Colgate-Palmolive (CL) DEF 14ADefinitive proxy

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. )

Colgate-Palmolive Company

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Colgate’s Priorities

Learn more about Colgate’s key priorities from the Annual Report, available in the Investors section of Colgate’s website atwww.colgatepalmolive.com   To learn about Colgate’s sustainability commitment, see the inside back cover of this Proxy Statement. Additional information about Colgate’s sustainability initiatives is available in the Sustainability section of Colgate’s website atwww.colgatepalmolive.com   (The information on the Annual Report and Sustainability web pages is not incorporated by reference into, and does not form part of, this Proxy Statement)

Message from Our Executive Chairman and Our President and CEO

March 25, 2020

Dear Fellow Colgate Stockholder:

You are cordially invited to attend our 2020 Annual Meeting of Stockholders on Friday, May 8, 2020 at 10:00 a.m. Eastern Daylight Time. Due to the emerging public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our stockholders, business partners, employees and Board of Directors, the Annual Meeting will be a completely virtual meeting, conducted only via live webcast. There will not be a physical meeting in New York City. You will be able to participate in the virtual meeting online, vote your shares electronically and submit your questions during the meeting by visiting: www.virtualshareholdermeeting.com/CL2020.   At the meeting, we will ask you to elect as directors the ten nominees named in the Proxy Statement, to ratify the selection of the independent registered public accounting firm and to cast an advisory vote on executive compensation. In addition, two stockholder proposals will be offered for your consideration, if properly presented at the meeting. We will also review the progress of the Company during the past year and answer your questions.   This booklet includes the Notice of Annual Meeting and Proxy Statement. The Proxy Statement describes the business we will conduct at the meeting and provides information about the Company that you should consider when you vote your shares.   The Proxy Statement includes a section highlighting the Company’s corporate governance practices. The Company and the Board of Directors have a longstanding commitment to good governance, and the Board of Directors reviews its governance practices on an ongoing basis to ensure that they promote stakeholder value. We invite you to review the governance section beginning on page 7 of the Proxy Statement to learn more about our continuing commitment to excellence in corporate governance.   It is important that your stock be represented at the meeting. Whether or not you plan to attend the virtual meeting, we hope that you will vote on the matters to be considered. You may vote your proxy via the internet or by telephone. If you received a printed copy of your proxy materials, you may also vote by mail by signing, dating and returning your proxy card in the envelope provided.   Very truly yours,		As a stockholder you have an important role to play in Colgate’s future. Please take the time to vote in advance of this year’s meeting.”
Ian Cook	Noel R. Wallace
Executive Chairman	President and Chief Executive Officer

Letter to Stockholders from Our Independent Directors

March 25, 2020

Dear Fellow Colgate Stockholder:

We are honored to serve as the independent members of your Board and want to thank you for placing your trust in us to oversee your Company and to represent you and your interests. Together with Colgate’s management team, we are committed to creating long-term value for you as well as our other stakeholders. As part of this commitment, we are focused on delivering long-term shareholder return, investing in the development of Colgate people, serving our consumers and customers, protecting the global environment and enhancing the communities where we do business and where Colgate people live and work.

We place a high priority on operating in an inclusive, responsible and respectful manner, with a particular focus on sustainability. Colgate’s sustainability efforts span all aspects of our business, including supply chain, marketing, innovation, customer development and people development. As your Board, we also are keenly aware of the importance of strong corporate governance and acting with integrity in all situations. Together with Colgate’s management team, we work to ensure we are living our values of caring, global teamwork and continuous improvement and meeting the needs of all of our stakeholders when designing and implementing Colgate’s key strategic business priorities. By ensuring that Colgate’s strategy focuses on all of our stakeholders, we strive to continue to build long-term business success and deliver sustainable growth and shareholder return.

We are pleased to have this opportunity to highlight for you a couple of key developments for Colgate in the last year.

Chairman and CEO Succession

2019 was a pivotal year for Colgate as we successfully executed our leadership succession plan, electing Noel Wallace President and Chief Executive Officer and a member of our Board, effective April 2, 2019. In connection with the leadership transition, we also requested that Ian Cook, who had served as Chairman of the Board and Chief Executive Officer since 2009, remain as Executive Chairman for a period of up to twelve months.

We believe that choosing the right leadership for Colgate is one of our most important duties as your Board, and the development of candidates who can be future CEOs has long been a key priority for us. Led by the Personnel and Organization Committee of the Board, we closely monitor the strategic talent planning process at all senior levels. Most recently, our long-term CEO succession planning process culminated in Noel’s selection as CEO, as we determined that Noel’s leadership capabilities and his expertise in developing and executing global strategy and in guiding operational performance around the world made him the best candidate to succeed Ian as CEO.

By ensuring that Colgate’s strategy focuses on all of our stakeholders, we strive to continue to build long-term business success and deliver sustainable growth and shareholder return.”

Letter to Stockholders from Our Independent Directors

We are very pleased to report that the leadership transition has progressed smoothly. As we anticipated, Noel has brought his exceptional experience, integrity and sharp focus on accelerating growth to the job of leading Colgate, and we expect he will continue to do so going forward. Noel was supported in this transition by Ian and we are grateful to Ian for this support, and for his strong leadership as CEO over nearly 12 years and as Chairman for the past 11 years. We extend our sincere thanks for his immense contributions over his more than 44 years of service to Colgate.

In connection with Ian’s upcoming retirement, on March 11, 2020, we announced we had elected Noel to serve as Chairman of the Board following Ian’s retirement, effective April 1, 2020. Having a combined CEO and Chair creates a bridge to management that helps provide us with the management support we need, and is particularly beneficial at this time given the dynamic consumer and retail landscape and rapidly evolving environment in which Colgate competes. Led by our independent Lead Director and our independent Board committees, all of which are chaired by independent directors, we look forward to working with Noel in this role and continuing to guide your Company.

Evolution of Colgate’s Long-Term Incentive Program

The Personnel and Organization Committee also recently oversaw a comprehensive review of our compensation strategy and program. To continue aligning pay to the Company’s strategy and performance, beginning with the 2018-2020 long-term performance cycle, the Personnel and Organization Committee, with support from the other independent directors, decided to evolve the Company’s long-term incentive program to focus primarily on Colgate’s performance relative to its peers. We believe that the increased focus on relative-to-peer performance will improve pay and performance alignment by ensuring that multi-year goals do not become obsolete, no matter the marketplace conditions, thereby enhancing long-term shareholder value.

As part of this evolution, we have also changed the grant timing of our long-term incentive awards to be more consistent with market practice. Accordingly, beginning with the 2019-2021 long-term performance cycle, we have moved from our historical approach of granting time-vested restricted stock units at the end of each three-year performance period that have an additional three-year vesting period to granting performance-based restricted stock units at the beginning of each three-year performance period that may be earned and vest on the basis of performance at the end of the performance period. We believe the new structure will better align with market standards and practice and be more intuitive for stockholders and prospective employees, while still focusing on growth and driving long-term performance.

Thank you for your trust and support and your continued investment in Colgate.

Very truly yours,						We are very pleased to report that the leadership transition has progressed smoothly.”
The Independent Members of Colgate’s Board of Directors
John P. Bilbrey		John T. Cahill		Lisa M. Edwards
Helene D. Gayle		C. Martin Harris		Martina Hund-Mejean
Lorrie M. Norrington		Michael B. Polk		Stephen I. Sadove

Notice of Annual Meeting of Stockholders

Logistics

DATE AND TIME Friday, May 8, 2020, at 10:00 a.m. Eastern Daylight Time

LIVE WEBCAST www.virtualshareholder meeting.com/CL2020

WHO CAN VOTE Stockholders of record at the close of business on March 9, 2020 are entitled to vote at the Annual Meeting

Items to be Voted On	Board Recommendation
PROPOSAL 1Elect as directors the ten nominees identified in the Proxy Statement		FOR each director nominee
PROPOSAL 2Ratify selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020		FOR
PROPOSAL 3Advisory vote on executive compensation		FOR
PROPOSALS 4-5Stockholder proposals, if properly presented at the meeting		AGAINST

 

Stockholders will also consider and act upon such other business as may properly come before the meeting.

 

Because the Annual Meeting is virtual and being conducted only via a live webcast, stockholders will not be able to physically attend the Annual Meeting. To attend the virtual meeting and vote and examine the Company’s stocklist during the meeting, go to www.virtualshareholdermeeting.com/CL2020. You will need the 16-digit control number found on your Notice of Internet Availability, your proxy card or on the instructions that accompany your proxy materials to participate in the Annual Meeting.

 

Your vote is important. We encourage you to vote by proxy even if you plan to attend the virtual meeting. You may vote your proxy via the internet or by telephone by following the instructions included on your Notice of Internet Availability or, if you received a printed copy of your proxy materials, on your proxy card. If you received a printed copy of your proxy materials, you may also vote by mail by signing, dating and returning your proxy card in the envelope provided. Voting now will not limit your right to change your vote or to attend the virtual meeting.

 

March 25, 2020

 

 

Jennifer M. Daniels

Chief Legal Officer and Secretary

 

Colgate-Palmolive Company
300 Park Avenue
New York, New York 10022

Table of Contents

Proxy Statement Summary

 

This summary highlights information about Colgate-Palmolive Company (referred to in this Proxy Statement as “we,” “Colgate” or the “Company”) and Colgate’s upcoming 2020 Annual Meeting of Stockholders (the “Annual Meeting”) contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider, and you should read the entire Proxy Statement carefully before voting.

 

About Colgate

Living Our Values:Colgate’s approximately 34,300 employees worldwide share a commitment to our three core corporate values: caring, global teamwork and continuous improvement. These values are reflected not only in the quality of our products and the reputation of our Company, but also in our dedication to serving the communities where we do business.

 

CARING	GLOBAL TEAMWORK	CONTINUOUS IMPROVEMENT
The Company cares about people: Colgate people, consumers, customers, stockholders and business partners. Colgate is committed to acting with compassion, integrity, honesty and high ethics in all situations, to listening with respect to others and to valuing differences. The Company is also committed to protecting the global environment, to enhancing the communities where Colgate people live and work, and to being compliant with government laws and regulations.	All Colgate people are part of a global team, committed to working together across countries and throughout the world. Only by sharing ideas, technologies and talents can the Company achieve and sustain profitable growth.	Colgate is committed to getting better every day in all it does, as individuals and as teams. To further this commitment, Colgate people regularly undertake foreign assignments and participate in internal and external talent development programs. By better understanding consumers’ and customers’ expectations and always working to innovate and improve products, services and processes, Colgate will continuously improve.

 

Colgate Today:We are a $15.7 billion global consumer products company with products marketed in over 200 countries and territories across four core categories:

 

Oral Care			Personal Care			Home Care			Pet Nutrition
Key Brands			Key Brands			Key Brands			Key Brands
•Colgate •elmex •Tom’s of Maine	•Sorriso •meridol		•Palmolive •Speed Stick •Lady Speed Stick   •Softsoap •Irish Spring	•Protex •Sanex •Filorga •EltaMD •PCA Skin		•Palmolive •Ajax •Axion	•Fabuloso •Soupline •Suavitel		•Hill’s Science Diet •Hill’s Prescription Diet
TOOTHPASTE #1 market share worldwide1			LIQUID HAND SOAP #1 market share worldwide1			LIQUID FABRIC CONDITIONER AND HAND DISHWASHING #2 market share worldwide1			HILLS PET NUTRITION #1 market share in vet clinics in U.S.2 Products marketed in over 80 countries and territories
MANUAL TOOTHBRUSH #1 market share worldwide1   MOUTHWASH #2 market share worldwide1			BAR SOAP AND LIQUID BODY CLEANSING #2 market share worldwide1			Worldwide 2019 Net Sales

1	Based on markets where we compete and purchase market share data
2	Based on IDEXX market share data

 

2

Proxy Statement Summary

 

Roadmap of Voting Items

 

The Board of Directors (the “Board”) recommends that you vote as follows on each proposal:

 

Proposal 1

Election of the Board of Directors

•	Diverse slate of director nominees with strong leadership experience
•	Director skills and attributes facilitate effective oversight of business strategies, risk management, Company culture and strategic talent planning

•	9 out of 10 director nominees are independent
•	Robust record of board refreshment with 5 new independent directors since 2015
•	Strong corporate governance practices promote stakeholder value

		Your Board recommends a voteFOReach director nominee	Seepage 62for further information

 

Proposal 2

Ratification of the selection of PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for 2020

•	Independent firm with few ancillary services and reasonable fees
•	Significant industry and financial reporting expertise
•	PwC has audited the Company’s accounts since May 2002

•	Lead audit partner rotated in 2019
•	The Audit Committee annually evaluates PwC and has determined that its continued retention is in the Company’s best interests

		Your Board recommends a voteFORthis proposal	Seepage 62for further information

 

Proposal 3

Advisory vote on executive compensation

•	High percentage of compensation is variable and tied to annual and long-term performance
•	Direct link between incentive payments and achievement of business goals and shareholder value

•	Multiple performance measures used
•	Programs designed to compensate at approximately median level if paid at target
•	Strong compensation governance features

		Your Board recommends a voteFORthis proposal	Seepage 65for further information

 

Proposal 4

Stockholder Proposal: Independent Board Chairman

•	Strong independent Lead Director with clear and robust duties, along with independent committee chairs, provides meaningful independent Board leadership and ensures proper checks and balances
•	The Company’s active and independent Board ensures that the full Board, and not the Chairman alone, determines the Board’s focus

•	Other corporate governance safeguards in place at the Company help to ensure Board effectiveness and accountability
•	Stockholders are best served if the Board retains flexibility to decide what leadership structure works best for the Company based on the facts and circumstances existing from time to time

		Your Board recommends a voteAGAINSTthis proposal	Seepage 65for further information

 

Proposal 5

Stockholder Proposal: Reduce Ownership Threshold to Call Special Stockholder Meetings to 10%

•	The Company’s existing 25% ownership threshold gives stockholders a meaningful right to call a special meeting while striking the appropriate balance against potential abuses by special interests and the substantial administrative and financial burdens that special meetings impose

•	Other corporate governance practices in place at the Company, including the ability for any stockholder to commence a consent solicitation, ensure Board accountability and help facilitate stockholder action
•	A majority of votes cast on this topic at prior annual stockholder meetings were consistently against lowering the Company’s existing threshold

		Your Board recommends a voteAGAINSTthis proposal	Seepage 67for further information

 

2020 Proxy Statement

3

Proxy Statement Summary

 

Director Nominees

The following table provides summary information about the ten director nominees the Board has nominated for election at the Annual Meeting. Additional information about each nominee’s background and experience can be found beginning on page 13.

 

		Years of	Committee Memberships				Other Current Public
Name and Principal Occupation	Age	Tenure	AUD	FIN	GOV	P&O	Company Boards
Noel R. Wallace1  President and Chief Executive Officer, Colgate-Palmolive Company	55	1
John P. BilbreyIndependent Former Chairman, President and Chief Executive Officer, The Hershey Company	63	5					Campbell Soup Company Elanco Animal Health Inc.
John T. CahillIndependent Vice Chairman, The Kraft Heinz Company	62	15					American Airlines Group Inc.   The Kraft Heinz Company
Lisa M. EdwardsIndependent Executive Vice President, Strategic Business Operations, Customer and Partner Engagement, Salesforce.com, Inc.	52	1
Helene D. GayleIndependent President and Chief Executive Officer, The Chicago Community Trust	64	10					The Coca-Cola Company
C. Martin HarrisIndependent Associate Vice President of the Health Enterprise and Chief Business Officer, Dell Medical School	63	4					Healthstream, Inc. Invacare Corporation Thermo Fisher Scientific Inc.
Martina Hund-MejeanIndependent Former Chief Financial Officer, Mastercard Inc.	59	0					Prudential Financial, Inc.
Lorrie M. NorringtonIndependent Operating Partner, Lead Edge Capital LLC	60	5					Autodesk, Inc. Eventbrite, Inc. HubSpot, Inc.
Michael B. PolkIndependent Advisory Director, Berkshire Partners LLC and Interim Chief Executive Officer, Implus Corporation	59	6					Logitech International S.A.
Stephen I. SadoveIndependent, Lead Director Founding Partner, JW Levin Management Partners LLC	68	13					Aramark Movado Group, Inc. Park Hotels & Resorts Inc.

AUD Audit   FIN Finance   GOV Nominating, Governance & Corporate Responsibility   P&O Personnel & Organization	Member	Chair

1	As previously announced, Mr. Wallace has also been elected Chairman of the Board, effective April 1, 2020.

 

Director Nominee Highlights

 

Diversity of Tenure, Age, Gender and Background

 

INDEPENDENT DIRECTOR NOMINEE TENURE		DIRECTOR NOMINEE AGE		DIRECTOR NOMINEE GENDER		BOARD REFRESHMENT SINCE 2015
Average Independent Director Nominee Tenure		Average Age
6.6		60.5		40%		5
YEARS		YEARS		FEMALE		NEW INDEPENDENT DIRECTORS

3newer independent director nominees (4 years or less)		4director nominees under 60		4female director nominees		We have also refreshed3 committee chairssince 2016
4medium-tenured independent director nominees (5 to 10 years)		5director nominees 60 to 65		6male director nominees
2experienced independent director nominees (more than 10 years)		1director nominee over 65

 

4

Proxy Statement Summary

 

Director Nominee Experience, Qualifications, Attributes and Skills

The Nominating, Governance and Corporate Responsibility Committee (the “Governance Committee”) seeks to compose a Board with members who have a broad range of experiences, skills, diversity and different points of view. In addition to educational achievement and a strong moral and ethical character, the following skills and attributes were all considered by the Board in connection with this year’s director nomination process:

 

Business Operations		Regulatory and Public Service		International		Diversity
8of 10 director nominees		2of 10 director nominees		9of 10 director nominees		5of 10 director nominees
Industry		Information Technologies		Corporate Governance
7of 10 director nominees		4of 10 director nominees		9of 10 director nominees

 

Governance Highlights

Colgate’s Board believes that good corporate governance accompanies and greatly aids Colgate’s long-term business success. The Board believes that the Company has consistently been at the forefront of good corporate governance. Reflecting its commitment to continuous improvement, the Board reviews its governance practices on an ongoing basis to ensure that they promote stakeholder value. The governance section beginning on page 7 describes Colgate’s corporate governance framework and commitment, which includes the following highlights:

 

BOARD FOCUSED ON KEY BUSINESS PRIORITIES
	Board plays major role in overseeing business strategy, risk management, Company culture and strategic talent planning
FOCUS ON BOARD PERFORMANCE
	Board composition defined by strong leadership, diversity and experience
	99% average attendance of incumbent directors at Board and committee meetings
	Annual Board and committee self-evaluations
	Regular independent director evaluations
	Regular review of committee charters, corporate governance guidelines and related policies
ALIGNMENT WITH STOCKHOLDER INTERESTS
	Substantial majority of director compensation paid in Colgate equity
	Robust stock ownership requirements for directors and officers
	Clawback, anti-hedging and anti-pledging policies
	Pay-for-performance philosophy
BOARD INDEPENDENCE
	Strict director independence standards
	9 out of 10 director nominees are independent
	Board committees are 100% independent
	Independent Lead Director
	Executive sessions of independent directors are held at every regularly scheduled Board meeting
STOCKHOLDER RIGHTS
	Annual election of all directors
	Majority voting and director resignation policy for directors in uncontested elections
	Stockholders have ability to act by written consent
	Stockholders have proxy access right

 

2020 Proxy Statement

5

Proxy Statement Summary

 

Executive Compensation Program Highlights

 

The key principles underlying the Company’s compensation philosophy are aligning pay and performance, driving strong business results, focusing on long-term shareholder return and attracting, motivating and retaining high-quality talent.

 

In 2019, the compensation of the Named Officers (as defined in the Compensation Discussion and Analysis, or “CD&A”) was designed so that approximately 75% to 85% of their target direct compensation (salary and target annual and long-term incentives) would be performance-based. Annual and long-term incentive award payments vary from target levels based on the Company’s business performance, and long-term incentive award payments and the value of equity awards also vary based on the performance of the Company’s common stock (“Common Stock”).

Colgate’s executive compensation program for 2018 received substantial stockholder support and was approved, on an advisory basis, by 92.3% of stockholders voting on the proposal at the 2019 Annual Meeting of Stockholders.

 

As further discussed in the CD&A, to continue aligning pay to the Company’s strategy and performance, the Company is evolving its long-term incentive program, beginning with the 2018-2020 performance cycle, to focus primarily on the Company’s performance relative to its peers. This focuses the Company’s executives on delivering peer-leading performance on key performance measures while acknowledging the difficulty of setting performance targets over a three-year horizon in a rapidly evolving strategic and macroeconomic environment. The Board’s compensation committee, known as the Personnel and Organization Committee (the “P&O Committee”), believes that the increased focus on relative-to-peer performance will improve pay and performance alignment by ensuring that multi-year goals do not become obsolete, no matter the marketplace conditions, thereby enhancing long-term shareholder value.

 

As part of this evolution, the Company has created a new long-term incentive program beginning with the 2019-2021 performance cycle, referred to as the “Growth Performance Plan.” Under the Growth Performance Plan, participants (including the Named Officers) are granted a target number of unearned performance-based restricted stock units (“PBRSUs”) at the beginning of each three-year performance cycle, which will be earned and will vest following the conclusion of the performance period on the basis of the achievement of performance goals determined by the P&O Committee. This structure differs from the Company’s legacy long-term incentive program, known as the “Long-Term Global Growth Program,” under which award opportunities were established for participants, including the Named Officers, at the beginning of the three-year performance cycle, but restricted stock units were only granted following the conclusion of the performance period, and were then subject to an additional three-year time-based vesting period.

 

Compensation Governance

Colgate’s key executive compensation practices include the following:

 

	High percentage of compensation is tied to performance and is variable
	Programs designed to compensate at approximately the median level if paid at target
	Multiple performance measures used
	Robust stock ownership guidelines
	Ability to claw back compensation
	Limited perquisites

	Double-trigger vesting of severance payments upon change in control
	No executive officer employment agreements
	No hedging or pledging of Colgate stock is permitted
	No backdating or repricing of stock options
	No tax gross-ups on perquisites (except for international assignment benefits) or severance

 

Please see the CD&A beginning on page 25 for a detailed description of Colgate’s executive compensation programs.

 

6

Governance of the Company

Colgate’s Corporate Governance Commitment

Colgate’s Board believes that good corporate governance accompanies and greatly aids Colgate’s long-term business success. Colgate’s key strategic business priorities are growing sales through engaging with consumers, developing world-class innovation and working with retail partners; driving efficiency on every line of the income statement to increase margins; generating strong cash flow performance and utilizing that cash effectively to enhance total shareholder return; and leading to win by staying true to the Company’s culture, developing Colgate people and focusing on all of its stakeholders. Colgate’s Board has been at the center of these key strategies, helping to design and implement them, and seeing that they guide the Company’s operations.

The Board believes that the Company has consistently been at the forefront of good corporate governance. Reflecting its commitment to continuous improvement, the Board reviews its governance practices on an ongoing basis to ensure that they promote stakeholder value.

Board Independence, Expertise and Accountability

Strict Director Independence Standards

From 2009 until April 2019, Colgate’s Board was comprised entirely of outside independent directors, with the exception of Ian Cook, then Chairman and Chief Executive Officer (the “CEO”). In April 2019, when Noel R. Wallace became President and CEO, he also joined the Board and Mr. Cook transitioned to Executive Chairman. As a result, currently nine of Colgate’s eleven directors are independent and only two are members of Colgate management. With Mr. Cook’s planned retirement from the Board effective April 1, 2020, the Board will again be comprised entirely of independent directors except for the CEO. All members of the Audit Committee, the Finance Committee, the Governance Committee and the P&O Committee are independent directors. The Board believes that an independent director should be free of any relationship with Colgate or its senior management that may in fact or in appearance impair the director’s ability to make independent judgments or compromise the director’s objectivity and loyalty to stockholders. Based on this principle, the Board adopted director independence standards that outline the types of relationships, both personal and professional, between directors and the Company, its senior management, other directors and third parties that, if present, would preclude a finding of independence. These standards, which are stricter than those required by the listing standards of the New York Stock Exchange (the “NYSE”), guide the Board’s annual affirmative determinations of independence. A copy of the standards is available on the Company’s website. For more information regarding Colgate’s independence standards and the Board’s determinations of independence, see “Director Independence.”

Executive Sessions/Lead Director

The independent directors of the Board meet in executive session, without any members of management present, at every regularly scheduled Board meeting. The Lead Director chairs these sessions. The Lead Director serves a three-year term and is selected by the independent directors following nomination by the Governance Committee. Stephen I. Sadove is currently serving as the Lead Director. For more information regarding the responsibilities of the Lead Director and the Board’s leadership structure, see “Board Structure and Responsibilities—Board Leadership Structure.”

All Directors Elected Annually by Majority Vote

Colgate’s Board is accountable to stockholders through the annual election of all directors by majority vote. Colgate has never had a staggered board. Under Colgate’s by-laws, in uncontested elections for directors, if a nominee for director who is an incumbent director is not re-elected by a majority of the votes cast, the by-laws require the director to promptly tender his or her resignation to the Board. The Governance Committee will then consider the resignation and make a recommendation to the Board.

Director Attendance at Annual Meetings

It is the Company’s policy that all members of the Board should attend the Company’s Annual Meeting of Stockholders, unless extraordinary circumstances prevent a director’s attendance. All of the directors who were elected to the Board at the 2019 Annual Meeting were in attendance.

Proxy Access

The Company’s by-laws permit a group of up to 20 stockholders who have owned at least three percent of Colgate’s outstanding Common Stock continuously for at least three years to submit director nominees (up to the greater of two individuals or 20% of the Board) for inclusion in the Company’s proxy statement if the stockholder(s) and the nominee(s) satisfy the requirements specified in the Company’s by-laws.

Governance of the Company

Audit Committee Independence and Financial Literacy

All members of the Audit Committee are independent directors. The Board has also determined that all members of the Audit Committee are “audit committee financial experts,” as that term is defined under the rules of the Securities and Exchange Commission (the “SEC”), and that they meet the independence and financial literacy requirements of the NYSE.

Board Experience and Diversity

As its present directors exemplify, Colgate values enterprise leadership experience, relevant sector experience in the fields of business, industry, regulatory and public service and information technologies, international experience, corporate governance experience, educational achievement, strong moral and ethical character and diversity. A copy of Colgate’s criteria for Board membership, entitled “Independent Board Candidate Qualifications,” is available on the Company’s website. For more information regarding the role of diversity in the selection of nominees for Board membership, see “The Board of Directors—Director Experience, Skills and Qualifications.”

Board Focused on Key Business Priorities

Directors are Stockholders

Director Compensation in Stock

On average, 80% of a non-employee director’s compensation was paid in Colgate equity in 2019. For more information regarding director compensation, see “Compensation of Directors.”

Significant Levels of Director Stock Ownership

Board members own significant amounts of Colgate stock. Under the Company’s stock ownership guidelines, independent directors are required to own stock equal in value to at least five times their annual share grant. For more information on director stock ownership, see “Stock Ownership—Stock Ownership of Directors and Executive Officers.”

Established Policies Guide Governance and Business Integrity

Corporate Governance Guidelines

First formalized in 1996, the corporate governance guidelines reflect the Board’s views and Company policy regarding significant corporate governance issues, which the Board believes are best practice. As part of its ongoing review of best practices in corporate governance, the Board periodically reviews and updates the guidelines. A copy of the guidelines, entitled “Board Guidelines on Significant Corporate Governance Issues,” is available on the Company’s website.

8

Governance of the Company

Code of Conduct

The Board sponsors the Company’s Code of Conduct, which promotes the highest ethical standards in all of the Company’s business dealings. The Global Ethics and Compliance function, headed by a corporate officer who reports to the CEO and provides reports directly to the Audit Committee, oversees compliance with these standards and periodically reviews and updates the Code of Conduct in conjunction with the Company’s Global Legal Organization. The Code of Conduct applies to the Company’s directors and employees, including the CEO, the Chief Financial Officer and the Controller (who is the Company’s chief accounting officer), and satisfies the SEC’s requirements for a code of ethics for senior financial officers. The Code of Conduct is available on the Company’s website.

Business Integrity Initiatives

The Board supports the Company’s efforts to effectively communicate its commitment to ethical business practices, which are led by the Company’s Global Ethics and Compliance function. To further this goal, all Company employees worldwide are required to annually certify that they understand and comply with the Code of Conduct. In addition, the Company’s executives and key managers worldwide participate in training programs regarding the Code of Conduct, Colgate’s values, effective leadership and the applicable laws and regulations that govern Colgate’s business practices around the world. Colgate directors also annually certify their compliance with the Code of Conduct.

Political Expenditures

As set forth in the Company’s Code of Conduct, the Company has a longstanding policy against making contributions to any political party or candidate. In addition, each year, the Company advises its U.S. trade associations of this policy to prevent the use of Company dues or contributions for any such expenditures and requests that such associations which receive at least $10,000 annually from the Company confirm their compliance with this policy.

Sustainability

Colgate places a high priority on operating in an inclusive, responsible and respectful manner, with a particular focus on sustainability, a topic that continues to gain resonance with all of its stakeholders. Colgate’s sustainability efforts span all aspects of its business, including supply chain, marketing, innovation, customer development and people development. To provide incentives for Colgate people to integrate sustainability into business strategy and operations, Colgate’s global sustainability initiatives are among the individual objectives used to determine the compensation for many of Colgate’s senior managers. For more information regarding Colgate’s sustainability commitment and initiatives, see the inside back cover of this Proxy Statement and the Sustainability section of the Company’s website.

Restrictions on Hiring Audit Firm Employees

To bolster the independence of Colgate’s independent registered public accounting firm and the integrity of Colgate’s internal financial reporting and audit processes, Colgate has a longstanding policy prohibiting the Company from hiring any partners or managers engaged in an audit of the Company or any employees engaged in the corporate portion of an audit of the Company from PricewaterhouseCoopers LLP, Colgate’s independent registered public accounting firm, within five years of the end of their engagement without the approval of the Audit Committee.

Hedging and Pledging Policies

To further ensure that the interests of Colgate’s directors, officers and senior managers are aligned with those of Colgate’s stockholders, the Company’s hedging policy prohibits Colgate’s directors, officers and employees who receive stock-based compensation from engaging in transactions to hedge against declines in the value of Colgate’s stock, as further described in the CD&A. The policy also strongly discourages all other employees from entering into such transactions. Further, to prevent forced sales of Colgate stock by Colgate’s directors and officers, the Company prohibits Colgate’s directors and officers from pledging Colgate stock.

Clawback Policy

The Company’s clawback policy permits Colgate to recoup cash and equity-based incentive awards made to an officer subject to the policy if the financial results on which such awards were based are subsequently restated and such officer’s intentional misconduct contributed to the restatement.

Direct Access to Management

Management Participation at Board Meetings

Key senior managers regularly attend Board meetings. Topics are presented to the Board by the members of management who are most knowledgeable about the issue at hand irrespective of seniority. An open and informal environment allows dialogue to develop between directors and management, which often produces new ideas and areas of focus.

Governance of the Company

Direct Access to Management

The Board’s direct access to management continues outside the boardroom during discussions with corporate officers, division presidents and other employees, often without the CEO or Executive Chairman present. Directors are invited to contact senior managers directly with questions and suggestions.

Ensuring Management Accountability

Performance-Based Compensation

Colgate has linked the pay of its managers and employees at all levels to the Company’s performance. As described in greater detail in the CD&A, the P&O Committee adheres to this pay-for-performance philosophy, and stock-based incentive awards are a significant component of senior management’s overall compensation.

CEO Evaluation Process

The Board’s evaluation of the CEO is a formal annual process. The CEO is evaluated by the Board against the goals set each year, including both objective measures (such as earnings per share and organic sales growth) and subjective criteria reflective of the Company’s strategy and core values. As part of the overall evaluation process, the Board meets informally with the CEO to give feedback on a regular basis.

Board Practices Promote Effective Oversight

Board Size

Designed to maximize board effectiveness, Colgate’s by-laws fix the number of directors between seven and 15. The number of directors is currently fixed at eleven, to be decreased to ten on April 1, 2020 upon Mr. Cook’s retirement, and ten directors have been nominated for election at the Annual Meeting.

Directorship Limits

To ensure that directors are able to devote sufficient time to properly discharge their duties, Colgate’s corporate governance guidelines provide that directors should not serve on more than three other public company boards.

Meeting Attendance

On average, the incumbent directors attended 99% of the meetings of the Board and the committees on which they served in 2019. No incumbent director attended less than 75% of these meetings.

Continuous Improvement Through Evaluation and Education

Board Self-Evaluation Process

Each year, the Board evaluates its performance against criteria that it has determined are important to its success. One or more of the following topics may be considered during such evaluations: financial oversight, strategic talent planning, executive compensation, strategic planning, corporate governance, ethics and compliance and Board structure and role. The Board then considers the results of the evaluation and identifies steps to enhance its performance.

Board Committee Evaluations

Self-evaluations of each of the Board’s committees are also conducted annually. The results of these evaluations are reviewed with each committee, and further enhancements are agreed for each committee.

Individual Director Evaluations

Complementing the Board and committee self-evaluations, the Board has also developed an individual director evaluation process to be used every three years. Using director effectiveness criteria selected by the Board following a review of external best practices, directors evaluate their peers and the resulting feedback is shared with individual directors by an external facilitator. This process, which the Board intends to conduct again in 2020, enables the directors to provide valuable feedback to one another and identifies areas of strength and areas of focus for enhanced effectiveness.

Ongoing Director Education

Outside experts periodically present to the Board on various subjects. During 2019, such subjects included artificial intelligence and machine learning, executive compensation trends and governance topics. From time to time, Colgate’s directors also visit Colgate operations around the world, deepening their understanding of Colgate’s business.

10

Governance of the Company

During 2019, the independent directors met in executive session without Mr. Cook, Mr. Wallace or other members of management present at every regularly scheduled Board meeting.

Director Experience, Skills and Qualifications

The Board selects director candidates based on the recommendation of the Governance Committee. The Governance Committee identifies, screens and recruits potential candidates for membership on the Board of Directors, taking into account the needs of the Company and the Board at the time. The Company has engaged a third-party international executive search firm to assist the Governance Committee in identifying and evaluating potential director candidates.

The Governance Committee seeks to compose a Board with members who have a broad range of experiences and skills and different points of view, with a particular emphasis on enterprise leadership experience, relevant sector experience in the fields of business, industry, regulatory and public service and information technologies, international experience, corporate governance experience, educational achievement, strong moral and ethical character and diversity. This variety and depth of experience enables the Board collectively to understand the Company’s global business and its consumers around the world and the directors individually to make significant contributions to the deliberations of the Board.

In 2002, the Board adopted a written statement, known as the Independent Board Candidate Qualifications and made available on the Company’s website, outlining the qualities sought in directors of the Company. This statement, which was most recently updated in 2015, is used by the Governance Committee in evaluating individual director candidates. It highlights the following skills and experiences, among others, as being important to creating an effective, well-rounded and diverse Board:

Governance of the Company

The Governance Committee expects each of the Company’s directors to have the personal qualities necessary to make a substantial contribution to the Board, including high moral and ethical standards, strong communication and interpersonal skills, a commitment to Colgate’s success and the willingness and ability to devote sufficient time to discharge their duties. Prospective directors must also satisfy the Company’s director independence standards.

In addition, the Governance Committee has a policy of promoting diversity on the Board, including diversity of points of view and diversity in the traditional sense (including gender, racial and ethnic diversity). The Governance Committee implements this policy through its director recruitment efforts and assesses the effectiveness of the policy regularly through Board and committee self-evaluations.

The Governance Committee will consider director candidates recommended by stockholders and others if such candidates meet Colgate’s criteria for Board membership, evaluating them in the same manner in which the committee evaluates other candidates. Such recommendations should be made in writing to the Governance Committee or the Company’s Secretary and should include a description of the qualifications of the proposed candidate. Any stockholder of the Company may also nominate a director at a stockholders’ meeting, and eligible stockholders of the Company may also nominate directors for inclusion in the Company’s proxy statement, in each case in accordance with the requirements of the Company’s by-laws relating to stockholder nominations as described in “Questions and Answers About Colgate’s Annual Meeting—Who nominates the directors?”

The table below provides a high-level summary of the particular skills and qualifications of each of the ten director nominees approved by the Governance Committee for election at the Annual Meeting. Biographical information and additional detail regarding the director nominees’ particular skills and qualifications follows. The absence of a reference to a qualification for an individual director nominee does not mean that the nominee does not possess that qualification, but rather that it is not one of the specific qualifications for which the nominee has been proposed. All nominees except for Ms. Hund-Mejean have been directors since last year’s annual meeting. Ms. Hund-Mejean, who joined the Board in March 2020, was recommended by a third-party international executive search firm.

Skill/Qualification	Business  Operations	Industry	Regulatory and  Public Service	Information  Technologies	International	Corporate  Governance	Diversity
Noel R. Wallace
John P. Bilbrey
John T. Cahill
Lisa M. Edwards
Helene D. Gayle
C. Martin Harris
Martina Hund-Mejean
Lorrie M. Norrington
Michael B. Polk
Stephen I. Sadove

12

Governance of the Company

Governance of the Company

14

Governance of the Company

Governance of the Company

16

Governance of the Company

Governance of the Company

A copy of the complete independence standards is available on the Company’s website.

In making its determination regarding the independence of each non-employee director, the Board considers any transactions, relationships or arrangements as required by the Company’s director independence standards. Based on these standards, the Board has determined that each current director, other than Mr. Cook, who is the Company’s Executive Chairman, and Mr. Wallace, who is the Company’s President and CEO, is independent as there were no transactions, relationships or arrangements of the types described in the Company’s director independence standards.

Certain Relationships and Related Transactions

Colgate has a longstanding policy prohibiting its directors, officers and employees from entering into transactions that present actual or potential conflicts of interest. This policy is reflected in the Company’s Code of Conduct, Business Practices Guidelines and Director Independence Standards. In addition, the Board has adopted a written policy regarding related person transactions which supplements these policies by establishing additional procedures for monitoring and reviewing and, if appropriate, approving or ratifying, these types of transactions. The policy covers any “related person transaction,” as defined under SEC rules, which generally includes any transaction, arrangement or relationship involving more than $120,000 in which the Company or any of its subsidiaries was, is or will be a participant and in which a “related person” had, has or will have a direct or indirect material interest. “Related persons” means directors and executive officers and their immediate family members, and stockholders owning five percent or more of Colgate’s outstanding stock.

The Company’s Corporate Legal Department, together with the Controller’s Department, is responsible for monitoring compliance with these policies and procedures. In the rare instance where a related person transaction is determined to provide a material benefit to the Company and its stockholders, the transaction must be submitted to the independent directors of the Board for their review. Only the independent directors of the Board may approve or ratify the transaction in accordance with the procedures for review and approval or ratification described in the policy. In the course of its review of related person transactions, the independent directors of the Board will consider all of the relevant facts and circumstances that are available to them, including but not limited to: (i) the benefits to the Company; (ii) in a transaction involving a director, the impact on the director’s independence; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; and (v) whether the transaction is proposed to be on terms more favorable to the Company than terms that could have been reached with an unrelated third party.

Lisa M. Edwards, who is a director of the Company, is Executive Vice President, Strategic Business Operations, Customer and Partner Engagement of Salesforce. During 2019, in the ordinary course of business the Company purchased software licenses from Salesforce and its subsidiaries on arm’s length terms, totaling approximately $1.2 million. In accordance with the Company’s related person transaction policy described above, these transactions are reviewed annually by the independent directors of the Board. Following the most recent review in January 2020, they concluded the transactions are in the best interests of the Company and its stockholders.

Based on the Company’s review of its transactions, there were no other transactions considered to be a related person transaction during 2019.

18

Governance of the Company

Compensation Committee Interlocks and Insider Participation

During 2019, the following directors were members of the P&O Committee: Drs. Gayle and Harris and Messrs. Cahill, Polk and Sadove. None of the members of the P&O Committee has been an officer of the Company and none was an employee of the Company during 2019, and none had any relationship with the Company or any of its subsidiaries during 2019 that would be required to be disclosed as a related person transaction. None of the executive officers of the Company has served on the board of directors or compensation committee of another company at any time during which an executive officer of such other company served on the Company’s Board or the P&O Committee.

Board Structure and Responsibilities

Board Leadership Structure

The Governance Committee regularly reviews Board leadership trends. As part of the succession planning process that took place in connection with the CEO transition from Mr. Cook to Mr. Wallace in 2019, the Board assessed its leadership structure and determined that appointing Mr. Wallace as President and CEO and Mr. Cook as Executive Chairman for a period of up to one year while retaining Mr. Sadove as Lead Director was in the Company’s best interests at that time. In connection with Mr. Cook’s upcoming retirement, the Board again assessed its leadership structure and determined that, at this time, appointing Mr. Wallace as Chairman, President and CEO while retaining Mr. Sadove as Lead Director is best for Colgate. Therefore, when Mr. Wallace becomes Chairman on April 1, 2020 following Mr. Cook’s retirement, Colgate’s Board leadership structure will consist of:

The Company’s Board structure ensures robust, independent oversight.Colgate’s active and independent Board, with its robust Lead Director role and independent committee chairs, ensures that the Board, and not the Chairman alone, determines the Board’s focus. The Chairman is guided by these strong independent leaders and having Colgate’s current or former CEO serve as the Chairman creates a bridge to management that helps provide the Board with the management support it needs. Based on these considerations, the Board believes that this is the best leadership structure for the Company at this time and that, operating under this structure, the Board will continue to effectively guide the Company and represent the interests of its stakeholders.

Board Effectiveness Colgate’s Board works very effectively together	Board Committees The Board’s committees are composed solely of, and chaired by, independent directors
Board Independence 9of 10 director nominees are independent	Executive Sessions The independent directors meet at each regularly scheduled Board meeting in separate executive sessions without any members of management present, which are chaired by the independent Lead Director

The Company has had an independent lead director since 2003.Colgate has long been committed to having an independent lead director, having established the position of Presiding Director in 2003 and expanded the role in 2006. Renamed in early 2012 in connection with a review of external practice, the role of the Lead Director is to:

Governance of the Company

The Lead Director serves a three-year term, beginning at the meeting of the Board of Directors immediately following the Annual Meeting of Stockholders unless an earlier appointment is required by reason of vacancy or otherwise. The Governance Committee nominates a candidate for Lead Director from among the independent directors, and the affirmative vote of a majority of the independent directors is required to appoint the nominee proposed by the Governance Committee.

Committees of the Board of Directors

The Board has four standing committees: the Audit Committee, the Finance Committee, the Governance Committee and the P&O Committee. A summary of the responsibilities of these committees is set forth below. The committee charters are available on the Company’s website.

Committee Membership

Director		Audit		Finance		Nominating, Governance and Corporate Responsibility		Personnel and Organization
Ian CookExecutive Chairman of the Board
John P. BilbreyIndependent
John T. CahillIndependent
Lisa M. EdwardsIndependent
Helene D. GayleIndependent
C. Martin HarrisIndependent
Martina Hund-MejeanIndependent
Lorrie M. NorringtonIndependent
Michael B. PolkIndependent
Stephen I. SadoveIndependent, Lead Director
Noel R. Wallace
Number of meetings held in 2019		7		5		4		4

Member

Chair

20

Governance of the Company

Governance of the Company

Board Role in Risk Oversight

Colgate has established a systematic and thorough risk management process, which is designed to identify, assess and prioritize risks that threaten achievement of the Company’s strategic and operating objectives.

Stockholder Engagement

The Company believes it is important to periodically engage with investors to better understand their priorities. During the first quarter of 2020, representatives of the Company’s Global Human Resources, Investor Relations, Global Legal and Sustainability functions reached out to a variety of institutional investors, including index, actively managed and public pension funds, based in and outside the United States, representing approximately 40% of the Company’s Common Stock. Discussions with these investors focused on the Company’s business strategy, changes to the Company’s long-term incentive compensation program and sustainability.

In addition, in light of the independent Board Chair stockholder proposal the Company received in connection with its 2019 Annual Meeting of Stockholders, the Company also discussed with these investors their views regarding independent Board Chairs, and found that a significant majority of the institutions with whom the Company engaged did not support an independent Board Chair requirement for Colgate. This feedback, combined with the fact that a majority of the votes cast on the proposal at the 2019 Annual Meeting of Stockholders voted against the proposal, led the Board to determine that it was not in the Company’s or its stockholders’ interest to implement the proposal.

Feedback from management’s discussions with institutional investors was reported to and discussed with the Board. The Board values stockholder feedback on all governance and compensation matters.

22

Governance of the Company

Communications to the Board of Directors

Stockholders and other interested parties are encouraged to communicate directly with the Company’s independent directors by sending an email to directors@colpal.com or by writing to Directors, c/o Office of the Chief Legal Officer, Colgate-Palmolive Company, 300 Park Avenue, 11th Floor, New York, New York 10022. Stockholders and other interested parties may also communicate with individual independent directors and committee chairs by writing to them at the above mailing address. Such communications are handled in accordance with the procedures described on the Company’s website.

Concerns and questions relating to accounting, internal accounting controls or auditing matters are immediately brought to the attention of the Audit Committee chair and handled in accordance with the procedures established by the Audit Committee. Under these procedures, the Company’s Global Ethics and Compliance function, in conjunction with the Company’s Internal Audit and Corporate Legal departments, addresses these concerns in accordance with the directions of the Audit Committee chair. The Audit Committee chair approves recommendations regarding the handling of each matter, oversees any investigations and approves the disposition of each matter. The Audit Committee chair may, in his or her discretion, engage outside counsel and other independent advisors. The Audit Committee receives quarterly updates regarding other concerns or questions relating to accounting, internal accounting controls or auditing matters.

Concerns relating to accounting, internal accounting controls or auditing matters may also be reported to the Global Ethics and Compliance function by telephone, facsimile and email as follows: 24-hour EthicsLine: (800) 778-6080 (toll-free from the United States, Canada and Puerto Rico) or (212) 310-2330 (collect from all other locations); facsimile number: (212) 310-3745; and email: ethics@colpal.com.

Colgate strictly prohibits retaliation against any individual who reports in good faith to the Company or the directors information concerning potential violations, or who participates in good faith in any investigation or proceeding by the Company or a government agency. Concerns may be submitted to the Company or the directors on an anonymous basis through their postal address or through the 24-hour EthicsLine numbers maintained by the Global Ethics and Compliance function. If requested, Colgate will keep information submitted confidential, subject to the need to conduct an effective investigation and take appropriate action or as otherwise required by applicable law.

Compensation of Directors

Compensation for the non-employee directors is set by the Board at the recommendation of the Governance Committee. The substantial majority of the compensation paid to the non-employee directors is in the form of fixed-value annual grants of Colgate equity pursuant to the stockholder-approved Colgate-Palmolive Company 2019 Incentive Compensation Plan (the “2019 Plan”), as described below.

In 2019, non-employee director compensation consisted of the following, as applicable:

Neither Mr. Cook nor Mr. Wallace received any compensation for serving on the Board in 2019.

Deferral of Compensation

Under the 2019 Plan, directors may elect to defer all or a part of their annual stock compensation. Deferred stock compensation is credited to a stock unit account, the value of which reflects changes in the market price of the Company’s Common Stock and dividends paid. No interest is paid on deferred balances. The directors also may elect to receive cash in lieu of up to 25% of the shares of the Company’s Common Stock granted and not deferred under the 2019 Plan.

Directors may elect to defer all or a part of their cash compensation under the Colgate-Palmolive Company Restated and Amended Deferred Compensation Plan for Non-Employee Directors. As with the 2019 Plan, deferred fees are credited to a stock unit account, the value of which reflects changes in the market price of the Company’s Common Stock and dividends paid. No interest is paid on deferred balances. Under both plans, distributions are made in shares of the Company’s Common Stock in annual installments or by lump sum in accordance with the distribution election made by the director.

Governance of the Company

The tables included below under “Director Compensation” and in “Stock Ownership—Stock Ownership of Directors and Executive Officers” include information concerning directors who have elected to defer their fees.

Director Compensation Governance Features

Under the Company’s stock ownership guidelines, independent directors are required to own stock equal in value to at least five times their annual share grant. Directors have five years from the date of their initial election to achieve required ownership levels. Compliance with these guidelines is evaluated on an annual basis. All of the directors are in compliance with this policy. For more information on director stock ownership, see “Stock Ownership—Stock Ownership of Directors and Executive Officers.” Directors are also prohibited from engaging in transactions to hedge against declines in the value of Colgate’s stock and from pledging Colgate stock, as further described in the CD&A. During 2019, all of the directors were in compliance with both the anti-hedging and anti-pledging policies.

Director Compensation

The following table shows the compensation earned by each non-employee director in 2019.

NOTES TO THE DIRECTOR COMPENSATION TABLE

24

Executive Compensation

 

The Company also maintained its strong balance sheet and cash flow, which led the Board of Directors to authorize an increase in the quarterly cash dividend, effective in the second quarter of 2019. This was the Company’s 57th consecutive year of dividend increases and its 124th consecutive year paying a dividend, as part of its continuing commitment and strong record of returning value to shareholders.

 

RETURN TO SHAREHOLDERS

 

 

Going forward, the Company remains focused on delivering long-term shareholder return and building long-term business success through good corporate governance and the design and implementation of Colgate’s key strategic business priorities—growing sales through engaging with consumers, developing world-class innovation and working with retail partners; driving efficiency on every line of the income statement to increase margins; generating strong cash flow performance and utilizing that cash effectively to enhance total shareholder return; and leading to win by staying true to the Company’s culture, developing Colgate people and focusing on all of its stakeholders. The Company intends to continue its practice of tying compensation to achievement of both annual and long-term business goals to help further those priorities.

 

This Compensation Discussion and Analysis (“CD&A”) discusses the compensation of the Named Officers, namely:

 

Ian Cook	Noel R. Wallace	Henning I. Jakobsen
Executive Chairman (Chief Executive Officer until April 2, 2019)	President and Chief Executive Officer (effective April 2, 2019)	Chief Financial Officer
Jennifer M. Daniels	Prabha Parameswaran	Panagiotis Tsourapas
Chief Legal Officer and Secretary	Group President, Global Innovation Group & Africa-Eurasia	Group President, Latin America & Asia Pacific

 

The Personnel and Organization Committee of the Board (the “P&O Committee”) annually reviews an analysis of the relationship between pay and performance for the Named Officers. The analysis includes a review of the relationship between the compensation paid to the CEO and the other Named Officers and Company performance relative to the Comparison Group (as defined below) over the past three years. The review shows a strong link between Company pay and Company performance in terms of various key operating measures. For example, in 2019, the Company’s adjusted net income growth, adjusted earnings-per-share growth, total shareholder return, net sales growth, organic sales growth, return on sales, operating cash flow as a percentage of sales, return on invested capital and CEO total direct compensation relative to the Comparison Group were as shown to the right.

COLGATE 2019 PERFORMANCE RELATIVE TO COMPARISON GROUP*

*     Adjusted net income growth, adjusted earnings-per-share growth and organic sales growth reflect the adjustments described in Annex A to Colgate’s net income, earnings per share and net sales growth, respectively, and comparable adjustments to peer companies’ net income, earnings per share and net sales growth. See page 29 for an explanation regarding the components of “total direct compensation” or “TDC.”

 

26

Executive Compensation

 

Performance Measures

The P&O Committee selected the following performance measures in 2019 to assess the performance of the Named Officers in 2019 and in the three-year performance period commencing in 2019:

 

Pay Component	CEO 2019 Target Compensation Mix	Other NEO Average 2019 Target Compensation Mix1	Performance Measures2	Performance Period	Form of Payment
Annual incentive			•   Base Business Earnings Per Share •   Organic sales growth	One year (2019)	Cash bonus
Long-term incentive3			•   Organic sales growth relative to the Comparison Group •   Base Business Net Income (defined below) growth relative to the Comparison Group •   Free Cash Flow Productivity (defined below) •   Total shareholder return relative to the Comparison Group (modifier)	Three years (2019-2021)	PBRSUs (vesting in 2022, if earned)

 

1	Does not include Ian Cook, the Company’s Executive Chairman, due to the unique nature of his role and therefore his compensation mix.
2	For annual incentives, performance measures shown are for Named Officers with corporate-wide responsibilities. Each of Ms. Parameswaran and Mr. Tsourapas were promoted from roles with divisional responsibilities to roles with corporate-wide responsibilities in August 2019. Therefore, their annual cash bonuses were calculated using a combination of divisional and corporate-wide performance measures, corresponding to the periods of 2019 they were in each of the roles. Please see “Annual Incentives” later in this CD&A for more information about the divisional performance measures.
3	Percentages shown include the target value of the PBRSU award opportunities for the 2019-2021 performance cycle pursuant to the Company’s Growth Performance Plan and the target value of stock option awards based on salary grade guidelines.

 

The performance measures in the annual and long-term incentive programs were selected to drive the Company’s growth strategy and focus on sustainable value creation.

 

Annual Incentive Awards – Named Officers with Corporate-Wide Responsibilities

 

Measure		Target		2019 Results		Outcome		Comparison vs. Comparison Group*
Base BusinessEarningsPer Share		$2.80		$2.83		131.0% of the assigned award opportunities for each of the Named Officers with solely corporate-wide responsibilities.		•   Annual bonuses for the Named Officers (other than Messrs. Cook and Wallace) were paid at approximately the 13th to the 56th percentile of annual bonuses for similar jobs in the Comparison Group. •   Mr. Wallace’s award represented a payout at approximately the 57th percentile of annual bonuses for CEOs in the Comparison Group. •   Due to the unique nature of his role, no similar comparison is provided for Mr. Cook.
Organic SalesGrowth		3.0%		4.0%

 

*	Based on the most recent data available to the Company.

 

Long-Term Incentive Awards

 

GROWTH PERFORMANCE PLAN (NEW) — 2019-2021 LONG-TERM INCENTIVE AWARDS PERFORMANCE CYCLE

 

Measure		Target*		Status
Relative OrganicSales Growth		Performance at the 50thpercentile of the Comparison Group		•   If PBRSUs were to vest solely based  on performance achieved through December 31, 2019, payout would be between the threshold and target levels. Performance over the remaining two years of the performance period will determine the actual number of shares earned, if any. •   PBRSUs will vest, if earned, in 2022.
Relative Base BusinessNet Income Growth		Performance at the 50thpercentile of the Comparison Group
Free CashFlow Productivity		90%
Total ShareholderReturn Modifier		The number of PBRSUs will increase or decrease by up to 25% based on the Company’s total shareholder return relative to the Comparison Group

 

*	Targets were set in March 2019 at the beginning of the three-year performance cycle.

 

LONG-TERM GLOBAL GROWTH PROGRAM (LEGACY) — 2017-2019 LONG-TERM INCENTIVE AWARDS PERFORMANCE CYCLE

 

Measure		Target*		Results		Outcome
Compounded AnnualGrowth in Organic Sales		4%		1.9%		0% of the assigned award opportunities for each of the Named Officers.
Compounded AnnualGrowth in CurrencyNeutral Earnings Per Share		7%		1.5%
Total ShareholderReturn Modifier		Top third when compared to the Comparison Group		The Company’s total shareholder return of 13.0% was not in the top third when compared to the Comparison Group, so the Named Officers did not qualify to receive additional restricted stock units equal in value to 25% of their individual assigned award opportunities.

 

*	Targets were set in March 2017 at the beginning of the three-year performance cycle.

 

28

 

Executive Compensation

 

Stock Options

In 2019, the P&O Committee approved annual stock option awards for the Named Officers. These awards are made based on guidelines set for each salary grade, which are established annually based on a review of market data and share usage.

 

CEO Transition

The Company also successfully executed its leadership succession plan and transitioned to a new CEO, Noel R. Wallace, in 2019. Please see the “Letter to Stockholders from Our Independent Directors” at the beginning of this Proxy Statement for more information about the Board’s CEO succession planning process. In connection with Mr. Wallace’s promotion to CEO, the P&O Committee increased his 2019 target direct compensation commensurate with his new role, taking into account Colgate’s compensation philosophy, competitive data from the Comparison Group and market trends. Based on the Company’s 2019 performance, Mr. Wallace’s 2019 total direct compensation was slightly above target, primarily due to an above-target payout on his annual cash bonus, reflecting the Company’s strong operating performance against its 2019 goals under his leadership and the impact of the Company’s pay-for-performance philosophy.

 

CEO TOTAL DIRECT COMPENSATION*

 

 

*

For purposes of this CD&A, Mr. Wallace’s 2019 total direct compensation includes his year-end salary and the amounts shown in the Summary Compensation Table in the columns “Stock Awards,” “Option Awards,” “Non-Equity Incentive Plan Compensation” and “All Other Compensation,” consistent with the way the P&O Committee analyzes his compensation. The actual value of the payout from his PBRSU award for the Growth Performance Plan’s 2019-2021 performance cycle shown in the Summary Compensation Table’s “Stock Awards” column will depend upon achievement of the performance goals as well as the price of the Company’s Common Stock at the time of vesting in 2022.

 

Additional Compensation Program Highlights

Highlighted below are compensation practices Colgate has implemented to drive Company performance and to align the interests of the Company’s executives with its stockholders.

 

What We Do		What We Don’t Do
Pay for Performance.Colgate’s executive compensation is tied to performance with clearly articulated financial goals. Each year, the P&O Committee conducts a comprehensive review of executive compensation prior to making compensation decisions to ensure pay and performance are aligned. Competitive Compensation Programs. Colgate regularly benchmarks its compensation programs and designs the programs to compensate employees at approximately the median level, with above-median payouts for superior performance and below-median payouts for performance below expectations. Robust Stock Ownership Guidelines. Colgate maintains stringent stock ownership guidelines for members of senior management, requiring the CEO to own Colgate stock equal in value to eight times his annual salary and the other Named Officers to hold Colgate stock in amounts equal to four times their annual salaries. Ability to “Claw Back” Compensation. Colgate’s clawback policy permits recoupment of cash and equity-based incentive awards made to an officer subject to the policy if the financial results on which such awards were based are subsequently restated and such officer’s intentional misconduct contributed to the restatement. Perquisites are Insignificant. Executive perquisites represent approximately 2% or less of the total compensation for each Named Officer reflected in the Summary Compensation Table, not including international assignment benefits.		Incentives Do Not Encourage Excessive Risk-Taking.The Company’s incentive programs do not contain features that may encourage excessive risk-taking, such as multi-year guaranteed bonuses or high pay opportunities relative to peer companies. In addition, the Company utilizes multiple performance measures for annual and long-term incentives. No Executive Officer Employment Agreements.The Company does not have employment agreements with its Named Officers, meaning they are not entitled to minimum base salaries, guaranteed bonuses or guaranteed levels of equity or other incentives. No Hedging or Pledging of Colgate Stock is Permitted.Colgate’s hedging policy prohibits Colgate’s directors, officers and employees who receive stock-based compensation from engaging in transactions that hedge against declines in the value of Colgate stock, strengthening the alignment between stockholders and directors and executives. Further, Colgate’s pledging policy prohibits Colgate’s directors and officers from pledging Colgate stock to prevent forced sales of Colgate stock by Colgate’s directors and officers. No Backdating or Repricing of Stock Options.The Company makes annual equity awards at the same predetermined times each year. Equity awards, including stock options, are never backdated or issued with below-market exercise prices. Repricing of stock options without stockholder approval is expressly prohibited. No Single Trigger Severance Payments Under the Company’s Severance Plan.Severance payments under the Colgate-Palmolive Company Executive Severance Plan (the “Severance Plan”) are payable only if an executive’s employment is terminated or an executive terminates his or her employment as a result of an “adverse change in conditions of employment” (as defined in the Severance Plan) following a change in control. No Tax Gross-Ups on Perquisites or Severance.Perquisites are insignificant, as previously noted, and any personal income taxes due as a result of perquisites provided to executives, other than international assignment benefits, are the responsibility of the executives. In addition, the Severance Plan does not provide for tax gross-ups on severance payments.

 

2020 Proxy Statement     29

 

Executive Compensation

Compensation Philosophy

Colgate believes that people are the most important driver of its business success and, accordingly, views compensation as an important tool to motivate leaders at all levels of the organization. Outlined below are the principles underlying Colgate’s executive compensation programs and examples of specific program features used to implement those principles.

	Base salary		Annual incentives		Long-term incentives
ALIGN PAY AND PERFORMANCE
Multiple performance measures are used to ensure a focus on overall Company performance.
Payouts vary based upon the degree to which performance measures are achieved.
Colgate does not guarantee minimum base salaries, bonuses or levels of equity or other incentives for its Named Officers, through employment agreements or otherwise.
DRIVE STRONG BUSINESS RESULTS
Selecting performance measures, such as organic sales growth, net income growth, earnings per share and free cash flow productivity, that are key metrics for investors fosters profitable growth and increases shareholder value.
Using performance measures tied to Colgate’s annual and long-term operating goals, the achievement of which the Named Officers have the ability to influence, motivates the Named Officers to achieve strong and sustained business results.
Using measures in the long-term incentive award program that emphasize the Company’s performance relative to peers focuses the Named Officers on achieving peer-leading performance.
FOCUS ON LONG-TERM SHAREHOLDER RETURN
Colgate’s long-term incentive award program has a three-year performance period, driving a focus on long-term results.
A significant portion of the Named Officers’ total compensation is paid in equity (approximately 50-65% in 2019), aligning the interests of the Named Officers with those of stockholders.
The Named Officers’ payout through the long-term incentive award program varies based on Colgate’s three-year total shareholder return compared to the Comparison Group, directly tying a portion of the Named Officers’ compensation opportunity to relative shareholder return.
Colgate’s use of stock options, which provide value only to the extent that the Company’s stock price appreciates, provides an effective link to changes in shareholder value that aligns the interests of stockholders and executives.
Stock ownership guidelines require that executives maintain significant levels of stock ownership, further strengthening the focus on long-term shareholder return.
ATTRACT, MOTIVATE AND RETAIN HIGH-QUALITY TALENT
Colgate regularly benchmarks its compensation programs and designs the programs to compensate executives at the median level, with above-median payouts for superior performance and below-median payouts for performance below expectations.
To promote equal pay and fairness, Colgate’s policy is to compensate each individual at a level commensurate with his or her role, work location, individual performance and experience, irrespective of gender, race, ethnicity or any other category protected by law.
Individual performance influences salary increases and stock option awards, motivating the Named Officers to perform at the highest levels.
Colgate rewards executives for strong performance, including by increasing payouts under the long-term incentive award program when Colgate outperforms its peers and decreasing payouts when Colgate underperforms its peers.

The P&O Committee devotes substantial time and attention throughout each year to executive compensation matters to ensure that compensation is aligned with the Company’s performance and the best interests of stockholders. The Company’s compensation programs reflect its longstanding strategic initiatives and balance achievement of short-term results with long-term strategic objectives. As discussed in more detail below, the P&O Committee’s well-balanced and disciplined approach includes regular reviews with its independent compensation consultant and careful benchmarking

30

Executive Compensation

to ensure that Colgate’s compensation is effective in attracting, retaining and motivating high-quality talent, is supported by underlying performance and is reasonable relative to the Company’s peers. In reviewing and approving compensation for the Named Officers, the P&O Committee considers all material components of compensation as well as comprehensive information regarding market practices. The purpose of these materials is to bring together all of the elements of actual and potential future compensation of the Named Officers, so that the P&O Committee may review individual elements of compensation, including compensation mix, as well as the aggregate amount of total compensation.

This CD&A discusses the compensation paid to the Named Officers. The compensation programs described, however, apply more broadly to the Company’s other officers and senior managers, with changes as appropriate to reflect different salary grade levels and job responsibilities. The Company believes that this approach helps to align Colgate people into one global team sharply focused on the Company’s performance objectives and key strategic initiatives.

Compensation-Setting Process

Role of the P&O Committee

The P&O Committee:

Role of the Independent Compensation Consultant

FW Cook, as the P&O Committee’s independent compensation consultant:

2019 CEO Transition

In February 2019, the Board elected Mr. Wallace President and CEO and elected Mr. Cook, who had served as CEO since 2007, Executive Chairman, in both cases effective April 2, 2019.

In connection with this transition, the P&O Committee worked with FW Cook to determine the appropriate target level of direct compensation for Mr. Wallace to reflect his new role. Following this review, which took into account Colgate’s compensation philosophy, competitive data from the Comparison Group and market trends, the P&O Committee determined in March 2019 to set Mr. Wallace’s overall target direct compensation (salary and annual and long-term

Executive Compensation

incentives) for 2019 between the 25th percentile and the median of the Comparison Group, with the possibility of above-target compensation based on superior performance and below-target compensation if performance fell below expectations. The P&O Committee also determined to have the variable portion of Mr. Wallace’s target direct compensation represent a larger portion of his compensation as compared with the other Named Officers to ensure his compensation is strongly tied to Company performance. In making these determinations, the P&O Committee worked together with the other independent directors of the Board.

In light of these determinations, in March 2019 the P&O Committee set Mr. Wallace’s target direct compensation at $10,000,000. The P&O Committee increased Mr. Wallace’s salary in connection with his promotion, effective April 2, 2019, from $950,000 to $1,250,000, increased his target annual bonus award opportunity, effective April 2, 2019, from 100% to 160% of his base salary, increased the guideline value of his stock option award from $1,250,000 to $3,375,000 and granted him a target award under the Company’s new Growth Performance Plan of 50,943 PBRSUs in March 2019 for the 2019-2021 performance cycle. The actual payout from this target Growth Performance Plan award will depend upon achievement of the performance goals established by the P&O Committee for the 2019-2021 performance cycle. In addition, consistent with the terms of the Company’s legacy Long-Term Global Growth Program, the P&O Committee increased Mr. Wallace’s target long-term incentive restricted stock unit award opportunities under the Long-Term Global Growth Program for the 2017-2019 and 2018-2020 performance cycles from $1,250,000 to $3,375,000.

In March 2019 the P&O Committee, in consultation with the other independent directors of the Board, also approved compensatory arrangements for Mr. Cook in his new role as Executive Chairman. Effective April 2, 2019, Mr. Cook’s total long-term incentive award opportunity was reduced from $9,250,000 to $3,610,000, which opportunity was to be paid in the form of stock options granted in September 2019 in accordance with the Company’s regular grant procedures. Mr. Cook did not receive a target PBRSU award under the Growth Performance Plan in 2019, his annual salary remained at $1,400,000 and his target annual bonus award opportunity remained at 160% of his base salary. The P&O Committee determined these arrangements were appropriate given Mr. Cook’s new role and his continued active leadership and engagement with management and the Board.

Comparison Group

The Company uses comparative compensation data from a group of other leading companies, referred to in this CD&A as the “Comparison Group,” as a point of reference in designing its compensation programs and in setting compensation levels. The P&O Committee does not use this comparative data as the determinative factor in setting compensation levels but rather as a single component in its effort to verify that the Company’s compensation programs are reasonable and competitive in light of compensation levels at similarly situated companies. The P&O Committee also reviews the Company’s performance against the Comparison Group for purposes of making awards that are based on relative performance measures, including the long-term incentive awards granted under the new Growth Performance Plan and the legacy Long-Term Global Growth Program.

The Comparison Group is selected to include companies of similar size and complexity to the Company (including the Company’s substantial international operations) and to represent both the market for executive talent in which the Company competes as well as the Company’s peer companies from a performance and investment perspective. It is comprised primarily of fast-moving consumer goods companies with product portfolios consisting of globally recognized brands that are similarly situated to the Company in terms of overall size or performance against relevant measures. The Company’s revenues and market capitalization are at the 30th and 53rd percentiles, respectively, of the Comparison Group.

The companies comprising the Comparison Group are approved by the P&O Committee after taking into account observations and recommendations of management and FW Cook.

For 2019, the P&O Committee determined not to make any changes to the Comparison Group, so it remained unchanged from 2018 and consisted of the following 15 companies:

32

Executive Compensation

Compensation data are collected for these companies for all of the Company’s three primary compensation components (base salary, annual incentive pay and long-term incentive pay), both individually and in the aggregate, as well as for indirect compensation elements such as perquisites and retirement benefits.

The Company’s adjusted net income growth, adjusted earnings-per-share growth, total shareholder return, net sales growth, organic sales growth, return on sales, operating cash flow as a percentage of sales, return on invested capital and CEO total direct compensation relative to the Comparison Group in 2019 were as follows:

COLGATE 2019 PERFORMANCE RELATIVE TO COMPARISON GROUP*

Compensation Components

Compensation Mix

Colgate’s executive compensation programs consist of the following three primary components:

In allocating target compensation among these three components, the P&O Committee seeks to provide reasonable and competitive levels of fixed compensation (i.e., salary), while emphasizing performance-based compensation that varies based on overall Company or business unit performance and/or the performance of the Company’s Common Stock. Accordingly, as the following chart illustrates, base salaries for the Named Officers other than Mr. Wallace and Mr. Cook represented approximately 25% of the three compensation components noted above, and incentive compensation, consisting of annual and long-term, represented approximately 75% at target, while the base salary for Mr. Wallace represented 13% of the three components noted above and incentive compensation represented 87% at target. The target compensation mix for Mr. Wallace reflects the P&O Committee’s belief that a larger portion of his compensation should be variable and tied to the Company’s financial and stock price performance. As discussed above, Mr. Cook’s target compensation mix differs from the other Named Officers due to the unique nature of his role.

Executive Compensation

The target mix between annual incentive pay and long-term incentives is determined based on competitive practice and Colgate’s desire to focus, first, on long-term performance and shareholder value and, second, on annual performance. Within the long-term incentive category, the Named Officers other than Mr. Cook are eligible to receive a mix of stock options and PBRSUs because the two types of awards serve different but complementary purposes. Stock options provide value only to the extent that the Company’s stock price appreciates, thereby providing an effective link to changes in shareholder value that aligns the interests of stockholders and executives. PBRSUs provide value based on both the Company’s long-term performance relative to its objectives and an increase in shareholder value, creating a strong link between compensation and the achievement of the Company’s long-term financial goals and its performance relative to peers. The Company’s compensation philosophy and competitive practice also drive determinations about total target compensation levels for the Named Officers.

In addition to the three primary components of compensation discussed above, the Company provides its executive officers, including the Named Officers, with limited perquisites that represent approximately 2% or less of the total compensation for each Named Officer shown in the Summary Compensation Table, not including international assignment benefits. For the Named Officers, such perquisites consist primarily of an annual allowance of up to $11,500 to be used for legal, financial or tax counseling, an annual physical exam and, in the case of Messrs. Cook and Wallace, the use of a Company car and driver. The Company implemented the allowance plan, which is available to approximately 700 employees with allowance amounts varying based on salary grade level, over 25 years ago to ensure uniformity of treatment for all executives regarding perquisites. For more information on perquisites provided to the Named Officers in 2019, see note 6 to the Summary Compensation Table. Any personal income taxes due as a result of these perquisites, other than international assignment benefits, are the responsibility of the Named Officers.

The compensation and benefits payable to the Named Officers in the event of retirement, severance and change in control are described on pages 49 to 52 and 53 to 58. The Company’s retirement programs are designed to provide the Company’s long-serving, retiring employees with competitive replacement income based on then-prevailing market practice. The Named Officers participate in the same retirement programs that are available to other U.S. employees, with supplemental benefits provided to make up for benefits under certain plans that cannot be provided as a result of the application of certain limits under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Mr. Cook’s pension benefit is calculated based on a formula available to salaried employees who were employed by the Company on June 30, 1989 and made a one-time election to participate in a final average earnings formula as described in “Retirement Plans,” limited by application of the cap also described in “Retirement Plans.” Pension benefits for Ms. Parameswaran and Messrs. Tsourapas and Wallace are determined under the PRA formula as described in “Retirement Plans.” Ms. Daniels and Mr. Jakobsen are not participants in the Colgate-Palmolive Company Employees’ Retirement Income Plan described in “Retirement Plans” and instead participate only in the Company’s defined contribution plans. The Company’s severance program is designed to provide participants with reasonable compensation if their employment is terminated in the event of a change in control or at the Company’s convenience. The potential payments and benefits under these various programs did not influence the decisions discussed in the balance of this CD&A regarding the setting of salary, annual incentives and long-term incentives for the Named Officers since these programs serve very different purposes.

Base Salary

Base salaries for the Named Officers and all other employees are based on established salary ranges for each grade level. The CEO’s and the Executive Chairman’s salaries are set independently by the P&O Committee, without the involvement of the CEO or the Executive Chairman. The P&O Committee reviews salaries for the other Named Officers based on recommendations from the Global Human Resources function and the CEO in accordance with the established salary ranges and the guidelines described below.

Since base salaries are designed to provide a reasonable, competitive level of fixed compensation, the mid-point of each salary range is set at the median pay level for similar jobs at companies in the Comparison Group. Salaries above the median are available for key contributors to the success of the Company and long-tenured exceptional performers. Setting salaries in the median range or above mitigates pressure that might otherwise exist to support short-term focused or higher-risk business strategies if fixed compensation were set materially below market rates.

Decisions regarding where in the range a particular individual’s salary should be and whether his or her salary should be increased during the year are based on the following factors:

34

Executive Compensation

The Named Officers are experienced executives, most of them with long tenure at the Company. In 2019, salaries for the Named Officers other than Mr. Cook and Mr. Wallace ranged between approximately the 45th and 69th percentiles of salaries for similar jobs in the Comparison Group based on the most recent data available to the Company. Mr. Wallace’s salary is between the 25th percentile and the median for CEOs in the Comparison Group. Each of the Named Officers except for Mr. Cook received a promotion during 2019. The increases in their salaries in 2019 were the result of these promotions and, in the case of Ms. Parameswaran and Messrs. Tsourapas and Wallace, the assumption of new responsibilities.

Annual Incentives

Award Opportunities

Annual incentive awards are awarded under stockholder-approved plans. Cash bonuses are designed to reward performance over a one-year period against one or more pre-established performance measures set by the P&O Committee at the beginning of the year. Awards are determined by the P&O Committee based on audited financial results available early in the following year based on achievement against the designated goals. In addition, the P&O Committee has discretion to adjust calculated awards upward or downward, subject to award limits established by the P&O Committee at the time the performance measures were set.

Executives, including the Named Officers, are each assigned a bonus award opportunity, which is based on salary grade level, expressed as a percentage of base salary and generally set at or below the median of the Comparison Group. Assigned award opportunities are established for the Named Officers to ensure that the portion of their annual cash compensation (i.e., salary plus cash bonus) that is based on performance is larger than for other employees, given their increased level of responsibility. This is intended to ensure that the executives who are most responsible for managing the Company and establishing its strategic plan are held most accountable to stockholders. For 2019, the Named Officers’ assigned award opportunities and award maximums, which are equal to 200% of the assigned award opportunities, were as follows:

The P&O Committee elected to increase the maximum award opportunities from 150% to 200% of the assigned award opportunities in 2019 based on a review of market practice. The annual cash bonuses for 2019 for all of the Named Officers were subject to a 10% downward adjustment if certain key global ethics and compliance objectives were not met. These ethics and compliance objectives were achieved in 2019 and therefore no downward adjustment was applied.

Performance Measures and Bonus Payouts

Named Officers with Corporate-Wide Responsibilities

All of the Named Officers, including the CEO and the Executive Chairman, had corporate-wide responsibilities during 2019. For Ms. Parameswaran and Mr. Tsourapas, who were each promoted to roles with corporate-wide responsibilities effective August 1, 2019, a portion of their annual cash bonuses was based on divisional goals, as described below, and a portion was based on corporate goals, consistent with the other Named Officers.

The performance measures used for the 2019 annual cash bonuses for the Named Officers with corporate-wide responsibilities were Base Business Earnings Per Share and organic sales growth, in each case as reported in the Company’s 2019 financial results. Prior to 2019, organic sales growth was included in the annual incentive program

Executive Compensation

as a modifier rather than a primary performance measure. In 2019, the Company determined to make organic sales growth a primary performance measure for annual cash bonuses to drive the Company’s growth strategy and reflect the underlying momentum of the Company’s business. The earnings-per-share measure was selected to create a strong focus on the Company’s overall profit goal and its underlying drivers of sales, cost control and financial efficiency. Prior to 2019, Free Cash Flow Productivity was also a performance measure used in the annual incentive program. In 2019, the Company decided that the Free Cash Flow Productivity measure should be included in the long-term rather than the annual incentive program because it is more relevant to long-term performance.

The earnings-per-share measure is adjusted for the effects of the following, as applicable: accounting changes, restructuring charges, gains or losses on the sales of businesses and certain other unusual, non-recurring items. The purpose of the adjustments is to ensure that the measurement of performance reflects factors that management can directly control and that payout levels are not impacted by factors unrelated to the ongoing operation of the business. These adjustments are consistent with the presentation in Colgate’s public filings in which the impact of these items is discussed separately.

The P&O Committee established targets in March 2019 consistent with the Company’s publicly announced guidance for 2019 and based on the Company’s 2019 business strategy to accelerate organic sales growth through investment behind its brands, strong innovation, pursuing adjacent categories and channel and market expansion. Given the economic and market conditions at the time the targets for the annual bonus award were set, the goals were designed to be challenging but achievable, with payout levels intended to encourage strong, focused performance. The 2019 earnings-per-share target was set below the 2018 earnings-per-share target and outcome in alignment with the Company’s publicly announced earnings-per-share goal for 2019, which as discussed earlier in this CD&A also represented a decline relative to 2018 as the Company planned to increase investment behind its brands to drive acceleration in organic sales growth. The Company takes into account the budget for its share repurchase program when setting its earnings-per-share targets, and no decisions about share repurchase plans are tied to an attempt to influence compensation results.

In 2019, the performance required to receive threshold, target and maximum payouts for each of those two components, and the payout relative to the Comparison Group that performance at each level would represent for the Named Officers, were as follows:

If Base Business Earnings Per Share was less than $2.72 or organic sales growth was less than 1%, no annual bonus would be paid with respect to that component. To the extent performance on either performance measure fell between two applicable values, the applicable payout percentage would be interpolated on a linear basis.

Colgate’s Base Business Earnings Per Share was $2.83 and organic sales growth was 4.0% in 2019 and, consequently, the P&O Committee approved bonus awards for the Named Officers at 131.0% of the assigned award opportunities (in the case of Ms. Parameswaran and Mr. Tsourapas, applicable only for the portion of the year they served in roles with corporate-wide responsibilities as described above).

Named Officers with Divisional Responsibilities

The performance measures used for the 2019 annual cash bonuses for the Named Officers with divisional responsibilities were organic sales growth, weighted 60%, and net profit after tax excluding businesses acquired during 2019 and certain other items (“NPAT”), weighted 40%. These measures were chosen because the Company believes that together they reflect the underlying momentum of the business unit and its ability to return value to stockholders. Until

36

Executive Compensation

August 1, 2019, Ms. Parameswaran was President, Colgate – Europe and Mr. Tsourapas was President, Colgate – Latin America. Based on the Company’s 2019 business strategy for Europe and Latin America, the performance required to receive threshold, target and maximum payouts for each of the two components were as follows:

For Europe organic sales growth was 0.4% and NPAT was $537.9 million in 2019, and for Latin America organic sales growth was 6.8% and NPAT was $750.8 million in 2019. Accordingly, the formula-driven award for the divisional portion of the bonus for Ms. Parameswaran was 83.5% of her assigned award opportunity and for Mr. Tsourapas was 147.2% of his assigned award opportunity. Combining the divisional and corporate portions, the P&O Committee approved bonus awards for Ms. Parameswaran and Mr. Tsourapas at 105.1% and 140.2% of their assigned award opportunities, respectively.

The annual cash bonus for Mr. Jakobsen equaled 96.6% of salary, for Ms. Daniels equaled 90.0% of salary, for Ms. Parameswaran equaled 67.4% of salary and for Mr. Tsourapas equaled 94.0% of salary. These awards were paid at approximately the 13th to the 56th percentile of annual bonuses for comparable jobs in the Comparison Group, based on the most recent data available to the Company. Mr. Wallace earned an annual cash bonus equal to 190% of salary, which represented a payout at approximately the 57th percentile of annual bonuses for CEOs in the Comparison Group based on the most recent data available to the Company, and Mr. Cook earned an annual cash bonus equal to 209.6% of salary.

Long-term Incentives

Overview

Colgate’s long-term incentive compensation is designed to focus the Named Officers and other Colgate executives on increasing shareholder value and to reward their contribution to the long-term growth and performance of the Company. Colgate uses two types of long-term incentives for the Named Officers, both paid in the form of equity: stock options and PBRSUs. Stock options and PBRSUs are used to balance and support the key principles discussed on page 30. Because their value is solely dependent on appreciation in stock price, stock options strongly support the objectives of ensuring that pay is aligned with changes in shareholder value and creating commonality of interest between the Named Officers and stockholders. The use of PBRSUs ensures that the amount of long-term incentive compensation granted is tied directly to both increases in shareholder value and the achievement of critically important multi-year performance objectives. Due to the multi-year earning and/or vesting requirements, all of Colgate’s long-term incentives support the goal of retaining the Named Officers and other key executives.

Consistent with Colgate’s longstanding practice of encouraging stock ownership throughout the organization to reward employees for the long-term value they create and to align management and stockholder interests, long-term equity grants are the largest component of target direct compensation for the Named Officers. With the exception of Mr. Wallace, whose long-term incentives were targeted below the median for CEOs in the Comparison Group in 2019 given his recent appointment, following a review of the practices of the Comparison Group, long-term incentives are targeted at the median of the Comparison Group, with above-median awards available based on superior performance and below-median awards available based on performance below expectations.

In 2019, Colgate’s annual stock option and restricted stock unit utilization for all awards was 0.74% of outstanding stock, placing it at the 57th percentile of the Comparison Group based on available market data. Because Colgate uses a mix of long-term incentives that is weighted more heavily toward stock options than full-value awards as compared with the companies in the Comparison Group, its utilization rate will generally be above the median of the Comparison Group.

Equity Grant Process and Policies

The Company makes annual equity awards at the same predetermined times each year, at regularly scheduled

 P&O Committee meetings in the first and third quarters. Equity awards for new hires or newly promoted employees or special awards for recognition or retention purposes are generally made on a monthly basis. The grant date of any award is no earlier than the date on which such award is approved, and the grant price of any award is never less than the closing price of the Company’s Common Stock on the date of grant. All awards are granted under stockholder-approved plans.

Executive Compensation

Stock Options

Overview

The number of stock options granted to individual executives is determined based on guidelines set for each salary grade level. Established annually, the stock option guidelines are determined based on a review of market data and share usage. Actual awards may vary from such guidelines based on a qualitative assessment of factors similar to those used to determine salary, including each individual’s performance, the performance of the business unit or function for which they are responsible and the assumption of new job responsibilities. (See discussion of salary beginning on page 34.) As with other compensation decisions, in the case of the CEO and the Executive Chairman, the P&O Committee makes such assessment with the participation and concurrence of the other independent directors of the Board and considering advice from its independent consultant, FW Cook. In the case of the other Named Officers, the P&O Committee reviews and approves awards taking into account the recommendations of the Global Human Resources function and the CEO.

Stock Option Grants

During 2019, stock option grants to Messrs. Wallace and Jakobsen were at the Company’s guideline award level. The stock option awards for Mses. Daniels and Parameswaran and Mr. Tsourapas were each 20% below the guideline award level due to their mid-year promotions. Mr. Cook’s stock option award was 26% below the guideline award level due to the mid-year change in his role. See column (j) of the Grants of Plan-Based Awards Table for the number of stock options granted to the Named Officers in 2019. Mr. Wallace’s award for 2019 was 322,042 options, consistent with the pre-established guideline as noted above.

Stock Option Terms

For all of the Named Officers, the stock options vest in equal annual installments over three years, the exercise price of the stock options is equal to the closing price of the Company’s Common Stock on the date of grant and, starting with stock options granted in 2019, the term of the stock options is eight years to better align with market practice. Stock options granted prior to 2019 had a term of six years. Unvested stock options are forfeited if the recipient terminates his or her employment with the Company, other than through retirement, death or disability. For more information regarding the effect of various types of termination of employment on the vesting of outstanding equity awards, including stock options, see pages 55 to 56.

Performance-Based Restricted Stock Unit Awards

As described earlier in the CD&A on page 27, the Company is evolving its long-term incentive program to focus on the Company’s performance relative to its peers and to align with market practice regarding grant timing. Due to the transition, and as described in greater detail below, the Named Officers had two performance-based award opportunities relevant to 2019, one for the 2017-2019 performance cycle under the legacy Long-Term Global Growth Program and one for the 2019-2021 performance cycle under the new Growth Performance Plan. As discussed below, no restricted stock units were granted under the Long-Term Global Growth Program following completion of the 2017-2019 performance cycle, and the actual payout from the PBRSUs granted under the Growth Performance Plan in March 2019 will be determined in 2022 based on the Company’s performance against the pre-established performance goals over the 2019-2021 performance cycle.

Growth Performance Plan

Awards

Under the Company’s new long-term incentive program, the Growth Performance Plan, beginning with the 2019-2021 performance cycle, executives, including the Named Officers, receive PBRSUs at the beginning of each three-year performance cycle.

Each year, at the beginning of a three-year performance cycle, the P&O Committee approves a set of performance goals and a target award expressed in dollars, which is converted into PBRSUs by dividing the dollar value by the price of the Company’s Common Stock on the grant date. The number of PBRSUs that are earned and vest at the end of the performance period will be determined based on Company performance against the pre-established performance goals. The PBRSUs will vest, to the extent earned, following the conclusion of the three-year performance period when actual performance is known and certified by the P&O Committee and shares of Common Stock are delivered in respect of the earned PBRSUs following vesting. In addition, the P&O Committee has discretion to adjust earned awards upward or downward, subject to award limits established by the P&O Committee at the time the performance measures were set.

For the 2019-2021 performance cycle, Mr. Wallace’s target award was 50,943 PBRSUs and the target awards for the other Named Officers (other than Mr. Cook) ranged from 8,622 PBRSUs to 13,209 PBRSUs. Given his change in role, Mr. Cook did not receive a PBRSU award for the 2019-2021 performance cycle. Depending upon performance against the pre-established measures discussed below, including the modifier based on total shareholder return relative to peers,

38

Executive Compensation

the number of PBRSUS that can be earned ranges from zero, if performance falls below a certain level, to a maximum of 250% of the target number of PBRSUs. The actual value of the payout from the award will depend upon achievement of the performance goals as well as the price of the Company’s Common Stock at the time of vesting.

Performance Measures

The performance measures used for the 2019-2021 performance cycle are described below.

If performance on any of the performance measures is below the threshold level, no PBRSUs would be earned with respect to that component. To the extent performance on any of the performance measures falls between two applicable values, the applicable payout percentage would be interpolated on a linear basis.

These measures were chosen based on the Company’s view that together they will drive sustainable profitable growth while reflecting the underlying momentum and strong fundamentals of the Company’s business and its ability to generate cash to satisfy current and future obligations, reinvest in business-building activities and return value to stockholders. The measures are primarily based on the Company’s performance relative to peers to ensure focus on delivering peer-leading performance, no matter the marketplace conditions.

If awards for the 2019-2021 performance cycle were to vest solely based on performance achieved through December 31, 2019, payout would be between the threshold and target levels. Performance over the remaining two years of the performance period will determine the actual number of shares earned, if any.

The Growth Performance Plan also includes a total shareholder return modifier to further link awards to creation of shareholder value and hold management accountable for outperforming peers. The number of PBRSUs earned following completion of the 2019-2021 performance cycle will increase or decrease by up to 25% based on the Company’s total shareholder return, defined as stock price appreciation plus dividends paid, relative to the Comparison Group over the same three-year period, as follows:

To the extent the Company’s total shareholder return relative to the Comparison Group falls between two applicable values, the total shareholder return modifier would be interpolated on a linear basis. In addition, in the event the Company’s total shareholder return over the performance period is negative, no participant would be eligible to earn more than the target number of PBRSUs, even if the Company’s performance on the other performance measures would otherwise entitle them to a higher payout.

Executive Compensation

PBRSU Terms

To the extent earned, the PBRSUs granted under the Growth Performance Plan vest upon certification of the performance results in February of the year following completion of the performance period (in 2022 for the 2019-2021 performance cycle) and are distributed as shares of Common Stock as soon as administratively practicable thereafter. Awards are forfeited if the recipient terminates his or her employment with the Company, other than through retirement, death or disability, prior to the end of the performance period. If a recipient retires, dies or becomes disabled during the performance period (provided he or she remained employed for at least the first six months of the performance period), he or she is eligible to earn PBRSUs on a pro rata basis at the conclusion of the performance period reflecting the proportion of the performance period for which he or she was employed. For more information regarding the effect of various types of termination on the vesting of outstanding equity awards, including PBRSUs, see pages 55 to 56. Recipients of PBRSUs do not have voting rights or the right to receive dividends until they are distributed as shares of Common Stock.

Long-Term Global Growth Program

Award Opportunities

Under the Company’s legacy long-term incentive program, the Long-Term Global Growth Program, the P&O Committee approved a set of performance goals and assigned each Named Officer a restricted stock unit award opportunity expressed in dollars in March 2017 at the beginning of the 2017-2019 performance cycle. As described on page 32, Mr. Wallace’s assigned award opportunity was increased to $3,375,000 in connection with his promotion to President and CEO. The assigned award opportunity for the other Named Officers (other than Mr. Cook) ranged from $727,000 to $825,500. Mr. Cook’s assigned award opportunity was $4,208,000. At the conclusion of the three-year cycle, actual performance was measured against the pre-established performance goals to determine the award value (if any), which, to the extent earned, would be calculated in dollars and then converted into restricted stock units by dividing the dollar value by the stock price on the grant date. Depending upon performance against the pre-established measures discussed below, including the measure based on total shareholder return relative to peers, actual award payouts ranged from zero, if performance fell below a certain level, to a maximum of two times the assigned award opportunity. The P&O Committee had discretion to adjust calculated awards upward or downward, subject to award limits established by the P&O Committee at the time the performance measures were set.

The award opportunities were designed using a pooling method, which facilitated compliance with the requirements of Section 162(m) of the Internal Revenue Code at the time the award opportunities were established in March 2017. The 2017-2019 Long-Term Global Growth Program pool was funded with an amount equal to 1.5% of the Company’s 2019 adjusted net income. Pre-established procedures required the adjustment of the net income measure for the effects of the following, as applicable: restructuring charges, gains or losses on the sales of businesses and certain other unusual, non-recurring items. This practice is generally consistent with the presentation in Colgate’s public filings, in which the impact of these items is discussed separately. Adjusted net income for 2019 for purposes of the Long-Term Global Growth Program pool excludes charges resulting from the Company’s Global Growth and Efficiency Program, remeasurements as a result of changes in the U.S. dollar and the Argentine peso exchange rate and certain litigation matters, acquisition-related costs and benefits related to a value-added tax matter in Brazil and Swiss income tax reform.

Each Named Officer was allocated a portion of the Long-Term Global Growth Program pool, applying a percentage established by the P&O Committee at the beginning of the performance period, from which the P&O Committee would grant individual awards to each Named Officer upon conclusion of the performance cycle. The P&O Committee had discretion to reduce, but not to increase, long-term incentive awards from this level. The P&O Committee determined actual individual long-term incentive awards based on pre-established performance measures, which, based on 2017-2019 performance, resulted in no awards being paid, as described below.

Performance Measures and Award Payouts

The performance measures used for the 2017-2019 performance cycle were compounded annual growth in organic sales and Currency Neutral Earnings Per Share (as defined below), weighted equally, over the three-year measurement period. The two measures of organic sales growth and currency-neutral earnings-per-share growth were chosen in March 2017 based on the Company’s view that together they reflect the underlying momentum and strong fundamentals of the Company’s business and its ability to generate funds to reinvest in business-building activities and return value to stockholders. Currency-neutral measures were selected for the long-term incentive award program to create a strong focus on driving local growth and profitability despite potential currency fluctuations, which can be difficult to forecast multiple years in advance and are largely outside the control of those running the business day-to-day.

40

Executive Compensation

“Currency Neutral Earnings Per Share” for each year in the 2017-2019 performance cycle was calculated by adjusting Base Business Earning Per Share for each year (in each case, as reported in the company’s financial results for that year) to eliminate the impact of period-over-period changes in foreign exchange rates in the translation of local currency results into United States dollars by translating 2019, 2018 and 2017 local currency quarterly results into United States dollars using average rates of foreign exchange for the comparable quarter in 2018, 2017 and 2016, respectively, and aggregating the results for each quarter. Currency Neutral Earnings Per Share growth for each year is calculated as the percentage increase in Currency Neutral Earnings Per Share versus adjusted earnings per share on a dollar basis for the preceding year.

For the 2017-2019 performance cycle, compounded annual growth in organic sales was 1.9% and compounded annual growth in Currency Neutral Earnings Per Share was 1.5%, whichresulted in a payout of 0%based on the Profitable Growth Matrix.

The Named Officers were also eligible to receive an increase in the number of performance-based restricted stock units awarded based on total shareholder return relative to peers over the same three-year period, which added a relative performance measure. If the Company’s total shareholder return during the period was in the top third when compared with the total shareholder return of the companies in the Comparison Group, additional performance-based restricted stock units equal in value to 25% of an individual’s assigned award opportunity would be granted. For the 2017-2019 cycle, the Company’s total shareholder return of 13.0% was not in the top third when compared to the Comparison Group, so the Named Officers did not receive any additional performance-based restricted stock units.

Given the Company’s performance in terms of compounded annual growth in organic sales and Currency Neutral Earnings Per Share and total shareholder return for the 2017-2019 performance cycle, as set forth above, the Named Officers did not receive restricted stock unit awards for the 2017-2019 performance cycle.

Restricted Stock Unit Terms

To the extent earned, the restricted stock units granted under the Long-Term Global Growth Program vest and are distributed as shares of Common Stock three years from the date of the award, as illustrated by the below graphic.

Awards are forfeited if the recipient terminates his or her employment with the Company, other than through retirement, death or disability, prior to the end of the three-year vesting period. For more information regarding the effect of various types of termination on the vesting of outstanding equity awards, including restricted stock unit awards, see pages 55 to 56. Recipients of restricted stock unit awards do not have voting rights or receive dividends until the awards vest. During the three-year vesting period, when the performance goals for the applicable measurement cycle have been met, even though the award is subject to a further vesting requirement, dividend equivalents in the form of additional restricted stock units accrue at the same rate that dividends are paid on the Company’s Common Stock, to be distributed as shares together with the underlying award.

Executive Compensation

Compensation Governance Features

Stock Ownership Guidelines

To further align the interests of the Company’s officers with those of its stockholders and ensure a long-term perspective, the Board has established minimum stock ownership guidelines for members of senior management. The CEO is required to own Colgate stock equal in value to eight times his annual salary, and the other Named Officers must hold Colgate stock in amounts equal to four times their annual salaries. Other senior managers of the Company are subject to ownership requirements of one or two times their annual salaries. Executives have five years from their initial promotion into an eligible position to achieve required ownership levels. Compliance with these guidelines is evaluated on an annual basis. All of the Named Officers are in compliance with this policy.

Hedging and Pledging of Company Stock

Colgate’s Board has adopted a policy that prohibits Colgate’s directors, officers and employees who receive stock-based compensation from purchasing any financial instrument that is designed to hedge against or offset any decrease in the value of Colgate’s stock, such as short sales and put and call options. The policy also strongly discourages all other employees from entering into such transactions. In addition, the Company prohibits Colgate’s directors and officers from pledging Colgate stock. During 2019, all of the Named Officers were in compliance with both the anti-hedging and anti-pledging policies.

Clawback Policy

Colgate’s Board has adopted a policy that permits Colgate to recoup cash and equity-based incentive awards made to an officer subject to the policy if the financial results on which such awards were based are subsequently restated and such officer’s intentional misconduct contributed to the restatement.

Conclusion

In summary, the P&O Committee believes in aligning pay and performance. Thus, its approach to executive compensation is guided by the principle that executives should have the potential for increased compensation when performance objectives are exceeded, provided that compensation decreases if performance objectives are not met.

P&O Committee Report

The P&O Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis and, based on such review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and this Proxy Statement.

The foregoing P&O Committee report has been submitted by the members of the P&O Committee: Michael B. Polk (Chair), John T. Cahill, Helene D. Gayle, C. Martin Harris and Stephen I. Sadove.

42

Executive Compensation

Summary Compensation Table

The following table shows the compensation of the Company’s current Chief Executive Officer, former Chief Executive Officer, Chief Financial Officer and three other most highly compensated executive officers (the “Named Officers”) for 2019, 2018 and 2017, as applicable.

NOTES TO THE SUMMARY COMPENSATION TABLE

Executive Compensation