UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Check the appropriate box:

LENNOX INTERNATIONAL INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)

Payment of Filing Fee (Check the appropriate box):

TABLE OF CONTENTS

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Cautionary Statement Regarding Forward-Looking Statements

This Proxy Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) that are based on information currently available to management as well as management’s assumptions and beliefs as of the date hereof. All statements, other than statements of historical fact, included in this Proxy Statement constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the words “may,” “will,” “should,” “plan,” “predict,” “anticipate,” “believe,” “intend,” “estimate,” and “expect” and similar expressions. Statements that are not historical should also be considered forward-looking statements. Such statements reflect our current views with respect to future events. Readers are cautioned not to place undue reliance on these forward-looking statements. We believe these statements are based on reasonable assumptions; however, such statements are inherently subject to risks and uncertainties, including but not limited to the specific uncertainties discussed in the risk factors set forth in Item 1A. Risk Factors of our Annual Report on Form 10-K. These risks and uncertainties may affect our performance and results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ materially from those in the forward-looking statements. We disclaim any intention or obligation to update or review any forward-looking statements or information, whether as a result of new information, future events or otherwise unless required by law.

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General Information Regarding the

2022 Annual Meeting of Stockholders

Virtual Annual Meeting Date and Time

Benefits of a Virtual Annual Meeting

Attendance at the Virtual Annual Meeting

Only stockholders of record and beneficial owners of shares of our common stock as of the close of business on March 28, 2022, the record date, may attend and participate in the Annual Meeting, including voting and submitting questions to be answered at the Annual Meeting. At the close of business on the record date, there were 36,042,441 shares of our common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote.

HOW TO REGISTER FOR THE VIRTUAL ANNUAL MEETING

In order to attend the Annual Meeting. you must register at www.proxydocs.com/LII using the control number located on your Proxy Card, Notice of Internet Availability, or voting instruction form. Upon completing your registration, you will receive further instructions by email, including a unique link that will allow you access to the Annual Meeting and to vote and submit questions to be answered at the Annual Meeting. If you are a beneficial owner of shares registered in the name of a broker, bank, or other nominee, as part of the registration process, you will also need to provide the registered name on your account and the name of your broker, bank, or other nominee.

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The Annual Meeting will start promptly at 10:30 a.m. CDT. Stockholders may begin to log in to the Annual Meeting 15 minutes prior to the start time. If you encounter any difficulties accessing the virtual Annual Meeting platform, including any difficulties voting, you may call the technical support number that will be included in your instructional email.

Questions at the Virtual Annual Meeting

		Our Annual Meeting allows stockholders to submit questions before and during the Annual Meeting. After the votes are tabulated for each of the proposals, there will be a designated question and answer period where we will respond to questions submitted by stockholders. We will answer as many questions as time permits, and any questions that we are unable to address during the Annual Meeting will be answered following the Annual Meeting.
If we receive substantially similar questions, to avoid repetition we will group those questions together and provide a single response. We will also post questions submitted by stockholders and our answers on our website for a period of 60 days following the Annual Meeting.

Matters to be Voted On

At the Annual Meeting, you will be asked to vote on four proposals. Our Board recommends you vote “for” each of the director nominees in Proposal 1 and “for” Proposals 2, 3, and 4. The proposals to be voted on at the Annual Meeting are:

		To elect two Class III directors to hold office for a three-year term expiring at the 2025 Annual Meeting of Stockholders;
		To conduct an advisory vote to approve the compensation of our named executive officers (“NEOs”) as disclosed in this Proxy Statement;
		To approve the Lennox International Inc. 2022 Employee Stock Purchase Plan; and
		To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year.

Record Versus Beneficial Ownership of Shares

If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are the “stockholder of record” with respect to those shares. If you are a stockholder of record, we sent our proxy materials directly to you.

If your shares are held in a stock brokerage account or by a bank, you are considered the “beneficial owner” of shares held in street name. In that case, our proxy materials will be forwarded to you by your broker or bank, which is considered the stockholder of record with respect to those shares. Your broker or bank will also send you instructions on how to vote. If you have not heard from your broker or bank, please contact them as soon as possible.

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2021 Performance Highlights

LENNOX INTERNATIONAL INC. is a leading provider of climate control solutions for heating, air conditioning and refrigeration markets around the world.

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Environmental, Social & Governance Highlights

For more information regarding our commitment to leadership in ESG matters, please see our 2020 ESG Report, available on our website at www.lennoxinternational.com under the heading “ESG.” We anticipate publishing our 2021 ESG Report in mid-2022.

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Proposals Requiring Your Vote

Proposal 1

Election of Directors

Our Bylaws provide that our Board may be composed of no less than three and no more than 15 members. The size of our Board is currently fixed at 10 members, divided into three classes, with each class serving a three-year term.

Upon the recommendation of the Board Governance Committee, the Board has nominated two Class III directors for re-election of a three-year term expiring at the 2025 Annual Meeting of Stockholders. The Board has nominated the Class III directors using the process and criteria described in the “Corporate Governance—Director Nomination Process and Nominee Criteria” section of this Proxy Statement. When Mr. Maskara begins his employment as Chief Executive Officer, he will also join the Board as a Class III director.

For each director and director nominee, we have included a biographical description below that includes the specific experience, expertise, attributes, and skills that led to the Board’s conclusion that such person should serve as a director of the Company at this time in light of our business and structure.

If you do not wish to vote your shares for any particular nominee, you may withhold your vote for that particular nominee. If any Class III director nominee becomes unavailable to serve, the persons named in the accompanying Proxy Card may vote for any alternate designated by the incumbent Board, or the number of directors constituting the Board may be reduced.

The Board has nominated the following directors for re-election as Class III directors for three-year terms expiring at the 2025 Annual Meeting of Stockholders:

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THE BOARD RECOMMENDS A VOTE “FOR”

THE ELECTION OF EACH OF THE ABOVE NOMINEES.

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The following Class I directors’ terms will continue until the 2023 Annual Meeting of Stockholders:

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The following Class II directors’ terms will continue until the 2024 Annual Meeting of Stockholders:

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Proposal 2

Advisory Vote to Approve the

Compensation of Our Named Executive Officers

In accordance with Section 14A of the Exchange Act, we are asking our stockholders to vote to approve the compensation of our Company’s NEOs (the “Say-on-Pay vote”), as disclosed in this Proxy Statement. The Say-on-Pay vote is an advisory vote on the resolution below and is not binding. Although the vote is non-binding, the directors value stockholders’ opinions and will consider the voting results of this proposal when making future compensation decisions. Say-on-Pay advisory votes are currently conducted annually. Our next advisory vote on the frequency of Say-on-Pay votes will take place at our annual meeting of stockholders in 2023.

As described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Company designed its market-competitive NEO compensation program to reward successful execution of its business strategy and achievement of desired business results, with a focus on creating alignment with the interests of our stockholders. The program seeks to achieve these goals on both an annual and long-term basis through an appropriate combination of base pay, annual incentives, and long-term incentives.

For our NEOs, the majority of compensation is both stock-based and contingent on performance. The annual incentive payout is based on Company financial performance metrics of core net income and free cash flow, and for NEOs that are business segment leaders, a combination of Company and business segment performance. Our long-term incentives currently include: (1) performance share units, which are designed to link compensation to the Company’s three-year financial performance as measured by return on invested capital and core net income growth; (2) stock appreciation rights, which are designed to incentivize NEOs to grow our business and deliver increased returns to our stockholders; and (3) restricted stock units, which are designed to support our retention efforts.

The Company also has several governance policies in place to align executive compensation with stockholder interests and mitigate risk. These policies include: stock ownership guidelines; a prohibition on hedging and pledging of Company stock; a clawback policy; and post-employment non-competition and non-solicitation restrictions. These policies are discussed in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement.

In 2021, the Company had a strong year despite COVID-19 challenges and global supply chain disruptions. The Company posted record highs for revenue and GAAP earnings per share from continuing operations. Results of our 2021 performance include the following:

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Financial results, including those from prior periods, are described in more detail in our Form 10-K for the fiscal year ended December 31, 2021. For further detail and a reconciliation of Segment Profit to Operating Income, see Note 3 in the Notes to the Consolidated Financial Statements in our Form 10-K for the fiscal year ended December 31, 2021. All total stockholder return calculations assume reinvestment of dividends.

We are asking stockholders to approve the following advisory resolution at the Annual Meeting:

RESOLVED, that the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion is hereby APPROVED.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE

APPROVAL OF THE COMPENSATION OF THE NEOs AS DISCLOSED IN

THIS PROXY STATEMENT.

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Proposal 3

Approval of the Lennox International Inc.

2022 Employee Stock Purchase Plan

The Lennox International Inc. 2012 Employee Stock Purchase Plan (the “2012 ESPP”), previously approved by the stockholders, allows employees of the Company to purchase shares of common stock, par value $0.01 per share, of the Company (as used in this proposal, “common stock”) under the terms of the 2012 ESPP. Because the 2012 ESPP terminates in 2022, we are asking our stockholders to vote to approve the Lennox International Inc. 2022 Employee Stock Purchase Plan (the “2022 ESPP”), which was adopted by our Board on March 11, 2022, subject to stockholder approval at the Annual Meeting scheduled for May 19, 2022. If stockholder approval is not obtained by 12 months after the date the Board approved the 2022 ESPP, the 2022 ESPP will have no effect.

Stockholders are being asked to approve the 2022 ESPP and the reservation by the Board of common stock under the 2022 ESPP primarily for the purpose of qualifying such common stock for special tax treatment under Section 423 of the Internal Revenue Code of 1984, as amended (the “Code”).

Like the 2012 ESPP, the purpose of the 2022 ESPP is to advance the interests of the Company and its stockholders by offering our employees the opportunity to purchase common stock at a discount. The Board and the Compensation Committee of the Board (as used in this proposal, the “Committee”) believe that the approval of the 2022 ESPP will continue to help: (1) attract and retain key personnel to the Company; (2) focus employees on the achievement of Company goals; and (3) align the interests of the Company’s employees with those of its stockholders. Based on all of these considerations, the Board recommends that our stockholders approve the 2022 ESPP. The material terms of the 2022 ESPP are summarized below. This summary, however, does not purport to be a complete description of the 2022 ESPP, and it is qualified in its entirety by reference to the complete text of the 2022 ESPP, a copy of which is attached as Appendix B to this Proxy Statement.

THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF

THE LENNOX INTERNATIONAL INC. 2022 EMPLOYEE STOCK PURCHASE PLAN.

Description of the 2022 ESPP

Overview. The purpose of the 2022 ESPP is to provide employees of the Company and its participating subsidiaries with an opportunity to purchase common stock at a discount, thereby further aligning their interests with those of other stockholders. It is intended that the ESPP satisfy the requirements of Section 423 of the Code. If the 2022 ESPP is approved by the Company’s stockholders, eligible employees will be able to purchase shares of common stock of the Company under the 2022 ESPP at the end of three month offering periods coinciding with our fiscal quarters. The purchase price for such shares of common stock under the 2022 ESPP will be 95% of the fair market value of the common stock on the purchase date (the last business day of the fiscal quarter offering period). In general, fair market value for this purpose will be the closing price of the common stock on the purchase date, unless otherwise determined by the Committee in accordance with applicable law. The Company anticipates that the first offering period will commence on July 1, 2022. In general, the Committee will administer the 2022 ESPP.

Share Limit. Subject to adjustment as described below and in the 2022 ESPP, there will be 1,000,000 shares of common stock available for issuance under the 2022 ESPP. Such shares may be treasury shares, shares purchased on the open market, shares of original issuance, or a combination

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thereof. On March 28, 2022, the closing price of a share of common stock was $262.50 per share, and the aggregate market value as of the date of the 1,000,000 shares of common stock requested under the 2022 ESPP was approximately $263 million. The 1,000,000 shares of Common Stock that will be available under the 2022 ESPP will represent approximately 2.77% of our 36,042,441 outstanding shares of common stock as of March 28, 2022.

Adjustments. Subject to certain tax law requirements, the Committee will make or provide for such adjustments in the purchase price and in the number or kind of shares of common stock or other securities covered by outstanding subscriptions, or in the aggregate number of shares that may be purchased under the 2022 ESPP, as the Committee in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of participants that would otherwise result from (1) any stock dividend, stock split, combination of shares, recapitalization, or other change in the capital structure of the Company; (2) any merger, consolidation, spin-off, split-off, spin-out, split-up, separation, reorganization, partial or complete liquidation, or other distribution of assets, issuance of rights or warrants to purchase stock; or (3) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Committee, in its discretion, may provide in substitution for any or all outstanding subscriptions under the 2022 ESPP such alternative consideration as it, in good faith, may determine to be equitable in the circumstances.

Eligibility. Except as set forth below, all employees of the Company and any participating subsidiaries are eligible to participate in the 2022 ESPP. Participating subsidiaries will be designated by the Committee from time to time. We may exclude (1) employees whose customary employment is 20 hours or less per week or five months or less per calendar year, (2) employees who have been employed for less than two years, and (3) employees who are citizens or residents of a foreign jurisdiction if the offering or acceptance of a subscription to or by such employees is prohibited by applicable foreign laws or if compliance with such applicable foreign laws would cause the 2022 ESPP or a subscription to violate the requirements of Section 423 of the Code. Any individual whose employment with the Company and our participating subsidiaries terminates for any reason before the end of an offering will become ineligible to purchase common stock under such offering and amounts deposited under the 2022 ESPP for such offering will be returned to the employee. A “highly compensated employee” (within the meaning of Section 414(q) of the Code) who is an “officer” (as such term is defined in Section 16a-1(f) of the Exchange Act) (“Section 16 Officers”) of the Company may not participate in the 2022 ESPP. Further, if immediately after the first business day of an offering period a participant owns, or holds options to purchase, stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any subsidiary of the Company (determined in accordance with applicable law), that participant may not subscribe to purchase shares on the immediately following purchase date.

As of March 28, 2022, the Company has approximately 11,000 employees, of which nine are Section 16 Officers who would be excluded from participation in the 2022 ESPP. The basis for participation in the 2022 ESPP is meeting the eligibility requirements and electing to participate.

Participation Elections and Share Purchases. Eligible employees may participate in the 2022 ESPP by timely completing a subscription agreement. The 2022 ESPP provides that eligible employees may accumulate after-tax contributions through payroll deductions over an offering period in order to purchase common stock at the end of the period. The accumulated contributions for an offering will be automatically applied at the end of the offering period to purchase shares of common stock, subject to the limitations set forth in the 2022 ESPP. If the dollar amount of shares of common stock subscribed for in any quarter exceeds the number of shares of common stock available to be purchased under the 2022 ESPP, the shares of common stock available to be purchased will be allocated on a pro-rata basis among the subscriptions. Unless otherwise determined by the Committee, fractional shares may be purchased under the 2022 ESPP and credited to an account for a participant.

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Payroll Deductions. The rate of an eligible employee’s payroll deduction will be elected by the employee, which rate generally must be a whole percentage of eligible compensation that is no less than 1% and no greater than 20%. The Committee may establish minimum payroll deductions. Eligible compensation under the 2022 ESPP consists of base salary, regular hourly wages, and sales commissions (prior to any reductions).

Changes to Elections. A participant will generally have the right, during the period between the sixteenth day of the second month prior and twenty-second day of the month prior to the start of a fiscal quarter, to change his or her subscription for such fiscal quarter and all subsequent fiscal quarters or to withdraw from the 2022 ESPP. However, with respect to the first offering commencing on July 1, 2022 (the “First Offering”), eligible employees may not subscribe to purchase shares of common stock under the 2022 ESPP prior to May 20, 2022. A participant in the 2022 ESPP will have the right to cancel his or her subscription in whole for any fiscal quarter and to obtain a refund of amounts withheld from his or her compensation for such fiscal quarter by submitting a written request by the 15^th calendar day of the month prior to the month in which the purchase date for such fiscal quarter occurs. Those amounts will thereafter be paid to the participant within a reasonable period of time.

Certain Limitations. No subscription will permit the rights of a participant to purchase common stock under all “employee stock purchase plans” (as defined in the Code) of the Company and its subsidiaries to accrue, under the applicable Code Section 423 rules, at a rate which exceeds $25,000 of fair market value of such common stock (determined at the beginning of the applicable offering period) for each calendar year. Additionally, the maximum number of shares of common stock that can be purchased by any participant during any offering period cannot exceed 500 shares.

Section 423 Status. In general, the 2022 ESPP is intended to comply with Section 423 of the Code, which may provide participants with certain tax benefits upon their subsequent sale or other disposition of the shares of common stock that they purchase under the 2022 ESPP. However, the Committee may also authorize grants of separate rights under the 2022 ESPP (to run concurrently with the fiscal quarters described in the 2022 ESPP) that are not intended to comply with Section 423 of the Code, pursuant to any rules, procedures, or sub-plans adopted by the Committee for such purpose, the terms of which grants may differ from the terms set forth in the 2022 ESPP to the extent such differing terms would not cause a grant under the 2022 ESPP that is intended to comply with Section 423 of the Code to fail to so comply.

Amendment and Termination. The Committee may amend or terminate the 2022 ESPP at any time; provided, however, that no increase in the number of shares of common stock reserved for issuance under the 2022 ESPP (except under the adjustment provisions described above), and no material modification to the eligibility requirements under the plan, may be made without stockholder approval. The 2022 ESPP will continue in effect until the earlier of (1) its termination by the Board, and (2) the issuance of all common stock available for issuance under the plan.

New Plan Benefits

Because benefits under the 2022 ESPP will depend on elections to participate and the fair market value of the Company’s common stock at various future dates, it is not possible to determine the benefits that will be received if the 2022 ESPP is approved by the stockholders.

U.S. Federal Income Tax Consequences Relating to the 2022 ESPP

The following discussion is a summary of the general U.S. federal income tax rules applicable to the 2022 ESPP, as currently in effect. This is not a complete summary of the applicable federal tax rules, and does not address any non-U.S., state, or local tax consequences. This summary is presented for the information of stockholders considering how to vote on this proposal and not for

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2022 ESPP participants, and employees should consult their own tax advisors to discuss the tax implications of participating in the plan since a taxpayer’s particular tax situation may alter the tax result described below.

The 2022 ESPP and the right of participants to make purchases thereunder are generally intended to qualify under the provisions of Sections 421 and 423 of the Code. Under those provisions, no income should be taxable to a participant at the time of grant of the option or the purchase of shares. A participant may, however, become liable for tax upon the disposition of shares acquired under the 2022 ESPP (or if he or she dies holding such shares). In these cases, the tax consequences will depend on how long a participant has held the shares prior to disposition.

If the shares are disposed of at least one year after the shares were purchased under the 2022 ESPP and at least two years after the first day of the offering period to which the shares relate (or if the participant dies while holding the shares), the participant (or in the case of the participant’s death, the participant’s estate) will recognize ordinary income in the year of disposition in an amount equal to the lesser of (a) the excess of fair market value of the shares at the time of such disposition over the purchase price of the shares (the option price), or (b) the excess of the fair market value of the shares at the time the option was granted (the first day of the offering period) over the purchase price (assuming purchase on the first day of the offering period). Any additional gain will be taxed at long-term capital gain rates. If the shares are sold and the sales price is less than the purchase price, the participant will have a long-term capital loss equal to the difference. No deduction will be allowed to the Company.

If the shares are sold or disposed of (including by way of gift) before the expiration of the applicable holding periods discussed above, the participant will generally recognize ordinary income in the year of sale or disposition in an amount equal to the excess of the fair market value of the shares on the purchase date over the purchase price. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on the holding period. The Company will be allowed a deduction for federal income tax purposes equal to the ordinary income realized by the employee.

Registration with the SEC

We intend to file a registration statement on Form S-8 relating to the issuance of common stock under the 2022 ESPP with the SEC pursuant to the Securities Act, as soon as practicable if the 2022 ESPP is approved by our stockholders.

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Proposal 4

Ratification of the Appointment of KPMG LLP

as Our Independent Registered Public

Accounting Firm for the 2022 Fiscal Year

The Audit Committee of the Board has appointed KPMG LLP to continue as our independent registered public accounting firm for the 2022 fiscal year. We are asking our stockholders to ratify the appointment of KPMG LLP as our independent registered public accounting firm. If our stockholders do not ratify this appointment, the Audit Committee will consider the reasons for the rejection and whether it should select a different firm; however, it is not required to do so. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that a change would be in the best interests of the Company and our stockholders.

A representative of KPMG LLP will be present at the Annual Meeting and will be available to respond to appropriate questions. The representative will also have an opportunity to make a statement at the meeting if he or she desires to do so.

THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF

KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM FOR THE 2022 FISCAL YEAR.

Audit and Non-Audit Fees

The following table sets forth the fees for audit and other services rendered by KPMG LLP for each of the last two fiscal years (in thousands).

Audit Committee Approval of Audit and Non-Audit Services

The Audit Committee pre-approves all audit services provided by our independent registered public accountants. In addition, all non-audit services provided by KPMG LLP are pre-approved in accordance with our policy that prohibits our independent registered public accountants from providing services specifically prohibited by the Securities and Exchange Commission (“SEC”). For permissible non-audit services, the Audit Committee has delegated pre-approval authority to the Audit Committee Chair. In addition, the Audit Committee has approved annual maximum amounts for tax advisory and tax return services. No engagements are commenced until the Audit Committee Chair’s approval has been received. All approved services are reported to the full Audit Committee at each quarterly meeting. In accordance with the foregoing, all services provided by KPMG LLP in 2020 and 2021 were pre-approved by the Audit Committee.

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Audit Committee Report

The Audit Committee maintains effective working relationships with the Board, management, the Company’s internal auditors and KPMG LLP, the Company’s independent registered public accounting firm (the “Independent Accountants”). As set forth in the Audit Committee Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that our Company’s consolidated financial statements and disclosures are complete and accurate and in accordance with U.S. generally accepted accounting principles and applicable rules and regulations. The Independent Accountants are responsible for auditing the Company’s consolidated financial statements and expressing an opinion as to the conformity of these financial statements with U.S. generally accepted accounting principles and on the Company’s internal control over financial reporting.

The Audit Committee has (1) reviewed and discussed the Company’s audited consolidated financial statements for the year ended December 31, 2021 with the Company’s management and with the Independent Accountants; (2) discussed with the Independent Accountants the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board; and (3) received the written disclosures and the letter from the Independent Accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the Independent Accountants’ communications with the Audit Committee concerning independence, and the Audit Committee has discussed with the Independent Accountants the Independent Accountants’ independence and considered whether the provision of non-audit services by the Independent Accountants to the Company is compatible with the Independent Accountants’ independence.

Members of the Audit Committee rely, without independent verification, on the information provided and on the representations made by management and the Independent Accountants. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audits of the Company’s consolidated financial statements have been carried out in accordance with generally accepted auditing standards, that the consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles or that the Company’s Independent Accountants are in fact “independent.”

Based upon the reviews and discussions described above, and subject to the limitations on the role and responsibilities of the Audit Committee referred to in this report and in the Audit Committee Charter, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Submitted by the Audit Committee of the Board:

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Corporate Governance

Board of Directors

Director Independence

Our Corporate Governance Guidelines require that a majority of our directors be “independent,” and that the Compensation and Human Resources, Board Governance, and Audit Committees consist exclusively of independent directors as defined under the NYSE listing standards, the Exchange Act, and any other applicable laws or regulations regarding independence. No director qualifies as “independent” unless the Board affirmatively determines that the director has no material relationship with the Company.

Applying these standards, the Board has determined that all of our Board members are independent, except for Todd J. Teske, who will not be deemed independent during his service as Interim Chief Executive Officer (“Interim CEO”). All of the members of the Board’s Compensation and Human Resources, Board Governance, and Audit Committees are independent directors (see the table under “Board Committees” below).

In making its determination as to the independence of our directors, the Board Governance Committee and the Board considered that (a) Ms. Quintos previously served as Chief Customer Officer of Dell, Inc., which provides computer equipment and related items to the Company in the ordinary course of business, and (b) Ms. Rucker serves as a member of the Board of Directors of HP Inc., and Mr. Wall serves as a special advisor to the CEO of HP Inc., which provides computer equipment and related items to the Company in the ordinary course of business. The Board affirmatively determined that no director had a material relationship with the Company despite these facts.

Board Meetings and Leadership Structure

Mr. Teske serves as Chairman of the Board and Interim CEO. The Board has determined that Mr. Teske’s position as Chairman allows him to be a liaison between management and the Board, providing the Board with the benefit of management’s perspective on our business strategy and all other aspects of the business as the Board performs its oversight role.

Throughout 2021 and prior to Mr. Teske’s appointment as Chairman of the Board, he served as Lead Independent Director in order to provide helpful guidance to the independent directors in their oversight of management. As Lead Independent Director, Mr. Teske, among other things, presided at all meetings of the Board at which the Chairman was not present, including executive sessions of the independent directors, served as liaison between the Chairman and the independent directors, assisted the Chairman in planning agendas for Board meetings, and advised on the presentation of information provided to the Board.

The Board met eight times in 2021. All directors attended more than 75% of the total number of all meetings of the Board and committees of the Board on which they served. Our Corporate Governance Guidelines include a policy that Board members are expected to attend the Annual Meeting of Stockholders. All of the individuals serving as directors at the time of our 2021 Annual Meeting of Stockholders attended our 2021 Annual Meeting of Stockholders and we expect all current directors to attend the Annual Meeting.

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Board Oversight of ESG

Our Board and Board Committees oversee all aspects of our Company sustainability and ESG goals, policies, and initiatives as shown in more detail in the table below:

Board Committees

The standing committees of the Board are as follows: Audit, Board Governance, Compensation and Human Resources, and Public Policy. The Board has adopted charters for each of these committees, copies of which are available on our website at www.lennoxinternational.com by following the links “About Us — Corporate Governance — Committee Charters.” Each of these Board committees is led by a different independent director and all members of our Board committees are independent directors.

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The following table provides current membership information for each of the Board committees and indicates which directors our Board determined are independent, as defined by the NYSE.

Audit Committee

The Audit Committee assists the Board in fulfilling its oversight responsibilities relating to the integrity of our financial statements and related systems of internal controls, our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications, independence and performance and the performance of our internal audit function. The Audit Committee also has the direct responsibility for the appointment, compensation, retention, and oversight of our Independent Accountants.

The Board has determined that each Audit Committee member is independent, as independence is defined for audit committee members by the SEC and the NYSE. The Board has also determined that each Audit Committee member is “financially literate” as defined by the NYSE, has accounting or related financial management expertise, and is an audit committee financial expert as defined by the SEC. The Audit Committee met nine times in 2021.

Board Governance Committee

The Board Governance Committee assists the Board by identifying individuals qualified to become Board members, developing qualification criteria for Board membership, making recommendations to the Board regarding the appropriate size of the Board and appointment of members to the Board’s committees, developing and recommending to the Board any changes to the Corporate Governance Guidelines and Code of Business Conduct applicable to our Company, developing our Company’s director education programs, and overseeing the evaluation of our Board, and each of the Board’s committees. The Board Governance Committee also conducts an individual peer review for any directors who are scheduled to be re-nominated. The Board has determined that each member of the Board Governance Committee is independent as independence is defined by the NYSE. The Board Governance Committee met twice in 2021.

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Compensation and Human Resources Committee

The Compensation and Human Resources Committee determines the compensation philosophy and oversees the compensation programs for the Company’s executive officers and the non-employee members of the Board. This Committee’s responsibilities include oversight of the short- and long-term incentive plans and the senior management succession plans. The Committee also reviews the funding requirements and investment policies for the defined benefit and defined contribution retirement plans, and the performance of investment funds, investment advisors and investment managers under those plans. The Committee may delegate its responsibilities to a subcommittee comprised of Committee members.

Although the Committee seeks input from the CEO on various elements of executive compensation, the Committee determines and approves the final compensation elements and amounts to be provided to the Company’s NEOs. The independent members of the Board (rather than the Committee) have direct responsibility for approving CEO and Board compensation; however, the Committee reviews and recommends proposed changes to CEO and Board compensation to the independent members of the Board for approval. See “Executive Compensation — Compensation Discussion and Analysis” for information concerning the Committee’s philosophy and objectives in overseeing executive compensation. The Board has affirmatively determined that each member of the Committee is independent as defined for compensation committee members by the NYSE. The Board has also determined that each member of the Committee is a “non-employee director” for purposes of Section 16b-3 of the Exchange Act. The Committee met eight times in 2021.

The Committee’s charter authorizes the Committee to retain third-party compensation consultants and to obtain advice and assistance from internal or external legal, accounting, or other advisors. For 2021, the Committee retained Pearl Meyer. Pearl Meyer does not provide any other services to the Company. See “Executive Compensation — Compensation Discussion and Analysis” for further information regarding our executive compensation programs and the scope of services provided by Pearl Meyer. The Committee has concluded that Pearl Meyer’s work does not raise any conflicts of interest that require disclosure under applicable SEC regulations.

Public Policy Committee

The Public Policy Committee is responsible for overseeing the Company’s (a) actions in furtherance of corporate environmental and social responsibilities and other sustainability issues of significance to investors and other key Company stakeholders and (b) health and safety issues. The Board has determined that each Public Policy Committee member is independent as defined by the NYSE. The Public Policy Committee met twice in 2021.

Director Nomination Process and Nominee Criteria

The Board is responsible for nominating candidates for Board membership. The Board has delegated the director screening and recruitment process to the Board Governance Committee. In this capacity, the Board Governance Committee develops and periodically reviews the qualification criteria for Board membership, identifies new director candidates, and makes recommendations to the Board regarding the appropriate size of the Board and appointment of members to the Board’s committees. The Board Governance Committee typically retains a third- party search firm to assist in identifying and evaluating potential new director candidates. We strive to maintain a well-rounded Board with a diversity of experience, functional expertise, and industry knowledge. Required qualifications for Board membership vary according to the particular areas of expertise, experience and skills being sought to complement the existing Board composition at the time of any vacancy.

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According to our Board of Director Qualification Guidelines, the Board Governance Committee considers the following factors in evaluating candidates, in addition to other factors that the Board Governance Committee deems relevant:

Although neither the Board nor the Board Governance Committee has a formal diversity policy, the Board and the Board Governance Committee fully appreciate the value of Board diversity. Consequently, our Corporate Governance Guidelines provide that, when nominating new members to the Board, the Board will seek the best qualified candidates with consideration for diversity. This includes diversity of professional experience, race, ethnicity, gender, age, and cultural background. Our current Board reflects this effort. Among other things, four of the Company’s directors are female. Further, our Board of Director Qualification Guidelines provide that the Board Governance Committee consider a candidate’s diversity of viewpoints in determining the particular qualifications desired for any new Board member. The Board and the Board Governance Committee are committed to developing a diverse pool of potential candidates for future Board service.

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In addition, we believe that diversity with respect to tenure is important to benefit from both fresh perspectives and deep experience and knowledge of our Company and our business. Therefore, we aim to maintain an appropriate balance of tenure among our directors. In furtherance of its succession planning responsibility, the Board has appointed four new directors since 2016. Upon the appointment of our new CEO to the Board, the average tenure of our directors will be 8.4 years.

When a vacancy occurs on the Board, a majority of the directors then in office may fill the vacancy or the size of the Board may be reduced. The Board Governance Committee considers nominees for election to the Board recommended by stockholders in the same manner as other candidates.

The full text of our Board of Directors Qualification Guidelines can be found on our website at www.lennoxinternational.com by following the links “About Us — Corporate Governance — Board of Director Qualification Guidelines.”

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Expertise, Experience and Skills of our Directors

Our directors bring a well-rounded variety of expertise, experience, and skills, and represent a mix of deep knowledge of the Company and fresh perspectives. The expertise, experience, and skills that the Board considers in evaluating its membership, and which inform Board succession planning and our director nomination processes, are highlighted in the following table. The table also identifies which directors have particularly strong expertise, experience, and skills in the areas described below. Further information about each individual director is set forth in the director biographies in this Proxy Statement.

Director Expertise, Experience, and Skills

Financial/Accounting Knowledge of finance or financial accounting; experience with debt or capital market transactions, or experience as a financial officer, accounting officer, controller, accountant, or auditor

✓

✓

✓

✓

✓

✓

✓

Executive Leadership Significant leadership experience, including as an executive officer of a public company or a significant subsidiary, division, or business unit

✓

✓

✓

✓

✓

✓

✓

✓

✓

Manufacturing/Distribution Experience in managing or analyzing large scale operations of a company primarily engaged in the manufacturing of goods in markets served by our Company

✓

✓

✓

✓

✓

ERM/Corporate Governance/ESG Experience in enterprise risk management, corporate governance, and corporate responsibility/sustainability, including governance of public companies, service on boards, managing ESG risk, and furthering sustainable business practices that address ESG issues

✓

✓

✓

✓

✓

✓

✓

✓

✓

Human Resources/Compensation Experience in attracting, developing, and retaining talent, including executives, and building strong cultures

✓

✓

✓

✓

✓

✓

✓

✓

✓

Marketing/Sales Experience in growing market share and revenue through innovative marketing and sales, as well as building brand awareness

✓

✓

✓

✓

✓

✓

Innovation/Technology/Cybersecurity Experience in engineering and technology innovation and knowledge of digital transformation, mobility, cybersecurity, and data management and analysis

✓

✓

✓

✓

✓

✓

✓

✓

✓

Global Experience Experience working in a globally-distributed business, including with different regulatory requirements, resulting in an understanding of operations and business strategy abroad

✓

✓

✓

✓

✓

✓

✓

✓

Strategic Planning/Oversight Experience in strategic planning, developing business strategies, and mergers and acquisitions in large organizations operating in multiple geographies

✓

✓

✓

✓

✓

✓

✓

✓

✓

Other Board Demographics

Person of Color

✓

White/Caucasian

✓

✓

✓

✓

✓

✓

✓

✓

Gender Identification (Male/Female/Other)

F

F

M

M

F

F

M

M

M

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Stockholder Nominations for Director

A stockholder wishing to nominate a candidate for election to the Board at a meeting of the stockholders (“Nominating Stockholder”) is required to give written notice to our Corporate Secretary of his or her intention to make a nomination in accordance with the terms of our Bylaws. The Nominating Stockholder must be a holder of record of stock of the Company entitled to vote at the annual meeting of stockholders and must appear at the annual meeting of stockholders to nominate such person. The Nominating Stockholder must include a written consent from its proposed director nominee. The proposed director nominee must also represent and agree that he or she (1) has not and will not give any assurance or commitment not disclosed to the Company on how he or she would vote on any issue or question, (2) has not and will not become party to any agreement not disclosed to the Company regarding direct or indirect compensation (other than from the Company) for his or her service as a director, and (3) if elected, will comply with all applicable policies and guidelines of the Company. We must receive the notice of nomination at least 60 days but no more than 90 days prior to the annual meeting of stockholders. However, if we give less than 70 days’ notice of the date of the annual meeting of stockholders, the notice of nomination must be received within 10 days following the date on which notice of the date of the annual meeting of stockholders was mailed or such public disclosure was made to our stockholders.

Pursuant to our Bylaws, the notice for the proposed director nominee must contain certain information about the nominee, the Nominating Stockholder and any person “acting in concert” with the Nominating Stockholder, including descriptions of any arrangements or understanding related to the nomination, the information that would be required if such person was making a stockholder proposal (as described under “Other Information – Stockholder Proposals for the 2023 Annual Meeting of Stockholders”), and other information sufficient to allow the Board Governance Committee to determine if the candidate meets our qualification criteria for Board membership. The Board Governance Committee may require the proposed director nominee to furnish additional information in order to determine that person’s eligibility to serve as a director. A nomination that does not comply with the above procedure will be disregarded. Nominating Stockholders whose nominations comply with the foregoing procedure and who meet the criteria described above under the heading “Director Nomination Process and Nominee Criteria” and in our Corporate Governance Guidelines, will be evaluated by the Board Governance Committee in the same manner as the Board Governance Committee’s nominees.

Stockholder Communications with Directors

Stockholders may send written communications to the Board by email to directors@lennoxintl.com, or by regular mail to 2140 Lake Park Blvd., Richardson, Texas 75080, Attention: Board of Directors, c/o Corporate Secretary.

Stockholder communications received by the Corporate Secretary will be delivered to one or more members of the Board or management, as determined by the Corporate Secretary. Any allegations of accounting, internal controls, or auditing-related complaints or concerns will be directed to the Chair of the Audit Committee.

ESG

Environmental Focus and Sustainability

We are a global leader in energy-efficient climate-control solutions. Dedicated to sustainability and creating comfortable and healthier environments for our residential and commercial customers while reducing their carbon footprint, we lead the field in innovation with our air conditioning, heating, indoor air quality, and refrigeration systems.

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In 2021, we set aggressive targets to reduce our GHG emissions in line with the Science Based Target Initiative (SBTi), a global coalition dedicated to curbing global warming based on climate science. SBTi has approved our targets, confirming our commitment to sustainability. Our targets, measured from a baseline in 2019, include reducing absolute Scope 1 and 2 emissions by 37.5% by 2034 and reducing Scope 3 emissions by 30% per product sold.

In 2014, we set goals to reduce the Company’s consumption of energy and water and to reduce the Company’s manufacturing waste by 25% by 2024. We have already exceeded our water and waste reduction goals and expect to meet our energy reduction goal. Our substantial progress towards meeting and exceeding these 2024 goals has been achieved by investing capital dedicated to sustainability projects, engaging our employees to identify and complete environmentally progressive projects, and encouraging employees to adopt conservation-minded behaviors. We are in the process of creating new targets for water, waste, and energy reduction.

When we published our first ESG report for the 2019 calendar year, we aligned our performance disclosures with the Sustainability Accounting Standards Board (SASB) and Task Force for Climate Disclosure (TCFD), two of the most globally recognized ESG frameworks. In 2021, we also adopted the United National Sustainable Development Goals (UN SDGs) most relevant to the Company’s business. These frameworks and goals allow investors to compare companies across meaningful topics, again demonstrating our commitment to ESG.

For more information regarding our commitment to leadership in ESG matters, please see our 2020 ESG Report, available on our website at www.lennoxinternational.com under the heading “ESG.” Information in our ESG Report is not incorporated by reference in this Proxy Statement. We anticipate publishing our 2021 ESG Report in mid-2022.

Risk Management

While the Board oversees the Company’s risk management, our management is responsible for the development, implementation, and maintenance of our risk management processes. Management provides periodic reports to the Board and Board committees on its assessment of strategic, operational, legal and compliance, information security, and financial reporting risks to the Company. The Board and Board committees, as appropriate, review and consider the management reports provided on the Company’s enterprise risk and risk management strategy.

Enterprise Risk Management

Our Enterprise Risk Management program, which identifies and addresses risk, is typically presented to the full Board twice a year. The Audit Committee oversees the guidelines and policies that govern the Company’s processes to assess and manage significant enterprise risk exposure.

Compensation Risk

The Board reviews the Company’s compensation policies and practices to determine if risks arising from those policies and practices are reasonably likely to have a material adverse effect on the Company. All of the Company’s material incentive compensation plans are reviewed at least annually. Based on these reviews, the Board has not identified any risks arising from the compensation policies and practices that are reasonably likely to have a material adverse effect on the Company. See “Executive Compensation — Compensation Discussion and Analysis” for more information about the design of our compensation program and risk mitigation compensation practices we have incorporated into our compensation program, including stock ownership guidelines and claw-back provisions.

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Cyber-Security/Information Security Risk

On an ongoing basis, the Company analyzes and assesses information security risks associated with our business. That assessment is primarily the responsibility of the Company’s information technology department, with input from our Data Protection & Cybersecurity Steering Committee, comprised of employees with relevant expertise. The Company seeks to adhere to the NIST Cyber-Security Framework, which provides best practice guidance on how to prevent, detect, and respond to cyberattacks. As part of the Company’s information security risk management program, the Company routinely tests our controls and information systems to help ensure we remain compliant with our security policies and procedures and industry standards and requires that IT infrastructure associated with sensitive customer credit card information be audited and certified by a quality security party. We also provide information security training for our employees and business partners. In addition, the Company maintains information security risk insurance.

Twice a year, management updates the Board on the Company’s information security policies and procedures, including, training, risk assessment, internal controls, security software, evaluation and testing, insurance, incident response plans, and forward-looking information security strategies. Additionally, our policies require our Board to be notified of breaches to our information systems based on pre-defined severity thresholds. Five of our directors, Janet K. Cooper, Max H. Mitchell, Gregory T. Swienton, Todd J. Teske, and Shane D. Wall, have experience and expertise in addressing cybersecurity issues.

Other Corporate Governance Policies and Practices

Code of Business Conduct

The Company has adopted a Code of Business Conduct that applies to all its directors and employees, including its senior financial and principal executive officers. The Code of Business Conduct covers a variety of matters, such as acting with integrity and compliance with laws, including anti-corruption laws. Amendments to and waivers, if any, of the Code of Business Conduct as it pertains to the executive officers will be disclosed on our website. The Code of Business Conduct is available on the Company’s website at www.lennoxinternational.com by following the links “About Us — Ethics & Compliance — Code of Conduct.”

Corporate Governance Guidelines

The Company has adopted Corporate Governance Guidelines that are available on the Company’s website at www.lennoxinternational.com by following the links “About Us — Corporate Governance — Corporate Governance Guidelines.”

Executive Session Meetings

The non-management directors of our Board, all of whom are independent, meet regularly in executive session without the presence of management. In 2021, the Lead Director chaired the executive session meetings of our independent directors.

Whistleblower Procedures

The Audit Committee has established procedures for the handling of complaints regarding accounting, internal accounting controls, or auditing matters, including procedures for confidential and anonymous submission by our employees of concerns regarding such matters. The Company’s Code of Business Conduct prohibits retaliation against employees who report violations or suspected violations of the Code of Business Conduct.

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Director Compensation

In 2021, our director compensation program consisted of annual retainers and long-term incentive compensation. We use a combination of cash, stock, and long-term equity awards to provide market-competitive compensation to members of our Board. Mr. Bluedorn, our Chairman and CEO in 2021, did not receive any additional compensation for serving on our Board.

Each year, the Committee reviews benchmark data from our Compensation Peer Group and other general industry surveys to assess the competitiveness of our director compensation program. If the Committee believes changes are warranted to the Board compensation program, the Committee recommends the proposed changes to the independent members of the Board for approval.

2021 Annual Compensation

In 2021, we provided the following annual retainers, which are paid in quarterly installments, and long-term incentive awards to members of our Board.

Non-Employee Directors’ Compensation and Deferral Plan

Under this plan, non-employee directors may receive all or a portion of their annual retainer for service on the Board in Company common stock.

Long-Term Incentive Compensation

Non-employee directors receive 100% of their long-term incentive in the form of RSUs under the 2019 Equity and Incentive Compensation Plan. In 2021, we awarded each non-employee director 431 RSUs. Generally, the RSUs vest three years following the date of grant provided that the director remains on our Board throughout the vesting period.

Retirement and Health and Welfare Plans

We provide a frozen Directors’ Retirement Plan for non-employee directors who were active Board members prior to 1998 and allow those directors to participate in our health care program under the same terms and provisions that we provide to our employees. The frozen Directors’ Retirement Plan also provides for partial continuation of the cash component of the director’s annual retainer at the time of retirement for life. During 2021, Mr. Major was the only current Board member eligible to participate in the Directors’ Retirement Plan and the only active Board member who participated in our health care program. With Mr. Major’s retirement from the Board in May 2021, no directors participate in the frozen Directors’ Retirement Plan.

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Perquisites and Other Compensation

We allow our non-employee directors to participate in our employee rebate program, which provides rebates on eligible residential heating and air conditioning equipment, accessories, and supplies. We also reimburse all non-employee directors for their reasonable expenses incurred in connection with attendance at Board or Board committee meetings.

Stock Ownership Guidelines

Pursuant to our Corporate Governance Guidelines, each non-employee director is required to own shares of our common stock having a value of at least three times the annual retainer within three years after their first election, and four times their annual retainer within five years after their first election to the Board. Unvested RSUs and shares of common stock owned count towards this requirement.

In December 2021, the Committee reviewed the stock ownership guidelines for directors and made the following changes to the program, effective January 1, 2022:

As of December 31, 2021, all non-employee directors with at least three years of service met these stock ownership guidelines.

2021 Director Compensation Table

The following table provides information regarding compensation earned in 2021 by each non-employee director.

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The following table provides information regarding the aggregate number of outstanding RSUs held by each non-employee director as of December 31, 2021. RSUs generally vest on the third anniversary of the date of grant.

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Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) reviews the philosophy, objectives, and elements of our executive compensation program, and discusses the 2021 compensation earned by our named executive officers (“NEOs”). It also describes the process followed by the Compensation and Human Resource Committee (the “Committee”) for making pay decisions, as well as its rationale for specific pay decisions related to 2021 executive compensation. In 2021, our NEOs consisted of the following individuals:

Executive Summary

The Company’s executive compensation program is designed to attract, retain, and motivate leadership talent, align with short- and long-term business goals, maintain market competitiveness and increase stockholder value by maintaining a strong alignment between pay and performance. Highlights of our 2021 financial performance and a description of the linkage between executive compensation and financial performance are set forth below.

Financial Highlights

In 2021, the Company posted record highs for revenue and earnings per share, while gross profit and segment profit margin improved over the prior year. Highlights of our 2021 performance include the following:

Revenue   (In millions)		Segment Profit Margin   Up 50 bps from 2020		GAAP Earnings Per Share   from continuing operations

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Financial results, including those from prior periods, are described in more detail in our Form 10-K for the fiscal year ended December 31, 2021, which was filed with the SEC on February 15, 2022 (“Form 10-K”). For further detail and a reconciliation of segment profit to operating income, see Note 3 in the Notes to the Consolidated Financial Statements in our Form 10-K. All total stockholder return calculations assume reinvestment of dividends.

Leadership Transition

In July 2021, the Board of Directors announced that after 15 years, Todd Bluedorn intended to step down from his position as Chairman and Chief Executive Officer by mid-2022. As a result, Mr. Bluedorn did not receive a long-term incentive award in December 2021. To encourage continuity of management, the Company granted one-time long-term incentive awards to its other NEOs as more fully described below under “One-Time Retention Awards.”

On March 23, 2022, the Board announced the following leadership transitions: (1) Mr. Bluedorn’s resignation as Chairman of the Board and Chief Executive Officer; (2) the appointment of Alok Maskara as Chief Executive Officer, effective on May 9, 2022; and (3) the appointment of Todd J. Teske, former Lead Independent Director, as Chairman of the Board and as Interim Chief Executive Officer until Mr. Maskara’s employment begins.

Compensation Highlights

The Committee believes that the design of the Company’s executive compensation program provides a direct link between Company performance and the compensation to our NEOs. Our executive compensation program has three primary elements: base salary, short-term incentives (as part of our Short-Term Incentive (“STI”) Program), and long-term equity incentives (as part of our Long-Term Incentive (“LTI”) Program). Each of these compensation elements serves a specific purpose in our compensation strategy. Base salary is an essential component to any market-competitive executive compensation program. Short-term incentives reward the achievement of annual goals, while long-term incentives drive our NEOs to focus on stockholder value creation.

Based on our performance and consistent with the design of our program, the Committee made the following compensation decisions for 2021:

For 2021, the Company’s performance exceeded target award levels, resulting in a weighted average payout of 210% for NEOs. Performance goals were not adjusted, and no discretionary payments were made to NEOs.

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The Committee believes the compensation payouts in 2021 align with the Company’s business performance for the year.

Stockholder Input

The Committee considers input from stockholders, including the result of the annual Say-on-Pay vote, in determining compensation policies and decisions. At our 2021 Annual Meeting, the advisory vote on the compensation of the Company’s NEOs received the approval of over 96% of the stockholders voting for or against this proposal. In an effort to maintain this strong support from stockholders, management has continued to review investor and proxy advisor inputs regarding executive compensation and governance and has engaged in dialogues with stockholders. The Say-on-Pay vote result was one of many factors the Committee considered in deciding to not implement any major changes to the executive compensation program in 2021.

Positive Governance Practices

The Committee assesses trends and developments in executive compensation practices and implements those that best fit with the Company’s business strategy and our stockholders’ long-term interests. Below are some of the practices we have incorporated into our compensation program, as described elsewhere in this Proxy Statement:

		What We Do						What We Don’t Do
		Median compensation philosophy						No tax gross-ups included in any CIC agreements after 2009
		Pay-for-performance linkage						No hedging of Company stock
		Long-term balance in compensation structure						No pledging of Company stock
		Use of independent compensation consultant						No dividends on equity awards in annual grant
		Annual risk assessment						No repricing of stock appreciation rights or options
		Rigorous stock ownership guidelines						No cash buyouts of underwater stock appreciation rights or options
		Clawback provisions						No significant perquisites
		Non-Competition / Non-Solicitation restrictions
		Annual reviews of share utilization
		Regular market assessment of our peer group

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What Guides Our Program

Pay-for-Performance

We maintain a pay-for-performance philosophy designed to reward successful execution of our business strategy and achievement of desired business results, with a focus on aligning compensation with stockholders’ interests. When our financial results exceed performance goals, monetary rewards to our NEOs generally pay out at higher levels. When our financial results fall below performance goals, monetary awards to our NEOs generally pay out at lower levels or may not pay out at all.

Recent payouts under our STI and LTI Programs demonstrate the strong link between Company performance and payments made to our NEOs. In 2021, the Company’s profitability and free cash flow performance resulted in above target level payouts under our annual STI program. Under our LTI Program, record weighted average return on invested capital of 45.1% exceeded the maximum payout goal for that metric, while the core net income compound annual growth rate of 6.3% was above threshold achievement. As a result, our NEOs received a PSU payout of 126% under our LTI plan, consistent with our pay-for-performance approach and results-oriented compensation.

The graph below illustrates the directional alignment of pay and performance by showing changes in CEO annual compensation (using totals from the Summary Compensation Table, excluding changes in pension value) versus changes in total stockholder return (“TSR”) over the last several years.

*$ amounts are in thousands. CEO pay excludes changes in pension value for all years.

*Given the CEO transition announced in July 2021, Mr. Bluedorn did not receive a long-term incentive grant in December 2021. TSR represents the change in a $100 investment from December 31, 2016 assuming reinvestment of dividends.

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In addition, long-term compensation for the CEO reflects a strong relative pay-for-performance alignment versus the Compensation Peer Group (as defined herein) across various metrics for 2018- 2020, as shown in the chart below.

*CEO pay excludes changes in pension value

Key Strategic Objectives

The strategic objectives of our executive compensation program are to:

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The following table lists each element of executive compensation and how the Committee believes it correlates to our compensation philosophy and key objectives.

Pay Positioning and Compensation Mix

For 2021, the Committee targeted all elements of compensation for the Company’s NEOs at the 50th percentile of the market and granted a majority of the NEOs’ total compensation in the form of incentive compensation. The following chart shows the 2021 average target compensation mix for the NEOs, except for Mr. Bluedorn, who did not receive an LTI grant in 2021. See the section in this CD&A entitled “Long-Term Incentive Program” for details. For reference, Mr. Bluedorn’s CEO target compensation mix for 2020 was 15% fixed (base salary and perquisites) and 85% variable (short-term and long-term incentives).

Other NEOs - Target Compensation Mix

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The Decision-Making Process

Role of the Compensation and Human Resource Committee

The Committee establishes and administers our executive compensation program, practices, and policies. The Committee receives input from management and its independent compensation consultant, and considers competitive practices, our business objectives, stockholder interests, regulatory requirements, and other relevant factors to develop our executive compensation program in an effort to most effectively drive the achievement of the Company’s business objectives.

Role of Senior Management

The Committee obtains input from management and the Committee’s independent consultant when making NEO compensation decisions. The CEO makes recommendations to the Committee with respect to all elements of compensation for each NEO, excluding himself. The CEO’s recommendations on NEO pay are developed in consultation with the Chief Human Resources Officer and the Committee’s independent compensation consultant, and are considered with market data. The Committee determines and approves the final compensation elements and amounts to be provided to the NEOs.

The Committee reviews and recommends proposed changes to CEO compensation to the independent members of the Board for approval. All independent members of the Board (rather than the Committee) have responsibility for approving CEO compensation.

Role of the Independent Compensation Consultant

In 2021, the Committee engaged Pearl Meyer to provide analysis, advice, and recommendations on executive compensation to the Committee. At the Committee’s request, Pearl Meyer performed the following services in 2021:

The Committee analyzed and considered the information provided by management and its consultants to determine the program design and the level and mix of each compensation element for the NEOs. The Committee conducted an independence assessment of Pearl Meyer in accordance with SEC rules. Based on this review, we are not aware of any conflict of interest raised by the work performed by the consultant that would prevent Pearl Meyer from serving as independent consultants to the Committee. Pearl Meyer reported directly to the Committee and did not provide any additional services to management.

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Market Competitive Compensation

To maintain a market-competitive program, the Committee uses benchmarking data when establishing executive compensation. Benchmarking against a representative peer group assists the Committee in assessing the competitiveness of our executive compensation program.

For the purposes of setting 2021 compensation, our Company’s compensation peer group, as reviewed and approved by the Committee, included the following 15 companies (the “Compensation Peer Group”):

The Committee selected the Compensation Peer Group using the following criteria:

In addition to comparing our NEO compensation to the compensation of our Compensation Peer Group, the Committee also references published compensation data and other studies of compensation trends and market practices (this data and practices, including our Compensation Peer Group, is collectively referred to as the “Market”).

Beyond traditional Market analysis, the Committee also utilizes various other compensation analyses to assist with its decision-making process. Below are examples of information the Committee reviews and considers, as appropriate, when making compensation decisions:

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Components and Analysis of 2021 Executive Compensation

Base Salary

In establishing each NEO’s annual base salary, the Committee considered market data, each individual’s experience and responsibilities, our annual merit budget for all employees, achievement of performance objectives, internal equity and recommendations provided by the CEO for his direct reports.

The following table provides detail regarding base salaries for each NEO:

In setting NEO base salaries, the Committee used the 50th percentile of the market as a guideline. The base salary was set within a reasonable range of this guideline for each NEO.

Short-Term Incentive Program

Our STI program as established under the Lennox International Inc. 2019 Equity and Incentive Compensation Plan, is an annual cash-based program for our NEOs designed to reward the successful performance of our Company, our business segments, and each individual NEO. In February 2021, the Committee approved financial metrics and performance goals required to be achieved for any payouts to be made under our STI Program. Under the STI Program, once the calculated STI amount is determined based on performance against the pre-approved goals, 25% of that amount may be modified up or down from 0% to 225% based on each NEO’s individual performance. However, the individual performance modifier may not increase the STI payout above 225% of the NEO’s STI target.

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Financial Performance. The following table summarizes the 2021 STI Program performance goals and payout opportunities, along with Company and business segment performance for each metric as approved by the Committee.

2021 Short-Term Incentive Program Summary — Financial Performance

($ in thousands)

Individual Performance. Once the calculated STI amount is determined based on performance against the pre-approved earnings and cash flow goals, 25% of that amount may be modified up or down from 0% to 225% based on each NEO’s individual performance. When determining whether to modify an NEO’s calculated STI amount the Committee considered each NEO’s performance against specific financial, operational, and strategic objectives, as well as each NEO’s contribution to our environmental, social, and governance (ESG) goals. The Company’s ESG goals include reducing the environmental impact of our products and operations, reducing the number of safety incidents in our operations, and enhancing the diversity and inclusiveness of our workforce. The CEO reviewed with the Committee the individual performance of each NEO (other than the CEO). Based on strong performance in the Residential segment, the Committee approved an increase to the STI payout for Mr. Young from 217% to 223%.

Targets and Payouts. Under the STI Program, target payout opportunities are determined as a percentage of base salary. The target payout opportunities are based on market data using the 50th percentile as a guideline. Each NEO’s target percentage fits within this guideline and was unchanged for 2021.

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Based on analysis of the market data and internal equity considerations, the Committee (or with respect to the CEO, the independent Board members) set the following STI targets for 2021. Based on financial and individual performance, the Committee (or with respect to the CEO, the independent Board members) approved the following 2021 payouts for each NEO:

2021 Short-Term Incentive Targets and Payouts

We include the short-term incentive payments made to the NEOs for 2021, which were approved by the Committee on February 25, 2022 and paid on March 15, 2022, in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.”

Long-Term Incentive Program

We have a LTI Program designed to incentivize those employees who have principal responsibility for our long-term profitability. We believe participation in our LTI Program aligns the interests of our NEOs with the interests of our stockholders.

We use a mix of performance share units (“PSUs”), restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) in our LTI Program. PSUs and SARs reward performance, as measured by achievement of specified financial objectives for PSUs and stock price growth for SARs. RSUs help us retain key members of management through time-based vesting. The Committee allocated the mix of elements in our LTI Program in a manner designed to drive Company performance, retain key talent, and provide competitive compensation.

For 2021, the long-term incentive award allocations for our NEOs were as follows:

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The Committee determines the grant date for all long-term incentive awards, and has a long-standing practice of granting all awards at its regularly scheduled December meeting. The Committee sets the exercise price of our SARs at 100% of fair market value, which is defined as the average of the high and low New York Stock Exchange (“NYSE”) trading prices of our common stock on the date of grant.

The target award values under our LTI are based on market data for similar positions using the 50th percentile as a guideline. The number of shares available for grant under the 2019 Equity and Incentive Compensation Plan is also considered. In December 2021, the Committee established the target award values at or near the 50^th percentile of the market for all NEOs. When determining the award sizes for each NEO, the Committee and independent Board members considered the NEO’s time in position, individual performance and potential, the NEO’s impact on the financial performance of the Company and internal equity.

Once the Committee determined the target long-term incentive award values for each NEO for the 2021 grants, 50% of the value was provided as PSUs, 30% as RSUs and 20% as SARs.

The following table summarizes the target award values and number of awards granted for each NEO:

PSUs. To maintain our strong focus on long-term Company performance, we granted 50% of the December 2021 long-term incentive award in the form of PSUs. PSUs generally vest at the end of a three-year performance period. If at least the threshold performance level has been achieved at the end of the performance period, the PSUs are distributed in the form of Company common stock based on the performance achieved. Dividends are not earned or paid on PSU awards during the three-year performance period. The Committee determines the measurement criteria annually, selecting financial metrics and setting performance goals designed to enhance stockholder value. The Committee certifies the financial performance levels following the end of the performance period and the Company distributes any earned shares.

December 2021 PSU Grant. The key attributes of the PSUs granted in December 2021 are summarized in the following table. The Committee established the Return on Invested Capital (“ROIC”) performance goals based on its assessment of desired return relative to the cost of capital as well as historical and projected ROIC outcomes. Similarly, the Committee set Company core net income growth performance goals based on historical results, projected outcomes of that measure, and

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expected market conditions. While specific forward-looking performance goals are not included in the table below in light of competitive sensitivities, the following chart broadly describes the performance required to achieve a target payout.

December 2021 PSU Grant

(for the January 1, 2022 — December 31, 2024 Performance Period)

The PSUs granted to our NEOs in 2021 are included in the 2021 Grants of Plan-Based Awards Table in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column.

December 2018 PSU Grant. The key attributes of the PSUs granted in December 2018, which vested on December 31, 2021, are summarized in the following table along with the financial performance goals and payout opportunities versus performance. In 2021, NEOs earned a payout of 126.4% of target for the PSUs granted in December 2018. The payout value is reflected in the 2021 Option/SAR Exercises and Stock Vested Table in the “Stock Awards - Value Realized on Vesting” column.

December 2018 PSU Grant

(for the January 1, 2019 — December 31, 2021 Performance Period)

RSUs. To support our leadership retention objectives, the Committee granted the NEOs 30% of the December 2021 long-term incentive award in the form of RSUs. RSUs generally vest and are distributed in shares of Company common stock three years following the date of grant if the recipient remains an employee of the Company and all other conditions of the award are met. Dividends are not earned or paid on RSUs during the three-year vesting period. The number of shares underlying RSUs granted to our NEOs in 2021 is included in the 2021 Grants of Plan-Based Awards Table in the “All Other Stock Awards: Number of Shares of Stock or Units” column.

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SARs. To incentivize NEOs to grow our business and deliver increased returns to our stockholders, the Committee granted the NEOs 20% of the December 2021 LTI award in the form of SARs. SARs vest in one-third increments on each anniversary of the date of grant. Upon the exercise of vested SARs, the increase between the fair market value of our common stock on the date of grant and the fair market value on the date of the SAR exercise is paid in Company common stock. The grant date fair value and the SAR exercise price is determined on the date of grant. SARs granted in 2021 expire seven years from the date of grant. The number of SARs granted to our NEOs in 2021 is included in the 2021 Grants of Plan-Based Awards Table in the “All Other Option Awards: Number of Securities Underlying Options” column.

One-Time Retention Awards

The Company granted one-time awards to the NEOs to encourage continuity of management during our CEO transition. In June 2021, the Committee approved a one-time cash award to Mr. Young with a two-year vesting provision. In December 2021, the Committee approved one-time RSU awards to each of Messrs, Reitmeier, Sessa and Torres with each award having a two-year vesting provision. These awards do not provide for pro-rata vesting upon voluntary termination or retirement.

Other Compensation Practices, Policies and Programs

Stock Ownership Guidelines

The Company has stock ownership guidelines for the CEO and other NEOs. We believe stock ownership by executives aligns the interests of executives with the interests of our stockholders and motivates executives to build long-term stockholder value.

The following chart sets forth, as of December 31, 2021, for each NEO, the stock ownership requirements as a multiple of base salary, the total number of shares and unvested RSUs counted toward the stock ownership requirements, and the value of the shares and unvested RSUs as a multiple of base salary. All of our NEOs met our stock ownership guidelines as of December 31, 2021. NEOs are given five years from the date of appointment as an NEO to meet the guidelines.

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In December 2021, the Committee reviewed the stock ownership guidelines and made the following changes to the program, effective January 1, 2022:

The Committee oversees and administers the stock ownership guidelines. If an NEO fails to comply with the guidelines, the Committee will determine any appropriate corrective measures to be taken.

Clawback Policy

Our Company has an incentive compensation clawback policy for the CEO and the other NEOs. Under this policy, in the event of any fraud or misconduct that results in a restatement of our Company’s financial results within three years of the filing of the original financial results, the Committee can recoup and cancel cash and equity-based incentive compensation of each person involved in such fraud or misconduct.

Prohibition on Hedging / Pledging Policy

The Company’s Insider Trading Policy prohibits directors, NEOs, all other employees, and each of their designees from trading in any interest, security or position relating to the future price of Company securities, such as a put, call, swap, short sale, hedge, or any other type of derivative security. It also prohibits directors, NEOs and all other employees from pledging Company securities as collateral for a loan, which includes purchases of Company securities on margin.

Benefit Programs

To attract top executive talent and as a market-competitive practice, we provide certain benefit programs to our NEOs that are in addition to those provided to our employees generally. The following table summarizes the additional benefit programs in place during 2021 and the purpose of each program.

Additional Benefit Programs Offered to NEOs in 2021

In 2018, the Committee closed the defined benefit Supplemental Retirement Plan to new participants and approved a defined contribution restoration plan for individuals who become eligible executive officers on or after January 1, 2019. The Committee made these changes to better align the Company’s non-qualified retirement benefit with current market practices.

Perquisites

We believe providing reasonable perquisites is a market-competitive practice to attract and retain top executive talent. Rather than offering individual perquisites, however, we provide a monthly cash stipend to each of our NEOs to allow more flexibility and choice. Our NEOs have full discretion on how the cash stipend is spent and it is not tracked by the Company after the money is paid. In addition, we offer the installation of Company products and equipment at each NEO’s home to promote our brand to business and personal guests. The value of the Company products and equipment is included as taxable income to each NEO.

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Employment Agreements and Change in Control Agreements

We have employment agreements and change in control (“CIC”) agreements with each NEO as reviewed and approved by the Committee. We believe employment agreements are helpful in attracting and retaining top executive talent and for financial and business planning purposes. We believe CIC agreements are necessary to (1) retain key executives during periods of uncertainty; (2) enable executives to objectively evaluate, negotiate and execute a CIC transaction; (3) encourage executives to remain focused on running the business rather than seeking other employment in the event of a possible CIC; (4) preserve stockholder value by providing continuity of management during a transition period; and (5) provide benefit to the Company in the form of restrictive covenants, such as non-compete and non-solicitation provisions. We do not provide tax gross-ups for any CIC agreements entered into after 2009.

Our employment agreements and CIC agreements, and the potential costs associated with each, are discussed in detail under “Potential Payments Upon Termination or Change in Control.”

Tax and Accounting Implications

Deductibility of Executive Compensation

Effective for taxable years beginning after December 31, 2017, The Tax Cuts and Jobs Act changed certain aspects of federal income taxation of executive compensation, including elimination of the “performance-based” compensation exemption to Section 162(m) which allowed a company to deduct “performance-based” compensation in excess of $1 million to NEOs. The Committee will continue to consider the income tax consequences to our Company when analyzing our executive compensation program. If granting awards or providing other executive compensation is consistent with Market data, our compensation philosophy or our strategic business goals, the Committee may provide executive compensation that is not fully deductible.

Non-Qualified Deferred Compensation

In addition to the non-qualified Supplemental Retirement Plan, our Company also maintains a frozen non-qualified Profit Sharing Restoration Plan. Both of these deferred compensation plans are administered in compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

Accounting for Stock-Based Awards

When developing NEO compensation, the Committee considers the accounting consequences (in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“FASB ASC Topic 718”)) of the program design and award levels, and structures the Company’s executive compensation program accordingly.

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Compensation and Human Resources Committee Report

The Compensation and Human Resources Committee has reviewed and discussed the foregoing CD&A with management. Based on this review and discussion, the Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference in our Form 10-K.

Submitted by the Compensation and Human Resources Committee of the Board:

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Compensation Tables

Summary Compensation Table

The following table provides information regarding the total compensation of each of the Company’s NEOs for the years ended December 31, 2021, 2020 and 2019.