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SHERWIN WILLIAMS CO - Annual Report: 2023 (Form 10-K)

Supplemental cash flow informationIncome taxes paid$ $ $ Interest paid   
See notes to consolidated financial statements.
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THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(in millions, except per share data)Common
Stock		Other
Capital		Retained
Earnings		Treasury
Stock		Accumulated
Other
Comprehensive
Loss		Total
Balance at January 1, 2021$ $ $ $()$()$ 
Net income
  
Other comprehensive income  
Treasury stock purchased()()
Treasury stock issued  
Stock-based compensation activity  () 
Other adjustments   
Cash dividends -- $ per share
()()
Balance at December 31, 2021   ()() 
Net income  
Other comprehensive loss()()
Treasury stock purchased()()
Treasury stock issued   
Stock-based compensation activity  () 
Other adjustments()()()
Cash dividends -- $ per share
()()
Balance at December 31, 2022   ()() 
Net income  
Other comprehensive income  
Treasury stock purchased()()
Stock-based compensation activity  () 
Other adjustments  
Cash dividends -- $ per share
()()
Balance at December 31, 2023$ $ $ $()$()$ 
See notes to consolidated financial statements.



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THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(millions of dollars, unless otherwise noted)

NOTE 1 –
Reportable Segments
During the first quarter of 2023, the Company realigned its organizational structure to manage the Latin America architectural paint business within the Consumer Brands Group. Previously, the Latin America architectural paint business was managed within The Americas Group; however, Latin America architectural demand and service model trends are shifting to align more closely with the Consumer Brand Group’s strategy. As a result of the change, The Americas Group has been renamed the Paint Stores Group which now focuses on the core U.S., Canada and Caribbean region stores business. All reported segment information herein, including comparable prior periods, include the Latin America architectural paint business within the Consumer Brands Group. See Note 23 for further details on this change and other information on the Company’s reportable segments.
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to years for buildings and to years for machinery and equipment. Depreciation and amortization are included in the appropriate Cost of goods sold or Selling, general and administrative expenses caption on the Statements of Consolidated Income. to years. See Note 7 for further details.
See Note 6 for further details.
material foreign currency option and forward contracts outstanding at December 31, 2023, 2022 and 2021. See Note 20 for further details.
The Company also entered into cross currency swap contracts to hedge its net investment in European operations in 2023, 2022, and 2021. These contracts qualified for and were designated as net investment hedges under US GAAP. The changes in fair value for the cross currency swaps are recognized in the foreign currency translation adjustments component of AOCI. The cash flow impact of these instruments is classified as an investing activity in the Statements of Consolidated Cash Flows. See Note 17 for further details.
 $ $ Other accruals   Other long-term liabilities   
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Amounts outstanding under these agreements totaled $ million, $ million and $ million at December 31, 2023, 2022 and 2021, respectively.
 $ $ Charges to expense   Settlements()()()Balance at December 31$ $ $ 
See Note 9 for further details.
See Note 14 for further details.
See Notes 11 and 20 for further details.
See Note 15 for further details.
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See Note 19 for further details.
Research and development costs were $ million, $ million and $ million for 2023, 2022 and 2021, respectively.
million, $ million and $ million in advertising costs during 2023, 2022 and 2021, respectively. General and administrative expenses include human resources, legal, finance and other support and administrative functions. million of government incentives received as cash payments related to the construction of the Company’s new headquarters and research and development center in 2022. These government incentives were recorded as a reduction in the carrying amount of the respective assets under construction within Property, plant and equipment, net on the Consolidated Balance Sheets and within Other as an investing activity on the Statements of Consolidated Cash Flows. There were material government incentives received in 2023 or 2021.
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on the Consolidated Balance Sheets and amounted to $ million, $ million and $ million at December 31, 2023, 2022 and 2021, respectively.
See Note 22 for further details.
NOTE 2 –
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NOTE 3 –
 million in cash. The purchase price is subject to certain closing conditions which are expected to be finalized in 2024. As of December 31, 2023, $ million of finite-lived intangible assets, $ million of goodwill, $ million of other assets, net of cash and $ million of liabilities were recognized from this transaction. The Company expects to finalize the purchase price allocation for the acquisition within the allowable measurement period. SIC Holding is reported within the Company’s Performance Coatings Group and the results of operations for the acquisition have been included in the consolidated financial statements since the acquisition date. Pro forma results of operations have not been presented as the impact on the Company’s consolidated financial results is not material.
Closed in 2022
In April 2022, the Company completed the acquisition of the European industrial coatings business of Sika AG. In July 2022, the Company completed the acquisitions of Gross & Perthun GmbH, Dur-A-Flex, Inc. and Powdertech Oy Ltd. In December 2022, the Company completed the acquisition of Industria Chimica Adriatica S.p.A. (ICA). The aggregate purchase price for the acquisitions completed in 2022 was approximately $ billion, including amounts withheld as security for certain representations, warranties and obligations of the sellers. The purchase price for each acquisition was preliminarily allocated to identifiable assets and liabilities based on information available at the date of acquisition. As of December 31, 2022, $ million of intangible assets and $ million of goodwill were recognized from these transactions.
During 2023, the Company revised the purchase price allocation from Goodwill to the various net assets acquired through its 2022 acquisition of ICA. Goodwill decreased $ million and deferred tax liabilities increased $ million, partially offset by an increase in finite-lived intangible assets of $ million, with the remaining purchase price allocated to various other assets acquired and liabilities assumed in the transaction. There was no material impact on previously reported financial results from these adjustments. Furthermore, in accordance with certain purchase agreements, the Company paid $ million in 2023 related to holdbacks for acquisitions completed in prior years. The Company finalized the purchase price allocation for Sika AG, Gross & Perthun GmbH, Dur-A-Flex, Inc., Powdertech Oy Ltd. and ICA within the allowable measurement period. These businesses are reported within the Company’s Performance Coatings Group and the results of operations for these acquisitions have been included in the consolidated financial statements since the respective acquisition dates. Pro forma results of operations have not been presented as the impact on the Company’s consolidated financial results is not material.
Closed in 2021
In February 2021, the Company completed the acquisition of a domestic coatings company. The acquisition expanded the Company’s platform for growth and portfolio of brands and technologies. In December 2021, the Company completed the acquisition of Specialty Polymers, Inc. (Specialty Polymers), a leading manufacturer and developer of water-based polymers used in architectural and industrial coatings and other applications. The acquisition added to the Company’s existing internal resin manufacturing capabilities. The aggregate purchase price for acquisitions completed in 2021 was approximately $ million, including amounts withheld as security for certain representations, warranties and obligations of the sellers. The purchase price for each acquisition was preliminarily allocated to identifiable assets and liabilities based on information available at the date of acquisition. As of December 31, 2021, $ million of goodwill and $ million of intangible assets were recognized from these transactions.
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million and property, plant and equipment assets acquired increased by $ million, offset by a corresponding net decrease in goodwill. There was no material impact on previously reported financial results from these adjustments. The Company completed the preliminary purchase price allocation for the acquisitions completed in 2021 within the allowable measurement period. These businesses are reported within the Company’s Performance Coatings Group and the results of operations for these acquisitions have been included in the consolidated financial statements since the respective acquisition dates. Pro forma results of operations have not been presented as the impact on the Company’s consolidated financial results is not material.
Divestitures
Closed in Current Year
The Company completed the divestiture of a non-core domestic aerosol business within the Consumer Brands Group in April 2023. This transaction resulted in the recognition of a $ million gain within the Administrative segment. This gain was recorded within Other general expense (income) - net (see Note 20).
In April 2023, the Company signed a definitive agreement to divest the China architectural business within the Consumer Brands Group, with annual revenue of approximately $ million and employees. The associated net assets were classified as held for sale at June 30, 2023 in accordance with the Property, Plant, and Equipment Topic of the ASC. Following the prescribed order of impairment testing, the Company first reviewed individual tangible and intangible assets under their applicable Topic of the ASC to determine if their carrying value was higher than their respective fair value. As a result, the Company recorded an impairment charge of $ million within the Consumer Brands Group related to China architectural trademarks. The Company then compared the updated carrying value of the assets and liabilities comprising the disposal group as a whole to its respective fair value which was determined to be equal to the selling price, less costs to sell. The fair value of the disposal group was classified as level 2 in the fair value hierarchy as it was based on a specific price and other observable inputs for similar items with no active market. As a result of this comparison, the Company recorded an additional impairment charge of $ million within the Administrative segment. During the third quarter of 2023, the Company completed the divestiture of the China architectural business. The Company expects to finalize an immaterial working capital adjustment during 2024.
These divestitures did not meet the criteria to be reported as discontinued operations in the consolidated financial statements as the Company’s decision to divest these businesses did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.

Closed in 2021
 million. In connection with this transaction, the Company recognized a loss of $ million within the Administrative segment. This loss was recorded within Other general expense (income) - net (see Note 20). The Wattyl divestiture did not meet the criteria to be reported as discontinued operations in the consolidated financial statements as the Company’s decision to divest this business did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.
NOTE 4 –
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 $ $ $ Provisions:Severance and related costs    Other qualified costs    Total    Payments, currency, and other adjustments () ()Balance at December 31, 2022    Provisions:Severance and related costs ()  Other qualified costs    Total ()  Payments, currency, and other adjustments()()()()
Balance at December 31, 2023
$ $ $ $ Total expense incurred$ $ $ $ 
In addition to the provisions above, which were primarily recorded in Cost of goods sold and Selling, general and administrative expense, trademark impairment related to the Restructuring Plan of $ million was also recorded in the Consumer Brands Group in 2022. See Note 7 for further information.
NOTE 5 –
 $ $ Work in process and raw materials   Inventories$ $ $ 
Inventories were stated at the lower of cost or net realizable value, with cost primarily determined on the LIFO method. Management believes that the use of LIFO results in a better matching of costs and revenues.
 % % %Excess of FIFO over LIFO$$$
During 2023 and 2021, certain inventories accounted for on the LIFO method were reduced, resulting in the liquidation of certain quantities carried at costs prevailing in prior years. The 2023 and 2021 liquidations increased Net income in those years by $ million and $ million, respectively.
The Company recorded a reserve for obsolescence of $ million, $ million and $ million at December 31, 2023, 2022 and 2021, respectively, to reduce Inventories to their estimated net realizable value.
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NOTE 6 –
 $ $ Buildings   Machinery and equipment   Construction in progress   Property, plant and equipment, gross   Less allowances for depreciation   Property, plant and equipment, net$ $ $ 
NOTE 7 –
 million and finite-lived intangibles of $ million. The acquired intangibles are being amortized over a weighted-average useful life of approximately years. In addition, during 2023, the Company divested a non-core domestic aerosol business and its China architectural business.
During 2022, the Company acquired companies which resulted in the recognition of goodwill of $ million and finite-lived intangibles of $ million. As a result of certain adjustments to the preliminary purchase price accounting during 2023, goodwill decreased $ million and the fair value of finite-lived intangible assets increased by $ million. The acquired intangibles are being amortized over a weighted-average useful life of approximately years.
During 2021, the Company acquired companies which resulted in the recognition of goodwill of $ million and finite-lived intangibles of $ million. As a result of certain adjustments to the preliminary purchase accounting during 2022, goodwill decreased by $ million and the fair value of finite-lived intangibles assets increased by $ million. In addition, during 2021, the Company divested its Wattyl business in Australia and New Zealand. See Note 3 for additional information related to the acquisitions and divestitures.
In accordance with the Goodwill and Other Intangibles Topic of the ASC, goodwill at the reporting unit level and indefinite-lived intangible assets are tested for impairment annually. In addition, interim impairment tests are performed whenever required as a result of a specific event or circumstances which indicate potential impairment on a more likely than not basis. October 1 has been established for the annual impairment review. An optional qualitative assessment may alleviate the need to perform quantitative goodwill and indefinite-lived intangible asset impairment tests when there is no indication of impairment on a more likely than not basis. Should a quantitative impairment test be performed, values are estimated separately for goodwill and indefinite-lived intangible assets using applicable valuation models, incorporating discount rates commensurate with the risks involved for each group of assets.
As a result of the Latin America architectural paint business moving to the Consumer Brands Group reportable segment effective January 1, 2023, the Company performed a quantitative impairment analysis for the impacted reporting units and determined both before and after the change, there was no indication of impairment.
The annual impairment review performed as of October 1, 2023 resulted in no goodwill impairment and trademark impairment of $ million in the Consumer Brands Group primarily related to a trademark in Europe. The annual impairment review performed as of October 1, 2022, which incorporated the impact of the Restructuring Plan, resulted in trademark impairments totaling $ million in the Consumer Brands Group related to the discontinuation of an architectural paint brand and lower
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 $ $ $ 
Reclassification related to segment change (2)
()  Acquisitions  Currency and other adjustments()()()
Balance at December 31, 2021 (1)
    Acquisitions and acquisition adjustments    Currency and other adjustments()()()
Balance at December 31, 2022 (1)
    Acquisitions and acquisition adjustments  Currency and other adjustments()  
Balance at December 31, 2023 (1)
$ $ $ $ 
(1)    Net of accumulated impairment losses of $ million ($ million in Paint Stores Group, $ million in Consumer Brands Group and $ million in Performance Coatings Group).

 $ $ $ $ Accumulated amortization()()()()()Net value$ $ $ $ $ $ $ December 31, 2022Gross$ $ $ $ $ Accumulated amortization()()()()()Net value$ $ $ $ $ $ $ December 31, 2021Gross$ $ $ $ $ Accumulated amortization()()()()()Net value$ $ $ $ $ $ $ 
(1)    Trademarks are net of accumulated impairment losses of $ million, $ million, and $ million as of December 31, 2023, 2022 and 2021, respectively.
Amortization of finite-lived intangible assets is estimated as follows for the next five years: $ million in 2024, $ million in 2025, $ million in 2026, $ million in 2027 and $ million in 2028.
Although the Company believes its estimates of fair value related to reporting units and indefinite-lived intangible assets are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such
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NOTE 8 –
% Senior Notes 2027$ $ $ 
% Senior Notes
2047   
% Senior Notes
2029   
% Senior Notes
2024   
% Senior Notes
2049   
% Senior Notes
2024   
% Senior Notes
2030   
% Senior Notes
2032   
% Senior Notes
2050   
% Senior Notes
2052   
% Senior Notes
2025   
% Senior Notes
2025   
% Senior Notes
2045   
% Senior Notes
2026   
% Senior Notes
2042   
% Senior Notes
2025   
% Senior Notes
2045   
% to % Promissory Notes
Through 2026   
% Debentures
2027   
% Debentures
2097   
% Senior Notes
2022   
Total (1)
   Less amounts due within one year   Long-term debt$ $ $ 
million, $ million and $ million and net of discounts of $ million, $ million, and $ million at December 31, 2023, 2022 and 2021, respectively.
Maturities of long-term debt are as follows for the next five years: $ billion in 2024; $ billion in 2025; $ million in 2026; $ billion in 2027 and in 2028. Interest expense on long-term debt was $ million, $ million and $ million for 2023, 2022 and 2021, respectively.
In December 2023, the Company exercised its call provision to make-whole the entire outstanding $ million aggregate principal amount of its % Debentures due 2027 and the entire outstanding $ million aggregate principal amount of its % Debentures due 2097. The retirement of the Debentures resulted in a loss of $ million recorded in Other general expense (income) - net. See Note 20.
In August 2022, the Company issued $ million of % Senior Notes due August 2024 and $ million of % Senior Notes due August 2025 in a public offering. The net proceeds from the issuance of these notes were used to repay borrowings outstanding under the Company’s credit agreement dated May 9, 2016, as amended, and the domestic commercial paper program.
In November 2021, the Company issued $ million of % Senior Notes due March 2032 and $ million of % Senior Notes due March 2052 in a public offering. The net proceeds from the issuance of these notes were used to repay outstanding borrowings under the Company’s domestic commercial paper program.
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million aggregate principal amount of its % Senior Notes due 2022 and its % Notes due 2022 initially issued by The Valspar Corporation (collectively, the % Senior Notes). The % Senior Notes were redeemed at a redemption price equal to % of the principal amount, plus accrued interest, and resulted in a gain of $ million recorded in Other expense (income) - net. See Note 20.
Among other restrictions, the Company’s notes, debentures and revolving credit agreement contain certain covenants relating to liens, ratings changes, merger and sale of assets, consolidated leverage and change of control, as defined in the agreements. In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result. The Company was in compliance with all covenants for all years presented.
Short-Term Borrowings
On August 30, 2022, the Company and two of its wholly-owned subsidiaries, Sherwin-Williams Canada Inc. (SW Canada) and Sherwin-Williams Luxembourg S.à r.l. (SW Luxembourg, together with the Company and SW Canada, the Borrowers), entered into a new $ billion credit agreement (2022 Credit Agreement). The 2022 Credit Agreement may be used for general corporate purposes, including the financing of working capital requirements. The 2022 Credit Agreement replaced the $ billion credit agreement dated June 29, 2021, as amended, which was terminated effective August 30, 2022. The 2022 Credit Agreement will mature on August 30, 2027 and provides that the Company may request to extend the maturity date of the facility for additional periods. In addition, the 2022 Credit Agreement provides that the Borrowers may increase the aggregate size of the facility up to an additional amount of $ million, subject to the discretion of each lender to participate in the increase, and the Borrowers may request letters of credit in an amount of up to $ million.
On August 2, 2021, the Company entered into an amended and restated $ million credit agreement (2021 Credit Agreement), which amends and restates the credit agreement entered into in September 2017. The 2021 Credit Agreement was subsequently amended on multiple dates to extend the maturity of commitments available for borrowing or letters of credit under the agreement.
On May 9, 2016, the Company entered into a credit agreement (2016 Credit Agreement), subsequently amended on multiple dates to extend the maturity of commitments available for borrowing or letters of credit under the agreement. The 2016 credit agreement gives the Company the right to borrow and obtain letters of credit up to an aggregate availability of $ million. These credit agreements are being used for general corporate purposes.
At December 31, 2023, 2022 and 2021, there were borrowings outstanding under these credit agreements.
The Company’s available capacity under its committed credit agreements is reduced for amounts outstanding under its domestic commercial paper program and letters of credit. At December 31, 2023, the Company had unused capacity under its various credit agreements of $ billion.
 $ $ Foreign facilities   Total$ $ $ Weighted average interest rate:Domestic % % %Foreign % % %
Interest expense on Short-term borrowings was $ million, $ million and $ million for 2023, 2022 and 2021, respectively.
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NOTE 9 –
, and active employees covered by the benefits under these plans at December 31, 2023, 2022 and 2021, respectively. The cost of these benefits for active employees, which includes claims incurred but not reported, amounted to $ million, $ million and $ million for 2023, 2022 and 2021, respectively.
Defined Contribution Pension Plans
The Company’s annual contribution for its domestic defined contribution pension plan was $ million, $ million and $ million for 2023, 2022 and 2021, respectively. The contribution percentage ranges from percent to percent of compensation for covered employees based on an age and service formula. Assets in employee accounts of the domestic defined contribution pension plan are invested in various investment funds as directed by the participants. These investment funds did not own a significant number of shares of the Company’s common stock for any year presented.
The Company’s annual contributions for its foreign defined contribution pension plans, which are based on various percentages of compensation for covered employees up to certain limits, were $ million, $ million and $ million for 2023, 2022 and 2021, respectively. Assets in employee accounts of the foreign defined contribution pension plans are invested in various investment funds. These investment funds did not own a significant number of shares of the Company’s common stock for any year presented.
Defined Benefit Pension Plans
At December 31, 2023, the domestic defined benefit pension plan was overfunded, with a projected benefit obligation of $ million, fair value of plan assets of $ million and excess plan assets of $ million. The plan was funded in accordance with all applicable regulations at December 31, 2023.
The Company has foreign defined benefit pension plans. At December 31, 2023, of the Company’s foreign defined benefit pension plans were unfunded or underfunded, with combined accumulated benefit obligations, projected benefit obligations, fair values of net assets and deficiencies of plan assets of $ million, $ million, $ million and $ million, respectively.
The Company expects to make the following benefit payments for all domestic and foreign defined benefit pension plans: $ million in 2024; $ million in 2025; $ million in 2026; $ million in 2027; $ million in 2028; and $ million in 2029 through 2033. The Company expects to contribute $ million to the foreign defined benefit pension plans in 2024.
The estimated net actuarial gains and prior service costs for the defined benefit pension plans that are expected to be amortized from AOCI into net pension costs in 2024 are $() million and $ million, respectively.
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 $ $ $ $ $ Interest cost      Expected return on plan assets()()()()()()Amortization of prior service cost (credit)   ()()()Amortization of actuarial (gains) losses()  Ongoing pension cost        Settlement (credits) costs ()() Net pension cost      
Other changes in plan assets and projected benefit
obligation recognized in AOCI (before taxes):
Net actuarial (gains) losses arising during the year() () ()()Prior service cost (credit) arising during the year    ()()Amortization of actuarial gains (losses) ()()Amortization of prior service (cost) credit()()() Loss (gain) recognized for settlement  ()Balance at December 31, 2023  
(1)    During the year ended December 31, 2022, the Company sold treasury shares to fund Company contributions to the domestic defined contribution plan. The related proceeds were $ million.
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 $ $ Total dividends (in millions)   
Treasury Stock
The Company acquires its common stock for general corporate purposes through its publicly announced share repurchase program. As of December 31, 2023, the Company had remaining authorization from its Board of Directors to purchase million shares of its common stock.
 $ $ Treasury stock purchases (shares)   Average price per share$ $ $ 
NOTE 14 –
employees contributed to the Company’s defined contribution savings plan, voluntary to all eligible salaried employees and any employee in a group of employees to which coverage has been extended on a non-discriminatory basis by the plan’s Administration Committee. Participants are allowed to contribute, on a pretax or after-tax basis, up to the lesser of percent of their annual compensation or the maximum dollar amount allowed under the Internal Revenue Code. The Company matches percent of all contributions up to percent of eligible employee contributions. Such participant contributions may be invested in a variety of investment funds or a Company common stock fund and may be exchanged between investments as directed by the participant. Participants are permitted to diversify both future and prior Company matching contributions previously allocated to the Company common stock fund into a variety of investment funds.
The Company made contributions to the defined contribution savings plan on behalf of participating employees, representing amounts authorized by employees to be withheld from their earnings, of $ million, $ million and $ million in 2023, 2022 and 2021, respectively. The Company’s matching contributions to the defined contribution savings plan charged to operations were $ million, $ million and $ million for 2023, 2022 and 2021, respectively.
At December 31, 2023, there were shares of the Company’s common stock being held by the defined contribution savings plan, representing % of the total number of voting shares outstanding. Shares of Company common stock credited to each member’s account under the defined contribution savings plan are voted by the trustee under instructions from each individual plan member. Shares for which no instructions are received are voted by the trustee in the same proportion as those for which instructions are received.
NOTE 15 –
shares of common stock, plus any shares relating to awards that expire, are forfeited or canceled. The Company issues new shares upon exercise of option rights (options) and vesting of restricted stock units (RSUs). The 2006 Employee Plan permits the granting of options, appreciation rights, restricted stock, RSUs, performance shares and performance units to eligible employees. At December 31, 2023, appreciation rights, performance shares or performance units had been granted under the 2006 Employee Plan. Shares available for future grants under the 2006 Employee Plan were at December 31, 2023.
The 2006 Stock Plan for Nonemployee Directors (Nonemployee Director Plan) authorizes the Board of Directors, or a committee of the Board of Directors, to issue or transfer up to an aggregate of shares of common stock, plus any shares relating to awards that expire, are forfeited or canceled. The Nonemployee Director Plan permits the granting of options, appreciation rights, restricted stock and RSUs to members of the Board of Directors who are not employees of the Company. At
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options or appreciation rights had been granted under the Nonemployee Director Plan. Shares available for future grants under the Nonemployee Director Plan were at December 31, 2023. million that is expected to be recognized over a weighted-average period of years.
202320222021
Stock-based compensation expense$ $ $ 
Income tax benefit recognized   
Excess tax benefits from share-based payments are recognized as an income tax benefit in the Statements of Consolidated Income when options are exercised and RSUs vest. For the years ended December 31, 2023, 2022 and 2021, the Company’s excess tax benefit from options exercised and RSUs vested reduced the income tax provision by $ million, $ million and $ million, respectively.
Options
 % % %Expected life of options years years yearsExpected dividend yield of stock % % %Expected volatility of stock % % %
The risk-free interest rate is based upon the U.S. Treasury yield curve at the time of grant. The expected life of options was calculated using a scenario analysis model. Historical data was used to aggregate the holding period from actual exercises, post-vesting cancellations and hypothetical assumed exercises on all outstanding options. The expected dividend yield of stock is the Company’s best estimate of the expected future dividend yield. Expected volatility of stock was calculated using historical and implied volatilities.
Grants of non-qualified and incentive stock options have been awarded to certain officers and key employees under the 2006 Employee Plan. The options generally become exercisable to the extent of one-third of the optioned shares for each full year following the date of grant and generally expire after the date of grant. Unrecognized compensation expense with respect to options granted to eligible employees amounted to $ million at December 31, 2023. The unrecognized compensation expense is being amortized on a straight-line basis over the vesting period, net of estimated forfeitures based on historical activity, and is expected to be recognized over a weighted-average period of years.
 $ $ Granted  Exercised() Forfeited() Expired() 
Outstanding at December 31, 2023
 $ $ 
Exercisable at December 31, 2023
 $ $ 
The following table summarizes fair value and intrinsic value information for option activity:
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 $ $ Total fair value of options vested   Total intrinsic value of options exercised   
RSUs
The fair value of each RSU is equal to the market value of a share of the Company’s stock on the grant date. Grants of time-based RSUs, which generally require of continuous employment from the date of grant before vesting and receiving the stock without restriction, have been awarded to certain officers and key employees under the 2006 Employee Plan. The February 2023, 2022 and 2021 grants of performance-based RSUs vest at the end of a period based on the Company’s achievement of specified financial and operating performance goals relating to earnings per share and return on net assets employed.
Unrecognized compensation expense with respect to grants of RSUs to eligible employees amounted to $ million at December 31, 2023. The unrecognized compensation expense is being amortized on a straight-line basis over the vesting period and is expected to be recognized over a weighted-average period of years.
Grants of RSUs have been awarded to nonemployee directors under the Nonemployee Director Plan. These grants generally vest and stock is received without restriction to the extent of one-third of the RSUs for each year following the date of grant. Unrecognized compensation expense with respect to grants of RSUs to nonemployee directors amounted to $ million at December 31, 2023. The unrecognized compensation expense is being amortized on a straight-line basis over the vesting period and is expected to be recognized over a weighted-average period of years.
 $ $ Granted   Vested() Forfeited() 
Outstanding at December 31, 2023
   $ 
The following table summarizes the fair value and intrinsic value information for RSU activity:
202320222021
Weighted average grant date fair value per share$ $ $ 
Intrinsic value of RSUs vested during year   
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NOTE 16 –
)$()$ $()Amounts recognized in AOCI()  Amounts reclassified from AOCI () Balance at December 31, 2021()() ()Amounts recognized in AOCI() ()Amounts reclassified from AOCI ()()Balance at December 31, 2022()  ()Amounts recognized in AOCI   Amounts reclassified from AOCI()()()Balance at December 31, 2023$()$ $ $()
(1)    Includes changes in the fair value of cross currency swap contracts of $() million, $ million, $ million in 2023, 2022 and 2021, respectively. See Note 17.
(2)    Net of taxes of $ million, $() million, $() million in 2023, 2022 and 2021, respectively. See Note 9.
(3)    Net of taxes of $ million, $ million and $ million in 2023, 2022 and 2021, respectively. See Statements of Consolidated Comprehensive Income.

NOTE 17 –
 June 1, 2024November 8, 2021 June 1, 2027March 28, 2023 August 8, 2024June 28, 2023 August 8, 2025December 7, 2023 August 15, 2029
In December 2023, the Company settled its $ million U.S. Dollar to Euro cross currency swap contract entered into on August 1, 2023. At the time of settlement, an immaterial unrealized gain was recognized in AOCI.
 $ $ Other accruals()  Other long-term liabilities()  
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)$ $ Tax effect ()()(Losses) gains, net of taxes$()$ $ 
NOTE 18 –
 $ $ $ $ $ $ $ Qualified replacement plan     Net investment hedges     $ $ $ $ $ $ $ $ $ Liabilities:Net investment hedges$ $ $ $ $ 
The deferred compensation plan assets consist of the investment funds maintained for future payments under the Company’s executive deferred compensation plans, which are structured as rabbi trusts. The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC. The level 1 investments are valued using quoted market prices multiplied by the number of shares. The level 2 investments are valued based on vendor or broker models. As of December 31, 2023, $ million of deferred compensation plan assets were held in partnership funds measured using NAV (or its equivalent) as a practical expedient. These investments are not classified in the fair value hierarchy. The cost basis of all investments within the deferred compensation plan and qualified replacement plan was $ million, $ million, and $ million at December 31, 2023, 2022 and 2021, respectively.
The qualified replacement plan assets consisted of investment funds maintained for future contributions to the Company’s domestic defined contribution pension plan. See Note 9. During the first quarter of 2023, the remaining balance was fully utilized to fund the Company’s domestic defined contribution pension plan. The cost basis of the investment funds was $ million and $ million at December 31, 2022 and 2021, respectively.
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 $ $ $ $ $ Non-traded debt      
NOTE 19 –
, not to exceed one year. Many customers who purchase on account take advantage of early payment discounts offered by paying within 30 days of being invoiced. The Company estimates variable consideration for these sales on the basis of both historical information and current trends to estimate the expected amount of discounts to which customers are likely to be entitled.
The remaining revenue is governed by long-term supply agreements and related purchase orders (“contracts”) that specify shipping terms and aspects of the transaction price including rebates, discounts and other sales incentives, such as advertising support. Contracts are at standalone pricing. The performance obligation in these contracts is determined by each of the individual purchase orders and the respective stated quantities, with revenue being recognized at a point in time when obligations under the terms of the agreement are satisfied. This generally occurs with the transfer of control of our products to the customer. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.
Refer to Note 23 for the Company’s disaggregation of Net sales by Reportable Segment. As the Reportable Segments are aligned by similar economic factors, trends and customers, this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Approximately % of the Company’s net external sales are in the Company’s North America region (which is comprised of the United States, Canada and the Caribbean region), slightly less than % in the EMEAI region (Europe, Middle East, Africa and India), with the remaining global regions accounting for the residual balance. No individual country outside of the United States is individually significant.
The Company has made payments or given credits for various incentives at the beginning of a long-term contract where future revenue is expected and before satisfaction of performance obligations. Under these circumstances, the Company recognizes a contract asset and amortizes these prepayments over the expected benefit life of the long-term contract, typically on a straight-line basis.
The majority of variable consideration in the Company’s contracts include a form of volume rebate, discounts, and other incentives, where the customer receives a retrospective percentage rebate based on the amount of their purchases. In these situations, the rebates are accrued as a fixed percentage of sales and recorded as a reduction of net sales until paid to the customer per the terms of the contract. Forms of variable consideration such as tiered rebates, whereby a customer receives a retrospective price decrease dependent on the volume of their purchases, are calculated using a forecasted percentage to determine the most likely amount to accrue. Management creates a baseline calculation using historical sales and then utilizing forecast information, estimates the anticipated sales volume each quarter to calculate the expected reduction to sales. The remainder of the transaction price is fixed as agreed upon with the customer, limiting estimation of revenues, including constraints.
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 $ $ $ $ Balance at December 31, 2023     
The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the contractual performance obligation and the associated payment.
Provisions for estimated returns are established and the expected costs continue to be recognized as contra-revenue per ASC 606 when the products are sold. The Company only offers an assurance type warranty on products sold, and there is no material service to the customer beyond fixing defects that existed at the time of sale and no warranties are sold separately.
Warranty liabilities are excluded from the table above. Amounts recognized during the year from deferred revenue were not material. The Company records a right of return liability within each of its operations to accrue for expected customer returns. Historical actual returns are used to estimate future returns as a percentage of current sales. Obligations for returns and refunds were not material individually or in the aggregate.
Allowance for Current Expected Credit Losses
 $ $ Bad debt expense   Uncollectible accounts written off, net of recoveries()()()Ending balance$ $ $ 
NOTE 20 –
 $()$()(Gain) loss on divestiture of businesses (see Note 3)()  Loss (gain) on sale or disposition of assets ()()Other   Total$ $()$ 
Provisions for environmental matters – net represent initial provisions for site-specific estimated costs of environmental investigation or remediation and increases or decreases to environmental-related accruals. These provisions are recorded or adjusted as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued. During 2023, provisions for environmental matters - net increased primarily due to new information which impacted the estimate of required remediation at certain Major Sites and other Company locations. See Note 11 for further details on the Company’s environmental-related activities.
The loss (gain) on sale or disposition of assets represents the net realized loss (gain) associated with the sale or disposal of property, plant and equipment and intangible assets previously used in the conduct of the primary business of the Company.
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)$ $()Loss (gain) on extinguishment of debt (see Note 8)  ()Net expense from banking activities   Foreign currency transaction related losses - net   Miscellaneous pension and benefit (income) expense()  Other income()()()Other expense   Total$ $ $()
Investment (gains) losses primarily relate to the change in market value of the investments held in the deferred compensation plan and qualified replacement plan. See Note 18 for additional information on the fair value of these investments.
Foreign currency transaction related losses - net include the impact from foreign currency transactions, including from highly inflationary economies such as Argentina, and net realized losses from foreign currency option and forward contracts. During 2023, foreign currency transaction related losses - net increased primarily as a result of the significant devaluation of the Argentine Peso in December 2023 as part of economic reforms implemented by the government of Argentina. As a result of these actions in Argentina, the Company incurred a loss of $ million. There were material foreign currency option and forward contracts outstanding at December 31, 2023, 2022 and 2021.
Miscellaneous pension and benefit (income) expense consists of the non-service components of net periodic pension and benefit cost. See Note 9.
Other income and other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company. There were no items within other income or other expense that were individually significant at December 31, 2023, 2022 and 2021.
NOTE 21 –
 $ $ Foreign   State and local   Total current   Deferred:Federal()()()Foreign()()()State and local ()()Total deferred()()()Total provisions for income taxes$ $ $ 
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 % % %Effect of:State and local income taxes   Investment vehicles()()()Employee share-based payments()()()Research and development credits()()()Amended returns and refunds   Taxes on non-U.S. earnings  ()Other - net () Reported effective tax rate % % %
The increase in the effective tax rate for 2023 compared to 2022 was primarily related to an unfavorable change in the jurisdictional mix of earnings.
 $ $ Foreign   $ $ $ 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using the enacted tax rates and laws that are currently in effect.
 $ $ Employee related and benefit items   Operating lease liabilities   Research and development capitalization  Other items    Total deferred tax assets   Deferred tax liabilities:Intangible assets and Property, plant, and equipment   LIFO inventories   Operating lease right-of-use assets   Other items    Total deferred tax liabilities   
Net deferred tax liabilities
$ $ $ 
As of December 31, 2023, the Company’s net deferred income tax liability relates primarily to deferred tax liabilities recorded for intangible assets acquired through the Valspar acquisition.
Netted against the Company’s other deferred tax assets were valuation allowances of $ million, $ million and $ million at December 31, 2023, 2022 and 2021, respectively. The Company has $ million of domestic net operating loss
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million that expire in calendar years 2028 through 2033 and foreign net operating losses of $ million. The foreign net operating losses are related to various jurisdictions that provide for both indefinite carryforward periods and others with carryforward periods that expire between tax years 2023 to 2043.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company finalized the IRS audit for the 2011 and 2013 through 2016 income tax returns and paid the tax assessment for 2013 through 2016 in the fourth quarter. The Company expects to pay the remaining assessment related to tax and interest in 2024. The IRS is currently auditing the Company’s 2017, 2018 and 2019 income tax returns. As of December 31, 2023, the U.S. federal statute of limitations has not expired for the 2013 through 2023 tax years.
As of December 31, 2023, the Company is subject to non-U.S. income tax examinations for the tax years of 2014 through 2023. In addition, the Company is subject to state and local income tax examinations for the tax years 1998 through 2023.
 $ $ Additions based on tax positions related to the current year   Additions for tax positions of prior years   Reductions for tax positions of prior years()()()Settlements()()()Lapses of statutes of limitations()()()Balance at end of year$ $ $ 
The decrease in unrecognized tax benefits was primarily settlements related to federal renewable energy tax credit funds with DC Solar Solutions, Inc. and certain of its affiliates and other adjustments with the IRS in each of the tax years 2011 and 2013 through 2016. There were also additions in unrecognized tax benefits related to the reversal of benefits recognized from certain positions taken on current and prior year income tax returns filed in U.S. federal and various state jurisdictions. These additions were primarily offset by various positions taken on prior year income tax returns filed in U.S. and various foreign jurisdictions that were no longer deemed to be at risk. At December 31, 2023, 2022 and 2021, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $ million, $ million and $ million, respectively.
Included in the balance of unrecognized tax benefits at December 31, 2023 is $ million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to federal audits of partnership investments and expiring statutes in federal, foreign and state jurisdictions.
The Company classifies all income tax related interest and penalties as income tax expense. During the year ended December 31, 2023, there was an increase in income tax interest and penalties of $ million. During the years ended December 31, 2022 and 2021, there was a increase (decrease) in income tax interest and penalties of $ million and $() million, respectively. The Company accrued $ million, $ million and $ million at December 31, 2023, 2022 and 2021, respectively, for the potential payment of interest and penalties.
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NOTE 22 –
 $ $ Weighted average shares outstanding   Basic net income per share$ $ $ DilutedNet income$ $ $ Weighted average shares outstanding assuming dilution:Weighted average shares outstanding   
Stock options and other contingently issuable shares (1)
   Weighted average shares outstanding assuming dilution   Diluted net income per share$ $ $ 
(1)    Stock options and other contingently issuable shares excludes million, million and million shares at December 31, 2023, 2022 and 2021, respectively, due to their anti-dilutive effect.
NOTE 23 –
reportable operating segments: Paint Stores Group, Consumer Brands Group and Performance Coatings Group (individually, a Reportable Segment and collectively, the Reportable Segments). Factors considered in determining the Reportable Segments of the Company include the nature of business activities, the management structure directly accountable to the Company’s CODM for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors. The Company reports all other business activities and immaterial operating segments that are not reportable in the Administrative segment.
The Company’s CODM has been identified as the Chief Executive Officer because they have the final authority over performance assessment and resource allocation decisions. Because of the diverse operations of the Company, the CODM regularly receives discrete financial information about each Reportable Segment as well as a significant amount of additional financial information about certain divisions, business units or subsidiaries of the Company. The CODM uses all such financial information for performance assessments and resource allocation decisions. The CODM evaluates the performance of and allocates resources to the Reportable Segments based on segment profit or loss and cash generated from operations. The accounting policies of the Reportable Segments are the same as those described in Note 1.
The Paint Stores Group consisted of company-operated specialty paint stores in the United States, Canada, and the Caribbean region at December 31, 2023. Each store in this segment is engaged in servicing the needs of architectural and industrial paint contractors and do-it-yourself homeowners. These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products. The majority of these products are produced by manufacturing facilities in the Consumer Brands Group. In addition, each store sells select purchased associated products. The loss of any single customer would not have a material adverse effect on the business of this segment. During 2023, this segment opened net new stores, consisting of new stores opened and stores closed. In 2022 and 2021, this segment opened and net new stores, respectively. The CODM uses discrete financial information about the Paint Stores Group, supplemented with information by geographic region, product type and customer type, to assess the performance of and allocate resources to the Paint Stores Group as a whole. In accordance with ASC
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million pre-tax loss for trademark impairments related to the Restructuring Plan (see Note 7). Sales and marketing of certain controlled brand and private-label products is performed by a direct sales staff. The products distributed through third-party customers are intended for resale to the ultimate end-user of the product. The Consumer Brands Group also consisted of company-operated specialty paint stores in Latin America at December 31, 2023. Each store in this segment is engaged in servicing the needs of home, commercial and industrial projects to contractors and do-it-yourself customers in Latin America. These stores market and sell Sherwin-Williams® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products which are branded for the Latin America market. In addition, each store sells select purchased associated products. The Consumer Brands Group had sales to certain customers that, individually, may be a significant portion of the sales and related profitability of the segment. During 2023, the segment opened net new stores, consisting of stores opened and stores closed. In 2022 and 2021, this segment (closed) opened () and net new stores, respectively.
The Consumer Brands Group also supports the Company’s other businesses around the world with new product research and development, manufacturing, distribution and logistics. Approximately % of the total sales of the Consumer Brands Group in 2023 were intersegment transfers of products primarily sold through the Paint Stores Group. This segment incurred most of the Company’s capital expenditures related to ongoing environmental compliance measures, manufacturing capacity expansion, operational efficiencies and maintenance projects at sites currently in operation. The CODM uses discrete financial information about the Consumer Brands Group, supplemented with information by geographic region, product type and customer type, to assess the performance of and allocate resources to the Consumer Brands Group as a whole. In accordance with ASC 280-10-50-9, the Consumer Brands Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.
The Performance Coatings Group develops and sells industrial coatings for wood finishing and general industrial (metal and plastic) applications, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and performance-based resins and colorants worldwide. This segment licenses certain technology and trade names worldwide, including Sherwin-Williams® and other controlled brand products which are distributed through the Paint Stores Group, this segment’s company-operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors. The Performance Coatings Group had sales to certain customers that, individually, may be a significant portion of the sales of the segment. However, the loss of any single customer would not have a material adverse effect on the overall profitability of the segment. During 2023, the segment added net new branches, consisting of opened or acquired branches and branches closed. The CODM uses discrete financial information about the Performance Coatings Group, supplemented with information about geographic divisions, business units and subsidiaries, to assess the performance of and allocate resources to the Performance Coatings Group as a whole. In accordance with ASC 280-10-50-9, the Performance Coatings Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.
The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site and the operations of a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s current global headquarters, and disposal of idle facilities. Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses that were not directly associated with the Reportable Segments. The Administrative segment included a $ million pre-tax gain on the divestiture of a non-core domestic aerosol business and a $ million pre-tax loss for the impairment of assets related to the divestiture of China architectural business in 2023 and a $ million pre-tax loss on the Wattyl divestiture in 2021. See Notes 3, 4 and 20 for additional information. Sales of this segment represented external leasing revenue. The Administrative segment did not include any significant foreign operations. Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment.
Net external sales of all consolidated foreign subsidiaries were $ billion, $ billion and $ billion for 2023, 2022 and 2021, respectively.
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billion, $ billion and $ billion at December 31, 2023, 2022 and 2021, respectively. Long-lived assets of consolidated foreign subsidiaries totaled $ billion, $ billion and $ billion at December 31, 2023, 2022 and 2021, respectively.
Total Assets of the Company were $ billion, $ billion and $ billion at December 31, 2023, 2022 and 2021, respectively. Total assets of consolidated foreign subsidiaries were $ billion, $ billion and $ billion, which represented %, % and % of the Company’s total assets at December 31, 2023, 2022 and 2021, respectively.
No single geographic area outside the United States was significant relative to consolidated Net sales or consolidated long-lived assets. Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all years presented.
 $ $ $ $ Intersegment transfers  ()— Total net sales and intersegment transfers$ $ $ $()$ Segment profit$ $ $ $ Interest expense$()()Administrative expenses and other()()Income before income taxes$ $ $ $()$ % to net sales % % % %Identifiable assets$ $ $ $ $ Capital expenditures     Depreciation     Amortization     

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 $ $ $ $ Intersegment transfers  ()— Total net sales and intersegment transfers$ $ $ $()$ Segment profit$ $ $ $ Interest expense$()()Administrative expenses and other()()Income before income taxes$ $ $ $()$ % to net sales % % % %Identifiable assets$ $ $ $ $ Capital expenditures     Depreciation     Amortization     
2021
Paint Stores
Group		Consumer Brands
Group		Performance Coatings
Group		AdministrativeConsolidated
Totals
Net sales$ $ $ $ $ 
Intersegment transfers  ()— 
Total net sales and intersegment transfers$ $ $ $()$ 
Segment profit$ $ $ $ 
Interest expense$()()
Administrative expenses and other()()
Income before income taxes$ $ $ $()$ 
% to net sales % % % %
Identifiable assets$ $ $ $ $ 
Capital expenditures     
Depreciation     
Amortization     
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.    CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our President and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and accumulated and communicated to our management, including our President and Chief Executive Officer and our Senior Vice President – Finance and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
The “Report of Management on Internal Control over Financial Reporting” and the “Report of the Independent Registered Public Accounting Firm on Internal Control over Financial Reporting” are set forth in Item 8.
There were no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.    OTHER INFORMATION
Trading Arrangements
During the quarter ended December 31, 2023, none of the Company’s directors or “officers,” as defined in Rule 16a-1(f) of the Exchange Act, , modified, or a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
ITEM 9C.    DISCLOSURE REGARDING JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
The information regarding our directors and director nominees is set forth in our Proxy Statement under the caption “Proposal 1 – Election of 11 Directors” and is incorporated herein by reference.
There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors. Please refer to the information set forth in our Proxy Statement under the caption “Board Committees,” which is incorporated herein by reference.
Executive Officers
The information regarding our executive officers is set forth under the caption “Information About Our Executive Officers” in Part I of this report, which is incorporated herein by reference.
Section 16(a) Beneficial Ownership Reporting Compliance
To the extent disclosure of any delinquent form under Section 16(a) of the Securities Exchange Act of 1934 is made by the Company, such disclosure will be set forth in our Proxy Statement under the caption “Delinquent Section 16(a) Reports” and is incorporated herein by reference.
Audit Committee
The information regarding the Audit Committee of our Board of Directors and audit committee financial experts is set forth in our Proxy Statement under the caption “Board Committees” and is incorporated herein by reference.
Code of Ethics
We have adopted a Code of Conduct, which applies to all directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions, of Sherwin-Williams and our subsidiaries wherever located. Our Code of Conduct contains the general guidelines and principles for conducting Sherwin-Williams’ business consistent with the highest standards of business ethics.
We have also adopted a Code of Ethics for Senior Financial Management, pursuant to which our chief executive officer, chief financial officer and senior financial management are responsible for creating and maintaining a culture of high ethical standards and of commitment to compliance throughout our Company to ensure the fair and timely reporting of Sherwin-Williams’ financial results and condition. Senior financial management includes the controller, the treasurer, the principal financial/accounting personnel in our operating groups and divisions, and all other financial/accounting personnel within our corporate departments and operating groups and divisions with staff supervision responsibilities.
Our Code of Conduct and Code of Ethics for Senior Financial Management are available on our Investor Relations website, investors.sherwin.com.
We intend to disclose on our Investor Relations website, investors.sherwin.com, any amendment to, or waiver from, a provision of our Code of Conduct or Code of Ethics for Senior Financial Management that applies to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or any persons performing similar functions, and that is required to be publicly disclosed pursuant to the rules of the SEC.
ITEM 11.    EXECUTIVE COMPENSATION
The information required by this item is set forth in our Proxy Statement under the captions “2023 Director Compensation Table,” “Director Compensation Program,” “Executive Compensation,” “Executive Compensation Tables” and “2023 CEO Pay Ratio” and is incorporated herein by reference (other than the Compensation Committee Report, which will be deemed furnished).
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information regarding security ownership of certain beneficial owners and management is set forth in our Proxy Statement under the captions “Security Ownership of Management, Directors and Director Nominees” and “Security Ownership of Certain Beneficial Owners” and is incorporated herein by reference.
The information regarding securities authorized for issuance under the Company’s equity compensation plans is set forth in our Proxy Statement under the caption “Equity Compensation Plan Information” and is incorporated herein by reference. 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is set forth in our Proxy Statement under the captions “Certain Relationships and Transactions with Related Persons” and “Director Independence” and is incorporated herein by reference.
ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is set forth in our Proxy Statement under the caption “Matters Relating to the Independent Registered Public Accounting Firm” and is incorporated herein by reference.
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PART IV
ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1)Financial Statements
Page Number in Form 10-K
Statements of Consolidated Income
48
Statements of Consolidated Comprehensive Income
49
Consolidated Balance Sheets
50
Statements of Consolidated Cash Flows
51
Statements of Consolidated Shareholders’ Equity
52
Notes to Consolidated Financial Statements
53

(2)
 $ $ 
Additions (deductions) (1)
  ()Ending balance$ $ $ 

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(3) Exhibits
3.(a)
(b)
(c)
4.(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
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(p)
(q)
(r)
(s)
(t)
(u)
(v)
(w)
(x)
(y)
(z)
(aa)
(bb)
(cc)
(dd)
(ee)
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(ff)
(gg)
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(ii)
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(tt)
(uu)
(vv)
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(aaa)
10.**(a)
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The Sherwin-Williams Company Executive Disability Income Plan filed as Exhibit 10(g) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991 (SEC File Number 001-04851), and incorporated herein by reference.
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**(j)
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**(m)
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21.
23.
24.(a)
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(b)
31.(a)
(b)
32.(a)
(b)
97.
101.INSInline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104
The cover page from this Annual Report on Form 10-K for the fiscal year ended December 31, 2023, formatted in Inline XBRL and contained in Exhibit 101.
*Certain exhibits and schedules have been omitted in accordance with Item 601(a)(5) of Regulation S-K and the Company agrees to furnish supplementally to the SEC a copy of any omitted exhibits and schedules upon request.
 **Management contract or compensatory plan or arrangement.


ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 20, 2024.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 20, 2024.

 
THE SHERWIN-WILLIAMS COMPANY
By:/S/MARY L. GARCEAU
Mary L. Garceau, Secretary

* HEIDI G. PETZPresident and Chief Executive Officer, Director
(Principal Executive Officer)
    Heidi G. Petz
* JOHN G. MORIKISExecutive Chairman, Director
    John G. Morikis
* ALLEN J. MISTYSYNSenior Vice President – Finance and Chief Financial Officer (Principal Financial Officer)
    Allen J. Mistysyn
* JANE M. CRONINSenior Vice President – Enterprise Finance
(Principal Accounting Officer)
    Jane M. Cronin
* KERRII B. ANDERSONDirector
    Kerrii B. Anderson
* ARTHUR F. ANTONDirector
    Arthur F. Anton 
* JEFF M. FETTIGDirector
    Jeff M. Fettig
* CHRISTINE A. POONDirector
    Christine A. Poon
* AARON M. POWELLDirector
    Aaron M. Powell
* MARTA R. STEWARTDirector
    Marta R. Stewart
* MICHAEL H. THAMANDirector
    Michael H. Thaman
* MATTHEW THORNTON IIIDirector
    Matthew Thornton III
* THOMAS L. WILLIAMSDirector
    Thomas L. Williams
*The undersigned, by signing her name hereto, does sign this report on behalf of the designated officers and directors of the Company pursuant to powers of attorney executed on behalf of each such officer and director and filed as an exhibit to this report.
By:/S/MARY L. GARCEAU  February 20, 2024
 Mary L. Garceau, Attorney-in-fact  
102

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