tm222474-1_def14a - none

500 Jackson Street, Box 3005, Columbus, Indiana 47202-3005

NOTICE OF 2022
ANNUAL MEETING OF
SHAREHOLDERS

To Our Shareholders:

NOTICE IS HEREBY GIVEN that the 2022 Annual Meeting of the Shareholders of Cummins Inc. will be held virtually on Tuesday, May 10, 2022, at 11:00 a.m. Eastern Time, for the following purposes:

to elect the thirteen nominees named in the attached proxy statement as directors for the ensuing year;

to consider an advisory vote on the compensation of our named executive officers;

to ratify the appointment of PricewaterhouseCoopers LLP as our auditors for 2022;

to consider a proposal from a shareholder regarding an independent chairman of the board; and

to transact any other business that may properly come before the meeting or any adjournment thereof.

Due to the ongoing public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees, shareholders and other stakeholders, the Annual Meeting of Shareholders will be held in a virtual meeting format only. You will not be able to attend the Annual Meeting physically.

Only shareholders of our Common Stock of record at the close of business on March 8, 2022, are entitled to notice of, and to vote at, the meeting.

If you do not expect to be present virtually at the meeting, you are urged to vote your shares by telephone, via the Internet, or by completing, signing and dating the enclosed proxy card and returning it promptly in the envelope provided.

You may revoke your proxy card at any time before the meeting. Except with respect to shares attributable to accounts held in the Cummins Retirement and Savings Plans, any shareholders entitled to vote at the annual meeting who attend the meeting will be entitled to cast their votes electronically during the meeting.

SHARON R. BARNER,
Secretary

March 28, 2022

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2022 ANNUAL SHAREHOLDER MEETING TO BE HELD ON MAY 10, 2022:
the Annual Report and Proxy Statement are available at www.proxyvote.com

	DATE May 10, 2022
	TIME 11:00 a.m. Eastern Time
	RECORD DATE March 8, 2022
	VOTING
	BY THE INTERNET Visit the website noted on your proxy card to vote online
	BY TELEPHONE Use the toll-free telephone number on your proxy card to vote by telephone
	BY MAIL Sign, date, and return your proxy card in the enclosed envelope to vote by mail.

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PROXY STATEMENT FOR 2022
ANNUAL SHAREHOLDERS MEETING

Generally

We are furnishing this proxy statement in connection with the solicitation by our Board of Directors of proxies to be voted at our 2022 Annual Meeting of Shareholders to be held on Tuesday, May 10, 2022, and at any adjournment thereof, which we refer to as our “Annual Meeting.” This proxy statement, together with the enclosed proxy card, is first being made available to our shareholders on or about March 28, 2022.

Holders of our Common Stock of record at the close of business on March 8, 2022 are entitled to vote at the Annual Meeting. On that date there were issued and outstanding 142,074,564 shares of Common Stock, each of which is entitled to one vote on each matter submitted to a shareholder vote at the Annual Meeting.

Each share of Common Stock represented by a properly executed and delivered proxy card will be voted at the Annual Meeting in accordance with the instructions indicated on that proxy card, unless such proxy card has been previously revoked. If no instructions are indicated on a signed proxy card, the shares represented by such proxy card will be voted as recommended by our Board.

A shareholder may revoke his or her proxy card at any time before the Annual Meeting by delivering to our Secretary written notice of such revocation. This notice must include the number of shares for which the proxy card had been given and the name of the shareholder of such shares as it appears on the stock certificate(s), or in book entry form on the records of our stock transfer agent and registrar, Broadridge Corporate Issuer Solutions, Inc., evidencing ownership of such shares. In addition, except with respect to shares attributable to accounts held in the Cummins Retirement and Savings Plans (the “Cummins RSPs”), any shareholder who has executed a proxy card but is present virtually at the Annual Meeting will be entitled to cast his or her vote electronically instead of by proxy card, thereby canceling the previously executed proxy card.

Participants in the Cummins RSP who hold shares of Common Stock in their account and provide voting instructions to the trustee with respect to such shares will have their shares voted by the trustee as instructed. Such participants will be considered named fiduciaries with respect to the shares allocated to their accounts solely for purposes of this proxy solicitation. If no voting instructions are provided, shares held in the accounts will be voted in the same manner and proportion as shares with respect to which valid voting instructions were received. Any instructions received by the trustee from participants regarding their vote shall be confidential. Cummins RSP participants may attend the Annual Meeting virtually but cannot vote the shares in their Cummins RSP accounts at the Annual Meeting.

Information About the Virtual Annual Meeting

Attendance and Participation

Due to the global COVID-19 pandemic, we will conduct a virtual Annual Meeting to help protect the safety of all stakeholders. Our virtual Annual Meeting will be conducted on the Internet via live webcast. You will be able to participate online and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CMI2022. Shareholders will be able to vote their shares electronically during the Annual Meeting.

To participate in the Annual Meeting, you will need the 16-digit control number included on your proxy card or your voting instruction form. The Annual Meeting will begin promptly at 11:00 a.m. Eastern Time. We encourage you to access the Annual Meeting prior to the start time. Online access will begin at 10:45 a.m. Eastern Time.

The virtual Annual Meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure they have a strong Internet connection wherever they intend to participate in the Annual Meeting. Participants should also allow plenty of time to log in and ensure that they can hear streaming audio prior to the start of the Annual Meeting.

Questions

Following adjournment of the formal business of the Annual Meeting, the chairman will give a presentation about the company’s business. At the conclusion of this presentation, the company will address appropriate general questions from shareholders regarding the company. We may also

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respond to questions on an individual basis or by posting answers on our Investor Relations website after the meeting. Shareholders eligible to vote may submit questions to the chairman by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/CMI2022, typing a question into the “Ask a Question” field, and clicking “Submit.”

Your question or comment should be addressed to the chairman, who will either respond or refer it to others as appropriate. Time permitting, the chairman will attempt to answer as many questions as possible. It will help us if questions are succinct and cover only one topic per question. Questions from multiple shareholders on the same topic or that are otherwise related may be grouped, summarized and answered together.

If there are any matters of individual or personal concern to a shareholder and not of general concern to all shareholders, or if a question posed was not otherwise answered, such matters may be raised separately after the Annual Meeting by contacting Investor Relations at www.cummins.com. Recording of the Annual Meeting is prohibited. A webcast playback, including responses to shareholder questions, will be available at www.virtualshareholdermeeting.com/CMI2022 24 hours after the completion of the meeting.

Technical Difficulties

Technical support, including related technical support phone numbers, will be available on the virtual meeting platform at www.virtualshareholdermeeting.com/CMI2022 beginning at 10:45 a.m. Eastern Time on May 10, 2022 through the conclusion of the Annual Meeting.

IMPORTANT: If you hold your shares in a brokerage account, you should be aware that, due to New York Stock Exchange, or NYSE, rules, if you do not affirmatively instruct your broker how to vote within 10 days prior to our Annual Meeting, your broker will not be permitted to vote your shares (i) for the election of directors; (ii) on the advisory vote on the compensation of our named executive officers; or (iii) on the shareholder proposal regarding an independent chairman of the board. Therefore, you must affirmatively take action to vote your shares at our Annual Meeting. If you do not affirmatively vote your shares, your shares will not be voted (i) for the election of directors, (ii) on the advisory vote on the compensation of our named executive officers, or (iii) on the shareholder proposal regarding an independent chairman of the board.

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PROXY SUMMARY

CUMMINS 2022 PROXY

PROXY SUMMARY

This summary highlights selected information contained in this proxy statement, but it does not contain all the information you should consider. We urge you to read the whole proxy statement before you vote. This proxy statement is being made available to shareholders on or about March 28, 2022.

WE WILL BE VOTING ON THE FOLLOWING MATTERS:

Agenda Item

Voting Recommendation

More Information

Election of thirteen directors nominated by Cummins’ Board

FOR EACH NOMINEE

Page 16

Advisory vote on the compensation of our named executive officers

FOR

Page 67

Ratification of independent public accountants

FOR

Page 68

Shareholder proposal regarding an independent chairman of the board

AGAINST

Page 72

			Committee Memberships
	Age	Director Since	Audit	Talent and Comp	Finance	Governance(1)	Safety Environment and Tech
N. THOMAS LINEBARGER Chairman and Chief Executive Officer, Cummins Inc.	59	2009
JENNIFER W. RUMSEY President and Chief Operating Officer, Cummins Inc.	48	2022
ROBERT J. BERNHARD Vice President for Research, University of Notre Dame	69	2008
FRANKLIN R. CHANG DIAZ Chairman and CEO, Ad Astra Rocket Company	71	2009
BRUNO V. DI LEO Managing Director, Bearing North LLC	65	2015
STEPHEN B. DOBBS Retired Senior Group President, Fluor Corporation	65	2010
CARLA A. HARRIS Senior Client Advisor, Morgan Stanley	59	2021
ROBERT K. HERDMAN Managing Director, Kalorama Partners, LLC	73	2008
THOMAS J. LYNCH Chairman, TE Connectivity Ltd.	67	2015
WILLIAM I. MILLER President, The Wallace Foundation	65	1989
GEORGIA R. NELSON Retired President and CEO, PTI Resources, LLC	72	2004
KIMBERLY A. NELSON Retired Senior Vice President, External Relations of General Mills, Inc.	59	2020
KAREN H. QUINTOS Retired Chief Customer Officer, Dell Technologies Inc.	58	2017

Chair

Member

(1)

We anticipate appointing the Chair of the Governance & Nominating Committee from among the independent Directors at the Annual Meeting.

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CUMMINS 2022 PROXY

PROXY SUMMARY

Our 2021 Performance*

In 2021, our revenues increased by 21 percent, as global economies began to recover from the impact of the COVID-19 pandemic in 2020. Full year revenues in North America increased 16 percent and represented 55 percent of our total revenues, driven by increased demand for truck, construction and power generation equipment. International revenues increased by 29 percent, driven by stronger demand across many of our markets and regions. While we saw demand improve in most of our major markets, the ongoing impacts of the COVID-19 pandemic have continued to constrain supply, resulting in part shortages and elevated freight, labor and logistics, impacting our profitability.

In light of the supply challenges, we have leveraged our global footprint to ensure that we meet the needs of our customers while still delivering solid financial results. For the full year, our earnings per share (EPS) was $14.61, up from $12.01 in 2020. The solid financial performance was made possible by our employees, who worked tirelessly to support our customers, manage through supplier shutdowns, part shortages and extended lead times, while adjusting the way we work in order to mitigate the spread of the virus.

Key business highlights include:

[MISSING IMAGE: tm222474d1-tbl_performpn.jpg]

See Annex A for reconciliation of GAAP to non-GAAP measures referenced in this section.

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CUMMINS 2022 PROXY

PROXY SUMMARY

Corporate Governance Highlights

We long have believed that good corporate governance is important in ensuring that we are managed for the long-term benefit of our shareholders.


Board Leadership • Annual assessment and determination of Board leadership structure • Lead Director has a strong role and significant governance duties, including chair of Governance & Nominating Committee and of all executive sessions of independent directors	Board Accountability • All directors are elected annually via majority voting standard • Our Board has adopted proxy access, shareholder right to call special meetings, and shareholder right to amend by-laws	Board Evaluation and Effectiveness • Board evaluation process led by Lead Director and facilitated by either Lead Director, General Counsel or third party (at discretion of Lead Director); facilitator schedules feedback call with each Board member annually; recommends any improvements or enhancements derived from evaluations • Annual feedback and evaluation session by each Committee Chair with its members on Committee performance; recommends any Committee improvements or enhancements
Board Oversight of Risk & ESG • Our Board and its Committees exercise robust oversight of the company’s enterprise risk management program with dedicated time at every regular Board meeting • Our Board or its Committees review ESG strategy, risks and progress with dedicated time at every regular Board meeting	Shareholder Engagement • Board members routinely meet with top shareholders for conversations focused on our Board’s skill set and refreshment and its oversight of a variety of topics including company strategy, growth, risk management, governance and ESG issues	Board Refreshment and Diversity • 6 new directors added to Board since 2015 and 11 new directors since 2008 • Board members represent diverse perspectives, including 5 female directors, 2 African-American directors and 2 directors from Latin America

2021-2022 Recognition Highlights

Our practices and policies have earned Cummins recognition on a range of issues.

NAMED TO THE S&P DOW JONES INDICES OF THE WORLD’S MOST SUSTAINABLE COMPANIES IN 2021 AND TO THE GROUP’S NORTH AMERICAN INDEX FOR 15 CONSECUTIVE YEARS

NAMED ONE OF THE WORLD’S MOST ETHICAL COMPANIES IN 2022 FOR 15 CONSECUTIVE YEARS BY THE ETHISPHERE INSTITUTE, A LEADER IN ADVANCING ETHICAL BUSINESS PRACTICES

NAMED A TOP 100 COMPANY ON NEWSWEEK’S 2022 LIST OF AMERICA’S MOST RESPONSIBLE COMPANIES

NAMED TO BARRON’S 2022 LIST OF AMERICA’S 100 MOST SUSTAINABLE PUBLICLY HELD COMPANIES

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PROXY SUMMARY

CUMMINS 2022 PROXY

Executive Compensation

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Our long-term success depends on our ability to attract, motivate, focus and retain highly talented individuals committed to Cummins’ vision, strategy, and corporate culture. To that end, our executive compensation program is designed to link our executives’ pay to their individual performance, to Cummins’ annual and long-term performance and to successful execution of Cummins’ business strategies. We also use our executive compensation program to encourage high-performing executives to remain with us over the course of their careers.

We believe the compensation packages for our Named Executive Officers reflect their extensive management experience, continued high performance, and exceptional service to Cummins. We also believe our compensation strategies have been effective in attracting executive talent and promoting performance and retention.

EXECUTIVE COMPENSATION PRINCIPLES

We believe the level of compensation received by executives should be closely tied to our corporate financial and stock price performance. This principle is apparent in the design of our executive compensation program and in the specific compensation packages we award.

In addition to aligning our executives’ pay with performance, we follow several other principles when designing and implementing our executive compensation program.

	• market positioning			• pay at risk			• simple and transparent
	• short-term/long-term mix			• retention			• alignment with shareholders’ interests

EXECUTIVE COMPENSATION ELEMENTS

Compensation Element	Form of Payment	Performance Metrics	Rationale
Base salary	Cash	Individual Performance	Market-based to attract and retain skilled executives. Designed to recognize scope of responsibility, individual performance, and experience.
Annual bonus	Cash	Return on Average Net Assets (ROANA) using EBITDA	Rewards operational performance. ROANA balances growth, profitability, and asset management.
Long-term incentive compensation	Performance cash (30%) and Performance shares (70%)	Return on Invested Capital (ROIC), weighted at 80% and EBITDA, weighted at 20% over a three-year period	ROIC and EBITDA provide an incentive for profitable growth and correlate well with shareholder value.

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CORPORATE GOVERNANCE

CUMMINS 2022 PROXY

CORPORATE
GOVERNANCE

We long have believed that good corporate governance is important in ensuring that we are managed for the long-term benefit of our shareholders. We regularly engage with our shareholders to understand their expectations. We also benchmark our governance structure and policies against industry best practices and the practices of other comparable public companies. Our corporate governance principles, charters for each of our Board’s Audit, Talent Management and Compensation and Governance and Nominating Committees, our code of business conduct and our by-laws, along with certain other corporate governance documents, are available on our website, www.cummins.com, and are otherwise available in print to any shareholder who requests them from our Secretary.

Corporate Governance Overview


Director Independence • 11 of 13 director nominees are independent • 5 fully independent Board Committees: Audit; Talent Management & Compensation; Governance & Nominating; Finance; and Safety, Environment & Technology	Board Leadership • Annual assessment and determination of Board leadership structure • Annual election of independent Lead Director whenever Chairman/CEO roles are combined or when the Chairman is not independent • Lead Director has a strong role and significant governance duties, including chair of Governance & Nominating Committee and of all executive sessions of independent directors	Board Accountability • All directors are elected annually via majority voting standard • Shareholder right to call special meetings (10% of voting power threshold) • Proxy access for director nominees available to a shareholder, or group of up to 20 shareholders, holding a total of at least 3% of our common stock for at least 3 years • Shareholder right to unilaterally amend the by-laws (upon a majority vote)
Board Evaluation and Effectiveness • Detailed Board and Committee evaluation process coordinated by our Lead Director and Governance and Nominating Committee Chair • Board evaluation process led by Lead Director and facilitated by either Lead Director, General Counsel or third party (at discretion of Lead Director); facilitator schedules feedback call with each Board member annually; recommends any improvements or enhancements derived from evaluations • Annual feedback and evaluation session by each Committee Chair with its members on Committee performance; recommends any Committee improvements or enhancements • Annual two-way feedback and evaluation sessions by Chairman with each director • Annual independent director evaluation of Chairman and CEO	Board Oversight of Risk and ESG • The Board and its Committees exercise robust oversight of the company’s enterprise risk management program with dedicated time at every regular Board meeting • Top tier risks are assigned to members of the Cummins Leadership Team • Board and its Committees provide strong oversight of ESG risks and opportunities including at least one annual review by full Board of ESG strategy and challenges and detailed reviews in the designated committees	Shareholder Engagement • Board members routinely meet with top shareholders for conversations focused on our Board’s skill set and refreshment and its oversight of a variety of topics including company strategy, growth, risk management, governance and ESG issues
Board Refreshment and Diversity • 6 new directors added to Board since 2015; 11 new directors since 2008 • Board members represent diverse perspectives, including 5 female directors, 2 African-American directors and 2 directors from Latin America • Goal of rotating Committee assignments every 3 to 5 years • Mandatory director retirement age	Director Engagement • All of the directors attended 75% or more of the aggregate number of meetings of our Board and the Committees on which they served during 2021 • Limits on director/CEO membership on other public company boards • Our directors routinely visit company locations without our CEO present to interact directly with managers and employees; in 2018-2019, individual directors visited 13 different locations in China, India, Australia and the United States; we suspended these in-person visits in 2020 and 2021 due to the ongoing global pandemic, except that one of our directors visited Spain in 2021 for the launch of a new company partnership; once the environment has normalized from the pandemic, we expect director visits to company facilities will resume	Clawback and Anti-Hedging Policies • Clawback policy permits us to recoup certain compensation payments in the event any of our financial statements are required to be materially restated resulting from the fraudulent actions of any officer or the non-fraudulent or individual behavioral actions of Section 16 officers resulting in reputational harm • Directors and officers prohibited from engaging in any pledging, short sales or hedging investments involving our common stock

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CUMMINS 2022 PROXY

CORPORATE GOVERNANCE

Additional Governance Features

Director Selection and Board Refreshment

It is a top priority of our Board and our Governance and Nominating Committee that our directors have the skills, background and values to effectively represent the long-term interests of our shareholders and other stakeholders. Throughout the year, our Board reviews a matrix of the qualifications, skills and experience that we believe our Board needs to have and discusses whether there are any gaps that need to be filled that will improve our Board’s performance. We assess potential new director candidates in light of the matrix and whether they possess the qualifications, skills and experience needed by our Board. When we identify potential new director candidates, we review extensive background information compiled by our professional search firm, evaluate their references, consider their prior board experience and conduct virtual and in-person interviews.

We also focus on board refreshment because we believe that new perspectives and ideas are essential for an innovative and strategic board. Since 2015, we have added six new directors to our Board. Board members also represent diverse perspectives, including five female directors, two African-American directors and two directors from Latin America.

The Governance and Nominating Committee routinely reviews the Board’s committee assignments with a goal of rotating membership on committees every three to five years. The committee assignments were most recently rotated in May 2020. Our Board will continue to review and refresh the skills, qualifications and experiences that our Board needs to have to serve the long-term interests of our shareholders.

As required by our corporate governance principles, our Governance and Nominating Committee must recommend director nominees such that our Board is comprised of a substantial majority of independent directors and possesses a variety of experience and backgrounds, including those who have substantial experience in the business community, those who have substantial experience outside the business community (such as public, academic or scientific experience) and those who will represent our stakeholders as a whole rather than special interest groups or individual constituencies.

Each candidate must have sufficient time available to devote to our affairs and be free of any conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of his or her responsibilities, including being able to represent the best long-term interests of all of our shareholders and other stakeholders. Each candidate also should possess substantial and significant experience that would be of particular importance to us in the performance of his or her duties as a director. The Committee does not intend to alter the manner in which it evaluates candidates, including the foregoing criteria, based on whether or not the candidate was recommended by a shareholder.

Importance of Diversity

One of our core values is diversity, equity and inclusion. In evaluating candidates for our Board, our Governance and Nominating Committee considers only potential directors who share this value, as well as our other core values of integrity, caring, excellence and teamwork. As reflected in our corporate governance principles, we are committed to equal employment opportunities in assembling our Board. We believe that directors with different backgrounds and experiences makes our boardroom and our company stronger. As our Committee considers possible directors, it seeks out candidates who represent the diverse perspectives of all of our stakeholders. We believe our Board has been effective in assembling a highly-qualified, diverse group of directors. Our slate of director nominees for this Annual Meeting has five female directors, two African-American directors and two directors from Latin America. We will continue to identify opportunities to enhance our Board diversity as we consider future candidates.

•

We believe that directors with different backgrounds and experiences makes our boardroom and our company stronger.

•

Our slate of director nominees for this Annual Meeting has five female directors, two African-American directors and two directors from Latin America

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CORPORATE GOVERNANCE

CUMMINS 2022 PROXY

Shareholder Outreach

We believe that meaningful corporate governance should include regular conversations between our directors and our shareholders. Our Board members routinely meet with shareholders for conversations focused on our Board’s skill set and refreshment and its oversight of a variety of topics, including company strategy, growth, risk management and ESG issues. In addition, our Corporate Secretary held discussions in 2021 with several top investors to capture their input on governance matters and practices. We capture the feedback from these sessions and present it to the full Board for its consideration.

Succession Planning

CEO and leadership succession planning is one of our Board’s most important responsibilities. Many times throughout the year, our full Board discusses succession planning for our CEO and other critical leaders of the company. At least once a year, our Board dedicates itself to examining the succession plans for our complete leadership team.

Sustainability and ESG

With the support and oversight of our Board, we continue to focus on sustainability, including our efforts related to environmental, social and governance issues (ESG). We ensure Board oversight of our top ESG risks and opportunities in the following committees depending upon the topic: Talent Management and Compensation Committee, Safety, Environment and Technology Committee, and the Governance and Nominating Committee. We also review ESG strategy and progress with the full Board at least once a year. In January 2022, the Company named a Chief Risk

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CUMMINS 2022 PROXY

CORPORATE GOVERNANCE

Officer to provide accountability over ESG strategic direction and serve as a primary point of contact for the Board and the Cummins executive management team. Below is a summary of our achievements over the past 12 months:

2021 ESG ACHIEVEMENTS

•

Published our first report under the Task Force on Climate-related Financial Disclosures (TCFD) to provide more information for stakeholders on our governance, strategy, risk management and metrics for addressing climate change.

•

Announced that we will bring to market a 15-liter natural gas engine, and the testing of a hydrogen-fuel internal combustion engine. The Company also expanded its presence in green hydrogen generation through partnerships with Iberdrola and Sinopec. The expanding product lineup is an important part of Destination Zero – Cummins strategy to provide cleaner technologies today that reduce NOx and greenhouse gas emissions prior to widespread commercialization of zero emission technologies. This strategy reduces greenhouse gas and air quality impacts in a way that is best for customers and all stakeholders.

•

Reported our progress against the Company’s 2020 environmental goals and transitioned to the 2030 goals included in PLANET 2050, Cummins’ environmental sustainability strategy adopted in 2019 to address climate change and other environmental challenges. In addition to the goals timed to 2030, PLANET 2050 includes the aspiration to power customer success using net-zero emission technologies to address air quality by 2050.

•

Launched an aggressive global effort to acquire COVID-19 vaccines and provide them onsite or near-site to our employees, their families and other stakeholders. By partnering with governments and health care providers, we facilitated the delivery of over 45,000 doses of approved vaccines. This includes over 5,000 shots in the U.S., over 30,000 shots in India and over 10,000 shots in Mexico.

•

Expanded our Cummins Advocating for Racial Equity (CARE) initiative to take a leadership role in undoing systemic discrimination against the Black community in U.S. cities with a significant company presence. CARE volunteers were part of 16 advocacy initiatives, resulting in eight law and policy changes, including revisions to two public safety use-of-force protocols. In just one year, $21 million has been invested into communities, including $3.75 million in grants and forgivable loans directly to over 300 Black-owned businesses.

•

To address the strategic and operational challenges of 2021, our Board held 10 meetings with enhanced time devoted to strategic oversight, enterprise risk management and ESG.

•

Prepared the Company’s first stand-alone Human Capital Management report for publication later in 2022 to detail the Company’s efforts to recruit, develop, retain and reward the employees necessary to ensure the Company can meet the challenges of today and tomorrow.

To learn more about the company’s sustainability efforts, go to the company’s ESG web page at https://www.cummins.com/company/esg. Websites disclosed herein are not incorporated into this proxy statement by reference.

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CORPORATE GOVERNANCE

CUMMINS 2022 PROXY

Independence

Eleven of our thirteen director nominees qualify as independent directors within the meaning of the rules adopted by the Securities and Exchange Commission, or SEC, and the corporate governance standards for companies listed on the NYSE. Our Board has adopted independence standards that meet or exceed the independence standards of the NYSE, including categorical standards to assist the Governance and Nominating Committee and our Board in evaluating the independence of each director. The categorical standards are included in our corporate governance principles, which are available on our website at www.cummins.com. A copy also may be obtained upon written request.

Following a discussion and applying the standards referenced above, the Governance and Nominating Committee of our Board determined that all director nominees standing for election, except N. Thomas Linebarger, our Chief Executive Officer, and Jennifer W. Rumsey, our President and Chief Operating Officer, qualify as independent. Based on the recommendation of the Committee, our full Board approved this conclusion.

Leadership Structure

Our corporate governance principles describe in detail how our Board must conduct its oversight responsibilities in representing and protecting our company’s stakeholders. As stated in the principles, our Board has the freedom to decide whom our Chairman and Chief Executive Officer should be based solely on what it believes is in the best interests of our company and its shareholders. Currently, our Board believes it is in the best interests of our company for the roles of our Chairman and Chief Executive Officer to be combined and to appoint a Lead Director from among our independent directors.

Our Board believes that this leadership structure currently assists our Board in creating a unified vision for our company, streamlines accountability for our performance and facilitates our Board’s efficient and effective functioning.

Our Board evaluates its policy on whether the roles of our Chairman and Chief Executive Officer should be combined on an annual basis. In doing so, our Board considers the skills, experiences and qualifications of our then-serving directors (including any newly elected directors), the evolving needs of our company, how well our leadership structure is functioning, and the views of our shareholders.

Based on its review of our leadership structure, our Board continues to believe that Mr. Linebarger, our Chief Executive Officer, is the person best qualified to serve as our Chairman given his history in executive positions with our company and his skills and experience in the industries in which we operate. Alexis M. Herman, our current independent Lead Director, will retire from the Board effective at the Annual Meeting. We anticipate appointing Ms. Herman’s successor as Lead Director from among the independent Directors at the Annual Meeting. The Board’s independent Lead Director will be actively involved in setting and approving the Board’s agendas and focus and will work to create a collaborative atmosphere that leverages the strengths of our diverse Board and encourages directors to actively question management when necessary and seeks to ensure that our Board is receiving the information necessary to complete its duties. The Lead Director will also meet with other directors and members of senior management outside of the regularly scheduled Board meetings to ensure that our Board is functioning effectively and to identify areas of potential improvement.

OUR LEAD DIRECTOR’S RESPONSIBILITIES INCLUDE:

SERVING as Chairman of the Governance and Nominating Committee;

CONFERRING with the Chairman on, and approving, Board meeting agendas and meeting schedules to assure there is sufficient time for discussion of all agenda items;

CALLING AND PRESIDING over all meetings of the Board at which the Chairman is not present, including executive sessions of independent directors and communicating feedback on executive sessions to the Chairman;

LEADING the annual performance reviews of the Chief Executive Officer and the Board;

ENSURING that there is open communication between our independent directors and the Chairman and other management members;

BEING AVAILABLE, when deemed appropriate by the Board, for consultation and direct communication with shareholders;

REVIEWING, at his or her discretion, information to be sent to the Board; and

CONFERRING with the Chairman on other issues of corporate importance, as appropriate.

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CUMMINS 2022 PROXY

CORPORATE GOVERNANCE

Risk Oversight

Our Board and its committees are involved on an ongoing basis in the oversight of our material enterprise-related risks. The company has a mature enterprise risk management program that identifies, categorizes and analyzes the relative severity and likelihood of the various types of material enterprise-related risks to which we are or may be subject. The company has an executive risk council, comprised of the Chief Operating Officer, Chief Financial Officer, General Counsel and Corporate Secretary, Vice President – Corporate Strategy and Chief Administrative Officer that meets quarterly with our leader of enterprise risk management to review and update our material enterprise-related risks and their mitigation plans. We assign ownership of our most significant enterprise risks to a member of our executive management team. In January 2022, the Company created a new position of Vice President-Chief Risk Officer to increase our focus on enterprise risk management as well as the strategic direction of ESG.

Our Board, Audit Committee, Finance Committee, Talent Management and Compensation Committee, Governance and Nominating Committee and/or Safety, Environment and Technology Committee receive periodic reports and information directly from our senior leaders who have functional responsibility over our enterprise risks. Our Board and/or its appropriate committees then review such information, including management’s proposed mitigation strategies and plans, to monitor our progress on mitigating the risks. For example, to oversee the company’s work to mitigate cybersecurity risks, we have identified separate risks for enterprise cybersecurity and product cybersecurity. The Audit Committee provides primary oversight for enterprise cybersecurity while the Safety, Environment and Technology Committee provides oversight of product cybersecurity. Our Vice President-Chief Risk Officer and our global cybersecurity leader meet regularly with the Board and its committees to review relevant areas including:

•

Review of a cybersecurity dashboard to track key metrics of the information security/cybersecurity program;

•

The purchase of cybersecurity risk insurance to mitigate exposure to the company; and

•

Metrics of the Company’s training and compliance program on information security and awareness of cyber risk.

Our Board’s and its committees’ roles in the oversight process of our identified material risks have not impacted our Board’s leadership structure.

Board of Directors and Committees

Our Board held 10 meetings during 2021. All of the directors attended 75% or more of the aggregate number of meetings of our Board and the committees on which they served that were held during the periods in which they served. The non-employee members of our Board also met in executive session without management present as part of each regular meeting. Alexis M. Herman, our current Lead Director, presided over these sessions.

Under our corporate governance principles, our Board has established six standing committees, with five of the committees consisting entirely of independent directors. Certain of the principal functions performed by these committees and the members of our Board currently serving on these committees are as follows:

AUDIT COMMITTEE

Meetings in 2021: 9

Members
Robert K. Herdman (Chair)
Robert J. Bernhard
Stephen B. Dobbs
William I. Miller
Georgia R. Nelson
Kimberly A. Nelson
Karen H. Quintos

KEY RESPONSIBILITIES

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Oversees the integrity of our financial statements and related financial disclosures and internal controls over financial reporting.

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Reviews our accounting principles and procedures.

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Monitors the independence and performance of our external and internal auditors.

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Exercises oversight of the company’s enterprise risk management program with dedicated time for review and discussion at every regular Board meeting.

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Oversees the company’s compliance with its ethics policies and legal and regulatory requirements.

All members are independent directors as defined under our independence criteria, SEC rules and NYSE listing standards, including those specifically applicable to audit committee members. Our Board has determined that Mr. Herdman is an “audit committee financial expert” for purposes of the SEC’s rules.

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CORPORATE GOVERNANCE

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TALENT MANAGEMENT AND COMPENSATION COMMITTEE

Meetings in 2021: 13

Members
Georgia R. Nelson (Chair)
Carla A. Harris
Alexis M. Herman*
Thomas J. Lynch
William I. Miller

KEY RESPONSIBILITIES

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Reviews and approves the company’s compensation philosophy and strategy primarily for the Board and the officers of the company and others as the committee may designate from time to time.

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Reviews and oversees the company’s strategies for talent management.

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Assesses talent management policies, programs and processes, including leadership, culture, diversity and inclusion and succession.

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Administers and determines eligibility for, and makes awards under, our incentive plans.

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Establishes goals and approves the compensation for our Chief Executive Officer following a review of his performance, including input from all of the other independent directors.

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Reports annually in the proxy statement regarding the company’s executive compensation programs.

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Conducts an annual compensation risk assessment.

All members are independent directors as defined under our independence criteria, SEC rules and NYSE listing standards, including those specifically applicable to compensation committee members. The Talent Management and Compensation Committee engaged Farient Advisors LLC as its independent compensation consultant in 2021 to provide input and advice to the Committee concerning the compensation of our officers and our Board and related matters.

FINANCE COMMITTEE

Meetings in 2021: 3

Members
Thomas J. Lynch (Chair)
Franklin R. Chang Diaz
Bruno V. Di Leo
Carla A. Harris
Alexis M. Herman*

KEY RESPONSIBILITIES

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Reviews and advises our management and our Board on our financial strategy pertaining to our capital structure, creditworthiness, dividend policy, share repurchase policy, and financing requirements.

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Reviews our banking relationships and lines of credit.

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Reviews and advises on financing proposals for acquisitions, partnerships and other alliances of the company.

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Discusses key areas of shareholder interest and feedback on our performance and strategy.

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Monitors our shareholder base and provides counsel on investor relations activity.

All members are independent directors as defined under our independence criteria, SEC rules and NYSE listing standards.

GOVERNANCE AND NOMINATING COMMITTEE

Meetings in 2021: 5

Members
Alexis M. Herman (2021 Chair)*
Robert J. Bernhard
Franklin R. Chang Diaz
Bruno V. Di Leo
Stephen B. Dobbs
Carla A. Harris
Robert K. Herdman
Thomas J. Lynch
William I. Miller
Georgia R. Nelson
Kimberly A. Nelson
Karen H. Quintos

KEY RESPONSIBILITIES

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Reviews and makes recommendations to our Board with respect to its membership, size, composition, procedures and organization.

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Identifies potential director candidates to ensure the Board is composed of well qualified and diverse candidates to oversee the company; engages a professional search firm to identify potential director candidates based on criteria selected by the Committee; and interviews identified candidates.

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Ensures the Board has a robust process for evaluating its performance and the performance of its committees and individual directors, including the use of a third party consultant to facilitate feedback among Board members.

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Ensures the Board is providing effective ongoing director education and new director orientation.

All members are independent directors as defined under our independence criteria, SEC rules and NYSE listing standards.

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CORPORATE GOVERNANCE

SAFETY, ENVIRONMENT AND TECHNOLOGY COMMITTEE

Meetings in 2021: 5

Members
Stephen B. Dobbs (Chair)
Robert J. Bernhard
Franklin R. Chang Diaz
Bruno V. Di Leo
Robert K. Herdman
Kimberly A. Nelson
Karen H. Quintos

KEY RESPONSIBILITIES

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Reviews the company’s safety program with an emphasis on employee, workplace and product safety.

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Reviews the company’s progress on its major sustainability initiatives from Planet 2050 and the environmental management of our facilities and operations.

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Reviews our key technology developments that may impact product competitiveness for both core and new business areas.

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Reviews public policy developments, strategies and positions taken by us with respect to safety, environmental and technological matters that significantly impact us or our products.

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Reviews product and service quality performance and guides our strategies and improvement initiatives.

* As noted above, Ms. Herman will retire from the Board effective at the conclusion of the Annual Meeting.

Executive Committee

The current members of our Executive Committee are N. Thomas Linebarger (Chairman), Alexis M. Herman and William I. Miller. We anticipate appointing Ms. Herman’s successor on the Executive Committee from among the independent Directors at the Annual Meeting. Our Executive Committee is authorized to exercise the powers of our Board in the management and direction of our business and affairs during the intervals between meetings of our Board. It also acts upon matters specifically delegated to it by our Board. Our Executive Committee did not meet during 2021.

Shareholder Nominations

Shareholder director candidate recommendations, including biographical information as to the proposed candidate and a statement from the shareholder as to the qualifications and willingness of such person to serve on our Board, along with the required disclosures set forth in our by-laws, must be properly and timely submitted in writing to our Secretary, as further described below. Any shareholder entitled to vote for the election of directors at a meeting may nominate a person or persons for election as directors only if written notice of such shareholder’s intent to make such nominations is given, either by personal delivery or by mail, postage prepaid, to the Secretary of our company not later than 160 days in advance of the originally scheduled date of such meeting (provided, however, that if the originally scheduled date of such meeting is earlier than the anniversary of the date of the previous year’s annual meeting, such written notice may be so given and received not later than the close of business on the 10th day following the date of the first public disclosure, which may include any public filing by us with the SEC, of the originally scheduled date of such meeting).

Each notice required by our by-laws must be signed manually or by facsimile by the shareholder of record and must set forth the information required by our by-laws, including (i) the name and address, as they appear on our books, of the shareholder who intends to make the nomination and of any beneficial owner or owners on whose behalf the nomination is made; (ii) a representation that the shareholder is a holder of record of shares of our Common Stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) certain other information regarding the shareholder and its interests in our company; (iv) the name, age, business address and residential address of each nominee proposed in such notice; (v) the principal occupation or employment of each such nominee; (vi) the number of shares of our capital stock that are owned of record or beneficially by each such nominee; (vii) with respect to each nominee for election or reelection to our Board, a completed and signed questionnaire, representation and agreement described in our by-laws; (viii) such other information regarding each nominee proposed by such shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each nominee been nominated, or intended to be nominated, by our Board; (ix) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, including all arrangements or understandings pursuant to which the nominations are being made, between or among such shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or any other person or persons (naming such person or persons), on the other hand; and (x) the written consent of each nominee to serve as a director if so elected.

The deadline for receiving any written notice of a shareholder’s intent to make a nomination with respect to the Annual Meeting was the close of business on December 1, 2021, which was 160 days in advance of the Annual Meeting (which is typically held on the second Tuesday of each May). We received no such qualifying nominations before this deadline with respect to the Annual Meeting.

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Communication with the Board of Directors

Shareholders and other interested parties may communicate with our Board, including our Lead Director and other non-management directors, by sending written communication to the directors c/o our Secretary, 301 East Market Street, Indianapolis, Indiana 46204. All such communications will be reviewed by the Secretary or his or her designee to determine which communications are appropriate to be forwarded to the directors. All communications will be forwarded except those that are related to our products and services, are solicitations or otherwise relate to improper or irrelevant topics as determined in the sole discretion of the Secretary or his or her designee.

Our Secretary maintains and provides copies of all such communications received and determined appropriate to be forwarded to the Governance and Nominating Committee in advance of each of its meetings and reports to the Committee on the number and nature of communications that were not determined appropriate to be forwarded.

We require all of our director nominees standing for election at an annual meeting of shareholders to attend such meeting. All director nominees standing for election at our 2021 Annual Meeting of Shareholders were present at the virtual meeting. We currently expect all director nominees to be present virtually at the Annual Meeting.

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ELECTION OF DIRECTORS

ELECTION
OF DIRECTORS

(ITEMS 1 THROUGH 13 ON THE PROXY CARD)

General

Except for Ms. Herman, who is retiring from the Board effective at the Annual Meeting, all of our current directors are nominated for reelection at the Annual Meeting to hold office until our 2023 annual meeting of shareholders and until their successors are elected and qualified. Any submitted proxy will be voted in favor of the nominees named below to serve as directors unless the shareholder indicates to the contrary on his or her proxy. All nominees have been previously elected to our Board by our shareholders and have served continuously since the date indicated below.

Majority Vote Required for Director Elections

To be elected, each director nominee must receive a majority of the votes cast by shareholders at the Annual Meeting. Receipt by a nominee of the majority of votes cast means that the number of shares voted “for” exceeds the number of votes “against” that nominee. Abstentions and broker non-votes are not counted as a vote either “for” or “against” a nominee. Our by-laws provide that the term of any incumbent director who receives more “against” votes than “for” votes in an uncontested election will automatically terminate at the shareholder meeting at which the votes were cast. In the case of a contested election, directors will be elected by a plurality of the votes represented in person or by proxy and entitled to vote in the election.

Our Board expects that each of the nominees will be able to serve as a director if elected at the Annual Meeting, but if any of them is unable to serve at the time the election occurs, proxies received that have been voted either for such nominee or for all nominees or which contain no voting instructions will be voted for the election of another nominee to be designated by our Board, unless our Board decides to reduce the number of our directors.

Nominees for Board of Directors

The names of the nominees for directors, together with biographical sketches, including their business experience during the past five years, directorships of other public corporations and their qualifications to serve on our Board are set forth below, beginning with our Chairman and Chief Executive Officer and our President and Chief Operating Officer, then followed by our independent directors in alphabetical order.

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Our Board Recommends that Shareholders Vote for Each of the Nominees Set Forth Below.

		Director Since: 2009 Age: 59 Board Committees: Executive				N. THOMAS LINEBARGER—Chairman and Chief Executive Officer, Cummins Inc.
						Mr. Linebarger became the Chairman of the Board and Chief Executive Officer of our company on January 1, 2012. Mr. Linebarger was our President and Chief Operating Officer from 2008-2011 after serving as Executive Vice President and President, Power Generation Business from 2003 to 2008 and as Vice President, Chief Financial Officer from 2000 to 2003. From 1998 to 2000, he was our Vice President, Supply Chain Management, after holding various other positions with us. Mr. Linebarger received a B.S. from Stanford University and a B.A. from Claremont McKenna College in 1986 and M.S. and M.B.A. degrees from Stanford in 1993. He has been a director of Harley-Davidson, Inc. since 2008. Summary of Qualifications and Experience: Key Contributions to the Board: • Provides strategic leadership for the Board with decades of experience with our global business • Seeks to ensure directors are informed of significant issues impacting our company and receive necessary information • Works collaboratively with our Lead Director to set agendas for Board meetings and assess the engagement and effectiveness of our Board, its committees, and individual directors • Ensures that there are strong succession plans in place for the CEO and other key leaders

		Director Since: 2022 Age: 48 Board Committees: None				JENNIFER W. RUMSEY—President and Chief Operating Officer, Cummins Inc.
						Ms. Rumsey became President and Chief Operating Officer of our company in March 2021. Ms. Rumsey was Vice President and President of our Components Business from 2019-2021 after serving as Vice President and Chief Technical Officer from 2015-2019. From 2013-2015, she was our Vice President of Engineering, Engine Business, after holding a variety of engineering and product life cycle roles with the company. Ms. Rumsey is a member of the Society of Women Engineers, Society of Automotive Engineers, the Purdue Engineering Advisory Committee and Women in Trucking Association. She holds a Bachelor of Science in Mechanical Engineering from Purdue University and a Master of Science in Mechanical Engineering from Massachusetts Institute of Technology. Ms. Rumsey has been a director of Hillenbrand, Inc. since 2020. Summary of Qualifications and Experience: Key Contributions to the Board: • Extensive knowledge of business operations through various leadership roles within our company • Offers expertise regarding manufacturing and technology issues • Leads long-term company strategy supporting the transition to decarbonized power for all stakeholders • Adds perspective gained through experience in automotive and transportation fields • Keeps directors apprised of current business and market trends

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ELECTION OF DIRECTORS

		Director Since: 2008 Age: 69 Board Committees: Audit; Governance and Nominating; Safety, Environment and Technology				ROBERT J. BERNHARD—Vice President for Research and Professor in the Department of Aerospace and Mechanical Engineering, University of Notre Dame
						Mr. Bernhard joined the University of Notre Dame in 2007 and prior to that was Associate Vice President for Research at Purdue University since 2004. He also held Assistant, Associate and full Professor positions at Purdue University. He was Director of the Ray W. Herrick Laboratories at Purdue’s School of Mechanical Engineering from 1994 to 2005. Mr. Bernhard is also a Professional Engineer and earned a B.S.M.E. and Ph.D., E.M. from Iowa State University in 1973 and 1982, and an M.S.M.E. from the University of Maryland in 1976. He was the Secretary General of the International Institute of Noise Control Engineering (I-INCE) from 2000 to 2015, and is currently the President of I-INCE. He is a Fellow of I-INCE, the Acoustical Society of America and the American Society of Mechanical Engineering. Summary of Qualifications and Experience: Key Contributions to the Board: • • Leverages technical background to offer valuable insight • Pushes for improvement in safety and technology planning • Mentors our technical leaders

		Director Since: 2009 Age: 71 Board Committees: Finance; Governance and Nominating; Safety, Environment and Technology				DR. FRANKLIN R. CHANG DIAZ—Founder, Chairman and Chief Executive Officer, Ad Astra Rocket Company
						Dr. Chang Diaz is Chairman and Chief Executive Officer of Ad Astra Rocket Company, a U.S. spaceflight engineering company based in Houston, Texas and dedicated to the development of advanced in-space electric propulsion technology. Ad Astra also develops space-derived Earth applications in clean renewable hydrogen energy storage for stationary applications and electric transportation. Dr. Chang Diaz founded Ad Astra in 2005 following his retirement from NASA after a 25-year career during which he flew seven space missions and logged over 1,600 hours in space. In 1994, Dr. Chang Diaz founded and directed NASA’s Advanced Space Propulsion Laboratory at the Johnson Space Center where he managed a multicenter research team developing new plasma rocket technology. Dr. Chang Diaz is a dual citizen of Costa Rica and the United States. As part of his involvement in Costa Rica’s development, Dr. Chang Diaz currently leads the implementation of the “Strategy for the XXI Century,” a plan to transform Costa Rica into a fully developed nation by the year 2050. Dr. Chang Diaz received the Liberty Medal in 1986 from President Ronald Reagan and is a four-time recipient of NASA’s Distinguished Service Medal, the agency’s highest honor. Dr. Chang Diaz also serves as an Adjunct Professor of Physics at Rice University and the University of Houston. Summary of Qualifications and Experience: Key Contributions to the Board: • Brings an expansive view of technology matters • Pushes our Board to think long-term in technology planning • Well-versed in international business issues • Strong engagement in the development of our Latin America business

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		Director Since: 2015 Age: 65 Board Committees: Finance; Governance and Nominating; Safety, Environment and Technology				BRUNO V. DI LEO ALLEN—Managing Director, Bearing-North LLC
						Mr. Di Leo has been the Managing Director of Bearing-North LLC, an independent advisory firm focused on business expansion and senior executive counseling in strategy and operations, since 2018. Prior to this role, Mr. Di Leo served as Senior Vice President of International Business Machines Corporation, or IBM, a globally integrated technology and consulting company, from January 2018 until his retirement in June 2018. He had previously served as Senior Vice President, Global Markets, for IBM since 2012. In that position, he was accountable for revenue, profit, and client satisfaction in Japan, Asia Pacific, Latin America, Greater China and the Middle East and Africa. He also oversaw IBM’s Enterprise and Commercial client segments globally. From 2008 to 2011, he was General Manager for IBM’s Growth Markets Unit based in Shanghai. Mr. Di Leo has more than 40 years of business leadership experience in multinational environments, having lived and held executive positions on four continents. Mr. Di Leo has served as a director of Ferrovial, S.A., since 2018. Mr. Di Leo is a member of the international advisory board of Instituto de Estudios Superiores de la Empresa (IESE Business School) as well as a member of the Deming Center Advisory Board of Columbia Business School. He holds a business administration degree from Ricardo Palma University and a postgraduate degree from Escuela Superior de Administracion de Negocios, both in his native Peru. He is fluent in Spanish, Portuguese, English and Italian. Summary of Qualifications and Experience: Key Contributions to the Board: • Brings perspective on international business issues having lived and held executive positions on four continents • Offers insight regarding technology and sales and marketing issues • Works to ensure customer-focused approach in addressing product and service-related issues

		Director Since: 2010 Age: 65 Board Committees: Audit; Governance and Nominating; Safety, Environment and Technology				STEPHEN B. DOBBS
						Mr. Dobbs is a former executive of Fluor Corporation, a publicly traded professional services firm providing engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, as well as project management services on a global basis. Mr. Dobbs served as Senior Group President over Fluor’s Industrial and Infrastructure Group until his retirement in 2014. In that role, Mr. Dobbs was responsible for a wide diversity of the markets served by Fluor, including infrastructure, telecommunications, mining, operations and maintenance, transportation, life sciences, heavy manufacturing, advanced technology, microelectronics, commercial, institutional, health care, water, and alternative power. Mr. Dobbs served Fluor in numerous U.S. and international locations including Southern Africa, Europe, and China. He is an industry recognized expert in project finance in Europe and the United States, particularly public private partnerships and private finance initiatives. In 2019, Mr. Dobbs retired from the Board of Directors of Lendlease Corporation Limited, an international property and infrastructure group that is publicly traded in Australia, where he had served on the Board since 2015. Mr. Dobbs earned his doctorate in engineering from Texas A&M University and holds two undergraduate degrees in nuclear engineering, also from Texas A&M. Until his retirement from Fluor, he served on the World Economic Forum’s Global Agenda Council on Geopolitical Risk as well as the Governor’s Business Council for the State of Texas. He also served as a director of the U.S. China Business Council. Summary of Qualifications and Experience: Key Contributions to the Board: • Chair of Safety, Environment and Technology Committee • Leverages technical background to provide insight regarding technology matters • Possesses emerging market/international experience from his Fluor career • Adds perspective gained from leading business operations in U.S., Southern Africa, Europe and China • Experience in project finance

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ELECTION OF DIRECTORS

		Director Since: 2021 Age: 59 Board Committees: Finance; Governance and Nominating; Talent Management and Compensation				CARLA A. HARRIS—Senior Client Advisor, Morgan Stanley
						Ms. Harris is Senior Client Advisor at Morgan Stanley. She is responsible for being a co-portfolio manager of the Next Level Fund and advising the Multicultural Innovation Lab, hosting the podcast “Access & Opportunities” and acting in various client coverage capacities. Her prior experience with Morgan Stanley includes investment banking, equity capital markets, equity private placements, and initial public offerings in a number of industries such as technology, media, retail, telecommunications, transportation, healthcare, and biotechnology. In August 2013, Ms. Harris was appointed by President Barack Obama to chair the National Women’s Business Council. Ms. Harris currently serves on the board of Walmart Corporation and serves on its Compensation and Management Development, Nominating and Governance, and Strategic Planning and Finance Committees. She also serves on the boards of several nonprofit organizations including Seize Every Opportunity (SEO), the Cabrini Foundation, Sesame Street Workshop, Harvard University Board of Overseers and the Morgan Stanley Foundation. Ms. Harris received an MBA from Harvard Business School and an A.B. from Harvard University. Summary of Qualifications and Experience: Key Contributions to the Board: • Brings broad-based and valuable insights in finance and strategy • Contributes extensive work experience in a regulated industry • Possesses senior leadership experience

		Director Since: 2008 Age: 73 Board Committees: Audit; Governance and Nominating, Safety, Environment and Technology				ROBERT K. HERDMAN—Managing Director, Kalorama Partners LLC
						Mr. Herdman has been Managing Director of Kalorama Partners LLC, a Washington, D.C. consulting firm specializing in providing advice regarding corporate governance, risk assessment, crisis management and related matters since 2004. He was the Chief Accountant of the SEC from October 2001 to November 2002 prior to joining Kalorama. Prior to joining the SEC, he was Ernst & Young’s Vice Chairman of Professional Practice for its Assurance and Advisory Business Services (AABS) practice in the Americas and the Global Director of AABS Professional Practice for Ernst & Young International. He was the senior Ernst & Young partner responsible for the firm’s relationships with the SEC, FASB and AICPA. Mr. Herdman served as a member of the Board of Directors of WPX Energy, Inc. from 2011 to 2021 and served on its Compensation Committee. He chaired the Audit Committee of WPX Energy, Inc. through April 2018. In April 2015, he retired from the Board of Directors of HSBC Finance Corporation and HSBC USA Inc. Mr. Herdman had served on the Audit Committees of both companies through April 2013. Mr. Herdman also retired from the Board of Directors of HSBC North America Holdings, Inc. in April 2015 and was past Chairman of both its Audit and Risk Committees. Summary of Qualifications and Experience: Key Contributions to the Board: • • Chair of Audit Committee • Provides insight concerning financial and risk management matters • Mentors finance leaders and helps our finance function enhance skills and talent • Actively engaged in our Enterprise Risk Management program

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		Director Since: 2015 Age: 67 Board Committees: Finance; Governance and Nominating; Talent Management and Compensation				THOMAS J. LYNCH—Chairman, TE Connectivity Ltd.
						Mr. Lynch is the Chairman of TE Connectivity Ltd. (formerly Tyco Electronics Ltd.), a global provider of connectivity and sensor solutions, and harsh environment applications. Mr. Lynch served as the Chief Executive Officer of TE Connectivity Ltd. from January 2006 to March 2017 and has served as a member of its board of directors since 2007 and as Chairman of the Board since January 2013. From September 2004 to January 2006, Mr. Lynch was at Tyco International as the President of Tyco Engineered Products & Services, a global manufacturer of industrial valves and controls. Mr. Lynch joined Tyco from Motorola, where he served as Executive Vice President of Motorola, and President and Chief Executive Officer of Motorola’s Personal Communications sector, a leading supplier of cellular handsets. Mr. Lynch has served as a director of Thermo Fisher Scientific Inc. since 2009 and as Lead Director since February 2020. He has also served as a director of Automatic Data Processing, Inc. since 2018. Mr. Lynch serves on the Board of The Franklin Institute and on the Rider University Board of Trustees. Summary of Qualifications and Experience: Key Contributions to the Board: • Chair of Finance Committee • Brings perspective of a sitting Chairman and former CEO of a publicly traded global company • Leverages business and financial background in rendering advice and insight • Identifies and raises strategic considerations for Board consideration

		Director Since: 1989 Age: 65 Board Committees: Audit; Executive; Governance and Nominating; Talent Management and Compensation				WILLIAM I. MILLER—President, The Wallace Foundation
						Mr. Miller has served as President of The Wallace Foundation, a national philanthropy with a mission of fostering equity and improvements in learning and enrichment for young people and in the arts for everyone, since 2011. Mr. Miller was the Chairman of Irwin Management Company, a Columbus, Indiana private investment firm, from 1990 to 2011. Mr. Miller has been a director or trustee of the New Perspective Fund, Inc. and the EuroPacific Growth Fund, Inc. since 1992 and of the New World Fund, Inc. since 1999. Mr. Miller serves as independent Chairman of the Board for all three of the funds, all of which are in the same mutual fund family. Summary of Qualifications and Experience: Key Contributions to the Board: • Professional experience in the banking and investment industries • Extensive knowledge of our company, its values and its global operations • Leadership experience in the civic, nonprofit and philanthropic sectors

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		Director Since: 2004 Age: 72 Board Committees: Audit; Governance and Nominating; Talent Management and Compensation				GEORGIA R. NELSON
						Prior to her retirement in June 2019, Ms. Nelson was President and CEO of PTI Resources, LLC, an independent consulting firm, since 2005. Prior to this role, Ms. Nelson retired in 2005 from Edison International, where she had been President of Midwest Generation EME, LLC since 1999 and General Manager of Edison Mission Energy Americas since 2002. Her business responsibilities have included management of regulated and unregulated power operations and a large energy trading subsidiary as well as the construction and operation of power generation projects worldwide. She has had extensive experience in business negotiations, environmental policy matters and human resources. She has served as a director of Ball Corporation since 2006, Sims Metal Management Limited since 2014 and Custom Truck One Source, Inc. since 2021. In December 2017, she retired as a director of CH2M Hill Companies Ltd., a privately-held company, where she has served as a director since 2010. In May 2021, she retired as a director of TransAlta Corporation where she has served as a director since 2014. She serves on the advisory committee of the Center for Executive Women at Northwestern University. In November 2012, Ms. Nelson was named to the 2012 National Association of Corporate Directors (NACD) Directorship 100 in recognition of exemplary leadership in the boardroom and promoting the highest standards of corporate governance. Ms. Nelson is an NACD Board Fellow. Summary of Qualifications and Experience: Key Contributions to the Board: • Chair of Talent Management and Compensation Committee • Provides perspective based on background in power generation and business • Utilizes expertise in talent management and governance matters to oversee best practices in executive compensation and human capital management • Possesses manufacturing and environmental experience • Works outside of regular meetings to support the development of women in leadership roles

		Director Since: 2020 Age: 59 Board Committees: Audit; Governance and Nominating; Safety, Environment and Technology				KIMBERLY A. NELSON
						Ms. Nelson worked for General Mills Inc. for nearly 30 years prior to her retirement in January 2018. During her career at General Mills, she held a number of senior brand and general management roles, including serving as President of the U.S. Snacks Division. Ms. Nelson became Senior Vice President, External Relations in 2010, a global role leading issues and crisis management, consumer relations, corporate branding and communications, environmental social governance, government relations and global external stakeholder relations. Ms. Nelson is on the board of Tate & Lyle PLC and serves on its Audit and Nominations Committees. She is also on the board of Colgate-Palmolive Company and serves on its Personnel & Organization and Nominating, Governance & Corporate Responsibility Committees. Ms. Nelson holds an MBA from Columbia Business School and a B.S. in International Relations from Georgetown University. She is a member of the Executive Leadership Council, Women Corporate Directors, and a National Association of Corporate Directors (NACD) Fellow. Ms. Nelson also serves on the boards of the Northside Achievement Zone and Fair Vote Minnesota. Summary of Qualifications and Experience: Key Contributions to the Board: • Identifies and raises strategic considerations for Board consideration • Brings global external relations perspective • Offers insight into environmental, social and governance matters • Brings strategic view on social justice, diversity and inclusion efforts

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		Director Since: 2017 Age: 58 Board Committees: Audit; Governance and Nominating; Safety, Environment and Technology				KAREN H. QUINTOS
						Prior to her retirement in June 2020, Ms. Quintos was Chief Customer Officer of Dell Technologies Inc., the world’s third largest supplier of personal computers and other computer hardware items, since 2016. In addition, Ms. Quintos led Dell’s global customer strategy and programs as well as Diversity and Inclusion, Corporate Responsibility and Entrepreneurship strategy and programs. From 2010 to 2016, Ms. Quintos served as Senior Vice President and Chief Marketing Officer, Vice President of public sector marketing and North America commercial marketing, and held executive roles in services, support and supply chain management. Ms. Quintos joined Dell in 2000 from Citigroup where she was Vice President of global operations and technology. Ms. Quintos earned a Master’s degree in marketing and international business from New York University and a B.S. in supply chain management from Pennsylvania State University. Ms. Quintos is on the board of Lennox International and serves on its Compensation and Human Resources Committee and its Public Policy Committee. She is founder and executive sponsor of Dell’s Women in Action employee resource group. She is Vice Chairman of the board of Penn State’s Smeal College of Business and a 2014 recipient of its highest honor, the Distinguished Alumni Award. Karen also serves on the boards for The National Center for Missing and Exploited Children, as well as TGEN (Translational Genomics). Summary of Qualifications and Experience: Key Contributions to the Board: • Contributes marketing and international perspective • Brings knowledge of global customer strategy and programs • Offers strategic insight in customer services, support and supply chain management • Offers strategic view on diversity and corporate responsibility programs

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ELECTION OF DIRECTORS

The table below summarizes key qualifications, skills and attributes most relevant to the decision to nominate the candidates to serve on our Board. A mark indicates a specific area of focus or experience on which the Board relies most. The lack of a mark does not mean the director nominee does not possess that qualification or skill. Each director nominee biography above in this section describes each nominee’s qualifications and relevant experience in more detail.

DIRECTORS

Automotive &
Transportation

Manufacturing

Technology/
IT

Sales/
Marketing

Government/
Regulatory

International

Academics

Financial

Robert J. Bernhard

●

Franklin R. Chang Diaz

●

Bruno V. Di Leo

●

Stephen B. Dobbs

●

Carla A. Harris

●

Robert K. Herdman

●

N. Thomas Linebarger

●

Thomas J. Lynch

●

William I. Miller

●

Georgia R. Nelson

●

Kimberly A. Nelson

●

Karen H. Quintos

●

Jennifer W. Rumsey

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EXECUTIVE COMPENSATION

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EXECUTIVE COMPENSATION

Note From The Chair of Our Talent
Management & Compensation Committee

As Chair of the Talent Management and Compensation Committee (“TMCC” or “the Committee”), I am pleased with the continued focus by management and the Committee in tackling important issues that were first brought to light during the difficult days of 2020 and have continued to require innovative thinking as we address specific emerging needs of our organization.

Given the opportunities and challenges presented in 2021, we took important actions to position the company for future success. Specifically, we:

Evolved our organization, as evidenced by key leadership changes in both our core business and in our “New Power” business;

Developed a long-range approach to managing on-site, remote, and hybrid workplace strategies, while also protecting the health and well-being of our employees, customers, suppliers and affiliates;

Deeply examined our workforce management and behavioral norms to identify the changes needed to fully realize our commitment to inclusion, pay equity, and diversity; and

Took appropriate actions pertaining to our executive compensation strategy and programs to ensure their continued alignment with the long-range interests of our stakeholders.

In taking these steps, we fully implemented our broader TMCC Charter, adopted in 2020.

While our approach to short-term incentive compensation remained the same, our approach to long-term incentive compensation continued to evolve to help achieve our objectives. In this regard, we implemented the change to our long-term incentive program, announced last year, to shift our long-term incentive compensation mix to an entirely performance-driven approach, with 70% performance shares and 30% performance cash. In doing so, we eliminated stock options. Further, with a view toward progressive succession planning and organization vitality, we also implemented targeted restricted stock or restricted stock unit awards to support our organizational changes and strengthen the ownership stakes of key executives who represent our future.

Looking ahead, we know that we have more work to do and must continue to make progress to fully realize our aspirations. Given the long-term orientation and strength of management and our Board, I am confident that our willingness to engage in deep examination and take action will continue to support our strategy and drive value for all stakeholders.

Georgia R. Nelson, CHAIR

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EXECUTIVE COMPENSATION

Executive Summary

Cummins operates with a strong pay for performance and team-oriented philosophy and continued to do so in 2021. The summary below highlights our business results, how our talent management supported those results, our governance framework, and compensation for our executives and the rationale for those decisions.

How Did We Perform?

Key 2021 Business Highlights

In 2021, our revenues increased by 21 percent, as global economies began to recover from the impact of the COVID-19 pandemic in 2020. Full year revenues in North America increased 17 percent and represented 56 percent of our total revenues, driven by increased demand for truck, construction and power generation equipment. International revenues increased by 27 percent, driven by stronger demand across many of our markets and regions. While we saw demand improve in most of our major markets, the ongoing impacts of the COVID-19 pandemic have continued to constrain supply, resulting in part shortages and elevated freight, labor and logistics, impacting our profitability. In light of the supply challenges, we have leveraged our global footprint to ensure that we meet the needs of our customers while still delivering solid financial results. For the full year, our earnings per share (EPS) was $14.61, up from $12.01 in 2020. The solid financial performance was made possible by our employees, who worked tirelessly to support our customers, manage through supplier shutdowns, part shortages and extended lead times while adjusting the way we work to mitigate the spread of the virus. We continued to see high acceptance of our products, and in 2021 we entered into new engine supply agreements with key partners in medium duty markets around the globe. This includes a global strategic partnership with Daimler to provide medium duty powertrain systems for Daimler Trucks and Buses. We also continue to see momentum in our New Power business, and in 2021 we entered into agreements with Sinopec in China and Iberdrola in Spain to explore green hydrogen production opportunities powered by our electrolyzer technology. We also continued investing in new technologies that will fuel profitable growth in the future across our businesses. In 2021 we invested a record $1.1 billion in our product portfolio of diesel, natural gas, battery, fuel cells, electrolyzers and related components. We remain disciplined as we examine new organic investment, partnership and acquisition opportunities that leverage our capabilities, and are committed to continuing to deliver top quartile return on our invested capital.

Key Performance Metrics*
	2021	2020
Total Net Sales	$24.0 BN	$19.8 BN
Net Income	$2.1 BN	$1.8 BN
EBITDA	$3.5 BN (14.7% of sales)	$3.1 BN (15.7% of sales)
Return on Average Net Assets (ROANA)	27%	26%
Return on Invested Capital (ROIC)	16%	15%
Cash from Operations	$2.3 BN	$2.7 BN
Total Shareholder Return	21% (3-year period ending in 2021)	12% (3-year period ending in 2020)
Diluted Earnings per Share (EPS)	$14.61	$12.01
Dividend	Increased our quarterly dividend from $1.35 to $1.45 a share, our 12th straight year of dividend growth

See Annex A for reconciliation of GAAP to non-GAAP measures referenced in this section.

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How Did our Talent Strategies and Actions Support our Performance?

		People drive Cummins’ success.				The overarching theme of our talent strategy is to “Inspire and Encourage All Employees to Reach Their Full Potential.” This strategy is built upon four pillars: (1) create a diverse and inclusive work environment; (2) engage employees and families in improving wellness; (3) develop self-aware and effective leaders; and (4) advance our workforce strategy by extending our talent management strategies to all employees.
		Diversity, Equity & Inclusion				With an international workforce of almost 60,000 employees operating in 59 countries, diversity, equity and inclusion have always been critical to our continued success as a global power leader. At Cummins, we recognize that leadership requires an unwavering commitment to constantly examining our role in society and how we can meet the evolving needs of our people. In 2021, we advanced several initiatives to ensure that diversity, equity and inclusion (DE&I) remain fundamental principles that connect us to one another across our global footprint.
						Enhancing our global diversity, equity and inclusion strategy
						We implemented new, more comprehensive quarterly DE&I Dashboards for our senior leaders to regularly track and act on critical metrics that help us to understand the representation, development and advancement of diverse groups across the organization. Concurrently, we rolled out extensive training and resources to support meaningful dialogue about race and facilitated workshops with our leadership team so they can more fully understand the deep roots of systemic racism in the United States and how it affects perceptions and actions today.
						Increasing transparency around our DE&I progress was a high priority in 2021. For the first time, we externally shared representation data for global and U.S. employees and the new Global DE&I strategy to support aspirational diversity goals.
						Executing our human capital management strategy
						As part of our human capital management strategy, we regularly review and analyze statistics on equity and inclusion. We measure equity by pay, promotions, and performance ratings of our employees by gender and ethnicity across job levels and job types. We also conduct pay equity analyses to ensure employees receive ‘equal pay for equal work.’
						Celebrating our achievements together
						At Cummins, winning awards is never the end game. Rather it is what we have learned and achieved on the journey. Nevertheless, we believe outside recognition reflects the commitment of our teammates, who work hard every day to create a diverse, equitable and inclusive environment. To them, we owe the following distinctions: • Top Employer for Disability Inclusion in the 2021 Disability Equality Index by Disability: IN, scoring 100 for the first time. • 2022 Military Friendly Employer (Bronze level) as well as Military Friendly Supplier Diversity and Brand designations; this is our best performance on this survey. • 2021 Inclusion Index Company: a diversity and inclusion index that measures which organizations are using established DE&I best practices to create inclusive workplaces. • 2021 Best Company for Multicultural Women: organizations on this list are demonstrating progress in supporting multicultural women talent, especially in top positions. • Corporate Equality Index: Human Rights Campaign Foundation’s Corporate Equality Index is the national benchmarking tool on corporate policies, practices and benefits pertinent to lesbian, gay, bisexual, transgender and queer employees.

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How Did our Talent Strategies and Actions Support our Performance?

		Health & Wellness				The health and well-being of our colleagues and their families has always been central to our culture and business philosophy. Today, the pace of change in the world and unprecedented challenges like the pandemic have taken their toll on the well-being of most everyone. At Cummins, we have a dedicated team of senior leaders continuously monitoring the impact of the pandemic on our employees and business. This team rapidly adapts health and safety precautions to support our employees in working safely and maintaining business function in an ever-changing global landscape. 2021, like its predecessor year, called for outsized efforts to ensure that our global workforce had access to the healthcare they and their families need now and going forward. Our major 2021 initiatives included: • Launching an aggressive global effort to acquire vaccines and provide them onsite or near-site to our employees, their families and other stakeholders. By partnering with governments and healthcare providers, we facilitated the delivery of over 45,000 doses of approved vaccines to employees including over 5,000 inoculations in the United States, over 30,000 in India and over 10,000 in Mexico. In Brazil, China, India and Mexico, the vaccination rate among employees is now greater than 90%. • Expanding our medical plan options to include a Preferred Provider Option (PPO) in addition to our existing High Deductible Health Plans (HDHPs), which offers our employees more comprehensive healthcare choices to best align and support their medical and financial needs. Additionally, we now offer a progressive Centers of Excellence (COE) program that provides our employees and their families the highest quality care with the lowest out-of-pocket costs for major surgical and medical procedures. • Refining and expanding our global mental health awareness campaign focused on destigmatizing and normalizing mental health and continuing to actively encourage our employees and their families to seek support through available Cummins resources. Employee Resource Groups (ERGs) played an increased role supporting the mental health of our employees by sponsoring and facilitating Safe Space Forums and Mindful Meditation sessions. As many employees continued to work remotely, ERGs also hosted virtual forums promoting inclusion and belonging.
		Leadership				In 2021, our leadership development framework, which focuses on building business acumen and emotional intelligence, was rolled out to multiple cohorts, including participants from our senior executive ranks through middle managers. This will be an ongoing effort to ensure our leaders and future leaders have the tools they need to advance their personal growth as well as their contribution to the sustainable growth of our enterprise. In 2021 we also launched an Employee Experience Survey to ensure we are delivering on our vision of enabling all employees to reach their full potential. The survey focused on aspects of the employee experience such as leadership, inclusion, and wellness. The collective survey insights will be used to: • Optimize talent and business outcomes by identifying talent process improvement opportunities • Identify development needs of leaders • Provide leaders with greater awareness of the health and work environment of their people
		Talent Management Strategies				Creating a work environment in which all employees can develop and grow their careers is critical to attracting and retaining top talent. As part of our “hire to develop” strategy, we hire qualified candidates early in their careers and then provide them with learning and development opportunities to build increasing levels of capability and responsibility over time. In 2021, we continued the phased implementation of our talent management processes to our hourly employee population, including our internal job posting process for all office and technician roles. Squarely focused on enabling employees to reach their full potential, this program is being well received and will continue to play a vital role in offering career paths and advancement opportunity to all our employees.

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How Did We Align Executive Pay and Performance?

		Annual Bonus Plan				Our Annual Bonus Plan paid out 130% of target based on actual 2021 ROANA of 27.3% against a target of 25.56%. All employees participating in the bonus plan received the same payout factor.
		Performance Share & Performance Cash Plans				Our Performance Share and Performance Cash plans for the 2019-2021 performance cycle paid out 90% of target based on actual 3-year cumulative EBITDA of $10,241 million compared to our goal of $10,993 million, and ROIC of 15.5% compared to our target of 15%. All employees participating in the long-term performance plans received the same payout factor.
		Long Term Incentive Mix				Starting with the 2021 long term incentive grant, the Talent Management and Compensation Committee decided to eliminate stock options from the pay mix and weight performance shares 70% and performance cash 30%. The rationale for this change was to make the plan 100% performance-based and to simplify the plan.
		Alignment between CEO’s Realizable Pay & financial/ TSR performance				The Committee, along with its consultant, Farient Advisors LLC (“Farient”), quantitatively and qualitatively assessed the relationship between realizable pay (defined as actual salary, actual annual bonus, actual long-term performance cash earned, actual long-term performance shares, earned valued at the stock price at the end of the performance period, and the economic value of the fully vested options grant three years prior) and financial and TSR performance for our CEO. The results of this analysis demonstrate strong alignment, as shown below:

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Purpose and Principles of our Executive
Compensation Program

PURPOSE OF OUR EXECUTIVE COMPENSATION PROGRAM

Our long-term success depends on our ability to attract, motivate, focus, and retain highly talented individuals committed to Cummins’ vision, strategy and corporate culture. To that end, our incentive plans, which apply to all participants including executives, are designed to link pay to Cummins’ annual and long-term performance, and to the successful execution of Cummins’ business strategies. Our salary levels and incentive targets are intended to recognize individual performance and market pay levels. We also use our executive compensation program to encourage high performing executives to remain with us over the course of their careers.

PRINCIPLES OF OUR EXECUTIVE COMPENSATION PROGRAM

Our compensation philosophy rewards executives for achieving our financial objectives and building long-term value for our shareholders and other stakeholders. We also follow several other principles when designing our executive compensation program including:

				Market Positioning We believe that, on average, our executives’ target total direct compensation opportunity (consisting of base salary, target annual bonus, and target long-term incentive value) should be at the median of the market.
				Short-Term / Long-Term Mix We believe that there should be an appropriate balance between annual and long-term elements of compensation commensurate with the position’s decision-making time horizon and competitive context.
				Pay at Risk We believe that the more senior an executive’s position, the more compensation should be “at risk,” which means it will vary based on Cummins’ financial and stock price performance.
				Retention We believe that our compensation program should support retention of our experienced executives and achievements of our leadership succession plans.
				Simple and Transparent We believe that our executive compensation program should be transparent to our investors and employees as well as simple and easy to understand.
				Alignment with Shareholder Interests We believe that equity-based compensation and stock ownership should be a substantial part of our executive compensation program in order to link executives’ compensation with our shareholders’ returns. The greater the level of responsibility of the officer, the more his or her compensation should be stock-based and the higher his or her stock ownership requirement should be.

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Advisory Shareholder Say-on-Pay Vote

At our 2021 Annual Meeting, after the 2021 executive compensation actions described in this CD&A had taken place, we held an advisory shareholder vote to approve the compensation of our Named Executive Officers (our “NEOs”). Of the votes cast by our shareholders, 88.6% were voted in favor of our executive compensation.

The Committee considered these voting results along with shareholder feedback as a part of its comprehensive assessment of Cummins’ executive compensation programs. Given the support we received from shareholders, we did not undertake any material changes to our executive compensation program. The Committee will continue to review our compensation programs each year in light of the annual “say-on-pay” voting results and will continue to solicit shareholder feedback to ensure our programs are aligned with their expectations.

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Compensation Elements Support Pay For
Performance Philosophy

As in prior years, our compensation program is designed to support our pay-for-performance philosophy aligned with the interests of our shareholders and other stakeholders. The key elements of our executive compensation program are:

Compensation Element	Form of Payment	Performance Metrics	Rationale
Base salary	Cash	Individual Performance	Market-based to attract and retain skilled executives. Designed to recognize scope of responsibility, individual performance and experience.
Annual bonus	Cash	Return on Average Net Assets (ROANA) using EBITDA	Rewards operational performance. ROANA balances growth, profitability and asset management.
Long-term incentive compensation	Performance cash (30%) and Performance shares (70%)	Return on Invested Capital (ROIC), weighted at 80% and EBITDA, weighted at 20% over a three-year period	ROIC and EBITDA provide an incentive for profitable growth and correlate well with shareholder value.

As described below under “One-time Equity Awards,” in 2021 we also granted one-time equity awards to two of our Named Executive Officers. These grants were intended to be one-time awards responsive to special situations outside of our annual long-term incentive compensation program.

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EXECUTIVE COMPENSATION

We believe the compensation of our most senior executives should be based on Cummins’ overall financial performance and a significant portion of their pay should be incentive-based and therefore at risk.

In 2021, performance-linked components (annual bonus and long-term incentive compensation other than the one-time equity awards) were 88% of the CEO’s target total direct compensation opportunity and 79% of the average target total direct compensation opportunity for the Named Executive Officers. These pay elements were allocated as shown below.

TARGET TOTAL DIRECT COMPENSATION MIX – FISCAL YEAR 2021

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Target Executive Compensation Aligned with
the Market

The Committee reviews our executive compensation levels and programs on a regular basis. For pay levels, we generally target the median of the market for total direct compensation as well as its components, including salary, bonus targets, and long-term incentive target values. We consider target compensation to be market competitive if it is within +/-10% of the median level indicated by the benchmarking data.

For making 2021 pay decisions, our primary compensation benchmarking sources were manufacturing companies in the Aon Radford Executive Survey and the Mercer Benchmark Database Survey. We also considered data from our Custom Peer Group (described below) regarding pay levels for the CEO and pay program design, dilution, and performance. We believe this approach provides an appropriate representation of the market, and using multiple sources lessens the impact of fluctuations in market data over time.

Our Custom Peer Group, identified in 2020 for making 2021 pay decisions, was made up of the sixteen public companies listed below. All companies fell into at least one of the following categories:

•

customers with a strong presence in one or more of our major markets;

•

companies that compete directly or indirectly with one or more of Cummins’ businesses;

•

key suppliers of related products; and

•

diversified industrial companies that compete for investor capital within the Industrial market segment.

The Custom Peer Group companies are also similar to Cummins in size and investor profile and compete with us for customers and talent.

Borg Warner Incorporated	Caterpillar Incorporated	Daimler AG	Deere & Company
Donaldson Co. Incorporated	Eaton Corporation	Emerson Electric Co.	Fortive Corporation
Honeywell International Inc.	Illinois Tool Works	Navistar International Corp.	Paccar Incorporated
Parker-Hannifin Corporation	Textron Incorporated	Volvo AB	W.W. Grainger

No changes were made to the peer group identified in 2020 for making 2021 pay decisions compared to the peer group identified in 2019 for making 2020 pay decisions.

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Executive Compensation Best Practices

We continually review best practices in the area of executive compensation and incorporate those practices in our executive compensation arrangements.

WHAT WE DO

WHAT WE DO NOT DO

Set clear financial goals that we believe are challenging yet achievable, meet or exceed competitive standards, and will enhance shareholder value over time

We do not allow backdating or repricing of stock options

Use different measures to ensure our executives focus on both annual and longer-term goals

We do not have separate employment contracts with our executive officers

Tie incentive awards for all participants to overall company performance to reinforce that the company’s success is more important than individual business success and to encourage collaboration and teamwork

We do not guarantee salary increases, bonuses or equity grants for our executive officers, and we do not provide discretionary bonuses to our Named Executive Officers

Encourage executives to focus on the sustained long-term growth of our company and promote retention by vesting awards only at the end of the performance or service period

We will not gross-up excise taxes that may be imposed on payments to our executive officers in connection with a change in control

Cap payouts under our short- and long-term incentive compensation plans at 200% of the target awards

We do not provide significant perquisites

Require all incentives awards for senior executives be subject to clawback and cancellation provisions

We do not permit officers or directors to engage in pledging, hedging or similar types of transactions with respect to our stock

Maintain a Talent Management and Compensation Committee composed of independent directors who are advised by an outside, independent compensation consultant

We do not pay dividends or dividend equivalents on unearned performance shares

Complete an annual assessment of the risk associated with our compensation program

Require executive officers to maintain prescribed stock ownership levels

Subject our executives to double trigger change in control provisions

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How Performance Measures and Goals are
Determined

The Committee regularly reviews all elements of our executive compensation program and makes changes as it deems appropriate. Each review includes general comparisons against market data and analysis prepared by Farient, including information on market practices in the following areas:

•

Pay strategy and positioning;

•

Annual bonus plan design, including performance measures and goals and plan leverage;

•

Long-term incentive plan strategy and design, including the mix of elements, as well as performance measures and goals and plan leverage;

•

Stock ownership guidelines;

•

Executive perquisites, including personal use of company aircraft; and

•

Executive benefits and protection policies, including severance practices for officers, supplemental retirement plans, deferred compensation plans and change in control arrangements.

The Talent Management and Compensation Committee establishes performance measures and goals each year for the annual and long-term incentive plans that are designed to help achieve our business strategy and objectives. The Committee also benchmarks against the historical performance of the Custom Peer Group and considers whether Cummins’ goals are sufficiently demanding relative to our peers. Additionally, the Committee solicits Farient’s assessment regarding the degree of difficulty associated with the incentive plan performance targets relative to both external analyst expectations for performance and peer performance expectations. The Committee believes this process leads to appropriate performance targets and incentive awards that reflect the creation of shareholder value.

The Talent Management and Compensation Committee has discretion to adjust performance results that reflect significant transactions (such as acquisitions, divestitures, or newly-formed joint ventures) or other unusual items (such as pension plan contributions above required levels, restructuring, or significant tax legislation) if such events were not anticipated at the time performance targets were initially established.

Compensation Programs

Our executive compensation program consists of three principal elements: base salary, annual bonus, and long-term incentive compensation. Together, these elements constitute total direct compensation.

Base Salary

We target base salary, on average, at the median of the market for similar executive positions. Some officers’ base salaries may vary from the median due to factors such as experience, tenure, potential, performance, and internal equity.

Annual Bonus

How Bonuses are Calculated

Our annual bonus is designed to link participants’ pay to our annual financial performance. The payout for each participant, including our NEOs, is calculated using the following formula:

Target awards as a percentage of salary are set such that performance at the target goal level generates an annual bonus aligned with the median range of the market. The “payout factor” is determined based on Cummins’ actual financial performance against its annual goals.

2021 ANNUAL BONUS PERFORMANCE MEASURE

ROANA was the sole performance measure for our 2021 annual bonus plan because ROANA appropriately balances our growth, profitability, and the management of our assets, all of which combine to drive our share value.

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ROANA for compensation purposes equals:

ROANA = Earnings Before Interest, Taxes, Depreciation, and Amortization (or EBITDA) ÷ Average Net Assets(1)

(1)

Average Net Assets is the average of the Net Assets ending in the five quarters preceding our fiscal year. Net Assets is derived from our consolidated balance sheet and excludes debt and related financing accounts, deferred tax amounts, and certain pension and post-retirement liability accounts

ROANA PERFORMANCE TARGETS FOR 2021

Setting the target with the appropriate level of difficulty underscores the importance of achieving or exceeding our annual operating plan (AOP) performance commitment. This approach requires increasingly difficult targets during economic upturns and realistic goals during cyclical downturns. The 2021 ROANA goals were set with this philosophy in mind. As in the past, we made no adjustments to the final 2021 plan results or awards despite the continued impact of the pandemic throughout the year.

Target ROANA decreased from 27.65% in 2020 to 25.56% in 2021. This decrease was due to the AOP projections for 2021. Target ROANA was established by the Talent Management and Compensation Committee after reviewing the AOP and considering input from Farient Advisors, the Committee’s independent outside consultant.

Target ROANA (a 100% payout factor) was the amount required to achieve our AOP. As shown below, the possible payout factors for 2021 ranged from 10% for threshold performance (70% of target ROANA) to a maximum of 200% for superior performance (115% of target ROANA or better). The payout factor changed in increments of 10% for results that fell between threshold and target, or between target and maximum.

	ROANA Goal		Goal as % of Target		Payout as % of Target(1)
>Maximum		29.39%		115%		200%
Target		25.56%		100%		100%
Threshold		17.89%		70%		10%
<Threshold		<17.89%		<70%		0%
EBITDA at target: $3.314 billion

(1)

Interpolate for performance between discrete points, rounded to the nearest 10% increment

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2021 ROANA PERFORMANCE AND PAYOUTS

Our 2021 ROANA performance was 27.3%, and, as a result, the payout factor used to calculate the 2021 annual bonus for all participants, including Named Executive Officers, was 130% of target.

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Long-Term Incentive Compensation

FORM OF LONG-TERM INCENTIVE AWARDS FOR 2021

Our long-term incentive compensation program for 2021 consisted of performance cash and performance shares. As previously disclosed, for 2021, the Talent Management and Compensation Committee decided to eliminate stock options from the pay mix and weight performance shares 70% and performance cash 30%. The rationale for this change was to make the plan 100% performance-based and to simplify the plan. We believe that the combination of these long-term incentive vehicles supports our pay-for-performance philosophy, provides appropriate incentives for participants to achieve financial targets, and provides strong linkage between the economic interests of our participants, including our NEOs, and our shareholders.

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TARGET GRANT VALUES

The Talent Management and Compensation Committee generally sets the target long-term incentive values for our officers on average at the median of the market. Grant values are set using a market-based economic valuation methodology which converts the targeted value of the grants into a targeted dollar amount of performance cash and a number of performance shares. The number of performance shares granted is based on a three-month average daily trading day stock price in the final quarter of our prior fiscal year to mitigate the impact of temporary stock price spikes or drops on the number of shares to be granted.

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PERFORMANCE PLAN MEASURES

Since the 2019-2021 long-term performance cycle, we have used two metrics for our long-term performance cash and performance shares: Return on Invested Capital (ROIC), which has an 80% weighting, and earnings before interest, taxes, depreciation, and amortization (EBITDA), which has a 20% weighting. The Talent Management and Compensation Committee reaffirmed these metrics were appropriate for the 2021-2023 award cycle as we continued to focus on both growth and delivering strong returns on the capital we invest. Together these metrics strongly correlate with total shareholder return.

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ROIC AND EBITDA PERFORMANCE TARGETS FOR THE 2019-2021 AWARD CYCLE

For the 2019-2021 performance cycle, we set a stable ROIC target of 15%, which represents a target that is both above the median of our peer group as well as a challenging goal across the 3-year performance period. We endeavor to maintain a stable target as long as our strategy remains the same in delivering competitive long-term returns. We also established a cumulative 3-year EBITDA goal the Talent Management and Compensation Committee deemed to be challenging, yet realistic, and consistent with our long-term strategy and financial plans.

ROIC for compensation purposes equals:

ROIC = Average Earnings Before Interest Expense and Noncontrolling Interests after taxes for the 3-year performance period ÷ Average Invested Capital for the 3-year performance period

EBITDA for compensation purposes equals:

EBITDA = Cumulative Earnings Before Interest Expense, Income Taxes, Noncontrolling Interests, Depreciation and Amortization for the 3-year performance period

The table below summarizes the ROIC and EBITDA targets for the 2019-2021 award cycle.

	ROIC Goal (80% Weighting)		ROIC Goal as a % of Target		EBITDA Goal (20% Weighting)		EBITDA Goal as % of Target		ROIC and EBITDA Payouts as % of Target(1)
<Maximum		19.50%		130%		$12,642		115%		200%
Target		15.00%		100%		$10.993		100%		100%
Threshold		10.50%		70%		$9,344		85%		10%
<Threshold(2)		10.50%		<70%		<$9,344		<85%		0%

(1)

Interpolate for performance between discrete points

(2)

Plan does not require that both measures are above threshold for a payout to occur

2019-2021 LONG-TERM PERFORMANCE CASH AND PERFORMANCE SHARE PAYOUTS

Based on our actual performance from January 1, 2019 through December 31, 2021, our ROIC was 15.50% and our 3-year Cumulative EBITDA was $10,241 million. As a result, the payout factor used to calculate the awards for all long-term incentive plan participants was 90%. We made the following exclusions:

•

$215 million benefit from 2019 net operating profit after tax and $207 million from 2019 shareholders’ equity associated with a lower effective tax rate as a result of the 2017 tax legislation;

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•

$93 million benefit from 2020 net operating profit after tax and $89 million from 2020 shareholders’ equity associated with a lower effective tax rate as a result of the 2017 tax legislation

•

$112 million benefit from 2021 net operating profit after tax and $107 million from 2021 shareholders’ equity associated with a lower effective tax rate as a result of the 2017 tax legislation

ROIC AND EBITDA PERFORMANCE TARGETS FOR THE 2020-2022 AND 2021-2023 AWARD CYCLES

The table below summarizes the ROIC and EBITDA targets for the 2020-2022 award cycle.

	ROIC Goal (80% Weighting)		ROIC Goal as a % of Target		EBITDA Goal (20% Weighting)		EBITDA Goal as % of Target		ROIC and EBITDA Payouts as % of Target(1)
<Maximum		19.50%		130%		$12,422		115%		200%
Target		15.00%		100%		$10,802		100%		100%
Threshold		10.50%		70%		$9,182		85%		10%
<Threshold(2)		10.50%		<70%		<$9,182		<85%		0%

(1)

Interpolate for performance between discrete points

(2)

Plan does not require that both measures are above threshold for a payout to occur

The table below summarizes the ROIC and EBITDA targets for the 2021-2023 award cycle.

	ROIC Goal (80% Weighting)		ROIC Goal as a % of Target		EBITDA Goal (20% Weighting)		EBITDA Goal as % of Target		ROIC and EBITDA Payouts as % of Target(1)
<Maximum		19.50%		130%		$12,157		115%		200%
Target		15.00%		100%		$10,571		100%		100%
Threshold		10.50%		70%		$8,985		85%		10%
<Threshold(2)		10.50%		<70%		<$8,985		<85%		0%

(1)

Interpolate for performance between discrete points

(2)

Plan does not require that both measures are above threshold for a payout to occur

One-Time Equity Awards

As previously disclosed, based on the additional responsibilities assumed by Mr. Satterthwaite upon his appointment to the Vice Chairman role, the Talent Management and Compensation Committee awarded Mr. Satterthwaite a) one-time, performance based restricted stock unit grant with a target value of $3,000,000(1), effective March 1, 2021. The grant is subject to ratable vesting over three years beginning on the first anniversary of the grant date, contingent upon the achievement of annual performance objectives, as determined by the Committee.

The award value was determined by assessing Mr. Satterthwaite’s position to the external market. Adding $1,000,000 per year on an amortized basis brings Mr. Satterthwaite’s total direct compensation slightly above the median of the market, which we feel is appropriate given the importance of Mr. Satterthwaite’s position and the fact that the award is contingent upon meeting critical strategic initiatives for the company.

At the end of 2021, we determined that the first year’s performance goals, which related to leadership development and the identification and completion of strategic projects, had been satisfactorily completed. The achievement of the performance goals for the second and third years of the grant will be evaluated following the completion of each year.

As previously disclosed, given the company’s desire to retain highly capable and sought-after business leaders, the Talent Management and Compensation Committee awarded Mr. Padmanabhan a one-time restricted stock award, with a target value of $1,000,000(1), effective March 1, 2021. The grant is subject to ratable vesting over three years beginning on the second anniversary of the grant date.

The award value was chosen as an amount that would be sufficient to retain Mr. Padmanabhan. Additionally, the award further strengthens the ownership stakes of a high performing executive who plays a critical role in the company’s success.

(1)

The target dollar value of the equity grants noted above does not reflect the grant date fair value for purposes of U.S. GAAP. Instead, based upon the target dollar value of the equity awards, the actual number of restricted stock units or shares of restricted stock granted was determined by dividing the target dollar value by an average of the closing prices of our common stock over a six-month period.

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EXECUTIVE COMPENSATION

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The Compensation Decision Process

ROLE OF OUR TALENT MANAGEMENT AND COMPENSATION COMMITTEE

The Talent Management and Compensation Committee reviews and discusses the Board’s evaluation of the Chairman and Chief Executive Officer’s performance, including the progress made in implementing Cummins’ business strategy and achieving specific long- and short-term business objectives. The Committee considers those discussions and the results of the formal review to determine the compensation of our Chief Executive Officer for the coming year. The Committee Chair then informs the Board of the Committee’s decisions. Members of management do not make recommendations regarding the compensation of our Chief Executive Officer.

ROLE OF OUR CHIEF EXECUTIVE OFFICER

For other Officers, including the NEOs, the Chief Executive Officer considers performance and makes individual recommendations to the Committee on base salary, annual incentive targets, and long-term incentive targets. This review occurs annually at the February Talent Management and Compensation Committee meeting, which is the first meeting of the year and provides the earliest opportunity to review and assess individual and corporate performance for the previous year.

The Talent Management and Compensation Committee evaluates each officer’s compensation relative to the market median for similar positions and considers internal equity and the experience, tenure, potential and performance of each officer and modifies and approves, as appropriate, these recommendations.

ROLE AND INDEPENDENCE OF OUR COMPENSATION CONSULTANT

For 2021, the Talent Management and Compensation Committee engaged Farient Advisors LLC, or Farient, as its independent compensation consultant to provide input and advice to the Committee. The consultant also advises the Committee on non-employee director compensation. Other than the services provided to the Committee, Farient does not provide any other services to our company. Our Committee maintains a formal process to ensure the independence of any executive compensation advisor engaged by the Committee, including consideration of all factors relevant to the advisor’s independence from management, including those factors specified by the NYSE listing rules. The Committee assessed the independence of Farient in light of those factors and concluded that Farient is an independent compensation advisor and that its work for the Committee did not raise any conflict of interest.

The Committee oversees the work of the consultant and has final authority to hire or terminate any consultant. The Committee also annually reviews structural safeguards to assure the independence of the consultant.

Compensation Decisions Pertaining to our Named Executive Officers

The discussion below outlines each NEO’s responsibilities, performance highlights for 2021, the compensation decisions made, and incentive outcomes for each individual.

The Talent Management and Compensation Committee believes the 2021 compensation packages for our NEOs and our executive compensation program align the interests of our shareholders and executives by emphasizing variable, at-risk compensation tied to measurable performance goals using an appropriate balance of short-term and long-term objectives.

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EXECUTIVE COMPENSATION

N. Thomas Linebarger

Chairman and Chief Executive Officer

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(1)

The salary shown for each year is based on the annualized salary that was intended to be paid starting on July 1 of each given year, which is Cummins’ normal effective focal increase date.

(2)

The target incentive values differ from those shown in the Summary Compensation table because the table shows earned not target annual incentive awards.

(3)

The salary shown for 2020 is before the reduction in Mr. Linebarger’s salary because of the COVID-19 pandemic. Mr. Linebarger’s actual salary for 2020 was $1,214,063.

Mr. Linebarger served as our Chairman of our board and Chief Executive Officer in 2021. He has held this role since 2012. At the beginning of 2021, the TMCC determined to maintain Mr. Linebarger’s salary, target annual bonus, and target long-term incentive at the levels established in 2020. Mr. Linebarger’s target total direct compensation in 2021 compared to 2020 is shown in the charts above.

In 2021, Mr. Linebarger:

•

Exceeded financial targets with revenue of $24 billion, net income of $2.1B, and adjusted ROIC of 16% for the year despite continued pandemic and supply chain challenges

•

With our lead Director, ensured the collective membership of our company’s Board comprise diversity of experience, tenure, race, and gender

•

Demonstrated strong commitment toward the company’s Destination Zero decarbonization goals, including significant investment in fuel cell, electrolyzer, and battery electric technologies, and serving as the Chairman of the Hydrogen Council

•

Advanced the company’s diversity, equity & inclusion efforts through leadership of the Chairman’s Diversity Council, investment in external community partnerships focused on racial justice, and sponsorship of an immersive program to expand our executive leadership team’s understanding of and competency in talking about race

Mr. Linebarger’s target compensation compared to his realized compensation for 2021 is shown in the table below:

Pay Component	Target	Performance Factor	Realized	Comments
Salary for 2021	$1,575,000	Not Applicable	$1,575,000	—
Annual Bonus for 2021	$2,520,000	130%	$3,276,000	$2,520,000 x 130%
Performance Cash for 2019-2021 cycle	$3,277,000	90%	$2,949,300	$3,277,000 x 90%
Performance Shares for 2019-2021 cycle	21,670	90%	19,503 Performance shares earned for 2019-2021 cycle, valued at $4,254,384	Value reflected $218.14 stock price on December 31, 2021; 21,670 shares × 90% × $218.14 stock price

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Mark Smith

Vice President – Chief Financial Officer

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(1)

The salary shown for each year is based on the annualized salary that was intended to be paid starting on July 1 of each given year, which is Cummins’ normal effective focal increase date.

(2)

The target incentive values differ from those shown in the Summary Compensation table because the table shows earned not target annual incentive awards.

(3)

The salary shown for 2020 is before the reduction in Mr. Smith’s salary because of the COVID-19 pandemic. Mr. Smith’s actual salary for 2020 was $628,646.

Mr. Smith served as our Vice President – Chief Financial Officer in 2021. He has held this role since 2019. At the beginning of 2021, the TMCC determined to maintain Mr. Smith’s base salary, target annual bonus, and target annual long-term incentive award at the levels established in 2020. Mr. Smith’s target total direct compensation in 2021 compared to 2020 is shown in the charts above.

In 2021, Mr. Smith:

•

Maintained strong liquidity for our global operations to support investment, future growth, and operating flexibility in the face of many challenges in 2021

•

Ensured that the company maintained strong financial controls while the majority of our global finance employees worked from home in response to the COVID-19 pandemic

•

Worked closely with other Cummins leaders to identify opportunities to reposition our portfolio of businesses to strengthen our growth potential as we lead the decarbonization of our industry

•

Continued focus on our talent management strategy resulting in increased representation of Black and LatinX employees in our U.S. finance organization in 2021

Mr. Smith’s target compensation compared to his realized compensation for 2021 is shown in the table below:

Pay Component	Target	Performance Factor	Realized	Comments
Salary for 2021	$710,000	Not Applicable	$710,000	—
Annual Bonus for 2021	$674,500	130%	$876,850	$674,500 x 130%
Performance Cash for 2019-2021 cycle	$717,000	90%	$645,300	$717,000 x 90%
Performance Shares for 2019-2021 cycle	4,740	90%	4,226 Performance shares earned for 2019-2021 cycle, valued at $930,585	Value reflected $218.14 stock price on December 31, 2021; 4,740 shares x 90% x $218.14 stock price

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EXECUTIVE COMPENSATION

Tony Satterthwaite

Vice Chairman

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(1)

The salary shown for each year is based on the annualized salary that was intended to be paid starting on July 1 of each given year, which is Cummins’ normal effective focal increase date.

(2)

The target incentive values differ from those shown in the Summary Compensation table because the table shows earned not target annual incentive awards. The target annual LTI for 2021 includes the $3,000,000 performance-based restricted stock unit grant that Mr. Satterthwaite received, as outlined in the One-Time Equity Awards section.

(3)

The salary shown for 2020 is before the reduction in Mr. Satterthwaite’s salary because of the COVID-19 pandemic. Mr. Satterthwaite’s actual salary for 2020 was $655,208.

Mr. Satterthwaite was appointed to the role of Vice Chairman in March 2021. He previously served as President and Chief Operating Officer. At the beginning of 2021, the TMCC determined to maintain Mr. Satterthwaite’s base salary and target annual bonus at the levels established in 2020. The Committee also kept Mr. Satterthwaite’s target long-term incentive at the same level of $2,300,000. The Committee, however, did provide Mr. Satterthwaite with a one-time performance-based restricted stock unit grant with a target value of $3,000,000 based on the additional responsibilities assumed upon his appointment to the Vice Chairman role. Additional details for this grant can be found in the One-Time Equity Awards section. Mr. Satterthwaite’s target total direct compensation in 2021 compared to 2020 is shown in the charts above.

In 2021, Mr. Satterthwaite:

•

Engineered our response to the ongoing COVID pandemic including vaccination policies, return to office decisions and the continued health and safety of our essential on-site employees

•

Initiated a long-term process automation project to improve SG&A costs

•

Served as interim Supply Chain Leader for 3 months, supporting strong demand in many markets

•

Led strategy work for multiple engine partnership deals and our New Power business

•

Launched Cummins Water Works, a critical Corporate Responsibility program to reduce our water usage and increase water availability to our communities

Mr. Satterthwaite’s target compensation compared to his realized compensation for 2021 is shown in the table below:

Pay Component	Target	Performance Factor	Realized	Comments
Salary for 2021	$740,000	Not Applicable	$740,000	—
Annual Bonus for 2021	$703,000	130%	$913,900	$703,000 x 130%
Performance Cash for 2019-2021 cycle	$819,000	90%	$737,100	$819,000 x 90%
Performance Shares for 2019-2021 cycle	5,420	90%	4,878 Performance shares earned for 2019-2021 cycle, valued at $1,064,087	Value reflected $218.14 stock price on December 31, 2021; 5,420 shares × 90% × $218.14 stock price

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Jennifer Rumsey

President and Chief Operating Officer

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(1)

2021 pay for Ms. Rumsey reflects her pay as of March 2021 when she was promoted to President and Chief Operating Officer.

(2)

The salary shown for each year is based on the annualized salary that was intended to be paid starting on July 1 of each given year, which is Cummins’ normal effective focal increase date.

(3)

The target incentive values differ from those shown in the Summary Compensation table because the table shows earned not target annual incentive awards.

(4)

The salary shown for 2020 is before the reduction in Ms. Rumsey’s salary because of the COVID-19 pandemic. Ms. Rumsey’s actual salary for 2020 was $531,250.

Ms. Rumsey served as our President and Chief Operating Officer in 2021. She was promoted to this role in March 2020 after serving as Vice President and President – Components. As part of the promotion, taking into account the median levels indicated by benchmarking data relating to her new role, the TMCC increased Ms. Rumsey’s base salary to $740,000, set her target annual bonus to $703,000 (95% of base salary), and provided a target long-term incentive award of $2,300,000. Ms. Rumsey’s target total direct compensation in 2021 compared to 2020 is shown in the charts above.

In 2021, Ms. Rumsey:

•

Led the company’s overall operations, delivering a 21% increase in revenue over 2020 amid significant supply chain and logistics challenges

•

Successfully launched new products globally including on-highway products in the US, Europe, and China to meet the next generation of emissions requirements and the Endurant Automated Manual transmission in China

•

Continued to work with OEM and end user customers to deliver value through improved product quality and performance and excellent product support

•

Played a leadership role in key Cummins strategies including our Destination Zero decarbonization strategy

•

Co-sponsored the Cummins Power Women Corporate Responsibility initiative

Ms. Rumsey’s target compensation compared to her realized compensation for 2021 is shown in the table below:

Pay Component	Target	Performance Factor	Realized	Comments
Salary for 2021	$740,000	Not Applicable	$740,000	Reflects Ms. Rumsey’s base salary as of March when she was promoted to President and COO.
Annual Bonus for 2021	$703,000	130%	$913,900	Reflects Ms. Rumsey’s annual bonus as of March when she was promoted to President and COO. $703,000 × 130%
Performance Cash for 2019-2021 cycle	$451,000	90%	$405,900	$451,000 x 90%
Performance Shares for 2019-2021 cycle	2,980	90%	2,682 Performance shares earned for 2019-2021 cycle, valued at $585,051	Value reflected $218.14 stock price on December 31, 2021; 2,980 shares × 90% × $218.14 stock price

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EXECUTIVE COMPENSATION

Srikanth Padmanabhan

Vice President and President,
Engine Business

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(1)

The salary shown for each year is based on the annualized salary that was intended to be paid starting on July 1 of each given year, which is Cummins’ normal effective focal increase date.

(2)

The target incentive values differ from those shown in the Summary Compensation table because the table shows earned not target annual incentive awards. The target annual LTI for 2021 includes the $1,000,000 time-vesting restricted stock grant that Mr. Padmanabhan received, as outlined in the One-Time Equity Awards section and is characterized as “at-risk” because the value of the grant depends on the value of our stock.

(3)

The salary shown for 2020 is before the reduction in Mr. Padmanabhan’s salary because of the COVID-19 pandemic. Mr. Padmanabhan’s actual salary for 2020 was $540,104.

Mr. Padmanabhan served as our Vice President and President, Engine Business in 2020. He has held this role since 2016. At the beginning of 2021, the TMCC determined to increase Mr. Padmanabhan’s base salary to better position him with the external market while maintaining his target annual bonus. The Committee also kept Mr. Padmanaban’s target long-term incentive at the same level of $1,500,000. The Committee, however, did provide Mr. Padmanabhan with a $1,000,000 restricted stock grant based on retention considerations. Additional details for this grant can be found in the One-Time Equity Awards section. Mr. Padmanabhan’s target total direct compensation in 2021 compared to 2020 is shown in the charts above.

In 2021, Mr. Padmanabhan:

•

Managed through unprecedented supply chain disruptions for the Engine segment while continuing to meet customer demand and deliver strong EBITDA performance

•

Increased share in key markets around the world, propelled by the reliable quality performance of our products

•

Introduced multiple new next-generation products positioned to help the world reach its net zero carbon goals, including natural gas and hydrogen internal combustion engines and the industry’s first-of-its-kind fuel agnostic engine platforms

•

Led an aggressive global internal combustion engine customer partnership strategy, supporting the industry in its sustainable transition

•

Delivered historic record volumes of nearly 1.5 million engines for the Engine Business amidst the pandemic

•

Championed the company’s inclusion efforts by sponsoring the South Asian and East Asian Employee resource group

•

Sponsored an ambitious local community coalition initiative on EquityWorks, promoting equity for all children by the end of the decade and our CARE efforts on biracial youth in Columbus

Mr. Padmanabhan’s target compensation compared to his realized compensation for 2021 is shown in the table below:

Pay Component	Target	Performance Factor	Realized	Comments
Salary for 2021	$647,000	Not Applicable	$647,000	—
Annual Bonus for 2021	$582,300	130%	$756,990	$582,300 x 130%
Performance Cash for 2019-2021 cycle	$451,000	90%	$405,900	$451,000 × 90%
Performance Shares for 2019-2021 cycle	2,980	90%	2,682 Performance shares earned for 2019-2021 cycle, valued at $585,051	Value reflected $218.14 stock price on December 31, 2021; 2,980 shares x 90% x $218.14 stock price

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Annual Compensation Risk Assessment

In 2021, the Talent Management and Compensation Committee conducted its annual risk assessment of our compensation policies and practices. The Committee evaluated the levels of risk-taking encouraged by our compensation arrangements to determine whether they were appropriate in the context of our strategic plan and annual budget, our compensation objectives, and Cummins’ overall risk profile. The Committee also reviewed the robust risk-mitigation features of our compensation program, the most significant of which are outlined below.

		Pay Mix				The three primary elements of our executive compensation program are base salary, annual bonus, and long-term incentive compensation. We target the median of the market for our total compensation package. This approach mitigates the need for executives to take significant risks to earn average competitive compensation and also ensures that the interests of our executives are closely aligned with those of our shareholders.
		Performance- Based Measurement				The performance goals set forth in our annual bonus and long-term incentive plans are based upon budgeted levels that are reviewed and approved by the Committee. We believe these goals are challenging yet attainable at their targeted levels without the need to take inappropriate risks, take actions that would violate our Code of Business Conduct, or make material changes to our long-term business strategy or operations. Payouts under both incentive plans are capped at 200% of target to make it less likely that executives would pursue outsized short-term achievements at the expense of the long term.
		Time Horizon				Our long-term incentive plan awards are based on a three-year performance period, which encourages our employees to focus on the sustained growth of our company rather than seeking potentially unsustainable short-term gains.
		Clawback Policy				Amounts paid to any officer under our annual bonus or long-term incentive compensation plans are subject to recovery in accordance with our Recoupment policy, as described below.
		Other Risk Mitigators				We pay incentive compensation only after our audited financial results are complete and the Committee has certified our performance results and the associated incentive awards. Additionally, we have stock ownership requirements for all officers that ensure the interests of our leaders and shareholders are aligned. We also prohibit officers from engaging in forms of hedging or monetization transactions involving the establishment of a short position in our securities and from entering into any arrangement that, directly or indirectly, involves the use of our securities as collateral for a loan.
		Exclusion of Unusual Items				In measuring financial performance under our annual short- and long-term bonus plans, the Talent Management and Compensation Committee has discretion to adjust performance results that reflect significant transactions or other unusual items if such events were not anticipated at the time performance targets were initially established. We believe allowing these exclusions ensures our executives will focus on the merits of proposed transactions for Cummins rather than the effect a proposed action may have on incentive compensation.

As a result of its review, the Committee concluded that Cummins has a balanced executive compensation program that does not drive excessive financial risk-taking. We believe that risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on our company.

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EXECUTIVE COMPENSATION

Benefits

Our officers, including our Named Executive Officers, participate in a full range of health, welfare and retirement benefits and are covered by the same plans as other exempt employees. We target our total benefit package to be at the median of the market.

In addition to these benefits, our U.S. officers, including our Named Executive Officers, participate in a supplemental life insurance and deferred income program that is designed to attract and retain key leadership talent in senior positions. This program provides additional life insurance equal to three times base salary while the officer is an active employee, and additional retirement payments, which are offset by and coordinated with payments from our regular retirement plans.

The supplemental retirement provision “tops up” the pension available from our regular pension plans to provide a total benefit based on a percentage of the officer’s highest average consecutive 60-month base salary and annual bonus received during the last 10 years of employment. The total replacement formula is 2% for each of the first 20 years and 1% for each of the next 10 years, with a maximum 50% total benefit for all officers other than Mr. Linebarger, who is eligible for an additional 10% benefit.

Our U.S. officers, including our Named Executive Officers, are also eligible to participate in our non-qualified deferred compensation plan. This program is designed to provide financial planning opportunities for capital accumulation on a tax-deferred basis and to meet competitive market practice.

A majority of our employees, including our Named Executive Officers, are eligible to participate in our employee stock purchase plan. Under the employee stock purchase plan, each eligible employee may authorize the withholding of 1-15% of base pay each pay period to be used to purchase shares of our common stock for the employee’s account on the open market. Cummins makes a matching contribution in cash in an amount sufficient to give employees a 15% discount on the purchase price of these shares.

Perquisites

Perquisites do not constitute a major element of our executive compensation program.

Our officers, including our Named Executive Officers, are entitled to the services of a financial counselor for estate- and tax-planning advice and tax return preparation. Cummins pays the fees for these services, which are detailed in the Summary Compensation Table.

Our officers, including our Named Executive Officers, may use our aircraft for reasonable personal use, following a prescribed approval process. The Talent Management and Compensation Committee reviews the level of usage annually. We believe that allowing our officers to use a company-owned plane for limited personal use saves time and provides additional security for them, which ultimately benefits Cummins. The aggregate incremental cost of personal aircraft use by our Named Executive Officers is detailed in the Summary Compensation Table.

Executive physical examinations are available for all officers, including our Named Executive Officers. The Committee considers this practice to be good corporate governance and a direct benefit to Cummins’ shareholders.

Executive Compensation Policies

COMPENSATION RECOUPMENT

Our incentive compensation awards are subject to our compensation recoupment, or “clawback” policy. This policy provides that, if any of our financial statements are required to be materially restated due to the fraudulent actions of any officer, the Talent Management and Compensation Committee may direct that we recover all or a portion of any award or any past or future compensation other than base salary from the responsible officer with respect to any year for which our financial results are adversely affected by such restatement.

Effective January 1, 2021, we adopted a modified clawback policy under which we are also authorized to recover incentive-based compensation erroneously awarded to an officer on the basis of a financial reporting measure that is subject to an accounting restatement. The modified clawback policy also authorizes us to recover incentive compensation paid or awarded to an officer if the officer engages in certain types of misconduct specified in the policy and that misconduct has caused, or might reasonably be expected to cause, significant reputational or financial harm to our company.

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POST-EMPLOYMENT COMPENSATION AND CHANGE IN CONTROL PROTECTIONS

We do not have formal severance agreements with any of our Named Executive Officers. However, we have a policy of paying severance under certain circumstances to officers whose employment is terminated, and certain of our plans provide for other benefits upon certain change-in-control events and terminations of employment. These arrangements are described in detail under “Potential Payments Upon Termination or Change in Control.” The purposes of these benefits are to encourage our key executives to concentrate on taking actions that are in the best interests of our shareholders without regard to whether such actions may ultimately have an adverse impact on their job security, and to enable key executives to provide objective advice on any potential change in control without undue concern for their personal financial situations. The Talent Management and Compensation Committee periodically reviews and modifies these benefits to ensure they continue to meet these objectives.

Under our change in control compensation protection arrangements, benefits would be provided following a qualified change in control and termination without “cause” by the company or termination by the officer for “good reason” within two years of the change in control. Upon the occurrence of both triggering events, the following benefits would be provided to any affected Named Executive Officer:

For Our Chief Executive Officer

For Our Named Executive Officers
(except our Chief Executive Officer)

	NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS
	PROXY STATEMENT FOR 2022 ANNUAL SHAREHOLDERS MEETING
	PROXY SUMMARY					1
	CORPORATE GOVERNANCE					7
	ELECTION OF DIRECTORS (Items 1 through 13 on the Proxy Card)					16
	NOMINEES FOR BOARD OF DIRECTORS					16
	EXECUTIVE COMPENSATION					25
	ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS (Item 14 on the Proxy Card)					67
	RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS (Item 15 on the Proxy Card)					68
	SHAREHOLDER PROPOSAL (Item 16 on the Proxy Card)					72
	STATEMENT IN OPPOSITION					73
	STOCK OWNERSHIP OF DIRECTORS, MANAGEMENT AND OTHERS					76
	OTHER BUSINESS					78
	ANNEX A RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES