5-12-22 FEI Chapter Meeting Keynote Speakers - Michael Pack & Tina Seashore | Oshkosh Corp.

Thanks for having us here and a special thanks for the contribution to the Boys and Girls Club. That certainly means a lot to Mike and I, and to our organization. Thanks for the quick snapshot of me, but a little bit more: I'm Tina Seashore. I lead HR today as of September for our commercial segment, which is a one-billion-dollar piece of the pie for Oshkosh. We make some pretty cool things—we help keep communities clean and efficient with refuse collection vehicles, concrete mixers, both front and rear discharge, and specialty vehicles with crane operation. You probably touch or see what the commercial segment makes every single day. I watched our RCVs come through my neighborhood this morning. Very big equipment with high technology within them. Prior to that, I led global rewards for Oshkosh and had accountability for strategic design for all of our comp, executive comp, HR systems, for the enterprise—15,000 folks across the globe. As you can imagine, you probably work with that individual alike in your organization, and it's important. I can say now, being the top business partner in the commercial segment, there probably isn't a day that goes by that I'm not talking with our VP of Finance and our President. The three of us together sit in a ton of strategic conversations and we're always updating one another. I have success stories just in my eight months already in that role that I'm not going to share today. But before I came to Oshkosh seven years ago, I worked for Bemis Company, which was acquired by Amcor, so heavy manufacturer, and I've been in HR basically all my life. I started out in retail for Walmart stores, so I've kind of seen it all. I've been part of a Fortune 500-plus organization publicly traded, which certainly has a lot of complexities. And that's me. I actually live in Appleton, Wisconsin. I have three kiddos, two dogs, a husband, and when I'm not working, I love to travel and see the world.

I like to add there that I think our everyday heroes that we serve do some of the most dangerous jobs in the world. A tow truck driver—one in how many are killed on the roadside every day? So we take endless amounts of pride in the products we make, knowing that those folks stepping into those vehicles are really going places that most of us wouldn't go. There's a ton of passion and pride around that, and you can see that in every single one of our manufacturing facilities. It's pretty special.

I think I'm covering—you're covering that. I'll add to it. Don't worry.

You bet. And I love our core values. If we can just throw them up right quick, Mike, one more time and go back. You know, when I first started at Oshkosh, we had this acronym called CHAIR, and those were our core values. I don't think—wait, citizenship, honesty? I don't even know what they stood for. They were just letters on a wall. We've been on this journey of being a people-first culture. We have the best products, the best customers, and we've really been focusing not just externally but internally on our people. One of the values that I love—all of them—is that we are better together. The way I approach my work internally is with that first, no matter what customer group I'm working with, no matter who it is, what function. Knowing that we can't get to where we want to go without each other. I think that resonates with the partnership that's been built over time within HR and finance. I wanted to highlight that one because I'm hoping you'll pick up on that a little bit too, and why it's so important to us.

All right, so we do have some learning objectives, but I want to spend just a little bit of time on this slide. We really believe that when we partner, there's a winning outcome. We are going to share with you four case studies—real-life examples, recent ones—and there are so many more we could talk about. But I thought it would be fun to take a quick walk down memory lane. The first time I ever had to talk to Mike, I was the VP of Total Rewards. I might have been in the position a year—I started June 2015. I'll give it like two weeks? No, I don't think so. So I've got our corporate finance team who has this authorization matrix, who approves what, all the governance. All of a sudden, I catch wind of a pension adjustment at Fire & Emergency that did not include me, and they just did it without any approval. So as daring, and as stubborn a little bit and bold as I can be, because I'm like, I'm not gonna let these people just walk all over me, so I call up Mike. It's funny because we laugh about that—the first time we ever had an interaction was us doing this, not without positive intent. But I'll tell you, at that moment in our journey as peers and partners, we probably didn't have the 'We Are Better Together' value foundation or the desire for partnership. It was kind of like, we do what we do and you do what you do, and we'll figure out the end solution, and we may fight about it and get really annoyed with one another—which is kind of what happened. So we've come a long way. That just does not work. And I already alluded to the fact that today, I am talking to my peer, Tina, VP of Finance. It makes Brad Nelson, my president, never like, well who do I talk to? Mike, too, right? You've got to talk to us both, but we're always talking, communicating, collaborating, getting different perspectives and insights. So we're hopeful through the case studies that you'll see that.

I told her, I'm like, you should cover that because thinking back to it, we've become such close business partners over the years, it's a funny example to look at. But you know what? I think what we quickly learned from it was that we both stepped back and tried to understand perspectives. From that point forward, it was very common for us to be picking the phone up all the time, saying, 'Hey, I want to run this by you,' or 'We're hiring this person, are you—if the person's looking for more money or more benefits'—really having that close interaction, knowing that she was a go-to person. Vice versa, yep.

Absolutely. I think we're judged by our stock price sometimes—it's as simple as the number, as complicated as it is. As a person who is partnered with Pat, and I've actually brought this to several of my teams, the feedback is amazing. What I see is more confidence, asking smarter questions, just being smarter business people, especially in our function. It's changing the conversation when they're meeting with their folks, giving them the courage to be different and show up different. It's been awesome. And this is something that John and Pat are so passionate about, and they take the time to do it. We appreciate it so much. But they also get to learn from the audience as well. It was kind of crazy six years ago when we started this—to think we hadn't ever had it. Just a simple request: when our earnings report comes out, what are the things that matter? Why do they matter? Why does our stock price jump or not jump after a call? What can we do like if we do something, how does that impact earnings per share when we're making decisions? The language and understanding of how a company makes money has been phenomenal. We just see our other functions getting smarter, and we're also sharing more information. We do it in an incentive comp quarterly, very transparent coming out of our earnings call. That's another example of taking financial data and applying it to the general population, understanding how they're attached and tied to our ultimate goal. This has been super cool to see. I challenge people: if you're not doing this in your organization, I think you will. It doesn't take much time or materials. We have the website up for investors; we don't have to recreate content. It just created such a great space for vulnerability and then that extra courage afterwards and understanding. It's been awesome.

Can we ask questions in the middle? Am I going off script? Do you want us to wait till the end?

When you do the financial training, does it transcend just human resources? I assume it's across all the company.

Is it reverse? Do you—does Mike learn from Tina?

Yes. I had the privilege for seven years to author the CD&A at Oshkosh, and I did it as well at Bemis. So I was kind of sad this last one I didn't get to—I did review it, but I was actually not writing it, which was a little scary to give that up, but it ended up being awesome.

The opportunity was we were with an organization for 19 years, our prior 401k partner. There was a desire and a need—we have a fiduciary responsibility and we always have to do RFPs on a basis that makes sense, make sure we're staying competitive, contracts are right, all of that. We went into that situation having zero intention to move. All of a sudden we came out of the process with 'Holy heck, we need to move to somebody new.' But the important part is this is anchored to our financial well-being pillar at Oshkosh. We focus on physical, emotional, and financial well-being, and we care a heck of a lot about this benefit for our folks. We always want to put in front of our team members the best-in-class. It's not a B-player or C-player; we are out there to find the best, and we have the courage to change if we need to. But the special part is, when I first started, I probably would have ran this project myself—I know how to vendor manage, do RFPs, sometimes do purchasing jobs, although I don't do those anymore because there are better-suited people. I have the tools in my toolkit to go out and find benefit platforms and plans. But this was an opportunity for us to bring forward subject matter experts from finance, treasury, digital technology, HR, marketing at the beginning. We were able to identify the intent, and when we went into the RFP process, we visited these vendors together, talked about results afterwards—everything from researching who we wanted to go out to RFP, to the site visits, to the way we were going to evaluate, to the implementation plan, to the communication rollout, to our integration with the investment committee. At the time I sat on the investment committee being the head of rewards, and Mike is on that too with our CEO, general counsel, chief HR officer, treasurer, and a couple other people. That committee is given authority from our board to operate with a management team for investment committee purposes. The alignment that resulted from bringing all those people from the beginning—I always hear fear of missing out is a real thing, but when you bring people together in the beginning and they get it, they become part of every solution. And that's what happened. We actually had to go in front of our investment committee to get this approved. We were in the middle of the pandemic, by the way. And this team was so passionate—yes, I know it's the middle of the pandemic, we've done our research, our team members deserve now more than ever something better. Being the investment committee member which I also had to remove my sponsor hat, those meetings with the investment committee folks were very seamless. They sensed our alignment, they sensed the risks. That was just very seamless for us as an organization even in the midst of the pandemic. We did alter the timeline—we had an aggressive implementation, we listened to some stakeholders and worked with Empower and adjusted that, so we delayed the project slightly, I think it was only a quarter. At the end of the day, there was certainly fear because it was pandemic, but internally our leadership teams, our segment presidents, their leadership teams were all bought in on board. The auditing process—we even brought in more of our friends from finance and HR to make sure every detail was identified. And it went off, and guess what? Silence. No tell me a time when that's happened. I've been in HR for 20 years, I've implemented benefits all over the place, I've closed pension plans, I've had to stand up in front of thousands of people—this was awesome. And our marketing strategy and communication plan, which included all these folks, it really was the team member at the center, doing the right thing for our people-first culture. It's a super cool example, and I think a couple of years ago we wouldn't have done it that way. We've learned, we grew, and it resulted in something really special.

Absolutely. I'll say I don't have the accountability anymore, but this has to be explained in our CD&A. If you've ever written one or read one, when you talk about how a financial measure if it's total shareholder return relative, you have to be able to precisely identify how it's calculated—what are the puts and takes, the numerator, the denominator—and we have that with relative return on invested capital too with a peer group for Oshkosh. This all has to be written and explained and be meaningful to our shareholders, pass Glass Lewis's and ISS's sniffers. We all believe it will, but that's a result we end up having to do a year later because we're always retrospective with the proxy. But that's really important. How we engaged our HR committee—we call it at Oshkosh our Human Resources Committee, because their responsibility and oversight spans beyond just basic executive compensation and benefits matters. That's critical again from an alignment perspective; all of these things have downstream ramifications and impact, and our shareholders need to read it and add value in it and hopefully vote our shares and we continue to stay in good graces of all the shareholders out there.

Yes. And as Mike said, we didn't have the benefit from learning from really anybody. The great thing is when you're publicly traded, you can go out and find out a lot of stuff once it's been released to the public. But I think we had like 10 organizations that were using this in the way that we are. So we really had to lean in and learn as much as we could. We've got a great comp consultant as well, but this felt very internal and relying on one another, looking to our left and right—do we have the right people at the table? Iteration, talk about it, why we should or shouldn't. It's another great example of—I've used the word courage a lot—being courageous to step into a space that we know is super important. We have executives' compensation and folks that are measured off of this. So you talked about in the beginning, we're putting our money where our mouth is, and I think it's going to be positive for Oshkosh. Importantly, with the rigor that we went into the process, there was a high degree of confidence, so there's a high degree of alignment from the executives who are ultimately under the plan as well.

All right, well we'll wrap up with this one. Did anyone else navigate the pandemic? I thought that mask picture was so cute, kind of in a way—sorry if I know I'm talking to a bunch of finance people, maybe you don't think those things are that cool, but I thought it was cute. It just gave me a sense of relief and a chuckle at how far we've come, and I certainly know we're still in this. Oshkosh was deemed an essential business. I think that's really important to understand. Every one of you probably were met with challenges in March of 2020 when we watched it come from China through Europe and into the US. I was part of our crisis management team, so we've been working on how to deploy stuff since then. But again, essential business. Our production team members never left. Our global headquarters shut down for two months; I think I returned to work May 20th of that year to the building. A lot of that is around kind of 'Better Together' and people-first culture. Each one of our business segments was met with different challenges. We had supply chain constraints, some had very large backlogs, and we couldn't let people off. In certain cases, we were trying to figure out how to shut down operation for a week or two weeks and bring it back up to meet the demands of the customer and the supply chain constraints. Everybody had a different issue or concern. But number one was to keep our team members safe and to limit the spread of COVID-19 in our facilities. We did not want that to happen at Oshkosh, and we had very few instances even still to this day where we believe team members contracted COVID-19 from another team member. That was critical. But we also had to meet the demands of our customers. Cost was an issue, I think it was for all of us. How do we meet our shareholders' expectations, our customers' expectations? Our team members were scared because they were hearing in the news people were losing their jobs left and right. We had some stuff to really work through. We knew what we had to take out from a cost perspective. I'll tell you, in other circumstances in my life where you have to reduce costs, the first place people go is headcount—that's natural. We had to look at that in a way; we had to look at how do we slow down the pace of wages. We did have to implement some furloughs, we did have to implement pay reductions for a period of time. Our executives took a pay reduction from April 1st through the end of September. I did as well. Some of our groups had to do one week, two weeks, or three weeks of furlough. We all had different avenues, but I'll tell you, we were not going to mess with people's financial well-being. We held that principle strong. We did not stop our 401k match, we did not cut benefits. We wanted our folks to know that we were going to get through this, and that's exactly what we did. So when I talk about cost takeout, the amount of conversation we had with keeping the team member at the center and caring for them in our underpinning with our people-first culture was so critical and important—how we made the decision, how we communicated this decision. I can tell you, our whole company rallied around one another and did what they had to do in their own individual part to make sure we were still standing at the end of it. And again, we're still going through it; we still have supply chain issues. If it's not something, it's the next. So we were really able to achieve what we set out to do with that flexibility, unique application in specific business units, but it still felt fair and consistent across our entire organization. We knew where we were trending from an operating income standpoint, which is one of our key measures for our short-term incentive plan compensation, and we knew we were well below threshold. But we looked around, and it's just true Oshkosh fashion: we persevere is one of our core values. We're tenacious, we fight through challenges, we fight against big competitors. It's who we are. Everyone just rallied and performed and kept us in a better position than probably we should have been as an organization. So our board of directors actually recognized this. In my prior role, I was privileged to attend every HR committee meeting. I actually authored most of the content and documents and presented a ton of it to our HR committee, along with partnership Mike and I did a lot of stuff together, and our CHRO, John Pfeiffer, and our President CEO as well. They came to us inquiring just about incentive comp. We rallied together and said, we kind of were getting underpinning feelings of the board willing to take positive discretion, which again, publicly traded company, you don't pass any type of sniffer from Glass Lewis or ISS—they can actually encourage shareholders to deny or vote down your say on pay, which is not good and not a place to be in. That has yet to happen to Oshkosh; I don't foresee it ever happening. But we were able to come together, talk about the discretion aspect in our short-term incentive plan, really share and tell a compelling story of what was actually happening. Our board was very keen on listening, and they wanted to do the right thing for our people. We assessed a risk with ISS, we tried to review other proxy statements in which maybe they were doing discretion for purposes through the pandemic. Our fiscal year used to be October 1 through September 30, so we kind of got the benefit of some early filers. We looked at that, and we just really honed in together and came to a conclusion that we were not going to fight for it, but we were going to talk holistically about what we had gone through and what our management team did to keep our organization in the shape that it was, which was amazing to watch. The end result is they actually approved an incentive comp payout, and we paid below the threshold value. We came up with the right formulaic approach; pro forma statements were created. Then the test: we actually had to write it in the CD&A of what we did, how we did it, how we approached it. And our say on pay that year was just as good as it was the other years, with no concerns from ISS or Glass Lewis. It was because we were specific, we talked about the why and all of the puts and takes of it, and were very transparent. That's just another example of collaboration specifically between HR and finance in all of these decisions, and ultimately how it translates into our shareholders and our board of directors. So in that case, we gained market share during it, we exceeded our cost reduction goals, we improved labor efficiency. There was a very tangible, higher OI on lower sales. Obviously, having the background from an HR perspective and working closely with the broader team, pulling that information together into compelling documentation, we could offer that. So again, a great success and a huge win from a people-first cultural perspective.

We also implemented a new pay practice during this for our folks who couldn't come to work because in the beginning, there was no testing and you're automatically quarantined. We implemented that and got alignment and agreement across the entire organization. We had to analyze the data—could we afford it? Was it the right thing to do? There was just one new benefit and compensation practice that we implemented during this, and it was all in the spirit of we don't want our folks coming in if they're not feeling well, and we don't want them worrying about their paycheck. If you're close contact and have to get sent home—one comment: if as an HR leader I didn't say this, I'd be really upset with myself. When Mike and I as senior leaders in our organization partner together, what do you think that means for our teams? What do you think that means for my direct reports working with Mike's direct reports? The flow of information is better, the communication and expectation around collaboration is already set when they see us do this or talk about that, or we bring each other up in conversation. The flow of stuff getting done and decision-making is so much easier for your people below. That's an added benefit, but it literally is true. Hopefully it gave you a few ideas of how you can break the barriers down. From humble beginnings of our working relationship to where we are today. I appreciate everyone's participation. I guess open it up to questions.