of the Executive Committee (other
than Michael W. Lamach) is “independent” as defined in the NYSE listing standards and the
Company’s Corporate Governance Guidelines.
A copy of the charter of the Executive Committee is available on our website,
www.tranetechnologies.com, under the heading “Company—Corporate Governance – Board
Committees and Charters.”
Finance
Committee
Meetings in 2020: 5
Members
Ann C. Berzin (Chair)
John Bruton
Myles P. Lee
April Miller Boise
John P. Surma
Richard J. Swift
Executive
Committee
Meetings in 2020: None
Members
Michael W. Lamach (Chair)
Ann C. Berzin (Chair of the
Finance Committee)
Gary D. Forsee
(Chair of the Sustainability,
Corporate Governance and
Nominating Committee)
John P. Surma (Chair of the
Audit Committee)
Richard J. Swift
(Lead Director)
Tony L. White (Chair of the
Compensation Committee)
34
CORPORATE GOVERNANCE Technology
and Innovation
Committee
Meetings in 2020: 2
Members
Jared L. Cohon (Chair)
Kirk E. Arnold
John Bruton
Gary D. Forsee
Linda P. Hudson
Karen B. Peetz
Richard J. Swift
Tony L. White
Key Functions
• Review the Company’s technology and innovation strategy and approach, including its
impact on the Company’s performance, growth and competitive position.
• Review with management technologies that can have a material impact on the Company,
including product and process development technologies, manufacturing technologies and
practices, and the utilization of quality assurance programs.
• Assist the Board in its oversight of the Company’s investments in technology and innovation,
including through acquisitions and other business development activities.
• Review technology trends that could significantly affect the Company and the industries in
which it operates.
• Assist the Board in its oversight of the Company’s technology and innovation initiatives.
• Oversee the direction and effectiveness of the Company’s research and
development operations
A copy of the charter of the Technology and Innovation Committee is available on our website,
www.tranetechnologies.com, under the heading “Company—Corporate Governance – Board
Committees and Charters.”
There were five meetings of the Board of Directors in 2020. All directors attended at least 75% or more of the total number of
meetings of the Board of Directors and the committees on which he or she served during the year. The Company’s non-employee
directors held five independent director meetings without management present during the fiscal year 2020. It is the Board’s general
practice to hold independent director meetings in connection with regularly scheduled Board meetings.
The Company expects all Board members to attend the annual general meeting, but from time to time other commitments prevent
all directors from attending the meeting. All of the members of our Board standing for re-election at the 2020 Annual General
Meeting on June 4, 2020 attended that meeting by telephone due to COVID travel restrictions.
Compensation Committee Interlocks and
Insider Participation
Our Compensation Committee is composed solely of independent directors. During fiscal 2020, no member of our Compensation
Committee was an employee or officer or former officer of the Company or had any relationships requiring disclosure under Item
404 of Regulation S-K. None of our executive officers has served on the board of directors or compensation committee of any other
entity that has or has had one or more executive officers who served as a member of our Board or our Compensation Committee
during fiscal 2020.
35
CORPORATE GOVERNANCE2021 Proxy Statement Compensation of Directors
Director Compensation
Our director compensation program is designed to compensate non-employee directors fairly for work required for a company of
our size and scope and to align their interests with the long-term interests of our shareholders. The program reflects our desire to
attract, retain and use the expertise of highly qualified people serving on the Company’s Board of Directors. Employee directors
do not receive any additional compensation for serving as a director. Our 2020 director compensation program for non-employee
directors consisted of the following elements:
ANNUAL RETAINER
Paid in Cash
$142,500 [47%]
* The number of restricted stock units granted is determined
by dividing the grant date value of the award, $162,500, by the
closing price of the Company’s common stock on the date of
grant. A director who retires, resigns or otherwise separates from
the Company for any reason receives a pro-rata cash retainer
payment for the quarter in which such event occurs based on
the number of days elapsed since the end of the immediately
preceding quarter and immediately vests in any unvested
restricted stock units.
Paid in
Restricted
Stock Units*
$162,500 [53%]
CASH RETAINER FOR COMMITTEE CHAIRS AND MEMBERS, LEAD DIRECTOR AND OTHER ELEMENTS
Audit Committee Chair
$30,000
Sustainability, Corporate Governance and Nominating Committee Chair
Compensation Committee Chair
Finance Committee Chair
Executive Committee Chair
$0
Technology and Innovation Committee Chair
Audit Committee Member
Lead Director
$7,500
$7,500
Additional Meetings or Unscheduled Planning Session Fees
$2,500
$XX
$20,000
$15,000
$15,000
$50,000
The Sustainability, Corporate Governance and Nominating Committee periodically reviews the compensation level of our
non-employee directors in consultation with the Committee’s independent compensation consultant, Korn Ferry, and makes
recommendations to the Board of Directors. The current compensation program was established in 2018.
Under our 2018 Incentive Stock Plan, the aggregate amount of stock-based and cash-based awards which may be granted to
any non-employee director in respect of any calendar year, solely with respect to his or her service as a member of the Board of
Directors, is limited to $1,000,000.
36
Share Ownership Requirement
To align the interests of directors with shareholders, the Board of Directors has adopted a share ownership requirement of five times
the annual cash retainer paid to the directors. A director cannot sell any shares of Company stock until he or she attains such level
of ownership and any sale thereafter cannot reduce the total number of holdings below the required ownership level. A director is
required to retain this minimum level of Company share ownership until his or her resignation or retirement from the Board.
2020 Director Compensation
The compensation paid or credited to our non-employee directors for the year ended December 31, 2020, is summarized in the table below.
Name
K. E. Arnold
A. C. Berzin
J. Bruton
J. L. Cohon
G. D. Forsee
L. P. Hudson
M. P. Lee
A. Miller Boise(b)
K. B. Peetz
J. P. Surma
R. J. Swift
T. L. White
Fees Earned or
Paid in Cash
($)(a)
Equity / Stock
Awards
($)
All Other
Compensation
($)
142,500
165,000
150,000
150,000
157,500
142,500
150,000
9,294
145,714
172,500
200,000
162,500
162,514
162,514
162,514
162,514
162,514
162,514
162,514
—
162,514
162,514
162,514
162,514
Total
($)
305,014
327,514
312,514
312,514
320,014
305,014
312,514
9,294
308,228
335,014
—
—
—
—
—
—
—
—
—
—
2,240
364,754
—
325,014
(a) The amounts in this column represent the following: annual cash retainer, the Committee Chair retainers, the Audit Committee member retainer, the Lead
Director retainer, and the Board, Committee and other meeting or session fees.
Name
K. E. Arnold
A. C. Berzin
J. Bruton
J. L. Cohon
G. D. Forsee
L. P. Hudson
M. P. Lee
A. Miller Boise
K. B. Peetz
J. P. Surma
R. J. Swift
T. L. White
Committee
Chair
Retainer
($)
Audit
Committee
Member
Retainer
($)
Lead
Director
Retainer
Fees
($)
Board,
Committee
and Other
Meeting or
Session Fees
($)
Total Fees
Earned or
Paid In Cash
($)
—
15,000
—
7,500
15,000
—
—
—
—
30,000
—
7,500
7,500
—
—
—
7,500
—
3,214
—
—
—
—
—
—
—
—
—
—
—
—
7,500
50,000
20,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
142,500
165,000
150,000
150,000
157,500
142,500
150,000
9,294
145,714
172,500
200,000
162,500
Cash
Retainer
($)
142,500
142,500
142,500
142,500
142,500
142,500
142,500
9,294
142,500
142,500
142,500
142,500
(b) Ms. Miller Boise joined the Board on December 8.
(c) Represents RSUs awarded in 2020 as part of each director’s annual retainer. The amounts in this column reflect the aggregate grant date fair value of RSU
awards granted for the year under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 and do not reflect
amounts paid to or realized by the directors. For a discussion of the assumptions made in determining the ASC 718 values see Note 15, “Share-Based
Compensation,” to the Company’s consolidated financial statements contained in its 2020 Form 10-K.
37
COMPENSATION OF DIRECTORS2021 Proxy Statement Number of
Unvested RSUs
1,701
1,701
1,701
1,701
1,701
1,701
1,701
—
1,701
1,701
1,701
1,701
For each non-employee director, the following table reflects all unvested RSU awards at December 31, 2020:
Name
K. E. Arnold
A. C. Berzin
J. Bruton
J. L. Cohon
G. D. Forsee
L. P. Hudson
M. P. Lee
A. Miller Boise
K. B. Peetz
J. P. Surma
R. J. Swift
T. L. White
38
COMPENSATION OF DIRECTORS Compensation Discussion and Analysis
The Compensation Discussion and Analysis (“CD&A”) set forth below provides an overview of our executive compensation philosophy
and underlying programs, including the objectives of such programs, as well as a discussion of how awards are determined for
our Named Executive Officers (“NEOs”). These NEOs include our Chairman and Chief Executive Officer (“CEO”), our Chief Financial
Officer (“CFO”), and our three most highly compensated executive officers for the 2020 fiscal year other than the CEO and CFO. In
addition, our former CFO is also an NEO for 2020. The NEOs are:
Named Executive Officers
Title
Mr. Michael W. Lamach
Chairman and Chief Executive Officer
Mr. Christopher J. Kuehn(1)
Senior Vice President and Chief Financial Officer
Mr. David S. Regnery
President and Chief Operating Officer
Ms. Marcia J. Avedon, Ph.D.
Executive Vice President, Chief Human Resources, Marketing and Communications Officer
Mr. Paul A. Camuti
Executive Vice President and Chief Technology and Strategy Officer
Ms. Susan K. Carter(2)
Former Senior Vice President and Chief Financial Officer
(1) Mr. Kuehn became Senior Vice President and Chief Financial Officer on March 1, 2020.
(2) Ms. Carter retired on April 1, 2020.
I. Executive Summary
On February 29, 2020 we successfully completed the separation of our Industrial segment businesses, approximately 20% of 2019
net revenue, through a Reverse Morris Trust (“RMT”) transaction. Through this transaction, Trane Technologies transformed into a
focused climate innovation company, working with our customers to address their sustainability challenges through heating, cooling
and transport refrigeration solutions.
2020 presented significant challenges. COVID-19 impacted the company’s ability to deliver target levels of revenue and EBITDA.
A broad contraction of global markets resulted in decreased demand for products. There was disruption to the supply chain and
pressure on costs as the Company, our suppliers and our customers took actions necessary to manage their respective businesses,
implement safety and personal protective equipment protocols and maintain financial stability through the crisis. COVID-19
negatively impacted transactional volume relative to plan with decreased demand and cancelled and delayed orders, all of which
impacted EBITDA due to a lower revenue base to absorb fixed costs.
As the COVID-19 pandemic expanded globally, the Company prioritized caring for the wellbeing and safety of employees,
maintaining a balanced focus on short-term performance and long-term business opportunities, and an emphasis on margin, cash
flow and working capital management to provide liquidity. The Company effectively executed and delivered on these priorities.
The Committee considered the effectiveness of the Company’s response to COVID-19 in addition to other performance
achievements in making compensation decisions. The Company minimized disruption to operations from COVID-19 safely and
quickly. Transformation commitments coming out of the RMT transaction were achieved and exceeded. There was significant
investment in innovation at an accelerated pace across all businesses including the launch of a cold storage solution in support
of COVID-19 vaccine distribution. In addition, the company achieved market share growth across the regions. These achievements
delivered value to shareholders as reflected by Total Shareholder Return of 43.51% for the year, significantly outperforming
the S&P 500 and the S&P 500 Industrials indices.
Following are additional financial and non-financial performance highlights taken into consideration in making compensation decisions.
39
2021 Proxy Statement 2020 Financial Results
The following graphic documents the enterprise financial results realized in 2020 relative to our executive incentive compensation
performance targets established for the period and shows other significant non-financial accomplishments that we achieved in 2020.
The Value We Create
FINANCIAL PERFORMANCE HIGHLIGHTS
Annual Revenue
Adjusted EBITDA(1)
$12.45
BILLION
Decrease of 4.8%
from 2019
$1.92
BILLION
Decrease of 3.3%
from 2019
Adjusted EBITDA Margin(1)
Free Cash Flow
15.4%
Increase of 0.2 percentage
points over 2019
3-Year Adjusted Cash Flow
Return on Invested Capital
(CROIC) (2018–2020)(1)
26.5%
$1.71
BILLION
Increase of 25.3%
from 2019
3-Year Total Shareholder
Return (TSR)
(2018-2020)(1)
101.73%
Ranks at the 72nd percentile of the
companies in the S&P 500 Industrials Index
Ranks at the 95th percentile
of the companies in the S&P 500
Industrials Index
(1) We report our financial results in our annual report on Form 10-K and our quarterly reports on Form 10-Q in accordance with United States generally
accepted accounting principles (“GAAP”). Our financial results described above for Adjusted EBITDA and Adjusted EBITDA Margin have been adjusted to
exclude the impact of certain non-routine and other items as described in our earnings releases and are non-GAAP financial measures. These metrics and
the related performance targets and results are relevant only to our executive compensation program and should not be used or applied in other contexts.
For a description of how the metrics above are calculated from our GAAP financial statements, please see “Annual Incentive Matrix (“AIM”) - Determination of
Payout” with respect to AIM payments and “Long Term Incentive Program (‘LTI’) – 2018 - 2020 Performance Share Units Payout” with respect to Performance
Share Program (“PSP”) awards.
Based on our 2020 results for Revenue, Adjusted EBITDA, Adjusted EBITDA Margin and Cash Flow, achievement under the Annual
Incentive Matrix (“AIM”) financial score was 74.8% of target for the Enterprise. In consideration of the Company’s effectiveness in
response to the COVID-19 pandemic, achievement of commitments to restructure the Company, streamline processes and reduce
costs following the RMT transaction, and strong financial performance relative to peers, the NEOs received AIM payouts at 100% of
target levels, see section V - Compensation Program Descriptions and Compensation Decisions for additional details.
Based on our CROIC of 26.5% and TSR of 101.73% during the 2018 - 2020 performance period, Performance Share Units (“PSUs”)
under our PSP achievement was 194.5% of target.
40
COMPENSATION DISCUSSION AND ANALYSIS
NON-FINANCIAL PERFORMANCE HIGHLIGHTS
innovation company.
Business
• Successfully completed our RMT transaction. We now operate as Trane Technologies, a focused climate
• For the eighth consecutive year, recognized by Fortune Magazine as one of the world’s most-admired companies.
Human Capital Management
• Renewed our membership in the CEO Action for Diversity and Inclusion pledge, focusing on our commitment to
• Renewed our commitment to the Paradigm for Parity Coalition, a pledge to bring gender parity to our corporate
• Became a Founding Member of the OneTen coalition, committed to hiring, retaining and advancing one million
• Second Consecutive Year: Forbes, Best Employers for Diversity.
leadership structure by 2030. We were the first in our industry to enter the coalition.
advance diversity and inclusion in the workplace.
Black Americans over the next ten years.
employers, Americas’ best employers for women and best large employer.
• Listed on numerous Forbes Indices over the years including being named as one of the world’s best
• Maintained strong employee engagement as we sought meaningful ways to enhance the working lives of our
employees, who remain committed to our core values and mission. Our overall employee engagement score
positions us well into the top quartile of all companies globally.
• For the fourth consecutive year, awarded a perfect score in workplace equality on the Human Rights Campaign
Foundation’s equality index.
new 2030 sustainability commitments.
targets verified by SBTi twice (once in 2014 and again in early 2021).
Sustainability
• We met our 2020 sustainability commitments that were set in 2013 in 2018, two years early, and launched bold
• Listed on the Dow Jones Sustainability North America Index for 10 consecutive years.
• We are one of 615 companies worldwide with science-based targets and one of only 47 companies to have its
• Earned recognition for our performance in addressing climate change, engaging employees, stewarding the
environment and advancing human rights and citizenship. Examples include:
• Named in the Thomson Reuters Global Diversity and Inclusion Index for leading the way in embedding
• Received a gold medal award from the World Environmental Center for our work in integrating sustainability
• Named on America’s Most JUST Companies report, which recognizes American companies who are
committed to fair pay, treating customers with respect, producing quality products and minimizing
environmental impact;
diversity and inclusion into company strategy;
into the core of our business;
• Ranked among the top 100 “Best Corporate Citizens for 2019” by Corporate Responsibility Magazine;
• Named to the Corporate Knights Global 100 Most Sustainable Corporation Index for the second consecutive year;
• For the sixth consecutive year, named to the FTSE4Good equity index, which measures companies with
strong environmental stewardship, human rights and corporate governance.
For more information regarding our Company’s commitment to leadership in environmental, social and governance matters and our
achievements in these areas, please also see our 2020 Annual Report to Shareholders included in these proxy materials and our
2020 ESG Report available on our website located at www.tranetechnologies.com under the heading “Sustainability.”
41
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement 2020 Say on Pay Vote
In undertaking this review, the Committee considers the views of shareholders as reflected in their annual advisory
vote on our executive compensation proposal. Shareholders voted 91% in favor of the Company’s Advisory Approval
of the Compensation of our NEOs proposal at our 2020 annual general meeting. Based on the Committee’s review
and the support our executive compensation programs received from shareholders, the Committee determined it
would be appropriate to maintain the core elements of our executive compensation programs.
91%
Executive Compensation Program Overview
The Committee has adopted executive compensation programs with a strong link between pay and performance and the
achievement of short-term and long-term Company goals. The primary elements of the executive compensation programs are:
Element(1)
Chairman and CEO
Other NEOs
Description of Element
D
E
X
F
I
I
K
S
R
T
A
Y
A
P
Base Salary
10%
22%
Fixed cash compensation.
Annual
Incentive
Matrix (“AIM”)
Long-Term
Incentives
(“LTI”)
17%
21%
73%
57%
Variable cash incentive compensation. Any award earned is
based on performance measured against pre-defined annual
Revenue, Adjusted EBITDA, Cash Flow and Adjusted EBITDA Margin
Percent objectives as set by the Committee, as well as individual
performance measured against pre-defined objectives.
Variable long-term incentive compensation. Performance is aligned
with the Company’s stock price and is awarded in the form of stock
options, restricted stock units (“RSUs”) and Performance Stock
Units (“PSUs”). PSUs are only payable if the Company’s CROIC and
TSR relative to companies in the S&P 500 Industrials Index exceed
threshold performance.
(1) See Section V, “Compensation Program Descriptions and Compensation Decisions”, for additional discussion of these elements of compensation.
As illustrated, the Committee places significant emphasis on variable compensation (AIM and LTI) so that a substantial percentage of
the six NEOs’ target total direct compensation (“TDC”) is contingent on the successful achievement of the Company’s short-term and
long-term performance goals.
Good Compensation Governance Practices
What We Do
What We Don’t Do
% Diversified metrics for our AIM and Performance Share
Programs (“PSP”) to align with business strategies and
shareholder interests
% Incentive awards tied to the achievement of rigorous pre-
determined and measurable performance objectives
% Significant emphasis on variable compensation in designing
our compensation mix
% Regular competitive benchmarking and compensation reviews
% Commitment to fair and competitive pay for our employees
and the avoidance of discrimination against any protected
class or individual
% Annual advisory vote on executive compensation
% Independent compensation consultant to advise the Committee
% Claw-back / recoupment policy
% Robust stock ownership requirements for our executives
% Reasonable limits on full-value awards
% Annual review of risk in executive compensation plans
% Limit of $1M dollars on non-employee directors
annual compensation
42
X No tax gross-ups for any change-in-control agreement
entered into after May 2009 (only 2 of 16 officers have a tax
gross-up provision in an agreement entered into with such
officer prior to May 2009)
X No dividends on unvested restricted stock and no
dividend equivalents on unvested restricted stock units or
performance units until the underlying awards vest
X No liberal share recycling practices for options
X No “Single-trigger” vesting for any cash payments upon a
change in control
X No “Single-trigger” vesting for any time-based equity awards
upon a change in control
X No hedging or pledging of Company stock by directors and
executive officers
X No re-pricing of equity awards
COMPENSATION DISCUSSION AND ANALYSIS
II. Compensation Philosophy and Design Principles
Our executive compensation programs are designed to attract, retain and focus the talent and energy of executive officers
(including our NEOs) who are capable of meeting the Company’s current and future goals, including the creation of sustainable
shareholder value. As we operate in an ever-changing environment, our Committee makes decisions with consideration of economic,
technological, regulatory, investor and competitive factors as well as our executive compensation principles. The Committee
regularly reviews the philosophy, objectives and elements of our executive compensation programs in relation to our short and long-
term business objectives and has determined that there is no undue risk in the compensation programs.
The design principles that govern our executive compensation programs are:
DESIGN PRINCIPLES AND RATIONALE
HOW THIS IS APPLIED TO TRANE TECHNOLOGIES PRACTICE
Business Strategy Alignment
Our executive compensation programs provide
flexibility to align with changing Company or
business strategies. The programs allow for
individuals within the Company’s businesses to
focus on specific financial measures to meet
the short and long-term plans of the particular
business for which they are accountable.
Pay for Performance
A strong pay for performance culture is
paramount to our success. As a result, each
executive’s target total direct compensation
(“TDC”) is tied to Company, business and
individual performance against set goals.
It is not only possible but also desirable for certain leaders to earn
substantial awards in years when their business outperforms against our
Annual Operating Plan (“AOP”).
Conversely, if a business fails to meet its performance goals, that business’
leader may earn a lesser award than their peers in that year. To provide
a balanced incentive, all executives have a significant portion of their
compensation tied to Company performance.
Company and business performance are measured against pre-established
financial, operational and strategic objectives as set by the Committee.
Individual performance is measured against pre-established individual goals
as well as demonstrated leadership competencies and behaviors consistent
with our leadership principles.
In addition, a portion of the long-term incentive is earned based upon
Company cash flow return on invested capital and shareholder value
performance relative to peer companies.
Shareholder Alignment
Our executive compensation programs align
the interests of our executives with those of
shareholders by incorporating key financial
targets such as revenue growth, Adjusted
EBITDA, CROIC and cash flow.
Financial targets should correlate with both share price appreciation over
time and the generation of cash flow for the Company. In addition, our
long-term incentives are tied to total shareholder returns, increases in value
as share price increases, and the effective use of assets to generate cash
flow. Other program requirements, including share ownership guidelines for
executives and vesting schedules on equity awards, further align executives’
and shareholders’ interests.
Mix of Short and Long-Term Incentives
A proper mix between short and long-term
incentives is important to encourage decision
making that mitigates risk and balances the
need to meet our AOP objectives while also
taking into account the long-term interests of the
Company and its shareholders.
Internal Parity
Each executive’s target TDC opportunity is
proportionate with the responsibility, scope and
complexity of their role within the Company.
Market Competitiveness
Compensation opportunities must serve to
attract and retain high performing executives in
a competitive environment for talent.
The mix of pay, including short and long-term incentives, is determined by
considering the Company’s pay for performance compensation philosophy
and strategic objectives as well as competitive market practice.
Comparable jobs are assigned similar target compensation opportunities.
Target TDC levels are set referencing applicable market compensation
benchmarks with consideration of retention and recruiting demands in the
industries and markets where we compete for business and executive talent.
Each executive’s target TDC may be above or below the market benchmark
reference based on their experience, proficiency, performance and potential
in performing the duties of their position in addition to the competitive
market for that individual.
43
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement III. Factors Considered in the Determination of Target
Total Direct Compensation
Our Committee reviews and evaluates our executive compensation levels and practices against those companies of comparable
revenue, industry and/or business fit with which we compete for executive talent. During 2020, these reviews were conducted
throughout the year using a variety of methods such as:
• The direct analysis of the proxy statements of other global manufacturers and service providers (refer to peer group below);
• A review of compensation survey data of other global, diversified industrial companies of similar size published by independent
consulting firms;
• A review of customized compensation survey data provided by independent consulting firms; and
• Feedback received from external constituencies.
The Committee does not rely on a single source of information when making executive compensation decisions. Many of the
companies included in these compensation surveys are also included in the S&P 500 Industrials Index referred to in our 2020 Form
10-K under the caption “Performance Graph.”
The Committee, with the assistance of its independent advisor, develops a peer group that it uses to evaluate executive
compensation programs and levels. In 2019, the Committee approved a peer group to reflect the Company’s post-transaction
size and business as a climate-focused engineered manufacturer and service provider for the global commercial and residential
construction and transportation market sectors. This peer group is comprised of the following sixteen global companies.
Ametek
Carrier
Cummins, Inc.
Danaher Corp
Dover
Eaton plc
Honeywell International
Otis Worldwide
Illinois Tool Works
Parker Hannifin Corp
Emerson Electric
Johnson Controls Inc.
Rockwell Automation
Fortive Corporation
Lennox International
TE Connectivity
Ametek, Carrier, Otis Worldwide and Lennox International were added and 3M, Paccar Inc., PPG Industries, Stanley Black & Decker and Textron were removed
from the peer group in consideration of the RMT transaction.
In assessing the relationship of CEO compensation to compensation of other executive officers (including our NEOs), the Committee
considers overall organization structure and scope of responsibility and also reviews the NEOs’ compensation levels relative to the
CEO and to one another. This ensures that the target TDC levels are set in consideration of internal pay equity as well as market
references and each executive’s experience, proficiency, performance and potential in performing the duties of their role. In
addition, the long tenure of our CEO (11 years) coupled with the strong performance of the company over this period, are taken into
consideration by the Committee when evaluating CEO compensation.
44
COMPENSATION DISCUSSION AND ANALYSIS IV. Role of the Committee, Independent Advisor and
Committee Actions
Our Committee, which is composed solely of independent directors, oversees our compensation plans and policies, administers our
equity-based programs and reviews and approves all forms of compensation relating to our executive officers, including the NEOs.
The Committee exclusively decides the compensation elements and the amounts to be awarded to our CEO. Our CEO does not
make any recommendations regarding his own compensation and is not informed of these awards until the decisions have been
finalized. Our CEO makes compensation recommendations related to our other NEOs and executive officers. The Committee
considers these recommendations when approving the compensation elements and amounts to be awarded to our other NEOs.
Our Committee is responsible for reviewing and approving amendments to our executive compensation and benefit plans.
In addition, our Committee is responsible for reviewing our principal broad-based employee benefit plans and making
recommendations to our Board of Directors for significant amendments to, or termination of, such plans. The Committee’s duties are
described in the Committee’s Charter, which is available on our website at www. tranetechnologies.com.
Our Committee has the authority to retain an independent advisor for the purpose of reviewing and providing guidance related to
our executive compensation and benefit programs. The Committee is directly responsible for the compensation and oversight of the
independent advisor. For 2020, the Committee continued to engage Korn Ferry to serve as its independent compensation advisor.
Korn Ferry provides the following services to the Committee among others:
• Review and analysis of executive compensation benchmarking data for the CEO and other top executives as needed;
• Review and analysis of the public company peer group used to benchmark the Company’s executive pay levels;
• Preparation of ad hoc analyses for the Committee to support decision-making around the executive compensation program; and
• Review and analysis of and advisement on management proposals regarding key elements of the executive compensation
program.
Korn Ferry also provided the Sustainability, Corporate Governance and Nominating Committee with advice on director compensation
matters including benchmarking data and market trends. The Committee determined that Korn Ferry is independent and does not
have a conflict of interest. In making this determination, the Committee considered the factors adopted by the NYSE with respect to
independence and conflicts of interest.
45
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement V. Compensation Program Descriptions and
Compensation Decisions
The following table provides a summary of the elements, objectives, risk mitigation factors and other key features of our TDC
program. Each of these elements is described in detail below:
Objective of Element Including
Risk Mitigation Factors
To provide a sufficient and stable source
of cash compensation.
To avoid encouraging excessive risk-
taking by ensuring that an appropriate
level of cash compensation is not
variable.
To serve as an annual cash award tied
to the achievement of pre-established
performance objectives.
Structured to take into consideration the
unique needs of the various businesses.
Amount of compensation earned cannot
exceed a maximum payout of 200%
of individual target levels and is also
subject to a claw back in the event of a
financial restatement in accordance with
our clawback policy.
To serve as a long-term incentive to
outperform, on a relative basis, companies
in the S&P 500 Industrials Index.
To promote long-term strategic focus
and discourage an overemphasis on
attaining short-term goals.
Structured to align with shareholder
interests.
Amount earned cannot exceed a
maximum payout of 200% of the
individual target shares granted and is
also subject to a claw back in the event
of a financial restatement in accordance
with our clawback policy.
Aligns the interests of the NEOs and
shareholders.
Awards provide a balance between
performance and retention.
Awards are subject to a claw back in
the event of a financial restatement in
accordance with our clawback policy.
Key Features Relative to NEOs
Adjustments are determined by the Committee based
on an evaluation of the NEO’s proficiency in fulfilling
their responsibilities, as well as performance against
key objectives and behaviors.
In 2020, base salary represents 10% of the CEO’s target
total direct compensation and 22%, on average, for the
other NEOs.
Each NEO has an AIM target expressed as a
percentage of base salary. Targets are set based on
the compensation levels of similar jobs in comparable
companies, as well as on the NEO’s experience and
proficiency level in performing the duties of the role.
Actual AIM payouts are dependent on business,
segment and enterprise financial performance and
individual performance. The financial metrics used
to determine the awards for 2020 were Revenue,
Adjusted EBITDA, and Cash Flow, modified (up or
down) based on Adjusted EBITDA Margin performance.
In 2020, AIM represents 17% of the CEO’s target total
direct compensation and 21%, on average, for the
other NEOs.
Performance share units (“PSUs”) granted under the
PSP are earned over a 3-year performance period.
The number of PSUs earned is based on relative TSR
and relative CROIC compared to companies within
the S&P 500 Industrials Index (with equal weight
given to each metric).
Actual value of the PSUs earned depends on our
share price at the time of payment. PSUs represent
36.5% of the CEO’s target total direct compensation
and 28.5%, on average, for the other NEOs.
Stock options and RSUs are granted annually, with
stock options having an exercise price equal to the
fair market value of ordinary shares on the date
of grant.
Both stock options and RSUs typically vest ratably
over three years, at a rate of one-third per year.
Stock options expire on the day immediately
preceding the 10th anniversary of the grant date
(unless employment terminates sooner).
In 2020, a balanced mix of stock options and RSUs
represents 36.5% of the CEO’s target total direct
compensation and 28.5%, on average, for the
other NEOs.
Element
Base Salary
Annual Incentive Matrix
(“AIM”) Program
LTI: Performance Share
Program
LTI: Stock Options /
Restricted Stock Units
(“RSUs”)
46
COMPENSATION DISCUSSION AND ANALYSIS Base Salary
The table below reflects the base salary adjustments for the NEOs between 2019 and 2020. When determining base salary
adjustments, each NEO is evaluated based on their position to the market for their job and on the results achieved and the
behaviors demonstrated.
(Dollar Amounts Annualized)
Mr. Michael W. Lamach
Mr. Christopher J. Kuehn
Mr. David S. Regnery
Ms. Marcia J. Avedon, Ph.D.
Mr. Paul A. Camuti
Ms. Susan K. Carter
Ms. Carter retired on April 1, 2020.
12/31/2019
($)
12/31/2020
($)
1,410,000
1,410,000
510,000
680,000
775,000
850,000
685,000
710,000
570,000
590,000
775,000
775,000
In response to the worsening global Coronavirus crisis, the Company made the decision to delay base salary increases for all
salaried employees in the U.S. and Puerto Rico who were scheduled to receive an increase on April 1, 2020. As a result, the merit
increases for Ms. Avedon and Mr. Camuti included in their respective base salaries above were delayed until October 1, 2020.
Mr. Kuehn received a portion of his base salary increase effective March 1, 2020 in conjunction with his promotion to Chief Financial
Officer, but the remaining portion of his base salary increase was delayed until October 1, 2020. Mr. Regnery received an increase
effective January 1, 2020 coincident with his promotion to President and Chief Operating Officer. Mr. Lamach, our CEO, did not
receive a 2020 base salary increase.
Annual Incentive Matrix (“AIM”)
The AIM program is an annual cash incentive program designed to reward NEOs for Revenue growth, increases in Adjusted EBITDA,
the delivery of strong Cash Flow and individual contributions to the Company. We believe that our AIM design provides participants
with clarity as to how they can earn a cash incentive based on strong performance relative to each metric. The Committee
establishes a target award for each NEO that is expressed as a percentage of base salary. Individual AIM payouts are calculated as
the product of a financial performance score and an individual performance score, both of which are based on achievement relative
to pre-established performance objectives adopted by the Committee. Individual AIM awards are calculated by multiplying individual
AIM targets by an AIM Payout Percentage calculated as illustrated below:
Financial Score:
Core Financial
Metrics
1/3 Revenue
1/3 Adjusted
EBITDA
1/3 Cash Flow
Multiplier
×
Adjusted EBITDA
Margin
Percent
Adjusted
Financial Score
(0% to 200%)
Financial Score ×
Multiplier
×
=
Individual
Performance
Score
(0% to 150%)
Performance
against
Individual
Objectives
=
AIM Payout
Percentage
(0% to 200%)
Adjusted Financial
Score × Individual
Performance
Score
The AIM incentive opportunity is tied to pre-established goals for three equally-weighted performance metrics (“Core Financial
Metrics”): Revenue, Adjusted EBITDA and Cash Flow. These metrics align with our objectives to profitably grow the businesses and
improve margins through operational efficiency. Threshold performance for each metric must be achieved in order for any incentive
to be payable for that metric. The financial AIM payout is the sum of the calculated payout percentage for each metric, adjusted by
an Adjusted EBITDA Margin percentage multiplier (“Multiplier”).
The AIM payout is determined by multiplying the NEO’s target award by the financial performance score and multiplying that result
by the individual performance score. AIM payouts cannot exceed 200% of the target award. If the overall AIM payout score is less
than 30%, no award is payable.
For 2020 AIM purposes, Mr. Lamach, Mr. Kuehn, Ms. Avedon, Mr. Camuti and Ms. Carter were measured on Enterprise financial
metrics. Mr. Regnery was measured on a combination of Enterprise and regional segment metrics (50% Enterprise, 20% Americas
segment, 15% EMEA segment and 15% Asia segment).
47
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement 2020 AIM Revenue, Adjusted EBITDA and Cash Flow performance goals were set based on 2020 financial plans and are summarized
with performance relative to those goals in the following table:
Metric
Threshold
Performance
Target
Performance
Maximum
Performance
2020 Adjusted
Performance
Enterprise
Revenue(2)
$12,917.40
$13,597.30
$14,277.20
$12,478.80
Adjusted EBITDA(2)
Cash Flow(2)
$ 1,906.70
$ 2,118.60
$ 2,330.50
$ 1,924.30
$ 1,017.60
$ 1,272.00
$ 1,526.40
$ 1,713.30
Adjusted EBITDA Margin Multiplier(3)
14.76%
15.58%
16.32%
15.42%
Americas Segment
Revenue(2)
$ 9,898.90
$10,419.90
$10,940.90
$ 9,728.30
Adjusted EBITDA(2)
Cash Flow(2)
$ 1,678.80
$ 1,865.30
$ 2,051.80
$ 1,676.80
$ 1,397.20
$ 1,746.50
$ 2,095.80
$ 1,737.70
Adjusted EBITDA Margin Multiplier(3)
16.96%
17.90%
18.75%
17.24%
EMEA Segment
Revenue(2)
$ 1,768.00
$ 1,861.00
$ 1,954.10
$ 1,633.50
Adjusted EBITDA(2)
Cash Flow(2)
$
$
273.10
222.20
$
$
303.40
277.70
$
$
333.70
333.20
$
$
268.10
283.00
Adjusted EBITDA Margin Multiplier(3)
15.45%
16.30%
17.08%
16.41%
Asia Segment
Revenue(2)
$ 1,250.60
$ 1,316.40
$ 1,382.20
$ 1,117.00
Adjusted EBITDA(2)
Cash Flow(2)
$
$
174.00
144.50
$
$
193.30
180.60
$
$
212.60
216.70
$
$
190.00
217.70
Adjusted EBITDA Margin Multiplier(3)
13.91%
14.68%
15.38%
17.01%
(1)
2020 Performance reflects adjustments as summarized below.
(2) Financial metrics generate payout of 30% at Threshold performance, 100% at Target performance and 200% at Maximum performance. Results are
interpolated between performance levels.
(3) The Adjusted EBITDA Margin Multiplier is 75% up to Threshold performance, 100% at Target performance and 150% at Maximum performance. Results are
interpolated between performance levels.
The Committee retains the authority to adjust the Company’s reported financial results for the impact of changes in accounting
principles, extraordinary items and unusual or non-recurring gains or losses, including significant differences from the assumptions
contained in the financial plan upon which the incentive targets were established, based on its own review and on recommendations
by the CEO. Adjustments to reported financial results are intended to better reflect an executive’s actual performance results, align
award payments with decisions which support the plan and strategies, avoid unintended inflation or deflation of awards due to
unusual or non-recurring items in the applicable period, and emphasize the Company’s preference for long-term and sustainable
growth. The Committee approved adjustments to 2020 performance results for AIM purposes at the enterprise and segment levels
to (a) reflect reallocation of costs across businesses due to post-RMT transaction restructuring, and (b) offset the favorable cash
flow impact of a change in interest rate assumption methodology used to calculate Pension Benefit Guaranty Corporation (“PBGC”)
premiums after the annual targets were set, and (c) adjust for separation-related impacts resulting from the RMT transaction that
were not contemplated when performance objectives were set. These adjustments, including restructuring and transformation costs,
were reviewed with the Audit Committee prior to approval by the Committee.
One-time expenses directly associated with the RMT transaction were excluded from the year-end 2020 AIM financials, as these
items are unusual or infrequent in nature. Performance targets are established and results are measured against financial metrics
that have been adjusted from our GAAP results as described below.
The calculated AIM financial score, unadjusted for any COVID-19 considerations, was 74.8% for the NEOs fully aligned to Enterprise
performance and 64.8% for Mr. Regnery, who has a portion of his award tied to segment performance.
2020 Considerations in Light of COVID-19:
COVID-19 created challenges in the Company’s ability to deliver target levels of revenue and EBITDA. A broad contraction of global
markets resulted in decreased demand for products, challenged the supply chain and increased pressure on costs for the Company,
all of which negatively impacted EBITDA due to a lower revenue base. The company took actions necessary to implement safety
protocols, provide support to our employees and maintain financial stability through the crisis, all while successfully transforming
48
COMPENSATION DISCUSSION AND ANALYSIS to the new Trane Technologies. The Committee does not believe that the calculated AIM payout levels reflect the quality of 2020
performance in light of COVID-19, noting the performance results and achievements despite COVID-19 disruption to the global
markets and the 2020 business plan.
The Company was effective in its response to the global COVID-19 pandemic, focusing on caring for the wellbeing and safety of
employees while maintaining balanced attention on short-term performance and long-term business opportunities. There was
significant investment in personal protection equipment and safety measures to bring facilities and all manufacturing plants quickly
and safely back to operation. Actions were also taken globally to reduce cost, including delaying merit increases and implementing
furloughs or temporary pay reductions in a manner to preserve benefit continuity. In lieu of pay reductions, Mr. Lamach contributed
$500,000 to the Helping Hand Fund to support employees, and members of the Enterprise Leadership Team and the Board of
Directors contributed approximately $315,000 in aggregate.
The Company focused on cash flow and working capital management and delivered Free Cash Flow of $1.71B, or 158% of net
earnings. This provided significant liquidity and allowed the Company to operate from a position of strength to continue investing in
the business, maintain its dividend, deploy capital to two acquisitions and resume share repurchases ($250 million) in the year. The
company also delivered strong profitability and cost control in 2020, driving Enterprise EBITDA Margin improvement of approximately
20 basis points and achieving operating leverage of 13%, well within gross margin targets. In 2020, the Company delivered strong
shareholder value with 43.5% Total Shareholder Return (TSR), which significantly outperformed the S&P 500 Index (18.4%) and the S&P
500 Industrial Index (11.1%).
In addition, the Company delivered on 2020 commitments to transform the company, streamline processes and reduce costs
following the RMT transaction. Notably, the Company pursued its structural and commercial transformation plan without disruption
and exceeded financial expectations with $143M EBITDA improvement as well as achieving $100M annual operational fixed cost
savings targets one year ahead of plan with an additional $40M savings projected in 2021.
If financial results were adjusted to completely offset the estimated impact of COVID-19, AIM payout for each of the NEOs would have
been approximately 154% of Target. The Committee applied its judgement and approved 2020 AIM payout levels for the NEOs at
100% as summarized in the following table.
Name
Mr. Michael W. Lamach
Mr. Christopher J. Kuehn
Mr. David S. Regnery
Ms. Marcia J. Avedon, Ph.D.
Mr. Paul A. Camuti
Ms. Susan K. Carter
AIM Target
($)
AIM Achievement
For 2020
AIM Award
For 2020
($)
2,397,000
100%
2,397,000
680,000
850,000
603,500
501,500
194,809
100%
100%
100%
100%
100%
680,000
850,000
603,500
501,500
194,809
Ms. Carter retired on April 1, 2020 and therefore the AIM Target and Award are prorated.
In addition to 2020 AIM awards, special bonuses were awarded in March 2020 to recognize individuals whose contributions were
critical to the successful completion of the RMT transaction. This transaction encompassed a tax-free spinoff of approximately
20% of the pre-transaction revenue in businesses in over 45 countries and was accomplished on an accelerated 10-month timeline
and created significant shareholder value. The Committee approved the payment of $500,000 for Mr. Lamach, $200,000 each for
Ms. Avedon and Ms. Carter, and $150,000 each for Messrs. Camuti, Kuehn and Regnery based on its evaluation of their contributions.
2021 AIM PROGRAM CHANGES
For 2021, the AIM program design has been updated to replace the Adjusted EBITDA multiplier with an Environmental, Social and
Governance (”ESG”) modifier with a range of +/- 20%. This design change was made in recognition of strong margin improvements
in 2020 and the desire to align management incentives with our commitment to and strategic focus on sustainability and diversity.
Performance relative to ESG objectives will be determined based on established targets and the Committee’s judgement of
performance relative to four components:
1)
Internal Greenhouse Gas Emissions Reduction
2) External / Customers Carbon Emissions Reduction
3) Gender Representation in Management
4) Racial/Ethnic Minority Representation (for U.S.-based employees only)
49
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement Long-Term Incentive Program (“LTI”)
Our long-term incentive program is comprised of stock options, RSUs and PSUs. This mix of equity-based awards aligns executive
interests with the interests of our shareholders from the perspectives of stock price appreciation and relative performance. This
approach enables us to develop and implement long-term strategies that we believe are in the best interest of shareholders.
Stock Options/Restricted Stock Units
We grant our NEOs an equal mix of stock options and RSUs. Our Committee believes that this mix provides an effective balance
between performance and retention for our NEOs and conserves share usage under our incentive stock plan. Stock options are
considered “at risk” since there is no value unless the stock price appreciates during the term of the option period. RSUs, on the
other hand, provide stronger retentive value because they have value even if our stock price does not grow during the restricted
period. Our Committee reviews our equity mix and grant policies annually to ensure they are aligned with our pay for performance
philosophy, our executive compensation objectives and the interests of our shareholders.
Stock option and RSU targets are expressed in dollars. The dollar target is converted to a number of shares based on the fair market
value of the Company’s shares on the date that the award is granted.
Both stock options and RSUs generally vest ratably, one third per year, over a three-year period following the grant. Dividend
equivalents are accrued on outstanding RSU awards at the same time and at the same rate as dividends paid to shareholders.
Dividend equivalents on RSUs are only payable if the underlying RSU award has vested. At the time of vesting, one ordinary share is
issued for each RSU and any accrued dividend equivalents are paid in cash.
Performance Share Program (“PSP”)
Our PSP is an equity-based incentive compensation program that provides our NEOs and other key executives with an opportunity
to earn PSUs based on our performance relative to the companies in the S&P 500 Industrials Index. PSUs granted in 2020 are earned
over a 3-year performance period based equally on our relative average CROIC and relative TSR as compared to the companies
within the S&P 500 Industrials Index. The actual number of PSUs earned for grants made in 2020 (which can range from 0% to 200%
of target) is based on the following thresholds:
Company Performance Relative to the Companies
within the S&P 500 Industrials Index
2020 – 2022 Measurement Period
% of Target PSUs Earned*
< 25th Percentile
25th Percentile
50th Percentile
≥ 75th Percentile
0%
25%
100%
200%
*
Results are interpolated between percentiles achieved.
PSP target awards for NEOs are expressed as a dollar amount and set in consideration of competitive long-term incentive market
values for executives in our peer group with similar roles and responsibilities and our mix of long-term incentives. The dollar target is
converted to share equivalent PSUs based on the fair market value of our shares on the date that the award is granted. The number
of PSUs earned is based on relative TSR and relative CROIC compared to companies within the S&P 500 Industrials Index (with equal
weight given to each metric).
• TSR is measured as the total stock price appreciation and dividends earned during the three years of the performance cycle. To
prevent an anomalous short-term change in stock price from having an inappropriate and outsized impact on payout levels, a 30-day
average stock price at the beginning and ending periods is used. TSR provides a tool for measuring performance among peers.
• CROIC is measured by dividing Free Cash Flow by gross fixed assets (Plant, Property & Equipment) plus Working Capital
(Accounts and Notes Receivable plus Inventory less Accounts and Notes Payable). CROIC is calculated in accordance with
GAAP, subject to adjustments for unusual or infrequent items; the impact of any change in accounting principles; goodwill and
other intangible asset impairments; and gains or charges associated with discontinued operations or through the acquisition or
divestiture of a business. As a result, expense for outstanding PSP awards is recorded using the fixed accounting method.
50
COMPENSATION DISCUSSION AND ANALYSIS Our Committee retains the authority and discretion to make downward adjustments to the calculated PSP award payouts or not to
grant any award payout regardless of actual performance.
Dividend equivalents are accrued on outstanding PSU awards at the same time and at the same rate as dividends paid to
shareholders. Dividend equivalents are only paid upon vesting on the number of PSUs actually earned and vested. Dividend
equivalents are payable in cash at the time the shares associated with vested PSUs are distributed unless the NEO elected to defer
the shares into our executive deferred compensation plan, in which case the dividend equivalents are also deferred.
2020 Equity Awards
In 2020, the Committee approved the stock option, RSU and target value of PSU awards based on its evaluation of market
competitiveness and each NEO’s sustained individual performance and demonstrated potential to impact future business results.
The values in the table below reflect equity-based awards approved by the Committee. The target values for the PSU awards differ
from the corresponding values reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table due to
different methodologies used in assigning the economic value of equity-based awards required for accounting and proxy statement
reporting purposes. The Committee makes equity award decisions based on grant date expected value while the accounting and
proxy statement values are determined in accordance with GAAP requirements. The PSU awards are earned, in part, based on TSR
performance relative to the S&P 500 Industrials Index over a three-year performance period which requires valuations to take into
account the expected payout distribution from 0-200% of target for accounting and proxy statement purposes.
Name
Mr. Michael W. Lamach
Mr. Christopher J. Kuehn
Mr. David S. Regnery
Ms. Marcia J. Avedon, Ph.D.
Mr. Paul A. Camuti
Ms. Susan K. Carter
Ms. Carter retired on April 1, 2020.
Stock Option
Award
($)
RSU
Award
($)
Target Value
2020-2022
PSU Award
($)
2,500,000
2,500,000
5,000,000
450,000
650,000
420,000
375,000
N/A
450,000
900,000
650,000
1,300,000
420,000
375,000
N/A
840,000
750,000
N/A
2018 – 2020 Performance Share Units Payout
As discussed above, PSUs for the three-year 2018 - 2020 performance period were earned based on the Company’s CROIC and TSR
performance relative to the companies in the S&P 500 Industrials Index.
• CROIC is measured as the average of the annual CROIC in each of the three years of the performance cycle. CROIC was 26.5% for
the 2018 - 2020 period, which ranked at the 72nd percentile of the companies in the S&P 500 Industrials Index.
• TSR is measured as the total stock price appreciation plus dividends earned during the three years of the performance cycle. To
account for stock price volatility, a 30-day average stock price at the beginning and ending periods is used. TSR was 101.73% for
the 2018 - 2020 period, which ranked at the 95th percentile of the companies in the S&P 500 Industrials Index.
PSUs for the 2018 - 2020 performance cycle achieved 194.5% of target levels as summarized in the table below.
Performance Metric
Relative CROIC
Relative TSR
Company
Performance
Percentile
Rank
Metric
Payout
Weighting
26.5%
101.73%
72nd
95th
189%
200%
50%
50%
Payout
Level
94.5%
100%
Total Award Payout Percentage:
194.5%
51
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement VI. Other Compensation and Tax Matters
Retirement Programs and Other Benefits
We maintain qualified and nonqualified defined benefit pension plans for our employees, including the NEOs, to provide for fixed
benefits upon retirement based on the individual’s age, compensation and number of years of service. These plans include the
Pension Plan, the Supplemental Pension Plans and our supplemental executive retirement plans (the Elected Officer Supplemental
Pension (“EOSP”) or the Key Management Supplemental Pension (“KMP”) programs). Refer to the Pension Benefits table and
accompanying narrative for additional details on these programs.
We offer a qualified defined contribution (401(k)) plan called the Trane Technologies Employee Savings Plan (the “ESP”) to our
salaried and non-union hourly U.S. workforce, including the NEOs. The ESP is a plan that provides a dollar-for-dollar Company match
on the first six percent of the employee’s eligible compensation that the employee contributes to the ESP. The ESP has several
investment options and is an important component of our U.S. retirement program.
We also have a nonqualified defined contribution plan. The Trane Technologies Supplemental Employee Savings Plan (the
“Supplemental ESP”) is an unfunded plan that makes up employer contributions that cannot be made to the ESP due to the Internal
Revenue Code limitation on the amount of compensation taken into account under the ESP or due to a deferral election under
another non-qualified plan. Supplemental ESP balances are deemed to be invested in the funds selected by the NEOs, which are the
same funds available in the ESP, except for a self-directed brokerage account, which is not available in the Supplemental ESP.
In June 2012, our Board of Directors approved significant changes to our broad-based, qualified retirement programs with the intent
to move employees from a combined defined benefit/defined contribution approach to a fully defined contribution plan approach
over time. Employees active prior to July 1, 2012 were given a choice between continuing to participate in the defined benefit plan
until December 31, 2022, or moving to an enhanced version of the ESP effective January 1, 2013. Employees hired or rehired on
or after July 1, 2012 were automatically covered under the enhanced version of the ESP. Under the enhanced version of the ESP,
employees will receive a basic employer contribution equal to two percent of eligible compensation in addition to the Company’s
matching contribution while ceasing to accrue benefits under the defined benefit plan. Effective as of December 31, 2022, accruals
in the tax-qualified defined benefit plan will cease for all employees. The Committee approved corresponding changes to the
applicable nonqualified defined benefit and contribution pension plans. Additional details on the changes can be found in the
narrative accompanying the Pension Benefits table.
Our Trane Technologies Executive Deferred Compensation Plan (the “EDCP I”) and the Trane Technologies Executive Deferred
Compensation Plan II (the “EDCP II” and, together with the EDCP I, the “EDCP”) allow eligible employees to defer receipt of a part
of their annual salary, AIM award and/or PSP award in exchange for deemed investments in our ordinary shares or in the same
funds available in the ESP, except for a self-directed brokerage account. Refer to the Nonqualified Deferred Compensation table for
additional details on the EDCP.
We provide an enhanced, long-term disability plan to certain executives. The plan supplements the broad-based group plan and
provides an additional monthly maximum benefit if the executive elects to purchase supplemental coverage under the group plan. It
has an underlying individual policy that is portable when the executive terminates.
In light of the enactment of Section 409A of the Code as part of the American Jobs Creation Act of 2004, “mirror plans” for several
of our nonqualified plans, including the Trane Technologies Supplemental Pension Plan (the “Supplemental Pension Plan I”) and the
EDCP I, were created. The mirror plans are the Trane Technologies Supplemental Pension Plan II (“Supplemental Pension Plan II”
and, together with the Supplemental Pension Plan I, the “Supplemental Pension Plans”) and the EDCP II. The purpose of these mirror
plans is not to provide additional benefits to participants, but merely to preserve the tax treatment of the plans that were in place
prior to December 31, 2004. In the case of the Supplemental Pension Plans, the mirror plan benefits are calculated by subtracting the
original benefit value to avoid double-counting the benefit. For the EDCP plans, balances accrued through December 31, 2004 are
maintained separately from balances accrued after that date.
We provide our NEOs with other benefits that we believe are consistent with prevailing market practice and those of our peer
companies. These other benefits and their incremental cost to the Company are reported in “All Other Compensation” shown in the
Summary Compensation Table.
52
COMPENSATION DISCUSSION AND ANALYSIS Severance Arrangements
In connection with external recruiting of certain officers, we generally enter into employment arrangements that provide for
severance payments upon certain termination events, other than in the event of a change in control (which is covered by separate
agreements with the officers). Mr. Lamach and Ms. Avedon have such arrangements in their employment agreements. In 2019 we
amended our Major Restructuring Severance Plan, originally adopted in 2012, to provide certain employees, including our NEOs,
with certain benefits in the event of a termination of employment without cause or for good reason under a Major Restructuring (as
defined in the Post-Employment Section below). Although we do not have a formal severance policy for our executives (other than in
the event of a Major Restructuring), we do have guidelines that in most cases would provide for severance in the event of termination
without cause. The severance payable under employment agreements for Mr. Lamach and Ms. Avedon and the benefits available in
connection with a Major Restructuring and under the severance guidelines are further described in the Post-Employment Benefits
section of the proxy statement.
Change-in-Control Provisions
We have entered into change-in-control agreements with our NEOs. Payments are subject to a “double trigger”, meaning that
payments would be received only if an officer is terminated without cause or resigns for “good reason” within two years following a
change in control. We provide change-in-control agreements to our NEOs to focus them on the best interests of shareholders and
assure continuity of management in circumstances that reduce or eliminate job security and might otherwise lead to accelerated
departures. Under the 2018 Incentive Stock Plan, time-based awards will only vest and become exercisable or payable, as applicable,
on a change in control if they are not assumed, substituted or otherwise replaced in connection with the change in control. If
the awards are assumed or continued after the change in control, the Committee may provide that such awards will be subject
to automatic vesting acceleration upon a participant’s involuntary termination within a designated period following the change
in control. Further, under the 2018 Incentive Stock Plan, PSUs will automatically vest upon a change in control of our Company,
based on (a) the target level, prorated to reflect the period the participant was in service during the performance period or (b) the
actual performance level attained, in each case, as determined by the Committee. Our 2013 Incentive Stock Plan provides for the
accelerated vesting of outstanding time-based awards in the event of a change in control of the Company only for awards issued
through June 7, 2018. Outstanding PSUs would be prorated based on the target for the actual days worked during the applicable
performance period. Refer to the Post-Employment Benefits section of this proxy statement for a more detailed description of the
change-in-control provisions.
Tax and Accounting Considerations
Although we consider the tax and accounting consequences of our compensation programs, the forms of compensation we utilize
are determined primarily by their effectiveness in creating maximum alignment with our key strategic objectives and the interests of
our shareholders.
Timing of Awards
The Committee generally grants our regular annual equity awards after the annual earnings release. The grant date is never selected
or changed to increase the value of equity awards for executives. In 2020, the grants were delayed until after the close of the RMT
transaction to allow for awards to be granted as stock of Trane Technologies.
Claw-Back/Recoupment Policy
To further align the interests of our employees and our shareholders, we have a claw-back/recoupment policy to ensure that any
fraud or intentional misconduct leading to a restatement of our financial statements would be properly addressed. The policy
provides that if it is found that an employee committed fraud or engaged in intentional misconduct that resulted, directly or indirectly,
in a need to restate our financial statements, then our Committee has the discretion to direct the Company to recover all or a portion
of any cash or equity incentive compensation paid or value realized, and/or to cancel any stock-based awards or AIM award granted
to an employee on or after February 2, 2010, the effective date of the policy. Our Committee may also request that the Company
seek to recover any gains realized on or after the effective date of the policy for equity or cash awards made prior to that date
(including AIM, stock options, PSUs and RSUs). Application of the claw-back/recoupment policy is subject to a determination by our
Committee that: (i) the cash incentive or equity compensation to be recouped was calculated on, or its realized value affected by,
the financial results that were subsequently restated; (ii) the cash incentive or equity award would have been less valuable than what
was actually awarded or paid based on the application of the correct financial results; and (iii) the employee to whom the policy
applied engaged in fraud or intentional misconduct. This policy will be revised if required under the Dodd-Frank Act if and when final
regulations implementing the claw-back policy requirements of that law have been adopted.
53
COMPENSATION DISCUSSION AND ANALYSIS2021 Proxy Statement Share-Ownership Requirements
We impose share ownership requirements on each of our officers. These share ownership requirements are designed to emphasize
share ownership by our officers and to further align their interests with our shareholders. Each officer must achieve and maintain
ownership of ordinary shares or ordinary share equivalents at or above a prescribed level. Given significant share price growth
since 2017 when share ownership requirements were last assessed, a market benchmark review of share ownership requirement
trends and practices was performed in 2020 to ensure that our guidelines were competitively positioned. Based on this review, the
Committee updated share ownership requirements effective in 2021.
The requirements are as follows:
Position
Chairman and Chief Executive Officer
President and Chief Operating Officer
Chief Financial Officer, Executive Vice Presidents and
Senior Vice Presidents
Strategic Business Unit Presidents and
Chief Accounting Officer
2020 Individual Ownership
Requirement (Shares
and Equivalents)
2021 Individual Ownership
Requirement (Shares
and Equivalents)
120,000
50,000
30,000
15,000
75,000
30,000
20,000
10,000
Based on the closing price on the record date of $166.58, these share ownership requirements equate to the following as a multiple
of average base salary:
Position
Chairman and Chief Executive Officer
President & Chief Operating Officer
Chief Financial Officer, Executive Vice Presidents and
Senior Vice Presidents
Strategic Business Unit Presidents and Chief Accounting Officer
2020 Guideline
Average Multiple of
Base Salary
2021 Guideline
Average Multiple of
Base Salary
14x
9x
8x
5x
9x
6x
6x
3x
These ownership requirements have been met by all the NEOs who continue to be employed by the Company as of the record date.
Our CEO owns shares valued at over 41 times base salary, our President & COO owns shares valued at over 12 times base salary and
our CFO, EVPs and SVPs own shares valued at over 14 times their individual base salary, on average.
Our share-ownership program requires the accumulation of ordinary shares (or ordinary share equivalents) over a five-year period
following the date the person becomes subject to share-ownership requirements at the rate of 20% of the required level each year.
Executives who are promoted and have their ownership requirement increased have five years to achieve the new level from the
date of promotion. Ownership credit is given for actual ordinary shares owned, deferred compensation that is invested in ordinary
shares within our EDCP Plan, ordinary share equivalents accumulated in our qualified and nonqualified employee savings plans as
well as unvested RSUs. Stock options and unvested PSUs do not count toward meeting the share-ownership target. If executives
fall behind their scheduled accumulation level during their applicable accumulation period, or if they fail to maintain their required
level of ownership after their applicable accumulation period, their right to exercise stock options will be limited to “buy and hold”
transactions and any shares received upon the vesting of RSU and PSU awards must be held until the required ownership level
is achieved.
54
COMPENSATION DISCUSSION AND ANALYSIS Compensation Committee Report
We have reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement.
Based on our review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement as well as the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
COMPENSATION COMMITTEE
Tony L. White (Chair)
Kirk E. Arnold
Jared L. Cohon
Gary D. Forsee
Linda P. Hudson
55
2021 Proxy Statement Executive Compensation
The following table provides summary information concerning compensation paid by the Company or accrued on behalf of our
NEOs for services rendered during the years ended December 31, 2020, 2019 and 2018.
Summary Compensation Table
Name and
Principal Position
Year
Salary
($)(a)
Bonus
($)(b)
Stock
Awards
($)(c)
Option
Awards
($)(d)
Non-Equity
Incentive Plan
Compensation
($)(e)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(f)
All Other
Compensation
($)(g)
Total
($)
M. W. Lamach
Chairman and Chief
Executive Officer
C. J. Kuehn
Senior Vice President
and Chief Financial Officer
D. S. Regnery
President and Chief
Operating Officer
M. J. Avedon
Executive Vice President,
Chief Human Resources,
Marketing and
Communications Officer
P. A. Camuti
Executive Vice President
and Chief Technology
and Strategy Officer
S. K. Carter
Former Senior Vice
President and
Chief Financial Officer
2020 1,410,000 500,000 9,262,869 2,500,012
2,397,000
11,591,666
445,939 28,107,486
2019 1,390,000
— 7,957,970 2,540,028
2,775,000
8,960,127
594,003 24,217,128
2018 1,350,000
— 8,181,039 2,592,247
2,900,000
—
562,199 15,585,485
2020
642,742 150,000 1,667,489
450,012
680,000
445,140
88,607
4,123,990
2020
2019
2018
2020
2019
2018
2020
2019
2020
2019
2018
850,000 150,000 2,408,938
650,009
761,250
730,000
— 1,887,911
642,630
— 1,678,263
531,745
691,250 200,000 1,556,448
420,004
671,250
643,750
— 1,337,076
426,735
— 1,409,821
446,663
575,000 150,000 1,389,663
375,008
557,500
— 955,008
304,818
196,686 200,000
298
—
761,250
735,000
— 2,132,808
680,732
— 2,248,810
712,536
850,000
856,177
971,398
603,500
712,034
736,527
501,500
521,625
194,809
948,963
939,504
3,735,597
2,693,861
119,679
8,764,223
159,876
7,001,705
—
106,602
4,018,008
2,547,784
1,785,641
100,288
6,119,274
125,019
5,057,755
216,578
102,458
3,555,797
814,644
609,446
628,837
760,722
261,347
77,655
3,883,470
103,530
3,051,927
159,471
1,380,101
186,901
5,471,376
179,074
5,076,271
(a) Pursuant to the EDCP II, a portion of a participant’s annual salary may be deferred into a number of investment options. In 2020, no NEOs elected to defer
salary into the EDCP II.
(b) Completion recognition bonuses were awarded in March 2020 to recognize individuals whose contributions were critical to the successful completion of the
RMT transaction.
(c) The amounts in this column reflect the aggregate grant date fair value of PSU awards and any RSU awards granted for the year under Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 and do not reflect amounts paid to or realized by the NEOs. For a discussion of
the assumptions made in determining the ASC 718 values see Note 15, “Share-Based Compensation,” to the Company’s consolidated financial statements
contained in its 2020 Form 10-K. The ASC grant date fair value of the PSU award is spread over the number of months of service required for the grant to
become non-forfeitable, disregarding any adjustments for potential forfeitures. In determining the aggregate grant date fair value of the PSU awards, the
awards are valued assuming target level performance achievement. The table below includes the maximum grant date value of the 2020-2022 PSU awards for
the persons listed. If the maximum level performance achievement is assumed, the aggregate grant date fair value of the PSU awards would be as follows:
Name
M. W. Lamach
C. J. Kuehn
D. S. Regnery
M. J. Avedon
P. A. Camuti
S. K. Carter
Maximum Grant Date
Value of PSU Awards
($)
13,525,057
2,434,584
3,516,748
2,272,260
2,028,773
N/A
Amounts in this column also include the incremental fair value of certain modifications made to outstanding stock awards in connection with the RMT transaction.
56
(d) The amounts in this column reflect the aggregate grant date fair value of stock option grants for financial reporting purposes for the year under ASC 718
and do not reflect amounts paid to or realized by the NEOs. For a discussion of the assumptions made in determining the ASC 718 values see Note 15,
“Share-Based Compensation,” to the Company’s consolidated financial statements contained in its 2020 Form 10-K. Please see “2020 Grants of Plan-Based
Awards” and “Outstanding Equity Awards at December 31, 2020” for additional detail. Amounts in this column also include the incremental fair value of certain
modifications made to outstanding stock awards in connection with the RMT transaction.
(e) This column reflects the amounts earned as annual awards under the AIM program. Unless deferred into the EDCP II, AIM program payments are made in
cash. In 2020, Mr. Kuehn and Mr. Regnery elected to defer a percentage (15% and 60% respectively) of their AIM awards into the EDCP II. Amounts shown in
this column are not reduced to reflect deferrals of AIM awards into the EDCP II.
(f) Amounts reported in this column reflect the aggregate increase in the actuarial present value of the benefits under the qualified Trane Technologies Pension
Plan Number One (the “Pension Plan”), Supplemental Pension Plans, the KMP and EOSP, as applicable. The change in pension benefits value is attributable
to the additional year of service and age, the annual AIM award and any annual salary increase.
Other external factors, outside the influence of the plan design, also impact the values shown in this column. Examples of these factors include changes to
mortality tables as well as interest and discount rates. For all the NEOs, the amounts in this column for 2020 were impacted by decreasing lump sum interest
rates (down from 2.25% to 1.00%) and discount rates (down from 2.96% to 2.08%) which cause the value of the lump sum distribution under the EOSP and the
KMP to increase. For Mr. Lamach, the majority of the change in the pension value is due to these required actuarial valuation changes.
There was no above market interest earned by the NEOs in any year.
(g) The following table summarizes the components of this column for fiscal year 2020:
Name
M. W. Lamach
C. J. Kuehn
D. S. Regnery
M. J. Avedon
P. A. Camuti
S. K. Carter
Company
Contributions
($)(1)
Company Cost
For Life Insurance
($)
Company Cost For
Long Term Disability
($)
Retiree
Medical Plan
($)(2)
Tax
Assistance
($)(3)
Other Benefits
($)(4)
Total
($)
251,100
82,718
102,371
84,197
65,798
91,652
6,966
828
3,689
3,225
2,632
1,888
1,285
1,496
1,456
1,824
1,911
566
—
—
600
—
—
—
119,747
66,841
445,939
—
—
—
—
—
3,565
88,607
11,563
119,679
11,042
100,288
7,314
77,655
65,365
159,471
(1) Represents Company contributions under the Company’s ESP and Supplemental ESP plans.
(2) For Mr. Regnery, represents the estimated year-over-year increase in the value of the retiree medical plan, calculated based on the methods used for
financial statement reporting purposes. Mr. Regnery is the only NEO eligible for the subsidized retiree medical plan upon retirement.
(3) The amount for Mr. Lamach represents tax equalization payments related to Irish taxes owed on $335,000, which is the portion of his income that is
allocated to his role as a director of the Company. Without these payments, Mr. Lamach would be subject to double taxation on this amount since he is
already paying U.S. taxes on this income.
(4) For Mr. Lamach, this amount includes the incremental cost to the Company of personal use of the Company aircraft (whether leased or owned) by
the CEO. For security and safety reasons and to maximize his availability for Company business, the Board of Directors requires the CEO to travel on
Company-provided aircraft for business and personal purposes, unless commercial travel is deemed a minimal security risk by the Company. The
incremental cost to the Company of personal use of the aircraft is calculated: (i) by taking the hourly average variable operating costs to the Company
(including fuel, maintenance, on board catering and landing fees) multiplied by the amount of time flown for personal use in the case of leased aircraft;
and (ii) by multiplying the flight time by a variable fuel charge and the average fuel price per gallon and adding any ground costs such as landing and
parking fees as well as crew charges for travel expenses in the case of the Company owned aircraft. Both methodologies exclude fixed costs that do
not change based on usage, such as pilots’ and other employees’ salaries, management fees and training, hangar and insurance expenses. We impose
an annual limit of $150,000 on the CEO’s non-business use of Company-provided aircraft. For 2020, the amount for Mr. Lamach was $58,453 for personal
use of Company-provided aircraft. Under the Company’s aircraft use policy, the Compensation Committee has determined that business use includes
travel that is related to the Company’s business or benefits the Company, such as travel to meetings of other boards on which the CEO sits. In 2020,
Mr. Lamach did not incur any charges for such business-related travel.
These amounts also include: (i) the following incremental cost of financial counseling services, which may include tax preparation and estate planning
services: Mr. Lamach, $8,340; Mr. Kuehn, $750; Ms. Carter $5,750; Mr. Regnery, $9,000; Ms. Avedon, $8,340; and Mr. Camuti $4,775; (ii) the following costs
for medical services provided through an on-site physician under the Executive Health Program: Mr. Lamach, $48; Mr. Kuehn, $2,315; Ms. Carter, $0;
Mr. Regnery, $2,463; Ms. Avedon $2,602 and Mr. Camuti, $2,439; (iii) a payment made to Ms. Carter in the amount of $59,615 for unused vacation at the
time of her retirement, and (iv) product rebates and company-branded items that do not exceed $500 in value.
57
EXECUTIVE COMPENSATION2021 Proxy Statement
2020 Grants of Plan-Based Awards
The following table shows all plan-based awards granted to the NEOs during fiscal 2020. In March 2020, we adjusted the numbers
of our outstanding stock option, RSU and PSU awards to preserve the intrinsic value of the awards in connection with the RMT
transaction as described in the footnotes to the table. This table is supplemental to the Summary Compensation Table and is
intended to complement the disclosure of equity awards and grants made under non-equity incentive plans in the Summary
Compensation Table. Share information reflects the number of shares granted on a post-RMT transaction basis. For additional
information regarding outstanding awards and the impact of modifications made in connection with the RMT transaction, please see
the “Outstanding Equity Awards at December 31, 2020” table.
Name
Grant
Date
Threshold
($)(a)
Target
($)(a)
Maximum
($)(a)
Threshold
(#)(b)
Target
(#)(b)
Maximum
(#)(b)
Estimated Future Payouts Under
Non-Equity Plan Awards
Estimated Future Payouts Under
Equity Incentive Plan Awards
719,100 2,397,000 4,794,000
—
—
—
—
—
—
—
—
—
—
—
11,874 47,493
—
—
—
—
—
94,986
—
—
—
—
—
—
—
—
—
—
—
—
—
—
17,357 69,427
15,830 63,320
—
—
—
—
138,854
126,640
—
—
204,000
—
—
—
680,000 1,360,000
—
—
—
—
—
—
—
8,549
—
—
2,138
—
—
—
17,098
—
—
—
—
—
—
—
—
—
—
—
—
—
—
980
1,030
—
—
3,918
4,117
—
—
255,000
—
—
—
850,000 1,700,000
—
—
—
—
—
—
—
—
3,088 12,349
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,572 14,287
3,561 14,242
3,641 14,564
—
—
—
—
—
—
7,836
8,234
—
—
—
24,698
—
—
28,574
28,484
29,128
—
—
—
2/4/2020
3/9/2020
3/9/2020
3/9/2020
2/6/2018
2/5/2019
2/6/2018
2/5/2019
2/4/2020
3/9/2020
3/9/2020
3/9/2020
M. W. Lamach
2020 Awards
AIM
PSUs (2020-2022)
Options
RSUs
Awards prior
to 2020
PSUs (2018-2020)
PSUs (2019-2021)
RSUs
RSUs
C. J. Kuehn
2020 Awards
AIM
PSUs (2020-2022)
Options
RSUs
Awards prior
to 2020
PSUs (2018-2020)
PSUs (2019-2021)
RSUs
RSUs
D. S. Regnery
2020 Awards
AIM
PSUs (2020-2022)
Options
RSUs
Awards prior
to 2020
PSUs (2018-2020) 10/3/2017
PSUs (2018-2020)
2/6/2018
PSUs (2019-2021)
2/5/2019
RSUs
10/3/2017
RSUs
2/6/2018
RSUs
2/5/2019
2/4/2020
3/9/2020
3/9/2020
3/9/2020
2/6/2018
2/5/2019
2/6/2018
2/5/2019
58
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(c)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(c)
Exercise
or Base
Price of
Option
Awards
($/Sh)(d)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(e)(f)
—
—
—
23,747
—
—
11,572
21,107
—
—
—
4,275
—
—
653
1,510
—
—
—
6,175
—
—
—
14,287
2,375
5,342
—
—
149,791
—
—
—
— 6,762,528
2,500,012
— 2,500,084
105.28
—
—
—
—
—
—
—
—
88
85
73
11
—
—
26,963
—
—
—
— 1,217,292
450,012
450,072
105.28
—
—
—
—
—
—
—
—
—
26
63
10
26
—
—
38,946
—
—
—
— 1,758,374
650,009
650,104
105.28
—
—
—
—
—
—
—
—
—
—
—
—
—
94
99
88
25
72
83
EXECUTIVE COMPENSATION
Estimated Future Payouts Under
Non-Equity Plan Awards
Estimated Future Payouts Under
Equity Incentive Plan Awards
Grant
Date
Threshold
($)(a)
Target
($)(a)
Maximum
($)(a)
Threshold
(#)(b)
Target
(#)(b)
Maximum
(#)(b)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(c)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(c)
Exercise
or Base
Price of
Option
Awards
($/Sh)(d)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(e)(f)
2/4/2020
3/9/2020
3/9/2020
3/9/2020
181,050
—
—
—
603,500 1,207,000
—
—
—
—
—
—
—
1,995
—
—
—
7,979
—
—
2/6/2018
2/5/2019
2/6/2018
2/5/2019
—
—
—
—
—
—
—
—
—
—
—
—
2,991 11,964
2,660 10,639
—
—
—
—
2/4/2020
3/9/2020
3/9/2020
3/9/2020
150,450
—
—
—
501,500 1,003,000
—
—
—
—
—
—
—
1,781
—
—
—
7,124
—
—
2/6/2018
2/5/2019
2/6/2018
2/5/2019
—
—
—
—
—
—
—
—
—
—
—
—
1,923
1,900
—
—
7,692
7,599
—
—
—
15,958
—
—
23,928
21,278
—
—
—
14,248
—
—
15,384
15,198
—
—
—
—
—
3,990
—
—
1,995
3,547
—
—
—
3,562
—
—
1,283
2,534
2/4/2020
58,443
194,809
389,618
—
—
—
—
2/6/2018
2/5/2019
2/6/2018
2/5/2019
—
—
—
—
—
—
—
—
—
—
—
—
4,772 19,085
4,243 16,971
—
—
—
—
38,170
33,942
—
—
—
—
3,182
5,657
—
—
25,165
—
—
—
— 1,136,130
420,004
420,067
105.28
—
—
—
—
—
—
—
—
—
104
75
40
33
—
—
22,469
—
—
—
— 1,014,386
375,008
375,007
105.28
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
63
110
30
66
—
86
94
90
28
Name
M. J. Avedon
2020 Awards
AIM
PSUs (2020-2022)
Options
RSUs
Awards prior
to 2020
PSUs (2018-2020)
PSUs (2019-2021)
RSUs
RSUs
P. A. Camuti
2020 Awards
AIM
PSUs (2020-2022)
Options
RSUs
Awards prior
to 2020
PSUs (2018-2020)
PSUs (2019-2021)
RSUs
RSUs
S. K. Carter
AIM
Awards prior
to 2020
PSUs (2018-2020)
PSUs (2019-2021)
RSUs
RSUs
(a) The target award levels established for the AIM program are established annually in February and are expressed as a percentage of the NEO’s base salary.
Refer to Compensation Discussion and Analysis under the heading “Annual Incentive Matrix Program” for a description of the Compensation Committee’s
process for establishing AIM program target award levels. The amounts reflected in the “Estimated Future Payouts Under Non-Equity Incentive Plan Awards”
columns represent the threshold, target and maximum amounts for awards under the AIM program that were paid in February 2021, based on performance in
2020. Thus, the amounts shown in the “threshold,” “target” and “maximum” columns reflect the range of potential payouts when the target award levels were
established in February 2020 for all NEOs. The AIM program pays $0 for performance below threshold. Ms. Carter retired on April 1, 2020 and therefore the
2020 AIM amounts reflect prorated levels. The actual amounts paid pursuant to those awards are reflected in the “Non-Equity Incentive Plan Compensation”
column of the Summary Compensation Table.
(b) The amounts reflected in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns represent the threshold, target and maximum amounts
for PSU awards. The PSP pays $0 for performance below threshold. For a description of the Compensation Committee’s process for establishing PSP target
award levels and the terms of PSU awards, please refer to Compensation Discussion and Analysis under the heading “Long-Term Incentive Program” and the
“Post-Employment Benefits” section below. There were no equity-based awards to Ms. Carter in 2020 due to her impending retirement.
(c) The amounts in these columns reflect the stock option and RSU awards. For a description of the Compensation Committee’s process for determining stock
option and RSU awards and the terms of such awards, see Compensation Discussion and Analysis under the heading “Long-Term Incentive Program” and the
“Post-Employment Benefits” section below. There were no new equity-based awards to Ms. Carter in 2020 due to her impending retirement.
(d) Stock options were granted under the Company’s Incentive Stock Plan of 2018 (the “2018 Plan”), which requires options to be granted at an exercise price
equal to or greater than the fair market value of the Company’s ordinary shares on the date of grant. The fair market value is defined in the 2018 Plan as the
closing price of the Company’s ordinary shares listed on the NYSE on the grant date. The closing price on the NYSE of the Company’s ordinary shares was
$105.28 on the March 2020 grant date.
59
EXECUTIVE COMPENSATION2021 Proxy Statement
(e) Amounts in this column include the grant date fair value of the equity awards, as well as the incremental fair value for awards that were modified during fiscal
2020 (see footnote (f)), calculated in accordance with ASC 718. The Company cautions that the actual amount ultimately realized by each NEO from the
stock option awards will likely vary based on a number of factors, including stock price fluctuations, differences from the valuation assumptions used and
timing of exercise or applicable vesting. For a description of the assumptions made in valuing the equity awards see Note 15, “Share-Based Compensation”
to the Company’s consolidated financial statements contained in its 2020 Form 10-K. For PSUs, the grant date fair value has been determined based on
achievement of target level performance, which is the performance threshold the Company believes is the most likely to be achieved under the grants.
(f)
In connection with the RMT transaction, certain adjustments were made to outstanding equity awards held by our employees, including the NEOs as
described in the narrative disclosure preceding the “Outstanding Equity Awards at December 31, 2020” table. The adjustments were designed to preserve
the intrinsic value of each form of equity award. Although these adjustments were intended to preserve the intrinsic value of each type of award, in some
cases, they constituted a modification under ASC Topic 718, which requires a comparison of fair values immediately before and after the RMT transaction. In
certain instances, the fair value of the equity awards calculated in accordance with ASC 718 immediately after the RMT transaction was higher. As a result,
the adjustment resulted in incremental compensation costs for these awards which are reported in this column.
60
EXECUTIVE COMPENSATION Outstanding Equity Awards at December 31, 2020
In connection with the RMT transaction, certain adjustments were made to outstanding equity awards held by our employees,
including the NEOs, as described below:
• Vested stock options - Outstanding stock options that were vested and exercisable at the time of the RMT transaction were
converted into vested and exercisable stock options of the Company. The number of underlying shares and exercise price for
each award was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction.
• Unvested stock options - Unvested stock options held at the time of the RMT transaction were converted into unvested stock
options of the participants’ employer following the separation. The number of underlying shares and exercise price for each award
was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction.
• Restricted stock units - Outstanding RSUs held at the time of the RMT transaction were converted into RSUs of the participants’
employer company following the separation. The number of underlying shares was adjusted to preserve the overall intrinsic value
of the awards immediately prior to the RMT transaction.
• Performance share units - Active and outstanding PSU awards held at the time of the RMT transaction were converted into active and
outstanding PSUs of the Company. Post-transaction, the Company’s employees will continue to participate in the plan at target levels
with payout based on actual performance at the end of the respective three-year performance period for each award. The number of
underlying shares was adjusted to preserve the overall intrinsic value of the awards immediately prior to the RMT transaction.
Option Awards(a)
Stock Awards(a)
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable(b)
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(b)
Option
Exercise
Price
($)
Option
Expiration
Date(c)
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)(d)
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(e)
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)(f)
Equity Incentive
Plan Awards: Market
or Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not
Vested
($)(e)
142,280
63,361
—
8,025
4,530
—
14,651
17,585
29,450
22,497
—
29,185
16,029
—
20,781
24,515
10,645
—
23,687
15,760
7,603
—
19,420
42,860
57,851
39,108
16,980
71,140
70.22
2/5/2028
11,572 1,679,792
126,726
78.97
2/4/2029
21,107 3,063,892
149,791
105.28
3/8/2030
23,747 3,447,115
4,013
9,061
70.22
2/5/2028
653
94,789
78.97
2/4/2029
1,510
219,192
26,963
105.28
3/8/2030
4,275
620,559
—
—
—
—
—
46.64 2/24/2024
52.28
2/2/2025
38.99
2/9/2026
62.53
2/6/2027
—
—
—
—
—
—
—
—
—
—
—
—
14,593
70.22
2/5/2028
2,375
344,755
32,062
78.97
2/4/2029
5,342
775,445
38,946
105.28
3/8/2030
6,175
896,363
—
62.53
2/6/2027
—
—
12,258
70.22
2/5/2028
1,995
289,594
21,290
78.97
2/4/2029
3,547
514,883
25,165
105.28
3/8/2030
3,990
579,188
—
62.53
2/6/2027
—
—
7,880
70.22
2/5/2028
1,283
186,240
15,207
78.97
2/4/2029
2,534
367,835
22,469
105.28
3/8/2030
3,562
517,060
—
—
—
46.64 2/24/2024
52.28
2/2/2025
62.53
4/1/2025
—
—
—
—
—
—
19,554
70.22
4/1/2025
3,182
461,899
33,963
78.97
4/1/2025
5,657
821,170
69,427
63,320
47,493
3,918
4,117
8,549
—
—
—
—
14,287
14,242
14,564
12,349
—
11,964
10,639
7,979
—
7,692
7,599
7,124
—
—
—
14,314
7,077
10,078,023
9,191,531
6,894,084
568,737
597,624
1,240,973
—
—
—
—
2,073,901
2,067,369
2,114,110
1,792,581
—
1,736,694
1,544,357
1,158,232
—
1,116,571
1,103,071
1,034,120
—
—
—
2,077,820
1,027,297
61
Name
Grant
Date
M. W. Lamach
2/6/2018
C. J. Kuehn
2/5/2019
3/9/2020
2/6/2018
2/5/2019
3/9/2020
D. S. Regnery 2/25/2014
2/3/2015
2/10/2016
2/7/2017
10/3/2017
2/6/2018
2/5/2019
3/9/2020
2/7/2017
2/6/2018
2/5/2019
3/9/2020
2/7/2017
2/6/2018
2/5/2019
3/9/2020
M. J. Avedon
P. A. Camuti
S. K. Carter
2/25/2014
2/3/2015
2/7/2017
2/6/2018
2/5/2019
EXECUTIVE COMPENSATION2021 Proxy Statement
(a)
In March 2020, we adjusted the numbers of our outstanding stock option, RSU and PSU awards to preserve the intrinsic value of the awards in connection
with the RMT transaction.
(b) These columns represent stock option awards. These awards generally become exercisable in three equal annual installments beginning on the first
anniversary after the date of grant, subject to continued employment or retirement.
(c) All options granted to the NEOs expire on the tenth anniversary (less one day) of the grant date.
(d) This column represents unvested RSUs. RSUs generally become vested in three equal annual installments beginning on the first anniversary after the date of
grant, subject to continued employment or retirement.
(e) The market value was computed based on $145.16, the closing market price of the Company’s ordinary shares on the NYSE at December 31, 2020.
(f)
This column represents the target number of unvested and unearned PSUs. PSUs vest upon the completion of a three-year performance period. The
actual number of shares an NEO will receive, if any, is subject to achievement of the performance goals as certified by the Compensation Committee, and
continued employment.
2020 Option Exercises and Stock Vested
The following table provides information regarding the amounts received by each NEO upon exercise of stock options, the vesting of
RSUs or the vesting of PSUs during the fiscal year ended December 31, 2020:
Name
M. W. Lamach(b)
C. J. Kuehn(c)
D. S. Regnery(d)
M. J. Avedon(b)
P. A. Camuti(b)
S. K. Carter(b)
Option Awards
Stock Awards
Number of
Shares
Acquired on
Exercise
(#)
Value
Realized on
Exercise
($)(a)
Number of
Shares
Acquired on
Vesting
(#)
Value
Realized on
Vesting
($)
232,115
19,098,190
140,434
20,285,289
11,718
782,838
11,490
1,601,187
14,167
1,223,156
26,160
3,456,699
39,549
2,932,124
22,459
3,243,590
15,815
1,245,748
14,558
2,102,255
—
—
35,388
5,110,659
(a) This column reflects the aggregate dollar amount realized by the NEO upon the exercise of the stock options by determining the difference between the
market price of the Company’s ordinary shares at exercise and the exercise price of the stock options.
(b) Reflects the value of the RSUs that vested on February 5, 2020, February 6, 2020, and February 7, 2020 and PSUs that vested on February 18, 2020, based on
the fair market value of the Company’s ordinary shares on the vesting date as determined in accordance with the relevant plan.
(c) Reflects the value of the RSUs that vested on January 3, 2020, February 5, 2020, February 6, 2020 and February 7, 2020 and PSUs that vested on February 18,
2020, based on the fair market value of the Company’s ordinary shares on the vesting date.
(d) Reflects the value of the RSUs that vested on February 5, 2020, February 6, 2020, February 7, 2020 and October 3, 2020 and PSUs that vested on February 18,
2020, based on the fair market of the Company’s ordinary shares on the vesting date.
2020 Pension Benefits
The NEOs participate in one or more, but not in all, of the following defined benefit plans:
• the Pension Plan;
• the Supplemental Pension Plans; and
• the EOSP or the KMP.
The Pension Plan is a funded, tax qualified, non-contributory (for all but a small subset of participants) defined benefit plan that
covers the majority of the Company’s salaried and non-union hourly U.S. employees who were hired or re-hired prior to June 30,
2012. The Pension Plan provides for normal retirement at age 65. The formula to determine the lump sum benefit under the Pension
Plan is: 5% of final average pay (the five consecutive years with the highest compensation out of the last ten years of eligible
compensation) multiplied by years of credited service (as defined in the Pension Plan). A choice for distribution between an annuity
and a lump sum option is available. The Pension Plan was closed to new participants after June 30, 2012 and no further benefits will
accrue to any Pension Plan participant for service performed after December 31, 2022. In addition, any employee who was a Pension
Plan participant on June 30, 2012 was provided the option to waive participation in the Pension Plan effective January 1, 2013, and, in
lieu of participation in the Pension Plan, receive an annual non-elective employer contribution equal to 2% of eligible compensation
in the ESP.
62
EXECUTIVE COMPENSATION The Supplemental Pension Plans are unfunded, nonqualified, non-contributory defined benefit restoration plans. The Supplemental
Pension Plans restore what is lost in the Pension Plan due to limitations under the Internal Revenue Code (the “Code”) on the annual
compensation and benefits recognized when calculating benefits under the qualified Pension Plan. The Supplemental Pension
Plans cover all employees of the Company who participate in the Pension Plan and who are impacted by the Code compensation
and benefits limits. A participant must meet the vesting requirements of the qualified Pension Plan to vest in benefits under the
Supplemental Pension Plans. Benefits under the Supplemental Pension Plans are available only as a lump sum distribution after
termination and paid in accordance with Section 409A of the Code. As a result of the 2012 changes to the Pension Plan, the
Supplemental Pension Plans were closed to employees hired on or after June 30, 2012, and no further benefits will accrue to any
Supplemental Plan participant for service performed after December 31, 2022.
The EOSP, which was closed to new participants effective April 2011, is an unfunded, nonqualified, non-contributory defined benefit
plan designed to replace a percentage of an officer’s final average pay based on his or her age and years of service at the time of
retirement. Final average pay is defined as the sum of the officer’s current annual base salary plus the average of his or her three
highest AIM awards during the most recent six years. No other elements of compensation (other than base salary and AIM awards)
are included in final average pay. The EOSP provides a benefit pursuant to a formula in which 1.9% of an officer’s final average pay is
multiplied by the officer’s years of service (up to a maximum of 35 years) and then reduced by the value of other retirement benefits
the officer will receive from the Company under certain qualified and nonqualified retirement plans as well as Social Security. If
additional years of service were granted to an officer as part of his or her employment agreement, those additional years of service
are reflected in the Pension Benefits table below. Vesting occurs, while the officer is employed by the Company, at the earlier of the
attainment of age 55 and the completion of 5 years of service or age 62. Unreduced benefits under the EOSP are available at age 62
and benefits are only available as a lump sum after termination and paid in accordance with Section 409A of the Code. Mr. Lamach
and Ms. Avedon participate in the EOSP.
The KMP is an unfunded, nonqualified, non-contributory defined benefit plan available to certain key management employees on
a highly selective basis. The KMP is designed to replace a percentage of a key employee’s final average pay based on his or her
age and years of service at the time of retirement. Final average pay is defined as the sum of the key employee’s current annual
base salary plus the average of the employee’s three highest AIM awards during the most recent six years. No other elements of
compensation (other than base salary and AIM awards) are included in final average pay. The KMP provides a benefit pursuant to
a formula in which 1.7% of a key employee’s final average pay is multiplied by years of service (up to a maximum of 30 years) and
then reduced by the value of other retirement benefits the key employee will receive that are provided by the Company under
certain qualified and nonqualified retirement plans as well as Social Security. Vesting occurs at the earlier of the attainment of age
55 and the completion of 5 years of service or age 65. For employees who begin participating on or after June 2015, there is a
minimum 5 year service requirement from date of participation to date of retirement. Benefits are only available as a lump sum after
termination and paid in accordance with Section 409A of the Code. Ms. Carter and Messrs. Kuehn, Regnery and Camuti participate
in the KMP.
The table below represents the estimated present value of defined benefits for the plans in which each NEO participates.
Name
M. W. Lamach(c)
C. J. Kuehn
S. K. Carter
D. S. Regnery(d)
M. J. Avedon(e)
P. A. Camuti
Plan Name
Pension Plan
Supplemental Pension Plan II
EOSP
KMP
KMP
Pension Plan
Supplemental Pension Plan I
Supplemental Pension Plan II
KMP
Pension Plan
Supplemental Pension Plan II
EOSP
Pension Plan
Supplemental Pension Plan II
KMP
Number
of Years
Credited
Service
(#)(a)
Present
Value of
Accumulated
Benefit
($)(b)
16.92
16.92
34
5.58
6.67
35.42
19.42
35.42
311,630
5,026,534
45,514,828
1,029,726
2,879,968
663,518
512,936
2,167,179
30
9,825,791
13.92
13.92
14
9.42
9.42
9.42
274,633
1,207,027
8,371,027
181,319
486,422
2,112,371
63
EXECUTIVE COMPENSATION2021 Proxy Statement (a) Under the EOSP or the KMP, for officers covered prior to May 19, 2009, a full year of service is credited for any year in which they work at least one day. In
the Pension Plan, the Supplemental Pension Plans as well as the EOSP and the KMP for officers covered on or after May 19, 2009, the number of years of
credited service is based on elapsed time (i.e., credit is given for each month in which a participant works at least one day). The years of credited service
used for calculating benefits under all plans are the years of credited service through December 31, 2020. The years of crediting service used for calculating
benefits under the Supplemental Pension Plan I are the years of crediting service through December 31, 2004 and the benefits earned under this plan serve
as offsets to the benefits earned under the Supplemental Pension Plan II.
(b) The amounts in this column reflect the estimated present value of each NEO’s accumulated benefit under the plans indicated. The calculations reflect the
value of the benefits assuming that each NEO was fully vested under each plan. The benefits were computed as of December 31, 2020, consistent with the
assumptions described in Note 10, “Pensions and Postretirement Benefits Other than Pensions,” to the consolidated financial statements in the 2020 Form 10-K.
(c) Mr. Lamach’s credited years of service exceed his actual years of service by 17 years pursuant to the provisions of his employment arrangement. Crediting
additional years of service to a nonqualified pension program such as the EOSP was not uncommon in 2004 when Mr. Lamach joined the Company and
was used to compensate him for benefits he was forfeiting at his prior employer. Mr. Lamach’s benefit under the EOSP is reduced by the pension benefit
he received from his former employer in July 2013, updated with interest. The increase in present value of benefits due to those additional years of credited
service is $25,206,210.
(d) Under the provisions of the KMP, Mr. Regnery’s service is capped at 30 years.
(e) Ms. Avedon, pursuant to the provisions of her employment arrangement, receives double credit for the first five years of employment (3.8% versus 1.9%) in
determining her benefit. The increase in present value of benefits due to this provision is $2,645,447.
2020 Nonqualified Deferred Compensation
The Company’s EDCP is an unfunded, nonqualified plan that permits certain employees, including the NEOs, to defer receipt of up
to 50% of their annual salary and up to 100% of their AIM awards and PSP awards. Elections to defer generally must be made prior to
the beginning of the calendar year or performance period, as applicable. The Company has established a nonqualified grantor trust
with a bank as the trustee to hold certain assets as a funding vehicle for the Company’s obligations under the EDCP. These assets
are considered general assets of the Company and are available to its creditors in the event of the Company’s insolvency. Amounts
held in the trust are invested by the trustee using various investment vehicles.
Participants are offered certain investment options (the same investment options available in the Employee Savings Plan other
than the self-directed brokerage), and can choose how they wish to allocate their cash deferrals among those investment options.
Participants are 100% vested in all amounts deferred, and bear the risk of any earnings and losses on such deferred amounts.
Generally, deferred amounts may be distributed following termination of employment or at the time of a scheduled in-service
distribution date chosen by the participant. If a participant has completed five or more years of service at the time of termination,
or is terminated due to long-term disability, death or retirement, the distribution is paid in accordance with the participant’s election.
If a participant terminates without meeting these requirements, the account balance for all plan years will be paid in a lump sum in
the year following the year of termination. A participant can elect to receive distributions at termination over a period of 5, 10, or 15
annual installments, or in a single lump sum. A participant can elect to receive scheduled in-service distributions in future years that
are at least two years after the end of the plan year for which they are deferring. In-service distributions can be received in two to
five annual installments, or if no election is made, in a lump sum. For those participants who have investments in ordinary shares, the
distribution of these assets will be in the form of ordinary shares, not cash.
64
EXECUTIVE COMPENSATION The following table provides information regarding contributions, distributions, earnings and balances for each NEO under our
nonqualified deferred compensation plans.
Name
Plan Name
M. W. Lamach
EDCP
Supplemental ESP
C. J. Kuehn
EDCP
Supplemental ESP
D. S. Regnery
EDCP
Supplemental ESP
M. J. Avedon
EDCP
Supplemental ESP
P. A. Camuti
EDCP
S. K. Carter
Supplemental ESP
Supplemental ESP
Executive
Contributions
in Last Fiscal
Year
($)(a)
Registrant
Contributions
in Last Fiscal
Year
($)(b)
Aggregate
Earnings in
Last Fiscal
Year
($)(c)
Aggregate
Withdrawals/
Distributions
($)
—
—
58,685
—
513,706
—
—
—
—
—
—
—
3,672,331
234,000
1,555,129
—
158,948
59,918
—
85,271
38,716
517,261
144,329
—
2,419,066
67,097
136,527
—
2,477,722
48,698
68,852
66,418
100,709
Aggregate
Balance At
Last Fiscal
Year End
($)(d)
12,321,660
6,557,689
675,141
289,647
—
—
—
—
(135,466)
6,206,100
—
—
—
—
—
1,379,038
8,116,518
1,080,645
8,313,297
551,569
851,053
(a) The annual deferrals (salary, AIM & PSP) are all reflected in the Salary column, the Non-Equity Incentive Plan column and the Stock Awards column,
respectively of the Summary Compensation Table.
(b) All of the amounts reflected in this column are included in the All Other Compensation column of the Summary Compensation Table.
(c) Amounts in this column include gains and losses on investments, as well as dividends on ordinary shares or ordinary share equivalents. None of the earnings
or losses reported in this column are included in the Summary Compensation Table.
(d) The following table reflects the amounts reported in this column as compensation to the NEOs in the Company’s Summary Compensation Table in proxy statements
for prior years. Each of Messrs. Lamach, Kuehn, Regnery, Ms. Carter, Ms. Avedon and Mr. Camuti first became NEOs and therefore had their compensation reported
in the Company’s proxy statements beginning with fiscal years 2004 (Lamach), 2020 (Kuehn), 2017 (Regnery), 2010 (Avedon), 2019 (Camuti) and 2014 (Carter).
Name
M. W. Lamach
C. J. Kuehn
D. S. Regnery
M. J. Avedon
P. A. Camuti
S. K. Carter
EDCP
($)
Supplemental ESP
($)
1,529,086
2,036,325
—
1,400,441
376,016
—
—
—
191,743
486,140
49,044
542,703
Post-Employment Benefits
The following discussion describes the compensation to which each active NEO would be entitled in the event of termination of such
executive’s employment.
Employment Arrangements and Severance Not in Connection
with a Change in Control
Mr. Lamach and Ms. Avedon are entitled to severance in the event of their involuntary termination without cause pursuant to the terms of
their employment agreements. Under the terms of his employment agreement, Mr. Lamach is eligible for 24 months of base annual salary
plus a prorated AIM award earned for the year of termination as determined and paid at the conclusion of the full performance year in
accordance with the terms of the AIM program. Ms. Avedon is eligible for 12 months of base salary and an AIM award equal to her target.
65
EXECUTIVE COMPENSATION2021 Proxy Statement Although the Company does not have a formal severance policy for officers, NEOs who do not have employment agreements
providing for severance and who are terminated by the Company other than for cause will generally be considered for severance
benefits up to 12 months’ base salary. Depending on the circumstances and timing of the termination, they may also be eligible
for a pro-rated portion of their AIM award earned for the year of termination as determined and paid at the conclusion of the full
performance year in accordance with the terms of the AIM program.
In addition, the Company’s equity award agreements provide for the following treatment upon the occurrence of one of the specified
events in the table below:
Retirement
Group
Termination
Job
Elimination
Death or
Disability
Stocks Options
RSUs
PSUs
Continue to vest on the same basis
as active employees and remain
exercisable for a period of up to five years
following retirement.
Continue to vest on the
same basis as active
employees.
Vest pro-rata based on the time worked
during the performance period and the
achievement of performance goals through
the end of the performance period.
Immediately vest in the portion of the
awards that would have vested within
twelve months of termination and remain
exercisable for a period of up to three
years following termination of employment.
Immediately vest in the
portion of the awards
that would have vested
within twelve months of
termination.
Unvested awards are forfeited and vested
awards remain exercisable for a period of
up to one year following termination.
Immediately vest in unvested awards and
vested awards remain exercisable for a
period of up to three years following death
or disability.
Unvested awards are
forfeited.
Immediately vest in
unvested awards.
Vest pro-rata based on the time worked
during the performance period and the
achievement of performance goals at
target performance, unless termination
occurs in the final quarter of the
performance period in which case the
awards vest based on actual performance.
In the event of a change in control or termination due to a Major Restructuring, severance would be determined pursuant to the
terms of the change-in-control agreements or the Major Restructuring Severance Plan described below in lieu of severance under
the terms of the employment agreements or the severance guidelines described above.
Change in Control
The Company has entered into a change-in-control agreement with each NEO. The change-in-control agreement provides for certain
payments if the employment is terminated by the Company without “cause” (as defined in the change-in-control agreements) or by
the NEO for “good reason” (as defined in the change-in-control agreements), in each case, within two years following a change in
control of the Company. For officers who first became eligible for a change-in-control agreement on or after May 19, 2009, including
Messrs. Kuehn, Regnery and Camuti, the Company eliminated a severance payment based on outstanding PSP awards and
eliminated a payment to cover the impact to the executive of certain incremental taxes incurred in connection with the payments
made following a change in control.
Following a change in control, each NEO is entitled to continue receiving his or her current base salary and is entitled to an annual
bonus in an amount not less than the highest annual bonus paid during the prior three full fiscal years.
If an NEO’s employment is terminated “without cause” or by the NEO for “good reason” within two years following a change in control,
the NEO is entitled to the following:
• any base salary and annual bonus for a completed fiscal year that had not been paid;
• an amount equal to the NEO’s annual bonus for the last completed fiscal year pro-rated for the number of full months employed in
the current fiscal year;
• an amount equal to the NEO’s base salary pro-rated for any unused vacation days;
• a lump sum severance payment from the Company equal to the three times (for the CEO) or two and one-half times (for other
NEOs) the sum of:
• the NEO’s annual salary in effect on the termination date, or, if higher, the annual salary in effect immediately prior to the
reduction of the NEO’s annual salary after the change in control; and
• the NEO’s target AIM award for the year of termination or, if higher, the average of the AIM award amounts beginning three years
immediately preceding the change in control and ending on the termination date; and
66
EXECUTIVE COMPENSATION • for Mr. Lamach and Ms. Avedon, a lump sum payment equal to three times for Mr. Lamach and two and one-half times for
Ms. Avedon of: (a) the cash value of the target amount of the most recent PSU award; or (b) if higher, the average amounts of
the last three PSU awards granted and paid to the NEO immediately preceding termination. This payment is in lieu of any rights
the individual might have with respect to unvested PSU awards.
A “change in control” is defined as the occurrence of any of the following events: (i) any person unrelated to the Company becomes
the beneficial owner of 30% or more of the combined voting power of the Company’s voting stock; (ii) the directors serving at the
time the change-in-control agreements were executed (or the directors subsequently elected by the shareholders of the Company
whose election or nomination was duly approved by at least two-thirds of the then serving directors) fail to constitute a majority of
the Board of Directors; (iii) the consummation of a merger or consolidation of the Company with any other corporation in which the
Company’s voting securities outstanding immediately prior to such merger or consolidation represent 50% or less of the combined
voting securities of the Company immediately after such merger or consolidation; (iv) any sale or transfer of all or substantially all
of the Company’s assets, other than a sale or transfer with a corporation where the Company owns at least 80% of the combined
voting power of such corporation or its parent after such transfer; or (v) any other event that the continuing directors determine to be
a change in control; provided however, with respect to (i), (iii) and (v) above, there shall be no change in control if shareholders of the
Company own more than 50% of the combined voting power of the voting securities of the Company or the surviving entity or any
parent immediately following such transaction in substantially the same proportion to each other as prior to such transaction.
In addition to the foregoing, the NEOs would also be eligible to participate in the Company’s welfare employee benefit programs for
the severance period (three years for the CEO and two and one-half years for the other NEOs). For purposes of determining eligibility
for applicable post-retirement welfare benefits, the NEO would be credited with any combination of additional years of service and
age, not exceeding 10 years, to the extent necessary to qualify for such benefits. Mr. Regnery is the only active NEO eligible for
subsidized retiree medical benefits (only until age 65) due to his age and service as of January 1, 2003, when eligibility for the retiree
medical benefit was frozen. The Company would also provide each NEO up to $100,000 of outplacement services.
In the event of a change in control, participants in the EOSP and KMP would be immediately vested. A termination within two years
following a change in control also triggers the payment of an enhanced benefit, whereby three years would be added to both
age and service with the Company under the EOSP or KMP. In addition, the “final average pay” under the EOSP or KMP would be
calculated as 33.33% of his or her severance benefit under the change-in-control agreement in the case of Mr. Lamach and 40% of
the severance benefit under the applicable change-in-control agreement in the case of the other NEOs. These percentages reflect
an annualized value of severance payments that would be provided in accordance with their respective agreements.
Under the Company’s 2018 Incentive Stock Plan, time-based awards will only vest and become exercisable or payable, as applicable,
on a change in control (as defined in the 2018 Incentive Stock Plan) if they are not assumed, substituted or otherwise replaced in
connection with the change in control. If the awards are assumed or continued after the change in control, the Committee may
provide that such awards will be subject to automatic vesting acceleration upon a participant’s involuntary termination within a
designated period following the change in control. Further, under the 2018 Incentive Stock Plan, PSUs will automatically vest upon a
change in control of our Company, based on (a) the target level, pro-rated to reflect the period the participant was in service during
the performance period or (b) the actual performance level attained, in each case, as determined by the Committee.
Major Restructuring
The Company has adopted a Major Restructuring Severance Plan (the “Severance Plan”) that provides a cash severance payment
in the event a participant’s employment is terminated due to an involuntary loss of job without Cause (as defined in the Severance
Plan) or a Good Reason (as defined in the Severance Plan), provided that the termination is substantially related to or a result of a
Major Restructuring. The cash severance payment would be equal to two and one-half times (for the CEO) or two times (for other
NEOs) (a) current base salary, and (b) current target AIM award. As of December 31, 2020, the value of cash severance for NEOs was:
Mr. Lamach, $9,517,500; Mr. Kuehn, $2,720,000; Mr. Regnery, $3,400,000; Ms. Avedon, $2,627,000; and Mr. Camuti, $2,183,000.
Participants would also receive a pro-rated portion of their target AIM award, based on actual Company and individual performance
during the fiscal year in which termination of employment occurred. Participants in the EOSP or KMP who are not vested in such plans
would also receive a cash payment equal to the amount of the benefit to which they would have been entitled if they were vested.
In addition, the Company’s equity awards provide that employees who terminate employment due to an involuntary loss of job
without Cause (as defined in the applicable award agreement) or for Good Reason (as defined in the applicable award agreement)
within one year of completion of a Major Restructuring will, provided that the termination is substantially related to the Major
Restructuring, (i) immediately vest in all unvested stock options and may exercise all vested stock options at any time within the
following three-year period (five years if retirement eligible) or the remaining term of the stock option, if shorter, (ii) immediately
vest in all RSUs, except that retirement eligible participants with at least five years of service would continue their existing vesting
schedule, and (iii) receive a prorated payout of outstanding PSUs based on actual performance at the end of performance period.
As of December 31, 2020, the value of unvested equity awards was: Mr. Lamach, $46,394,492; Mr. Kuehn, $4,292,084; Mr. Regnery,
$12,935,506; Ms. Avedon, $7,868,646; and Mr. Camuti, $5,762,000.
67
EXECUTIVE COMPENSATION2021 Proxy Statement A “Major Restructuring” is defined as a reorganization, recapitalization, extraordinary stock dividend, merger, sale, spin-off or other
similar transaction or series of transactions, which individually or in the aggregate, has the effect of resulting in the elimination of
all, or the majority of, any one or more of the Company’s business segments, so long as such transaction or transactions do not
constitute a Change in Control (as defined in the applicable plan).
2020 Post-Employment Benefits Table
The following table describes the compensation to which each of the NEOs would be entitled in the event of termination of such
executive’s employment on December 31, 2020, including termination following a change in control. The potential payments were
determined under the terms of our plans and arrangements in effect on December 31, 2020. The table does not include the pension
benefits or nonqualified deferred compensation amounts that would be paid to an NEO, which are set forth in the Pension Benefits
table and the Nonqualified Deferred Compensation table above, except to the extent that the NEO is entitled to an additional benefit
as a result of the termination.
Voluntary
Resignation/
Retirement
($)
Involuntary
Without
Cause
($)
Involuntary
With Cause
($)
Change in
Control
($)
Disability
($)
Death
($)
—
—
2,820,000
2,397,000
— 12,575,000
— 2,397,000
—
—
—
—
18,510,803
18,510,803
— 46,292,309
18,510,803
18,510,803
27,883,689
27,883,689
— 27,883,689
27,883,689
27,883,689
—
—
—
—
—
11,400
—
—
— 9,876,850
—
—
—
100,000
28,319
—
—
—
—
—
—
—
—
—
46,394,492
51,622,892
99,153,167
46,394,492
46,394,492
—
—
—
—
—
—
—
—
—
—
6,149,994
6,785,512
—
—
—
588,461
680,000
—
—
—
11,400
—
1,279,861
850,000
850,000
6,149,994
6,785,512
—
11,400
—
— 3,400,000
—
680,000
—
—
—
—
— 1,380,907
1,381,778
1,381,778
— 2,910,306
2,910,306
2,910,306
— 1,826,327
—
—
100,000
23,612
—
—
—
—
—
—
— 10,321,152
4,292,084
4,292,084
— 4,250,000
—
850,000
—
—
—
—
— 6,148,397
6,149,994
6,149,994
— 6,785,512
6,785,512
6,785,512
— 3,863,463
—
—
100,000
86,612
—
—
—
—
—
—
12,935,506
14,646,906
— 22,083,984
12,935,506
12,935,506
Name
M. W. Lamach
Severance(a)
Earned but Unpaid AIM Award(s)(b)
PSP Award Payout(c)
Value of Unvested Equity Awards(d)
Enhanced Retirement Benefits(e)
Outplacement(f)
Health Benefits(g)
Tax Assistance(h)
Total
C. J. Kuehn
Severance(a)
Earned but Unpaid AIM Award(s)(b)
PSP Award Payout(c)
Value of Unvested Equity Awards(d)
Enhanced Retirement Benefits(e)
Outplacement(f)
Health Benefits(g)
Total
D. S. Regnery
Severance(a)
Earned but Unpaid AIM Award(s)(b)
PSP Award Payout(c)
Value of Unvested Equity Awards(d)
Enhanced Retirement Benefits(e)
Outplacement(f)
Health Benefits(g)
Total
68
EXECUTIVE COMPENSATION Name
M. J. Avedon
Severance(a)
Earned but Unpaid AIM Award(s)(b)
PSP Award Payout(c)
Value of Unvested Equity Awards(d)
Enhanced Retirement Benefits(e)
Outplacement(f)
Health Benefits(g)
Tax Assistance(h)
Total
P. A. Camuti
Severance(a)
Earned but Unpaid AIM Award(s)(b)
PSP Award Payout(c)
Value of Unvested Equity Awards(d)
Enhanced Retirement Benefits(e)
Outplacement(f)
Health Benefits(g)
Total
Voluntary
Resignation/
Retirement
($)
Involuntary
Without
Cause
($)
Involuntary
With Cause
($)
Change in
Control
($)
Disability
($)
Death
($)
—
—
3,153,601
4,715,045
—
—
—
—
710,000
603,500
3,153,601
4,715,045
—
11,400
—
—
— 3,529,441
—
603,500
—
—
—
—
— 5,340,162
3,153,601
3,153,601
— 4,715,045
4,715,045
4,715,045
— 3,407,041
—
—
—
100,000
23,612
—
—
—
—
—
—
—
—
—
7,868,646
9,193,546
— 17,718,801
7,868,646
7,868,646
—
—
2,197,722
3,564,278
—
—
—
590,000
501,500
2,197,722
3,564,278
—
11,400
—
— 2,745,936
—
501,500
—
—
—
—
— 2,196,706
2,197,722
2,197,722
— 3,564,278
3,564,278
3,564,278
— 1,803,801
—
—
100,000
23,612
—
—
—
—
—
—
5,762,000
6,864,900
— 10,935,833
5,762,000
5,762,000
(a) For the “Involuntary without Cause” column, for those NEOs who do not have a formal separation agreement, the current severance guidelines permit
payment of up to one year’s base salary provided that such termination was not eligible for severance benefits under the Major Restructuring Severance
Plan. Because of his service, Mr. Kuehn’s severance is equal to 45 weeks rather than 52. For the amounts shown under the “Change in Control” columns, refer
to the description of how severance is calculated in the section above, entitled Post-Employment Benefits.
(b) For the “Involuntary without Cause” column, these amounts represent the AIM awards earned by Mr. Lamach and Ms. Avedon in 2020 and paid pursuant to
the terms of their employment agreements and (ii) prorated AIM awards (up to target) that may be paid to the other NEOs depending on the circumstances
and timing of the termination. For the amounts under “Change in Control,” these amounts represent the actual award earned for the 2020 performance
period, which may be more or less than the target award.
(c) For the “Involuntary without Cause” column, these amounts represent the cash value of the prorated PSU award payout to the NEOs as a result of their
retirement eligibility at December 31, 2020. For the “Change in Control” column for Mr. Lamach and Ms. Avedon, these amounts represent the cash value of the
PSU award payout, based on the appropriate multiple. For the “Change in Control” column for Mr. Regnery, Mr. Kuehn and Mr. Camuti, these values represent
what would be provided under the terms of the 2013 Plan, which provides a pro-rated payment for all outstanding awards at target, and the 2018 Plan, which
provides for either a pro-rated payment for all outstanding awards at target or a payment based on actual performance, as determined by the Committee. For
the “Retirement,” “Disability” and “Death” columns, amounts represent the cash value of the prorated portion of their PSUs that vest upon such events assuming
performance at target. Amounts for each column are based on the closing stock price of the ordinary shares on December 31, 2020 ($145.16).
(d) The amounts shown for “Retirement,” “Involuntary without Cause,” “Change in Control,” “Death” and “Disability” represent (i) the value of the unvested RSUs,
which is calculated based on the number of unvested RSUs multiplied by the closing stock price of the ordinary shares on December 31, 2020 ($145.16), and
(ii) the intrinsic value of the unvested stock options, which is calculated based on the difference between the closing stock price of the ordinary shares on
December 31, 2020 ($145.16) and the relevant exercise price. However, only in the event of termination following a “Change in Control” or termination due to
“Death” or “Disability” is there accelerated vesting of unvested awards. For “Retirement,” the awards do not accelerate but continue to vest on the same basis
as active employees. Messrs. Lamach, Regnery, Camuti and Ms. Avedon are retirement eligible.
(e)
(f)
In the event of a change in control of the Company and termination of the NEOs, the present value of the pension benefits under the EOSP, KMP and
Supplemental Pension Plan would be paid out as lump sums. While there is no additional benefit to the NEOs as a result of either voluntary retirement/
resignation and/or involuntary resignation without cause, there are differences (based on the methodology mandated by the SEC) between the numbers that
are shown in the Pension Benefits Table and those that would actually be payable to the NEO under these termination scenarios.
For the “Involuntary without Cause” column, each NEO is eligible for outplacement services for a twelve month period, not to exceed $11,400. For the “Change
in Control” column, the amount represents the maximum expenses the Company would reimburse the NEO for professional outplacement services.
(g) Represents the Company cost of health and welfare coverage. The cost for “Change in Control” represents continued active coverage for the severance
period. For Mr. Regnery, the value shown includes the cost for retiree coverage.
(h) Pursuant to the change-in-control agreements for Mr. Lamach and Ms. Avedon, if any payment or distribution by the Company to these NEOs creates certain
incremental taxes, they would be entitled to receive from the Company a payment in an amount sufficient to place them in the same after-tax financial
position as if such taxes had not been imposed. There is no such incremental tax for a change in control as of December 31, 2020. Therefore, no value is
shown in the table above.
69
EXECUTIVE COMPENSATION2021 Proxy Statement CEO Pay Ratio
The ratio of our CEO’s total compensation to our median employee’s total compensation (the “CEO Pay Ratio”) is a reasonable
estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. Due to the flexibility afforded by Item 402(u) in
calculating the CEO Pay Ratio, the ratio may not be comparable to CEO pay ratios presented by other companies.
We identified our median employee using our global employee population as of October 31, 2020. We have employees in 58
countries including 12,679 non-U.S. employees. As part of our methodology, and in compliance with the pay ratio rule under Item
402(u), we employed the de minimis exemption for non-U.S. employees and excluded all employees in 34 countries totaling 1,038
employees (approximately 3.0% of our total workforce of 34,246). Employees in the following countries were excluded:
Country
Belgium
Colombia
Vietnam
Republic of Korea
Poland
Sweden
Turkey
Panama
Russian Federation
Hungary
Israel
Egypt
Number of
Employees
89
87
76
70
68
52
49
43
42
40
39
34
Country
Romania
Switzerland
Qatar
Greece
Portugal
Saudi Arabia
Austria
Costa Rica
Kuwait
Peru
Dominican Republic
Hong Kong
Number of
Employees
32
29
28
26
26
25
24
22
17
15
14
14
Country
Lebanon
Macao
South Africa
Guam
Finland
Slovakia
Australia
Croatia
Denmark
Luxembourg
Number of
Employees
12
12
12
10
9
8
6
3
3
2
Our in-scope employees consisted of our full-time, part-time, seasonal and temporary employees and excluded independent
contractors and leased workers. To determine our median employee, we used annual base salary as our consistently applied
compensation measure for 2020 (the “2020 CACM”). For commission-based employees, actual earnings were considered their
base salary. In identifying our median employee, we further annualized pay for those full-time and part-time employees (but not
seasonal and temporary employees) who commenced work during 2020. The median employee identified had anomalous total
annual compensation related to facility closure. We therefore substituted an employee with the next lowest annual base pay, which is
a practice we will continue if future median employees work in a facility where closure has been announced. We believe that annual
base salary provides a reasonable estimate of annual compensation of our employees.
After identifying the median employee, we calculated the median employee’s total annual compensation in accordance with the
requirements of the Summary Compensation Table. Based on such calculation, our median employee’s total compensation was
$57,867, while our CEO’s compensation was $28,107,486. Accordingly, our CEO Pay Ratio was 486:1.
Equity Compensation Plan Information
The following table provides information as of December 31, 2020, with respect to the Company’s ordinary shares that may be issued
under equity compensation plans:
Plan Category
Equity compensation plans approved by
security holders(1)
Equity compensation plans not approved by
security holders(2)
Total
Number of Securities to
Be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
Weighted Average
Exercise Price
of Outstanding Options,
Warrants and Rights
7,022,072
759,967
7,782,039
$ 70.53
—
$ 70.53
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding Securities
Reflected in First Column)
15,656,139
—
15,656,139
(1) Consists of the 2007 Plan, the 2013 Plan and the 2018 Plan.
(2) Consists of the EDCP, the Trane Technologies Directors Deferred Compensation Plan (the “DDCP I”), the Trane Technologies Directors Deferred
Compensation and Stock Award Plan II (the “DDCP II” and, together with the DDCP I, the “DDCP”), and the Trane Deferred Compensation Plan (the “TDCP”).
Plan participants acquire Company shares under these plans as a result of the deferral of salary or directors’ fees, AIM awards and PSUs.
70
EXECUTIVE COMPENSATION Information Concerning Voting
and Solicitation
Why Did I Receive This Proxy Statement?
We sent you this Proxy Statement or a Notice of Internet Availability of Proxy Materials (”Notice”) because our Board of Directors is
soliciting your proxy to vote at the Annual General Meeting. This Proxy Statement summarizes the information you need to know to
vote on an informed basis.
Why Are There Two Sets of Financial Statements
Covering the Same Fiscal Period?
U.S. securities laws require us to send you our 2020 Form 10-K, which includes our financial statements prepared in accordance with
GAAP. These financial statements are included in the mailing of this Proxy Statement. Irish law also requires us to provide you with
our Irish Financial Statements for our 2020 fiscal year, including the reports of our Directors and auditors thereon, which accounts
have been prepared in accordance with Irish law. The Irish Financial Statements are available on the Company’s website at www.
tranetechnologies.com under the heading “Investors – Irish Statutory Accounts” and will be laid before the Annual General Meeting.
How Do I Attend the Annual General Meeting?
In light of any COVID-19 measures that may be in place in Ireland and the United States on the date of the Annual General Meeting,
we strongly encourage all shareholders not to attend the Annual General Meeting in person and instead to submit proxy forms to
ensure they can vote and be represented at the Annual General Meeting without attending in person. Shareholders are encouraged
to keep up-to-date with, and follow, the guidance from the Government of Ireland and the Department of Health (of Ireland) and
other local health departments as circumstances may change at short notice.
Taking into account the latest guidance from the Government of Ireland, particularly in relation to indoor public gatherings, it is
possible the Annual General Meeting Annual General Meeting may be adjourned to a different time and/ or venue, in each case
notification of such adjournment will be given in accordance with Company’s constitution. Any announcements of changes or
updates to the arrangements for the Annual General Meeting will be made available at www.tranetechnologies.com.
Due to travel restrictions and health concerns, the Directors may participate by telephone instead of attending in person, there may
be significantly reduced attendance by company personnel and the meeting will be conducted as efficiently as possible.
In the event that the Annual General Meeting can proceed as normal, in order to be admitted, you must present a form of personal
identification and evidence of share ownership.
If you are a shareholder of record, evidence of share ownership will be either (1) an admission ticket, which is attached to the proxy card
and must be separated from the proxy card and kept for presentation at the meeting if you vote your proxy by mail, or (2) a Notice.
Shareholders in Ireland may participate in the Annual General Meeting remotely on June 3, 2021 at 1:00 p.m. (Dublin time)
telephonically at the Arthur Cox Building, Ten Earlsfort Terrace, Dublin 2, D02 T380, Ireland, in order to be admitted, you must present
a form of personal identification and evidence of share ownership.
If you own your shares through a bank, broker or other holder of record (“street name holders”), evidence of share ownership will be
either (1) your most recent bank or brokerage account statement, or (2) a Notice. If you would rather have an admission ticket, you
can obtain one in advance by mailing a written request, along with proof of your ownership of the Company’s ordinary shares, to:
Secretary
Trane Technologies plc
170/175 Lakeview Dr.
Airside Business Park
Swords, Co. Dublin
Ireland
No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be
permitted at the Annual General Meeting.
71
2021 Proxy Statement Who May Vote?
You are entitled to vote if you beneficially owned the Company’s ordinary shares at the close of business on April 8, 2021, the Record
Date. At that time, there were 239,108,880 of the Company’s ordinary shares outstanding and entitled to vote. Each ordinary share
that you own entitles you to one vote on all matters to be voted on a poll at the Annual General Meeting.
How Do I Vote?
Shareholders of record can cast their votes by proxy by:
• using the Internet and voting at www.proxyvote.com;
• calling 1-800-690-6903 and following the telephone prompts; or
• completing, signing and returning a proxy card by mail.
If you received a Notice and did not receive a proxy card, you may request one at sendmaterial@proxyvote.com.
The Notice is not a proxy card and it cannot be used to vote your shares.
If you are a shareholder of record and you choose to submit your proxy by telephone by calling the toll-free number on your proxy
card, your use of that telephone system and in particular the entry of your pin number/other unique identifier, will be deemed to
constitute your appointment, in writing and under hand, and for all purposes of the Companies Act 2014, of the persons named on
the proxy card as your proxy to vote your shares on your behalf in accordance with your telephone instructions.
Subject to guidance from the Government of Ireland at the time of the Annual General Meeting, shareholders of record may also
vote their shares directly by attending the Annual General Meeting and casting their vote in person or appointing a proxy (who
does not have to be a shareholder) to attend the Annual General Meeting and casting votes on their behalf in accordance with their
instructions.
Street name holders must vote their shares in the manner prescribed by their bank, brokerage firm or nominee. Street name holders
who wish to vote in person at the Annual General Meeting must obtain a legal proxy from their bank, brokerage firm or nominee.
Street name holders will need to bring the legal proxy with them to the Annual General Meeting and hand it in with a signed ballot
that is available upon request at the meeting. Street name holders will not be able to vote their shares at the Annual General Meeting
without a legal proxy and a signed ballot.
Taking the Company’s Covid-19 guidance about attending in person into consideration, even if you plan to attend the Annual General
Meeting, we recommend that you vote by proxy as described above so that your vote will be counted if you later decide not to attend
the meeting.
In order to be timely processed, your vote must be received by 11:59 p.m. Eastern Time on June 2, 2021
(or, if you are a street name holder, such earlier time as your bank, brokerage firm or nominee may require).
How May Employees Vote under Our Employee Plans?
If you participate in the ESP, the Trane Technologies Company Employee Savings Plan for Bargained Employees, the Trane
Technologies Retirement Savings Plan for Participating Affiliates in Puerto Rico, or the Trane 401(k) and Thrift Plan, then you may
be receiving these materials because of shares held for you in those plans. In that case, you may use the enclosed proxy card to
instruct the plan trustees of those plans how to vote your shares, or give those instructions by telephone or over the Internet. They
will vote these shares in accordance with your instructions and the terms of the plan. The plan trustees will not disclose to the
Company how any individual employee instructed the plan trustees to vote their shares.
To allow plan administrators to properly process your vote, your voting instructions
must be received by 11:59 p.m. Eastern Time on May 28, 2021.
If you do not provide voting instructions for shares held for you in any of these plans, the plan trustees will vote these shares in the
same ratio as the shares for which voting instructions are provided.
72
INFORMATION CONCERNING VOTING AND SOLICITATION May I Revoke My Proxy?
You may revoke your proxy at any time before it is voted at the Annual General Meeting in any of the following ways:
• by notifying the Company’s Secretary in writing: c/o Trane Technologies plc, 170/175 Lakeview Drive., Airside Business Park, Swords,
Co. Dublin, Ireland;
• by submitting another properly signed proxy card with a later date or another Internet or telephone proxy at a later date but prior
to the close of voting described above; or
• by voting in person at the Annual General Meeting.
Merely attending the Annual General Meeting does not revoke your proxy. To revoke a proxy, you must take one of the actions
described above.
How Will My Proxy Get Voted?
If your proxy is properly submitted, your proxy holder (one of the individuals named on the proxy card) will vote your shares as you
have directed. If you are a street name holder, the rules of the NYSE permit your bank, brokerage firm or nominee to vote your shares
on Items 3, 4, 5 and 6 (routine matters) if it does not receive instructions from you. However, your bank, brokerage firm or nominee
may not vote your shares on Items 1 and 2 (non-routine matters) if it does not receive instructions from you (“broker non-votes”).
Broker non-votes will not be counted as votes for or against the non-routine matters, but rather will be regarded as votes withheld
and will not be counted in the calculation of votes for or against the resolution.
If you are a shareholder of record and you do not specify on the proxy card you send to the Company (or when giving your proxy
over the Internet or telephone) how you want to vote your shares, then the Company-designated proxy holders will vote your
shares in the manner recommended by our Board of Directors on all matters presented in this Proxy Statement and as the proxy
holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting.
What Constitutes a Quorum?
The presence (in person or by proxy) of shareholders entitled to exercise a majority of the voting power of the Company on the
Record Date is necessary to constitute a quorum for the conduct of business. Abstentions and broker non-votes are treated as
“shares present” for the purposes of determining whether a quorum exists.
What Vote is Required to Approve Each Proposal?
A majority of the votes cast at the Annual General Meeting is required to approve each of Items 1, 2, 3 and 4. A majority of the votes
cast means that the number of votes cast “for” an Item must exceed the number of votes cast “against” that Item. Items 5 and 6 are
considered special resolutions under Irish law and require 75% of the votes cast for approval.
Although abstentions and broker non-votes are counted as “shares present” at the Annual General Meeting for the purpose of
determining whether a quorum exists, they are not counted as votes cast either “for” or “against” the resolution and, accordingly, will
not affect the outcome of the vote.
Who Pays the Expenses of This Proxy Statement?
We have hired Alliance Advisors, LLC to assist in the distribution of proxy materials and the solicitation of proxies for a fee estimated
at $15,000 plus out-of-pocket expenses. Proxies will be solicited on behalf of our Board of Directors by mail, in person, by telephone
and through the Internet. We will bear the cost of soliciting proxies. We will also reimburse brokers and other custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to the persons for whom they hold shares.
How Will Voting on Any Other Matter be Conducted?
Although we do not know of any matters to be presented or acted upon at the Annual General Meeting other than the items
described in this Proxy Statement, if any other matter is proposed and properly presented at the Annual General Meeting, the proxy
holders will vote on such matters in accordance with their best judgment.
73
INFORMATION CONCERNING VOTING AND SOLICITATION2021 Proxy Statement Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth as of the Record Date, the beneficial ownership of our ordinary shares by (i) each director of the
Company, (ii) each executive officer of the Company named in the Summary Compensation Table below, and (iii) all directors and
executive officers of the Company as a group:
Name
K. E. Arnold
A. C. Berzin
J. Bruton
J. L. Cohon
G. D. Forsee
L. P. Hudson
M. P. Lee
A. Miller Boise
K. B. Peetz
J. P. Surma
R. J. Swift
T. L. White
M. W. Lamach
C.J. Kuehn
D. S. Regnery
M. J. Avedon
P. A. Camuti
Ordinary
Shares(1)
Notional
Shares(2)
Options
Exercisable
Within
60 Days(3)
3,506
31,373
11,237
25,744
30,086
6,625
7,311
—
3,736
10,883
1,701
29,543
182,582
25,939
53,123
43,709
29,998
—
46,329
—
—
—
—
—
—
—
—
86,357
65,424
85,500
2,382
1,150
56,320
57,686
—
—
—
—
—
—
—
—
—
—
—
—
646,079
72,835
241,314
131,659
106,524
All directors and executive officers as a group (20 persons)(4)
523,669
426,934
1,254,128
(1) Represents (i) ordinary shares held directly; (ii) ordinary shares held indirectly through a trust; (iii) unvested shares, including any RSUs or PSUs, and ordinary
shares and ordinary share equivalents notionally held under the TDCP that may vest or are distributable within 60 days of the Record Date; and (iv) ordinary
shares held by the trustee under the ESP for the benefit of executive officers. No director or executive officer of the Company beneficially owns 1% or more
of the Company’s ordinary shares.
(2) Represents ordinary shares and ordinary share equivalents notionally held under the DDCP, and the EDCP that are not distributable within 60 days of the
Record Date.
(3) Represents ordinary shares as to which directors and executive officers had stock options exercisable within 60 days of the Record Date, under the
Company’s Incentive Stock Plans.
(4) The Company’s ordinary shares beneficially owned by all directors and executive officers as a group (including shares issuable under exercisable options)
aggregated approximately 0.74% of the total outstanding ordinary shares. Ordinary shares and ordinary share equivalents notionally held under the DDCP, the
EDCP and the TDCP and ordinary share equivalents resulting from dividends on deferred stock awards are not counted as outstanding shares in calculating
these percentages because they are not beneficially owned; the directors and executive officers have no voting or investment power with respect to these
shares or share equivalents.
74
The following table sets forth each shareholder which is known by us to be the beneficial owner of more than 5% of the outstanding
ordinary shares of the Company based solely on the information filed by such shareholder on Schedule 13D or filed by such
shareholder in 2020 for the year ended December 31, 2020 on Schedule 13G under the Securities Exchange Act of 1934:
Name and Address of Beneficial Owner
BlackRock, Inc.(2)
55 East 52nd Street
New York, New York 10022
Vanguard Group(3)
100 Vanguard Blvd.
Malvern, PA 19355
Amount and
Nature of
Beneficial
Ownership
Percent
of Class(1)
17,933,014
7.5%
17,814,249
7.4%
(1)
(2)
(3)
The ownership percentages set forth in this column are based on the Company’s outstanding ordinary shares on the Record Date and assumes that each of
the beneficial owners continued to own the number of shares reflected in the table above on such date.
Information regarding BlackRock, Inc. and its stockholdings was obtained from a Schedule 13G filed with the SEC on February 1, 2021. The filing indicated that,
as of December 31, 2020, BlackRock, Inc. had sole voting power as to 15,311,105 of such shares and sole dispositive power as to 17,933,014 of such shares.
Information regarding Vanguard Group Inc. and its stockholdings was obtained from a Schedule 13G filed with the SEC on February 10, 2021. The filing
indicated that, as of December 31, 2020, Vanguard Group Inc. had sole voting power as to none of such shares and sole dispositive power as to 16,775,002 of
such shares.
75
SECURITY OWNERSHIP2021 Proxy Statement
Certain Relationships and Related
Person Transactions
The Company does not generally engage in transactions in which its executive officers, directors or nominees for directors, any
of their immediate family members or any of its 5% shareholders have a material interest. Pursuant to the Company’s written
related person transaction policy, any such transaction must be reported to management, which will prepare a summary of the
transaction and refer it to the Sustainability, Corporate Governance and Nominating Committee for consideration and approval by
the disinterested directors. The Sustainability, Corporate Governance and Nominating Committee reviews the material terms of the
related person transaction, including the dollar values involved, the relationships and interests of the parties to the transaction and
the impact, if any, to a director’s independence. The Sustainability, Corporate Governance and Nominating Committee only approves
those transactions that are in the best interest of the Company. In addition, the Company’s Code of Conduct, which sets forth
standards applicable to all employees, officers and directors of the Company, generally proscribes transactions that could result in
a conflict of interest for the Company. Any waiver of the Code of Conduct for any executive officer or director requires the approval
of the Company’s Board of Directors. Any such waiver will, to the extent required by law or the NYSE, be disclosed on the Company’s
website at www.tranetechnologies.com or on a current report on Form 8-K. No such waivers were requested or granted in 2020.
We have not made payments to directors other than the fees to which they are entitled as directors (described under the heading
“Compensation of Directors”) and the reimbursement of expenses related to their services as directors. We have made no loans to
any director or officer nor have we purchased any shares of the Company from any director or officer.
Since June 2020, Ms. Peetz has served as chief administrative officer of Citigroup Inc. Citigroup or affiliates of Citigroup (“Citigroup”)
have acted as Joint Lead Arranger, Joint Bookrunner and Syndication Agent in connection with our 2020 refinancing of our $1
billion revolving credit facility and with respect to our $1 billion revolving credit facility entered into in April 2018. As agent and
lender, Citigroup provides other services under these facilities. There were no amounts outstanding under these facilities as of
December 31, 2020. Citigroup was paid an arrangement fee of $250,000 in connection with the 2020 refinancing and approximately
$668,000 in connection with portfolio management fees relating to upfront and undrawn fees on these facilities. In addition, Citigroup
provides certain FX and derivatives services to the Company, which totaled approximately $850,000 during the fiscal year ended
December 31, 2020 and certain treasury and trade solutions relating to cash/bank transactions and trade activity, which totaled
approximately $935,000 during the fiscal year ended December 31, 2020. Our credit facilities were entered into in the ordinary course
of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable loans with persons not related to the lender and did not involve more than the normal risk at the time for comparable
loans with persons not related to the lender and did not involve more than the normal risk of collectability or present other
unfavorable features. Our other transactions with Citigroup were made in the ordinary course of business on standard terms and
conditions. Ms. Peetz does not personally participate in or benefit from any aspect of our relationship with Citigroup.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who beneficially
own more than ten percent of the Company’s ordinary shares, to file reports of ownership and reports of changes in ownership with
the SEC and the NYSE. To the Company’s knowledge, based solely on its review of such forms received by the Company and written
representations that no other reports were required, all Section 16(a) filing requirements were complied with for the year 2020.
76
Shareholder Proposals and
Nominations
Any proposal by a shareholder intended to be presented at the 2022 Annual General Meeting of shareholders of the Company must
be received by the Company at its registered office at 170/175 Lakeview Drive, Airside Business Park, Swords, Co. Dublin, Ireland, Attn:
Secretary, no later than December 24, 2021, for inclusion in the proxy materials relating to that meeting. Any such proposal must meet
the requirements set forth in the rules and regulations of the SEC, including Rule 14a-8, in order for such proposals to be eligible for
inclusion in our 2022 proxy statement.
The Company’s Articles of Association set forth procedures to be followed by shareholders who wish to nominate candidates for
election to the Board of Directors in connection with Annual General Meetings of shareholders or pursuant to written shareholder
consents or who wish to bring other business before a shareholders’ general meeting. All such nominations must be accompanied
by certain background and other information specified in the Articles of Association. In connection with the 2022 Annual General
Meeting, written notice of a shareholder’s intention to make such nominations or bring business before the Annual General Meeting
must be given to the Secretary of the Company not later than March 5, 2022. If the date of the 2022 Annual General Meeting occurs
more than 30 days before, or 60 days after, the anniversary of the 2021 Annual General Meeting, then the written notice must be
provided to the Secretary of the Company not later than the seventh day after the date on which notice of such Annual General
Meeting is given.
In addition, the Company’s Articles of Association separately provide shareholders representing 3% or more of the voting power
of the Company’s shares with the right, subject to certain terms and conditions, to nominate candidates for election to the Board
of Directors and have such candidate included in our proxy materials for the applicable Annual General Meeting (“proxy access”).
All such nominations must be accompanied by certain background and other information specified in the Articles of Association.
In connection with the 2022 Annual General Meeting, written notice of proxy access nominations must be given to the Secretary
of the Company not earlier than November 24, 2021 and not later than later than December 24, 2021. If the date of the 2022 Annual
General Meeting occurs more than 30 days before, or 60 days after, the anniversary of the 2021 Annual General Meeting, then the
written notice must be provided to the Secretary of the Company not earlier than 120 days prior to the 2022 Annual General Meeting
and not later than the close of business on the later of (x) the 90th day prior to the 2022 Annual General Meeting or (y) the 10th day
following the day on which public announcement of the date of the 2022 Annual General Meeting is first made.
The Sustainability, Corporate Governance and Nominating Committee will consider all shareholder recommendations for candidates
for Board membership, which should be sent to the Committee, care of the Secretary of the Company, at the address set forth
above. In addition to considering candidates recommended by shareholders, the Committee considers potential candidates
recommended by current directors, Company officers, employees and others. As stated in the Company’s Corporate Governance
Guidelines, all candidates for Board membership are selected based upon their judgment, character, achievements and experience
in matters affecting business and industry. Candidates recommended by shareholders are evaluated in the same manner as director
candidates identified by any other means.
In order for you to bring other business before a shareholder general meeting, timely notice must be received by the Secretary of the
Company within the time limits described above. The notice must include a description of the proposed item, the reasons you believe
support your position concerning the item, and other specified matters. These requirements are separate from and in addition to the
requirements you must meet to have a proposal included in our Proxy Statement. The foregoing time limits also apply in determining
whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority.
If a shareholder wishes to communicate with the Board of Directors for any other reason, all such communications should be sent in
writing, care of the Secretary of the Company, or by email at board@tranetechnologies.com.
77
2021 Proxy Statement Householding
SEC rules permit a single set of annual reports and proxy statements to be sent to any household at which two or more shareholders
reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This
procedure is referred to as householding. While the Company does not household in mailings to its shareholders of record, a
number of brokerage firms with account holders who are Company shareholders have instituted householding. In these cases, a
single proxy statement and annual report will be delivered to multiple shareholders sharing an address unless contrary instructions
have been received from the affected shareholders. Once a shareholder has received notice from his or her broker that the
broker will be householding communications to the shareholder’s address, householding will continue until the shareholder is
notified otherwise or until the shareholder revokes his or her consent. If at any time a shareholder no longer wishes to participate
in householding and would prefer to receive a separate proxy statement and annual report, he or she should notify his or her
broker. Any shareholder can receive a copy of the Company’s proxy statement and annual report by contacting the Company at its
registered office at 170/175 Lakeview Drive, Airside Business Park, Swords, Co. Dublin, Ireland, Attention: Secretary or by accessing it
on the Company’s website at www.tranetechnologies.com.
Shareholders who hold their shares through a broker or other nominee who currently receive multiple copies of the proxy statement
and annual report at their address and would like to request householding of their communications should contact their broker.
Dated: April 23, 2021
78
2020
Financials
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-34400
TRANE TECHNOLOGIES PLC
(Exact name of registrant as specified in its charter)
Ireland
(State or other jurisdiction of incorporation or organization)
98-0626632
(I.R.S. Employer Identification No.)
170/175 Lakeview Dr.
Airside Business Park
Swords Co. Dublin
Ireland
Securities registered pursuant to Section 12(b) of the Act:
(Address of principal executive offices)
Registrant’s telephone number, including area code: +(353) (0) 18707400
Title of each class
Ordinary Shares, Par Value $1.00 per Share
Trading Symbol
TT
Name of each exchange on which registered
New York Stock Exchange
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 No
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 No
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 No
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 No
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
Smaller reporting company
Emerging growth company
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.
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(b)) by the registered public
accounting firm that prepared or issued its audit report. Yes No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
The aggregate market value of ordinary shares held by nonaffiliates on June 30, 2020 was approximately $21.2 billion based on the closing
price of such stock on the New York Stock Exchange.
The number of ordinary shares outstanding as of February 1, 2021 was 238,428,700.
Portions of the registrant’s proxy statement to be filed within 120 days of the close of the registrant’s fiscal year in connection with the
registrant’s Annual General Meeting of Shareholders to be held June 3, 2021 are incorporated by reference into Part II and Part III of this
Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
TRANE TECHNOLOGIES PLC
Form 10-K
For the Fiscal Year Ended December 31, 2020
TABLE OF CONTENTS
Part I
Part II
Part III
Part IV
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Signatures
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Quantitative and Qualitative Disclosure About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
Page
6
13
25
25
25
26
27
28
29
46
46
48
48
48
49
49
49
49
49
50
59
60
3
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report
Cautionary Statement for Forward Looking Statements
Certain statements in this report, other than purely historical information, are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,”
“will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally
intended to identify forward-looking statements.
Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax provisions,
earnings, cash flows, benefit obligations, share or debt repurchases or other financial items; any statements of the plans,
strategies and objectives of management for future operations, including those relating to any statements concerning
expected development, performance or market share relating to our products and services; any statements regarding
future economic conditions or our performance including our future performance statements related to the continued
impact of the COVID-19 global pandemic; any statements regarding pending investigations, claims or disputes; any
statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. These
statements are based on currently available information and our current assumptions, expectations and projections
about future events. While we believe that our assumptions, expectations and projections are reasonable in view of the
currently available information, you are cautioned not to place undue reliance on our forward-looking statements. You
are advised to review any further disclosures we make on related subjects in materials we file with or furnish to the
Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made and are not
guarantees of future performance. They are subject to future events, risks and uncertainties - many of which are beyond
our control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from our
expectations and projections. We do not undertake to update any forward-looking statements.
Factors that might affect our forward-looking statements include, among other things:
• impacts of the COVID-19 global pandemic on our business operations, financial results and financial position and on
the world economy;
• overall economic, political and business conditions in the markets in which we operate;
• trade protection measures such as import or export restrictions and requirements, the imposition of tariffs and quotas
or revocation or material modification of trade agreements;
• competitive factors in the industries in which we compete;
• our ability to develop new products and services and the acceptance of these products in the markets that we serve;
• other capital market conditions, including availability of funding sources, interest rate fluctuations and other changes in
borrowing costs;
• currency exchange rate fluctuations, exchange controls and currency devaluations;
• the outcome of any litigation, governmental investigations, claims or proceedings;
• the outcome of Chapter 11 proceedings for our deconsolidated subsidiaries Aldrich Pump LLC (Aldrich) and Murray
Boiler LLC (Murray);
• the impact of potential information technology, system failures, data security breaches or other cybersecurity issues;
• evolving data privacy and protection laws;
• intellectual property infringement claims and the inability to protect our intellectual property rights;
• changes in laws and regulations;
• health epidemics or pandemics or other contagious outbreaks;
• climate change, changes in weather patterns, natural disasters and seasonal fluctuations;
• availability of and fluctuations in the prices of key commodities;
• the outcome of any tax audits or settlements;
• the strategic acquisition or divestiture of businesses, product lines and joint ventures;
• impairment of our goodwill, indefinite-lived intangible assets and/or our long-lived assets;
4
2020 ANNUAL REPORT2020 ANNUAL REPORT
• changes in tax laws and requirements (including tax rate changes, new tax laws, new and/or revised tax law
interpretations and any legislation that may limit or eliminate potential tax benefits resulting from our incorporation in a
non-U.S. jurisdiction, such as Ireland); and
• work stoppages, union negotiations, labor disputes and similar issues
Some of the significant risks and uncertainties that could cause actual results to differ materially from our expectations
and projections are described more fully in Part I, Item 1A “Risk Factors.” You should read that information in conjunction
with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of
this report and our Consolidated Financial Statements and related notes in Part II, Item 8 “Financial Statements and
Supplementary Data” of this report. We note such information for investors as permitted by the Private Securities Litigation
Reform Act of 1995.
5
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report
Part I
Item 1. Business
OVERVIEW
Trane Technologies plc (formerly known as Ingersoll-Rand plc), a public limited company incorporated in Ireland in
2009, and its consolidated subsidiaries (collectively, we, our, the Company) is a global climate innovator that brings
efficient and sustainable climate solutions to buildings, homes and transportation driven by strategic brands Trane®
and Thermo King® and an environmentally responsible portfolio of products and services. We generate revenue and
cash primarily through the design, manufacture, sale and service of a diverse portfolio of climate control products and
services for Heating, Ventilation and Air Conditioning (HVAC) and transport solutions.
To achieve our mission of being a world leader in creating comfortable, sustainable and efficient environments, we
continue to focus on growth by increasing our recurring revenue stream from parts, services, controls, used equipment
and rentals; and to continuously improve efficiencies and capabilities of our operations and products and services for
our customers. We also continue to focus on operational excellence strategies as a central theme to improving our
earnings and cash flow.
SEPARATION OF INDUSTRIAL SEGMENT BUSINESSES
On February 29, 2020 (Distribution Date), we completed our Reverse Morris Trust transaction (the Transaction) with
Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name to Ingersoll Rand Inc. after the Transaction)
whereby we distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained our former Industrial segment (Ingersoll Rand
Industrial), through a pro rata distribution (the Distribution) to our shareholders of record as of February 24, 2020. Ingersoll
Rand Industrial then merged into a wholly-owned subsidiary of Gardner Denver. Upon close of the Transaction, our
existing shareholders received approximately 50.1% of the shares of Gardner Denver common stock on a fully-diluted
basis and Gardner Denver stockholders retained approximately 49.9% of the shares of Gardner Denver on a fully diluted
basis. As a result, our shareholders received .8824 shares of Gardner Denver common stock with respect to each share
owned as of February 24, 2020. In connection with the Transaction, Ingersoll-Rand Services Company, an affiliate of
Ingersoll Rand Industrial, borrowed an aggregate principal amount of $1.9 billion under a senior secured first lien term
loan facility (Term Loan), the proceeds of which were used to make a special cash payment of $1.9 billion to a subsidiary
of ours. The obligations under the Term Loan were retained by Ingersoll-Rand Services Company, which following the
Transaction is a wholly-owned subsidiary of Gardner Denver.
In connection with the Transaction, we entered into several agreements covering supply, administrative and tax matters
to provide or obtain services on a transitional basis for varying periods after the Distribution Date. The agreements
cover services such as manufacturing, information technology, human resources and finance. Income and expenses
under these agreements were not material. In accordance with several customary transaction-related agreements
between us and Gardner Denver, the parties are in a process to determine final adjustments to working capital, cash
and indebtedness amounts as of the Distribution Date, as well as another process to determine funding levels related to
pension plans, non-qualified deferred compensation plans and retiree health benefits. As of December 31, 2020, both are
ongoing in accordance with the transaction-related agreements. Upon finalization of these agreements, any adjustments
will be recognized within Retained earnings.
REPORTABLE SEGMENTS
Prior to the separation of our Industrial segment on February 29, 2020, we announced a new organizational model and
business segment structure designed to enhance our regional go-to-market capabilities, aligning the structure with our
strategy and increased focus on climate innovation. Under the revised structure, we created three new regional operating
segments from the former climate segment, which also serve as our reportable segments.
6
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
• Our Americas segment innovates for customers in the North America and Latin America regions. The Americas
segment encompasses commercial heating and cooling systems, building controls, and energy services and
solutions; residential heating and cooling; and transport refrigeration systems and solutions. This segment had 2020
net revenues of $9.7 billion.
• Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment
encompasses heating and cooling systems, services and solutions for commercial buildings, and transport
refrigeration systems and solutions. This segment had 2020 net revenues of $1.6 billion.
• Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment
encompasses heating and cooling systems, services and solutions for commercial buildings and transport
refrigeration systems and solutions. This segment had 2020 net revenues of $1.1 billion.
This model is designed to create deep customer focus and relevance in markets around the world. Each segment
reports through separate management teams and regularly reviews their operating results with the Chief Executive
Officer, our Chief Operating Decision Maker (CODM) determined in accordance with applicable accounting guidance. All
prior period comparative segment information has been recast to reflect the current reportable segments.
PRODUCTS AND SERVICES
Our principal products and services include the following:
Aftermarket and OEM parts and supplies
Hybrid-powered trailer refrigeration
Air conditioners
Air exchangers
Air handlers
Airside and terminal devices
Auxiliary power units
Building management systems
Bus and rail HVAC systems
Chillers
Coils and condensers
Ice energy storage solutions
Indoor air quality assessments and related products for
HVAC and Transport solutions
Industrial refrigeration
Installation contracting
Large commercial unitary
Light commercial unitary
Motor replacements
Multi-pipe HVAC systems
Package heating and cooling systems
Container refrigeration systems and gensets
Control systems
Cryogenic refrigeration systems
Performance contracting
Rail refrigeration systems
Refrigerant reclamation
Diesel-powered refrigeration systems
Repair and maintenance services
Ductless systems
Rental services
Electric-powered trailer refrigeration systems
Self-powered truck refrigeration systems
Electric-powered truck refrigeration systems
Service agreements
Energy management services
Facility management services
Furnaces
Geothermal systems
Heat pumps
Home automation
Humidifiers
Temporary heating and cooling systems
Thermostats/controls
Trailer refrigeration systems
Transport heater products
Unitary systems (light and large)
Variable Refrigerant Flow
Vehicle-powered truck refrigeration systems
Hybrid and non-diesel transport refrigeration solutions
Water source heat pumps
These products are sold primarily under our name and under our tradenames including Trane®, Thermo King® and
American Standard®.
7
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
COMPETITIVE CONDITIONS
Our products and services are sold in highly competitive markets throughout the world. Due to the diversity of these
products and services and the variety of markets served, we encounter a wide variety of competitors that vary by
product line and services. They include well-established regional or specialized competitors, as well as larger U.S. and
non-U.S. corporations or divisions of larger companies.
The principal methods of competition in these markets relate to price, quality, delivery, service and support, technology
and innovation. We believe that we are one of the leading manufacturers in the world of HVAC systems and services and
transport temperature control products.
DISTRIBUTION
Our products are distributed by a number of methods, which we believe are appropriate to the type of product. U.S. sales
are made through branch sales offices, distributors and dealers across the country. Non-U.S. sales are made through
numerous subsidiary sales and service companies with a supporting chain of distributors throughout the world.
OPERATIONS BY GEOGRAPHIC AREA
Approximately 28% of our net revenues in 2020 were derived outside the U.S. and we sold products in more than
100 countries. Therefore, the attendant risks of manufacturing or selling in a particular country, such as currency devaluation,
nationalization and establishment of common markets, may have an adverse impact on our non-U.S. operations.
CUSTOMERS
We have no customer that accounted for more than 10% of our consolidated net revenues in 2020, 2019 or 2018. No
material part of our business is dependent upon a single customer or a small group of customers; therefore, the loss of
any one customer would not have a material adverse effect on our results of operations or cash flows.
RAW MATERIALS
We manufacture many of the components included in our products, which requires us to employ a wide variety of
commodities. Principal commodities, such as steel, copper and aluminum, are purchased from a large number of
independent sources around the world, primarily within the region where the products are manufactured. We believe
that available sources of supply will generally be sufficient for the foreseeable future. There have been no commodity
shortages which have had a material adverse effect on our businesses.
SEASONALITY
Demand for certain of our products and services is influenced by weather conditions. For instance, sales in our
commercial and residential HVAC businesses historically tend to be seasonally higher in the second and third quarters
of the year because this represents spring and summer in the U.S. and other northern hemisphere markets, which are
the peak seasons for sales of air conditioning systems and services. Therefore, results of any quarterly period may not be
indicative of expected results for a full year and unusual weather patterns or events could negatively or positively affect
certain segments of our business and impact overall results of operations.
RESEARCH AND DEVELOPMENT
We engage in research and development activities in an effort to introduce new products, enhance existing product
effectiveness, improve ease of use and reliability as well as expand the various applications for which our products may
be appropriate. We also continually evaluate developing technologies in areas that we believe will enhance our business
for possible investment or acquisition. In addition, we have a strong focus on sustaining activities, which include costs
incurred to reduce production costs, improve existing products, create custom solutions for customers and provide
support to our manufacturing facilities. We anticipate that we will continue to make significant expenditures for research
and development and sustaining activities as we look to maintain and improve our competitive position.
8
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
PATENTS AND LICENSES
Our intellectual property rights are important to our business and include numerous patents, trademarks, copyrights,
trade secrets, proprietary technology, technical data, business processes, and other confidential information. Although
in aggregate we consider our intellectual property rights to be valuable to our operations, we do not believe that our
business is materially dependent on a single intellectual property right or any group of them. In our opinion, engineering,
production skills and experience are more responsible for our market position than our intellectual property rights.
BACKLOG
Our approximate backlog of orders, believed to be firm, at December 31, was as follows:
IN MILLIONS
Americas
EMEA
Asia Pacific
Total
2020
2019
$ 1,788.0 $ 1,592.4
426.2
680.6
336.9
584.0
$ 2,894.8 $ 2,513.3
These backlog figures are based on orders received and only include amounts associated with our equipment and
contracting and installation performance obligations. A major portion of our products are built in advance of order and
either shipped or assembled from stock. As a result, we expect to ship a majority of the December 31, 2020 backlog
during 2021. However, orders for specialized machinery or specific customer application are submitted with extensive
lead times and are often subject to revision and deferral, and to a lesser extent cancellation or termination. To the extent
projects are delayed, the timing of our revenue could be affected.
ENVIRONMENTAL MATTERS
We continue to be dedicated to environmental and sustainability programs to minimize the use of natural resources,
and reduce the utilization and generation of hazardous materials from our manufacturing processes and to remediate
identified environmental concerns. As to the latter, we are currently engaged in site investigations and remediation
activities to address environmental cleanup from past operations at current and former manufacturing facilities.
We are sometimes a party to environmental lawsuits and claims and have received notices of potential violations of
environmental laws and regulations from the Environmental Protection Agency and similar state authorities. We have also
been identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at federal
Superfund and state remediation sites. For all such sites, there are other PRPs and, in most instances, our involvement is
minimal.
In estimating our liability, we have assumed that we will not bear the entire cost of remediation of any site to the exclusion
of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken into account,
based on our understanding of the parties’ financial condition and probable contributions on a per site basis. Additional
lawsuits and claims involving environmental matters are likely to arise from time to time in the future.
For a further discussion of our potential environmental liabilities, see Note 22 to the Consolidated Financial Statements.
ASBESTOS-RELATED MATTERS
On June 18, 2020 (Petition Date), our indirect wholly-owned subsidiaries Aldrich Pump LLC (Aldrich) and Murray Boiler
LLC (Murray) each filed a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Code (the
Bankruptcy Code) in the United States Bankruptcy Court for the Western District of North Carolina in Charlotte (the
Bankruptcy Court). As a result of the Chapter 11 filings, all asbestos-related lawsuits against Aldrich and Murray have
been stayed due to the imposition of a statutory automatic stay applicable in Chapter 11 bankruptcy cases. Only Aldrich
and Murray have filed for Chapter 11 relief. Neither Aldrich’s wholly-owned subsidiary, 200 Park, Inc. (200 Park), Murray’s
wholly-owned subsidiary, ClimateLabs LLC (ClimateLabs), Trane Technologies plc nor its other subsidiaries (the Trane
Companies) are part of the Chapter 11 filings.
9
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
The goal of these Chapter 11 filings is an efficient and permanent resolution of all current and future asbestos claims
through court approval of a plan of reorganization, which would establish, in accordance with section 524(g) of the
Bankruptcy Code, a trust to pay all asbestos claims. Such a resolution, if achieved, would likely include a channeling
injunction to enjoin asbestos claims resolved in the Chapter 11 cases from being filed or pursued against us or our
affiliates. The Chapter 11 cases remain pending as of December 31, 2020.
Prior to the Petition Date, certain of our wholly-owned subsidiaries and former companies were named as defendants
in asbestos-related lawsuits in state and federal courts. In many of the lawsuits, a large number of other companies
have also been named as defendants. The vast majority of those claims allege injury caused by exposure to asbestos
contained in certain historical products, primarily pumps, boilers and railroad brake shoes. None of our existing or
previously-owned businesses were a producer or manufacturer of asbestos.
See also the discussion under Part I, Item 3, “Legal Proceedings,” and in Note 22 to the Consolidated Financial
Statements.
HUMAN CAPITAL MANAGEMENT
Our people and culture management are critical to achieving our operational, financial and strategic goals. Further
information is available in our Environmental Social and Governance (ESG) report available on our website.
As of December 31, 2020, we employed approximately 35,000 people in nearly 60 countries including approximately 12,500
outside of the U.S. As of December 31, 2020, 25.3% of our global employees were women and 35.5% of our employees in
the United States were racially and ethnically diverse. In 2020, 31.2% of our new hires globally were women and 47.9% of
new hires in the United States were racially and ethnically diverse. Approximately 21.7% of leadership and management
positions were held by women as of December 31, 2020.
Culture and Purpose
In 2020, as Trane Technologies, we refined and reaffirmed dimensions of our culture as a climate innovator dedicated
to our purpose of boldly challenging what’s possible for a sustainable world. We engaged thousands of employees in
surveys and online focus groups to define the core Leadership Behaviors for all employees to live our new purpose.
Since its launch in 2006, our annual employee engagement survey has enabled employees to share their experiences
and perceptions of our Company. Employees provided ratings and written comments for continuous improvement. In
2020, 90% of our workforce participated in our annual engagement survey and our overall employee engagement score
positions us well into the top quartile of all companies globally.
Diversity and Inclusion
Our commitment to Diversity and Inclusion is core to our purpose and our 2030 sustainability commitments. We are
proud members of Paradigm for Parity (a coalition of more than 100 corporations who have committed to closing the
gender gap in corporate leadership) and OneTen (a coalition dedicated to hiring one million Black Americans in the
next ten years to achieve economic mobility). In addition, our CEO is a 2018 signatory to the CEO Action for Diversity and
Inclusion pledge (the largest CEO-driven business commitment to advance diversity and inclusion within the workplace).
We offer company-sponsored forums to promote diversity and inclusion in the workplace including:
• Bridging Connections – a safe forum created to allow our employees to speak from the heart about a variety of topics
without fear of retribution.
• Unity Squads – site-based committees of employees that foster diversity and inclusion by celebrating cultural heritage
milestones and offering cross-cultural awareness programs, open to all employees.
• Black Leader Forum – a half day intensive session bringing together company leaders to learn, further a sense of
community, and build upon our strategic intent to advance Black leaders.
• Employee Resources Groups (ERGs) – Trane Technologies sponsors eight ERGs (the Women’s Employee Network, the
Black Employee Network, the Veterans Employee Resource Group, the Asian Employee Resource Group, the Global
Organization of Latinos, the LGBTA Employee Resource Group, the InterGenerational Employee Network, and Visibility).
All ERGs are voluntary, open and inclusive organizations that offer employees a sense of belonging, networking and
learning opportunities.
10
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
Learning and Development
We offer learning and career development opportunities that enhance our employees’ skills and abilities and ensure
contemporary technical and functional skills and competencies such as innovation, collaboration and leadership.
Examples of these programs include:
• Team Leader Development Program – An eight-week experiential development program that engages, teaches and
empowers front-line plant leaders to apply continuous improvement methods, make sound business decisions, solve
problems, and serve as a coach of direct workers.
• Graduate Training Program (GTP) – A five-month development program designed to prepare university graduate
engineers for a rewarding career in technical sales. The program prepares sales engineers to sell Trane’s complex
HVAC systems and energy services. The program, started in 1926, is recognized as the industry’s most comprehensive
training program and provides intensive technical, business, sales, and leadership training. GTP accelerates careers
and provides the skills needed to help us lower the energy intensity of the world.
• Accelerated Development Program (ADP) – An early career rotational program focused on both functional and
leadership development, designed to build a pipeline of strong talent for key roles in the organization. Participants
rotate to multiple geographic locations and business units during the 2.5 year program, while experiencing diverse
assignments, and receiving dedicated functional training and developmental experiences. Established in 1979, the ADP
holds a rich history of developing early talent and spans six functions and four regions.
• Women’s Leadership Program – An award-winning cohort program that enables high-potential women around the
world to gain individual insights and skills through mentoring and peer networking, and to build their leadership
competencies and business acumen through action-learning projects and exposure to senior leaders.
• Engaging Your Employees – Approximately 4,000 Trane managers have completed this program since its launch.
During 2020, we delivered 14 virtual Engaging Your Employees workshops to approximately 311 managers globally.
• Professional development – We have numerous online learning courses in professional development skills as varied as
working virtually, resiliency, Microsoft Teams, unconscious bias, effective communication, alert driving, sustainability, and
strategic capability initiatives such as product management and other programs that support our strategy of being a
world class lean enterprise.
• Compliance Training – Our Compliance Training curriculum covers key topics that are important to protect our
Company, our people and our customers. Topics include certification in our Code of Conduct, Information Security,
Understanding and Preventing Sexual Harassment and Human Trafficking Prevention. All salaried employees globally
complete our annual compliance curriculum.
Employee Volunteerism
In 2020, due to the restrictions of the COVID-19 global pandemic many of our employees sought out virtual volunteering
opportunities, and more than 15,000 of our people contributed more than 20,000 volunteer hours in support of building
sustainable futures in our communities. Our support for those in need also included our own colleagues support for one
another. Due to the impacts of the pandemic, we accelerated our employee fundraising efforts and employees donated
$1.4 million to our Helping Hand Fund (our employee crisis relief program). These funds provided approximately 1,100
employees with emergency relief grants for themselves and their families. We also developed a new Global Volunteer
Time program, providing all salaried employees a full work day (8 hours) per calendar year to volunteer with non-profit
organizations. This program will be piloted for hourly employees at select locations around the world in 2021, with an
expected full global implementation in 2022.
Health, Safety and Well-Being
Trane Technologies believes in supporting the total health and safety of our employees. It was even more critical in 2020,
given COVID-19. Therefore, we expanded the support we offered, by:
• Providing 100% of our employees around the world access to at least one company-sponsored wellness activity.
• Accelerating the rollout of our global Employee Assistance Program (EAP). Each year, we expand our EAP to five to
six countries. This year, we accelerated rollout of our global EAP to 25 remaining countries (final country pending Works
Council approvals). Employees received frequent communications on resources, targeted to crisis concerns such as
mental health, childcare, and education.
11
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
• Amending the U.S. medical plans to cover COVID-19 testing and telehealth visits at no cost to employees.
• Modifying our Short-Term Disability Plan to eliminate previous waiting period, by ensuring benefits started on first day of
absence for COVID-related illness or required quarantine.
• Amending the defined contribution plans for U.S. employees to allow for COVID-19 related distributions and a delay for
loan repayments without penalties.
• Providing back-up care and working parent resource enhancements in the U.S.
• Accelerating our “Future of Work” initiative to create revised Flex Time and Flex Place policies and resources that vary
by type of role, continued work-from-home arrangements, and other approaches to ensuring productivity while being
supportive to employee needs.
In 2020 we continued our multi-year, world class safety record with Lost-time Incident Rate of 0.07 and Recordable
Rate of 0.79. In response to the pandemic, we quickly developed a pandemic response team that developed over
50 elements of standard work such as travel restrictions, active screenings, 100% requirement for face masks, etc. In our
factories, we reconfigured over 5,000 work stations to meet the social distancing guidelines. We also completed over
30,000 observations of our service technicians and manufacturing employees to ensure all employees were following our
COVID-19 protocols.
Competitive Pay and Benefits
Our compensation programs and policies are based on a strong connection to our strategy, to attract and retain a
talented workforce and to meet the needs of employees globally. We are committed to competitive wages and benefits
and equal pay for equal work, regardless of background. We have rigorous pay practices to ensure we compensate
our employees fairly, equitably and competitively. In addition, our incentive compensation programs are tied to our
2030 Commitments. Beginning in 2021, management incentive compensation will include environmental sustainability
and workforce diversity goals, in addition to financial goals.
Our proxy statement provides more detail on the competitive compensation programs we offer.
AVAILABLE INFORMATION
We have used, and intend to continue to use, the homepage, the investor relations and the “News” section of our website
(www.tranetechnologies.com), among other sources such as press releases, public conference calls and webcasts, as
a means of disclosing additional information, which may include future developments related to the COVID-19 global
pandemic and/or material non-public information. We encourage investors, the media, and others interested in our
Company to review the information it makes public in these locations on its website.
We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
This Annual Report on Form 10-K, as well as our quarterly reports on Form 10-Q, current reports on Form 8-K
and any amendments to all of the foregoing reports, are made available free of charge on our Internet website
(www.tranetechnologies.com) as soon as reasonably practicable after such reports are electronically filed with or
furnished to the Securities and Exchange Commission. The Board of Directors of our Company have also adopted and
posted in the Investor Relations section of our website the Corporate Governance Guidelines and charters for each of
the Board’s standing committees. The contents of our website are not incorporated by reference in this report.
12
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of our executive officers as of February 9, 2021.
NAME AND AGE
DATE OF SERVICE AS AN
EXECUTIVE OFFICER
Michael W. Lamach (57)
2/16/2004
Christopher J. Kuehn (48)
6/1/2015
David S. Regnery (58)
8/5/2017
Marcia J. Avedon (59)
2/7/2007
Paul A. Camuti (59)
8/1/2011
Evan M. Turtz (52)
4/3/2019
Keith A. Sultana (51)
10/12/2015
Heather R. Howlett (43)
3/1/2020
PRINCIPAL OCCUPATION AND OTHER INFORMATION FOR PAST FIVE YEARS
Chairman of the Board (since June 2010) and Chief Executive Officer
and Director (since February 2010)
Senior Vice President and Chief Financial Officer (since March 2020);
Vice President and Chief Accounting Officer (June 2015 to February
2020)
President and Chief Operating Officer (since January 1, 2020);
Executive Vice President (September 2017 to December 2019); Vice
President, President of Commercial HVAC, North America and EMEA
(2013-2017)
Executive Vice President, Chief Human Resources, Marketing and
Communications Officer (since January 1, 2020); Senior Vice President,
Human Resources, Communications and Corporate Affairs (June 2013
to December 2019)
Executive Vice President and Chief Technology and Strategy Officer
(since January 1, 2020); Senior Vice President, Innovation and Chief
Technology Officer (August 2011 to December 2019)
Senior Vice President and General Counsel (since April 2019); Secretary
(since October 2013); Vice President (2008-2019); Deputy General
Counsel, Industrial, General Counsel, CTS (2016-2019); Deputy General
Counsel-Labor and Employment (2008-2016)
Senior Vice President, Supply Chain and Operational Services (since
January 2020); Senior Vice President, Global Operations and Integrated
Supply Chain (October 2015-December 2019); Vice President, Global
Procurement (January 2015 to October 2015)
Vice President and Chief Accounting Officer (since March 2020); Vice
President and Corporate Controller (August 2019 to February 2020);
Vice President and Corporate Controller, Catalent, Inc. (2015 to August
2019)
No family relationship exists between any of the above-listed executive officers of our Company. All officers are elected to
hold office for one year or until their successors are elected and qualified.
Item 1A. Risk Factors
Our business, financial condition, results of operations, and cash flows are subject to a number of risks that could cause
the actual results and conditions to differ materially from those projected in forward-looking statements contained in
this Annual Report on Form 10-K. The risks set forth below are those we consider most significant. We face other risks,
however, that we do not currently perceive to be material which could cause actual results and conditions to differ
materially from our expectations. You should evaluate all risks before you invest in our securities. If any of the risks actually
occur, our business, financial condition, results of operations or cash flows could be adversely impacted. In that case, the
trading price of our ordinary shares could decline, and you may lose all or part of your investment.
RISKS RELATED TO ECONOMIC CONDITIONS
The COVID-19 global pandemic and resulting adverse economic conditions have already adversely impacted
our business and could have a more material adverse impact on our business, financial condition and results
of operations.
We continue to closely monitor the impact of the COVID-19 global pandemic on all aspects of our business and
geographies, including how it has and will impact our customers, team members, suppliers, vendors, business partners
and distribution channels. The COVID-19 global pandemic has created significant volatility, uncertainty and economic
13
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
disruption, which may continue to affect our business operations and may materially and adversely affect our results of
operations, cash flows and financial position.
While our business is largely categorized as “essential” by the U.S. Department of Homeland Security, the COVID-19
global pandemic has caused certain disruptions to and shutdowns of our business and operations and could cause
material disruptions to and shutdowns of our business and operations in the future as a result of, among other things,
quarantines, worker absenteeism as a result of illness or other factors, social distancing measures and other travel,
health-related, business or other restrictions. Our business and operations have been impacted globally, resulting in
lower revenue, supply chain delays and unfavorable foreign currency exchange rate movements. The COVID-19 global
pandemic has also adversely impacted, and may continue to adversely impact, our suppliers and their manufacturers
and our customers. Some of our purchases are from sole or limited source suppliers for reasons of cost effectiveness,
uniqueness of design, or product quality. The effects of the COVID-19 global pandemic may exacerbate supply chain
issues with these suppliers. Any delay in receiving critical supplies could have a material adverse effect on our results of
operations, financial condition and cash flows.
As a result of the effects of the COVID-19 global pandemic, our costs have increased (including the costs to address
the health and safety of our employees), our ability to obtain products or services from suppliers has been and may be
adversely impacted, and our ability to operate at certain impacted locations has been and may be impacted, and, as a
result, our business, financial condition and results of operations have been adversely impacted and could be materially
adversely affected if the current outbreak and spread of the COVID-19 global pandemic continues.
The COVID-19 global pandemic also resulted in severe disruptions and volatility in financial markets which had a material
adverse impact on some of our customers and suppliers. A recurrence in volatility due to a resurgence in the COVID-19
global pandemic could impact our access to capital and credit markets. Notwithstanding the recent introduction of
vaccines to combat the COVID-19 global pandemic and measures taken by governments to provide economic stimulus,
the severity of the pandemic’s impact on economies in the United States and around the world, the potential length of
the economic recovery and the longer term economic impacts are uncertain. The current and potential further outbreaks
and spread of the COVID-19 global pandemic or other future pandemics could cause a delayed recovery, a prolonged
recession or future economic disruptions, which could have a further adverse impact on our financial condition and
operations.
The impact of the COVID-19 global pandemic may also exacerbate other risks discussed in Item 1A. Risk Factors in our
Annual Report on Form 10-K, any of which could have a material effect on us. This situation is continuing to evolve rapidly
and additional impacts may arise that we are not aware of currently.
Our global operations subject us to economic risks.
Our global operations are dependent upon products manufactured, purchased and sold in the U.S. and internationally.
These activities are subject to risks that are inherent in operating globally, including:
• changes in local laws and regulations or imposition of currency restrictions and other restraints;
• limitation of ownership rights, including expropriation of assets by a local government, and limitation on the ability to
repatriate earnings;
• sovereign debt crises and currency instability in developed and developing countries;
• trade protection measures such as import or export restrictions and requirements, the imposition of burdensome
tariffs and quotas or revocation or material modification of trade agreements;
• difficulty in staffing and managing global operations;
• difficulty of enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems;
• national and international conflict, including war, civil disturbances and terrorist acts; and
• recessions, economic downturns, slowing economic growth and social and political instability.
These risks could increase our cost of doing business internationally, increase our counterparty risk, disrupt our
operations, disrupt the ability of suppliers and customers to fulfill their obligations, limit our ability to sell products in
certain markets and have a material adverse impact on our results of operations, financial condition, and cash flows.
14
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
We face significant competition in the markets that we serve.
The markets that we serve are highly competitive. We compete worldwide with a number of other manufacturers and
distributors that produce and sell similar products. There has been consolidation and new entrants (including non-
traditional competitors) within our industries and there may be future consolidation and new entrants which could result
in increased competition and significantly alter the dynamics of the competitive landscape in which we operate. Due
to our global footprint we are competing worldwide with large companies and with smaller, local operators who may
have customer, regulatory or economic advantages in the geographies in which they are located. In addition, some
of our competitors may employ pricing and other strategies that are not traditional. While we understand our markets
and competitive landscape, there is always the risk of disruptive technologies coming from companies that are not
traditionally manufacturers or service providers of our products.
Our growth is dependent, in part, on the development, commercialization and acceptance of new products and
services.
We must develop and commercialize new products and services in a rapidly changing technological and business
environment in order to remain competitive in our current and future markets and in order to continue to grow our
business. The development and commercialization of new products and services require a significant investment of
resources and an anticipation of the impact of new technologies and the ability to compete with others who may have
superior resources in specific technology domains. We cannot provide any assurance that any new product or service
will be successfully commercialized in a timely manner, if ever, or, if commercialized, will result in returns greater than our
investment. Investment in a product or service could divert our attention and resources from other projects that become
more commercially viable in the market. We also cannot provide any assurance that any new product or service will be
accepted by our current and future markets. Failure to develop new products and services that are accepted by these
markets could have a material adverse impact on our competitive position, results of operations, financial condition, and
cash flows.
Some of the markets in which we operate are cyclical and seasonal and demand for our products and services
could be adversely affected by downturns in these industries.
Demand for most of our products and services depends on the level of new capital investment and planned
maintenance expenditures by our customers. The level of capital expenditures by our customers fluctuates based on
planned expansions, new builds, repairs, commodity prices, general economic conditions, availability of credit, inflation,
interest rates, market forecasts, tax and regulatory developments, trade policies, fiscal spending and sociopolitical factors
among others.
Our commercial and residential HVAC businesses provide products and services to a wide range of markets,
including significant sales to the commercial and residential construction markets. Weakness in either or both of these
construction markets may negatively impact the demand for our products and services.
Demand for our commercial and residential HVAC business is also influenced by weather conditions. For instance, sales
in our commercial and residential HVAC businesses historically tend to be seasonally higher in the second and third
quarters of the year because, in the U.S. and other northern hemisphere markets, spring and summer are the peak
seasons for sales of air conditioning systems and services. The results of any quarterly period may not be indicative of
expected results for a full year and unusual weather patterns or events could negatively or positively affect our business
and impact overall results of operations.
Decrease in the demand for our products and services could have a material adverse impact on our results of
operations and cash flow.
The capital and credit markets are important to our business.
Instability in U.S. and global capital and credit markets, including market disruptions, limited liquidity and interest rate
volatility, or reductions in the credit ratings assigned to us by independent rating agencies could reduce our access
to capital markets or increase the cost of funding our short and long term credit requirements. In particular, if we are
unable to access capital and credit markets on terms that are acceptable to us, we may not be able to make certain
investments or fully execute our business plans and strategies.
15
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
Our suppliers and customers are also dependent upon the capital and credit markets. Limitations on the ability of
customers, suppliers or financial counterparties to access credit at interest rates and on terms that are acceptable to
them could lead to insolvencies of key suppliers and customers, limit or prevent customers from obtaining credit to
finance purchases of our products and services and cause delays in the delivery of key products from suppliers.
In addition, changes in regulatory standards or industry practices, such as the transition away from LIBOR as a
benchmark for short-term interest rates, could create incremental uncertainty in obtaining financing or increase the cost
of borrowing for us, our suppliers or our customers.
Currency exchange rate fluctuations and other related risks may adversely affect our results.
We are exposed to a variety of market risks, including the effects of changes in currency exchange rates. See Part II
Item 7A, “Quantitative and Qualitative Disclosure About Market Risk.”
We have operations throughout the world that manufacture and sell products in various international markets. As a result,
we are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other
currencies throughout the world.
Many of our non-U.S. operations have a functional currency other than the U.S. dollar, and their results are translated into
U.S. dollars for reporting purposes. Therefore, our reported results will be higher or lower depending on the weakening or
strengthening of the U.S. dollar against the respective foreign currency.
We use derivative instruments to hedge those material exposures that cannot be naturally offset. The instruments utilized
are viewed as risk management tools, and are not used for trading or speculative purposes. To minimize the risk of
counter party non-performance, derivative instrument agreements are made only through major financial institutions with
significant experience in such derivative instruments.
We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may
limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign
subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a
diminished value of funds denominated in the currency of the country instituting the devaluation.
RISKS RELATED TO LITIGATION
Material adverse legal judgments, fines, penalties or settlements could adversely affect our results of operations or
financial condition.
We are currently and may in the future become involved in legal proceedings and disputes incidental to the operation
of our business or the business operations of previously-owned entities. Our business may be adversely affected by
the outcome of these proceedings and other contingencies (including, without limitation, contract claims or other
commercial disputes, product liability, product defects and asbestos-related matters) that cannot be predicted with
certainty. Moreover, any insurance or indemnification rights that we may have may be insufficient or unavailable to
protect us against the total aggregate amount of losses sustained as a result of such proceedings and contingencies.
As required by generally accepted accounting principles in the United States, we establish reserves based on our
assessment of contingencies. Subsequent developments in legal proceedings and other events could affect our
assessment and estimates of the loss contingency recorded as a reserve and we may be required to make additional
material payments, which could have a material adverse impact on our liquidity, results of operations, financial condition,
and cash flows.
The Aldrich and Murray Chapter 11 cases involve various risks and uncertainties that could have a material effect
on us.
On June 18, 2020, our indirect wholly-owned subsidiaries Aldrich Pump LLC (Aldrich) and Murray Boiler LLC (Murray) each
filed a voluntary petition for reorganization under Chapter 11 of Title 11 the United States Code (the Bankruptcy Code) in
the United States Bankruptcy Court for the Western District of North Carolina in Charlotte (the Bankruptcy Court). The goal
of these Chapter 11 filings is an efficient and permanent resolution of all current and future asbestos claims through court
approval of a plan of reorganization, which would establish, in accordance with section 524(g) of the Bankruptcy Code,
16
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
a trust to pay all asbestos claims. Such a resolution, if achieved, would likely include a channeling injunction to enjoin
asbestos claims resolved in the Chapter 11 cases from being filed or pursued against us or our affiliates. The Chapter 11
cases remain pending.
Certain of our subsidiaries have entered into funding agreements with Aldrich and Murray (collectively the Funding
Agreements), pursuant to which those subsidiaries are obligated, among other things, to fund the costs and expenses
of Aldrich and Murray during the pendency of the Chapter 11 cases to the extent distributions from their respective
subsidiaries are insufficient to do so and to provide an amount for the funding for a trust established pursuant to
section 524(g) of the Bankruptcy Code, to the extent that the other assets of Aldrich and Murray are insufficient to provide
the requisite trust funding.
There are a number of risks and uncertainties associated with these Chapter 11 cases, including, among others, those
related to:
• the ultimate determination of the asbestos liability of Aldrich and Murray to be satisfied under a Chapter 11 plan;
• the outcome of negotiations with the committee of asbestos personal injury claimants appointed in the Chapter 11
cases, the future claimants’ representative appointed in the Chapter 11 cases and other participants in the Chapter 11
cases, including insurers, concerning, among other things, the size and structure of a potential section 524(g) trust to
pay the asbestos liability of Aldrich and Murray and the means for funding that trust;
• the actions of representatives of the asbestos claimants, including opposition to the extension of the Bankruptcy Court
order temporarily staying asbestos-related claims against us and other potential actions in opposition to, or otherwise
inconsistent with, the efforts by Aldrich and Murray to diligently prosecute the Chapter 11 cases and ultimately seek
Bankruptcy Court approval of a plan of reorganization;
• the decisions of the Bankruptcy Court relating to numerous substantive and procedural aspects of the Chapter 11
case, including with regard to the extension of the Bankruptcy Court order temporarily staying asbestos-related
claims against us and other efforts by Aldrich and Murray to diligently prosecute the Chapter 11 cases and ultimately
seek Bankruptcy Court approval of a plan of reorganization, whether such decisions are in response to actions of
representatives of the asbestos claimants or otherwise; and
• the decisions of appellate courts regarding approval of a plan of reorganization or relating to orders of the Bankruptcy
Court that may be appealed.
The ability of Aldrich and Murray to successfully reorganize and resolve their asbestos liabilities will depend on various
factors, including their ability to reach agreements with representatives of the asbestos claimants on the terms of a plan
of reorganization that satisfies all applicable legal requirements and to obtain the requisite court approvals of such plan,
and remains subject to the risks and uncertainties described above. We cannot ensure that Aldrich and Murray can
successfully reorganize, nor can we give any assurances as to the amount of the ultimate obligations under the Funding
Agreements or the resulting impact on our financial condition, results of operations or future prospects. We are also
unable to predict the timing of any of the foregoing matters or the timing for a resolution of the Chapter 11 cases, all of
which could have an impact on us.
It also is possible that, in the Chapter 11 cases, various parties will seek to bring claims against us and other related
parties, including by raising allegations that we are liable for the asbestos-related liabilities of Aldrich and Murray. Although
we believe we have no such responsibility for liabilities of Aldrich and Murray, except indirectly through our obligation to
provide funding to Aldrich and Murray under the terms of the Funding Agreements, we cannot provide assurances that
such claims will not be pursued.
In sum, the outcome of the Chapter 11 cases is uncertain and there is uncertainty as to what extent we may have to
contribute to a section 524(g) trust under the Funding Agreements.
17
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
RISKS RELATED TO CYBERSECURITY AND TECHNOLOGY
We are subject to risks relating to our information technology systems.
We rely extensively on information technology systems, some of which are supported by third party vendors including
cloud services, to manage and operate our business. We invest in new information technology systems designed to
improve our operations. We have had failures of these systems in the past and may have failures of these systems in
the future. If these systems cease to function properly, if these systems experience security breaches or disruptions or
if these systems do not provide the anticipated benefits, our ability to manage our operations could be impaired, which
could have a material adverse impact on our results of operations, financial condition, and cash flows.
Security breaches or disruptions of the technology systems, infrastructure or products of the Company or our
vendors could negatively impact our business and financial results.
Our information technology systems, networks and infrastructure and technology embedded in certain of our control
products have been and may be subject to cyber attacks and unauthorized security intrusions. It is possible for such
vulnerabilities to remain undetected for an extended period. Like other large companies, certain of our information
technology systems and the systems of our vendors have been subject to computer viruses, malicious code,
unauthorized access, phishing attempts, denial-of-service attacks and other cyber attacks and we expect that we and
our vendors will be subject to similar attacks in the future. The methods used to obtain unauthorized access, disable
or degrade service, or sabotage information technology systems are constantly changing and evolving. Despite having
instituted security policies and business continuity plans, and implementing and regularly reviewing and updating
processes and procedures to protect against unauthorized access and requiring similar protections from our vendors,
the ever-evolving threats mean we must continually evaluate and adapt our systems and processes and ask our vendors
to do the same, and there is no guarantee that such steps will be adequate to safeguard against all data security
breaches or misuses of data. Hardware, software or applications we develop or obtain from third parties may contain
defects in design or deployment or other problems that could unexpectedly result in security breaches or disruptions.
Our systems, networks and certain of our control products and those of our vendors may also be vulnerable to system
damage, malicious attacks from hackers, employee errors or misconduct, viruses, power and utility outages, and other
catastrophic events. Any of these incidents could cause significant harm to our business by negatively impacting our
business operations, compromising the security of our proprietary information or the personally identifiable information
of our customers, employees and business partners, exposing us to litigation or other legal actions against us or
the imposition of penalties, fines, fees or liabilities. Such events could have a material adverse impact on our results
of operations, financial condition and cash flows and could damage our reputation which could adversely affect our
business. Our insurance coverage may not be adequate to cover all the costs related to a cybersecurity attack or
disruptions resulting from such attacks. Customers are increasingly requiring cybersecurity protections and mandating
cybersecurity standards in our products, and we may incur additional costs to comply with such demands.
Data privacy and protection laws are evolving and present increasing compliance challenges.
The regulatory environment surrounding data privacy and protection is increasingly demanding, with the frequent
imposition of new and changing requirements across businesses and geographic areas. We are required to comply
with complex regulations when collecting, transferring and using personal data, which increases our costs, affects our
competitiveness and can expose us to substantial fines or other penalties.
Intellectual property infringement claims of others and the inability to protect our intellectual property rights could
harm our competitive position.
Our intellectual property rights are important to our business and include numerous patents, trademarks, copyrights,
trade secrets, proprietary technology, technical data, business processes, and other confidential information. Although
in aggregate we consider our intellectual property rights to be valuable to our operations, we do not believe that our
business is materially dependent on a single intellectual property right or any group of them. In our opinion, engineering,
production skills and experience are more responsible for our market position than our patents and/or licenses.
Nonetheless, this intellectual property may be subject to challenge, infringement, invalidation or circumvention by third
parties. Despite extensive security measures, our intellectual property may be subject to misappropriation through
unauthorized access of our information technology systems, employee theft, or theft by private parties or foreign actors,
18
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
including those affiliated with or controlled by state actors. Our business and competitive position could be harmed
by such events. Our ability to protect our intellectual property rights by legal recourse or otherwise may be limited,
particularly in countries where laws or enforcement practices are inadequate or undeveloped. Our inability to enforce our
IP rights under any of these circumstances could have an impact on our competitive position and business.
RISKS RELATED TO REGULATORY MATTERS
Our reputation, ability to do business and results of operations could be impaired by improper conduct by any of
our employees, agents or business partners.
We are subject to regulation under a wide variety of U.S. federal and state and non-U.S. laws, regulations and policies,
including laws related to anti-corruption, anti-bribery, export and import compliance, anti-trust and money laundering,
due to our global operations. We cannot provide assurance our internal controls will always protect us from the improper
conduct of our employees, agents and business partners. Any violations of law or improper conduct could damage our
reputation and, depending on the circumstances, subject us to, among other things, civil and criminal penalties, material
fines, equitable remedies (including profit disgorgement and injunctions on future conduct), securities litigation and a
general loss of investor confidence, any one of which could have a material adverse impact on our business prospects,
financial condition, results of operations, cash flows, and the market value of our stock.
Our operations are subject to regulatory risks.
Our U.S. and non-U.S. operations are subject to a number of laws and regulations, including among others, laws related to
the environment and health and safety. We have made, and will be required to continue to make, significant expenditures
to comply with these laws and regulations. Any violations of applicable laws and regulations could lead to significant
penalties, fines or other sanctions. Changes in current laws and regulations could require us to increase our compliance
expenditures, cause us to significantly alter or discontinue offering existing products and services or cause us to develop
new products and services. Altering current products and services or developing new products and services to comply
with changes in the applicable laws and regulations could require significant research and development investments,
increase the cost of providing the products and services and adversely affect the demand for our products and services.
The U.S. federal government and various states and municipalities have enacted or may enact legislation intended to
deny government contracts to U.S. companies that reincorporate outside of the U.S. or have reincorporated outside of the
U.S or may take other actions negatively impacting such companies. If we are unable to effectively respond to changes
to applicable laws and regulations, interpretations of applicable laws and regulations, or comply with existing and future
laws and regulations, our competitive position, results of operations, financial condition and cash flows could be materially
adversely impacted.
Global climate change and related regulations could negatively affect our business.
Refrigerants are essential to many of our products and there is concern regarding the global warming potential of
such materials. As such, national, regional and international regulations and policies are being implemented to curtail
their use. As regulations reduce the use of the current class of widely used refrigerants, our next generation solutions
are being adopted globally, with sales in more than 30 countries to date. Our climate commitment requires us to offer
a full line of next generation, lower global warming potential products by 2030 without compromising safety or energy
efficiency. Additionally, while we met our commitment to reduce energy consumption and the greenhouse gas footprint
of our operations by 35 percent by 2020, on a normalized basis, our 2030 commitment requires a much more stringent
absolute energy use reduction by 10 percent. While we are committed to pursuing these sustainability objectives, there
can be no assurance that our commitments will be successful, that our products will be accepted by the market, that
proposed regulation or deregulation will not have a negative competitive impact or that economic returns will match the
investment that we are making in new product development.
Concerns regarding global climate change have resulted in the Kigali amendment to the Montreal Protocol, pursuant to
which countries have agreed to a scheduled phase down of certain high global warming potential refrigerants. Countries
may pass regulations that are even more restrictive than this international accord. Some countries, including the U.S.,
have not yet ratified the amendment, lowering customer demand for next generation products in these countries.
There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. Such
regulatory uncertainty extends to future incentives for energy efficient buildings and vehicles and costs of compliance,
which may impact the demand for our products, obsolescence of our products and our results of operations.
19
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
RISKS RELATED TO OUR BUSINESS OPERATIONS
Commodity shortages and price increases could adversely affect our financial results.
We rely on suppliers to secure commodities, particularly steel and non-ferrous metals, required for the manufacture
of our products. A disruption in deliveries from our suppliers or decreased availability of commodities could have an
adverse effect on our ability to meet our commitments to customers or increase our operating costs. We believe
that available sources of supply will generally be sufficient for our needs for the foreseeable future. Nonetheless, the
unavailability of some commodities could have a material adverse impact on our results of operations and cash flows.
Volatility in the prices of these commodities or the impact of inflationary increases could increase the costs of our products
and services. We may not be able to pass on these costs to our customers and this could have a material adverse impact
on our results of operations and cash flows. Conversely, in the event there is deflation, we may experience pressure from our
customers to reduce prices. There can be no assurance that we would be able to reduce our costs (through negotiations
with suppliers or other measures) to offset any such price concessions which could adversely impact results of operations
and cash flows. While we may use financial derivatives or supplier price locks to hedge against this volatility, by using
these instruments we may potentially forego the benefits that might result from favorable fluctuations in prices and could
experience lower margins in periods of declining commodity prices. In addition, while hedging activity may minimize near-
term volatility of the commodity prices, it would not protect us from long-term commodity price increases.
Some of our purchases are from sole or limited source suppliers for reasons of cost effectiveness, uniqueness of design,
or product quality. If these suppliers encounter financial or operating difficulties, we might not be able to quickly establish
or qualify replacement sources of supply.
Our business strategy includes acquiring companies, businesses, product lines, plants and assets, entering into joint
ventures and making investments that complement our existing businesses. We also occasionally divest businesses
that we own. We may not identify acquisition or joint venture candidates or investment opportunities at the same
rate as the past. Acquisitions, dispositions, joint ventures and investments that we identify could be unsuccessful or
consume significant resources, which could adversely affect our operating results.
We continue to analyze and evaluate the acquisition and divestiture of strategic businesses and product lines,
technologies and capabilities, plants and assets, joint ventures and investments with the potential to strengthen our
industry position, to enhance our existing set of product and services offerings, to increase productivity and efficiencies,
to grow revenues, earnings and cash flow, to help us stay competitive or to reduce costs. There can be no assurance
that we will identify or successfully complete transactions with suitable candidates in the future, that we will consummate
these transactions at rates similar to the past or that completed transactions will be successful. Strategic transactions
may involve significant cash expenditures, debt incurrence, operating losses and expenses that could have a material
adverse effect on our business, financial condition, results of operations and cash flows. Such transactions involve
numerous other risks, including:
• diversion of management time and attention from daily operations;
• difficulties integrating acquired businesses, technologies and personnel into our business without high costs;
• difficulties in obtaining and verifying the financial statements and other business and other due diligence information
of acquired businesses;
• inability to obtain required regulatory approvals and/or required financing on favorable terms;
• potential loss of key employees, key contractual relationships or key customers of either acquired businesses or our
business;
• assumption of the liabilities and exposure to unforeseen or undisclosed liabilities of acquired businesses and
exposure to regulatory sanctions;
• inheriting internal control deficiencies;
• dilution of interests of holders of our common shares through the issuance of equity securities or equity-linked
securities; and
• in the case of joint ventures and other investments, interests that diverge from those of our partners without the
ability to direct the management and operations of the joint venture or investment in the manner we believe most
appropriate to achieve the expected value.
20
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
Any acquisitions, divestitures, joint ventures or investments may ultimately harm our business, financial condition, results of
operations and cash flows. There are additional risks related to our Reverse Morris Trust transaction, see page 15 under
“Risks Related to the Transactions” for more information.
We may be required to recognize impairment charges for our goodwill and other indefinite-lived intangible assets.
At December 31, 2020, the net carrying value of our goodwill and other indefinite-lived intangible assets totaled $5.3 billion
and $2.6 billion, respectively. In accordance with generally accepted accounting principles, we assess these assets
annually during the fourth quarter for impairment or when there is a significant change in events or circumstances
that indicate that the fair value of an asset is more likely than not less than the carrying amount of the asset. Significant
negative industry or economic trends, disruptions to our business, unexpected significant changes or planned changes
in use of the assets, divestitures and sustained market capitalization declines may result in recognition of impairments to
goodwill or other indefinite-lived assets. Any charges relating to such impairments could have a material adverse impact
on our results of operations in the periods recognized.
Natural disasters, epidemics or other unexpected events may disrupt our operations, adversely affect our results of
operations and financial condition, and may not be fully covered by insurance.
The occurrence of one or more unexpected events including hurricanes, fires, earthquakes, floods and other forms
of severe weather, health epidemics or pandemics or other contagious outbreaks or other unexpected events in
the U.S. or in other countries in which we operate or are located could adversely affect our operations and financial
performance. Natural disasters, power outages, health epidemics or pandemics or other contagious outbreaks or other
unexpected events could result in physical damage to and complete or partial closure of one or more of our plants,
temporary or long-term disruption of our operations by causing business interruptions or by impacting the availability
and cost of materials needed for manufacturing. Existing insurance arrangements may not provide full protection for
the costs that may arise from such events, particularly if such events are catastrophic in nature or occur in combination.
The occurrence of any of these events could increase our insurance and other operating costs or harm our sales in
affected areas.
Our business may be adversely affected by work stoppages, union negotiations, labor disputes and other matters
associated with our labor force.
Certain of our employees are covered by collective bargaining agreements or works councils. We experience from time
to time work stoppages, union negotiations, labor disputes and other matters associated with our labor force and some
of these events could result in significant increases in our cost of labor, impact our productivity or damage our reputation.
Additionally, a work stoppage at one of our suppliers could materially and adversely affect our operations if an alternative
source of supply were not readily available. Stoppages by employees of our customers could also result in reduced
demand for our products.
RISKS RELATING TO TAX MATTERS
Changes in tax or other laws, regulations or treaties, changes in our status under U.S. or non-U.S. laws or adverse
determinations by taxing or other governmental authorities could increase our tax burden or otherwise affect our
financial condition or operating results, as well as subject our shareholders to additional taxes.
The realization of any tax benefit related to our operations and corporate structure could be impacted by changes
in tax or other laws, treaties or regulations or the interpretation or enforcement thereof by the U.S. or non-U.S. tax or
other governmental authorities. Enacted comprehensive tax reform legislation in December 2017 known as the Tax
Cuts and Jobs Act (the Act) made broad and complex changes to the U.S. tax code. As part of the migration from a
worldwide system of taxation to a modified territorial system for corporations, the Act imposed a transition tax on certain
unrepatriated earnings of non-U.S. subsidiaries and an additional annual U.S. tax on the earnings of certain non-U.S.
subsidiaries. The Act also imposed new and substantial limitations on, and/or the elimination of, certain tax deductions
(including interest) and credits (including foreign tax credits) that could adversely impact our effective tax rate or
operating cash flows.
21
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
Notwithstanding this change in U.S. tax law, we continue to monitor for other tax changes, U.S. and non-U.S. related, which
can also adversely impact our overall tax burden. From time to time, proposals have been made and/or legislation has
been introduced to change the tax laws, regulations or interpretations thereof of various jurisdictions or limit tax treaty
benefits that if enacted or implemented could materially increase our tax burden and/or effective tax rate and could have
a material adverse impact on our financial condition and results of operations. Moreover, the Organisation for Economic
Co-operation and Development has released proposals to create an agreed set of international rules for fighting base
erosion and profit shifting, including Pillar One and Pillar Two, such that tax laws in countries in which we do business
could change on a prospective or retroactive basis, and any such changes could adversely impact us. Finally, the
European Commission has been very active in investigating whether various tax regimes or private tax rulings provided
by a country to particular taxpayers may constitute State Aid. We cannot predict the outcome of any of these potential
changes or investigations in any of the jurisdictions, but if any of the above occurs and impacts us, this could materially
increase our tax burden and/or effective tax rate and could have a material adverse impact on our financial condition and
results of operations.
While we monitor proposals and other developments that would materially impact our tax burden and/or effective tax
rate and investigate our options, we could still be subject to increased taxation on a going forward basis no matter what
action we undertake if certain legislative proposals or regulatory changes are enacted, certain tax treaties are amended
and/or our interpretation of applicable tax or other laws is challenged and determined to be incorrect. In particular, any
changes and/or differing interpretations of applicable tax law that have the effect of disregarding the shareholders’
decision to reorganize in Ireland, limiting our ability to take advantage of tax treaties between jurisdictions, modifying or
eliminating the deductibility of various currently deductible payments, or increasing the tax burden of operating or being
resident in a particular country could subject us to increased taxation.
In addition, tax authorities periodically review tax returns filed by us and can raise issues regarding our filing positions,
timing and amount of income or deductions, and the allocation of income among the jurisdictions in which we operate.
These examinations on their own, or any subsequent litigation related to the examinations, may result in additional taxes
or penalties against us. If the ultimate result of these audits differ from our original or adjusted estimates, they could have
a material impact on our tax provision.
RISKS RELATED TO OUR REVERSE MORRIS TRUST TRANSACTION
On February 29, 2020 (the Distribution Date), we completed our Reverse Morris Trust transaction (the Transaction) with
Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name to Ingersoll Rand Inc. after the Transaction)
whereby we distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained our former Industrial segment (Ingersoll Rand
Industrial), through a pro rata distribution (the Distribution) to our shareholders of record as of February 24, 2020. Ingersoll
Rand Industrial then merged with a wholly-owned subsidiary of Gardner Denver. Upon close of the Transaction, our
existing shareholders received approximately 50.1% of the shares of Gardner Denver common stock on a fully-diluted
basis and Gardner Denver stockholders retained approximately 49.9% of the shares of Gardner Denver on a fully diluted
basis. As a result, our shareholders received 0.8824 shares of Gardner Denver common stock with respect to each share
of our stock owned as of February 24, 2020. In connection with the Transaction, Ingersoll-Rand Services Company, an
affiliate of Ingersoll Rand Industrial, borrowed an aggregate principal amount of $1.9 billion under a senior secured first
lien term loan facility (the Term Loan), the proceeds of which were transferred to one of our wholly-owned subsidiaries.
The obligations under the Term Loan were retained by Ingersoll-Rand Services Company, which following the Transaction
is a wholly-owned subsidiary of Ingersoll Rand Inc. Following the Transaction, our Company was renamed Trane
Technologies plc and trades under the symbol “TT” on the NYSE.
If the Distribution is determined to be taxable for Irish tax purposes, significant Irish tax liabilities may arise for our
shareholders.
We received an opinion from Irish Revenue regarding certain tax matters associated with the Distribution, as well as
a legal opinion from our Irish counsel Arthur Cox, regarding certain Irish tax consequences for shareholders of the
Distribution. For our shareholders that are not resident or ordinarily resident in Ireland for Irish tax purposes and that do
not hold their shares in connection with a trade or business carried on by such shareholders through an Irish branch
or agency, we consider, based on both opinions taken together, that no adverse Irish tax consequences for such
shareholders should have arisen. These opinions relied on certain facts and assumptions and certain representations.
Notwithstanding the opinion from Irish Revenue, Irish Revenue could ultimately determine on audit that the Distribution is
22
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
taxable for Irish tax purposes, for example, if it determines that any of these facts, assumptions or representations are not
correct or have been violated. A legal opinion represents the tax adviser’s best legal judgment and is not binding on Irish
Revenue or the courts and Irish Revenue or the courts may not agree with the legal opinion. In addition, the legal opinion
is based on current law and cannot be relied upon if current law changes with retroactive effect. If the Distribution
ultimately is determined to be taxable for Irish tax purposes, certain of our shareholders and we could have significant
Irish tax liabilities as a result of the Distribution, and there could be a material adverse impact on our business, financial
condition, results of operations and cash flows in future reporting periods.
If the Distribution together with certain related transactions do not qualify as tax-free under Sections 355 and 368(a)
of the Code, including as a result of subsequent acquisitions of stock of the Company or Ingersoll Rand Inc., then
the Company and our shareholders may be required to pay substantial U.S. federal income taxes, and Ingersoll
Rand Inc. may be obligated to indemnify the Company for such taxes imposed on the Company.
We received an opinion from our U.S. tax counsel Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul Weiss) substantially to
the effect that, for U.S. federal income tax purposes, the Distribution together with certain related transactions undertaken
in anticipation of the Distribution and taking into account the merger of Ingersoll Rand Industrial with the wholly-owned
subsidiary of Gardner Denver will qualify as a tax-free transaction under Sections 368(a), 361 and 355 of the Code, with the
result that we and our shareholders will not recognize any gain or loss for U.S. federal income tax purposes as a result
of the spin-off. The opinion of our counsel was based on, among other things, certain representations and assumptions
as to factual matters made by Gardner Denver, Ingersoll Rand Industrial and the Company. The failure of any factual
representation or assumption to be true, correct and complete in all material respects could adversely affect the validity
of the opinion of counsel. An opinion of counsel represents counsel’s best legal judgment, is not binding on the Internal
Revenue Service (IRS) or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinion
will be based on current law, and cannot be relied upon if current law changes with retroactive effect. If the Distribution,
and/or related internal transactions in anticipation of the Distribution ultimately are determined to be taxable, we could
incur significant U.S. federal income tax liabilities, which could cause a material adverse impact on our business, financial
condition, results of operations and cash flows in future reporting periods, although if this determination resulted from
certain actions taken by Ingersoll Rand Industrial or Ingersoll Rand Inc., Ingersoll Rand Inc. would be required to bear the
cost of any resultant tax liability pursuant to the terms of the Tax Matters Agreement.
The Distribution will be taxable to the Company pursuant to Section 355(e) of the Code if there is a 50% or greater
change in ownership of either the Company or Ingersoll Rand Industrial, directly or indirectly (including through such a
change in ownership of Ingersoll Rand Inc.), as part of a plan or series of related transactions that include the Distribution.
A Section 355(e) change of ownership would not make the Distribution taxable to our shareholders, but instead may
result in corporate-level taxable gain to certain of our subsidiaries. Because our shareholders will collectively be treated
as owning more than 50% of the Ingersoll Rand Inc. common stock following the merger, the merger alone should not
cause the Distribution to be taxable to our subsidiaries under Section 355(e). However, Section 355(e) might apply if other
acquisitions of stock of the Company before or after the merger, or of Ingersoll Rand Inc. before or after the merger, are
considered to be part of a plan or series of related transactions that include the Distribution together with certain related
transactions. If Section 355(e) applied, certain of our subsidiaries might recognize a very substantial amount of taxable
gain, although if this applied as a result of certain actions taken by Ingersoll Rand Industrial, Ingersoll Rand Inc. or certain
specified Ingersoll Rand Inc. stockholders, Ingersoll Rand Inc. would be required to bear the cost of any resultant tax
liability under Section 355(e) pursuant to the terms of the Tax Matters Agreement.
If the merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, our shareholders may
be required to pay substantial U.S. federal income taxes.
We have received an opinion from Paul Weiss, and Ingersoll Rand Inc. has received an opinion from their counsel
Simpson Thacher & Bartlett LLP, substantially to the effect that the merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code with the result that U.S. holders of Ingersoll Rand Industrial common stock who
received Gardner Denver common stock in the merger will not recognize any gain or loss for U.S. federal income tax
purposes (except with respect to cash received in lieu of fractional shares of Gardner Denver common stock). These
opinions were based upon, among other things, certain representations and assumptions as to factual matters made
by Ingersoll Rand Inc., the Company, Ingersoll Rand Industrial and the merger subsidiary used by Ingersoll Rand Inc.
The failure of any factual representation or assumption to be true, correct and complete in all material respects could
23
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
adversely affect the validity of the opinions. An opinion of counsel represents counsel’s best legal judgment, is not
binding on the IRS or the courts, and the IRS or the courts may not agree with the opinion. In addition, the opinions will
be based on current law, and cannot be relied upon if current law changes with retroactive effect. If the merger were
taxable, U.S. holders of Ingersoll Rand Industrial would be considered to have made a taxable sale of their Ingersoll
Rand Industrial common stock to Ingersoll Rand Inc., and such U.S. holders of Ingersoll Rand Industrial would generally
recognize taxable gain or loss on their receipt of Ingersoll Rand Inc. common stock in the merger.
RISKS RELATED TO OUR IRISH DOMICILE
Irish law differs from the laws in effect in the United States and may afford less protection to holders of our
securities.
The United States currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement
of judgments in civil and commercial matters. As such, there is some uncertainty as to whether the courts of Ireland
would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on U.S.
federal or state civil liability laws, including the civil liability provisions of the U.S. federal or state securities laws, or hear
actions against us or those persons based on those laws.
As an Irish company, we are governed by the Irish Companies Act, which differs in some material respects from laws
generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested
director and officer transactions, indemnification of directors and shareholder lawsuits. Likewise, the duties of directors
and officers of an Irish company generally are owed to the company only. Shareholders of Irish companies generally
do not have a personal right of action against directors or officers of the company and may exercise such rights of
action on behalf of the company only in limited circumstances. Accordingly, holders of our securities may have more
difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the
United States. In addition, Irish law does not allow for any form of legal proceedings directly equivalent to the class action
available in the United States.
Irish law allows shareholders to authorize share capital which then can be issued by a board of directors without
shareholder approval. Also, subject to specified exceptions, Irish law grants statutory pre-emptive rights to existing
shareholders to subscribe for new issuances of shares for cash, but allows shareholders to authorize the waiver of the
statutory pre-emptive rights with respect to any particular allotment of shares. Under Irish law, we must have authority
from our shareholders to issue any shares, including shares that are part of the Company’s authorized but unissued
share capital. In addition, unless otherwise authorized by its shareholders, when an Irish company issues shares for
cash to new shareholders, it is required first to offer those shares on the same or more favorable terms to existing
shareholders on a pro-rata basis. If we are unable to obtain these authorizations from our shareholders, or are otherwise
limited by the terms of our authorizations, our ability to issue shares or otherwise raise capital could be adversely
affected.
Dividends received by our shareholders may be subject to Irish dividend withholding tax.
In certain circumstances, we are required to deduct Irish dividend withholding tax (currently at the rate of 25%) from
dividends paid to our shareholders. In the majority of cases, shareholders resident in the United States will not be subject
to Irish withholding tax, and shareholders resident in a number of other countries will not be subject to Irish withholding
tax provided that they complete certain Irish dividend withholding tax forms. However, some shareholders may be subject
to withholding tax, which could have an adverse impact on the price of our shares.
Dividends received by our shareholders could be subject to Irish income tax.
Dividends paid in respect of our shares will generally not be subject to Irish income tax where the beneficial owner
of these dividends is exempt from dividend withholding tax, unless the beneficial owner of the dividend has some
connection with Ireland other than his or her shareholding in Trane Technologies plc.
Our shareholders who receive their dividends subject to Irish dividend withholding tax will generally have no further
liability to Irish income tax on the dividends unless the beneficial owner of the dividend has some connection with Ireland
other than his or her shareholding in Trane Technologies plc.
24
2020 ANNUAL REPORT2020 ANNUAL REPORT PART I
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2020, we owned or leased a total of approximately 26 million square feet of space worldwide.
Manufacturing and assembly operations are conducted in 35 plants across the world. We also maintain various
warehouses, offices and repair centers throughout the world. The majority of our plant facilities are owned by us with the
remainder under long-term lease arrangements. We believe that our plants have been well maintained, are generally in
good condition and are suitable for conducting our business.
The locations by segment of our principal plant facilities at December 31, 2020 were as follows:
EMEA
ASIA PACIFIC
Bangkok, Thailand
Taicang, China
Wujiang, China
Zhongshan, China
Barcelona, Spain
Bari, Italy
Charmes, France
Essen, Germany
Galway, Ireland
Golbey, France
King Abdullah Economic City, Saudi Arabia
Kolin, Czech Republic
AMERICAS
Arecibo, Puerto Rico
Brampton, Ontario
Charlotte, North Carolina
Clarksville, Tennessee
Columbia, South Carolina
Curitiba, Brazil
Fairlawn, New Jersey
Fort Smith, Arkansas
Fremont, Ohio
Grand Rapids, Michigan
Hastings, Nebraska
La Crosse, Wisconsin
Lexington, Kentucky
Lynn Haven, Florida
Monterrey, Mexico
Newberry, South Carolina
Pueblo, Colorado
Rushville, Indiana
St. Paul, Minnesota
Trenton, New Jersey
Tyler, Texas
Vidalia, Georgia
Waco, Texas
Item 3. Legal Proceedings
In the normal course of business, we are involved in a variety of lawsuits, claims and legal proceedings, including
commercial and contract disputes, employment matters, product liability and product defect claims, asbestos-related
claims, environmental liabilities, intellectual property disputes, and tax-related matters. In our opinion, pending legal
matters are not expected to have a material adverse impact on our results of operations, financial condition, liquidity or
cash flows.
25
2020 ANNUAL REPORT2020 ANNUAL REPORT2020 Annual Report PART I
ASBESTOS-RELATED MATTERS
On the Petition Date, Aldrich and Murray each filed a voluntary petition for reorganization under Chapter 11 of the
Bankruptcy Code. As a result of the Chapter 11 filings, all asbestos-related lawsuits against Aldrich and Murray have
been stayed due to the imposition of a statutory automatic stay applicable in Chapter 11 bankruptcy cases. Only Aldrich
and Murray have filed for Chapter 11 relief. Neither Aldrich’s wholly-owned subsidiary, 200 Park, Murray’s wholly-owned
subsidiary, ClimateLabs, Trane Technologies plc nor the Trane Companies are part of the Chapter 11 filings.
The goal of these Chapter 11 filings is an efficient and permanent resolution of all current and future asbestos claims
through court approval of a plan of reorganization, which would establish, in accordance with section 524(g) of the
Bankruptcy Code, a trust to pay all asbestos claims. Such a resolution, if achieved, would likely include a channeling
injunction to enjoin asbestos claims resolved in the Chapter 11 cases from being filed or pursued against us or our
affiliates. The Chapter 11 cases remain pending as of December 31, 2020.
Prior to the Petition Date, certain of our wholly-owned subsidiaries and former companies were named as defendants
in asbestos-related lawsuits in state and federal courts. In virtually all of the suits, a large number of other companies
have also been named as defendants. The vast majority of those claims allege injury caused by exposure to asbestos
contained in certain historical products, primarily pumps, boilers and railroad brake shoes. None of our existing or
previously-owned businesses were a producer or manufacturer of asbestos.
See also the discussion in Note 22 to the Consolidated Financial Statements.
Item 4. Mine Safety Disclosures
None.
26
2020 ANNUAL REPORT2020 ANNUAL REPORT Part II
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of
Equity Securities
Information regarding the principal market for our ordinary shares and related shareholder matters is as follows:
Our ordinary shares are traded on the New York Stock Exchange under the symbol TT. As of February 1, 2021, the
approximate number of record holders of ordinary shares was 2,656.
ISSUER PURCHASES OF EQUITY SECURITIES
The following table provides information with respect to purchases by us of our ordinary shares during the quarter ended
December 31, 2020:
PERIOD
October 1 - October 31
November 1 - November 30
December 1 - December 31
Total
TOTAL NUMBER
OF SHARES
PURCHASED
(000’S)(a)(b)
AVERAGE
PRICE PAID PER
SHARE(a)(b)
TOTAL NUMBER OF
SHARES PURCHASED
AS PART OF PROGRAM
(000’S)(a)
APPROXIMATE DOLLAR
VALUE OF SHARES
STILL AVAILABLE TO BE
PURCHASED UNDER THE
PROGRAM ($000’S)(a)
6.9
$ 122.56
832.2
922.9
143.05
142.06
—
832.2
921.9
$ 749,959
$ 630,910
$ 499,956
1,762.0
$ 142.45
1,754.1
(a) Share repurchases are made from time to time in accordance with management’s capital allocation strategy, subject to market
conditions and regulatory requirements. In October 2018, our Board of Directors authorized the repurchase of up to $1.5 billion of our
ordinary shares under a share repurchase program (2018 Authorization) upon completion of the prior authorized share repurchase
program. During the fourth quarter of 2020, we repurchased and canceled approximately $250 million of our ordinary shares leaving
approximately $500 million remaining under the 2018 Authorization.
(b) We may also reacquire shares outside of the repurchase program from time to time in connection with the surrender of shares to
cover taxes on vesting of share based awards. We reacquired 6,925 shares in October and 1,045 shares in December in transactions
outside the repurchase programs.
27
2020 ANNUAL REPORT2020 Annual Report PART II
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on our ordinary shares with the cumulative
total return on (i) the Standard & Poor’s 500 Stock Index and (ii) the Standard & Poor’s 500 Industrial Index for the
five years ended December 31, 2020. The graph assumes an investment of $100 in our ordinary shares (adjusted for the
Transaction), the Standard & Poor’s 500 Stock Index and the Standard & Poor’s 500 Industrial Index on December 31, 2015
and assumes the reinvestment of dividends.
l
e
u
a
V
x
e
d
n
I
$400
$350
$300
$250
$200
$150
$100
$50
2015
2016
2017
2018
2019
2020
Trane Technologies
S&P 500
S&P 500 Industrials Index
COMPANY/INDEX
Trane Technologies
S&P 500
S&P 500 Industrials Index
2015
100
100
100
2016
139
112
119
2017
168
136
144
2018
2019
2020
175
130
125
260
171
161
373
203
179
Item 6. Selected Financial Data
In connection with the completion of the Transaction, we do not beneficially own any Ingersoll Rand Industrial shares of
common stock and no longer consolidate Ingersoll Rand Industrial in our financial statements. As a result, the following
Selected Financial Data presents the results of Ingersoll Rand Industrial as a discontinued operation for periods prior to
the Distribution date.
In millions, except per share amounts:
AT AND FOR THE YEARS ENDED DECEMBER 31,
Net revenues
Net earnings (loss) attributable to Trane
Technologies plc ordinary shareholders:
Continuing operations
Discontinued operations
Total assets
Total debt
Total Trane Technologies plc shareholders’
equity
Earnings (loss) per share attributable to
Trane Technologies plc ordinary shareholders:
Basic:
Continuing operations
Discontinued operations
Diluted:
Continuing operations
Discontinued operations
Dividends declared per ordinary share
2020
2019
2018
2017
2016
$ 12,454.7
$ 13,075.9
$ 12,343.8
$
11,167.5
$ 10,545.0
977.2
(122.3)
18,156.7
5,272.1
6,407.7
1,145.1
265.8
20,492.3
5,573.2
7,267.6
1,007.8
329.8
17,914.9
4,091.2
7,022.7
1,072.8
229.8
18,173.3
4,064.0
7,140.3
1,222.2
254.0
17,397.4
4,070.1
6,643.8
$
$
$
4.07
(0.51)
4.02
(0.50)
2.12
$
$
$
4.74
1.10
4.69
1.08
2.12
$
$
$
4.08
1.33
4.03
1.32
1.96
$
$
$
4.21
0.90
4.16
0.89
1.70
$
$
$
4.72
0.98
4.67
0.98
1.36
28
2020 ANNUAL REPORT
PART II
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-
looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed
in the forward-looking statements. Factors that might cause a difference include, but are not limited to, those discussed
under Item 1A. Risk Factors in this Annual Report on Form 10-K. The following section is qualified in its entirety by the
more detailed information, including our financial statements and the notes thereto, which appears elsewhere in this
Annual Report.
This section discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019. Discussions of 2018
items and year-to-year comparisons between 2019 and 2018 have been excluded in this Form 10-K and can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for year ended December 31, 2019.
OVERVIEW
ORGANIZATIONAL
Trane Technologies plc is a global climate innovator. We bring efficient and sustainable climate solutions to buildings,
homes and transportation driven by strategic brands Trane® and Thermo King® and an environmentally responsible
portfolio of products and services. Prior to the separation of our Industrial segment on February 29, 2020, we announced
a new organizational model and business segment structure designed to enhance our regional go-to-market
capabilities, aligning the structure with our strategy and increased focus on climate innovation. Under the revised
structure, we created three new regional operating segments from the former climate segment, which also serve as our
reportable segments.
• Our Americas segment innovates for customers in the North America and Latin America regions. The Americas
segment encompasses commercial heating and cooling systems, building controls, and energy services and
solutions; residential heating and cooling; and transport refrigeration systems and solutions.
• Our EMEA segment innovates for customers in the Europe, Middle East and Africa regions. The EMEA segment
encompasses heating and cooling systems, services and solutions for commercial buildings, and transport
refrigeration systems and solutions.
• Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment
encompasses heating and cooling systems, services and solutions for commercial buildings and transport
refrigeration systems and solutions.
This model is designed to create deep customer focus and relevance in markets around the world. All prior period
comparative segment information has been recast to reflect the current reportable segments.
SEPARATION OF INDUSTRIAL SEGMENT BUSINESS
On February 29, 2020 (Distribution Date), we completed our Reverse Morris Trust transaction (the Transaction) with
Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name to Ingersoll Rand Inc. after the Transaction)
whereby we distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained our former Industrial segment (Ingersoll Rand
Industrial), through a pro rata distribution (the Distribution) to our shareholders of record as of February 24, 2020. Ingersoll
Rand Industrial then merged into a wholly-owned subsidiary of Gardner Denver. Upon close of the Transaction, our
existing shareholders received approximately 50.1% of the shares of Gardner Denver common stock on a fully-diluted
basis and Gardner Denver stockholders retained approximately 49.9% of the shares of Gardner Denver on a fully diluted
basis. As a result, our shareholders received .8824 shares of Gardner Denver common stock with respect to each share
owned as of February 24, 2020. In connection with the Transaction, Ingersoll-Rand Services Company, an affiliate of
Ingersoll Rand Industrial, borrowed an aggregate principal amount of $1.9 billion under a senior secured first lien term
loan facility (Term Loan), the proceeds of which were used to make a special cash payment of $1.9 billion to a subsidiary
of ours. The obligations under the Term Loan were retained by Ingersoll-Rand Services Company, which following the
Transaction is a wholly-owned subsidiary of Gardner Denver.
29
2020 ANNUAL REPORT2020 Annual Report PART II
In connection with the Transaction, we entered into several agreements covering supply, administrative and tax matters
to provide or obtain services on a transitional basis for varying periods after the Distribution Date. The agreements
cover services such as manufacturing, information technology, human resources and finance. Income and expenses
under these agreements were not material. In accordance with several customary transaction-related agreements
between us and Gardner Denver, the parties are in a process to determine final adjustments to working capital, cash
and indebtedness amounts as of the Distribution Date, as well as another process to determine funding levels related to
pension plans, non-qualified deferred compensation plans and retiree health benefits. As of December 31, 2020, both are
ongoing in accordance with the transaction-related agreements. Upon finalization of these agreements, any adjustments
will be recognized within Retained earnings.
SIGNIFICANT EVENTS
COVID-19 GLOBAL PANDEMIC
In March 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a newly
discovered coronavirus, known now as COVID-19, as a global pandemic and recommended containment and mitigation
measures worldwide. Beginning in the first quarter of 2020, many countries responded by implementing measures to
combat the outbreak which impacted global business operations and resulted in our decision to temporarily close or
limit our workforce to essential crews within many facilities throughout the world in order to ensure employee safety. In
addition, our non-essential employees were instructed to work from home in compliance with global government stay-in-
place protocols.
We have been adversely impacted by the COVID-19 global pandemic. Temporary facility closures beginning in the first
quarter of 2020 disrupted results in the Asia Pacific region with impacts more widely felt throughout operations in the
Americas and EMEA in the months thereafter. During the second quarter of 2020, we began to reopen facilities while
maintaining appropriate health and safety precautions. However, the challenges in connection with the pandemic
continued as we experienced lower volume, which negatively impacted revenue, and certain supply chain delays.
In response, we proactively initiated cost cutting actions in an effort to mitigate the impact of the pandemic on our
business. This included reducing discretionary spending, restricting travel, delaying merit-based salary increases and
implementing employee furloughs in certain markets.
We continue to navigate the new realities brought about by the COVID-19 global pandemic as well as any impact on
our liquidity needs and ability to access capital markets. Despite these challenges, all production facilities remain open
and we continue to sell, install and service our products. During the second half of 2020, we did not experience any
major delays in our supply chain and continued to focus on health and safety precautions to protect our employees
and customers. In addition, during the fourth quarter of 2020 we completed several restorative actions including the
reinstatement of annual merit-based salary increases and resuming all aspects of our balanced capital allocation
strategy which included acquisitions and share repurchases. Operationally, our financial reporting systems, internal
control over financial reporting and disclosure controls and procedures continue to operate effectively despite a remote
workforce of non-essential front-line employees. We will continue to monitor the ongoing situation as it evolves globally
and will assess any potential impacts to our business and financial position.
The preparation of financial statements requires management to use judgments in making estimates and assumptions
based on the relevant information available at the end of each period. These estimates and assumptions have a
significant effect on reported amounts of assets and liabilities, revenue and expenses, as well as the disclosure of
contingencies because they may arise from matters that are inherently uncertain. The financial statements reflect
our best estimates as of December 31, 2020 (including as it relates to the actual and potential future impacts of
the COVID-19 global pandemic) with respect to the recoverability of our assets, including our receivables and long-
lived assets such as goodwill and intangibles. However, due to significant uncertainty surrounding the COVID-19
global pandemic, management’s judgment regarding this could change in the future. In addition, while our results
of operations, cash flows and financial condition could be negatively impacted, the extent of the impact cannot be
estimated with certainty at this time.
As part of the response to COVID-19 global pandemic, many countries implemented emergency economic relief plans
as a way of minimizing the economic impact of this health crisis. We are evaluating the potential benefits from certain of
these measures and will continue to monitor the plans as they are finalized and implemented. In the United States, the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 providing numerous tax
30
2020 ANNUAL REPORT PART II
provisions and other stimulus measures. We are currently applying the CARES Act to our operations, which includes the
deferral of employer social security payroll tax payments under the CARES Act through January 1, 2021, with 50 percent
owed on December 31, 2021 and the other half owed on December 31, 2022.
REORGANIZATION OF ALDRICH AND MURRAY
On the Petition Date, Aldrich and Murray each filed a voluntary petition for reorganization under Chapter 11 of the
Bankruptcy Code in the Bankruptcy Court. As a result of the Chapter 11 filings, all asbestos-related lawsuits against
Aldrich and Murray have been stayed due to the imposition of a statutory automatic stay applicable in Chapter 11
bankruptcy cases. Only Aldrich and Murray have filed for Chapter 11 relief. Neither Aldrich’s wholly-owned subsidiary,
200 Park, Murray’s wholly-owned subsidiary, ClimateLabs, Trane Technologies plc nor the Trane Companies are part of
the Chapter 11 filings.
The goal of these Chapter 11 filings is an efficient and permanent resolution of all current and future asbestos claims
through court approval of a plan of reorganization, which would establish, in accordance with section 524(g) of the
Bankruptcy Code, a trust to pay all asbestos claims. Such a resolution, if achieved, would likely include a channeling
injunction to enjoin asbestos claims resolved in the Chapter 11 cases from being filed or pursued against us or our
affiliates. The Chapter 11 cases remain pending as of December 31, 2020.
From an accounting perspective, we no longer have control over Aldrich and Murray as of the Petition Date as their
activities are subject to review and oversight by the Bankruptcy Court. Therefore, Aldrich and its wholly-owned subsidiary
200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated as of the Petition Date and their
respective assets and liabilities were derecognized from our Consolidated Financial Statements. As a result, we recorded
an equity investment for an aggregate of $53.6 million within Other noncurrent assets in the Consolidated Balance Sheet.
Simultaneously, we recognized a liability of $248.8 million within Other noncurrent liabilities in the Consolidated Balance
Sheet related to our obligation under the Funding Agreements. The liability recorded may be subject to change based
on the facts and circumstances of the Chapter 11 proceedings.
As a result of these actions, we recognized an aggregate loss of $24.9 million in our Consolidated Statements of
Comprehensive Income. A gain of $0.9 million related to Murray and its wholly-owned subsidiary ClimateLabs was
recorded within Other income/(expense), net and a loss of $25.8 million related to Aldrich and its wholly-owned subsidiary
200 Park was recorded within Discontinued operations, net of tax. Additionally, the deconsolidation resulted in an investing
cash outflow of $41.7 million in our Consolidated Statements of Cash Flows, of which $10.8 million was recorded within
continuing operations.
ISSUANCE OF SENIOR NOTES
In March 2019, we issued $1.5 billion principal amount of senior notes in three tranches through Trane Technologies
Luxembourg Finance S.A., an indirect, wholly-owned subsidiary. The tranches consist of $400 million aggregate principal
amount of 3.500% senior notes due 2026, $750 million aggregate principal amount of 3.800% senior notes due 2029 and
$350 million aggregate principal amount of 4.500% senior notes due 2049.
TRENDS AND ECONOMIC EVENTS
We are a global corporation with worldwide operations. As a global business, our operations are affected by worldwide,
regional and industry-specific economic factors as well as political and social factors wherever we operate or do
business. Our geographic diversity and the breadth of our product and services portfolios have helped mitigate the
impact of any one industry or the economy of any single country on our consolidated operating results.
Given our broad range of products manufactured and geographic markets served, management uses a variety of
factors to predict the outlook for our company. We monitor key competitors and customers in order to gauge relative
performance and the outlook for the future. We regularly perform detailed evaluations of the different market segments
we are serving to proactively detect trends and to adapt our strategies accordingly. In addition, we believe our order rates
are indicative of future revenue and thus are a key measure of anticipated performance.
Current economic conditions are uncertain as a result of the COVID-19 global pandemic, impacting both the global
Heating, Ventilation and Air Conditioning (HVAC) and Transport end-markets as well as limiting visibility in the factors used
to predict the outlook for our company. Entering 2021, market conditions are expected to improve as vaccine distribution
expands across the geographies where we serve our customers.
31
2020 ANNUAL REPORT2020 Annual Report PART II
We believe we have a solid foundation of global brands that are highly differentiated in all of our major product lines. Our
geographic and product diversity coupled with our large installed product base provides growth opportunities within
our service, parts and replacement revenue streams. In addition, we are investing substantial resources to innovate and
develop new products and services which we expect will drive our future growth.
RESULTS OF OPERATIONS
In connection with the completion of the Transaction, we do not beneficially own any Ingersoll Rand Industrial shares of
common stock and no longer consolidate Ingersoll Rand Industrial in our financial statements. As a result, the following
Management’s Discussion and Analysis of Financial Condition and Results of Operations presents the results of Ingersoll
Rand Industrial as a discontinued operation for periods prior to the Distribution date. In addition, the assets and liabilities
of Ingersoll Rand Industrial have been recast to held-for-sale at December 31, 2019.
YEAR ENDED DECEMBER 31, 2020 COMPARED TO THE YEAR ENDED DECEMBER 31, 2019 - CONSOLIDATED RESULTS
DOLLAR AMOUNTS IN MILLIONS
Net revenues
Cost of goods sold
Gross profit
Selling and administrative expenses
Operating income
Interest expense
Other income/(expense), net
Earnings before income taxes
Benefit (provision) for income taxes
Earnings from continuing operations
Discontinued operations, net of tax
Net earnings
NET REVENUES
2020
2019
PERIOD
CHANGE
2020% OF
REVENUES
2019% OF
REVENUES
69.5%
30.5%
18.2%
12.3%
69.5%
30.5%
17.7%
12.8%
$ 12,454.7
$ 13,075.9
$ (621.2)
(8,651.3)
(9,085.5)
434.2
3,803.4
3,990.4
(187.0)
(2,270.6)
(2,320.3)
49.7
1,532.8
1,670.1
(137.3)
(248.7)
4.1
(242.8)
(28.4)
(5.9)
32.5
1,288.2
1,398.9
(110.7)
(296.8)
991.4
(121.4)
(238.6)
1,160.3
268.2
(58.2)
(168.9)
(389.6)
$
870.0
$ 1,428.5
$ (558.5)
Net revenues for the year ended December 31, 2020 decreased by 4.8%, or $621.2 million, compared with the same period
of 2019. The components of the period change are as follows:
Volume
Pricing
Currency translation
Total
(5.5)%
0.8 %
(0.1)%
(4.8)%
During 2020, we were impacted by the economic environment resulting from the COVID-19 global pandemic; however,
strong operational results during the second half of the year mitigated a challenging first half. The decrease in Net
revenues is primarily related to lower volumes across each of our segments. Temporary facility closures beginning in
the first quarter of 2020 disrupted results in the Asia Pacific region with impacts more widely felt throughout operations
in the Americas and EMEA in the months thereafter. Unfavorable foreign currency exchange rate movements further
contributed to the year-over-year decrease, partially offset by improved pricing. Refer to the “Results by Segment” below
for a discussion of Net Revenues by segment.
32
2020 ANNUAL REPORT PART II
GROSS PROFIT MARGIN
Gross profit margin for the year ended December 31, 2020 remained flat at 30.5% compared to the same period of 2019.
Gross profit margin was favorably impacted by improved pricing, cost containment initiatives and deflation. However,
these favorable impacts were offset by unfavorable product mix due to lower volumes on higher margin products and
the under absorption of fixed production overhead costs.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses for the year ended December 31, 2020 decreased by 2.1%, or $49.7 million, compared
with the same period of 2019. Due to the COVID-19 global pandemic, we initiated cost containment actions in order to
mitigate its impacts on our business including reduced discretionary spending, employee furloughs in certain regions
and a six-month delay to annual merit-based salary increases. These amounts were partially offset by higher spending
on restructuring and transformation initiatives associated with the completion of the Transaction. However, selling and
administrative expenses as a percentage of net revenues for the year ended December 31, 2020 increased 50 basis
points from 17.7% to 18.2% primarily due to lower comparable revenue year-over-year.
INTEREST EXPENSE
Interest expense for the year ended December 31, 2020 increased by $5.9 million compared with the same period of 2019
due to the $1.5 billion issuance of Senior notes during the first quarter of 2019. The increase was partially offset by the
redemption of 2.625% Senior notes in April 2020 of $300.0 million and repayment of commercial paper of $179.0 million
during the third quarter of 2019.
OTHER INCOME/(EXPENSE), NET
The components of Other income/(expense), net, for the years ended December 31 are as follows:
IN MILLIONS
Interest income/(loss)
Foreign currency exchange gain (loss)
Other components of net periodic benefit cost
Other activity, net
Other income/(expense), net
2020
$
4.5
$
(10.0)
(14.7)
24.3
2019
0.6
(9.5)
(34.9)
15.4
$
4.1
$ (28.4)
Other income/(expense), net includes the results from activities other than normal business operations such as interest
income and foreign currency gains and losses on transactions that are denominated in a currency other than an entity’s
functional currency. In addition, we include the components of net periodic benefit cost for pension and post retirement
obligations other than the service cost component. Other activity, net includes items associated with certain legal
matters as well as asbestos-related activities through the Petition Date. During the year ended December 31, 2020, we
recorded a $17.4 million adjustment to correct an overstatement of a legacy legal liability that originated in prior years and
a gain of $0.9 million related to the deconsolidation of Murray and its wholly-owned subsidiary ClimateLabs within other
activity, net.
PROVISION FOR INCOME TAXES
The 2020 effective tax rate was 23.0% which was higher than the U.S. Statutory rate of 21% due to a $36.5 million non-cash
charge related to the establishment of valuation allowances on net deferred tax assets, primarily net operating losses in
certain tax jurisdictions and the write-off of a carryforward tax attribute as a result of the completion of the Transaction,
U.S. state and local taxes and certain non-deductible employee expenses. These amounts were partially offset by excess
tax benefits from employee share-based payments, a $14.0 million benefit primarily related to a reduction in valuation
allowances on deferred taxes related to net operating losses as a result of a planned restructuring in a non-U.S. tax
jurisdiction and foreign tax credits as a result of revised projections of future foreign source income and earnings in
non-U.S. jurisdictions, which in aggregate have a lower effective tax rate. The impact of the changes in the valuation
allowances and the write-off of the carryforward tax attribute increased the effective tax rate by 1.7%. Revenues from non-
U.S. jurisdictions accounted for approximately 28% of our total 2020 revenues, such that a material portion of our pretax
33
2020 ANNUAL REPORT2020 Annual Report PART II
income was earned and taxed outside the U.S. at rates ranging from 0% to 38%. When comparing the results of multiple
reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions can cause variability in
our overall effective tax rate.
The 2019 effective tax rate was 17.1% which is lower than the U.S. Statutory rate of 21% primarily due to a reduction in
deferred tax asset valuation allowances for certain non-U.S. net deferred tax assets and excess tax benefits from
employee share-based payments. These amounts were partially offset by U.S. state and local taxes, an increase in a
deferred tax asset valuation allowance for certain state net deferred tax assets and certain non-deductible expenses. In
addition, the reduction was also driven by earnings in non-U.S. jurisdictions, which in aggregate, have a lower effective tax
rate. Revenues from non-U.S. jurisdictions accounted for approximately 31% of our total 2019 revenues, such that a material
portion of our pretax income was earned and taxed outside the U.S. at rates ranging from 0% to 38%. When comparing
the results of multiple reporting periods, among other factors, the mix of earnings between U.S. and foreign jurisdictions
can cause variability in our overall effective tax rate.
DISCONTINUED OPERATIONS
The components of Discontinued operations, net of tax for the years ended December 31 are as follows:
IN MILLIONS
Net revenues
Pre-tax earnings (loss) from discontinued operations
Tax benefit (expense)
Discontinued operations, net of tax
2020
2019
$ 469.8
$ 3,523.0
(136.3)
14.9
397.5
(129.3)
$ (121.4)
$ 268.2
Discontinued operations are retained obligations from previously sold businesses, including amounts related to Ingersoll
Rand Industrial as part of the completion of the Transaction and asbestos-related activities of Aldrich through the Petition
Date. In addition, the year ended December 31, 2020 includes pre-tax Ingersoll Rand Industrial separation costs primarily
related to legal, consulting and advisory fees of $114.2 million and a loss of $25.8 million related to the deconsolidation
of Aldrich and its wholly-owned subsidiary 200 Park. The year ended December 31, 2019 includes $94.6 million of pre-tax
Ingersoll Rand Industrial separation costs.
The components of Discontinued operations, net of tax for the years ended December 31 are as follows:
IN MILLIONS
Ingersoll Rand Industrial, net of tax
Other discontinued operations, net of tax
Discontinued operations, net of tax
2020
2019
$ (84.9)
$ 227.6
(36.5)
40.6
$ (121.4)
$ 268.2
YEAR ENDED DECEMBER 31, 2020 COMPARED TO THE YEAR ENDED DECEMBER 31, 2019 - SEGMENT RESULTS
We operate under three regional operating segments designed to create deep customer focus and relevance in
markets around the world.
• Our Americas segment innovates for customers in the North America and Latin America regions. The Americas
segment encompasses commercial heating and cooling systems, building controls, and energy services and
solutions; residential heating and cooling; and transport refrigeration systems and solutions.
• Our EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA segment
encompasses heating and cooling systems, services and solutions for commercial buildings, and transport
refrigeration systems and solutions.
• Our Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific segment
encompasses heating and cooling systems, services and solutions for commercial buildings and transport
refrigeration systems and solutions.
34
2020 ANNUAL REPORT PART II
Management measures operating performance based on net earnings excluding interest expense, income taxes,
depreciation and amortization, restructuring, unallocated corporate expenses and discontinued operations (Segment
Adjusted EBITDA). Segment Adjusted EBITDA is not defined under accounting principles generally accepted in the United
States of America (GAAP) and may not be comparable to similarly-titled measures used by other companies and should
not be considered a substitute for net earnings or other results reported in accordance with GAAP. We believe Segment
Adjusted EBITDA provides the most relevant measure of profitability as well as earnings power and the ability to generate
cash. This measure is a useful financial metric to assess our operating performance from period to period by excluding
certain items that we believe are not representative of our core business and we use this measure for business planning
purposes. Segment Adjusted EBITDA also provides a useful tool for assessing the comparability between periods and
our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures
because it eliminates non-cash charges such as depreciation and amortization expense.
The following discussion compares our results for each of our three reportable segments for the year ended
December 31, 2020 compared to the year ended December 31, 2019.
DOLLAR AMOUNTS IN MILLIONS
Americas
Net revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA as a percentage of net revenues
EMEA
Net revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA as a percentage of net revenues
Asia Pacific
Net revenues
Segment Adjusted EBITDA
Segment Adjusted EBITDA as a percentage of net revenues
Total Net revenues
Total Segment Adjusted EBITDA
AMERICAS
2020
2019
%
CHANGE
$
9,685.9
$ 10,059.5
(3.7)%
1,677.7
1,742.1
(3.7)%
17.3 %
17.3 %
$
1,648.1
$
1,762.6
(6.5)%
265.7
16.1 %
267.7
(0.7)%
15.2 %
$
1,120.7
$
1,253.8
(10.6)%
188.8
16.8 %
182.8
3.3 %
14.6 %
$ 12,454.7
$ 13,075.9
(4.8)%
$
2,132.2
$
2,192.6
(2.8)%
Net revenues for the year ended December 31, 2020 decreased by 3.7% or $373.6 million, compared with the same period
of 2019. The components of the period change are as follows:
Volume
Pricing
Currency translation
Total
(4.4)%
1.0 %
(0.3)%
(3.7)%
During 2020, the Americas region was impacted by the economic environment resulting from the COVID-19 global
pandemic; however, strong operational results during the second half of the year mitigated a challenging first half. The
decrease in Net revenues primarily related to lower volumes in each of our businesses during the first half of 2020. In
addition, unfavorable foreign currency exchange rate movements further contributed to the year-over-year decrease,
partially offset by favorable pricing.
Segment Adjusted EBITDA margin for the year ended December 31, 2020 remained flat at 17.3% compared to the same
period of 2019. Improved pricing, cost containment initiatives, deflation and lower spending on investments were offset by
unfavorable product mix, lower volumes and under absorption of fixed production overhead costs.
35
2020 ANNUAL REPORT2020 Annual Report PART II
EMEA
Net revenues for the year ended December 31, 2020 decreased by 6.5% or $114.5 million, compared with the same period
of 2019. The components of the period change are as follows:
Volume
Pricing
Currency translation
Total
(8.0)%
0.3 %
1.2 %
(6.5)%
During 2020, the EMEA region was heavily impacted by the economic environment resulting from the COVID-19 global
pandemic. The decrease in Net revenues primarily related to lower volumes, partially offset by favorable foreign currency
exchange rate movements and improved pricing.
Segment Adjusted EBITDA margin for the year ended December 31, 2020 increased by 90 basis points to 16.1% compared
to 15.2% for the same period of 2019. The increase was primarily driven by cost containment initiatives, lower spending on
investments, favorable foreign currency exchange rate movements and improved pricing. These amounts were partially
offset by lower volumes, unfavorable product mix and under absorption of fixed production overhead costs.
ASIA PACIFIC
Net revenues for the year ended December 31, 2020 decreased by 10.6% or $133.1 million, compared with the same period
of 2019. The components of the period change are as follows:
Volume
Pricing
Currency translation
Total
(11.5)%
0.5 %
0.4 %
(10.6)%
During 2020, the Asia Pacific region was heavily impacted by the economic environment resulting from the COVID-19
global pandemic. The decrease in Net revenues primarily related to lower volumes since the beginning of the year,
partially offset by improved pricing and favorable foreign currency exchange rate movements.
Segment Adjusted EBITDA margin for the year ended December 31, 2020 increased by 220 basis points to 16.8%
compared to 14.6% for the same period of 2019. The increase was primarily driven by cost containment initiatives,
improved pricing and deflation. These amounts were partially offset by lower volumes, unfavorable product mix and
under absorption of fixed production overhead costs.
LIQUIDITY AND CAPITAL RESOURCES
We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities.
In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory
turns, capital expenditure commitments and income tax payments. Our cash requirements primarily consist of the
following:
• Funding of working capital
• Funding of capital expenditures
• Dividend payments
• Debt service requirements
Our primary sources of liquidity include cash balances on hand, cash flows from operations, proceeds from debt
offerings, commercial paper, and borrowing availability under our existing credit facilities. We earn a significant amount of
our operating income in jurisdictions where it is deemed to be permanently reinvested. Our most prominent jurisdiction
of operation is the U.S. We expect existing cash and cash equivalents available to the U.S. operations, the cash generated
by our U.S. operations, our committed credit lines as well as our expected ability to access the capital and debt markets
36
2020 ANNUAL REPORT PART II
will be sufficient to fund our U.S. operating and capital needs for at least the next twelve months and thereafter for the
foreseeable future. In addition, we expect existing non-U.S. cash and cash equivalents and the cash generated by our
non-U.S. operations will be sufficient to fund our non-U.S. operating and capital needs for at least the next twelve months
and thereafter for the foreseeable future. The maximum aggregate amount of unsecured commercial paper notes
available to be issued, on a private placement basis, under the commercial paper program is $2.0 billion, of which we
had no outstanding balance as of December 31, 2020.
As of December 31, 2020, we had $3,289.9 million of cash and cash equivalents on hand, of which $2,471.2 million was
held by non-U.S. subsidiaries. Cash and cash equivalents held by our non-U.S. subsidiaries are generally available for
use in our U.S. operations via intercompany loans, equity infusions or via distributions from direct or indirectly owned
non-U.S. subsidiaries for which we do not assert permanent reinvestment. As a result of the Tax Cuts and Jobs Act in
2017, additional repatriation opportunities to access cash and cash equivalents held by non-U.S. subsidiaries have been
created. In general, repatriation of cash to the U.S. can be completed with no significant incremental U.S. tax. However, to
the extent that we repatriate funds from non-U.S. subsidiaries for which we assert permanent reinvestment to fund our
U.S. operations, we would be required to accrue and pay applicable non-U.S. taxes. As of December 31, 2020, we currently
have no plans to repatriate funds from subsidiaries for which we assert permanent reinvestment.
Share repurchases are made from time to time in accordance with management’s balanced capital allocation strategy,
subject to market conditions and regulatory requirements. In October 2018, our Board of Directors authorized the
repurchase of up to $1.5 billion of our ordinary shares under a share repurchase program (2018 Authorization) upon
completion of the prior authorized share repurchase program. No material amounts were repurchased under this
program in 2018. During the year ended December 31, 2019, we repurchased and canceled approximately $750 million
of our ordinary shares leaving approximately $750 million remaining under the 2018 Authorization. During the year
ended December 31, 2020, we repurchased and canceled approximately $250 million of our ordinary shares leaving
approximately $500 million remaining under the 2018 Authorization. Additionally, through February 9, 2021, we repurchased
approximately $100 million of our ordinary shares under the 2018 Authorization. In February 2021, our Board of Directors
authorized the repurchase of up to $2.0 billion of our ordinary shares under a new share repurchase program
(2021 Authorization) upon completion of the 2018 Authorization.
In June 2018, we announced an increase in our quarterly share dividend from $0.45 to $0.53 per ordinary share. This
reflected an 18% increase that began with our September 2018 payment and an 83% increase since the beginning of
2016. In February 2021, we announced an 11% increase in our quarterly share dividend from $0.53 to $0.59 per ordinary
share that will begin with our March 2021 payment.
We continue to actively manage and strengthen our business portfolio to meet the current and future needs of our
customers. We achieve this partly through engaging in research and development and sustaining activities and partly
through acquisitions. Each year, we make a significant investment in new product development and new technology
innovation as they are key factors in achieving our strategic objectives as a leader in the climate sector. We also
focus on partnering with our suppliers and technology providers to align their investment decisions with our technical
requirements. In addition, we have a strong focus on sustaining activities, which include costs incurred to reduce
production costs, improve existing products, create custom solutions for customers and provide support to our
manufacturing facilities. Combined, these costs account for approximately two percent of net revenues each year.
In pursuing our business strategy, we routinely conduct discussions, evaluate targets and enter into agreements
regarding possible acquisitions, divestitures, joint ventures and equity investments. Since 2018, we have acquired several
businesses and entered into a joint venture that complements existing products and services further enhancing
our product portfolio. In addition, we completed a Reverse Morris Trust transaction with Gardner Denver whereby we
separated Ingersoll Rand Industrial from our business portfolio, transforming the Company into a global climate innovator.
We recognized separation-related costs of $114.2 million during the year ended December 31, 2020 and $94.6 million
during the year ended December 31, 2019. These expenditures were incurred in order to facilitate the transaction and are
included within Discontinued operations, net of tax.
We incur ongoing costs associated with restructuring initiatives intended to result in improved operating performance,
profitability and working capital levels. Actions associated with these initiatives may include workforce reductions,
improving manufacturing productivity, realignment of management structures and rationalizing certain assets. Post
separation, we intend to reduce costs by $140 million through 2021 and an additional $160 million by 2023 for a total of
37
2020 ANNUAL REPORT2020 Annual Report PART II
$300 million in total annual savings. We believe that our existing cash flow, committed credit lines and access to the
capital markets will be sufficient to fund share repurchases, dividends, research and development, sustaining activities,
business portfolio changes and ongoing restructuring actions.
Certain of our subsidiaries entered into Funding Agreements with Aldrich and Murray pursuant to which those
subsidiaries are obligated, among other things, to pay the costs and expenses of Aldrich and Murray during the
pendency of the Chapter 11 cases to the extent distributions from their respective subsidiaries are insufficient to do so
and to provide an amount for the funding for a trust established pursuant to section 524(g) of the Bankruptcy Code, to
the extent that the other assets of Aldrich and Murray are insufficient to provide the requisite trust funding.
As the COVID-19 global pandemic impacts both the broader economy and our operations, we will continue to assess
our liquidity needs and our ability to access capital markets. A continued worldwide disruption could materially affect
economies and financial markets worldwide, resulting in an economic downturn that could affect demand for our
products, our ability to obtain financing on favorable terms and otherwise adversely impact our business, financial
condition and results of operations. The COVID-19 global pandemic created substantial volatility in the short-term credit
markets during the first half of 2020. A recurrence in volatility due to a resurgence in the COVID-19 global pandemic could
impact the cost of our credit facilities, the cost of any borrowing we might make under those facilities or the cost of any
commercial paper we may issue, to the extent we were to either draw on our facilities or issue commercial paper. See
Part I, Item 1A Risk Factors for more information.
LIQUIDITY
The following table contains several key measures of our financial condition and liquidity at the periods ended
December 31:
IN MILLIONS
Cash and cash equivalents
Short-term borrowings and current maturities of long-term debt(1)
Long-term debt
Total debt
Total Trane Technologies plc shareholders’ equity
Total equity
Debt-to-total capital ratio
2020
2019
$ 3,289.9
$ 1,278.6
775.6
4,496.5
5,272.1
6,407.7
6,427.1
650.3
4,922.9
5,573.2
7,267.6
7,312.4
45.1 %
43.3 %
(1)
The $300.0 million of 2.625% Senior notes due in May 2020 were redeemed in April 2020.
DEBT AND CREDIT FACILITIES
Our short-term obligations primarily consists of current maturities of long-term debt. In addition, we have outstanding
$343.0 million of fixed rate debentures that contain a put feature that the holders may exercise on each anniversary
of the issuance date. If exercised, we are obligated to repay in whole or in part, at the holder’s option, the outstanding
principal amount (plus accrued and unpaid interest) of the debentures held by the holder. We also maintain a
commercial paper program which is used for general corporate purposes. Under the program, the maximum aggregate
amount of unsecured commercial paper notes available to be issued, on a private placement basis, is $2.0 billion as of
December 31, 2020. We had no commercial paper outstanding at December 31, 2020 and December 31, 2019. See Note 8
to the Consolidated Financial Statements for additional information regarding the terms of our short-term obligations.
Our long-term obligations primarily consist of long-term debt with final maturity dates ranging between 2021 and 2049. In
addition, we maintain two $1.0 billion senior unsecured revolving credit facilities, one of which matures in March 2022 and
the other in April 2023. The facilities provide support for our commercial paper program and can be used for working
capital and other general corporate purposes. Total commitments of $2.0 billion were unused at December 31, 2020 and
December 31, 2019. See Note 8 to the Consolidated Financial Statements and further below in Supplemental Guarantor
Financial Information for additional information regarding the terms of our long-term obligations and their related
guarantees.
38
2020 ANNUAL REPORT PART II
CASH FLOWS
The following table reflects the major categories of cash flows for the years ended December 31, respectively. For
additional details, please see the Consolidated Statements of Cash Flows in the Consolidated Financial Statements.
IN MILLIONS
Net cash provided by (used in) continuing operating activities
Net cash provided by (used in) continuing investing activities
Net cash provided by (used in) continuing financing activities
Operating Activities
2020
2019
$
1,766.2
$
1,523.7
(338.5)
884.3
(281.8)
272.0
Net cash provided by continuing operating activities for the year ended December 31, 2020 was $1,766.2 million, of which
net income provided $1,422.5 million after adjusting for non-cash transactions. Changes in other assets and liabilities, net
provided $343.7 million. Net cash provided by continuing operating activities for the year ended December 31, 2019 was
$1,523.7 million, of which net income provided $1,594.0 million after adjusting for non-cash transactions. Changes in other
assets and liabilities, net used $70.3 million. The year-over-year increase in net cash provided by continuing operating
activities was primarily driven by improved working capital whereby lower inventory and higher outstanding accounts
payable balances more than offset higher accounts receivable and lower earnings in the current year.
Investing Activities
Cash flows from investing activities represents inflows and outflows regarding the purchase and sale of assets. Primary
activities associated with these items include capital expenditures, proceeds from the sale of property, plant and
equipment, acquisitions, investments in joint ventures and divestitures. During the year ended December 31, 2020, net
cash used in investing activities from continuing operations was $338.5 million. The primary drivers of the usage was
attributable to the acquisition of businesses, which totaled $182.8 million, net of cash acquired and $146.2 million of capital
expenditures. In addition, as a result of the deconsolidation of Murray and its wholly-owned subsidiary ClimateLabs under
the Chapter 11 bankruptcy filing, the assets and liabilities of these entities were derecognized, which resulted in a cash
outflow of $10.8 million. During the year ended December 31, 2019, net cash used in investing activities from continuing
operations was $281.8 million. The primary drivers of the usage was attributable to $205.4 million of capital expenditures
and the acquisition of several businesses, which totaled $83.4 million, net of cash acquired.
Financing Activities
Cash flows from financing activities represent inflows and outflows that account for external activities affecting equity
and debt. Primary activities associated with these actions include paying dividends to shareholders, repurchasing our
own shares, issuing our stock and debt transactions. During the year ended December 31, 2020, net cash provided by
financing activities from continuing operations was $884.3 million. The primary driver of the inflow related to the receipt
of a special cash payment of $1.9 billion pursuant to the completion of the Transaction. This amount was partially offset
by dividends paid to ordinary shareholders of $507.3 million, the repayment of long term debt of $307.5 million and the
repurchase of $250.0 million in ordinary shares. During the year ended December 31, 2019, net cash provided by financing
activities from continuing operations was $272.0 million. The primary driver of the inflow related to the issuance of $1.5
billion of senior notes during the period. This amount was partially offset by the repurchase of $750.1 million in ordinary
shares and dividends paid to ordinary shareholders of $510.1 million.
Free Cash Flow
Free cash flow is a non-GAAP measure and defined as net cash provided by (used in) continuing operating activities,
less capital expenditures, plus cash payments for restructuring and transformation costs. This measure is useful to
management and investors because it is consistent with management’s assessment of our operating cash flow
performance. The most comparable GAAP measure to free cash flow is net cash provided by (used in) continuing
operating activities. Free cash flow may not be comparable to similarly-titled measures used by other companies and
should not be considered a substitute for net cash provided by (used in) continuing operating activities in accordance
with GAAP.
39
2020 ANNUAL REPORT2020 Annual Report PART II
A reconciliation of net cash provided by (used in) continuing operating activities to free cash flow the years ended
December 31 is as follows:
IN MILLIONS
Net cash provided by (used in) continuing operating activities
Capital expenditures
Cash payments for restructuring
Transformation costs paid
Free cash flow(1)
(1) Represents a non-GAAP measure.
PENSION PLANS
2020
2019
$
1,766.2
$
1,523.7
(146.2)
68.9
25.4
(205.4)
45.3
4.3
$
1,714.3
$
1,367.9
Our investment objective in managing defined benefit plan assets is to ensure that all present and future benefit
obligations are met as they come due. We seek to achieve this goal while trying to mitigate volatility in plan funded status,
contribution and expense by better matching the characteristics of the plan assets to that of the plan liabilities. Our
approach to asset allocation is to increase fixed income assets as the plan’s funded status improves. We monitor plan
funded status and asset allocation regularly in addition to investment manager performance. In addition, we monitor the
impact of market conditions on our defined benefit plans on a regular basis. None of our defined benefit pension plans
have experienced a significant impact on their liquidity due to market volatility. See Note 12 to the Consolidated Financial
Statements for additional information regarding pensions.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
Trane Technologies plc (Plc or Parent Company) and certain of its 100% directly or indirectly owned subsidiaries provide
guarantees of public debt issued by other 100% directly or indirectly owned subsidiaries. The following table shows our
guarantor relationships as of December 31, 2020:
PARENT, ISSUER OR GUARANTORS(1)
Trane Technologies plc (Plc)
Trane Technologies Irish Holdings
Unlimited Company (TT Holdings)
Trane Technologies Lux International
Holding Company S.à.r.l.
(TT International)
Trane Technologies Global Holding
Company Limited (TT Global)
Trane Technologies Luxembourg
Finance S.A. (TT Lux)
Trane Technologies HoldCo Inc.
(TTC HoldCo)
Trane Technologies Company LLC
(TTC)
NOTES ISSUED
NOTES GUARANTEED
None
None
None
None
3.550% Senior notes due 2024
3.500% Senior notes due 2026
3.800% Senior notes due 2029
4.650% Senior notes due 2044
4.500% Senior notes due 2049
2.900% Senior notes due 2021
4.250% Senior notes due 2023
3.750% Senior notes due 2028
5.750% Senior notes due 2043
4.300% Senior notes due 2048
9.000% Debentures due 2021
7.200% Debentures due 2021-2025
6.480% Debentures due 2025
Puttable debentures due 2027-2028
All registered notes and debentures
All notes issued by TT Lux and TTC
HoldCo
All notes issued by TT Lux and TTC
HoldCo
All notes issued by TT Lux and TTC
HoldCo
All notes and debentures issued by TTC
HoldCo and TTC
All notes issued by TT Lux
All notes issued by TT Lux and TTC
HoldCo
(1) Plc is formerly known as Ingersoll-Rand plc
TT Holdings is formerly known as Ingersoll-Rand Irish Holdings Unlimited Company
TT International is formerly known as Ingersoll-Rand Lux International Holding Company S.à.r.l
TT Global is formerly known as Ingersoll-Rand Global Holding Company Limited
TT Lux is formerly known as Ingersoll-Rand Luxembourg Finance S.A
TTC HoldCo is a new entity as of June 30, 2020
TTC is the successor to Ingersoll-Rand Company
40
2020 ANNUAL REPORT
PART II
Each subsidiary debt issuer and guarantor is owned 100% directly or indirectly by the Parent Company. Each guarantee
is full and unconditional, and provided on a joint and several basis. There are no significant restrictions of the Parent
Company, or any guarantor, to obtain funds from its subsidiaries, such as provisions in debt agreements that prohibit
dividend payments, loans or advances to the parent by a subsidiary. The following tables present summarized financial
information for the Parent Company and subsidiary debt issuers and guarantors on a combined basis (together, “obligor
group”) after elimination of intercompany transactions and balances based on the Company’s legal entity ownerships
and guarantees outstanding at December 31, 2020. Our obligor groups are as follows: obligor group 1 consists of Plc,
TT Holdings, TT International, TT Global, TT Lux, TTC HoldCo and TTC; obligor group 2 consists of Plc, TT Lux and TTC.
SUMMARIZED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
IN MILLIONS
Net revenues
Gross profit (loss)
Intercompany interest and fees
Earnings (loss) from continuing operations
Discontinued operations, net of tax
Net earnings (loss)
Less: Net earnings attributable to noncontrolling interests
Net earnings (loss) attributable to Trane Technologies plc
SUMMARIZED BALANCE SHEET
IN MILLIONS
ASSETS
Intercompany receivables
Current assets
Intercompany notes receivable
Noncurrent assets
LIABILITIES & EQUITY
Intercompany payables
Current liabilities
Intercompany notes payable
Noncurrent liabilities
YEAR ENDED DECEMBER 31, 2020
OBLIGOR GROUP 1
OBLIGOR GROUP 2
$
—
—
(88.7)
(493.1)
(152.2)
(645.3)
—
$
—
—
48.2
(375.2)
(113.3)
(488.5)
—
$ (645.3)
$ (488.5)
DECEMBER 31, 2020
OBLIGOR GROUP 1
OBLIGOR GROUP 2
$
458.4
$
1,254.7
1,523.7
1,331.9
2,195.0
5,572.2
6,880.3
2,249.7
7,729.6
2,200.5
1,331.9
1,967.2
3,599.6
4,539.1
—
3,430.5
CAPITAL RESOURCES
Based on historical performance and current expectations, we believe our cash and cash equivalents balance, the cash
generated from our operations, our committed credit lines and our expected ability to access capital markets will satisfy
our working capital needs, capital expenditures, dividends, share repurchases, upcoming debt maturities, and other
liquidity requirements associated with our operations for the foreseeable future.
Capital expenditures were $146.2 million, $205.4 million and $284.7 million for the years ended December 31, 2020, 2019 and
2018, respectively. Our investments continue to improve manufacturing productivity, reduce costs, provide environmental
enhancements, upgrade information technology infrastructure and security and advanced technologies for existing
facilities. The capital expenditure program for 2021 is estimated to be approximately one to two percent of revenues,
including amounts approved in prior periods. Many of these projects are subject to review and cancellation at our option
without incurring substantial charges.
For financial market risk impacting the Company, see Item 7A. “Quantitative and Qualitative Disclosure About Market Risk.”
41
2020 ANNUAL REPORT2020 Annual Report PART II
CAPITALIZATION
In addition to cash on hand and operating cash flow, we maintain significant credit availability under our Commercial
Paper Program. Our ability to borrow at a cost-effective rate under the Commercial Paper Program is contingent upon
maintaining an investment-grade credit rating. As of December 31, 2020, our credit ratings were as follows, remaining
unchanged from 2019:
Moody’s
Standard and Poor’s
SHORT-TERM
LONG-TERM
P-2
A-2
Baa2
BBB
The credit ratings set forth above are not a recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal by the assigning rating organization. Each rating should be evaluated independently of any other rating.
Our public debt does not contain financial covenants and our revolving credit lines have a debt-to-total capital covenant
of 65%. As of December 31, 2020, our debt-to-total capital ratio was significantly beneath this limit.
CONTRACTUAL OBLIGATIONS
The following table summarizes our contractual cash obligations by required payment period:
IN MILLIONS
Long-term debt
LESS THAN
1 YEAR
1 - 3
YEARS
3 - 5
YEARS
MORE THAN
5 YEARS
TOTAL
$
775.8 (a)
$
715.8 $
665.1 $
3,150.0 $
5,306.7
Interest payments on long-term debt
Purchase obligations
Operating leases
231.4
735.2
152.0
415.1
—
192.3
345.7
1,641.6
2,633.8
—
69.6
—
34.5
735.2
448.4
Total contractual cash obligations
$ 1,894.4
$
1,323.2 $
1,080.4 $
4,826.1 $
9,124.1
(a)
Includes $343.0 million of debt redeemable at the option of the holder. The scheduled maturities of these bonds range between
2027 and 2028.
Future expected obligations under the Funding agreement and our pension and postretirement benefit plans, income
taxes, environmental and product liability matters have not been included in the contractual cash obligations table above.
PENSIONS
At December 31, 2020, we had a net unfunded liability of $548.2 million, which consists of noncurrent pension assets of
$72.8 million and current and non-current pension benefit liabilities of $621.0 million. It is our objective to contribute to
the pension plans to ensure adequate funds are available in the plans to make benefit payments to plan participants
and beneficiaries when required. We currently expect that we will contribute approximately $56 million to our enterprise
plans worldwide in 2021. The timing and amounts of future contributions are dependent upon the funding status of the
plan, which is expected to vary as a result of changes in interest rates, returns on underlying assets, and other factors.
Therefore, pension contributions have been excluded from the preceding table. See Note 12 to the Consolidated
Financial Statements for additional information regarding pensions.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
At December 31, 2020, we had postretirement benefit obligations of $389.1 million. We fund postretirement benefit costs
principally on a pay-as-you-go basis as medical costs are incurred by covered retiree populations. Benefit payments,
which are net of expected plan participant contributions and Medicare Part D subsidy, are expected to be approximately
$37 million in 2021. Because benefit payments are not required to be funded in advance, and the timing and amounts
of future payments are dependent on the cost of benefits for retirees covered by the plan, they have been excluded
from the preceding table. See Note 12 to the Consolidated Financial Statements for additional information regarding
postretirement benefits other than pensions.
INCOME TAXES
At December 31, 2020, we have total unrecognized tax benefits for uncertain tax positions of $65.4 million and $14.6 million
of related accrued interest and penalties, net of tax. The liability has been excluded from the preceding table as we
42
2020 ANNUAL REPORT PART II
are unable to reasonably estimate the amount and period in which these liabilities might be paid. See Note 18 to the
Consolidated Financial Statements for additional information regarding income taxes, including unrecognized tax benefits.
CONTINGENT LIABILITIES
We are involved in various litigation, claims and administrative proceedings, including those related to the Funding
Agreements and environmental and product liability matters. We believe that these liabilities are subject to the uncertainties
inherent in estimating future costs for contingent liabilities, and will likely be resolved over an extended period of time.
Because the timing and amounts of potential future cash flows are uncertain, they have been excluded from the preceding
table. See Note 22 to the Consolidated Financial Statements for additional information regarding contingent liabilities.
CRITICAL ACCOUNTING POLICIES
Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our
Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally
accepted in the United States (GAAP). The preparation of financial statements in conformity with those accounting
principles requires management to use judgment in making estimates and assumptions based on the relevant
information available at the end of each period. These estimates and assumptions have a significant effect on reported
amounts of assets and liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities
because they result primarily from the need to make estimates and assumptions on matters that are inherently uncertain.
Actual results may differ from these estimates. If updated information or actual amounts are different from previous
estimates, the revisions are included in our results for the period in which they become known.
The following is a summary of certain accounting estimates and assumptions made by management that we consider
critical.
• Goodwill and indefinite-lived intangible assets – We have significant goodwill and indefinite-lived intangible assets on
our balance sheet related to acquisitions. These assets are tested and reviewed annually during the fourth quarter for
impairment or when there is a significant change in events or circumstances that indicate that the fair value of an asset is
more likely than not less than the carrying amount of the asset. In addition, an interim impairment test is completed upon
a triggering event or when there is a reorganization of reporting structure or disposal of all or a portion of a reporting unit.
The determination of estimated fair value requires us to make assumptions about estimated cash flows, including
profit margins, long-term forecasts, discount rates and terminal growth rates. We developed these assumptions based
on the market and geographic risks unique to each reporting unit. The estimates of fair value are based on the best
information available as of the date of the assessment, which primarily incorporates management assumptions about
expected future cash flows.
Annual Goodwill Impairment Test
Impairment of goodwill is assessed at the reporting unit level and begins with a qualitative assessment to determine
if it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for
determining whether it is necessary to perform the goodwill impairment test under Financial Accounting Standards
Board (FASB) Accounting Standard Codification (ASC) 350, “Intangibles-Goodwill and Other” (ASC 350). For those
reporting units that bypass or fail the qualitative assessment, the test compares the carrying amount of the reporting
unit to its estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the
reporting unit is not impaired. To the extent that the carrying value of the reporting unit exceeds its estimated fair value,
an impairment loss would be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair
value, not to exceed the carrying amount of goodwill in that reporting unit.
As quoted market prices are not available for our reporting units, the calculation of their estimated fair value is
determined using three valuation techniques: a discounted cash flow model (an income approach), a market-adjusted
multiple of earnings and revenues (a market approach), and a similar transactions method (also a market approach).
The discounted cash flow approach relies on our estimates of future cash flows and explicitly addresses factors such
as timing, growth and margins, with due consideration given to forecasting risk. The multiple of earnings and revenues
approach reflects the market’s expectations for future growth and risk, with adjustments to account for differences
between the guideline publicly traded companies and the subject reporting units. The similar transactions method
considers prices paid in transactions that have recently occurred in our industry or in related industries. These
valuation techniques are weighted 50%, 40% and 10%, respectively.
43
2020 ANNUAL REPORT2020 Annual Report PART II
Interim Goodwill Impairment Test
During the first quarter of 2020, we announced a new organizational model and business segment structure. Under
the revised structure, we created three new regional operating segments (which also serve as our reportable
segments) previously reported under our former climate segment. In connection with the new segment structure, we
performed an interim goodwill impairment assessment immediately prior to the reorganization becoming effective,
the results of which did not indicate any goodwill impairment. We then reassigned our goodwill among the newly
designated reporting units using a relative fair value approach and immediately performed a second goodwill
impairment assessment under the new reporting structure. The results did not indicate any goodwill impairment. We
relied on the guideline public company method, specifically a market-adjusted multiple of earnings and revenues
approach, to calculate the fair value of the new reporting units.
OTHER INDEFINITE-LIVED INTANGIBLE ASSETS
Impairment of other intangible assets with indefinite useful lives is first assessed using a qualitative assessment to
determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. This assessment is
used as a basis for determining whether it is necessary to calculate the fair value of an indefinite-lived intangible asset.
For those indefinite-lived assets where it is required, a fair value is determined on a relief from royalty methodology
(income approach) which is based on the implied royalty paid, at an appropriate discount rate, to license the use of
an asset rather than owning the asset. The present value of the after-tax cost savings (i.e., royalty relief) indicates the
estimated fair value of the asset. Any excess of the carrying value over the estimated fair value would be recognized as
an impairment loss equal to that excess.
• Asbestos matters – Prior to the Petition Date, certain of our wholly-owned subsidiaries and former companies were
named as defendants in asbestos-related lawsuits in state and federal courts. We recorded a liability for our actual and
anticipated future claims as well as an asset for anticipated insurance settlements. We performed a detailed analysis
and projected an estimated range of the total liability for pending and unasserted future asbestos-related claims.
In accordance with ASC 450, “Contingencies” (ASC 450), we recorded the liability at the low end of the range as we
believed that no amount within the range is a better estimate than any other amount. Our key assumptions underlying
the estimated asbestos-related liabilities included the number of people occupationally exposed and likely to develop
asbestos-related diseases such as mesothelioma and lung cancer, the number of people likely to file an asbestos-
related personal injury claim against us, the average settlement and resolution of each claim and the percentage of
claims resolved with no payment. Asbestos-related defense costs were excluded from the asbestos claims liability
and were recorded separately as services were incurred. None of our existing or previously-owned businesses were
a producer or manufacturer of asbestos. We recorded certain income and expenses associated with our asbestos
liabilities and corresponding insurance recoveries within Discontinued operations, net of tax, as they related to
previously divested businesses, except for amounts associated with asbestos liabilities and corresponding insurance
recoveries of Murray and its predecessors, which were recorded within continuing operations.
• Revenue recognition – Revenue is recognized when control of a good or service promised in a contract (i.e.,
performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the
use of and obtain substantially all of the remaining benefits from that good or service. A majority of our revenues are
recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However,
a portion of our revenues are recognized over time as the customer simultaneously receives control as we perform
work under a contract. For these arrangements, the cost-to-cost input method is used as it best depicts the transfer
of control to the customer that occurs as we incurs costs. We adopted Accounting Standard Update (ASU) No. 2014-09,
“Revenue from Contracts with Customers” (ASC 606), on January 1, 2018 using the modified retrospective approach.
Refer to Note 3, “Summary of Significant Accounting Policies” and Note 13, “Revenue” for additional information related
to the adoption of ASC 606.
The transaction price allocated to performance obligations reflects our expectations about the consideration we
will be entitled to receive from a customer. To determine the transaction price, variable and noncash consideration
are assessed as well as whether a significant financing component exists. We include variable consideration in
the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur
when the uncertainty associated with variable consideration is subsequently resolved. We consider historical data in
determining our best estimates of variable consideration, and the related accruals are recorded using the expected
value method.
44
2020 ANNUAL REPORT PART II
We enter into sales arrangements that contain multiple goods and services, such as equipment, installation and
extended warranties. For these arrangements, each good or service is evaluated to determine whether it represents
a distinct performance obligation and whether the sales price for each obligation is representative of standalone
selling price. If available, we utilize observable prices for goods or services sold separately to similar customers in
similar circumstances to evaluate relative standalone selling price. List prices are used if they are determined to
be representative of standalone selling prices. Where necessary, we ensure that the total transaction price is then
allocated to the distinct performance obligations based on the determination of their relative standalone selling price
at the inception of the arrangement.
We recognize revenue for delivered goods or services when the delivered good or service is distinct, control of the
good or service has transferred to the customer, and only customary refund or return rights related to the goods or
services exist. For extended warranties and long-term service agreements, revenue for these distinct performance
obligations are recognized over time on a straight-line basis over the respective contract term.
• Income taxes – Deferred tax assets and liabilities are determined based on temporary differences between financial
reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in
which the differences are expected to reverse. We recognize future tax benefits, such as net operating losses and tax
credits, to the extent that realizing these benefits is considered in our judgment to be more likely than not. We regularly
review the recoverability of our deferred tax assets considering our historic profitability, projected future taxable income,
timing of the reversals of existing temporary differences and the feasibility of our tax planning strategies. Where
appropriate, we record a valuation allowance with respect to a future tax benefit.
The provision for income taxes involves a significant amount of management judgment regarding interpretation of
relevant facts and laws in the jurisdictions in which we operate. Future changes in applicable laws, projected levels of
taxable income, and tax planning could change the effective tax rate and tax balances recorded by us. In addition, tax
authorities periodically review income tax returns filed by us and can raise issues regarding our filing positions, timing
and amount of income or deductions, and the allocation of income among the jurisdictions in which we operate.
A significant period of time may elapse between the filing of an income tax return and the ultimate resolution of an
issue raised by a revenue authority with respect to that return. We believe that we have adequately provided for any
reasonably foreseeable resolution of these matters. We will adjust our estimate if significant events so dictate. To the
extent that the ultimate results differ from our original or adjusted estimates, the effect will be recorded in the provision
for income taxes in the period that the matter is finally resolved.
• Employee benefit plans – We provide a range of benefits to eligible employees and retirees, including pensions,
postretirement and postemployment benefits. Determining the cost associated with such benefits is dependent on
various actuarial assumptions including discount rates, expected return on plan assets, compensation increases,
mortality, turnover rates and healthcare cost trend rates. Actuarial valuations are performed to determine expense
in accordance with GAAP. Actual results may differ from the actuarial assumptions and are generally accumulated
and amortized into earnings over future periods. We review our actuarial assumptions at each measurement date
and make modifications to the assumptions based on current rates and trends, if appropriate. The discount rate,
the rate of compensation increase and the expected long-term rates of return on plan assets are determined as of
each measurement date. We believe that the assumptions utilized in recording our obligations under our plans are
reasonable based on input from our actuaries, outside investment advisors and information as to assumptions used
by plan sponsors.
Changes in any of the assumptions can have an impact on the net periodic pension cost or postretirement benefit
cost. Estimated sensitivities to the expected 2021 net periodic pension cost of a 0.25% rate decline in the two basic
assumptions are as follows: the decline in the discount rate would increase expense by approximately $4.8 million
and the decline in the estimated return on assets would increase expense by approximately $7.6 million. A 0.25% rate
decrease in the discount rate for postretirement benefits would increase expected 2021 net periodic postretirement
benefit cost by $0.5 million.
45
2020 ANNUAL REPORT2020 Annual Report PART II
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 3 to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We are exposed to fluctuations in currency exchange rates, interest rates and commodity prices which could impact our
results of operations and financial condition.
FOREIGN CURRENCY EXPOSURES
We have operations throughout the world that manufacture and sell products in various international markets. As a result,
we are exposed to movements in exchange rates of various currencies against the U.S. dollar as well as against other
currencies throughout the world.
Many of our non-U.S. operations have a functional currency other than the U.S. dollar, and their results are translated into
U.S. dollars for reporting purposes. Therefore, our reported results will be higher or lower depending on the weakening
or strengthening of the U.S. dollar against the respective foreign currency. Our largest concentration of revenues from
non-U.S. operations as of December 31, 2020 are in Euros and Chinese Yuan. A hypothetical 10% unfavorable change in
the average exchange rate used to translate Net revenues for the year ended December 31, 2020 from either Euros or
Chinese Yuan-based operations into U.S. dollars would not have a material impact on our financial statements.
We use derivative instruments to hedge those material exposures that cannot be naturally offset. The instruments utilized
are viewed as risk management tools, primarily involve little complexity and are not used for trading or speculative
purposes. To minimize the risk of counter party non-performance, derivative instrument agreements are made only
through major financial institutions with significant experience in such derivative instruments.
We evaluate our exposure to changes in currency exchange rates on our foreign currency derivatives using a sensitivity
analysis. The sensitivity analysis is a measurement of the potential loss in fair value based on a percentage change
in exchange rates. Based on the firmly committed currency derivative instruments in place at December 31, 2020, a
hypothetical change in fair value of those derivative instruments assuming a 10% adverse change in exchange rates
would result in an unrealized loss of approximately $22.3 million, as compared with $27.8 million at December 31, 2019.
These amounts, when realized, would be offset by changes in the fair value of the underlying transactions.
COMMODITY PRICE EXPOSURES
We are exposed to volatility in the prices of commodities used in some of our products and we use fixed price contracts
to manage this exposure. We do not have committed commodity derivative instruments in place at December 31, 2020.
INTEREST RATE EXPOSURE
Our debt portfolio mainly consists of fixed-rate instruments, and therefore any fluctuation in market interest rates is not
expected to have a material effect on our results of operations.
Item 8. Financial Statements and Supplementary Data
(a) The following Consolidated Financial Statements and the report thereon of PricewaterhouseCoopers LLP dated
February 9, 2021, are presented in this Annual Report on Form 10-K beginning on page F-1.
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018
Consolidated Balance Sheets at December 31, 2020 and 2019
For the years ended December 31, 2020, 2019 and 2018:
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
46
2020 ANNUAL REPORT (b) In connection with the completion of the Transaction, we do not beneficially own any Ingersoll Rand Industrial
shares of common stock and no longer consolidate Ingersoll Rand Industrial in our financial statements. As a
result, the following unaudited selected quarterly financial data presents the results of Ingersoll Rand Industrial as a
discontinued operation for periods prior to the Distribution date. The unaudited selected quarterly financial data for
the two years ended December 31, is as follows:
PART II
IN MILLIONS, EXCEPT PER SHARE AMOUNTS
Net revenues
Cost of goods sold
Operating income
Earnings from continuing operations
Discontinued operations, net of tax
Net earnings (loss)
Net earnings (loss) attributable to Trane Technologies plc
Amounts attributable to Trane Technologies plc ordinary
shareholders:
Continuing operations
Discontinued operations
Net earnings (loss)
Earnings (Loss) per share attributable to Trane Technologies plc
ordinary shareholders:
Basic:
Continuing operations
Discontinued operations
Diluted:
Continuing operations
Discontinued operations
Net revenues
Cost of goods sold
Operating income
Earnings from continuing operations
Discontinued operations, net of tax
Net earnings (loss)
Net earnings (loss) attributable to Trane Technologies plc
Amounts attributable to Trane Technologies plc ordinary
shareholders:
Continuing operations
Discontinued operations
Net earnings (loss)
Earnings (Loss) per share attributable to Trane Technologies plc
ordinary shareholders:
Basic:
Continuing operations
Discontinued operations
Diluted:
Continuing operations
Discontinued operations
2020
FIRST
QUARTER
SECOND
QUARTER
THIRD
QUARTER
FOURTH
QUARTER
$
2,641.3 $
3,138.8 $
3,495.5 $
3,179.1
(1,898.8)
(2,160.5)
(2,360.8)
(2,231.2)
154.4
52.8
(78.7)
(25.9)
(29.2)
423.5
278.3
(36.2)
242.1
238.8
566.9
410.1
(5.5)
404.6
400.6
388.0
250.2
(1.0)
249.2
244.7
$
$
$
$
$
$
50.0 $
275.4 $
406.1 $
245.7
(79.2)
(36.6)
(5.5)
(1.0)
(29.2) $
238.8 $
400.6 $
244.7
0.21 $
1.15 $
1.69 $
(0.33) $
(0.15) $
(0.02) $
0.21 $
1.14 $
1.67 $
(0.33) $
(0.15) $
(0.03) $
2019
1.02
—
1.01
—
FIRST
QUARTER
SECOND
QUARTER
THIRD
QUARTER
FOURTH
QUARTER
$
2,803.7 $
3,617.6 $
3,470.9 $
3,183.7
(1,989.2)
(2,462.8)
(2,366.6)
(2,266.9)
236.5
147.3
56.4
203.7
199.9
566.9
412.6
47.7
460.3
456.1
536.5
386.3
77.1
463.4
458.8
330.2
214.1
87.0
301.1
296.1
$
$
$
$
$
$
144.2 $
409.1 $
382.6 $
209.2
55.7
47.0
76.2
86.9
199.9 $
456.1 $
458.8 $
296.1
0.59 $
0.23 $
1.69 $
0.19 $
1.58 $
0.32 $
0.59 $
0.23 $
1.67 $
0.19 $
1.57 $
0.31 $
0.87
0.36
0.86
0.36
47
2020 ANNUAL REPORT2020 Annual Report PART II
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have conducted an
evaluation of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the
period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded as of December 31, 2020, that the Company’s disclosure controls and procedures were
effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under
the Exchange Act has been recorded, processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms, and that such information has been accumulated and communicated to the Company’s
management including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
(b) 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 under Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting
is a process designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer and
effected by the Company’s Board of Directors 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.
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 and procedures may
deteriorate.
Management has assessed the effectiveness of internal control over financial reporting as of December 31, 2020. In
making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations
(COSO) of the Treadway Commission in Internal Control - Integrated Framework (2013). Management concluded that
based on its assessment, the Company’s internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears
herein.
(c) Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) that occurred during the quarter ended December 31, 2020 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
None.
48
2020 ANNUAL REPORT Part III
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding our executive officers is included in Part I under the caption “Executive Officers of Registrant.”
The other information required by this item is incorporated herein by reference to the information contained under the
headings “Item 1. Election of Directors”, “Delinquent Section 16(a) Reports” and “Corporate Governance” in our definitive
proxy statement for the 2021 annual general meeting of shareholders (2021 Proxy Statement).
Item 11. Executive Compensation
The other information required by this item is incorporated herein by reference to the information contained under
the headings “Compensation Discussion and Analysis,” “Compensation of Directors,” “Executive Compensation,”
“Compensation Committee Report” and “Compensation Committee Interlocks and Insider Participation” in our 2021 Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
The other information required by this item is incorporated herein by reference to the information contained under
the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan
Information” in our 2021 Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
The other information required by this item is incorporated herein by reference to the information contained under
the headings “Corporate Governance” and “Certain Relationships and Related Person Transactions” in our 2021 Proxy
Statement.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated herein by reference to the information contained under the caption
“Fees of the Independent Auditors” in our 2021 Proxy Statement.
49
2020 ANNUAL REPORT2020 Annual Report Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) 1.
2.
3.
Financial Statements
See Item 8.
Financial Statement Schedules
Schedules have been omitted because the required information is not applicable or because
the required information is included elsewhere in this Annual Report on Form 10-K.
Exhibits
The exhibits listed on the accompanying index to exhibits are filed as part of this Annual Report
on Form 10-K.
50
2020 ANNUAL REPORT PART IV
TRANE TECHNOLOGIES PLC
INDEX TO EXHIBITS
(Item 15(a))
DESCRIPTION
Pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), Trane Technologies plc (the
“Company”) has filed certain agreements as exhibits to this Annual Report on Form 10-K. These agreements may contain
representations and warranties by the parties. These representations and warranties have been made solely for the
benefit of the other party or parties to such agreements and (i) may have been qualified by disclosures made to such
other party or parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified
in such agreements and are subject to more recent developments, which may not be fully reflected in our public
disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply materiality
standards different from what may be viewed as material to investors. Accordingly, these representations and warranties
may not describe our actual state of affairs at the date hereof and should not be relied upon.
On July 1, 2009, Ingersoll-Rand Company Limited, a Bermuda company, completed a reorganization to change the
jurisdiction of incorporation of the parent company from Bermuda to Ireland. As a result, Ingersoll-Rand plc replaced
Ingersoll-Rand Company Limited as the ultimate parent company effective July 1, 2009. All references related to the
Company prior to July 1, 2009 relate to Ingersoll-Rand Company Limited. On March 2, 2020, Ingersoll-Rand plc changed
its name to Trane Technologies plc.
(a) Exhibits
EXHIBIT NO.
DESCRIPTION
METHOD OF FILING
2.1
2.2
2.3
3.1
3.2
4.1
Separation and Distribution Agreement between
Ingersoll-Rand plc and Allegion plc, dated
November 29, 2013.
Incorporated by reference to Exhibit 3.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on December 2, 2013.
Agreement and Plan of Merger, dated as of April 30,
2019, by and among the Company, Gardner Denver
Holdings, Inc., Ingersoll-Rand U.S. HoldCo, Inc. and
Charm Merger Sub Inc.
Incorporated by reference to Exhibit 2.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on May 6, 2019.
Separation and Distribution Agreement, dated as of
April 30, 2019, by and between Ingersoll-Rand plc and
Ingersoll-Rand U.S. HoldCo, Inc.
Incorporated by reference to Exhibit 2.2 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on May 6, 2019).
Constitution of the Company, as amended and
restated on June 2, 2016
Incorporated by reference to Exhibit 3.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on June 7, 2016.
Amendment to the Constitution of the Company dated
March 2, 2020
Filed herewith.
The Company and its subsidiaries are parties to
several long-term debt instruments under which, in
each case, the total amount of securities authorized
does not exceed 10% of the total assets of the
Company and its subsidiaries on a consolidated basis.
Indenture, dated as of June 20, 2013, by and among
Ingersoll-Rand Global Holding Company Limited, as
issuer, Ingersoll-Rand plc, Ingersoll-Rand Company
Limited and Ingersoll-Rand International Holding
Limited, as guarantors and The Bank of New York
Mellon, as Trustee.
Pursuant to paragraph 4 (iii)(A) of Item 601 (b) of
Regulation S-K, the Company agrees to furnish
a copy of such instruments to the Securities and
Exchange Commission upon request.
Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on June 26, 2013.
51
2020 ANNUAL REPORT2020 Annual Report PART IV
EXHIBIT NO.
DESCRIPTION
METHOD OF FILING
First Supplemental Indenture, dated as of June 20,
2013, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Company Limited and Ingersoll-Rand
International Holding Limited, as guarantors and The
Bank of New York Mellon, as Trustee, relating to the
2.875% Senior Notes due 2019.
Second Supplemental Indenture, dated as of June 20,
2013, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Company Limited and Ingersoll-Rand
International Holding Limited, as guarantors and The
Bank of New York Mellon, as Trustee, relating to the
4.250% Senior Notes due 2023.
Third Supplemental Indenture, dated as of June 20,
2013, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Company Limited and Ingersoll-Rand
International Holding Limited, as guarantors and The
Bank of New York Mellon, as Trustee, relating to the
5.750% Senior Notes due 2043.
Fourth Supplemental Indenture, dated as of
November 20, 2013, among Ingersoll-Rand Global
Holding Company Limited, a Bermuda company,
Ingersoll-Rand Company Limited, a Bermuda company,
Ingersoll-Rand International Holding Limited, a
Bermuda company, Ingersoll-Rand plc, an Irish public
limited company, Ingersoll-Rand Company, a New
Jersey corporation, and The Bank of New York Mellon,
as Trustee, to the Indenture dated as of June 20, 2013.
Fifth Supplemental Indenture, dated as of October 28,
2014, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand Company,
as co-obligor, Ingersoll-Rand plc, Ingersoll-Rand
Company Limited, Ingersoll-Rand International Holding
Limited, Ingersoll-Rand Luxembourg Finance S.A.,
as guarantors, and The Bank of New York Mellon, as
Trustee, to an Indenture, dated as of June 20, 2013.
Sixth Supplemental Indenture, dated as of
December 18, 2015, by and among Ingersoll-Rand
Global Holding Company Limited, as issuer, Ingersoll-
Rand Company, as co-obligor, Ingersoll-Rand plc,
Ingersoll-Rand International Holding Limited, Ingersoll-
Rand Luxembourg Finance S.A., and Ingersoll-
Rand Lux International Holding Company S.à.r.l. as
guarantors, and The Bank of New York Mellon, as
Trustee, to an Indenture, dated as of June 20, 2013.
Seventh Supplemental Indenture, dated as of
April 5, 2016, by and among Ingersoll-Rand Global
Holding company Limited, as issuer, Ingersoll-Rand
Company, as co-obligor, Ingersoll-Rand plc, Ingersoll-
Rand International Holding Limited, Ingersoll-Rand
Luxembourg Finance S.A., Ingersoll-Rand Lux
International Holding Company S.à r.l., and Ingersoll-
Rand Irish Holdings Unlimited Company, as guarantors,
and The Bank of New York Mellon, as Trustee, to an
indenture, dated as of June 20, 2013.
Incorporated by reference to Exhibit 4.2 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on June 26, 2013.
Incorporated by reference to Exhibit 4.3 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on June 26, 2013.
Incorporated by reference to Exhibit 4.4 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on June 26, 2013.
Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on November 26, 2013.
Incorporated by reference to Exhibit 4.5 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on October 29, 2014.
Incorporated by reference to Exhibit 4.21 to the
Company’s Form 10-K for the fiscal year ended 2015
(File No. 001-34400) filed with the SEC on February
12, 2016.
Incorporated by reference to Exhibit 4.19 to the
Company’s Form 10-K for the fiscal year ended
2016 (File No. 001-34400) filed with the SEC on
February 13, 2017.
4.2
4.3
4.4
4.5
4.6
4.7
4.8
52
2020 ANNUAL REPORT EXHIBIT NO.
DESCRIPTION
PART IV
METHOD OF FILING
Filed herewith.
4.9
4.10
4.11
4.12
4.13
4.14
4.15
Eighth Supplemental Indenture, dated as of May 1,
2020, by and among Ingersoll-Rand Global Holding
Company Limited, Ingersoll-Rand Company, Trane
Technologies plc, Trane Technologies Luxembourg
Finance S.A., Trane Technologies Lux International
Holding Company S.à.r.l., Trane Technologies Irish
Holdings Unlimited Company, Trane Technologies
HoldCo Inc., and The Bank of New York Mellon, as
Trustee, to an indenture dated as of June 20, 2013.
Ninth Supplemental Indenture, dated as of May 1,
2020, by and among Ingersoll-Rand Global Holding
Company Limited, Ingersoll-Rand Company, Trane
Technologies plc, Trane Technologies Luxembourg
Finance S.A., Trane Technologies Lux International
Holding Company S.à.r.l., Trane Technologies Irish
Holdings Unlimited Company, Trane Technologies
HoldCo Inc., and The Bank of New York Mellon, as
Trustee, to an indenture dated as of June 20, 2013.
Tenth Supplemental Indenture, dated as of May 1,
2020, by and among Trane Technologies HoldCo Inc.,
Ingersoll-Rand Global Holding Company Limited,
Ingersoll-Rand Company, Trane Technologies plc,
Trane Technologies Luxembourg Finance S.A., Trane
Technologies Lux International Holding Company
S.à.r.l., Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies Company LLC, and The
Bank of New York Mellon, as Trustee, to an indenture
dated as of June 20, 2013.
Eleventh Supplemental Indenture, dated as of May 1,
2020, by and among Trane Technologies HoldCo Inc.,
Ingersoll-Rand Global Holding Company Limited,
Ingersoll-Rand Company, Trane Technologies plc,
Trane Technologies Luxembourg Finance S.A., Trane
Technologies Lux International Holding Company
S.à.r.l., Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies Company LLC, and The
Bank of New York Mellon, as Trustee, to an indenture
dated as of June 20, 2013.
Indenture, dated as of October 28, 2014, by and among
Ingersoll-Rand Luxembourg Finance S.A., as issuer,
and Ingersoll-Rand plc, Ingersoll-Rand Company
Limited, Ingersoll-Rand International Holding Limited,
Ingersoll-Rand Company and Ingersoll-Rand Global
Holding Company Limited, as guarantors, and The
Bank of New York Mellon, as Trustee.
First Supplemental Indenture, dated as of October 28,
2014, by and among Ingersoll-Rand Luxembourg
Finance S.A., as issuer, and Ingersoll-Rand plc,
Ingersoll-Rand Company Limited, Ingersoll-Rand
International Holding Limited, Ingersoll-Rand Company
and Ingersoll-Rand Global Holding Company Limited,
as guarantors, and The Bank of New York Mellon, as
Trustee, relating to the 2.625% Senior Notes due 2020.
Second Supplemental Indenture, dated as of
October 28, 2014, by and among Ingersoll-Rand
Luxembourg Finance S.A., as issuer, and Ingersoll-Rand
plc, Ingersoll-Rand Company Limited, Ingersoll-Rand
International Holding Limited, Ingersoll-Rand Company
and Ingersoll-Rand Global Holding Company Limited,
as guarantors, and The Bank of New York Mellon, as
Trustee, relating to the 3.550% Senior Notes due 2024.
Filed herewith.
Filed herewith.
Filed herewith.
Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on October 29, 2014
Incorporated by reference to Exhibit 4.2 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on October 29, 2014.
Incorporated by reference to Exhibit 4.3 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on October 29, 2014.
53
2020 ANNUAL REPORT2020 Annual Report PART IV
EXHIBIT NO.
DESCRIPTION
METHOD OF FILING
Incorporated by reference to Exhibit 4.4 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on October 29, 2014.
Incorporated by reference to Exhibit 4.27 to the
Company’s Form 10-K for the fiscal year ended
2015 (File No. 001-34400) filed with the SEC on
February 12, 2016.
Incorporated by reference to Exhibit 4.25 to the
Company’s Form 10-K for the fiscal year ended
2016 (File No. 001-34400) filed with the SEC on
February 13, 2017.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Third Supplemental Indenture, dated as of October 28,
2014, by and among Ingersoll-Rand Luxembourg
Finance S.A., as issuer, and Ingersoll-Rand plc,
Ingersoll-Rand Company Limited, Ingersoll-Rand
International Holding Limited, Ingersoll-Rand Company
and Ingersoll-Rand Global Holding Company Limited,
as guarantors, and The Bank of New York Mellon, as
Trustee, relating to the 4.650% Senior Notes due 2044.
Fourth Supplemental Indenture, dated as of
December 18, 2015, by and among Ingersoll-Rand
Luxembourg Finance S.A., as issuer, and Ingersoll-
Rand plc, Ingersoll-Rand International Holding Limited,
Ingersoll-Rand Company, Ingersoll-Rand Global
Holding Company Limited, and Ingersoll-Rand Lux
International Holding Company S.à.r.l. as guarantors,
and The Bank of New York Mellon, as Trustee.
Fifth Supplemental Indenture, dated as of April 5, 2016,
by and among Ingersoll-Rand Luxembourg Finance
S.A., as Issuer, and Ingersoll-Rand plc, Ingersoll-Rand
Company Limited, Ingersoll-Rand Company, Ingersoll-
Rand International Holding Limited, Ingersoll-Rand Lux
International Holding Company S.à r.l., Ingersoll-Rand
Irish Holdings Unlimited Company, as guarantors, and
The Bank of New York Mellon, as Trustee.
Sixth Supplemental Indenture, dated as of May 1,
2020, by and among Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Ingersoll-Rand
Global Holding Company Limited, Ingersoll-Rand
Company, Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies HoldCo Inc., and the
Bank of New York Mellon, as Trustee.
Seventh Supplemental Indenture, dated as of May 1,
2020, by and among Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Ingersoll-Rand
Global Holding Company Limited, Trane Technologies
Irish Holdings Unlimited Company, Trane Technologies
HoldCo Inc., Trane Technologies Company LLC, and
the Bank of New York Mellon, as Trustee.
Eighth Supplemental Indenture, dated as of May 1,
2020, by and among Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Ingersoll-Rand
Global Holding Company Limited, Trane Technologies
Lux International Holding Company S.à.r.l., Trane
Technologies Irish Holdings Unlimited Company,
Trane Technologies HoldCo Inc., Trane Technologies
Company LLC, and the Bank of New York Mellon, as
Trustee.
Ninth Supplemental Indenture, dated as of
May 1, 2020, by and among Trane Technologies
Luxembourg Finance S.A., Trane Technologies plc,
Ingersoll-Rand Global Holding Company Limited,
Trane Technologies Lux International Holding
Company S.à.r.l., Trane Technologies Irish Holdings
Unlimited Company, Trane Technologies HoldCo Inc.,
Trane Technologies Company LLC, and the Bank of
New York Mellon, as Trustee.
4.16
4.17
4.18
4.19
4.20
4.21
4.22
54
2020 ANNUAL REPORT EXHIBIT NO.
DESCRIPTION
METHOD OF FILING
PART IV
4.23
4.24
4.25
4.26
4.27
4.28
4.29
Indenture, dated as of February 21, 2018, by and
among Ingersoll-Rand Global Holding Company
Limited, as issuer, Ingersoll-Rand plc, Ingersoll-
Rand Luxembourg Finance S.A., Ingersoll-Rand Lux
International Holding Company S.à r.l., Ingersoll-Rand
Irish Holdings Unlimited Company and Ingersoll-
Rand Company, as guarantors, and Wells Fargo Bank,
National Association, as Trustee.
First Supplemental Indenture, dated as of February 21,
2018, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-
Rand Lux International Holding Company S.à r.l.,
Ingersoll-Rand Irish Holdings Unlimited Company and
Ingersoll-Rand Company, as guarantors, and Wells
Fargo Bank, National Association, as Trustee, relating
to the 2.900% Senior Notes due 2021.
Second Supplemental Indenture, dated as of
February 21, 2018, by and among Ingersoll-Rand
Global Holding Company Limited, as issuer, Ingersoll-
Rand plc, Ingersoll-Rand Luxembourg Finance S.A.,
Ingersoll-Rand Lux International Holding Company S.à
r.l., Ingersoll-Rand Irish Holdings Unlimited Company
and Ingersoll-Rand Company, as guarantors, and Wells
Fargo Bank, National Association, as Trustee, relating
to the 3.750% Senior Notes due 2028.
Third Supplemental Indenture, dated as of February 21,
2018, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-
Rand Lux International Holding Company S.à r.l.,
Ingersoll-Rand Irish Holdings Unlimited Company and
Ingersoll-Rand Company, as guarantors, and Wells
Fargo Bank, National Association, as Trustee, relating
to the 4.300% Senior Notes due 2048.
Fourth Supplemental Indenture, dated as of March 21,
2019, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-
Rand Lux International Holding Company S.à r.l.,
Ingersoll-Rand Irish Holdings Unlimited Company and
Ingersoll-Rand Company, as guarantors, and Wells
Fargo Bank, National Association, as Trustee, relating
to the 3.500% Senior Notes due 2026.
Fifth Supplemental Indenture, dated as of March 21,
2019, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-
Rand Lux International Holding Company S.à r.l.,
Ingersoll-Rand Irish Holdings Unlimited Company and
Ingersoll-Rand Company, as guarantors, and Wells
Fargo Bank, National Association, as Trustee, relating
to the 3.800% Senior Notes due 2029.
Sixth Supplemental Indenture, dated as of March 21,
2019, by and among Ingersoll-Rand Global Holding
Company Limited, as issuer, Ingersoll-Rand plc,
Ingersoll-Rand Luxembourg Finance S.A., Ingersoll-
Rand Lux International Holding Company S.à r.l.,
Ingersoll-Rand Irish Holdings Unlimited Company and
Ingersoll-Rand Company, as guarantors, and Wells
Fargo Bank, National Association, as Trustee, relating
to the 4.500% Senior Notes due 2049.
Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on February 26, 2018.
Incorporated by reference to Exhibit 4.2 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on February 26, 2018.
Incorporated by reference to Exhibit 4.4 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on February 26, 2018.
Incorporated by reference to Exhibit 4.6 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on February 26, 2018.
Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on March 26, 2019.
Incorporated by reference to Exhibit 4.3 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on March 26, 2019.
Incorporated by reference to Exhibit 4.5 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on March 26, 2019.
55
2020 ANNUAL REPORT2020 Annual Report PART IV
EXHIBIT NO.
DESCRIPTION
Seventh Supplemental Indenture, dated as of May 1,
2020, by and among Ingersoll-Rand Global Holding
Company Limited, Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Ingersoll-Rand
Company, Trane Technologies Lux International
Holding Company S.à r.l., Trane Technologies Irish
Holdings Unlimited Company, Trane Technologies
HoldCo Inc. and Wells Fargo Bank, National
Association, as Trustee.
Eighth Supplemental Indenture, dated as of May 1,
2020, by and among Ingersoll-Rand Global Holding
Company Limited, Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Trane
Technologies Lux International Holding Company
S.à r.l., Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies HoldCo Inc., Trane
Technologies Company LLC and Wells Fargo Bank,
National Association, as Trustee.
Ninth Supplemental Indenture, dated as of May 1,
2020, by and among Ingersoll-Rand Global Holding
Company Limited, Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Trane
Technologies Lux International Holding Company
S.à r.l., Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies HoldCo Inc., Trane
Technologies Company LLC and Wells Fargo Bank,
National Association, as Trustee.
Tenth Supplemental Indenture, dated as of May 1,
2020, by and among Ingersoll-Rand Global Holding
Company Limited, Trane Technologies Luxembourg
Finance S.A., Trane Technologies plc, Trane
Technologies Lux International Holding Company
S.à r.l., Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies HoldCo Inc., Trane
Technologies Company LLC and Wells Fargo Bank,
National Association, as Trustee.
Form of Ordinary Share Certificate of Ingersoll-Rand
plc.
METHOD OF FILING
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Incorporated by reference to Exhibit 4.6 to the
Company’s Form S-3 (File No. 333-161334) filed with
the SEC on August 13, 2009.
Description of Registrant’s Securities
Form of Global Stock Option Award Agreement
(February 2021).
Form of Global Restricted Stock Unit Award
Agreement (February 2021).
Form of Global Performance Stock Unit Award
Agreement (February 2021).
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on April 19, 2018.
Credit Agreement dated April 17, 2018 among Ingersoll-
Rand Global Holding Company Limited, Ingersoll-
Rand plc, Ingersoll-Rand Luxembourg Finance S.A.,
Ingersoll-Rand Lux International Holding Company
S.à r.l., Ingersoll-Rand Irish Holdings Unlimited
Company, Ingersoll-Rand Company, JPMorgan Chase
Bank, N.A., as Administrative Agent, Citibank, N.A., as
Syndication Agent, Bank of America, N.A., BNP Paribas,
Deutsche Bank Securities Inc., Goldman Sachs Bank
USA, Mizuho Bank, Ltd., and MUFG Bank Ltd. as
Documentation Agents, and JPMorgan Chase Bank,
N.A. and Citigroup Global Markets Inc., as joint lead
arrangers and joint bookrunners, and certain lending
institutions from time to time parties thereto.
4.30
4.31
4.32
4.33
4.34
4.35
10.1*
10.2*
10.3*
10.4
56
2020 ANNUAL REPORT EXHIBIT NO.
DESCRIPTION
METHOD OF FILING
PART IV
10.5
10.6
10.7
10.8
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on June 10, 2020.
Credit Agreement dated June 4, 2020 among Trane
Technologies Holdco Inc., Trane Technologies Global
Holding Company Limited and Trane Technologies
Luxembourg Finance S.A., Trane Technologies
plc, Trane Technologies Lux International Holding
Company S.à r.l. (“TT Lux Holding Company”), Trane
Technologies Irish Holdings Unlimited Company (“Irish
Holdings”), Trane Technologies Company LLC (“TTC”
and, together with TT Parent, Irish Holdings and TT
Lux Holding Company, the “Guarantors”), JPMorgan
Chase Bank, N.A., as Administrative Agent, Citibank,
N.A., as Syndication Agent, Deutsche Bank Securities
Inc., Goldman Sachs Bank USA and MUFG Bank, Ltd.,
as Documentation Agents, and JPMorgan Chase Bank,
N.A., Citibank, N.A., BofA Securities, Inc., BNP Securities
Corp. and Mizuho Bank, Ltd., as joint lead arrangers
and joint bookrunners, and certain lending institutions
from time to time parties thereto.
Deed Poll Indemnity of Ingersoll-Rand plc, an Irish
public limited company, as to the directors, secretary
and officers and senior executives of Ingersoll-Rand
plc and the directors and officers of Ingersoll-Rand
plc’s subsidiaries.
Tax Sharing Agreement, dated as of July 16, 2007, by
and among American Standard Companies Inc. and
certain of its subsidiaries and WABCO Holdings Inc.
and certain of its subsidiaries.
Tax Matters Agreement between Ingersoll-Rand plc
and Allegion plc, dated November 30, 2013.
Incorporated by reference to Exhibit 10.5 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on July 1, 2009.
Incorporated by reference to Exhibit 10.1 to Trane
Inc.’s Form 8-K (File No. 001-11415) filed with the SEC
on July 20, 2007.
Incorporated by reference to Exhibit 10.2 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on December 2, 2013.
Trane Technologies Incentive Stock Plan of 2013
(amended and restated as of March 2, 2020).
Filed herewith.
Trane Technologies Incentive Stock Plan of 2018
(amended and restated as of March 2, 2020).
Filed herewith.
Trane Technologies Executive Deferred Compensation
Plan (as amended and restated effective May 4, 2020).
Filed herewith.
Trane Technologies Executive Deferred Compensation
Plan II (as amended and restated effective May 4,
2020).
Filed herewith.
Trane Technologies Director Deferred Compensation
and Stock Award Plan (as amended and restated
effective March 2, 2020).
Trane Technologies Director Deferred Compensation
and Stock Award Plan II (as amended and restated
effective March 2, 2020).
Filed herewith.
Filed herewith.
Trane Technologies Supplemental Employee Savings
Plan (amended and restated effective May 4, 2020).
Filed herewith.
Trane Technologies Supplemental Employee Savings
Plan II (effective January 1, 2005 and amended and
restated through May 4, 2020).
Trane Inc. Deferred Compensation Plan (as amended
and restated as of May 4, 2020, except where
otherwise stated).
Filed herewith.
Filed herewith.
Trane Technologies Supplemental Pension Plan
(Amended and Restated Effective May 4, 2020).
Filed herewith.
57
2020 ANNUAL REPORT2020 Annual Report PART IV
EXHIBIT NO.
DESCRIPTION
10.19*
10.20*
10.21*
Trane Technologies Supplemental Pension Plan II
(Amended and Restated Effective May 4, 2020).
Trane Technologies Elected Officers Supplemental
Plan (Effective January 1, 2005 and Amended and
Restated effective May 4, 2020).
Trane Technologies Key Management Supplemental
Program (Effective January 1, 2005 and Amended and
Restated effective May 4, 2020).
Filed herewith.
METHOD OF FILING
Filed herewith.
Filed herewith.
10.22*
Description of Annual Incentive Matrix Program.
10.23*
10.24*
10.25*
Form of Tier 1 Change in Control Agreement (Officers
before May 19, 2009).
Form of Tier 2 Change in Control Agreement (Officers
before May 19, 2009).
Form of Tier 1 Change in Control Agreement (New
Officers on or after May 19, 2009).
10.26*
Form of Tier 2 Change in Control Agreement (New
Officers on or after May 19, 2009).
Incorporated by reference to Exhibit 10.30 to the
Company’s Form 10-K (File No. 001-34400) filed with
the SEC on February 12, 2018.
Incorporated by reference to Exhibit 99.1 to the
Company’s Form 8-K (File No. 001-16831) filed with
the SEC on December 4, 2006.
Incorporated by reference to Exhibit 99.2 to the
Company’s Form 8-K (File No. 001-16831) filed with
the SEC on December 4, 2006.
Incorporated by reference to Exhibit 10.32 to
the Company’s Form 10-Q for the period ended
June 30, 2009 (File No. 001-34400) filed with the
SEC on August 6, 2009.
Incorporated by reference to Exhibit 10.33 to
the Company’s Form 10-Q for the period ended
June 30, 2009 (File No. 001-34400) filed with the
SEC on August 6, 2009.
10.27*
Amended and Restated Major Restructuring
Severance Plan (as amended and restated effective
May 4, 2020).
Filed herewith.
10.28*
Michael W. Lamach Letter, dated December 24, 2003.
10.29*
Michael W. Lamach Letter, dated June 4, 2008.
10.30*
Michael W. Lamach Letter, dated February 4, 2009.
10.31*
Michael W. Lamach Letter, dated February 3, 2010.
10.32*
Michael W. Lamach Letter, dated December 23, 2012.
10.33*
Marcia J. Avedon Letter, dated January 8, 2007.
10.34*
Marcia J. Avedon Letter, dated December 20, 2012.
Incorporated by reference to Exhibit 10.35 to the
Company’s Form 10-K for the fiscal year ended
2003 (File No. 001-16831) filed with the SEC on
February 27, 2004.
Incorporated by reference to Exhibit 10.2 to the
Company’s Form 8-K (File No. 001-16831) filed with
the SEC on June 10, 2008.
Incorporated by reference to Exhibit 10.43 to the
Company’s Form 10-K for the fiscal year ended
2008 (File No. 001-16831) filed with the SEC on
March 2, 2009.
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on February 5, 2010.
Incorporated by reference to exhibit 10.48 to the
Company’s Form 10-K for the fiscal year ended
2012 (File No. 001-34400) filed with the SEC on
February 14, 2013.
Incorporated by reference to Exhibit 10.45 to the
Company’s Form 10-K for the fiscal year ended
December 31, 2006 (File No. 001-16831) filed with the
SEC on March 1, 2007.
Incorporated by reference to exhibit 10.53 to the
Company’s Form 10-K for the fiscal year ended
2012 (File No. 001-34400) filed with the SEC on
February 14, 2013.
58
2020 ANNUAL REPORT EXHIBIT NO.
DESCRIPTION
METHOD OF FILING
PART IV
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on October 2, 2013.
Incorporated by reference to Exhibit 10.44 to
the Company’s Form 10-K for the year ended
December 31, 2018 (File No. 001-34400) filed with
the SEC on February 12, 2019.
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on December 11, 2019.
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on December 10, 2019.
Incorporated by reference to Exhibit 10.1 to the
Company’s Form 8-K (File No. 001-34400) filed with
the SEC on December 2, 2013.
10.35*
Susan K. Carter Letter, dated as of August 19, 2013.
10.36*
David S. Regnery Letter, dated as of September 1, 2017.
10.37*
David S. Regnery Letter, dated as of December 9, 2019.
10.38*
10.39*
21
23.1
31.1
31.2
32
101
Christopher J. Kuehn Letter, dated as of December 10,
2019.
Employee Matters Agreement between Ingersoll-Rand
plc and Allegion plc, dated November 30, 2013.
List of Subsidiaries of Trane Technologies plc.
Consent of Independent Registered Public Accounting
Firm.
Filed herewith.
Filed herewith.
Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
Certifications of Chief Executive Officer and Chief
Financial Officer Pursuant to Rule 13a-14(b) or
Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
Furnished herewith.
The following materials from the Company’s Annual
Report on Form 10-K for the year ended December 31,
2020, formatted in Inline XBRL (Extensible Business
Reporting Language): (i) the Consolidated Statements
of Comprehensive Income, (ii) the Consolidated
Balance Sheets, (iii) the Consolidated Statements of
Equity, (iv) the Consolidated Statements of Cash Flows,
and (v) Notes to Consolidated Financial Statements.
Furnished herewith.
* Management contract or compensatory plan or arrangement.
Item 16. Form 10-K Summary
Not applicable.
59
2020 ANNUAL REPORT2020 Annual Report PART IV
Signatures
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.
TRANE TECHNOLOGIES PLC
(Registrant)
By:
/s/ Michael W. Lamach
Michael W. Lamach
Chairman of the Board and Chief Executive Officer
Date: February 9, 2021
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
/s/ Michael W. Lamach
(Michael W. Lamach)
/s/ Christopher J. Kuehn
(Christopher J. Kuehn)
/s/ Heather R. Howlett
(Heather R. Howlett)
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
/s/ Kirk E. Arnold
(Kirk E. Arnold)
/s/ Ann C. Berzin
(Ann C. Berzin)
/s/ John Bruton
(John Bruton)
/s/ Jared L. Cohon
(Jared L. Cohon)
/s/ Gary D. Forsee
(Gary D. Forsee)
/s/ Linda P. Hudson
(Linda P. Hudson)
/s/ Myles P. Lee
(Myles P. Lee)
/s/ April Miller Boise
(April Miller Boise)
/s/ Karen B. Peetz
(Karen B. Peetz)
/s/ John P. Surma
(John P. Surma)
/s/ Richard J. Swift
(Richard J. Swift)
/s/ Tony L. White
(Tony L. White)
60
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Date
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
February 9, 2021
2020 ANNUAL REPORT Part IV
TRANE TECHNOLOGIES PLC
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
PART IV
F-2
F-5
F-7
F-8
F-9
F-10
F-1
2020 Annual Report2020 ANNUAL REPORT PART IV
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Trane Technologies plc
OPINIONS ON THE FINANCIAL STATEMENTS AND INTERNAL CONTROL OVER
FINANCIAL REPORTING
We have audited the accompanying consolidated balance sheets of Trane Technologies plc and its subsidiaries
(the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income,
of equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related
notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal
control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each
of the three years in the period ended December, 31 2020 in conformity with accounting principles generally accepted
in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
CHANGE IN ACCOUNTING PRINCIPLE
As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts
for leases in 2019.
BASIS FOR OPINIONS
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (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 audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated 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 consolidated 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 consolidated
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such
other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
F-2
2020 ANNUAL REPORT PART IV
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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.
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.
CRITICAL AUDIT MATTERS
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i) relate
to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
TAX-FREE DETERMINATION OF THE REVERSE MORRIS TRUST TRANSACTION
As described in Notes 2, 18 and 19 to the consolidated financial statements, on February 29, 2020, the Company
completed its Reverse Morris Trust transaction (the Transaction) with Gardner Denver Holdings, Inc. (Gardner Denver,
which changed its name to Ingersoll Rand, Inc. after the Transaction) whereby the Company distributed Ingersoll-Rand
U.S. Holdco, Inc., which contained the Company’s former Industrial segment (Ingersoll Rand Industrial), through a pro rata
distribution (the Distribution) to shareholders of record as of February 24, 2020. Ingersoll Rand Industrial then merged
into a wholly-owned subsidiary of Gardner Denver. As disclosed by management, the Transaction was determined to
qualify for tax-free treatment under certain sections of the Internal Revenue Code. The determination of the Transaction
as tax-free requires management to make significant judgments about the interpretation of tax laws and regulations. This
determination is the subject of periodic audits by U.S. tax authorities. Unfavorable audit findings and tax rulings may have
a material adverse effect on the Company’s financial condition, results of operations or cash flows.
The principal considerations for our determination that performing procedures relating to the tax-free determination of the
Reverse Morris Trust transaction is a critical audit matter are (i) the significant judgment by management regarding the
Transaction and application of U.S. tax laws and regulations in determining that the Transaction would qualify as tax-free, (ii)
a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related
to the tax-free determination, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to the determination of the tax-free treatment of the Transaction. These procedures also included, among others
(i) testing management’s process in determining the tax-free treatment of the Transaction, (ii) testing the information used
in management’s determination, including opinions of third-party tax advisors, tax laws and regulations, and (iii) evaluating
the reasonableness of management’s interpretation of the tax laws and regulations and determinations reached for
the tax treatment of each component of the Transaction. Professionals with specialized skill and knowledge were used
to assist in the evaluation of the tax-free treatment of the Transaction, including evaluating certain representations from
management, and management’s application of the relevant tax laws and regulations.
F-3
2020 Annual Report2020 ANNUAL REPORT PART IV
REASSIGNMENT OF GOODWILL TO NEWLY DESIGNATED REPORTING UNITS
As described in Note 6 to the consolidated financial statements, in connection with the new organizational model
and business segment structure, the Company reassigned its goodwill among the newly designated reporting units
using a relative fair value approach. As disclosed by management, because quoted market prices are not available for
their reporting units, the calculation of their estimated fair value was determined using the guideline public company
method specifically a market-adjusted multiple of earnings and revenues (a market approach). The earnings and
revenues multiple approach reflects the market’s expectations for future growth and risk, with adjustments to account for
differences between the guideline publicly traded companies and the subject reporting units. Total goodwill amounts to
$5.3 billion as of December 31, 2020.
The principal considerations for our determination that performing procedures relating to the reassignment of goodwill to
the newly designated reporting units is a critical audit matter are (i) the significant judgment by management in developing
the relative fair value of the reporting units; (ii) a high degree of auditor judgment, subjectivity and effort in performing
procedures and evaluating management’s significant assumptions related to the multiples of earnings and revenues used
in the market approach; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to developing the fair value of the reporting units, including controls over the multiples of earnings and
revenues utilized within the valuations. These procedures also included, among others, testing management’s process
for developing the fair value estimate, evaluating the reasonableness of the market approach, and evaluating the
reasonableness of the significant assumptions used by management related to the multiples of earnings and revenues
used in the market approach. Evaluating the reasonableness of management’s significant assumptions related to the
multiples of earnings and revenues involved (i) comparing the multiples to peer groups, (ii) verifying the multiples are
within the range identified by the valuation specialists engaged by the Company, and (iii) testing the completeness and
accuracy of underlying data used in the model. Professionals with specialized skill and knowledge were used to assist in
the evaluation of management’s market approach.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
February 9, 2021
We have served as the Company’s auditor since at least 1906. We have not been able to determine the specific year we
began serving as auditor of the Company.
F-4
2020 ANNUAL REPORT Trane Technologies plc
Consolidated Statements of Comprehensive Income
In millions, except per share amounts
PART IV
FOR THE YEARS ENDED DECEMBER 31,
Net revenues
Cost of goods sold
Selling and administrative expenses
Operating income
Interest expense
Other income/(expense), net
Earnings before income taxes
Benefit (provision) for income taxes
Earnings from continuing operations
Discontinued operations, net of tax
Net earnings
Less: Net earnings from continuing operations attributable to
noncontrolling interests
Less: Net earnings from discontinuing operations attributable to
noncontrolling interests
Net earnings attributable to Trane Technologies plc
Amounts attributable to Trane Technologies plc ordinary shareholders:
Continuing operations
Discontinued operations
Net earnings
Earnings (loss) per share attributable to Trane Technologies plc ordinary
shareholders:
Basic:
Continuing operations
Discontinued operations
Net earnings
Diluted:
Continuing operations
Discontinued operations
Net earnings
2020
2019
2018
$ 12,454.7 $ 13,075.9 $ 12,343.8
(8,651.3)
(9,085.5)
(8,582.5)
(2,270.6)
(2,320.3)
(2,249.2)
1,532.8
1,670.1
1,512.1
(248.7)
4.1
(242.8)
(28.4)
(221.0)
(33.3)
1,288.2
1,398.9
1,257.8
(296.8)
991.4
(121.4)
870.0
(14.2)
(238.6)
(234.9)
1,160.3
1,022.9
268.2
334.6
1,428.5
1,357.5
(15.2)
(15.1)
(0.9)
(2.4)
(4.8)
854.9 $
1,410.9 $
1,337.6
977.2 $
1,145.1 $
1,007.8
(122.3)
265.8
329.8
854.9 $
1,410.9 $
1,337.6
4.07 $
4.74 $
(0.51)
1.10
3.56 $
5.84 $
4.02 $
4.69 $
(0.50)
1.08
3.52 $
5.77 $
4.08
1.33
5.41
4.03
1.32
5.35
$
$
$
$
$
$
$
F-5
2020 Annual Report2020 ANNUAL REPORT PART IV
Trane Technologies plc
Consolidated Statements of Comprehensive Income
In millions, except per share amounts
(continued)
FOR THE YEARS ENDED DECEMBER 31,
Net earnings
Other comprehensive income (loss):
Currency translation
Cash flow hedges
Unrealized net gains (losses) arising during period
Net gains (losses) reclassified into earnings
Tax (expense) benefit
Total cash flow hedges, net of tax
Pension and OPEB adjustments:
Prior service costs for the period
Net actuarial gains (losses) for the period
Amortization reclassified into earnings
Settlements/curtailments reclassified to earnings
Currency translation and other
Tax (expense) benefit
Total pension and OPEB adjustments, net of tax
Other comprehensive income (loss), net of tax
Comprehensive income, net of tax
Less: Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Trane Technologies plc
See accompanying notes to Consolidated Financial Statements.
2020
2019
2018
$
870.0 $
1,428.5 $
1,357.5
261.5
(37.1)
(230.6)
3.3
1.9
—
5.2
(1.9)
(52.5)
43.4
(1.8)
(10.4)
(0.7)
(23.9)
(2.7)
0.7
0.9
(1.1)
(5.7)
(41.9)
48.1
2.2
(1.4)
(4.7)
(3.4)
1.2
0.9
(0.1)
2.0
(16.0)
12.8
50.7
2.5
7.5
(17.2)
40.3
242.8
(41.6)
(188.3)
1,112.8 $
1,386.9 $
1,169.2
(17.8)
(18.5)
(16.9)
1,095.0 $
1,368.4 $
1,152.3
$
$
F-6
2020 ANNUAL REPORT Trane Technologies plc
Consolidated Balance Sheets
In millions, except share amounts
DECEMBER 31,
ASSETS
Current assets:
Cash and cash equivalents
Accounts and notes receivable, net
Inventories
Other current assets
Assets held-for-sale
Total current assets
Property, plant and equipment, net
Goodwill
Intangible assets, net
Other noncurrent assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued compensation and benefits
Accrued expenses and other current liabilities
Short-term borrowings and current maturities of long-term debt
Liabilities held-for-sale
Total current liabilities
Long-term debt
Postemployment and other benefit liabilities
Deferred and noncurrent income taxes
Other noncurrent liabilities
Total liabilities
Equity:
Trane Technologies plc shareholders’ equity
Ordinary shares, $1.00 par value (263,309,250 and 262,804,939 shares issued at
December 31, 2020 and 2019, respectively)
Ordinary shares held in treasury, at cost (24,500,862 and 24,499,897 shares at
December 31, 2020 and 2019, respectively)
Retained earnings
Accumulated other comprehensive (loss)
Total Trane Technologies plc shareholders’ equity
Noncontrolling interest
Total equity
Total liabilities and equity
See accompanying notes to Consolidated Financial Statements.
PART IV
2020
2019
$
3,289.9
$
1,278.6
2,202.1
1,189.2
224.4
—
6,905.6
1,349.5
5,342.8
3,286.4
1,272.4
2,184.6
1,278.6
344.8
4,207.2
9,293.8
1,352.0
5,125.7
3,323.6
1,397.2
$ 18,156.7
$ 20,492.3
$
1,520.2
$
1,381.3
451.1
1,592.0
775.6
—
4,338.9
4,496.5
1,024.6
578.5
1,291.1
442.4
1,564.2
650.3
1,200.4
5,238.6
4,922.9
1,048.2
572.0
1,398.2
11,729.6
13,179.9
263.3
262.8
(1,719.4 )
(1,719.4)
8,495.3
9,730.8
(631.5 )
(1,006.6)
6,407.7
19.4
6,427.1
7,267.6
44.8
7,312.4
$ 18,156.7
$ 20,492.3
F-7
2020 Annual Report2020 ANNUAL REPORT PART IV
Trane Technologies plc
Consolidated Statements of Equity
IN MILLIONS, EXCEPT PER SHARE
AMOUNTS
TRANE TECHNOLOGIES PLC SHAREHOLDERS’ EQUITY
ORDINARY SHARES
TOTAL
EQUITY
AMOUNT
AT PAR
VALUE SHARES
ORDINARY
SHARES
HELD IN
TREASURY,
AT COST
CAPITAL IN
EXCESS OF
PAR VALUE
RETAINED
EARNINGS
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
NONCONTROLLING
INTEREST
Balance at December 31, 2017
$ 7,206.9 $ 274.0
274.0 $ (1,719.4)
$ 461.3 $ 8,903.2
$
(778.8)
$ 66.6
Net earnings
Other comprehensive income (loss)
Shares issued under incentive
stock plans
1,357.5
(188.3)
—
—
—
—
43.1
2.1
2.1
Repurchase of ordinary shares
(900.2)
(9.7)
(9.7)
Share-based compensation
Dividends declared to
noncontrolling interest
Adoption of ASU 2014-09
(Revenue Recognition)
Adoption of ASU 2016-16
(Intra-Entity Transfers)
Cash dividends declared
($1.96 per share)
Other
74.7
(41.4)
2.4
(9.1)
(480.8)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
41.0
1,337.6
—
—
(581.2)
(309.3)
78.8
(4.1)
—
—
—
—
0.1
—
2.4
(9.1)
(480.8)
(0.1)
—
(185.3)
—
—
—
—
—
—
—
—
19.9
(3.0)
—
—
—
(41.4)
—
—
—
—
Balance at December 31, 2018
$ 7,064.8 $ 266.4
266.4 $ (1,719.4)
$
— $ 9,439.8
$
(964.1)
$ 42.1
Net earnings
Other comprehensive income (loss)
Shares issued under incentive
stock plans
1,428.5
(41.6)
—
—
—
—
72.5
2.8
2.8
Repurchase of ordinary shares
(750.1)
(6.4)
(6.4)
Share-based compensation
Dividends declared to
noncontrolling interest
Cash dividends declared
($2.12 per share)
Other
63.5
(15.8)
(509.5)
0.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
69.7
1,410.9
—
—
(136.1)
(607.6)
66.4
(2.9)
—
—
—
—
(509.5)
0.1
—
(42.5)
—
—
—
—
—
—
17.6
0.9
—
—
—
(15.8)
—
—
Balance at December 31, 2019
$ 7,312.4 $ 262.8
262.8 $ (1,719.4)
$
— $ 9,730.8
$ (1,006.6)
$ 44.8
Net earnings
Other comprehensive income (loss)
Shares issued under incentive
stock plans
870.0
242.8
—
—
—
—
64.5
2.3
2.3
Repurchase of ordinary shares
(250.0)
(1.8)
(1.8)
Share-based compensation
Dividends declared to
noncontrolling interest
Investment by joint venture partner
Cash dividends declared
($2.12 per share)
Separation of Ingersoll Rand
Industrial
66.3
(18.3)
7.0
(507.7)
(1,359.9)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
62.2
854.9
—
—
(135.6)
(112.6)
69.5
(3.2)
—
3.9
—
—
—
(507.7)
—
240.1
—
—
—
—
—
—
— (1,466.9)
135.0
Balance at December 31, 2020
$ 6,427.1 $ 263.3
263.3 $ (1,719.4)
$
— $ 8,495.3
$
(631.5)
15.1
2.7
—
—
—
(18.3)
3.1
—
(28.0)
$ 19.4
See accompanying notes to Consolidated Financial Statements.
F-8
2020 ANNUAL REPORT PART IV
Trane Technologies plc
Consolidated Statements of Cash Flows
In millions
FOR THE YEARS ENDED DECEMBER 31,
Cash flows from operating activities:
Net earnings
Discontinued operations, net of tax
Adjustments for non-cash transactions:
Depreciation and amortization
Pension and other postretirement benefits
Stock settled share-based compensation
Other non-cash items, net
Changes in other assets and liabilities, net of the effects of acquisitions:
Accounts and notes receivable
Inventories
Other current and noncurrent assets
Accounts payable
Other current and noncurrent liabilities
Net cash provided by (used in) continuing operating activities
Net cash provided by (used in) discontinued operating activities
Net cash provided by (used in) operating activities
Cash flows from investing activities:
Capital expenditures
Acquisitions and equity method investments, net of cash acquired
Proceeds from sale of property, plant and equipment
Deconsolidation of certain entities under Chapter 11
Other investing activities, net
Net cash provided by (used in) continuing investing activities
Net cash provided by (used in) discontinued investing activities
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Short-term borrowings (payments), net
Proceeds from long-term debt
Payments of long-term debt
Net proceeds from (payments of) debt
Debt issuance costs
Dividends paid to ordinary shareholders
Dividends paid to noncontrolling interests
Proceeds (payments) from shares issued under incentive plans, net
Repurchase of ordinary shares
Receipt of special cash payment
Other financing activities, net
Net cash provided by (used in) continuing financing activities
Net cash provided by (used in) discontinued financing activities
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents – beginning of period
Cash and cash equivalents – end of period
Cash paid during the year for:
Interest
Income taxes, net of refunds
See accompanying notes to Consolidated Financial Statements.
2020
2019
2018
$
870.0
121.4
$
1,428.5
(268.2 )
$
1,357.5
(334.6 )
294.3
68.8
69.5
(1.5)
5.9
109.0
29.7
75.8
123.3
1,766.2
(331.2 )
1,435.0
(146.2 )
(182.8 )
0.1
(10.8 )
1.2
(338.5 )
(37.7 )
(376.2 )
—
—
(307.5 )
(307.5 )
(3.6 )
(507.3 )
(18.3 )
64.5
(250.0 )
1,900.0
6.5
884.3
—
884.3
68.2
2,011.3
1,278.6
3,289.9
243.5
151.6
288.8
96.3
66.4
(17.8 )
(77.8 )
3.9
(245.8 )
93.2
156.2
1,523.7
395.8
1,919.5
(205.4 )
(83.4 )
2.2
—
4.8
(281.8 )
(1,498.2 )
(1,780.0 )
—
1,497.9
(7.5 )
1,490.4
(13.1 )
(510.1 )
(15.8 )
72.5
(750.1 )
—
(1.8 )
272.0
(1.5 )
270.5
(9.8 )
400.2
878.4
1,278.6
220.9
425.3
$
$
$
282.3
85.0
78.8
(99.2 )
(213.5 )
(186.9 )
55.3
99.6
(127.0 )
997.3
410.5
1,407.8
(284.7 )
(285.7 )
9.7
—
(1.2 )
(561.9 )
(67.5 )
(629.4 )
(6.4 )
1,147.0
(1,123.0 )
17.6
(12.0 )
(479.5 )
(41.4 )
43.1
(900.2 )
—
(3.5 )
(1,375.9 )
(2.9 )
(1,378.8 )
(45.6 )
(646.0 )
1,524.4
878.4
200.6
375.4
$
$
$
$
$
$
F-9
2020 Annual Report2020 ANNUAL REPORT PART IV
Notes to Consolidated Financial Statements
NOTE 1. DESCRIPTION OF COMPANY
Trane Technologies plc (formerly known as Ingersoll-Rand plc), a public limited company incorporated in Ireland in 2009,
and its consolidated subsidiaries (collectively, we, our, the Company) is a global climate innovator that brings efficient
and sustainable climate solutions to buildings, homes and transportation driven by strategic brands Trane® and Thermo
King® and an environmentally responsible portfolio of products and services.
REPORTABLE SEGMENTS
Prior to the separation of the Company’s Industrial segment on February 29, 2020, the Company announced a new
organizational model and business segment structure designed to enhance its regional go-to-market capabilities,
aligning the structure with the Company’s strategy and increased focus on climate innovation. Under the revised
structure, the Company created three new regional operating segments from the former climate segment, which also
serve as the Company’s reportable segments.
• The Company’s Americas segment innovates for customers in the North America and Latin America regions. The
Americas segment encompasses commercial heating and cooling systems, building controls, and energy services
and solutions; residential heating and cooling; and transport refrigeration systems and solutions.
• The Company’s EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA
segment encompasses heating and cooling systems, services and solutions for commercial buildings, and transport
refrigeration systems and solutions.
• The Company’s Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific
segment encompasses heating and cooling systems, services and solutions for commercial buildings and transport
refrigeration systems and solutions.
This model is designed to create deep customer focus and relevance in markets around the world. Each segment
reports through separate management teams and regularly reviews their operating results with the Chief Executive
Officer, the Company’s Chief Operating Decision Maker (CODM) determined in accordance with applicable accounting
guidance. All prior period comparative segment information has been recast to reflect the current reportable segments.
COVID-19 GLOBAL PANDEMIC
In March 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a newly
discovered coronavirus, known now as COVID-19, as a global pandemic and recommended containment and mitigation
measures worldwide. Beginning in the first quarter of 2020, many countries responded by implementing measures to
combat the outbreak which impacted global business operations and resulted in a Company decision to temporarily
close or limit its workforce to essential crews within many facilities throughout the world in order to ensure employee
safety. In addition, the Company’s non-essential employees were instructed to work from home in compliance with global
government stay-in-place protocols.
The Company has been adversely impacted by the COVID-19 global pandemic. Temporary facility closures beginning in
the first quarter of 2020 disrupted results in the Asia Pacific region with impacts more widely felt throughout operations
in the Americas and EMEA in the months thereafter. During the second quarter of 2020, the Company began to reopen
facilities while maintaining appropriate health and safety precautions. However, the challenges in connection with the
pandemic continued as the Company experienced lower volume, which negatively impacted revenue, and certain supply
chain delays. In response, the Company proactively initiated cost cutting actions in an effort to mitigate the impact of the
pandemic on its business. This included reducing discretionary spending, restricting travel, delaying merit-based salary
increases and implementing employee furloughs in certain markets.
The Company continues to navigate the new realities brought about by the COVID-19 global pandemic. Despite these
challenges, all production facilities remain open and the Company continues to sell, install and service its products.
During the second half of 2020, the Company did not experience any major delays in its supply chain and continued to
focus on health and safety precautions to protect its employees and customers. In addition, during the fourth quarter
of 2020, the Company completed several restorative actions including the reinstatement of annual merit-based salary
F-10
2020 ANNUAL REPORT PART IV
increases and resuming all aspects of our balanced capital allocation strategy which included acquisitions and share
repurchases.
The preparation of financial statements requires management to use judgments in making estimates and assumptions
based on the relevant information available at the end of each period. These estimates and assumptions have a
significant effect on reported amounts of assets and liabilities, revenue and expenses, as well as the disclosure of
contingencies because they may arise from matters that are inherently uncertain. The financial statements reflect
the Company’s best estimates as of December 31, 2020 (including as it relates to the actual and potential future
impacts of the global pandemic) with respect to the recoverability of its assets, including its receivables and long-
lived assets such as goodwill and intangibles. However, due to significant uncertainty surrounding the COVID-19 global
pandemic, management’s judgment regarding this could change in the future. In addition, while the Company’s results
of operations, cash flows and financial condition could be negatively impacted, the extent of the impact cannot be
estimated with certainty at this time.
REORGANIZATION OF ALDRICH AND MURRAY
On May 1, 2020, certain subsidiaries of the Company underwent an internal corporate restructuring that was effectuated
through a series of transactions (2020 Corporate Restructuring). As a result, Aldrich Pump LLC (Aldrich) and Murray Boiler
LLC (Murray), indirect wholly-owned subsidiaries of Trane Technologies plc, became solely responsible for the asbestos-
related liabilities, and the beneficiaries of the asbestos-related insurance assets, of Trane Technologies Company LLC,
formerly known as Ingersoll-Rand Company, and Trane U.S. Inc, respectively. On a consolidated basis, the 2020 Corporate
Restructuring did not have an impact on the Consolidated Financial Statements.
On June 18, 2020 (Petition Date), Aldrich and Murray filed voluntary petitions for relief under Chapter 11 of Title 11 of the
United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Western District of North
Carolina (the Bankruptcy Court) to resolve equitably and permanently all current and future asbestos related claims in
a manner beneficial to claimants, Aldrich and Murray. As a result of the Chapter 11 filings, all asbestos-related lawsuits
against Aldrich and Murray have been stayed due to the imposition of a statutory automatic stay applicable in Chapter
11 bankruptcy cases. Only Aldrich and Murray have filed for Chapter 11 relief. Neither Aldrich’s wholly-owned subsidiary,
200 Park, Inc. (200 Park), Murray’s wholly-owned subsidiary, ClimateLabs LLC (ClimateLabs), Trane Technologies plc nor
its other subsidiaries (the Trane Companies) are part of the Chapter 11 filings. The Trane Companies are expected to
continue to operate as usual, with no disruption to their employees, suppliers, or customers globally. However, as of the
Petition Date, Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs
were deconsolidated and their respective assets and liabilities were derecognized from the Company’s Consolidated
Financial Statements. Refer to Note 22, “Commitments and Contingencies,” for more information regarding the Chapter 11
bankruptcy and asbestos-related matters.
NOTE 2. COMPLETION OF REVERSE MORRIS TRUST TRANSACTION
On February 29, 2020 (Distribution Date), the Company completed its Reverse Morris Trust transaction (the Transaction)
with Gardner Denver Holdings, Inc. (Gardner Denver, which changed its name to Ingersoll Rand, Inc. after the Transaction)
whereby the Company distributed Ingersoll-Rand U.S. HoldCo, Inc., which contained the Company’s former Industrial
segment (Ingersoll Rand Industrial), through a pro rata distribution (the Distribution) to shareholders of record as of
February 24, 2020. Ingersoll Rand Industrial then merged into a wholly-owned subsidiary of Gardner Denver. Upon close
of the Transaction, the Company’s existing shareholders received approximately 50.1% of the shares of Gardner Denver
common stock on a fully-diluted basis and Gardner Denver stockholders retained approximately 49.9% of the shares
of Gardner Denver on a fully diluted basis. As a result, the Company’s shareholders received .8824 shares of Gardner
Denver common stock with respect to each share owned as of February 24, 2020. In connection with the Transaction,
Ingersoll-Rand Services Company, an affiliate of Ingersoll Rand Industrial, borrowed an aggregate principal amount of
$1.9 billion under a senior secured first lien term loan facility (Term Loan), the proceeds of which were used to make a
special cash payment of $1.9 billion to a subsidiary of the Company. The obligations under the Term Loan were retained
by Ingersoll-Rand Services Company, which following the Transaction is a wholly-owned subsidiary of Gardner Denver.
DISCONTINUED OPERATIONS
After the Distribution Date, the Company does not beneficially own any Ingersoll Rand Industrial shares of common
stock and will no longer consolidate Ingersoll Rand Industrial in its financial statements. In accordance with GAAP, the
F-11
2020 Annual Report2020 ANNUAL REPORT PART IV
historical results of Ingersoll Rand Industrial are presented as a discontinued operation in the Consolidated Statement
of Comprehensive Income (Loss) and Consolidated Statement of Cash Flows. In addition, the assets and liabilities of
Ingersoll Rand Industrial have been recast to held-for-sale at December 31, 2019. In connection with the Transaction,
the Company entered into several agreements with Gardner Denver covering supply, administrative and tax matters to
provide or obtain services on a transitional basis for varying periods after the Distribution Date. The agreements cover
services such as manufacturing, information technology, human resources and finance. Income and expenses under
these agreements were not material. In accordance with several customary transaction-related agreements between
the Company and Gardner Denver, the parties are in a process to determine final adjustments to working capital, cash
and indebtedness amounts as of the Distribution Date, as well as another process to determine funding levels related to
pension plans, non-qualified deferred compensation plans and retiree health benefits. As of December 31, 2020, both are
ongoing in accordance with the transaction-related agreements. Upon finalization of these agreements, any adjustments
will be recognized within Retained earnings.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies used in the preparation of the accompanying Consolidated Financial
Statements follows:
Basis of Presentation: The accompanying Consolidated Financial Statements reflect the consolidated operations of
the Company and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) as
defined by the Financial Accounting Standards Board (FASB) within the FASB Accounting Standards Codification (ASC).
Intercompany accounts and transactions have been eliminated. The assets, liabilities, results of operations and cash
flows of all discontinued operations have been separately reported as discontinued operations for all periods presented.
The Consolidated Financial Statements include all majority-owned subsidiaries of the Company. A noncontrolling interest
in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the parent.
The Company includes Noncontrolling interest as a component of Total equity in the Consolidated Balance Sheet and
the Net earnings attributable to noncontrolling interests are presented as an adjustment from Net earnings used to
arrive at Net earnings attributable to Trane Technologies plc in the Consolidated Statement of Comprehensive Income.
Partially-owned equity affiliates represent 20-50% ownership interests in investments where the Company demonstrates
significant influence, but does not have a controlling financial interest. Partially-owned equity affiliates are accounted for
under the equity method.
Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent
assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses
during the reporting period. Estimates are based on several factors including the facts and circumstances available at
the time the estimates are made, historical experience, risk of loss, general economic conditions and trends, and the
assessment of the probable future outcome. Actual results could differ from those estimates. Estimates and assumptions
are reviewed periodically, and the effects of changes, if any, are reflected in the statement of operations in the period that
they are determined.
Currency Translation: Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar,
have been translated at year-end exchange rates, and income and expense accounts have been translated using average
exchange rates throughout the year. Adjustments resulting from the process of translating an entity’s financial statements
into the U.S. dollar have been recorded in the equity section of the Consolidated Balance Sheet within Accumulated other
comprehensive income (loss). Transactions that are denominated in a currency other than an entity’s functional currency are
subject to changes in exchange rates with the resulting gains and losses recorded within Net earnings.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, demand deposits and all highly liquid
investments with original maturities at the time of purchase of three months or less. The Company maintains amounts
on deposit at various financial institutions, which may at times exceed federally insured limits. However, management
periodically evaluates the credit-worthiness of those institutions and has not experienced any losses on such deposits.
Allowance for Doubtful Accounts: In accordance with Accounting Standard Update (ASU) 2016-13, “Financial
Instruments - Credit Losses” (ASU 2016-13), the Company maintains an allowance for doubtful accounts receivable
F-12
2020 ANNUAL REPORT PART IV
which represents the best estimate of probable loss inherent in the Company’s accounts receivable portfolio. This
estimate is based upon a two-step policy that results in the total recorded allowance for doubtful accounts. The first
step is to record a portfolio reserve based on the aging of the outstanding accounts receivable portfolio and the
Company’s historical experience with the Company’s end markets, customer base and products. The second step is
to create a specific reserve for significant accounts as to which the customer’s ability to satisfy their financial obligation
to the Company is in doubt due to circumstances such as bankruptcy, deteriorating operating results or financial
position. In these circumstances, management uses its judgment to record an allowance based on the best estimate
of probable loss, factoring in such considerations as the market value of collateral, if applicable. Actual results could
differ from those estimates. These estimates and assumptions are reviewed periodically, and the effects of changes, if
any, are reflected in the Consolidated Statement of Comprehensive Income in the period that they are determined. The
Company reserved $40.0 million and $32.2 million for doubtful accounts as of December 31, 2020 and 2019, respectively.
Inventories: Depending on the business, U.S. inventories are stated at the lower of cost or market using the last-in, first-
out (LIFO) method or the lower of cost or market using the first-in, first-out (FIFO) method. Non-U.S. inventories are primarily
stated at the lower of cost or market using the FIFO method. At December 31, 2020 and 2019, approximately 60% and 62%,
respectively, of all inventory utilized the LIFO method.
Property, Plant and Equipment: Property, plant and equipment are stated at cost, less accumulated depreciation.
Assets placed in service are recorded at cost and depreciated using the straight-line method over the estimated useful
life of the asset except for leasehold improvements, which are depreciated over the shorter of their economic useful life
or their lease term. The range of useful lives used to depreciate property, plant and equipment is as follows:
Buildings
Machinery and equipment
Software
10 to 50 years
2 to 12 years
2 to 7 years
Major expenditures for replacements and significant improvements that increase asset values and extend useful lives are
also capitalized. Capitalized costs are amortized over their estimated useful lives using the straight-line method. Repairs
and maintenance expenditures that do not extend the useful life of the asset are charged to expense as incurred. The
carrying amounts of assets that are sold or retired and the related accumulated depreciation are removed from the
accounts in the year of disposal, and any resulting gain or loss is reflected within current earnings.
Per ASC 360, “Property, Plant, and Equipment” (ASC 360), the Company assesses the recoverability of the carrying value
of its property, plant and equipment whenever events or changes in circumstances indicate that the carrying amount of
the asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset
group to the future net undiscounted cash flows expected to be generated by the asset group. If the undiscounted cash
flows are less than the carrying amount of the asset group, an impairment loss is recognized for the amount by which
the carrying value of the asset group exceeds the fair value of the asset group.
Goodwill and Intangible Assets: The Company records as goodwill the excess of the purchase price over the fair value
of the net assets acquired in a business combination. In accordance with ASC 350, “Intangibles-Goodwill and Other”
(ASC 350), goodwill and other indefinite-lived intangible assets are tested and reviewed annually for impairment during
the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value
of the asset is more likely than not less than the carrying amount of the asset. In addition, an interim impairment test is
completed upon a triggering event or when there is a reorganization of reporting structure or disposal of all or a portion
of a reporting unit.
Impairment of goodwill is assessed at the reporting unit level and begins with an optional qualitative assessment to
determine if it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis
for determining whether it is necessary to perform the goodwill impairment test under ASC 350. For those reporting
units that bypass or fail the qualitative assessment, the test compares the carrying amount of the reporting unit to its
estimated fair value. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting
unit is not impaired. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, an
impairment loss will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value,
not to exceed the carrying amount of goodwill in that reporting unit.
F-13
2020 Annual Report2020 ANNUAL REPORT PART IV
Intangible assets such as patents, customer-related intangible assets and other intangible assets with finite useful lives
are amortized on a straight-line basis over their estimated economic lives. The weighted-average useful lives approximate
the following:
Customer relationships
Other
17 years
10 years
The Company assesses the recoverability of the carrying value of its intangible assets with finite useful lives whenever
events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable.
Recoverability is measured by a comparison of the carrying amount of an asset group to the future net undiscounted
cash flows expected to be generated by the asset group. If the undiscounted cash flows are less than the carrying
amount of the asset group, an impairment loss is recognized for the amount by which the carrying value of the asset
group exceeds the fair value of the asset group.
Business Combinations: In accordance with ASC 805, “Business Combinations” (ASC 805), acquisitions are recorded
using the acquisition method of accounting. The Company includes the operating results of acquired entities from
their respective dates of acquisition. The Company recognizes and measures the identifiable assets acquired, liabilities
assumed, and any non-controlling interest as of the acquisition date fair value. The excess, if any, of total consideration
transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed and any
non-controlling interest is recognized as goodwill. Costs incurred as a result of a business combination other than costs
related to the issuance of debt or equity securities are recorded in the period the costs are incurred.
Employee Benefit Plans: The Company provides a range of benefits, including pensions, postretirement and
postemployment benefits to eligible current and former employees. Determining the cost associated with such benefits
is dependent on various actuarial assumptions, including discount rates, expected return on plan assets, compensation
increases, mortality, turnover rates, and healthcare cost trend rates. Actuaries perform the required calculations to
determine expense in accordance with GAAP. Actual results may differ from the actuarial assumptions and are generally
accumulated into Accumulated other comprehensive income (loss) and amortized into Net earnings over future
periods. The Company reviews its actuarial assumptions at each measurement date and makes modifications to the
assumptions based on current rates and trends, if appropriate.
Loss Contingencies: Liabilities are recorded for various contingencies arising in the normal course of business. The
Company has recorded reserves in the financial statements related to these matters, which are developed using input
derived from actuarial estimates and historical and anticipated experience data depending on the nature of the reserve,
and in certain instances with consultation of legal counsel, internal and external consultants and engineers. Subject
to the uncertainties inherent in estimating future costs for these types of liabilities, the Company believes its estimated
reserves are reasonable and does not believe the final determination of the liabilities with respect to these matters would
have a material effect on the financial condition, results of operations, liquidity or cash flows of the Company for any year.
Environmental Costs: The Company is subject to laws and regulations relating to protecting the environment.
Environmental expenditures relating to current operations are expensed or capitalized as appropriate. Expenditures
relating to existing conditions caused by past operations, which do not contribute to current or future revenues, are
expensed. Liabilities for remediation costs are recorded when they are probable and can be reasonably estimated,
generally no later than the completion of feasibility studies or the Company’s commitment to a plan of action. The
assessment of this liability, which is calculated based on existing remediation technology, does not reflect any offset for
possible recoveries from insurance companies, and is not discounted.
Asbestos Matters: Prior to the Petition Date, certain of the Company’s wholly-owned subsidiaries and former companies
were named as defendants in asbestos-related lawsuits in state and federal courts. The Company recorded a liability for
actual and anticipated future claims as well as an asset for anticipated insurance settlements. Asbestos-related defense
costs were excluded from the asbestos claims liability and were recorded separately as services were incurred. None
of the Company’s existing or previously-owned businesses were a producer or manufacturer of asbestos. The Company
recorded certain income and expenses associated with asbestos liabilities and corresponding insurance recoveries
within discontinued operations, net of tax, as they related to previously divested businesses, except for amounts
associated with the predecessor of Murray’s asbestos liabilities and corresponding insurance recoveries, which were
recorded within continuing operations.
F-14
2020 ANNUAL REPORT PART IV
Product Warranties: Standard product warranty accruals are recorded at the time of sale and are estimated based
upon product warranty terms and historical experience. The Company assesses the adequacy of its liabilities and
will make adjustments as necessary based on known or anticipated warranty claims, or as new information becomes
available. The Company’s extended warranty liability represents the deferred revenue associated with its extended
warranty contracts and is amortized into revenue on a straight-line basis over the life of the contract, unless another
method is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating
the expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty
liability.
Income Taxes: Deferred tax assets and liabilities are determined based on temporary differences between financial
reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which
the differences are expected to reverse. The Company recognizes future tax benefits, such as net operating losses
and tax credits, to the extent that realizing these benefits is considered in its judgment to be more likely than not. The
Company regularly reviews the recoverability of its deferred tax assets considering its historic profitability, projected future
taxable income, timing of the reversals of existing temporary differences and the feasibility of its tax planning strategies.
Where appropriate, the Company records a valuation allowance with respect to a future tax benefit.
Revenue Recognition: Revenue is recognized when control of a good or service promised in a contract (i.e.,
performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the
use of and obtain substantially all of the remaining benefits from that good or service. A majority of the Company’s
revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract.
However, a portion of the Company’s revenues are recognized over time as the customer simultaneously receives control
as the Company performs work under a contract. For these arrangements, the cost-to-cost input method is used as
it best depicts the transfer of control to the customer that occurs as the Company incurs costs. See Note 13 to the
Consolidated Financial Statements for additional information regarding revenue recognition.
Research and Development Costs: The Company conducts research and development activities for the purpose of
developing and improving new products and services. These expenditures are expensed when incurred. For the years
ended December 31, 2020, 2019 and 2018, these expenditures amounted to $165.0 million, $174.2 million and $166.7 million,
respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB ASC is the sole source of authoritative GAAP other than the Securities and Exchange Commission (SEC)
issued rules and regulations that apply only to SEC registrants. The FASB issues an ASU to communicate changes to
the codification. The Company considers the applicability and impact of all ASU’s. ASU’s not listed below were assessed
and determined to be either not applicable or are not expected to have a material impact on the consolidated financial
statements.
RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
In October 2020, the FASB issued ASU 2020-09, “Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC
Release No. 33-10762” (ASU 2020-09), which amends Topic 470 and certain other topics to conform to disclosure
rules on guaranteed debt offerings in SEC Release No.33-10762. The SEC adopted amendments to the financial
disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered in Rule
3-10 of Regulations S-X, and affiliates whose securities registered or being registered in Rule 3-16 of Regulation S-X. The
amended rules aim to improve disclosure, reduce compliance burdens for issuers and increase investor protection.
ASU 2020-09 is effective on January 4, 2021, pursuant to SEC Release No. 33-10762 with early application permitted. The
Company early adopted this standard during the first quarter of 2020 and elected to disclose summarized financial
information of the issuers and guarantors on a combined basis within Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement that is a Service Contract” (ASU 2018-15), which aligns the requirements for capitalizing
implementation costs in a cloud-computing arrangement service contract with the requirements for capitalizing
F-15
2020 Annual Report2020 ANNUAL REPORT PART IV
implementation costs incurred to develop or obtain internal-use software. In addition, the guidance also clarifies the
presentation requirements for reporting such costs in the financial statements. ASU 2018-15 is effective for annual
reporting periods beginning after December 15, 2019 with early adoption permitted. The Company adopted this standard
on January 1, 2020 on a prospective basis with no material impact on its financial statements.
In June 2016, the FASB issued ASU 2016-13, which changes the impairment model for most financial assets and certain
other instruments from an incurred loss model to an expected loss model. In addition, the guidance also requires
incremental disclosures regarding allowances and credit quality indicators. ASU 2016-13 is required to be adopted using
the modified-retrospective approach and is effective in fiscal years beginning after December 15, 2019, including interim
periods within those fiscal years, with early adoption permitted. The Company adopted this standard on January 1, 2020
with no material impact on its financial statements.
In February 2016, the FASB issued ASU 2016-02, “Leases” (ASC 842), which requires the lease rights and obligations
arising from lease contracts, including existing and new arrangements, to be recognized as assets and liabilities on
the balance sheet. The Company adopted this standard using a modified-retrospective approach as of January 1, 2019.
Under this approach, the Company recognized and recorded a right-of-use (ROU) asset and related lease liability on the
Consolidated Balance Sheet of $521 million with no impact to Retained earnings. Reporting periods prior to January 1,
2019 continue to be presented in accordance with previous lease accounting guidance under GAAP. As part of the
adoption, the Company elected the package of practical expedients permitted under the transition guidance which
includes the ability to carry forward historical lease classification. Refer to Note 11, “Leases,” for a further discussion on the
adoption of ASC 842.
In August 2017, the FASB issued ASU 2017-12, “Derivatives and hedging (Topic 815): Targeted improvements to accounting
for hedging activities” (ASU 2017-12). This standard more closely aligns the results of cash flow and fair value hedge
accounting with risk management activities through changes to both the designation and measurement guidance for
qualifying hedging relationships and the presentation of hedge results in the financial statements. This standard also
addresses specific limitations in current GAAP by expanding hedge accounting for both nonfinancial and financial
risk components and by refining the measurement of hedge results to better reflect an entity’s hedging strategies.
Additionally, by aligning the timing of recognition of hedge results with the earnings effect of the hedged item for cash
flow and net investment hedges, and by including the earnings effect of the hedging instrument in the same income
statement line item in which the earnings effect of the hedged item is presented, the results of an entity’s hedging
program and the cost of executing that program will be more visible to users of financial statements. ASU 2017-12 is
effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. The Company
adopted this standard on October 1, 2018 with no material impact to the financial statements.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than
Inventory” (ASU 2016-16) which removed the prohibition in Topic 740 against the immediate recognition of the current
and deferred income tax effects of intra-entity transfers of assets other than inventory. As a result, the income tax
consequences of an intra-entity transfer of assets other than inventory will be recognized in the current period income
statement rather than being deferred until the assets leave the consolidated group. The Company applied ASU 2016-
16 on a modified retrospective basis through a cumulative effect adjustment which reduced Retained earnings by $9.1
million as of January 1, 2018.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (ASC 606), which created a
comprehensive, five-step model for revenue recognition that requires a company to recognize revenue to depict the
transfer of promised goods or services to a customer at an amount that reflects the consideration it expects to receive
in exchange for those goods or services. Under ASC 606, a company will be required to use more judgment and
make more estimates when considering contract terms as well as relevant facts and circumstances when identifying
performance obligations, estimating the amount of variable consideration in the transaction price and allocating the
transaction price to each separate performance obligation. The Company adopted this standard on January 1, 2018
using the modified retrospective approach and recorded a cumulative effect adjustment to increase Retained earnings
by $2.4 million with related amounts not materially impacting the Balance Sheet. Refer to Note 13, “Revenue,” for a further
discussion on the adoption of ASC 606.
F-16
2020 ANNUAL REPORT PART IV
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”
(ASU 2019-12), which simplifies certain aspects of income tax accounting guidance in ASC 740, reducing the complexity
of its application. Certain exceptions to ASC 740 presented within the ASU include: intraperiod tax allocation, deferred tax
liabilities related to outside basis differences, year-to-date loss in interim periods, among others. ASU 2019-12 is effective
for annual reporting periods beginning after December 15, 2020 including interim periods therein with early adoption
permitted. The Company adopted this standard on January 1, 2021 with no material impact on its financial statements.
NOTE 4. INVENTORIES
Depending on the business, U.S. inventories are stated at the lower of cost or market using the LIFO method or the lower
of cost or market using the FIFO method. Non-U.S. inventories are primarily stated at the lower of cost or market using
the FIFO method.
At December 31, the major classes of inventory were as follows:
IN MILLIONS
Raw materials
Work-in-process
Finished goods
LIFO reserve
Total
2020
2019
$
$
305.0
163.9
761.4
333.5
173.7
804.9
1,230.3
1,312.1
(41.1)
(33.5)
$ 1,189.2
$ 1,278.6
The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable
inventories and records necessary provisions to reduce such inventories to net realizable value. Reserve balances,
primarily related to obsolete and slow-moving inventories, were $85.6 million and $66.1 million at December 31, 2020 and
December 31, 2019, respectively.
NOTE 5. PROPERTY, PLANT AND EQUIPMENT
At December 31, the major classes of property, plant and equipment were as follows:
IN MILLIONS
Land
Buildings
Machinery and equipment
Software
Accumulated depreciation
Total
2020
2019
$
40.7
$
676.7
1,749.3
638.0
3,104.7
40.1
660.0
1,600.2
655.2
2,955.5
(1,755.2)
(1,603.5)
$
1,349.5
$
1,352.0
Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $172.8 million, $167.2 million and $160.7
million, which include amounts for software amortization of $50.2 million, $55.4 million and $51.6 million, respectively.
NOTE 6. GOODWILL
The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired in a
business combination. Measurement period adjustments may be recorded once a final valuation has been performed.
Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant
change in events or circumstances that indicate that the fair value of the reporting unit may be less than its carrying
value. In addition, an interim impairment test is completed upon a triggering event or when there is a reorganization of
reporting structure or disposal of all or a portion of a reporting unit.
F-17
2020 Annual Report2020 ANNUAL REPORT PART IV
In connection with the new organizational model and business segment structure, the Company performed a goodwill
impairment assessment immediately prior to the reorganization becoming effective, the results of which did not indicate
any goodwill impairment. The Company then reassigned its goodwill between the newly designated reporting units using
a relative fair value approach. Subsequent to the reassignment, the Company performed a second goodwill impairment
assessment under the new reporting structure, the results of which also did not indicate any goodwill impairment.
The reassigned amounts of goodwill as of December 31, 2018 and the changes in the carrying amount of goodwill are as
follows:
IN MILLIONS
Net balance as of December 31, 2018
Acquisitions(1)
Currency translation
Net balance as of December 31, 2019
Acquisitions(1)
Deconsolidation of certain entities under Chapter 11(2)
Currency translation
Net balance as of December 31, 2020
AMERICAS
EMEA
ASIA PACIFIC
TOTAL
$
3,809.4
$
747.3
$
542.5
$ 5,099.2
45.3
4.1
3,858.8
130.1
(9.2)
0.3
—
(16.2)
731.1
—
—
62.4
—
(6.7)
535.8
—
—
33.5
45.3
(18.8)
5,125.7
130.1
(9.2)
96.2
$
3,980.0
$
793.5
$
569.3
$ 5,342.8
(1) Refer to Note 19, “Acquisitions and Divestitures” for more information regarding acquisitions.
(2) Refer to Note 22, “Commitments and Contingencies”, for more information regarding the Chapter 11 bankruptcy and asbestos-
related matters.
The net goodwill balances at December 31, 2020, 2019 and 2018 include $2,496.0 million of accumulated impairment. The
accumulated impairment relates entirely to a charge recorded in 2008.
NOTE 7. INTANGIBLE ASSETS
Indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever
there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the
carrying amount of the asset. All other intangible assets with finite useful lives are being amortized on a straight-line basis
over their estimated useful lives.
The following table sets forth the gross amount and related accumulated amortization of the Company’s intangible
assets at December 31:
IN MILLIONS
2020
2019
GROSS
CARRYING
AMOUNT
ACCUMULATED
AMORTIZATION
NET
CARRYING
AMOUNT
GROSS
CARRYING
AMOUNT
ACCUMULATED
AMORTIZATION
NET
CARRYING
AMOUNT
Customer relationships
$
2,010.2
$ (1,362.4) $
647.8 $
1,928.5
$ (1,239.2) $
689.3
Other
210.7
(199.4)
11.3
212.2
(203.4)
8.8
Total finite-lived intangible assets
$
2,220.9
$ (1,561.8) $
659.1 $
2,140.7
$ (1,442.6) $
698.1
Trademarks (indefinite-lived)
2,627.3
—
2,627.3
2,625.5
—
2,625.5
Total
$
4,848.2
$ (1,561.8) $ 3,286.4 $
4,766.2
$ (1,442.6) $ 3,323.6
Intangible asset amortization expense for 2020, 2019 and 2018 was $115.7 million, $116.7 million and $116.8 million,
respectively. Future estimated amortization expense on existing intangible assets in each of the next five years amounts to
approximately $122 million for 2021, $122 million for 2022, $121 million for 2023, $120 million for 2024, and $89 million for 2025.
F-18
2020 ANNUAL REPORT PART IV
NOTE 8. DEBT AND CREDIT FACILITIES
At December 31, Short-term borrowings and current maturities of long-term debt consisted of the following:
IN MILLIONS
Debentures with put feature
2.625% Senior notes due 2020(1)
2.900% Senior notes due 2021(2)
9.000% Debentures due 2021(3)
Other current maturities of long-term debt
Total
(1)
The 2.625% Senior notes due in May 2020 were redeemed in April 2020.
(2) The 2.900% Senior notes are due in February 2021.
(3) The 9.000% Debentures are due in August 2021.
2020
2019
$
343.0 $
343.0
—
299.8
299.9
125.0
7.7
—
—
7.5
$
775.6 $
650.3
The Company’s short-term obligations primarily consist of current maturities of long-term debt. The weighted-average
interest rate for Short-term borrowings and current maturities of long-term debt at December 31, 2020 and 2019 was 5.4%
and 4.6%, respectively.
COMMERCIAL PAPER PROGRAM
The Company uses borrowings under its commercial paper program for general corporate purposes. The maximum
aggregate amount of unsecured commercial paper notes available to be issued, on a private placement basis, under
the commercial paper program is $2.0 billion as of December 31, 2020. Under the commercial paper program, the
Company may issue notes from time to time through Trane Technologies Global Holding Company Limited or Trane
Technologies Luxembourg Finance S.A. Each of Trane Technologies plc, Trane Technologies Irish Holdings Unlimited
Company, Trane Technologies Lux International Holding Company S.à.r.l., Trane Technologies Global Holding Company
Limited and Trane Technologies Company LLC provided irrevocable and unconditional guarantees for any notes issued
under the commercial paper program. The Company had no outstanding balance under its commercial paper program
as of December 31, 2020 and December 31, 2019.
DEBENTURES WITH PUT FEATURE
At December 31, 2020 and December 31, 2019, the Company had $343.0 million of fixed rate debentures outstanding
which contain a put feature that the holders may exercise on each anniversary of the issuance date. If exercised,
the Company is obligated to repay in whole or in part, at the holder’s option, the outstanding principal amount of
the debentures plus accrued interest. If these options are not exercised, the final contractual maturity dates would
range between 2027 and 2028. Holders of these debentures had the option to exercise the put feature on each of the
outstanding debentures in 2020, subject to the notice requirement. No material exercises were made in 2020 or 2019.
F-19
2020 Annual Report2020 ANNUAL REPORT PART IV
At December 31, long-term debt excluding current maturities consisted of:
IN MILLIONS
2.900% Senior notes due 2021(1)
9.000% Debentures due 2021(2)
4.250% Senior notes due 2023
7.200% Debentures due 2020-2025
3.550% Senior notes due 2024
6.480% Debentures due 2025
3.500% Senior notes due 2026
3.750% Senior notes due 2028
3.800% Senior notes due 2029
5.750% Senior notes due 2043
4.650% Senior notes due 2044
4.300% Senior notes due 2048
4.500% Senior notes due 2049
Other loans and notes
Total
2020
2019
$
— $
—
698.4
29.9
497.3
149.7
397.3
545.6
744.4
494.7
296.1
296.2
345.7
1.2
299.1
124.9
697.8
37.3
496.6
149.7
396.8
545.1
743.6
494.5
295.9
296.0
345.5
0.1
$
4,496.5 $ 4,922.9
(1)
The 2.900% Senior notes are due in February 2021 and have been reclassified from noncurrent to current.
(2) The 9.000% Debentures are due in August 2021 and have been reclassified from noncurrent to current.
Scheduled maturities of long-term debt, including current maturities, as of December 31, 2020 are as follows:
IN MILLIONS
2021
2022
2023
2024
2025
Thereafter
Total
$
775.6
7.9
706.3
505.1
157.2
3,120.0
$ 5,272.1
ISSUANCE OF SENIOR NOTES
In March 2019, the Company issued $1.5 billion principal amount of senior notes in three tranches through Trane
Technologies Luxembourg Finance S.A., an indirect, wholly-owned subsidiary. The tranches consist of $400 million
aggregate principal amount of 3.500% senior notes due 2026, $750 million aggregate principal amount of 3.800% senior
notes due 2029 and $350 million aggregate principal amount of 4.500% senior notes due 2049. The notes are fully and
unconditionally guaranteed by each of Trane Technologies plc, Trane Technologies Irish Holdings Unlimited Company,
Trane Technologies Lux International Holding Company S.à.r.l, Trane Technologies Global Holding Company Limited, Trane
Technologies HoldCo Inc. and Trane Technologies Company LLC. The Company has the option to redeem the notes in
whole or in part at any time, prior to their stated maturity date at redemption prices set forth in the indenture agreement.
The notes are subject to certain customary covenants, however, none of these covenants are considered restrictive to
the Company’s operations.
OTHER CREDIT FACILITIES
On June 4, 2020, the Company entered into a new $1.0 billion senior unsecured revolving credit facility which matures
in March 2022 and terminated its $1.0 billion facility set to expire in March 2021. As a result, the Company maintains two
$1.0 billion senior unsecured revolving credit facilities, one of which matures in March 2022 and the other in April 2023
(the Facilities) through its wholly-owned subsidiaries, Trane Technologies HoldCo Inc., Trane Technologies Global Holding
F-20
2020 ANNUAL REPORT PART IV
Company Limited and Trane Technologies Luxembourg Finance S.A. (collectively, the Borrowers). Each senior unsecured
credit facility provides support for the Company’s commercial paper program and can be used for working capital and
other general corporate purposes. Trane Technologies plc, Trane Technologies Irish Holdings Unlimited Company, Trane
Technologies Lux International Holding Company S.à.r.l. and Trane Technologies Company LLC each provide irrevocable
and unconditional guarantees for these Facilities. In addition, each Borrower will guarantee the obligations under the
Facilities of the other Borrower. Total commitments of $2.0 billion were unused at December 31, 2020 and December 31, 2019.
FAIR VALUE OF DEBT
The Company considers the carrying value of short-term borrowings to be a reasonable estimate of the fair value due
to the short-term nature of the instruments. The fair value of the Company’s debt instruments at December 31, 2020 and
December 31, 2019 was $6.3 billion and $6.2 billion, respectively. The Company measures the fair value of its long-term
debt instruments for disclosure purposes based upon observable market prices quoted on public exchanges for similar
assets. These fair value inputs are considered Level 2 within the fair value hierarchy.
NOTE 9. FINANCIAL INSTRUMENTS
In the normal course of business, the Company is exposed to certain risks arising from business operations and
economic factors. These fluctuations can increase the cost of financing, investing and operating the business. The
Company may use various financial instruments, including derivative instruments, to manage the risks associated with
interest rate, commodity price and foreign currency exposures. These financial instruments are not used for trading or
speculative purposes. The Company recognizes all derivatives on the Consolidated Balance Sheet at their fair value as
either assets or liabilities.
On the date a derivative contract is entered into, the Company designates the derivative instrument as a cash flow
hedge of a forecasted transaction or as an undesignated derivative. The Company formally documents its hedge
relationships, including identification of the derivative instruments and the hedged items, as well as its risk management
objectives and strategies for undertaking the hedge transaction. This process includes linking derivative instruments that
are designated as hedges to specific assets, liabilities or forecasted transactions.
The Company assesses at inception and at least quarterly thereafter, whether the derivatives used in cash flow
hedging transactions are highly effective in offsetting the changes in the cash flows of the hedged item. To the extent
the derivative is deemed to be a highly effective hedge, the fair market value changes of the instrument are recorded
to Accumulated other comprehensive income (loss) (AOCI). If the hedging relationship ceases to be highly effective,
or it becomes probable that a forecasted transaction is no longer expected to occur, the hedging relationship will be
undesignated and any future gains and losses on the derivative instrument will be recorded in Net earnings.
The fair values of derivative instruments included within the Consolidated Balance Sheet as of December 31 were as
follows:
IN MILLIONS
Derivatives designated as hedges:
Currency derivatives
Derivatives not designated as hedges:
Currency derivatives
Total derivatives
DERIVATIVE
ASSETS
DERIVATIVE
LIABILITIES
2020
2019
2020
2019
$ 0.7 $ 0.1 $ 1.7 $ 3.9
1.5
1.0
4.8
3.3
$ 2.2 $ 1.1 $ 6.5 $ 7.2
Asset and liability derivatives included in the table above are recorded within Other current assets and Accrued
expenses and other current liabilities, respectively.
F-21
2020 Annual Report2020 ANNUAL REPORT PART IV
CURRENCY HEDGING INSTRUMENTS
The notional amount of the Company’s currency derivatives was $0.5 billion at both December 31, 2020 and 2019,
respectively. At December 31, 2020 and 2019, a net loss of $0.7 million and $2.9 million, net of tax, respectively, was included
in AOCI related to the fair value of the Company’s currency derivatives designated as accounting hedges. The amount
expected to be reclassified into Net earnings over the next twelve months is a loss of $0.6 million. The actual amounts
that will be reclassified to Net earnings may vary from this amount as a result of changes in market conditions. Gains
and losses associated with the Company’s currency derivatives not designated as hedges are recorded in Net earnings
as changes in fair value occur. At December 31, 2020, the maximum term of the Company’s currency derivatives was
approximately 12 months, except for currency derivatives in place related to a long-term contract.
OTHER DERIVATIVE INSTRUMENTS
In the past, the Company utilized forward-starting interest rate swaps and interest rate locks to manage interest rate
exposure in periods prior to the anticipated issuance of certain fixed-rate debt. These instruments were designated as
cash flow hedges and had a notional amount of $1.3 billion. Consequently, when the contracts were settled upon the
issuance of the underlying debt, any realized gains or losses in the fair values of the instruments were deferred into AOCI.
These deferred gains or losses are subsequently recognized in Interest expense over the term of the related notes. The
net unrecognized gain in AOCI was $5.3 million and $6.0 million at December 31, 2020 and at December 31, 2019. The net
deferred gain at December 31, 2020 will continue to be amortized over the term of notes with maturities ranging from 2023
to 2044. The amount expected to be amortized over the next twelve months is a net gain of $0.7 million. The Company has
no forward-starting interest rate swaps or interest rate lock contracts outstanding at December 31, 2020 or 2019.
The following table represents the amounts associated with derivatives designated as hedges affecting Net earnings
and AOCI for the years ended December 31:
IN MILLIONS
AMOUNT OF GAIN (LOSS)
RECOGNIZED IN AOCI
2020
2019
2018
LOCATION OF GAIN
(LOSS) RECLASSIFIED
FROM AOCI AND
RECOGNIZED INTO NET
EARNINGS
AMOUNT OF GAIN (LOSS)
RECLASSIFIED FROM AOCI
AND RECOGNIZED INTO
NET EARNINGS
2020
2019
2018
Currency derivatives - continuing
$
3.3
$ (2.5) $ 0.7 Cost of goods sold
$ (2.6) $ (1.5) $ (1.0)
Currency derivatives - discontinued
Interest rate swaps & locks
—
—
(0.2)
—
0.5 Discontinued operations
— Interest expense
—
0.7
0.1
0.7
0.2
(0.1)
Total
$
3.3
$ (2.7) $ 1.2
$ (1.9) $ (0.7) $ (0.9)
The following table represents the amounts associated with derivatives not designated as hedges affecting Net earnings
for the years ended December 31:
IN MILLIONS
LOCATION OF GAIN (LOSS) RECOGNIZED
IN NET EARNINGS
Currency derivatives - continuing
Other income (expense), net
Currency derivatives - discontinued
Discontinued operations
Total
AMOUNT OF GAIN (LOSS)
RECOGNIZED IN NET EARNINGS
2020
2019
2018
$
$
7.5
$
(5.2)
$ (30.0)
(0.4)
(1.2)
0.4
7.1
$
(6.4)
$ (29.6)
The gains and losses associated with the Company’s undesignated currency derivatives are materially offset in Net
earnings by changes in the fair value of the underlying transactions.
F-22
2020 ANNUAL REPORT The following table presents the effects of the Company’s designated financial instruments on the associated financial
statement line item within the Consolidated Statement of Comprehensive Income where the financial instrument are
recorded for the years ended December 31:
PART IV
CLASSIFICATION AND AMOUNT OF GAIN (LOSS) RECOGNIZED IN INCOME ON CASH FLOW
HEDGING RELATIONSHIPS
2020
2019
2018
COST OF
GOODS SOLD
INTEREST
EXPENSE
COST OF
GOODS SOLD
INTEREST
EXPENSE
COST OF
GOODS SOLD
INTEREST
EXPENSE
$
(8,651.3) $ (248.7) $ (9,085.5)
$
(242.8)
$
(8,582.5) $ (221.0)
IN MILLIONS
Total amounts presented in the
Consolidated Statements of
Comprehensive Income
Gain (loss) on cash flow hedging
relationships
Currency derivatives:
Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
Amount excluded from
effectiveness testing recognized
in net earnings based on
changes in fair value and
amortization
Interest rate swaps & locks:
Amount of gain (loss)
reclassified from AOCI and
recognized into Net earnings
$
$
$
(2.6) $
— $
(1.5)
$
— $
(1.0) $
—
(2.1) $
— $
(3.0)
$
— $
(0.1) $
—
— $
0.7
$
— $
0.7
$
— $
(0.1)
For the years ended December 31, 2019 and 2018, the amount of gain (loss) reclassified from AOCI and recognized into
Net earnings also included a gain of $0.1 million and $0.2 million, respectively, related to the historical results of Ingersoll
Rand Industrial. The gains were recorded within Discontinued operations, net of tax.
CONCENTRATION OF CREDIT RISK
The counterparties to the Company’s forward contracts consist of a number of investment grade major international
financial institutions. The Company could be exposed to losses in the event of nonperformance by the counterparties.
However, the credit ratings and the concentration of risk in these financial institutions are monitored on a continuous
basis and present no significant credit risk to the Company.
NOTE 10. FAIR VALUE MEASUREMENTS
ASC 820, “Fair Value Measurement,” (ASC 820) defines fair value 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. ASC 820 also
establishes a three-level fair value hierarchy that prioritizes information used in developing assumptions when pricing an
asset or liability as follows:
• Level 1: Observable inputs such as quoted prices in active markets;
• Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
• Level 3: Unobservable inputs where there is little or no market data, which requires the reporting entity to develop its
own assumptions.
ASC 820 requires the use of observable market data, when available, in making fair value measurements. When inputs
used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is
categorized is based on the lowest level input that is significant to the fair value measurement.
F-23
2020 Annual Report2020 ANNUAL REPORT PART IV
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a
recurring basis as of December 31, 2020:
IN MILLIONS
Assets:
Derivative instruments
Liabilities:
Derivative instruments
FAIR VALUE MEASUREMENTS
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
$ 2.2
$ —
$ 2.2
$ —
$ 6.5
$ —
$ 6.5
$ —
The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a
recurring basis as of December 31, 2019:
IN MILLIONS
Assets:
Derivative instruments
Liabilities:
Derivative instruments
FAIR VALUE MEASUREMENTS
FAIR VALUE
LEVEL 1
LEVEL 2
LEVEL 3
$ 1.1
$ —
$ 1.1
$ —
$ 7.2
$ —
$ 7.2
$ —
Derivative instruments include forward foreign currency contracts and instruments related to non-functional currency
balance sheet exposures. The fair value of the derivative instruments are determined based on a pricing model that uses
spot rates and forward prices from actively quoted currency markets that are readily accessible and observable.
The carrying values of cash and cash equivalents, accounts receivable and accounts payable are a reasonable estimate
of their fair value due to the short-term nature of these instruments. There have been no transfers between levels of the
fair value hierarchy.
NOTE 11. LEASES
The Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other
equipment. At contract inception, the Company determines a lease exists if the contract conveys the right to control an
identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has
the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to
direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based
on the present value of the future lease payments, with an offsetting entry to recognize a right-of-use asset. Options to
extend or terminate a lease are included when it is reasonably certain an option will be exercised. As a majority of the
Company’s leases do not provide an implicit rate within the lease, an incremental borrowing rate is used which is based
on information available at the commencement date.
The following table includes a summary of the Company’s lease portfolio and Balance Sheet classification:
IN MILLIONS
Assets
CLASSIFICATION
DECEMBER 31, 2020
DECEMBER 31, 2019
Operating lease right-of-use assets (1)
Other noncurrent assets
$
409.0
$
469.4
Liabilities
Operating lease current
Other current liabilities
Operating lease noncurrent
Other noncurrent liabilities
Weighted average remaining lease term
Weighted average discount rate
138.8
276.5
145.0
329.9
4.0 years
4.3 years
3.3%
3.6%
(1) Prepaid lease payments and lease incentives are recorded as part of the right-of-use asset. The net impact was $6.3 million and
$5.5 million at December 31, 2020 and December 31, 2019, respectively.
F-24
2020 ANNUAL REPORT PART IV
The Company accounts for each separate lease component of a contract and its associated non-lease component as
a single lease component. In addition, the Company utilizes a portfolio approach for the vehicle, information technology
and equipment asset classes as the application of the lease model to the portfolio would not differ materially from the
application of the lease model to the individual leases within the portfolio.
The following table includes lease costs and related cash flow information for the year ended December 31:
IN MILLIONS
Operating lease expense
Variable lease expense
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilities
2020
2019
$ 173.0
$ 163.5
24.9
19.9
172.2
114.6
161.5
162.9
Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain
leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual
usage of the leased asset. These payments are not included in the right-of-use asset or lease liability and are expensed
as incurred as variable lease expense.
Maturities of lease obligations were as follows:
IN MILLIONS
Operating leases:
2021
2022
2023
2024
2025
After 2025
Total lease payments
Less: Interest
Present value of lease liabilities
DECEMBER 31, 2020
$ 152.0
114.1
78.2
46.8
22.8
34.5
$ 448.4
(33.1)
$ 415.3
NOTE 12. PENSIONS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors several U.S. defined benefit and defined contribution plans covering substantially all of the
Company’s U.S. employees. Additionally, the Company has many non-U.S. defined benefit and defined contribution plans
covering eligible non-U.S. employees. Postretirement benefits other than pensions (OPEB) provide healthcare benefits,
and in some instances, life insurance benefits for certain eligible employees.
PENSION PLANS
The noncontributory defined benefit pension plans covering non-collectively bargained U.S. employees provide benefits
on a final average pay formula while plans for most collectively bargained U.S. employees provide benefits on a flat dollar
benefit formula or a percentage of pay formula. The non-U.S. pension plans generally provide benefits based on earnings
and years of service. The Company also maintains additional other supplemental plans for officers and other key or
highly compensated employees.
In connection with completion of the Transaction, the Company transferred certain pension obligations for current and
former employees of Ingersoll Rand Industrial to Gardner Denver. The transfer of these obligations reduced pension
liabilities by $486.2 million, pension assets by $351.7 million and AOCI by $111.3 million.
F-25
2020 Annual Report2020 ANNUAL REPORT PART IV
The following table details information regarding the Company’s pension plans at December 31:
IN MILLIONS
Change in benefit obligations:
2020
2019
Benefit obligation at beginning of year
$ 3,851.2
$ 3,465.3
Service cost
Interest cost
Employee contributions
Amendments
Actuarial (gains) losses(1)
Benefits paid
Currency translation
Curtailments, settlements and special termination benefits
Impact of the Transaction
Other, including expenses paid
Benefit obligation at end of year
Change in plan assets:
Fair value at beginning of year
Actual return on assets
Company contributions
Employee contributions
Benefits paid
Currency translation
Settlements
Impact of the Transaction
Other, including expenses paid
Fair value of assets end of year
Net unfunded liability
Amounts included in the balance sheet:
Other noncurrent assets
Assets held-for-sale
Accrued compensation and benefits
Postemployment and other benefit liabilities
Liabilities held-for-sale
Net amount recognized
58.3
83.8
1.0
1.9
317.7
(189.2)
43.8
(7.8)
(486.2)
(11.7)
73.6
119.1
1.1
5.7
422.8
(225.3)
9.0
(3.1)
—
(17.0)
$ 3,662.8
$ 3,851.2
$ 3,136.8
$ 2,766.9
395.6
99.7
1.0
526.1
83.1
1.1
(189.2)
(225.3)
39.5
(7.8)
(351.7)
(9.3)
12.0
(5.3)
—
(21.8)
$ 3,114.6
$ 3,136.8
$
$
(548.2)
$
(714.4)
72.8
$
—
(22.9)
(598.1)
—
50.0
0.3
(7.2)
(617.3)
(140.2)
$
(548.2)
$
(714.4)
(1) Actuarial (gains) losses primarily resulted from changes in discount rates
It is the Company’s objective to contribute to the pension plans to ensure adequate funds, and no less than required by
law, are available in the plans to make benefit payments to plan participants and beneficiaries when required. However,
certain plans are not or cannot be funded due to either legal, accounting, or tax requirements in certain jurisdictions. As
of December 31, 2020, approximately seven percent of the Company’s projected benefit obligation relates to plans that
cannot be funded.
F-26
2020 ANNUAL REPORT PART IV
The pretax amounts recognized in Accumulated other comprehensive income (loss) were as follows:
IN MILLIONS
December 31, 2019
Current year changes recorded to AOCI
Amortization reclassified to earnings
Settlements/curtailments reclassified to earnings
Impact of the Transaction
Currency translation and other
December 31, 2020
PRIOR SERVICE
BENEFIT (COST)
NET ACTUARIAL
GAINS (LOSSES)
TOTAL
$ (32.4)
$ (800.2)
$ (832.6)
(1.9)
5.3
—
1.3
(0.6)
(43.2)
43.7
(1.8)
110.0
(9.8)
(45.1)
49.0
(1.8)
111.3
(10.4)
$ (28.3)
$ (701.3)
$ (729.6)
Weighted-average assumptions used to determine the benefit obligation at December 31 were as follows:
Discount rate:
U.S. plans
Non-U.S. plans
Rate of compensation increase:
U.S. plans
Non-U.S. plans
2020
2019
2.52 % 3.22 %
1.27 % 1.66 %
4.00 % 4.00 %
3.75 % 3.75 %
The accumulated benefit obligation for all defined benefit pension plans was $3,566.4 million and $3,734.5 million at
December 31, 2020 and 2019, respectively. The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for pension plans with accumulated benefit obligations more than plan assets were $3,128.7 million, $3,043.9
million and $2,510.9 million, respectively, as of December 31, 2020, and $3,405.7 million, $3,308.2 million and $2,645.1 million,
respectively, as of December 31, 2019.
Pension benefit payments are expected to be paid as follows:
IN MILLIONS
2021
2022
2023
2024
2025
2026-2030
$
210.7
204.5
207.1
200.7
246.6
960.9
F-27
2020 Annual Report2020 ANNUAL REPORT PART IV
The components of the Company’s net periodic pension benefit costs for the years ended December 31 include the following:
IN MILLIONS
Service cost
Interest cost
Expected return on plan assets
Net amortization of:
Prior service costs (benefits)
Plan net actuarial (gains) losses
Net periodic pension benefit cost
Net curtailment, settlement, and special termination benefits (gains) losses
Net periodic pension benefit cost after net curtailment and settlement (gains) losses
Amounts recorded in continuing operations:
Operating income
Other income/(expense), net
Amounts recorded in discontinued operations
Total
2020
2019
2018
$
58.3
$
73.6
$
75.0
83.8
119.1
109.7
(121.1)
(138.5)
(146.6)
5.3
43.7
70.0
(1.8)
5.0
54.3
113.5
4.5
4.2
51.3
93.6
2.3
68.2
$ 118.0
$
95.9
51.7
$
58.8
$
61.0
11.7
4.8
31.8
27.4
14.2
20.7
$
$
$
68.2
$ 118.0
$
95.9
Pension benefit cost for 2021 is projected to be approximately $51 million.
Weighted-average assumptions used to determine net periodic pension cost for the years ended December 31 were as follows:
Discount rate:
U.S. plans
Service cost
Interest cost
Non-U.S. plans
Service cost
Interest cost
Rate of compensation increase:
U.S. plans
Non-U.S. plans
Expected return on plan assets:
U.S. plans
Non-U.S. plans
2020
2019
2018
3.36 % 4.24% 3.70%
2.78 % 3.88% 3.24%
1.87 % 2.81% 2.52%
1.51 % 2.83% 2.46%
4.00 % 4.00% 4.00%
3.75 % 4.00% 4.00%
4.75 % 5.75% 5.50%
2.75 % 3.25% 3.25%
The expected long-term rate of return on plan assets reflects the average rate of returns expected on the funds invested
or to be invested to provide for the benefits included in the projected benefit obligation. The expected long-term rate
of return on plan assets is based on what is achievable given the plan’s investment policy, the types of assets held and
target asset allocations. The expected long-term rate of return is determined as of the measurement date. The Company
reviews each plan and its historical returns and target asset allocations to determine the appropriate expected long-term
rate of return on plan assets to be used.
The Company’s objective in managing its defined benefit plan assets is to ensure that all present and future benefit
obligations are met as they come due. It seeks to achieve this goal while trying to mitigate volatility in plan funded status,
contribution, and expense by better matching the characteristics of the plan assets to that of the plan liabilities. The
Company utilizes a dynamic approach to asset allocation whereby a plan’s allocation to fixed income assets increases as
the plan’s funded status improves. The Company monitors plan funded status and asset allocation regularly in addition to
investment manager performance.
F-28
2020 ANNUAL REPORT Part IV
PART IV
The fair values of the Company’s pension plan assets at December 31, 2020 by asset category were as follows:
IN MILLIONS
Cash and cash equivalents
Equity investments:
Registered mutual funds – equity specialty
Commingled funds – equity specialty
Fixed income investments:
U.S. government and agency obligations
Corporate and non-U.S. bonds(a)
Asset-backed and mortgage-backed securities
Registered mutual funds – fixed income specialty
Commingled funds – fixed income specialty
Other fixed income(b)
Derivatives
Real estate(c)
Other(d)
Total assets at fair value
Receivables and payables, net
Net assets available for benefits
FAIR VALUE MEASUREMENTS
LEVEL 1
LEVEL 2
LEVEL 3
NET
ASSET
VALUE
TOTAL
FAIR VALUE
$ 3.1
$
34.2
$
— $
— $
37.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
504.7
1,424.2
48.4
—
—
—
1,977.3
0.3
—
—
—
—
—
—
—
—
—
—
28.3
28.3
—
2.8
112.3
65.1
622.0
687.1
—
—
—
118.3
153.3
—
65.1
622.0
687.1
504.7
1,424.2
48.4
118.3
153.3
28.3
271.6
2,277.2
—
—
—
0.3
2.8
112.3
$ 3.1
$ 2,011.8
$ 143.4 $ 958.7 $ 3,117.0
(2.4)
$ 3,114.6
The fair values of the Company’s pension plan assets at December 31, 2019 by asset category were as follows:
IN MILLIONS
Cash and cash equivalents
Equity investments:
Registered mutual funds – equity specialty
Commingled funds – equity specialty
Fixed income investments:
U.S. government and agency obligations
Corporate and non-U.S. bonds(a)
Asset-backed and mortgage-backed securities
Registered mutual funds – fixed income specialty
Commingled funds – fixed income specialty
Other fixed income(b)
Derivatives
Real estate(c)
Other(d)
Total assets at fair value
Receivables and payables, net
Net assets available for benefits
FAIR VALUE MEASUREMENTS
LEVEL 1
LEVEL 2
LEVEL 3
NET
ASSET
VALUE
TOTAL
FAIR
VALUE
$ 7.0
$
26.3
$
— $
— $
33.3
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
528.5
1,393.0
70.9
—
—
—
1,992.4
0.4
—
—
—
—
—
—
0.4
—
—
—
26.0
26.4
—
3.4
114.1
61.5
665.2
726.7
—
—
—
103.3
127.6
—
61.5
665.2
726.7
528.5
1,393.4
70.9
103.3
127.6
26.0
230.9
2,249.7
—
—
—
0.4
3.4
114.1
$ 7.0
$ 2,019.1
$ 143.9 $ 957.6 $ 3,127.6
9.2
$ 3,136.8
F-29
2020 Annual Report2020 ANNUAL REPORT PART IV
(a) This class includes state and municipal bonds.
(b) This class includes group annuity and guaranteed interest contracts.
(c) This class includes a private equity fund that invests in real estate.
(d) This investment comprises the Company’s non-significant, non-US pension plan assets. It primarily includes insurance contracts.
Cash equivalents are valued using a market approach with inputs including quoted market prices for either identical or
similar instruments. Fixed income securities are valued through a market approach with inputs including, but not limited
to, benchmark yields, reported trades, broker quotes and issuer spreads. Commingled funds are valued at their daily
net asset value (NAV) per share or the equivalent. NAV per share or the equivalent is used for fair value purposes as a
practical expedient. NAVs are calculated by the investment manager or sponsor of the fund. Private real estate fund
values are reported by the fund manager and are based on valuation or appraisal of the underlying investments. Refer to
Note 10, “Fair Value Measurements” for additional information related to the fair value hierarchy defined by ASC 820. There
have been no significant transfers between levels of the fair value hierarchy.
The Company made required and discretionary contributions to its pension plans of $99.7 million in 2020, $83.1 million in
2019, and $86.9 million in 2018 and currently projects that it will contribute approximately $56 million to its plans worldwide
in 2021. The contribution in 2020 included $24.4 million to fund Ingersoll Rand Industrial plans prior to the completion of
the Transaction. The Company’s policy allows it to fund an amount, which could be in excess of or less than the pension
cost expensed, subject to the limitations imposed by current tax regulations. However, the Company anticipates funding
the plans in 2021 in accordance with contributions required by funding regulations or the laws of each jurisdiction.
Most of the Company’s U.S. employees are covered by defined contribution plans. Employer contributions are
determined based on criteria specific to the individual plans and amounted to approximately $111.0 million, $140.2 million
and $131.9 million in 2020, 2019 and 2018, respectively. The Company’s contributions relating to non-U.S. defined
contribution plans and other non-U.S. benefit plans were $19.2 million, $56.7 million and $52.0 million in 2020, 2019 and 2018,
respectively.
MULTIEMPLOYER PENSION PLANS
The Company also participates in a number of multiemployer defined benefit pension plans related to collectively
bargained U.S. employees of Trane. The Company’s contributions, and the administration of the fixed retirement
payments, are determined by the terms of the related collective-bargaining agreements. These multiemployer plans pose
different risks to the Company than single-employer plans, including:
1. The Company’s contributions to multiemployer plans may be used to provide benefits to all participating employees
of the program, including employees of other employers.
2.
3.
In the event that another participating employer ceases contributions to a plan, the Company may be responsible for
any unfunded obligations along with the remaining participating employers.
If the Company chooses to withdraw from any of the multiemployer plans, the Company may be required to pay a
withdrawal liability, based on the underfunded status of the plan.
As of December 31, 2020, the Company does not participate in any plans that are individually significant, nor is the
Company an individually significant participant to any of these plans.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors several postretirement plans that provide for healthcare benefits, and in some instances,
life insurance benefits that cover certain eligible employees. These plans are unfunded and have no plan assets,
but are instead funded by the Company on a pay-as-you-go basis in the form of direct benefit payments. Generally,
postretirement health benefits are contributory with contributions adjusted annually. Life insurance plans for retirees are
primarily noncontributory.
In connection with the completion of the Transaction, the Company transferred certain postretirement benefit obligations
for current and former employees of Ingersoll Rand Industrial to Gardner Denver. The transfer of these obligations
reduced postretirement plan liabilities by $28.7 million and increased AOCI by $5.5 million.
F-30
2020 ANNUAL REPORT The following table details changes in the Company’s postretirement plan benefit obligations for the years ended
December 31:
PART IV
IN MILLIONS
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial (gains) losses(1)
Benefits paid, net of Medicare Part D subsidy(2)
Impact of the Transaction
Other
Benefit obligations at end of year
2020
2019
$ 428.8
$ 442.7
2.4
9.7
8.2
9.3
(39.9)
(28.7)
(0.7)
2.6
14.8
7.7
6.7
(45.6)
—
(0.1)
$ 389.1
$ 428.8
(1) Net actuarial losses primarily resulted from losses driven by changes in discount rates offset by gains driven by changes in per
capita cost assumptions.
(2) Amounts are net of Medicare Part D subsidy of $0.7 million and $0.8 million in 2020 and 2019, respectively.
The benefit plan obligations are reflected in the Consolidated Balance Sheets as follows:
IN MILLIONS
Accrued compensation and benefits
Postemployment and other benefit liabilities
Liabilities held-for-sale
Total
DECEMBER 31,
2020
DECEMBER 31,
2019
$
(37.1)
$
(38.3)
(352.0)
—
(361.3)
(29.2)
$ (389.1)
$ (428.8)
The pre-tax amounts recognized in Accumulated other comprehensive income (loss) were as follows:
IN MILLIONS
Balance at December 31, 2019
Gain (loss) in current period
Amortization reclassified to earnings
Impact of the Transaction
Balance at December 31, 2020
NET ACTUARIAL
GAINS (LOSSES)
$ 72.8
(9.3)
(5.6)
(5.5)
$ 52.4
The components of net periodic postretirement benefit (income) cost for the years ended December 31 were as follows:
IN MILLIONS
Service cost
Interest cost
Net amortization of:
Prior service costs (benefits)
Net actuarial (gains) losses
Net periodic postretirement benefit cost
Amounts recorded in continuing operations:
Operating income
Other income/(expense), net
Amounts recorded in discontinued operations
Total
2020
2.4
9.7
2019
2018
$
2.6
$
2.8
14.8
14.4
—
(0.3)
(5.6)
(10.9)
(3.8)
(1.0)
6.5
$
6.2
$ 12.4
2.4
3.0
1.1
6.5
$
$
2.5
3.1
0.6
6.2
$
2.8
6.9
2.7
$ 12.4
$
$
$
$
F-31
2020 Annual Report2020 ANNUAL REPORT PART IV
Postretirement cost for 2021 is projected to be approximately $6 million. The amount expected to be recognized in net
periodic postretirement benefits cost in 2021 for net actuarial gains is approximately $2 million.
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31 were as
follows:
Discount rate:
Benefit obligations at December 31
Net periodic benefit cost
Service cost
Interest cost
Assumed health-care cost trend rates at December 31:
Current year medical inflation
Ultimate inflation rate
Year that the rate reaches the ultimate trend rate
2020
2019
2018
2.25 % 2.99%
4.05%
3.18 % 4.13%
2.73 % 3.67%
3.47%
2.94%
6.50 % 6.75%
4.75 % 4.75%
6.45%
5.00%
2028
2028
2023
Benefit payments for postretirement benefits, which are net of expected plan participant contributions and Medicare
Part D subsidy, are expected to be paid as follows:
IN MILLIONS
2021
2022
2023
2024
2025
2026 — 2030
$
37.1
35.8
33.7
31.7
29.9
121.7
NOTE 13. REVENUE
The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation)
is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain
substantially all of the remaining benefits from that good or service. A majority of the Company’s revenues are recognized
at a point-in-time as control is transferred at a distinct point in time per the terms of a contract. However, a portion of
the Company’s revenues are recognized over time as the customer simultaneously receives control as the Company
performs work under a contract. For these arrangements, the cost-to-cost input method is used as it best depicts the
transfer of control to the customer that occurs as the Company incurs costs.
PERFORMANCE OBLIGATIONS
A performance obligation is a distinct good, service or a bundle of goods and services promised in a contract. The
Company identifies performance obligations at the inception of a contract and allocates the transaction price to
individual performance obligations to faithfully depict the Company’s performance in transferring control of the promised
goods or services to the customer.
The following are the primary performance obligations identified by the Company:
Equipment and parts. The Company principally generates revenue from the sale of equipment and parts to customers
and recognizes revenue at a point in time when control transfers to the customer. Transfer of control is generally
determined based on the shipping terms of the contract.
F-32
2020 ANNUAL REPORT PART IV
Contracting and Installation. The Company enters into various construction-type contracts to design, deliver and
build integrated solutions to meet customer specifications. These transactions provide services that range from the
development and installation of new HVAC systems to the design and integration of critical building systems to optimize
energy efficiency and overall performance. These contracts have a typical term of less than one year and are considered
a single performance obligation as multiple combined goods and services promised in the contract represent a single
output delivered to the customer. Revenues associated with contracting and installation contracts are recognized over
time with progress towards completion measured using an input method as the basis to recognize revenue and an
estimated profit. To-date efforts for work performed corresponds with and faithfully depicts transfer of control to the
customer.
Services and Maintenance. The Company provides various levels of preventative and/or repair and maintenance type
service agreements for its customers. The typical length of a contract is 12 months but can be as long as 60 months.
Revenues associated with these performance obligations are primarily recognized over time on a straight-line basis
over the life of the contract as the customer simultaneously receives and consumes the benefit provided by the
Company. However, if historical evidence indicates that the cost of providing these services on a straight-line basis
is not appropriate, revenue is recognized over the contract period in proportion to the costs expected to be incurred
while performing the service. Certain repair services do not meet the definition of over time revenue recognition as the
Company does not transfer control to the customer until the service is completed. As a result, revenue related to these
services is recognized at a point in time.
Extended warranties. The Company enters into various warranty contracts with customers related to its products.
A standard warranty generally warrants that a product is free from defects in workmanship and materials under
normal use and conditions for a certain period of time. The Company’s standard warranty is not considered a distinct
performance obligation as it does not provide services to customers beyond assurance that the covered product is free
of initial defects. An extended warranty provides a customer with additional time that the Company is liable for covered
incidents associated with its products. Extended warranties are purchased separately and can last up to five years.
As a result, they are considered separate performance obligations for the Company. Revenue associated with these
performance obligations are primarily recognized over time on a straight-line basis over the life of the contract as the
customer simultaneously receives and consumes the benefit provided by the Company. However, if historical evidence
indicates that the cost of providing these services on a straight-line basis is not appropriate, revenue is recognized over
the contract period in proportion to the costs expected to be incurred while performing the service. Refer to Note 22,
“Commitments and Contingencies,” for more information related to product warranties.
The transaction price allocated to performance obligations reflects the Company’s expectations about the consideration
it will be entitled to receive from a customer. To determine the transaction price, variable and noncash consideration are
assessed as well as whether a significant financing component exists. The Company includes variable consideration in
the estimated transaction price when it is probable that significant reversal of revenue recognized would not occur when
the uncertainty associated with variable consideration is subsequently resolved. The Company considers historical data
in determining its best estimates of variable consideration, and the related accruals are recorded using the expected
value method. The Company has performance guarantees related to energy savings contracts that are provided under
the maintenance portion of contracting and installation agreements extending from 2021-2047. These performance
guarantees represent variable consideration and are estimated as part of the overall transaction price. The Company has
not recognized any significant adjustments to the transaction price due to variable consideration.
The Company enters into sales arrangements that contain multiple goods and services, such as equipment, installation
and extended warranties. For these arrangements, each good or service is evaluated to determine whether it represents
a distinct performance obligation and whether the sales price for each obligation is representative of standalone selling
price. If available, the Company utilizes observable prices for goods or services sold separately to similar customers
in similar circumstances to evaluate relative standalone selling price. List prices are used if they are determined to be
representative of standalone selling prices. Where necessary, the Company ensures that the total transaction price is
then allocated to the distinct performance obligations based on the determination of their relative standalone selling
price at the inception of the arrangement.
F-33
2020 Annual Report2020 ANNUAL REPORT PART IV
The Company recognizes revenue for delivered goods or services when the delivered good or service is distinct,
control of the good or service has transferred to the customer, and only customary refund or return rights related to the
goods or services exist. The Company excludes from revenues taxes it collects from a customer that are assessed by a
government authority.
DISAGGREGATED REVENUE
Net revenues by geography and major type of good or service for the year ended at December 31 were as follows:
IN MILLIONS
Americas
Equipment
Services and parts
Total Americas
EMEA
Equipment
Services and parts
Total EMEA
Asia Pacific
Equipment
Services and parts
Total Asia Pacific
Total Net revenues
2020
2019
2018
$
6,479.0
$
6,880.4
$
6,236.6
3,206.9
3,179.1
2,982.8
$
9,685.9
$ 10,059.5
$
9,219.4
$
1,119.9
$
1,208.0
$
1,271.7
528.2
554.6
559.4
$
1,648.1
$
1,762.6
$
1,831.1
$
773.6
$
879.7
$
347.1
374.1
917.3
376.0
$
1,120.7
$
1,253.8
$
1,293.3
$ 12,454.7
$ 13,075.9
$ 12,343.8
Revenue from goods and services transferred to customers at a point in time accounted for approximately 81%, 82% and
82% of the Company’s revenue for the years ended December 31, 2020, 2019 and 2018, respectively.
CONTRACT BALANCES
The opening and closing balances of contract assets and contract liabilities arising from contracts with customers for
the period ended December 31, 2020 and December 31, 2019 were as follows:
IN MILLIONS
Contract assets
Contract liabilities
2020
2019
$
255.4
$ 172.6
1,077.0
941.9
The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets, and
customer advances and deposits (contract liabilities) on the Consolidated Balance Sheet. In general, the Company
receives payments from customers based on a billing schedule established in its contracts. Contract assets relate to
the conditional right to consideration for any completed performance under the contract when costs are incurred in
excess of billings under the percentage-of-completion methodology. Accounts receivable are recorded when the right to
consideration becomes unconditional. Contract liabilities relate to payments received in advance of performance under
the contract or when the Company has a right to consideration that is unconditional before it transfers a good or service
to the customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.
During the years ended December 31, 2020 and 2019, changes in contract asset and liability balances were not materially
impacted by any other factors.
Approximately 55% of the contract liability balance at December 31, 2019 was recognized as revenue during the year
ended December 31, 2020. Additionally, approximately 40% of the contract liability balance at December 31, 2020 was
classified as noncurrent and not expected to be recognized as revenue in the next 12 months.
F-34
2020 ANNUAL REPORT PART IV
NOTE 14. EQUITY
The authorized share capital of Trane Technologies plc is 1,185,040,000 shares, consisting of (1) 1,175,000,000 ordinary
shares, par value $1.00 per share, (2) 40,000 ordinary shares, par value EUR 1.00 and (3) 10,000,000 preference shares,
par value $0.001 per share. There were no preference shares or Euro-denominated ordinary shares outstanding at
December 31, 2020 or 2019.
The changes in ordinary shares and treasury shares for the year ended December 31, 2020 were as follows:
IN MILLIONS
December 31, 2019
Shares issued under incentive plans
Repurchase of ordinary shares
December 31, 2020
ORDINARY
SHARES ISSUED
ORDINARY
SHARES HELD IN
TREASURY
262.8
2.3
(1.8)
263.3
24.5
—
—
24.5
Share repurchases are made from time to time in accordance with management’s capital allocation strategy, subject to
market conditions and regulatory requirements. Shares acquired and canceled upon repurchase are accounted for as
a reduction of Ordinary Shares and Capital in excess of par value, or Retained earnings to the extent Capital in excess
of par value is exhausted. Shares acquired and held in treasury are presented separately on the balance sheet as a
reduction to Equity and recognized at cost.
In October 2018, the Company’s Board of Directors authorized the repurchase of up to $1.5 billion of its ordinary shares
under a share repurchase program (2018 Authorization) upon completion of the prior authorized share repurchase
program. No material amounts were repurchased under this program in 2018. During the year ended December 31,
2019, the Company repurchased and canceled approximately $750 million of its ordinary shares leaving approximately
$750 million remaining under the 2018 Authorization. During the year ended December 31, 2020, the Company
repurchased and canceled approximately $250 million of our ordinary shares leaving approximately $500 million
remaining under the 2018 Authorization. Additionally, through February 9, 2021, we repurchased approximately $100 million
of our ordinary shares under the 2018 Authorization. In February 2021, our Board of Directors authorized the repurchase of
up to $2.0 billion of our ordinary shares under a new share repurchase program (2021 Authorization) upon completion of
the 2018 Authorization.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The changes in Accumulated other comprehensive income (loss) were as follows:
IN MILLIONS
December 31, 2018
Other comprehensive income (loss) attributable to Trane
Technologies plc
December 31, 2019
Separation of Ingersoll Rand Industrial, net of tax
Other comprehensive income (loss) attributable to Trane
Technologies plc
December 31, 2020
DERIVATIVE
INSTRUMENTS
PENSION AND
OPEB ITEMS
FOREIGN
CURRENCY
TRANSLATION
TOTAL
$ 6.7
$ (454.0)
$ (516.8) $
(964.1)
(1.1)
(3.4)
(38.0)
(42.5)
$ 5.6
$ (457.4)
$ (554.8) $ (1,006.6)
—
5.2
64.8
70.2
135.0
(23.9)
258.8
240.1
$10.8
$ (416.5)
$ (225.8) $
(631.5)
The amounts of Other comprehensive income (loss) attributable to noncontrolling interests for 2020, 2019 and 2018 were
$2.7 million, $0.9 million and $(3.0) million, respectively, related to currency translation.
F-35
2020 Annual Report2020 ANNUAL REPORT PART IV
NOTE 15. SHARE-BASED COMPENSATION
The Company accounts for stock-based compensation plans in accordance with ASC 718, “Compensation - Stock
Compensation” (ASC 718), which requires a fair-value based method for measuring the value of stock-based
compensation. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The
Company’s share-based compensation plans include programs for stock options, restricted stock units (RSUs),
performance share units (PSUs), and deferred compensation. Under the Company’s incentive stock plan, the total
number of ordinary shares authorized by the shareholders is 23.0 million, of which 15.7 million remains available as of
December 31, 2020 for future incentive awards.
In connection with the completion of the Transaction, the provisions of the Company’s existing share-based
compensation plans required adjustment to the terms of outstanding awards in order to preserve the intrinsic value of
the awards immediately before and after the separation. The outstanding awards will continue to vest over the original
vesting period, which is generally three years from the grant date.
The stock awards held as of February 29, 2020 were adjusted as follows:
• Vested stock options - Outstanding stock options that were vested and exercisable at the time of the Transaction
were converted into vested and exercisable stock options of the Company. The number of underlying shares and
exercise price for each award was adjusted to preserve the overall intrinsic value of the awards immediately prior to
the Transaction.
• Unvested stock options - Unvested stock options held at the time of the Transaction were converted into stock options
of the participants employer following the separation. The number of underlying shares and exercise price for each
award was adjusted to preserve the overall intrinsic value of the awards immediately prior to the Transaction.
• Restricted stock units - Outstanding RSUs held at the time of the Transaction were converted into RSUs of the
participants employer following the separation. The number of underlying shares was adjusted to preserve the overall
intrinsic value of the awards immediately prior to the Transaction.
• Performance share units - Active and outstanding PSU awards held at the time of the Transaction were converted
into active and outstanding PSUs of the Company. Post-transaction, the Company’s employees will continue to
participate in the plan at target levels with payout based on actual performance at the end of the respective three-year
performance period for each award. Post-transaction, Ingersoll Rand Industrial employees will continue to participate in
the plan with the target number of PSUs prorated based on the portion of the performance cycle completed as of the
transaction date with payout based on actual performance at the end of the respective three year performance period
for each award. The number of underlying shares was adjusted to preserve the overall intrinsic value of the awards
immediately prior to the Transaction.
Per ASC 718, an adjustment to the terms of a stock-based compensation award to preserve its value after an equity
restructuring may result in significant incremental compensation cost if there was no requirement to make such an
adjustment based on the awards existing terms. The Company reviewed the provisions of its existing share-based
compensation plans and determined the Transaction required modification to the terms of outstanding awards. As a
result, the Company incurred less than $0.1 million of incremental compensation costs at the date of the Transaction.
F-36
2020 ANNUAL REPORT COMPENSATION EXPENSE
Share-based compensation expense related to continuing operations is included in Selling and administrative expenses.
The following table summarizes the expenses recognized:
PART IV
IN MILLIONS
Stock options
RSUs
PSUs
Deferred compensation
Other(1)
Pre-tax expense
Tax benefit
After-tax expense
Amounts recorded in continuing operations
Amounts recorded in discontinued operations
Total
(1)
Includes certain plans that have a market-based component.
Grants issued during the year ended December 31 were as follows:
2020
2019
2018
$
17.9
$ 20.2
$ 23.5
23.3
26.7
3.9
3.3
75.1
(18.2)
26.5
17.9
3.1
3.5
71.2
(17.3)
30.4
23.0
3.4
0.5
80.8
(19.6)
$
56.9
$ 53.9
$ 61.2
55.2
1.7
46.5
7.4
52.5
8.7
$
56.9
$ 53.9
$ 61.2
2020
2019
2018
NUMBER
GRANTED
WEIGHTED-
AVERAGE FAIR
VALUE PER AWARD
NUMBER
GRANTED
WEIGHTED-
AVERAGE FAIR
VALUE PER AWARD
NUMBER
GRANTED
WEIGHTED-
AVERAGE FAIR
VALUE PER AWARD
Stock options
RSUs
Performance shares(1)
1,021,628
$
16.75 1,286,857
$
17.17 1,541,025
213,142
278,468
$ 104.76
268,465
$ 102.98
327,411
$ 140.72
312,362
$ 111.12
363,342
$ 15.51
$ 90.07
$ 106.31
(1)
The number of performance shares represents the maximum award level.
STOCK OPTIONS / RSUs
Eligible participants may receive (i) stock options, (ii) RSUs or (iii) a combination of both stock options and RSUs. The fair
value of each of the Company’s stock option and RSU awards is expensed on a straight-line basis over the required
service period, which is generally the 3-year vesting period. However, for stock options and RSUs granted to retirement
eligible employees, the Company recognizes expense for the fair value at the grant date.
The average fair value of the stock options granted is determined using the Black Scholes option pricing model. The
following assumptions were used during the year ended December 31:
Dividend yield
Volatility
Risk-free rate of return
Expected life in years
2020
2019
2018
2.01 %
2.06 %
2.00 %
24.33 % 21.46 % 21.64 %
0.56 %
2.46 %
2.48 %
4.8
4.8
4.8
A description of the significant assumptions used to estimate the fair value of the stock option awards is as follows:
• Volatility - The expected volatility is based on a weighted average of the Company’s implied volatility and the most
recent historical volatility of the Company’s stock commensurate with the expected life.
• Risk-free rate of return -The Company applies a yield curve of continuous risk-free rates based upon the published US
Treasury spot rates on the grant date.
F-37
2020 Annual Report2020 ANNUAL REPORT PART IV
• Expected life - The expected life of the Company’s stock option awards represents the weighted-average of the actual
period since the grant date for all exercised or canceled options and an expected period for all outstanding options.
• Dividend yield - The Company determines the dividend yield based upon the expected quarterly dividend payments
as of the grant date and the current fair market value of the Company’s stock.
• Forfeiture Rate - The Company analyzes historical data of forfeited options to develop a reasonable expectation of the
number of options to forfeit prior to vesting per year. This expected forfeiture rate is applied to the Company’s ongoing
compensation expense; however, all expense is adjusted to reflect actual vestings and forfeitures.
Changes in options outstanding under the plans for the years 2020, 2019 and 2018 were as follows:
December 31, 2017
Granted
Exercised
Cancelled
December 31, 2018
Granted
Exercised
Cancelled
December 31, 2019
Granted
Exercised
Cancelled
Adjustment due to the Transaction
Outstanding December 31, 2020
Exercisable December 31, 2020
SHARES
SUBJECT TO
OPTION
WEIGHTED-
AVERAGE
EXERCISE
PRICE
AGGREGATE
INTRINSIC
VALUE
(MILLIONS)
WEIGHTED-
AVERAGE
REMAINING
LIFE (YEARS)
6,354,882
$
56.49
1,541,025
(1,515,955)
(94,601)
6,285,351
1,286,857
(2,076,338)
(76,624)
5,419,246
1,021,628
(1,767,782)
(49,539)
1,095,805
5,719,358
3,352,349
89.71
45.44
79.53
66.95
101.42
56.17
92.38
78.91
105.29
58.27
88.12
n/a
70.53
58.77
$
$
$ 426.9
$ 289.6
6.2
5.0
The following table summarizes information concerning currently outstanding and exercisable options:
OPTIONS OUTSTANDING
OPTIONS EXERCISABLE
NUMBER
OUTSTANDING AT
DECEMBER 31,
2020
WEIGHTED-
AVERAGE
REMAINING
LIFE (YEARS)
NUMBER
EXERCISABLE AT
DECEMBER 31,
2020
WEIGHTED-
AVERAGE
REMAINING
LIFE (YEARS)
RANGE OF EXERCISE PRICE
$
15.01 — $
30.00
30.01 —
40.01 —
50.01 —
60.01 —
70.01 —
80.01 —
90.01 —
100.01 —
110.01 —
40.00
50.00
60.00
70.00
80.00
90.00
100.00
110.00
145.00
91,434
682,984
232,405
328,001
939,243
2,430,895
1,667
19,921
991,715
1,093
WEIGHTED-
AVERAGE
EXERCISE
PRICE
$ 26.16
37.95
46.56
52.28
63.19
74.53
86.31
94.50
105.25
144.34
0.9
4.0
3.0
3.7
5.6
6.8
8.3
8.6
8.9
9.9
6.2
91,434
682,984
232,405
328,001
776,864
1,207,923
555
1,369
30,814
—
WEIGHTED-
AVERAGE
EXERCISE
PRICE
$ 26.16
37.95
46.56
52.28
62.66
73.38
86.31
92.92
105.28
—
$ 58.77
0.9
4.0
3.0
3.7
5.2
6.4
8.3
8.7
3.5
0.0
5.0
$
18.90 — $ 144.34
5,719,358
$ 70.53
3,352,349
At December 31, 2020, there was $8.3 million of total unrecognized compensation cost from stock option arrangements
granted under the plan, which is primarily related to unvested shares of non-retirement eligible employees. The
aggregate intrinsic value of options exercised during the year ended December 31, 2020 and 2019 was $120.5 million and
$124.5 million, respectively. Generally, stock options expire ten years from their date of grant.
F-38
2020 ANNUAL REPORT The following table summarizes RSU activity for the years 2020, 2019 and 2018:
Outstanding and unvested at December 31, 2017
Granted
Vested
Cancelled
Outstanding and unvested at December 31, 2018
Granted
Vested
Cancelled
Outstanding and unvested at December 31, 2019
Granted
Vested
Cancelled
Adjustment due to the Transaction
Outstanding and unvested at December 31, 2020
PART IV
WEIGHTED-
AVERAGE
GRANT DATE
FAIR VALUE
RSUs
803,699
$
67.09
327,411
(389,285)
(20,186)
90.07
64.88
77.95
721,639
$
78.40
268,465
102.98
(364,817)
(20,947)
70.26
89.64
604,340
$
93.56
213,142
104.76
(338,952)
(11,356)
22,348
86.62
84.38
n/a
489,522
$
87.75
At December 31, 2020, there was $11.5 million of total unrecognized compensation cost from RSU arrangements granted
under the plan, which is related to unvested shares of non-retirement eligible employees.
PERFORMANCE SHARES
The Company has a Performance Share Program (PSP) for key employees. The program provides awards in the form
of PSUs based on performance against pre-established objectives. The annual target award level is expressed as a
number of the Company’s ordinary shares based on the fair market value of the Company’s stock on the date of grant.
All PSUs are settled in the form of ordinary shares.
Beginning with the 2018 grant year, PSU awards are earned based 50% upon a performance condition, measured
by relative Cash Flow Return on Invested Capital (CROIC) to the S&P 500 Industrials Index over a 3-year performance
period, and 50% upon a market condition, measured by the Company’s relative total shareholder return (TSR) as
compared to the TSR of the S&P 500 Industrials Index over a 3-year performance period. The fair value of the market
condition is estimated using a Monte Carlo Simulation approach in a risk-neutral framework based upon historical
volatility, risk-free rates and correlation matrix. Awards granted prior to 2018 were earned based 50% upon a performance
condition, measured by relative earnings-per-share (EPS) growth to the industrial group of companies in the S&P 500
Index over a 3-year performance period, and 50% upon a market condition measured by the Company’s relative TSR as
compared to the TSR of the industrial group of companies in the S&P Index over a 3-year performance period.
F-39
2020 Annual Report2020 ANNUAL REPORT PART IV
The following table summarizes PSU activity for the maximum number of shares that may be issued for the years 2020,
2019 and 2018:
Outstanding and unvested at December 31, 2017
Granted
Vested
Forfeited
Outstanding and unvested at December 31, 2018
Granted
Vested
Forfeited
Outstanding and unvested at December 31, 2019
Granted
Vested
Forfeited
Adjustment due to the Transaction
Outstanding and unvested at December 31, 2020
WEIGHTED-
AVERAGE GRANT
DATE FAIR VALUE
PSUs
1,364,536
$
73.31
363,342
(309,306)
(172,408)
106.31
76.00
90.89
1,246,164
$
79.83
312,362
(539,402)
(34,194)
984,930
278,468
(340,400)
(56,430)
151,904
111.12
53.76
106.14
$ 103.12
140.72
93.63
89.94
n/a
1,018,472
$
99.53
At December 31, 2020, there was $18.0 million of total unrecognized compensation cost from PSU arrangements based
on current performance, which is related to unvested shares. This compensation will be recognized over the required
service period, which is generally the three-year vesting period.
DEFERRED COMPENSATION
The Company allows key employees to defer a portion of their eligible compensation into a number of investment
choices, including its ordinary share equivalents. Any amounts invested in ordinary share equivalents will be settled in
ordinary shares of the Company at the time of distribution.
NOTE 16. RESTRUCTURING ACTIVITIES
The Company incurs costs associated with restructuring initiatives intended to result in improved operating performance,
profitability and working capital levels. Actions associated with these initiatives include workforce reduction, improving
manufacturing productivity, realignment of management structures and rationalizing certain assets. Restructuring
charges recorded during the years ended December 31 were as follows:
IN MILLIONS
Americas
EMEA
Asia Pacific
Corporate and Other
Total
Cost of goods sold
Selling and administrative expenses
Total
F-40
2020
2019
2018
$ 35.3 $ 39.0 $ 27.5
7.4
5.1
27.9
5.1
6.7
1.8
4.6
2.0
9.4
$ 75.7 $ 52.6 $ 43.5
$ 24.1 $ 37.3 $ 25.2
51.6
15.3
18.3
$ 75.7 $ 52.6 $ 43.5
2020 ANNUAL REPORT The changes in the restructuring reserve were as follows:
IN MILLIONS
December 31, 2018
Additions, net of reversals(1)
Cash paid/Other
December 31, 2019
Additions, net of reversals(2)
Cash paid/Other
December 31, 2020
PART IV
AMERICAS
$
15.3
36.3
(39.7)
11.9
31.3
(30.6)
$
EMEA
1.7
5.1
(4.0)
2.8
7.4
(5.9)
ASIA
PACIFIC
CORPORATE
AND OTHER
TOTAL
$
1.9
6.7
0.5
9.1
5.1
(12.2)
$
2.6 $ 21.5
1.8
(2.8)
1.6
27.9
(18.9)
49.9
(46.0)
25.4
71.7
(67.6)
$
12.6
$
4.3
$
2.0
$ 10.6 $ 29.5
(1) Excludes the non-cash costs of asset rationalizations ($2.7 million).
(2) Excludes the non-cash costs of asset rationalizations ($4.0 million).
During the year ended December 31, 2020, costs associated with announced restructuring actions primarily included the
following:
• costs related to the reorganization of resources and facilities in response to the completion of the Transaction and
separation of Ingersoll Rand Industrial; and
• the plan to close a U.S. manufacturing facility within the Americas and relocate production to another existing U.S.
facility announced in 2018.
Amounts recognized primarily relate to severance and exit costs. In addition, the Company also includes costs that
are directly attributable to the restructuring activity but do not fall into the severance, exit or disposal categories. As of
December 31, 2020, the Company had $29.5 million accrued for costs associated with its ongoing restructuring actions, of
which a majority is expected to be paid within one year.
NOTE 17. OTHER INCOME/(EXPENSE), NET
The components of Other income/(expense), net for the years ended December 31, 2020, 2019 and 2018 were as follows:
IN MILLIONS
Interest income/(loss)
Foreign currency exchange gain (loss)
Other components of net periodic benefit cost
Other activity, net
Other income/(expense), net
2020
2019
2018
$
4.5
$
0.6 $
2.4
(10.0)
(14.7)
24.3
(9.5)
(34.9)
15.4
(12.8)
(21.1)
(1.8)
$
4.1
$ (28.4) $ (33.3)
Other income /(expense), net includes the results from activities other than normal business operations such as interest
income and foreign currency gains and losses on transactions that are denominated in a currency other than an entity’s
functional currency. In addition, the Company includes the components of net periodic benefit cost for pension and post
retirement obligations other than the service cost component. Other activity, net includes items associated with certain
legal matters as well as asbestos-related activities through the Petition Date. During the year ended December 31, 2020,
the Company recorded a $17.4 million adjustment to correct an overstatement of a legacy legal liability that originated
in prior years and a gain of $0.9 million related to the deconsolidation of Murray and its wholly-owned subsidiary
ClimateLabs within other activity, net. Refer to Note 22, “Commitments and Contingencies,” for more information regarding
asbestos-related matters.
F-41
2020 Annual Report2020 ANNUAL REPORT PART IV
NOTE 18. INCOME TAXES
CURRENT AND DEFERRED PROVISION FOR INCOME TAXES
Earnings before income taxes for the years ended December 31 were taxed within the following jurisdictions:
IN MILLIONS
United States
Non-U.S.
Total
2020
2019
2018
$
653.9 $
837.4 $
634.3
561.5
728.2
529.6
$ 1,288.2 $ 1,398.9 $ 1,257.8
The components of the Provision for income taxes for the years ended December 31 were as follows:
IN MILLIONS
Current tax expense (benefit):
United States
Non-U.S.
Total:
Deferred tax expense (benefit):
United States
Non-U.S.
Total:
Total tax expense (benefit):
United States
Non-U.S.
Total
2020
2019
2018
$ 168.3 $ 181.8 $
201.0
106.3
274.6
77.4
259.2
131.7
332.7
11.2
11.0
22.2
2.2
(22.8)
(20.6)
(50.2)
(47.6)
(97.8)
179.5
117.3
184.0
150.8
54.6
84.1
$ 296.8 $ 238.6 $
234.9
The Provision for income taxes differs from the amount of income taxes determined by applying the applicable U.S.
statutory income tax rate to pretax income, as a result of the following differences:
Statutory U.S. rate
Increase (decrease) in rates resulting from:
Non-U.S. tax rate differential
Tax on U.S. subsidiaries on non-U.S. earnings(a)
State and local income taxes (b)
Valuation allowances(c)
Change in permanent reinvestment assertion(a), (d)
Transition tax(d)
Remeasurement of deferred tax balances(d)
Stock based compensation
Expiration of carryforward tax attributes
Reserves for uncertain tax positions
Provision to return and other true-up adjustments
Other adjustments
Effective tax rate
(a)
Net of foreign tax credits
(b) Net of changes in state valuation allowances
(c) Primarily federal and non-U.S., excludes state valuation allowances
(d) Provisional amounts reported under SAB 118 were finalized in 2018
F-42
PERCENT OF PRETAX INCOME
2020
2019
2018
21.0 % 21.0 %
21.0 %
(1.1)
0.3
4.3
(1.1)
—
—
—
(1.7)
1.1
(0.1)
(0.2)
0.5
(2.8)
(0.2)
3.0
(2.9)
—
—
—
(1.7)
—
(0.5)
0.1
1.1
(2.6)
(0.6)
2.1
0.7
(3.1)
2.0
0.4
(1.0)
—
0.5
(0.8)
0.1
23.0 % 17.1 %
18.7 %
2020 ANNUAL REPORT PART IV
Tax incentives, in the form of tax holidays, have been granted to the Company in certain jurisdictions to encourage
industrial development. The expiration of these tax holidays varies by country. The tax holidays are conditional on the
Company meeting certain employment and investment thresholds. The most significant tax holidays relate to the
Company’s qualifying locations in China, Puerto Rico and Panama. The benefit for the tax holidays for the years ended
December 31, 2020, 2019 and 2018 was $24.6 million, $28.3 million and $21.3 million, respectively.
DEFERRED TAX ASSETS AND LIABILITIES
A summary of the deferred tax accounts at December 31 were as follows:
IN MILLIONS
Deferred tax assets:
Inventory and accounts receivable
Fixed assets and intangibles
Operating lease liabilities
Postemployment and other benefit liabilities
Product liability
Funding liability
Other reserves and accruals
Net operating losses and credit carryforwards
Other
Gross deferred tax assets
Less: deferred tax valuation allowances
Deferred tax assets net of valuation allowances
Deferred tax liabilities:
Inventory and accounts receivable
Fixed assets and intangibles
Operating lease right-of-use assets
Postemployment and other benefit liabilities
Other reserves and accruals
Product liability
Undistributed earnings of foreign subsidiaries
Other
Gross deferred tax liabilities
Net deferred tax assets (liabilities)
2020
2019
$
11.7
$
9.5
101.0
323.5
4.8
71.8
164.8
509.0
58.5
13.3
9.7
117.6
340.6
68.9
—
143.6
562.6
33.6
1,254.6
(320.5)
1,289.9
(309.4)
934.1
$
980.5
(22.3)
$
(25.3)
(1,186.0)
(1,184.7)
$
$
(99.5)
(14.1)
(7.2)
(0.2)
(22.4)
(3.2)
(117.6)
(10.9)
(12.4)
(0.7)
(22.1)
(18.7)
(1,354.9)
(1,392.4)
$
(420.8)
$
(411.9)
At December 31, 2020, no deferred taxes have been provided for earnings of certain of the Company’s subsidiaries, since
these earnings have been, and under current plans will continue to be permanently reinvested in these subsidiaries.
These earnings amount to approximately $1.6 billion which if distributed would result in additional taxes, which may be
payable upon distribution, of approximately $260.0 million.
At December 31, 2020, the Company had the following operating loss, capital loss and tax credit carryforwards available
to offset taxable income in prior and future years:
IN MILLIONS
U.S. Federal net operating loss carryforwards
U.S. Federal credit carryforwards
U.S. State net operating loss carryforwards
U.S. State credit carryforwards
Non-U.S. net operating loss carryforwards
Non-U.S. credit carryforwards
AMOUNT
EXPIRATION
PERIOD
$
611.8 2021-2036
138.6 2022-2030
2,898.4 2021-Unlimited
31.7 2021-Unlimited
490.8 2021-Unlimited
9.3 Unlimited
F-43
2020 Annual Report2020 ANNUAL REPORT PART IV
The U.S. state net operating loss carryforwards were incurred in various jurisdictions. The non-U.S. net operating loss
carryforwards were incurred in various jurisdictions, predominantly in Belgium, Brazil, India, Luxembourg, Spain and the
United Kingdom.
Activity associated with the Company’s valuation allowance is as follows:
IN MILLIONS
Beginning balance
Increase to valuation allowance
Decrease to valuation allowance
Other deductions
Write off against valuation allowance
Accumulated other comprehensive income (loss)
Ending balance
2020
2019
2018
$ 309.4 $ 310.3 $ 320.6
38.9
(22.8)
(0.1)
(3.7)
(1.2)
44.0
(43.6)
—
—
(1.3)
54.6
(52.8)
—
(4.6)
(7.5)
$ 320.5 $ 309.4 $ 310.3
During 2020, the Company recorded a $22.3 million increase in valuation allowance on deferred tax assets primarily
related to certain state net deferred tax assets as a result of the Transaction. In addition, the Company recorded a
$16.0 million reduction in valuation allowances related to non-U.S. net operating losses, primarily as a result of a planned
restructuring in a non-U.S. tax jurisdiction, and foreign tax credits as a result of revised projections of future foreign source
income.
During 2019, the Company recorded a $43.6 million reduction in valuation allowance on deferred tax assets primarily
related to non-U.S. net operating losses. In addition, the Company recorded a $19.3 million increase in a valuation
allowance for certain state net deferred tax assets as a result of revised projections of future state taxable income during
the carryforward period.
During 2018, the Company recorded a net addition to the valuation allowance related to excess foreign tax credits in
the amount of $17.3 million. In addition, the Company recorded a $35.0 million reduction in a valuation allowance for
certain state net deferred tax assets primarily the result of revised projections of future state taxable income during the
carryforward period.
UNRECOGNIZED TAX BENEFITS
The Company has total unrecognized tax benefits of $65.4 million and $63.7 million as of December 31, 2020, and
December 31, 2019, respectively. The amount of unrecognized tax benefits that, if recognized, would affect the continuing
operations effective tax rate are $36.8 million as of December 31, 2020. A reconciliation of the beginning and ending
amount of unrecognized tax benefits is as follows:
IN MILLIONS
Beginning balance
Additions based on tax positions related to the current year
Additions based on tax positions related to prior years
Reductions based on tax positions related to prior years
Reductions related to settlements with tax authorities
Reductions related to lapses of statute of limitations
Translation (gain) loss
Ending balance
2020
2019
2018
$ 63.7 $
68.7 $ 108.4
1.0
2.1
(1.5)
(0.7)
(1.7)
2.5
1.2
9.3
(13.1)
(0.9)
(0.6)
(0.9)
1.1
23.0
(47.3)
(14.2)
(0.6)
(1.7)
$ 65.4 $
63.7 $
68.7
The Company records interest and penalties associated with the uncertain tax positions within its Provision for income
taxes. The Company had reserves associated with interest and penalties, net of tax, of $14.6 million and $16.0 million at
December 31, 2020 and December 31, 2019, respectively. For the year ended December 31, 2020 and December 31, 2019,
the Company recognized a $0.1 million tax expense and a $0.7 million tax benefit, respectively, in interest and penalties, net
of tax in continuing operations related to these uncertain tax positions.
F-44
2020 ANNUAL REPORT PART IV
The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on
future events including, but not limited to, the settlements of ongoing audits and/or the expiration of applicable statutes
of limitations. Although the outcomes and timing of such events are highly uncertain, it is reasonably possible that the
balance of gross unrecognized tax benefits, excluding interest and penalties, could potentially be reduced by up to
approximately $4.7 million during the next 12 months.
The provision for income taxes involves a significant amount of management judgment regarding interpretation
of relevant facts and laws in the jurisdictions in which the Company operates. Future changes in applicable laws,
projected levels of taxable income and tax planning could change the effective tax rate and tax balances recorded
by the Company. In addition, tax authorities periodically review income tax returns filed by the Company and can raise
issues regarding its filing positions, timing and amount of income or deductions, and the allocation of income among
the jurisdictions in which the Company operates. A significant period of time may elapse between the filing of an
income tax return and the ultimate resolution of an issue raised by a revenue authority with respect to that return. In the
normal course of business the Company is subject to examination by taxing authorities throughout the world, including
such major jurisdictions as Brazil, Canada, China, France, Germany, Ireland, Italy, Mexico, Spain, the Netherlands, the
United Kingdom and the United States. These examinations on their own, or any subsequent litigation related to the
examinations, may result in additional taxes or penalties against the Company. If the ultimate result of these audits differ
from original or adjusted estimates, they could have a material impact on the Company’s tax provision. In general, the
examination of the Company’s material tax returns are complete or effectively settled for the years prior to 2011, with
certain matters prior to 2011 being resolved through appeals and litigation and also unilateral procedures as provided for
under double tax treaties.
In connection with the Transaction, the Company and Gardner Denver entered into a tax sharing agreement for the
allocation of taxes. The Company has an indemnity payable to Gardner Denver, included within other non-current
liabilities, in the amount of $13.5 million of tax and interest primarily related to open audit years in non-U.S. tax jurisdictions.
NOTE 19. ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND EQUITY METHOD INVESTMENTS
Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805, “Business
Combinations” (ASC 805). As a result, the aggregate purchase price has been allocated to assets acquired and liabilities
assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. The valuation
of intangible assets are determined using an income approach methodology.
During 2020, the Company acquired independent dealers, reported within the Americas segment, to support the
Company’s ongoing strategy to expand its distribution network and service area. The aggregate cash paid, net of
cash acquired, totaled $182.8 million and was financed through cash on hand. Intangible assets associated with these
acquisitions totaled $78.9 million and primarily relate to customer relationships. The excess purchase price over the
estimated fair value of net assets acquired was recognized as goodwill and totaled $130.1 million.
The fair values of the customer relationship intangible assets were determined using the multi-period excess earnings
method based on discounted projected net cash flows associated with the net earnings attributable to the acquired
customer relationships. These projected cash flows are estimated over the remaining economic life of the intangible
asset and are considered from a market participant perspective. Key assumptions used in estimating future cash flows
included projected revenue growth rates and customer attrition rates. The projected future cash flows are discounted
to present value using an appropriate discount rate. The customer relationships had a weighted-average useful life of 16
years.
F-45
2020 Annual Report2020 ANNUAL REPORT PART IV
During 2019, the Company acquired several businesses including independent dealers to support its ongoing strategy
to expand its distribution network and service area as well as other businesses that strengthen the Company’s product
portfolios. The aggregate cash paid, net of cash acquired, totaled $83.4 million and was funded through cash on hand.
Intangible assets associated with these acquisitions totaled $25.5 million and primarily relate to trademarks and customer
relationships. The excess purchase price over the estimated fair value of net assets acquired was recognized as goodwill
and totaled $45.3 million. These acquisitions were not material to the Company’s financial statements and were reported
in the Americas segment.
During 2018, the Company acquired several businesses and entered into a joint venture. The aggregate cash paid, net
of cash acquired, totaled $285.7 million and was funded through cash on hand. Primary activity during 2018 related to the
acquisition of ICS Group Holdings Limited in January 2018. The business, reported within the EMEA segment, specializes
in the temporary rental of energy efficient chillers for commercial and industrial buildings across Europe. In addition, the
Company acquired independent dealers to expand its distribution network and service area. Intangible assets associated
with these acquisitions totaled $45.2 million and primarily relate to trademarks and customer relationships. The excess
purchase price over the estimated fair value of net assets acquired was recognized as goodwill and totaled $118.0 million.
In addition, the Company completed its investment of a 50% ownership interest in a joint venture with Mitsubishi Electric
Corporation (Mitsubishi) in May 2018. The joint venture, reported within the Americas segment, focuses on marketing,
selling and supporting variable refrigerant flow (VRF) and ductless heating and air conditioning systems through Trane,
American Standard and Mitsubishi channels in the U.S. and select Latin American countries. Ownership interests in a joint
venture are accounted for under the equity method when the Company does not have a controlling financial interest
and reported within Other noncurrent assets on the Balance Sheet. Ongoing results since the date of investment are
accounted for under the equity method and are not considered material to the Company’s results of operations.
DIVESTITURES
The components of Discontinued operations, net of tax for the years ended December 31 were as follows:
IN MILLIONS
Net revenues
Cost of goods sold
Selling and administrative expenses
Operating income (loss)
Other income/ (expense), net
Pre-tax earnings (loss) from discontinued operations
Benefit (provision) for income taxes
Discontinued operations, net of tax
2020
2019
2018
$
469.8
$ 3,523.0
$ 3,324.4
(315.8)
(234.4)
(80.4)
(55.9)
(136.3)
14.9
(2,366.0)
(2,265.1)
(809.5)
347.5
50.0
397.5
(129.3)
(654.0)
405.3
(88.3)
317.0
17.6
$
(121.4)
$
268.2
$
334.6
The table above presents the financial statement line items that support amounts included in Discontinued operations,
net of tax. For the year ended December 31, 2020, Selling and administrative expenses included pre-tax Ingersoll Rand
Industrial separation costs of $114.2 million, which are primarily related to legal, consulting and advisory fees. In addition,
for the year ended December 31, 2020, Other income/ (expense), net included a loss of $25.8 million related to the
deconsolidation of Aldrich and its wholly-owned subsidiary 200 Park. The year ended December 31, 2019 includes $94.6
million of pre-tax Ingersoll Rand Industrial separation costs within Selling and administrative expenses.
SEPARATION OF INDUSTRIAL SEGMENT BUSINESSES
On February 29, 2020, the Company completed the Transaction with Gardner Denver whereby the Company separated
Ingersoll Rand Industrial which then merged with a wholly-owned subsidiary of Gardner Denver. In accordance with
GAAP, the historical results of Ingersoll Rand Industrial are presented as a discontinued operation in the Consolidated
Statement of Comprehensive Income and Consolidated Statement of Cash Flows. In addition, the assets and liabilities of
Ingersoll Rand Industrial have been recast to held-for-sale at December 31, 2019.
F-46
2020 ANNUAL REPORT PART IV
Net revenues and earnings from operations, net of tax of Ingersoll Rand Industrial for the years ended December 31 were
as follows:
IN MILLIONS
Net revenues
Earnings (loss) attributable to Trane Technologies plc
Earnings (loss) attributable to noncontrolling interests
Earnings (loss) from operations, net of tax
2020
2019
2018
$ 469.8
$3,523.0
$ 3,324.4
(85.8)
0.9
225.2
351.3
2.4
4.8
$ (84.9) $ 227.6
$ 356.1
Earnings (loss) attributable to Trane Technologies plc includes Ingersoll Rand Industrial separation costs, net of tax
primarily related to legal, consulting and advisory fees of $96.2 million during the year ended December 31, 2020. In
addition, the year ended December 31, 2019 includes $89.4 million of Ingersoll Rand Industrial separation costs, net of tax.
The components of Ingersoll Rand Industrial’s assets and liabilities recorded as held-for-sale on the Consolidated
Balance Sheet at December 31, 2019 were as follows:
IN MILLIONS
Assets
Current assets(1)
Property, plant and equipment, net
Goodwill
Intangible assets, net
Other noncurrent assets
Assets held-for-sale
Liabilities
Current liabilities
Noncurrent liabilities
Liabilities held-for-sale
DECEMBER 31, 2019
$
$
$
$
1,130.6
454.3
1,657.4
825.2
139.7
4,207.2
823.7
376.7
1,200.4
(1)
Includes $25 million cash and cash equivalents in accordance with the merger agreement.
OTHER DISCONTINUED OPERATIONS
Other discontinued operations, net of tax related to retained obligations from previously sold businesses that primarily
include ongoing expenses for postretirement benefits, product liability and legal costs. In addition, the Company includes
asbestos-related activities of Aldrich through the Petition Date.
The components of Discontinued operations, net of tax for the years ended December 31 were as follows:
IN MILLIONS
Ingersoll Rand Industrial, net of tax
Other discontinued operations, net of tax
Discontinued operations, net of tax
2020
2019
2018
$ (84.9) $ 227.6 $ 356.1
(36.5)
40.6
(21.5)
$ (121.4) $ 268.2 $ 334.6
In addition, other discontinued operations, net of tax includes a loss of $25.8 million related to the deconsolidation of
Aldrich and its wholly-owned subsidiary 200 Park, for the year ended December 31, 2020. Refer to Note 22, “Commitments
and Contingencies,” for more information regarding the deconsolidation and asbestos-related matters.
F-47
2020 Annual Report2020 ANNUAL REPORT PART IV
NOTE 20. EARNINGS PER SHARE (EPS)
Basic EPS is calculated by dividing Net earnings attributable to Trane Technologies plc by the weighted-average number
of ordinary shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the denominator of
the basic EPS calculation for the effect of all potentially dilutive ordinary shares, which in the Company’s case, includes
shares issuable under share-based compensation plans. The following table summarizes the weighted-average number
of ordinary shares outstanding for basic and diluted earnings per share calculations:
IN MILLIONS
Weighted-average number of basic shares outstanding
Shares issuable under incentive stock plans
Weighted-average number of diluted shares outstanding
Anti-dilutive shares
Dividends declared per ordinary share
2020
2019
2018
240.1 241.6
247.2
3.0
2.8
2.9
243.1 244.4
250.1
0.6
—
1.5
$ 2.12 $ 2.12 $ 1.96
NOTE 21. BUSINESS SEGMENT INFORMATION
The Company operates under three regional operating segments designed to create deep customer focus and
relevance in markets around the world. Intercompany sales between segments are immaterial.
• The Company’s Americas segment innovates for customers in the North America and Latin America regions. The
Americas segment encompasses commercial heating and cooling systems, building controls, and energy services
and solutions; residential heating and cooling; and transport refrigeration systems and solutions.
• The Company’s EMEA segment innovates for customers in the Europe, Middle East and Africa region. The EMEA
segment encompasses heating and cooling systems, services and solutions for commercial buildings, and transport
refrigeration systems and solutions.
• The Company’s Asia Pacific segment innovates for customers throughout the Asia Pacific region. The Asia Pacific
segment encompasses heating and cooling systems, services and solutions for commercial buildings and transport
refrigeration systems and solutions.
Management measures operating performance based on net earnings excluding interest expense, income taxes,
depreciation and amortization, restructuring, unallocated corporate expenses and discontinued operations (Segment
Adjusted EBITDA). Segment Adjusted EBITDA is not defined under GAAP and may not be comparable to similarly-
titled measures used by other companies and should not be considered a substitute for net earnings or other results
reported in accordance with GAAP. The Company believes Segment Adjusted EBITDA provides the most relevant
measure of profitability as well as earnings power and the ability to generate cash. This measure is a useful financial
metric to assess the Company’s operating performance from period to period by excluding certain items that it believes
are not representative of its core business and the Company uses this measure for business planning purposes.
Segment Adjusted EBITDA also provides a useful tool for assessing the comparability between periods and the
Company’s ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital
expenditures because it eliminates non-cash charges such as depreciation and amortization expense.
F-48
2020 ANNUAL REPORT A summary of operations by reportable segment for the years ended December 31 were as follows:
PART IV
IN MILLIONS
Net revenues
Americas
EMEA
Asia Pacific
Total Net revenues
Segment Adjusted EBITDA
Americas
EMEA
Asia Pacific
Total Segment Adjusted EBITDA
Reconciliation of Segment Adjusted EBITDA to earnings before income taxes
Total Segment Adjusted EBITDA
Interest expense
Depreciation and amortization
Restructuring costs
Unallocated corporate expenses
Earnings before income taxes
Depreciation and Amortization
Americas
EMEA
Asia Pacific
Depreciation and amortization from reportable segments
Unallocated depreciation and amortization
Total depreciation and amortization
Capital Expenditures
Americas
EMEA
Asia Pacific
Capital expenditures from reportable segments
Corporate capital expenditures
Total capital expenditures
2020
2019
2018
$ 9,685.9
$ 10,059.5
$
9,219.4
1,648.1
1,120.7
1,762.6
1,253.8
1,831.1
1,293.3
$ 12,454.7
$ 13,075.9
$ 12,343.8
$ 1,677.7
$ 1,742.1
$
1,565.5
265.7
188.8
267.7
182.8
302.7
173.2
$ 2,132.2
$ 2,192.6
$
2,041.4
$ 2,132.2
$ 2,192.6
$
2,041.4
(248.7)
(294.3)
(75.7)
(225.3)
(242.8)
(288.8)
(52.6)
(209.5)
(221.0)
(282.3)
(43.5)
(236.8)
$ 1,288.2
$ 1,398.9
$
1,257.8
$
224.0
$
213.6
$
208.8
32.6
11.6
268.2
26.1
294.3
98.2
24.7
7.7
130.6
15.6
146.2
$
$
$
$
$
31.0
13.4
258.0
30.8
288.8
146.8
30.0
11.3
188.1
17.3
205.4
$
$
$
$
$
$
$
$
$
$
30.0
13.2
252.0
30.3
282.3
195.3
14.5
7.5
217.3
67.4
284.7
At December 31, a summary of long-lived assets by geographic area were as follows:
IN MILLIONS
United States
Non-U.S.
Total
2020
2019
$ 1,219.4
$ 1,346.3
539.1
475.1
$ 1,758.5
$ 1,821.4
F-49
2020 Annual Report2020 ANNUAL REPORT PART IV
NOTE 22. COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigations, claims and administrative proceedings, including those related to
environmental, asbestos, and product liability matters. In accordance with ASC 450, “Contingencies” (ASC 450), the
Company records accruals for loss contingencies when it is both probable that a liability will be incurred and the
amount of the loss can be reasonably estimated. Amounts recorded for identified contingent liabilities are estimates,
which are reviewed periodically and adjusted to reflect additional information when it becomes available. Subject to
the uncertainties inherent in estimating future costs for contingent liabilities, except as expressly set forth in this note,
management believes that any liability which may result from these legal matters would not have a material adverse
effect on the financial condition, results of operations, liquidity or cash flows of the Company.
ASBESTOS-RELATED MATTERS
Certain wholly-owned subsidiaries and former companies of the Company were named as defendants in asbestos-
related lawsuits in state and federal courts. In virtually all of the suits, a large number of other companies have also been
named as defendants. The vast majority of those claims were filed against predecessors of Aldrich and Murray and
generally allege injury caused by exposure to asbestos contained in certain historical products sold by predecessors of
Aldrich or Murray, primarily pumps, boilers and railroad brake shoes. None of the Company’s existing or previously-owned
businesses were a producer or manufacturer of asbestos.
On June 18, 2020, Aldrich and Murray filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code to resolve
equitably and permanently all current and future asbestos related claims in a manner beneficial to claimants, Aldrich and
Murray. As a result of the Chapter 11 filings, all asbestos-related lawsuits against Aldrich and Murray have been stayed
due to the imposition of a statutory automatic stay applicable in Chapter 11 bankruptcy cases. In addition, at the request
of Aldrich and Murray, the Bankruptcy Court has entered an order temporarily staying all asbestos-related claims against
the Trane Companies that relate to claims against Aldrich or Murray (except for asbestos-related claims for which the
exclusive remedy is provided under workers’ compensation statutes or similar laws).
The goal of these Chapter 11 filings is an efficient and permanent resolution of all current and future asbestos claims
through court approval of a plan of reorganization, which would establish, in accordance with section 524(g) of the
Bankruptcy Code, a trust to which all asbestos claims would be channeled for resolution. Aldrich and Murray intend to
seek an agreement with representatives of the asbestos claimants on the terms of a plan for the establishment of such
a trust.
Prior to the Petition Date, predecessors of each of Aldrich and Murray had been litigating asbestos-related claims
brought against them. No such claims have been paid since the Petition Date, and it is not contemplated that any such
claims will be paid until the end of the Chapter 11 cases. At this point in the Chapter 11 cases of Aldrich and Murray,
it is not possible to predict whether or how long the Bankruptcy Court order temporarily staying asbestos-related
claims against the Trane Companies will be extended, whether or when any agreement with representatives of the
asbestos claimants on the terms of a plan for the establishment of a trust will be reached, what the terms of any plan of
reorganization or the extent of the asbestos liability will be or how long the Chapter 11 cases will last.
From an accounting perspective, the Company no longer has control over Aldrich and Murray as of the Petition Date
as their activities are subject to review and oversight by the Bankruptcy Court. Therefore, Aldrich and its wholly-owned
subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs were deconsolidated as of the Petition Date
and their respective assets and liabilities were derecognized from the Company’s Consolidated Financial Statements.
Amounts derecognized primarily related to the legacy asbestos-related liabilities and asbestos-related insurance
recoveries and $41.7 million of cash. However, in connection with the 2020 Corporate Restructuring, certain subsidiaries of
the Company entered into funding agreements with Aldrich and Murray (collectively the Funding Agreements), pursuant
to which those subsidiaries are obligated, among other things, to pay the costs and expenses of Aldrich and Murray
during the pendency of the Chapter 11 cases to the extent distributions from their respective subsidiaries are insufficient
to do so and to provide an amount for the funding for a trust established pursuant to section 524(g) of the Bankruptcy
Code, to the extent that the other assets of Aldrich and Murray are insufficient to provide the requisite trust funding.
F-50
2020 ANNUAL REPORT PART IV
ACCOUNTING TREATMENT PRIOR TO THE PETITION DATE
Historically, the Company performed a detailed analysis and projected an estimated range of the Company’s total liability
for pending and unasserted future asbestos-related claims. In accordance with ASC 450, the Company recorded the
liability at the low end of the range as it believed that no amount within the range was a better estimate than any other
amount. Asbestos-related defense costs were excluded from the liability and were recorded separately as services were
incurred. The methodology used to prepare estimates relied upon and included the following factors, among others:
• the interpretation of a widely accepted forecast of the population likely to have been occupationally exposed to asbestos;
• epidemiological studies estimating the number of people likely to develop asbestos-related diseases such as
mesothelioma and lung cancer;
• the Company’s historical experience with the filing of non-malignancy claims and claims alleging other types of malignant
diseases filed against the Company relative to the number of lung cancer claims filed against the Company;
• the analysis of the number of people likely to file an asbestos-related personal injury claim against the Company based on
such epidemiological and historical data and the Company’s claims history;
• an analysis of the Company’s pending cases, by type of disease claimed and by year filed;
• an analysis of the Company’s history to determine the average settlement and resolution value of claims, by type of disease
claimed;
• an adjustment for inflation in the future average settlement value of claims, at a 2.5% annual inflation rate, adjusted downward
to 1.0% to take account of the declining value of claims resulting from the aging of the claimant population; and
• an analysis of the period over which the Company has and is likely to resolve asbestos-related claims against it in the future
(currently projected through 2053).
Prior to the Petition Date and at December 31, 2019, over 73 percent of the open and active claims against the Company
were non-malignant or unspecified disease claims. In addition, the Company had a number of claims which had been
placed on inactive or deferred dockets and expected to have little or no settlement value against the Company.
At June 17, 2020, immediately prior to the Petition Date, and at December 31, 2019, the Company’s liability for asbestos-
related matters and the asset for probable asbestos-related insurance recoveries were included in the following
accounts within the Consolidated Balance Sheet:
IN MILLIONS
JUNE 17, 2020
DECEMBER 31, 2019
Accrued expenses and other current liabilities
Other noncurrent liabilities
Total asbestos-related liabilities
Other current assets
Other noncurrent assets
Total asset for probable asbestos-related insurance recoveries
$
57.1
451.0
$ 508.1
$
50.3
220.6
$ 270.9
$
63.0
484.4
$ 547.4
$
66.2
237.8
$ 304.0
The Company’s asbestos insurance receivable related to the predecessors of Aldrich and Murray were $160.4 million
and $110.5 million, respectively, at June 17, 2020 and $188.7 million and $115.3 million, respectively, at December 31, 2019.
These receivables attributable to the predecessors of each of Aldrich and Murray for probable insurance recoveries
as of June 17, 2020 and December 31, 2019 are entirely supported by settlement agreements between them and their
respective insurance carriers. Most of these settlement agreements constitute “coverage-in-place” arrangements, in
which the insurer signatories agree to reimburse the predecessors of Aldrich and Murray, as applicable, for specified
portions of their respective costs for asbestos bodily injury claims and the predecessors of Aldrich and Murray, as
applicable, agree to certain claims-handling protocols and grants to the insurer signatories certain releases and
indemnifications.
F-51
2020 Annual Report2020 ANNUAL REPORT PART IV
Prior to the Petition Date, the costs associated with the settlement and defense of asbestos-related claims, insurance
settlements on asbestos-related matters and the revaluation of the Company’s liability for potential future claims and
recoveries were included in the Consolidated Statement of Comprehensive Income within continuing operations or
discontinued operations depending on the business to which they relate. Income and expenses associated with
asbestos-related matters of Aldrich and its predecessors were recorded within discontinued operations as they related
to previously divested businesses, primarily Ingersoll-Dresser Pump, which was sold by the Company in 2000. Income
and expenses associated with asbestos-related matters for Murray and its predecessors were recorded within continuing
operations. The year ended December 31, 2020 includes a $17.4 million adjustment to correct an overstatement of a
legacy legal liability that originated in prior years.
The net income (expense) associated with these pre-Petition Date transactions for the years ended December 31, were
as follows:
IN MILLIONS
Continuing operations
Discontinued operations
Total
2020
2019
2018
$ 14.8 $
7.0
$ (10.4)
(11.2)
68.2
(56.5)
$
3.6 $ 75.2
$ (66.9)
The amounts recorded by the Company for asbestos-related liabilities and insurance-related assets are based on
currently available information. Key assumptions underlying the estimated asbestos-related liabilities include the
number of people occupationally exposed and likely to develop asbestos-related diseases such as mesothelioma and
lung cancer, the number of people likely to file an asbestos-related personal injury claim against the Company, the
average settlement and resolution of each claim and the percentage of claims resolved with no payment. Furthermore,
predictions with respect to estimates of the liability are subject to greater uncertainty as the projection period lengthens.
Other factors that may affect the Company’s liability include uncertainties surrounding the litigation process from
jurisdiction to jurisdiction and from case to case, reforms that may be made by state and federal courts, and the
passage of state or federal tort reform legislation.
The aggregate amount of the stated limits in insurance policies available to Aldrich and Murray for asbestos-related
claims acquired, over many years and from many different carriers, is substantial. However, as a result of limitations in that
coverage, the projected total liability to claimants substantially exceeds the probable insurance recovery.
ACCOUNTING TREATMENT AFTER THE PETITION DATE
Upon deconsolidation, the Company recorded its retained interest in Aldrich and Murray at fair value within Other
noncurrent assets in the Consolidated Balance Sheet. In determining the fair value of its equity investment, the Company
used a market-adjusted multiple of earnings valuation technique (a market approach). Under the market approach, the
Company used an adjusted multiple ranging from 11.0 to 12.5 of projected earnings before interest, taxes, depreciation
and amortization (EBITDA) based on the market information of comparable companies. As a result, the Company
recorded an aggregate equity investment of $53.6 million as of the Petition Date. Subsequent to deconsolidation, the
Company will account for its equity investment in Aldrich and Murray at cost less impairment under the measurement
alternative election in ASC 321, “Investments - Equity Securities”.
Simultaneously, the Company recognized a liability of $248.8 million within Other noncurrent liabilities in the Consolidated
Balance Sheet related to its obligation under the Funding Agreements. Although the amounts that Aldrich and Murray
may ultimately require under the Funding Agreements are unknown, the Company believes that an estimate of $248.8
million in the aggregate is reasonable at this time as the Company has no better estimate for the amounts that may
ultimately be required under the Funding Agreement. The liability is based on asbestos-related liabilities and insurance-
related assets balances previously recorded by the Company prior to the Petition Date and may be subject to change
based on the facts and circumstances of the Chapter 11 proceedings.
F-52
2020 ANNUAL REPORT PART IV
As a result of these actions, the Company recognized an aggregate loss of $24.9 million in its Consolidated Statements
of Comprehensive Income. A gain of $0.9 million related to Murray and its wholly-owned subsidiary ClimateLabs was
recorded within Other income/ (expense), net and a loss of $25.8 million related to Aldrich and its wholly-owned subsidiary
200 Park was recorded within Discontinued operations, net of tax. Additionally, the deconsolidation resulted in an
investing cash outflow of $41.7 million in the Company’s Consolidated Statements of Cash Flows, of which $10.8 million was
recorded within continuing operations.
Furthermore, in connection with the 2020 Corporate Restructuring, Aldrich, Murray and their respective subsidiaries
entered into several agreements with subsidiaries of the Company to ensure they each have access to services
necessary for the effective operation of their respective businesses and access to capital to address any liquidity needs
that arise as a result of working capital requirements or timing issues. In addition, the Company regularly transacts
business with Aldrich and its wholly-owned subsidiary 200 Park and Murray and its wholly-owned subsidiary ClimateLabs.
As of the Petition Date, these entities are considered related parties and post deconsolidation activity between the
Company and them are reported as third party transactions and are reflected within the Company’s Consolidated
Statements of Comprehensive Income. Since the Petition Date, there were no material transactions between the
Company and these entities.
ENVIRONMENTAL MATTERS
The Company continues to be dedicated to environmental and sustainability programs to minimize the use of natural
resources, and reduce the utilization and generation of hazardous materials from our manufacturing processes and to
remediate identified environmental concerns. As to the latter, the Company is currently engaged in site investigations
and remediation activities to address environmental cleanup from past operations at current and former manufacturing
facilities.
The Company is sometimes a party to environmental lawsuits and claims and has received notices of potential violations
of environmental laws and regulations from the Environmental Protection Agency and similar state authorities. It has also
been identified as a potentially responsible party (PRP) for cleanup costs associated with off-site waste disposal at federal
Superfund and state remediation sites. For all such sites, there are other PRPs and, in most instances, the Company’s
involvement is minimal.
In estimating its liability, the Company has assumed it will not bear the entire cost of remediation of any site to the
exclusion of other PRPs who may be jointly and severally liable. The ability of other PRPs to participate has been taken
into account, based on the Company’s understanding of the parties’ financial condition and probable contributions on
a per site basis. Additional lawsuits and claims involving environmental matters are likely to arise from time to time in the
future.
Reserves for environmental matters are classified as Accrued expenses and other current liabilities or Other noncurrent
liabilities based on their expected term. As of December 31, 2020 and 2019, the Company has recorded reserves for
environmental matters of $39.9 million and $40.2 million, respectively. Of these amounts $37.5 million relate to remediation
of sites previously disposed by the Company.
WARRANTY LIABILITY
Standard product warranty accruals are recorded at the time of sale and are estimated based upon product warranty
terms and historical experience. The Company assesses the adequacy of its liabilities and will make adjustments as
necessary based on known or anticipated warranty claims, or as new information becomes available.
F-53
2020 Annual Report2020 ANNUAL REPORT PART IV
The changes in the standard product warranty liability for the year ended December 31, were as follows:
IN MILLIONS
Balance at beginning of period
Reductions for payments
Accruals for warranties issued during the current period
Changes to accruals related to preexisting warranties
Translation
Balance at end of period
2020
2019
$ 251.4 $ 245.6
(130.5)
(142.8)
144.6
144.1
14.9
2.3
5.1
(0.6)
$ 282.7 $ 251.4
Standard product warranty liabilities are classified as Accrued expenses and other current liabilities, or Other noncurrent
liabilities based on their expected term. The Company’s total current standard product warranty reserve at December 31,
2020 and December 31, 2019 was $127.7 million and $124.9 million, respectively.
WARRANTY DEFERRED REVENUE
The Company’s extended warranty liability represents the deferred revenue associated with its extended warranty
contracts and is amortized into Net revenues on a straight-line basis over the life of the contract, unless another method
is more representative of the costs incurred. The Company assesses the adequacy of its liability by evaluating the
expected costs under its existing contracts to ensure these expected costs do not exceed the extended warranty liability.
The changes in the extended warranty liability for the year ended December 31, were as follows:
IN MILLIONS
Balance at beginning of period
Amortization of deferred revenue for the period
Additions for extended warranties issued during the period
Changes to accruals related to preexisting warranties
Translation
Balance at end of period
2020
2019
$
302.8 $ 290.6
(123.6)
(120.9)
123.7
133.5
—
1.5
(0.4)
—
$
304.4 $ 302.8
The extended warranty liability is classified as Accrued expenses and other current liabilities or Other noncurrent liabilities
based on the timing of when the deferred revenue is expected to be amortized into Net revenues. The Company’s total
current extended warranty liability at December 31, 2020 and December 31, 2019 was $108.6 million and $107.3 million,
respectively. For the years ended December 31, 2020, 2019 and 2018, the Company incurred costs of $61.0 million, $62.8
million and $63.8 million, respectively, related to extended warranties.
F-54
2020 ANNUAL REPORT At Trane Technologies, we boldly
challenge what’s possible for a
sustainable world.
We innovate. We are climate innovators with the courage to take bold action toward a sustainable future.
We act with urgency to deliver sustainable solutions for our customers and enhance the well-being
of our employees, communities and planet. Our strategic brands Trane and Thermo King create and deliver
market-leading sustainable and efficient climate solutions for buildings, homes and transportation.
We solve. Boldly challenging what’s possible for a sustainable world means starting with everyday actions
that, together, help create a better planet for generations to come. We continuously improve and through
our strategic brands, we scale technology, innovation and sustainability strategies to deliver market-leading
solutions that will shape the future of our world.
We uplift. It is our responsibility to lead the change we want to see in our business, industry and world.
Guided by our leadership principles, our teams focus on building a diverse workforce, cultivating inclusiveness
and creating opportunity for all. In our communities, we build sustainable futures for under-represented
groups through education and pathways to green and STEM careers.
OUR LEADERSHIP PRINCIPLES
Work today for a sustainable tomorrow.
Dare to do things differently.
Keep customers at the heart of all we do.
Own our actions and decisions.
Include and uplift one another.
Do what’s right, always.
E
W
Make better happen.
LEADERSHIP RECOGNITION
We’re proud of our legacy of sustainability leadership and honored to continue the tradition of highly regarded
ESG performance in our first year as Trane Technologies.
CONSECUTIVE
CONSECUTIVE
CONSECUTIVE
10TH
YEAR
6TH
YEAR
8TH
YEAR
RANKED
#85
GLOBALLY
CLIMATE
RANKING
OF A-
7TH
PERCENTILE
GLOBALLY
Annual General Meeting
The company’s 2020 Annual Report on Form
10-K as filed with the United States Securities and
Exchange Commission, and other company
information, is available through Trane Technologies’
website, www.tranetechnologies.com. Securities
analysts, portfolio managers and representatives
of institutional investors seeking information about
the company should contact:
Shane Lawrence
Director, Investor Relations
704-655-5651
Date and Time
Thursday, June 3, 2021 at 8:00 a.m. EDT
Location
Trane Technologies plc
800-C Beaty Street
Davidson, NC 28036
Ireland
Shareholders in Ireland may
participate in the Annual
General Meeting remotely on
June 3, 2021 at 1:00 pm
(Dublin time) telephonically
at the Arthur Cox Building,
Ten Earlsfort Terrace, Dublin 2,
D02 T380, Ireland.
See “Information Concerning
Voting and Solicitation” of the proxy
statement for further information
on participating in the Annual
General Meeting.
This integrated annual report and the 2020 online ESG
Report at www.tranetechnologies.com/sustainability-reports
is produced in accordance with the G4 framework
established by the Global Reporting Initiative (GRI) and
reports on our financial and non-financial performance
for the 2020 fiscal year. For more information on GRI,
please visit www.globalreporting.org. To ensure the quality
of our environmental, health and safety data, we assure
selected data with a third-party provider. The results of this
assurance can be found in our 2020 ESG Report at
www.tranetechnologies.com/sustainability-reports. At the
time of publication, assurance of our environmental and
safety data from operations was not yet complete and the
data presented in this document is subject to change.
This annual report, including the letter to shareholders,
contains “forward-looking statements,” which are statements
that are not historical facts, including our ability to address
environmental and social challenges, the future success
of our operational excellence initiatives, our future financial
performance, our growth, market opportunities and our
positioning in and the performance of the markets in
which we operate. These statements are based on currently
available information and our current assumptions,
expectations and projections about future events. While
we believe that our assumptions, expectations and projections
are reasonable in view of the currently available information,
you are cautioned not to place undue dependence on our
forward-looking statements. Forward-looking statements speak
only as of the date they are made and are not guarantees
of future performance. They are subject to future events, risks
and uncertainties—many of which are beyond our control—
as well as potentially inaccurate assumptions that could cause
actual results to differ materially from our expectations and
projections. You are advised to review the factors described
under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Conditions and Results
of Operations” in our Form 10-K for the fiscal year ended
December 31, 2020, and any further disclosures we make
on related subjects in materials we file with or furnish to the
SEC. We do not undertake any obligation to update any
Transfer Agent and Registrar
forward-looking statements.
Computershare
Telephone Inquiries: 866-229-8405
Website: www.computershare.com/Investor
Address shareholder inquiries with standard priority:
Computershare
PO BOX 505000
Louisville, KY 40233-5000
Address shareholder inquiries with overnight priority:
Computershare
462 South 4th Street Suite 1600
Louisville, KY 40202
381892_TT_2020AR_Cover_8.25x10.75_FINAL2_040621.indd 4-6
4/7/21 3:13 AM
Bold Action for a
Sustainable Future
2020 Annual Report
2021 Notice and Proxy Statement
T
r
a
n
e
T
e
c
h
n
o
l
o
g
i
e
s
2
0
2
0
A
n
n
u
a
l
R
e
p
o
r
t
2
0
2
1
N
o
t
i
c
e
a
n
d
P
r
o
x
y
S
t
a
t
e
m
e
n
t
About Trane Technologies
Trane Technologies is a global climate innovator. Through our strategic brands Trane and
Thermo King, and our environmentally responsible portfolio of products and services, we bring
efficient and sustainable climate solutions to buildings, homes and transportation.
www.tranetechnologies.com
We are committed to using environmentally conscious print practices.
©2021 Trane Technologies
381892_TT_2020AR_Cover_8.25x10.75_FINAL2_040621.indd 1-3
4/7/21 3:13 AM