MSC INDUSTRIAL DIRECT CO INC MSM

53% shingled-prose overlap between the two filings.

2024: 52,694 chars · 2025: 56,494 chars

• Committee Report:77% overlap (1,070 → 1,070 chars)
• Pay Ratio (Item 402(u)):55% overlap (4,368 → 4,597 chars)
• Say-on-Pay proposal:65% overlap (24,999 → 24,992 chars)

• changedFollowing this discussion, you will find a series of tables containing more specific details about the compensation earned by or awarded to the following individuals, whom we refer to as the “named executive officers” or “NEOs.” This discussion focuses principally on compensation and compensation practices relating to the NEOs for fiscal year 2025. 2024.
• changedOur NEOs for fiscal year 2025 2024were:
• newNamePositionErik GershwindChief Executive OfficerGregory ClarkVice President and Interim Chief Financial OfficerKristen Actis-Grande (1)Former Executive Vice President and Chief Financial OfficerMartina McIsaacPresident and Chief Operating OfficerNeal DongreSenior Vice President, General Counsel and Corporate SecretaryKimberly Shacklett (2)Senior Vice President, Customer Experience
• new(1)Ms. Actis-Grande departed the Company on August 8, 2025.
• new(2)Until September 29, 2025, Ms. Shacklett served as the Company's Senior Vice President, Sales & Customer Success
• changedFiscal Year 2025 2024Performance Highlights
• newIn fiscal year 2025, we built upon our 85-year legacy and harnessed long-term momentum driven by the continued advancement of our strategic initiatives aimed at driving profitable growth.
• newAgainst a backdrop of ongoing market volatility, we returned to sales growth exiting the fiscal year as momentum began to build with noticeable improvement in our most profitable customer base, the Core customer.
• newWe generated another strong year of cash flow from operations of more than $330M, that represented 169% of net income.
• newThis continued strength in cash generation supported our sustained commitment to returning capital to shareholders in the form of dividends and share repurchases totaling $229M during the fiscal year.
• newWe strengthened our position to drive long-term profitable growth following further advancement of the initiatives embedded in our Mission Critical strategy.
• newThe largest scope of work was improving our E-commerce experience, which underpinned our efforts in reenergizing the Core customer.
• newWe launched our enhanced website entering the second half of the fiscal year which included an improved product discovery platform, a streamlined checkout experience and increased personalization throughout the customers’ buying journey.
• newComplementing the launch of our website was an enhanced marketing campaign focused on increasing awareness of our website upgrades and our more competitive pricing structure that we introduced towards the end of fiscal year 2024.
• newAs a result of these actions, we began to see improving average daily sales trends on the website, which contributed to the Core customer improvement we experienced during the second half of the fiscal year.
• newWe also made progress in other key operational areas of the business in fiscal 2025.
• newWe enhanced seller coverage and effectiveness by leveraging an enhanced data-driven territory model, strengthening our onboarding process, and introducing tools that help our sales team more easily identify untapped opportunities.
• newWe quickly began to see the benefits from of these endeavors as sales per representative per day trends improved during the second half of the fiscal year.
• newSecond, we continued to expand our solutions footprint through further share capture, resulting in 10% growth in our installed vending machine units and 20% growth in the number of In-Plant programs.
• newThe execution of our initiatives throughout fiscal 2025 drove a return to growth in the fourth quarter, and we’re entering fiscal 2026 with strong momentum.
• newWe are laser focused on executing across our productivity pipeline, which, combined with moderating operating expenses, creates compelling incremental margin opportunity.
• newThis positions MSC strongly on the path towards our long-term targets of adjusted operating margin in the mid-teens and delivering 400 basis points of growth above the Industrial Production index over the cycle.
• changedOur operating performance in fiscal year 2025 2024was highlighted by the following:
• changed•Our net sales decreased 1.3% 4.7%to $3.77 $3.8billion;
• changed•Our gross profit decreased 2.3% 4.3%to $1.54 $1.6billion;
• changed•Our operating expenses increased 4.8% 1.4%to $1.22 $1.17billion, as compared to $1.17 $1.15billion in the prior fiscal year;
• changed32MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 31
• changed•Our operating income was $301.6 $390.4million, representing a decrease of 22.8% 19.3%from operating income of $390.4 $483.7million in the prior fiscal year;
• changed•Our diluted earnings per share was $3.57 versus $4.58 versus$6.11in the prior fiscal year;
• changed•We generated $333.7 $410.7million of cash from operations;
• changed•We paid out $189.7 $187.3million in quarterly cash dividends compared to $187.3 $176.7million in the prior fiscal year;
• changed•We repurchased $39.3 andimmediatelyretired$187.7million of MSC’s Class A Common Stock. Stock;and
• changed32 MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 33
• changedThe following table provides information about the key elements of our fiscal year 2025 2024compensation programs:
• changedCompensation ElementDescriptionKey ObjectivesBase SalaryFixed Annual CashlAttract and retain highly talented executiveslRecognize day-to-day contributions and responsibilitieslTargeted at or below the median of our competitive market datalCompetitive positioning may vary based upon executive’s experience and individual performanceAnnual Performance BonusVariable Annual CashlRewards CashlPay-for-performanceprogramthatrewardsachievement of two key short-term Company financial metrics (organic revenue growth and adjusted operating profit)(1) margin)(1)and meaningful individual goals and objectives (“G&Os”)l“At risk” since there is no payout for any measure when the Company or the executive fails to achieve the threshold level for such measurelMaximum payout of 188% of target realized only if the Company and the executive achieve superior performance for all Company financial and individual measureslThe Committee retains discretion to modify annual bonus payoutsLong-Term Incentive CompensationVariable Equity (Performance Share Units (“PSUs”) and RSUs)lPay-for-performance program that rewards achievement of long-term Company performance aligning the RSUs)lAlignsourexecutives' interest interestswith those of our shareholderslPSUs represented 50% shareholderslPromotesretentionlRSUsvest25%oneachof the grant date value of equity awards to executive officers, with 50% firstthroughfourthanniversariesof the grant date value represented by RSUslPSUs grantlPSUscliff vest after three years, with payouts ranging from 0% to 200% of target based upon our average adjusted return on invested capital(1) over a period of three fiscal years, subject to the grantee’s continued employmentl“At risk” since there is no payout on the PSUs if performance is below the threshold level of performancelDividend equivalents on PSUs vest at the same time as the underlying PSUs, subject to the same performance vesting requirementslRSUs vest 25% on each requirementslPSUsrepresented50%of the first through fourth anniversaries grantdatevalueof grantlPromotes retentionWelfare equityawardstoexecutiveofficers,with50%ofthegrantdatevaluerepresentedbyRSUslPay-for-performanceprogramthatrewardsachievementoflong-termCompanyperformancealigningtheexecutives'interestwiththoseofourshareholdersWelfareBenefits and PerquisitesGenerally Track Broad-Based BenefitslNo supplemental life insurance, financial planning, country club memberships or special health benefitsRetirementMSC Industrial Direct 401(k) PlanlExecutives participate on the same basis as our associateslNo pension or supplemental retirement plans; no deferred compensation arrangements
• changed(1)Adjusted Operating Profit, Average Daily Sales Margin,OrganicRevenueGrowth and Adjusted Return on Invested Capital are non-GAAP financial measures.
• changed34MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 33
• changedNo NEO has an employment agreement.Generally target executive compensation at the median of the market data.Provide unusual or excessive perquisites.Use a pay-for-performance executive compensation model with a significant portion at-risk and/or long-term.Provide for tax “gross-ups” in our executive change in control severance plan.Grant RSUs and PSUs (each weighted 50% in fiscal year 2025), which promotes retention and aligns 2024,PSUsrepresented50%ofthegrantdatevalueofequityawardstoexecutive compensation officers,with the creation remaining50%of long-term shareholder value.Provide thegrantdatevaluerepresentedbyRSUs.Provide“single trigger” accelerated vesting of equity awards upon a change in control.Regularly review senior level promotion and succession plans, including for the Chief Executive Officer position.Maintain executive pension plans or supplemental executive retirement plans.Maintain a clawback policy to recoup incentive compensation in the event of a financial restatement as well as in cases of breach of non-competition and other covenants.Allow option repricing (including cash buyouts) of underwater options and share recycling for options and stock appreciation rights (“SARs”).Maintain a formal investor relations outreach program to solicit the views of institutional shareholders on a variety of topics, including executive compensation.Allow associates and Board members to engage in short-selling, margin transactions, trading in exchange-traded options or hedging or monetization transactions, or pledging Company shares in margin accounts.
• changedWe strictly limit pledging of Company stock as collateral for non-margin account loans.Maintain aformalinvestorrelationsoutreachprogramtosolicittheviewsofinstitutionalshareholdersonavarietyoftopics,includingexecutivecompensation.Maintainstock ownership guidelines for executives, other senior officers and non-executive directors.
• changed34 MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 35
• changedAs part of this program, and during fiscal year 2025, 2024,our senior management and investor relations team met with many institutional investors, including our top 25 investors with actively managed funds, through investor conferences, investor roadshows, virtual meetings and telephone conferences.
• changedWe are also committed to continued engagement between shareholders and the Company through our annual theformal“say-on-pay” advisory vote on executive compensation.
• changedAt our 2025 2024Annual Meeting of Shareholders held on January 22, 2025, 24,2024,the advisory vote received the support of more than 98% of the votes cast at the meeting.
• changedIn its review of our executive compensation programs, the Committee carefully considered the results of the 2025 2024advisory vote on executive compensation.
• changedThe Committee is directly responsible for determining, in consultation with the Board, the G&Os of our executive compensation programs and for the ongoing review and evaluation of our compensation programs to determine whether they ourcompensationprogramsare achieving their intended objectives.
• changedAt its October meeting, when the Company’s fiscal year financial results are being considered by the Board, the Committee reviews the achievement of the prior fiscal year’s annual performance bonus plan financial metrics and each NEO’s individual G&Os, and approves the annual bonus payouts.
• changed36MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 35
• changedIn addition, FW Cook assists the Committee with its risk assessment of our compensation programs and advised on the methodology used for our 2025 2024CEO pay ratio disclosure.
• changedFiscal Year 2025 2024Executive Compensation
• changedSummary of Fiscal Year 2025 2024Compensation Decisions
• changedBased on Company and individual performance, the Committee believes that compensation levels for fiscal year 2025 2024were appropriate and consistent with the philosophy and objectives of the Company's compensation programs and reflect the Company's pay for performance strategy.
• changedOur results in fiscal year 2025 2024reflected organic revenue growth and adjusted operating profit, margin,as computed for purposes of our annual performance bonus plan, between belowthe threshold and target level.
• newAs a consequence, bonus payouts for Company financial performance were approximately 93% of that combined target for our NEOs.
• newIn addition, the Committee determined that Mr. Gershwind, Ms. McIsaac, Mr. Dongre and Ms. Shacklett achieved aggressive targets in respect to their individual G&Os, resulting in a performance multiplier of 100% of their target awards based on G&O performance, yielding a combined payout of 95% of target.
• newMr. Clark was significantly above target in respect to his individual G&Os, resulting in a performance multiplier of 150% of his target awards based on G&O performance, yielding a combined payout of 108% of target.
• changedIn fiscal year 2025, 2024,all NEO base salaries were increased consistent with the overall budget for base salary increases for executive and senior officers with the exception of Mr. Gershwind who did not have a salary increase in fiscal year 2025. officers.
• changed36 MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 37
• changedThe following table sets forth the base salaries set by the Committee for fiscal year 2025: 2024:
• newNamed Executive Officer (1)Fiscal 2025 Base Salary ($)Fiscal 2024 Base Salary ($)IncreaseErik Gershwind871,411871,411—%Gregory Clark (2)314,038304,8913.0%Martina McIsaac630,000569,25010.7%Neal Dongre465,000425,0009.4%Kimberly Shacklett429,250425,0001.0%
• new(1)Ms. Actis-Grande departed the Company on August 8, 2025.
• newBase salary as of Ms. Actis-Grande's departure date was $630,000 and base salary as of the end of fiscal year 2024 was $600,000, representing a 5.0% year over year increase.
• new(2)In addition to the base salary reported above, Mr. Clark received an annual stipend of $110,000 for his services as interim Chief Financial Officer.
• newThe portion of the annual stipend applicable to fiscal year 2025 was $4,227.
• changedAnnual Performance Bonus Plan Program
• changedFor fiscal year 2025, 2024,we measured financial performance under our annual performance bonus plan based on two financial metrics – organic revenue growth (on an average daily sales ("ADS") basis) and adjusted operating profit, margin,weighted at 37.5% each.
• changedOur performance bonus plan for fiscal year 2025 2024fixed payout levels based on achievement of financial metrics measured against our fiscal year 2025 2024operating plan.
• changedMaximum bonus payout opportunities in fiscal year 2025 2024were capped at 188% of target.
• changedThe Committee retains discretion to modify annual bonus payouts otherwise payable under the performance bonus plan programwhere it determines that bonus amounts are not reflective of Company and individual performance.
• newThe Committee did not make any modifications to the annual bonus payouts for fiscal year 2025.
• changedFor threshold, target and maximum dollar amounts of performance bonus opportunities under our performance bonus plan programfor the NEOs, please see the Fiscal Year 2025 2024Grants of Plan-Based Awards table on page 48 49of this Proxy Statement.
• changedFor fiscal year 2025, 2024,Company financial metrics were:
• new•adjusted operating profit.
• newThe Committee used these financial metrics similar to prior fiscal years because revenue growth and operating profit are important drivers of value creation for our shareholders.
• changedThe following table sets forth the payout level opportunities available for our NEOs in fiscal year 2025 2024for each Company financial metric as a percentage of the target award (with each financial metric having a weighting of 37.5%) based on different levels of performance and the actual performance achievement.
• changed38MSC Industrial Direct Co., Inc. Notice of 2026 2025Annual Meeting and 2025 2024Proxy Statement 37
• changedPerformance MeasuresWeights of Target(%)Threshold(25% Payout)Target(100% payout)Stretch(125% payout)Maximum(200% Payout)Actual(%)Organic Revenue Growth (ADS) (%)(1)37.5(5.0)0.04.47.0(1.3)Adjusted (%)(1)37.51.04.05.09.2(5.1)AdjustedOperating Profit ($) (1)37.5300.0329.0407.0480.0315.8Individual Margin(%)(1)37.512.012.613.013.810.5IndividualGoals and Objectives (%)25.0N/AN/AN/AN/AN/A
• newAchievement of Individual G&Os
• newFor fiscal year 2025, the Committee determined that Mr. Gershwind, Ms. McIsaac, Mr. Dongre and Ms. Shacklett achieved aggressive targets in respect to their individual G&Os, resulting in a performance multiplier of 100% of target.
• newMr. Clark was significantly above target in respect to his individual G&Os, resulting in a performance multiplier of 150% of his target awards based on G&O performance.
• newThe Committee considered the individual performance goals and performance of each NEO who was eligible for an annual performance bonus award at the end of the fiscal year, including the following:

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