Board Justification

The Committee’s primary goal in compensating Applied’s executive officers is maximizing long-term shareholder return. In pursuing this goal, the Committee seeks to design and to maintain a program that will accomplish the following: • Attract and retain qualified and motivated executives by providing compensation that, at target performance, is competitive with a peer group of distribution industry companies, • Incentivize executives to achieve goals, and to take appropriate risks, consistent with Applied’s business strategies, and • Reward executives for results they influence that contribute to long-term shareholder value.

Board Justification

Sixty percent (60%) of each executive officer’s Management Incentive Plan payout was determined based on the level of achievement of net income and twenty percent (20%) was determined based on the level of achievement of average working capital as a percentage of sales, with the remainder determined by the executive officer’s individual performance.

Board Justification

Retirement Savings Plan (section 401(k) plan) matching contributions, KERP account credits, Company contributions for executive life insurance, for a $300,000 benefit, and Estimated values of perquisites and other personal benefits.

Board Justification

These awards are the 2023-2025 performance shares described in the Compensation Discussion and Analysis at page 38. The performance period ended on June 30, 2025, and performance for the final year was certified on August 12, 2025.