Invitation to 2021 Annual Meeting of Shareholders

Dear Fellow Shareholder:

I am pleased to invite you to join me, our Board of Directors, executive officers, associates and other shareholders at Flowserve’s 2021 Annual Meeting of Shareholders. The attached Notice of 2021 Annual Meeting of Shareholders and Proxy Statement, which we are providing to shareholders beginning on April 9, 2021, contain details of the business to be conducted at the meeting.

Our Performance in 2020

2020 was a year of significant challenges, not just for Flowserve but for the global economy as a whole. Despite the significant progress made in 2019, the onset of the COVID-19 pandemic, compounded by volatility in oil and gas prices, have had a significant impact on our end markets, our business and our financial performance. These impacts have only heightened the importance of continuing our Flowserve 2.0 Transformation program and accelerated the need to adapt our long-term strategy. The most significant area of focus in 2020 was keeping our people safe from the COVID-19 pandemic while performing our essential operations in order to keep critical infrastructure and industries operating, including oil and gas, water, chemical, power generation and other essential industries, such as food and beverage and healthcare. Our associates rose to the challenges presented by the COVID-19 pandemic, adapting to new policies and procedures to keep our facilities safe, adjusting to work-from-home practices, and improving hygiene and sanitation for those who have continued to keep our manufacturing facilities running, which is evidence of just how deeply our associates are committed to the Flowserve mission, values and behaviors. With bookings down 19.5% in the wake of these unprecedented challenges, our aggressive cost-saving actions combined with the process improvements implemented as part of the Flowserve 2.0 transformation allowed us to nonetheless achieve solid results in revenue, operating income, and earnings per share in light of the pressures faced by Flowserve and the broader economy in 2020.

2020 highlights include:

 

Bolstered balance sheet by refinancing debt structure and generated strong free cash flow

Safety improvements resulted in record low total recordable incident rate.

 

Reaffirmed our commitment to Diversity, Equity & Inclusion

Announced aggressive carbon emissions reduction target

 

More than 20 commercial launches of new, redesigned or upgraded products

 

Our Business Strategy

While 2020 was a challenging year for Flowserve and for our customers, through the commitment and dedication of our associates, combined with the positive impact of our transformation efforts, we are increasingly optimistic for the opportunities that lie ahead in 2021 and beyond. During 2021, we will continue our focus on cash conversion, financial returns and managing margin performance as we continue to navigate the ongoing pandemic, vaccine rollout and return to infrastructure investment and increased energy demands. We believe Flowserve is well positioned to win in the recovery and create long-term value for our shareholders and other stakeholders.

Shareholder Feedback

Flowserve’s Board and senior leadership continue to be encouraged by the positive feedback we have received about the clarity of information we provide through our proxy statement. We are continually reviewing ways to enhance the information in our public disclosures and will continue to do so based on your feedback. Your vote is very important to us and to our business. Prior to the meeting, I encourage you to sign and return your proxy card, or use telephone or Internet voting, so that your shares will be represented and voted at the meeting. You can find instructions on how to vote beginning on page 74. Thank you in advance for voting and for your continued support of Flowserve.

R. Scott Rowe, President and CEO

Notice of 2021 Annual Meeting of Shareholders

When: Thursday, May 20, 2021 at 11:30 a.m. CDT

Where: Online at www.virtualshareholdermeeting.com/FLS2021

We are pleased to invite you to join our Board of Directors and senior leadership at Flowserve’s 2021 Annual Meeting of Shareholders. The Governor of the State of New York has issued several temporary executive orders permitting New York corporations to hold virtual only shareholder meetings in light of the COVID-19 pandemic. In addition, on March 17, 2021, the New York State Legislature approved amendments to New York law that, if signed by the Governor, would permit New York corporations to hold virtual-only shareholder meetings this year.

As such, we intend to hold the Annual Meeting solely by means of remote communications with no in-person location if permitted by New York law or executive order as of the date of the Annual Meeting. In the event a solely virtual meeting is not permitted as of such date, we may provide a venue for an in-person annual meeting, in addition to virtual participation. In that case, we will notify our shareholders in advance on our website (ir.flowserve.com) and by issuing a press release and filing it as additional proxy materials with the Securities and Exchange Commission and on www.proxyvote.com.

2021 Proposals		Board Vote Recommendation	Page Reference (for more detail)
1	Elect the 10 directors named in the proxy statement	For ✔	Page 12
2	Approve, on an advisory basis, the Company’s executive compensation	For ✔	Page 61
3	Ratify the appointment of PricewaterhouseCoopers as our independent auditor for 2021	For ✔	Page 68
4	Management Proposal to Amend the Company’s Restated Certificate of Incorporation to Delete Article Tenth Regarding Supermajority Approval of Business Combinations with Certain Interested Parties	For ✔	Page 71

Shareholders will also transact any other business that is properly brought before the Annual Meeting.

Record Date: Shareholders of record of the Company’s common stock, par value $1.25 per share, at the close of business on March 26, 2021 are entitled to notice of and to vote at the Annual Meeting.

Attending the Meeting Virtually: To participate in the meeting, including to vote or to ask questions during the meeting, you must access the meeting website at www.virtualshareholdermeeting.com/FLS2021, and log in using the 16-digit control number provided on your proxy card, voting instruction form, or Notice of Internet Availability of Proxy Materials. If you do not receive a 16-digit control number, consult your voting instruction form or Notice of Internet Availability. You may need to request a “legal proxy” from your broker in advance of the meeting in order to participate online. For additional related information, please refer to the disclosure beginning on Page 76 in the enclosed proxy statement. The proxy statement and 2020 annual report to shareholders and any other proxy materials are available at www.proxyvote.com

Your vote is very important. Whether or not you plan to attend the Annual Meeting online, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described to the right on this page. Returning a proxy card or otherwise submitting your proxy does not deprive you of your right to attend the Annual Meeting and vote online at www.virtualshareholdermeeting.com/FLS2021.

By order of the Board of Directors,

Lanesha T. Minnix
Senior Vice President, Chief Legal Officer and Corporate Secretary

Proxy Summary

This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all the information that you should consider, and you should read the entire proxy statement carefully before voting. Page references are supplied to help you find additional information in the proxy statement.

Board Nominees (Page 12)

ROGER L. FIX		R. SCOTT ROWE		SUJEET CHAND
Independent Chairman Age: 67 Director since 2006 Committees: * Other Public Company Boards: 2		President & CEO, Flowserve Age: 50 Director since 2017 Committees: None Other Public Company Boards: None		Independent Age: 63 Director since 2019 Committees:
				●	●
				Other Public Company Boards: 1
RUBY R. CHANDY		GAYLA J. DELLY		JOHN R. FRIEDERY
Independent Age: 59 Director since 2017 Committees:		Independent Age: 61 Director since 2008 Committees:		Independent Age: 64 Director since 2007 Committees:
★	●	●	●	★	●
Other Public Company Boards: 2		Other Public Company Boards: 2		Other Public Company Boards: None
JOHN L. GARRISON		MICHAEL C. MCMURRAY		DAVID E. ROBERTS
Independent Age: 60 Director since 2018 Committees:		Independent Age: 56 Director since 2018 Committees:		Independent Age: 60 Director since 2011 Committees:
●	●	★	●	★	●
Other Public Company Boards: 1		Other Public Company Boards: None		Other Public Company Boards: None
CARLYN R. TAYLOR
Independent Age: 52 Director since 2020 Committees:
●			●
Other Public Company Boards: None
Chair ● Audit Committee ● Corporate Governance and Nominating Committee ● Finance and Risk Committee ● Organization and Compensation Committee * As Chairman of the Board, Mr. Fix rotates between committee meetings and serves as an alternate committee member for all committees, as needed.

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Executive Officers (Page 26)

	Name and Position	Age	Since	Previous Position
	R. Scott Rowe President, CEO and Director	50	April 2017	President — Cameron Group, Schlumberger Ltd.
	Elizabeth L. Burger Senior VP and Chief Human Resources Officer	50	April 2018	SVP and Chief Human Resources Officer, Hanesbrands, Inc.
	Sanjay K. Chowbey President, Aftermarket Services & Solutions	53	July 2019	President, Subcom Business Unit TE Connectivity
	Keith E. Gillespie Senior VP and Chief Sales Officer	55	May 2015	Managing Director, AlixPartners LLC
	Lanesha T. Minnix Senior VP, Chief Legal Officer and Corporate Secretary	46	June 2018	SVP and General Counsel, BMC Stock Holdings, Inc.
	Tamara M. Morytko President, Flowserve Pumps Division	50	September 2020	Chief Operating Officer, Norsk Titanium
	Amy B. Schwetz Senior VP and Chief Financial Officer	46	February 2020	EVP and Chief Financial Officer, Peabody
	Scott K. Vopni Vice President, Chief Accounting Officer	52	June 2020	SVP — Finance, Chief Accounting Officer, Dean Foods Co.
	Kirk R. Wilson President, President, Flow Control Division	54	July 2019	Flowserve President, Aftermarket Services & Solutions

2021 PROXY STATEMENT      3

Executive Compensation Highlights (Page 29)

Compensation Philosophy and Principles

	ATTRACT & RETAIN	Attract and retain high-quality and high-performance leaders with a passion for our purpose, values, behaviors and achieving extraordinary business outcomes
	REINFORCE OUR STRATEGY	Align our incentive programs with our vision and key business strategies with a healthy balance between short and long-term rewards
	COMPETITIVE AND MARKET-BASED	Maintain a market-based strategy that provides a competitive total target compensation opportunity approximating the market median
	ALIGN PAY AND PERFORMANCE	Provide incentive programs that reward short-term and long-term performance leading to shareholder value growth and appropriate risk taking
	ALIGN WITH SHAREHOLDERS	Provide that a majority of total compensation is ‘at risk’ and aligned with shareholder interests

Pay for Performance Alignment

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2020 Executive Total Compensation Mix

The majority of the total target compensation provided to our Named Executive Officers is ‘at risk’ and aligned with our compensation philosophy and principals to drive shareholder value creation.

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Table of Contents

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FLOWSERVE 2.0
TRANSFORMATION — Our Purpose, Values and Behaviors

In the second quarter of 2018, we launched and committed resources to our Flowserve 2.0 Transformation, a program designed to transform our business model to drive operational excellence, reduce complexity, accelerate growth, improve organizational health and better leverage our existing global platform. A significant launching point for our Flowserve 2.0 Transformation was to put a foundation in place for our organization by establishing our purpose and six core values. In 2019, we expanded this foundation to include our seven behaviors. Our purpose, values and behaviors were all created by a cross-functional, global group of employees.

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FLOWSERVE 2.0
TRANSFORMATION — Our Focus

We have approached the Flowserve 2.0 Transformation with a focus on four key areas that are integral to our success — People, Process & Technology, Customer, and Finance.

	People The most significant focus area in 2020 was working to keep our people safe from COVID-19 while performing essential operations. During 2020, safety improved to a record low total recordable incident rate ranking Flowserve among top decile for safety among manufacturing companies. Additionally, based on the results of our annual employee engagement survey, employee engagement modestly increased in 2020 despite the challenges presented by COVID-19 and the subsequent market volatility. We reaffirmed our commitment to diversity, equity and inclusion and strengthened our leadership team with minimal organizational disruption with the hiring of our new CFO and President of our Flowserve Pumps Division.
	Process & Technology Our globalized operations leverage our common processes and systems. We continue to make progress in our technology delivery and product innovation. During 2020, we improved upon our ZeroDefect quality program, manufacturing planning and Flowserve Lean Systems to increase productivity and first pass yield. We also continued to focus on innovation, including product enhancements and design to value product development in order to provide our customers with high quality, cost-effective product solutions, resulting in the launch of 21 new products in 2020.
	Customer We are committed to providing quality products and services to our customers. We have significant aftermarket capabilities to serve our customers across industries and geographies, and we are leveraging the breadth of our portfolio of mission-critical products to deliver pure-play options and provide enhanced value to our customers. These capabilities were especially important in 2020 as our products were used by customers to continue to deliver essential products and services to the world. For example, we have supplied and are continuing to supply mechanical mixer seals, ball values and pumps to support North American and European production of a COVID-19 vaccine.
	Finance Despite the market and COVID-19 headwinds faced in 2020 that led to a decrease in bookings, we were able to produce solid results in revenue, operating income, and earnings per share. We took swift action following the onset of the pandemic to reduce SG&A expenses, capital expenditures and other discretionary spending in the second quarter and bolster our balance sheet by refinancing our debt structure in the third quarter of 2020. These efforts, among others, helped to maintain strong free cash flow and end the year with approximately $1.1 billion in cash.

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CORPORATE SOCIAL RESPONSIBILITY

Our Sustainability Program

Guided by our values, we aim to create extraordinary flow control solutions to make the world better for everyone. One of the ways we strive to make the world a better place is through our commitment to environmental, social and governance (ESG) issues, both in our own operations as well as in the operations of our customers who rely on our products to improve the world around us.

We operate through governance practices that are consistent with our high standards of ethics, integrity and transparency in all our stakeholder relationships, including attracting and retaining world-class leadership talent by investing in their professional development and providing them with challenging and rewarding opportunities for personal growth, obtaining high standards of corporate citizenship by protecting the health and safety of our employees, and safeguarding the environment and communities where we do business. With executive-level participation and Board oversight of the program, sustainability has top-down support and is a company-wide priority.

During 2020, in an effort to increase transparency for our stakeholders regarding our sustainability program, we published our 2019 Sustainability Report with the SASB Industrial Machinery and Goods Reporting Standard and the TCFD Reporting Format.

Protecting the Planet Flowserve is committed to reducing the Company’s environmental footprint and delivering environmentally responsible solutions that help customers become more sustainable in the marketplace. We do this by providing our customers with innovative and high-quality products, which reduce emissions, minimize leaks and enhance efficiency. For example, our customers have used our products across the world in the development of carbon capture technology, concentrated solar power projects and flare gas recovery.   In 2020, we set an ambitious target to reduce carbon emission intensity by 40% by 2030, using 2015 as a baseline. We also signed the WASH Pledge, committing to implement access to safe water, sanitation and hygiene in all of our facilities and to encourage our supply chain and communities to do the same.

Valuing Our People We live our values through programs like safety week, integrity & compliance week, providing enterprise leadership development and empowerment training, investing in research and development, and committing to improved diversity, equity and inclusion.   During 2020, our “people first” philosophy drove our response to the COVID-19 pandemic, as we developed a comprehensive pandemic response plan that included safety precautions to prevent spread and contact tracing procedures to isolate affected personnel. We implemented a work from home policy for all associates who were able to do so to promote the safety of all employees. We continue to diligently monitor the local and global impacts of the virus and continue to keep our employees informed of critical updates and changes on an internal website dedicated to the COVID-19 pandemic. Additionally, we continue to make operating decisions that prioritize the safety of our people.

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Promoting Operational Excellence Our executive leadership, together with our Board of Directors, creates the operating structure, establishes strategic direction and develops a roadmap of risks and opportunities facing Flowserve. With that foundation, the entire Flowserve team diligently implements the strategic plan, seizing opportunity to build value through efficiency and continuous improvement.   As part of our strategy, in 2020 we launched TargetZero, a program that unifies our goals and initiatives to drive continuous improvement by striving for zero accidents, defects, delays, emissions and waste.

Our Global Community Impact Program

Supporting our Community Flowserve Cares is our community impact program that takes a global approach to the way we serve our communities, including through monetary donations, in-kind contributions and volunteerism supporting local organizations in the communities where our associates and customers live and work. Flowserve Cares focuses on at-risk youth, STEM programs and education, disaster recovery and local community-related issues.   In addition to these programs and focus areas, our associates around the globe responded to the COVID-19 pandemic by helping in their communities. For example, in Coimbatore, India, our associates distributed over 2,000 “family kits” to residents of the community near our facility, providing food, medicine and safety equipment to approximately 10,000 people. In Bangalore and Chennai, India, in partnership with other charitable organizations, our associates helped to distribute family kits, hygiene kids, and other personal protective equipment to thousands of residents.   In Bali, we also partnered with Social Impakt to distribute ceramic water filters to residents of Bali, Indonesia in order to help ease the impact of COVID-19 in two communities especially hard hit by COVID-19.

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Engagement with Shareholders

Flowserve routinely engages with our shareholders to better understand their views, carefully considering the feedback we receive and taking action when appropriate. We review the results of the annual advisory vote on executive compensation in making determinations about the structure of Flowserve’s pay program, or whether any changes to the program should be considered.

In 2019, as a result of the majority shareholder vote in favor of adopting written consent, we reached out to shareholders representing approximately 80% of our outstanding shares to discuss the vote and received feedback on the implementation of written consent. The feedback we received was considered and incorporated into the changes proposed in our 2020 proxy to implement the right of shareholders to act by less than unanimous written consent. Promptly following the approval of this proposal by almost 90% of the outstanding shares at our 2020 Annual Meeting, we amended our Certificate of Incorporation and By-Laws to implement this right for our shareholders.

As in other areas of our business during 2020, the COVID-19 pandemic had a significant impact on our shareholder outreach efforts. On the one hand, the principal negative impact was that we engaged in less in-person interaction with shareholders as work-from-home policies were implemented around the globe. On the other hand, the COVID-19 pandemic had a positive impact on our ability to reach more of our shareholders as a result of the widespread adoption of virtual meetings. During 2020, members of management were able to participate and present in more electronic investor conferences and meetings than in past years due to the absence of travel. Fortunately, in February 2020 before the pandemic limited our ability to travel, our Chief Executive Officer was able to meet with five of our top shareholders in person. Thereafter, once the financial community adopted virtual conferences and meetings, we were able to provide our shareholders with even more access to our chief executive officer and chief financial officer.

As a result, members of our executive management team were able to interact with more of our shareholders than in previous years. Additionally, our CEO or CFO participated in five investor conferences during the year. We value the views and perspectives that our shareholders and the financial community provide us during these interactions, and we formally communicate the information and feedback that we obtain to the Board and its Committees on a regular basis.

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PROPOSAL ONE:
ELECTION OF DIRECTORS

The Company’s Board of Directors (the “Board”) currently consists of ten directors. All the director nominees listed below were previously elected by shareholders at the 2020 Annual Meeting, other than Carlyn R. Taylor, who was appointed to the Board in August 2020. The Board has nominated all ten existing directors to serve a one-year term until the 2022 Annual Meeting of shareholders or until their successors have been elected and qualified. Biographical information for each nominee is provided below under the heading “Board of Directors—Biographical Information—Nominees to Serve an Annual Term Expiring at the 2022 Annual Meeting of Shareholders.” In addition to the ten director nominees listed below, during 2020, two board members, Joe E. Harlan and Rick J. Mills, served on our Board until our 2020 Annual Meeting, when Mr. Mills retired from the Board and Mr. Harlan decided not to stand for re-election to the Board.

Required Vote and Recommendation:

The table below summarizes the key qualifications and areas of expertise that led our Board to nominate these individuals.

	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

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Board of Directors — Biographical Information

Nominees to Serve an Annual Term Expiring at the 2022 Annual Meeting of Shareholders

	Manufacturing/Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

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	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

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	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

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	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

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	Manufacturing/ Operations		Industry/Product Knowledge		Multinational Operations		Financial/Accounting		Product Innovation/R&D
	Energy/Alternative Energy Markets		Supply Chain		HR/Talent Development		Mergers & Acquisitions		Corporate Strategy/ Governance

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THE BOARD AND COMMITTEES

Role of the Board; Corporate Governance Matters

The Board oversees the CEO and other senior management in the competent and ethical operation of the Company on a day-to-day basis and to help confirm that our shareholders’ best interests are served. In its efforts to satisfy this duty, our Board has adopted Corporate Governance Guidelines (“Guidelines”). Our Guidelines, as well as other corporate governance documents, such as the Company’s Code of Conduct for employees and directors and an additional Code of Ethics for directors, are available on the Company’s website at www.flowserve.com under the “Investors—Corporate Governance” caption. The table below highlights some of the Company’s investor friendly governance practices.

The Board, through the CG&N Committee, regularly reviews developments in corporate governance and best practices and modifies the Guidelines, committee charters and key practices as necessary.

The Board also works with management to develop the Company’s long-term strategy. The Board dedicates one full meeting per year solely to our long-term strategy, in which the Board receives updates from management and discusses the progress made, challenges encountered and future plans to continue implementing our strategic priorities. At each quarterly meeting of the Board, management also provides additional updates on our strategic priorities based on particular focus areas, including our business platforms, culture and organizational health, regulatory and legal risk, operations, and climate change and sustainability.

Our approximately 16,000 associates around the global are a critical component of our ability to execute on our strategy. Accordingly, the Board continually monitors and assesses our human capital management, principally in the areas of workplace health and safety, employee engagement, compensation and benefits and training, development and ethics. Each year, our associates complete an annual ethics training on our Code of Conduct and participate in “Integrity & Compliance Week” and “Safety Week” to help further emphasize the ongoing training that our associates receive. We also conduct annual employee engagement surveys to solicit feedback and input directly from our associates and, based on the results of our surveys, management and the Board work together to create additional action plans as appropriate.

Board Operations

Board Leadership Structure and Risk Oversight

We have separated the positions of Chairman of the Board and CEO since 2005. Roger L. Fix, the Company’s current Non-Executive Chairman of the Board, presides over the meetings of the Board, including executive sessions of the Board where only non-employee directors are present. He reviews and approves the agendas for Board meetings, among his other duties as Chairman of the Board. He also serves as an alternate member for all Board committees. Mr. Fix strives to attend as many committee meetings as possible.

We believe that separating the positions of Chairman of the Board and CEO is appropriate for the Company at this time because it places an independent director in a position of leadership on the Board. We believe this independent leadership and the Non-Executive Chairman’s authority to call meetings of the non-employee directors adds value to our shareholders by facilitating a more efficient exercise of the Board’s fiduciary duties and best enables the Board to effectively manage our businesses, risks, opportunities and affairs in the best interests of our shareholders. We also believe the Non-Executive Chairman further enhances independent oversight by being responsible for establishing the Board’s annual schedule and collaborating with the CEO on the agendas for all Board meetings. The separation of Chairman and CEO also allows the Non-Executive Chairman to provide support and advice to the CEO, reinforcing the reporting relationship and accountability of the CEO to the Board.

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The Board and its Committees exercise their risk oversight function by carefully evaluating the reports they receive from management and by making inquiries of management with respect to areas of particular interest to the Board. The Board and its Committees oversee senior management’s policies and procedures in assessing and addressing risk areas that fall within the scope of the Board’s and the Committees’ respective areas of oversight responsibility, as further detailed in the Board Committees section below. The Board and management frequently discuss the long-term strategy of the Company. The Board is regularly informed through Committee reports of each Committee’s activities in overseeing risk management.

Meeting Attendance

Board meetings. There were 13 meetings of the Board during the year ended December 31, 2020. Executive sessions of non-employee directors are normally held at each regular Board meeting and are presided over by our independent Chairman of the Board, or, in the Chairman’s absence, by the Chairman of the CG&N Committee. During the year ended December 31, 2020, each Director nominee attended at least 92% of the total number of meetings of the Board and of each of the Board committees on which he or she served while he or she has been a director or committee member.

Shareholder meetings. Board members are expected to attend the Company’s Annual Meetings of shareholders. All directors then-serving were in attendance at the 2020 Annual Meeting other than Joe E. Harlan, who did not stand for re-election at the 2020 Annual Meeting.

Communicating with the Board

Shareholders and other interested parties may communicate with the Board directly by writing to: Non-Executive Chairman of the Board, c/o Flowserve’s Corporate Secretary, Flowserve Corporation, 5215 N. O’Connor Blvd., Suite 2300, Irving, Texas 75039. All such communications will be delivered to our chairman. These communications are reviewed by the Corporate Secretary to determine whether it is appropriate for presentation to the Board or such director. The purpose of this screening is to avoid having the Board consider irrelevant or inappropriate communications (such as advertisements, solicitations, and product inquiries).

Board Composition

What We Look For in Directors

The identification and evaluation of director candidates begins with the Guidelines, which establish the criteria for Board membership. As a starting point under the Guidelines, all prospective Board members must, for example, adhere to the highest standards of integrity and ethics, exercise diligent and constructive oversight of the Company’s business, risk profile and strategy, demonstrate relevant and successful career experience, display a global business perspective, and possess the time to responsibly perform all director duties and effectively represent the interests of the shareholders. In addition, we believe that Board members should have varied professional expertise in areas relevant to the Company. In this regard, our director nominees bring a wide array of qualifications, skills and attributes to our Board of Directors that support its oversight role on behalf of the shareholders. The table on page 12 summarizes the key qualifications and areas of experience that led our Board to nominate these individuals.

The Guidelines further articulate the Board’s firm belief that the Board’s members should also have a diversity of backgrounds, which we view holistically. In evaluating diversity of backgrounds, the Board considers individual qualities and attributes, such as educational background, professional skills, business experience and cultural viewpoint, as well as more categorical diversity metrics, such as race, age, gender and nationality. This consideration is implemented through the selection process for director nominees, and the Board assesses its effectiveness in promoting diversity through an annual self-assessment process that solicits feedback concerning the appropriateness of the Board’s diversity, among other critical performance factors.

Director Recruitment Process

The CG&N Committee considers various potential director candidates who may come to the attention of the CG&N Committee through current Board members, professional search firms, shareholders or other persons. The CG&N Committee generally retains a national executive-recruiting firm to research, screen and contact potential candidates regarding their interest in serving on the Board, although the CG&N Committee may also use less formal recruiting methods. Carlyn R. Taylor was recommended to the Board by a third-party search firm. All identified candidates, including shareholder-recommended candidates, are evaluated by the CG&N Committee using generally the same

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methods and criteria, although those methods and criteria may vary from time to time depending on the CG&N Committee’s assessment of the Company’s needs and current situation.

Director Evaluation Process

We believe that a robust Board evaluation and feedback process helps to promote the effectiveness of our Board and Committees and encourages our Board members, individually and collectively, to continually improve in their roles and responsibilities. Our Board evaluation process is led by an independent member of the Board, the Chair of the CG&N Committee, who engages independent external advisors each year to assist in compiling the results of the evaluations submitted by the members of the Board and to provide additional perspective on effectively responding to the evaluations and feedback received.

Our annual evaluation process begins with a self-assessment in which each independent member of the Board provides a performance rating for a series of questions in several key categories, including the structure, process and resources of the Board, effectiveness of the Committees of the Board, and management of the Company. The self-evaluation concludes with several open-ended questions in order to encourage members of the Board to freely discuss their own performance, priorities for the upcoming year, and any other comments that the applicable member of the Board deems important.

Each independent member of the Board is also required to complete a peer evaluation of each other independent member of the Board (other than the Chairman, who is evaluated separately), which solicits feedback on how the applicable director adds value to the Board and its Committees, what the applicable director could do to increase effectiveness, and any other commentary that the evaluating member of the Board deems pertinent. In 2020, due to the unique challenges presented by the COVID-19 pandemic and the necessity to hold meetings by video conference instead of in person, the peer evaluation process was temporarily changed to take into account the impact of the pandemic.

Each member of the Board is also required to complete a Chairman evaluation to provide feedback on the performance and contributions of the Chairman of the Board. The Chairman evaluation requires each member of the Board to rate the Chairman’s performance in a dozen key areas and also provides an opportunity to provide open feedback on the performance of the Chairman of the Board.

Each member of the Board is also required to complete an evaluation of our Chief Executive Officer’s performance. While our Chief Executive Officer is a member of the Board, his evaluation is focused on his performance as a member of management and not as a member of the Board.

Once the evaluations are complete, the results are compiled by an independent external advisor, anonymized (other than for the self-evaluation), and provided to the CG&N Chair, who then conducts individual interviews with members of the Board in advance of the Board’s February meetings. The results of the process are discussed by the CG&N Committee, and the full Board, at their February meeting and considered by the CG&N Committee and the Board when engaging in director recruitment, director development, strategy, and governance.

Director Independence

We believe that all members of the Board (other than our CEO) should be independent under the New York Stock Exchange (“NYSE”) listing standards. Under these standards, only those directors who have no material relationship with the Company (except in his or her role as a director) are deemed independent. The Board has determined that each of Roger L. Fix, Sujeet Chand, Ruby R. Chandy, Gayla J. Delly, John R. Friedery, John L. Garrison, Michael C. McMurray, David E. Roberts, and Carlyn R. Taylor (all of our current directors other than R. Scott Rowe, the Company’s President and Chief Executive Officer) meet the independence standards set forth in the NYSE corporate governance listing standards. In addition, Joe E. Harlan and Rick J. Mills, each of whom served as a director until our 2020 Annual Meeting, were independent during the period they served on the Board.

How Shareholders Can Recommend a Candidate

A shareholder desiring to recommend a candidate for election to the Board should submit a written notice, as required by the Company’s By-Laws, including the candidate’s name and qualifications, to our Corporate Secretary, who will refer the recommendation to the CG&N Committee. The CG&N Committee may require any shareholder-recommended candidate to furnish such other information as may reasonably be required to determine the eligibility of such

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recommended candidate or to assist in evaluating the recommended candidate, including a Director and Officer Questionnaire.

Under the proxy access provisions of our By-Laws, eligible shareholders and/or shareholder groups also are permitted to include shareholder-nominated director candidates in our proxy materials. Additional details about the requirements for including shareholder-nominated director candidates in our proxy materials are set forth under “General Voting and Meeting Information—Shareholder Proposals and Nominations” below.

Board Committees

The Board maintains an Audit Committee, a Finance and Risk Committee (“F&R Committee”), a Corporate Governance and Nominating Committee, and an Organization and Compensation Committee (“O&C Committee”). Only independent directors are eligible to serve on Board committees. Each committee has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities and is governed by a written charter, which is available on the Company’s website at www.flowserve.com under the “Investors—Corporate Governance—Documents & Charters” caption.

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Oversight of the Executive Compensation Program

Our executive compensation program is administered by the O&C Committee. Consistent with the NYSE corporate governance listing standards, the O&C Committee is composed entirely of independent, non-employee members of the Board. In addition, the Non-Executive Chairman of the Board generally attends the meetings of the O&C Committee.

As reflected in its charter, the O&C Committee has overall responsibility for setting the compensation for our CEO, which is approved by the full Board, and for approving the compensation of our other executive officers, including the other Named Executive Officers. The O&C Committee is also charged with overseeing the organizational design of the Company, including the development and retention of management.

The O&C Committee is also responsible for reviewing the management succession plan and for recommending changes in director compensation to the CG&N Committee and to the Board. On matters pertaining to director compensation, the O&C Committee also receives data and advice from F.W. Cook. The O&C Committee periodically reviews the organizational design, management development plans and managerial capabilities of the Company. The O&C Committee also prepares and issues the Organization and Compensation Committee Report included in this proxy statement.

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The O&C Committee’s process of reviewing the executive compensation program and setting compensation levels for our Named Executive Officers involves several components. During the first quarter of each year, the O&C Committee reviews each Named Executive Officer’s total compensation. The O&C Committee members also meet regularly with the Named Executive Officers at various times during the year, both formally within Board meetings and informally outside of Board meetings, which allows the O&C Committee to assess directly each Named Executive Officer’s performance. The O&C Committee also solicits input from all non-employee members of the Board as to the CEO’s performance during the year.

The O&C Committee generally considers the results of the CG&N Committee’s process for reviewing the CEO’s performance with all independent Board members. The CG&N Committee’s process includes the independent Board members individually and collectively presenting their assessment of the CEO’s performance, as well as the CEO presenting his self-assessment of his performance. The O&C Committee uses these results when determining the CEO’s recommended compensation, which is subject to the independent Board members’ approval.

In addition, the CEO annually presents an evaluation of each other Named Executive Officer’s performance to the O&C Committee, which includes a review of each officer’s contributions over the past year, and his or her strengths, weaknesses, development plans and succession potential. The CEO also presents compensation recommendations for each Named Executive Officer for the O&C Committee’s consideration. Following this presentation and a benchmarking review for pay, the O&C Committee makes its own assessments and formulates compensation amounts for each Named Executive Officer with respect to each of the elements in the Company’s executive compensation program as described below.

Independent Compensation Consultant

The O&C Committee has the authority to retain outside advisors as it deems appropriate. The O&C Committee has engaged F.W. Cook as its compensation consultant to provide advice and information. F.W. Cook has assisted and advised the O&C Committee on all aspects of our executive compensation program, and they provide no other services to the Company. The services they provide include:

Director Compensation

2020 Director Compensation Program

Program Overview. Our director compensation program is established by the Board after review of data prepared by the O&C Committee’s independent consultant regarding competitive director compensation levels for peer companies and the Company’s compensation peer group, which is discussed under “Executive Compensation.” In 2020, our non-employee director compensation program consisted of the following:

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Additionally, non-employee directors are also eligible to receive special additional compensation when performing certain special services. The Board has set a compensatory rate of $3,500 per day for such services, though no compensation was paid for this purpose in 2020.

Compensation Deferral. Directors may elect to defer all or a portion of their annual cash and equity compensation. The annual cash compensation may be deferred in the form of cash or in phantom shares, which reflect an equivalent value of Company common stock. Compensation deferred in the form of cash accrues interest at rates that do not exceed market rates or constitute preferential earnings. If a director elects to defer cash compensation in the form of phantom shares, the director receives a 15% premium on the amount deferred.

Equity Compensation. The equity portion of non-employee director compensation is granted on the date of the Annual Meeting of shareholders in the form of restricted stock. The restricted shares have voting rights and fully vest after the earlier of one year from the date of grant, the termination of the director’s service due to death or disability or a change in control.

In May 2020, in recognition of the unfolding COVID-19 pandemic, the Board approved a change to their equity compensation for 2020 by reducing the size of the annual equity grant to a number of shares that the Board would have received had the grant been made at the same time that equity grants were made to members of management on February 20, 2020, prior to the date on which the COVID-19 pandemic began to have a material impact on the U.S. economy and the trading price of companies listed on the NYSE. On February 20, 2020, the date on which the Company made its annual equity grant to members of management, the price per share of the Company’s common stock was $47.56, and on May 22, 2020, the date on which the Company made its annual equity grant to the Board, the price per share of the Company’s common stock was $25.20. By approving the annual equity grant to members of the Board in an amount equal to the number of shares that would have been granted at the stock price on February 20, 2020, the dollar value of the annual equity grant to Board members was reduced from the target of $125,000 to $66,225.60.

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Stock Ownership Guidelines. Under our stock ownership guidelines, all non-employee directors must own shares of Company common stock with a value of at least five times his or her annual cash retainer (currently $425,000) by his or her fifth anniversary of Board service. If the stock ownership requirement is not met, the director will receive all future Board compensation in the form of Company common stock until the requirement is satisfied. For 2020, all non-employee directors met their stock ownership requirements.

The following table sets forth our non-employee director compensation for 2020. Mr. Rowe did not receive any compensation for his service as a director. His compensation is set forth below under “Executive Compensation—Summary Compensation Table.”

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EXECUTIVE OFFICERS

R. Scott Rowe

President, CEO and Director since: April 2017 Age: 50

• Flowserve Corporation | President, Chief Executive Officer, Director (2017 – Present) • Cameron Group of Schlumberger Ltd, an oilfield services company | President (2016 – 2017) • Cameron International Corporation, an oilfield services company | President, Chief Executive Officer (2015 – 2016) • Cameron International Corporation | President, Chief Operating Officer (2014 – 2015) • OneSubsea, a joint venture established by Cameron and Schlumberger | Chief Executive Officer (2014 – 2014) • Subsea Systems, a division of Cameron | President (2012 – 2014) • Cameron International Corporation | President of the Engineered and Process Valves division (2010 – 2012)

Elizabeth L. Burger

SVP, CHRO since: April 2018 Age: 50

• Flowserve Corporation | Senior Vice President and Chief Human Resources Officer (2018 – Present) • HanesBrands, Inc., a global manufacturer and marketer of everyday basic apparel | Chief Human Resources Officer (2013—2017) • Monsanto Company, a global provider of technology solutions and agricultural products | Senior Vice President, Global Business Operations (2007 – 2013) • Monsanto Company | Vice President, Corporate HR (2006 – 2007) • Monsanto Company | Vice President, Compensation (2005 – 2006) • Monsanto Company | Various leadership roles (1995 – 2005)

Sanjay K. Chowbey

President, AMSS since: July 2019 Age: 53

• Flowserve Corporation | President, Aftermarket Services & Solutions (2019 – Present) • Lean Focus, LLC, a business transformation organization | General Manager (2018 – 2019) • TE Connectivity, Ltd. a global technology connectivity and sensor provider | President, SubCom business unit (2017 – 2018) • Danaher Corporation, a global science and technology innovation company | President, Thomson Industries, an industrial technology subsidiary of Danaher (2014 – 2017) • Danaher Corporation | President, Hennessy Industries (2012 – 2013) • Gilbarco Veeder-Root, Inc., a fueling and environmental solutions company | Vice President and General Manager, Commercial & Industrial Business Unit (2010 – 2012) • Gilbarco Veeder-Root, Inc. | Vice President and General Manager, Services (2006 – 2010)

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Keith E. Gillespie

SVP, CSO since: October 2016 Age: 55

• Flowserve Corporation | Senior Vice President and Chief Sales Officer (2016 – Present) • Flowserve Corporation | Chief Strategy Officer (2015 – 2016) • AlixPartners, LLP, a consulting company focused on operational turnarounds | Managing Director (2002 – 2015) • i2 Technologies, a high-tech consulting practice | Vice President (1999 – 2001) • Ten Fold Corporation, a software and services company | Senior Vice President (1999 – 2001) • McKinsey & Company, a global consulting company focused on change management | Senior Engagement Manager (1992 – 1997)

Lanesha T. Minnix

SVP, CLO since: June 2018 Age: 46

• Flowserve Corporation | Senior Vice President and Chief Legal Officer (2018 – Present) • BMC Stock Holdings, Inc., a leading provider of diversified building products and services | Senior Vice President and General Counsel (2017 – 2018) • ABM Industries Incorporated, a Fortune 500 facility solutions company | Vice President, Deputy General Counsel and Chief Compliance Officer (2012 – 2017) • Shell Oil Company, a multinational oil & gas company | Senior Legal Counsel (2007 – 2012) • Sprint Nextel, a global telecommunications company | Corporate Counsel (2004 – 2007) • K&L Gates LLP, a global law firm | Corporate Associate (2000 – 2004)

Tamara M. Morytko

President, FPD since: September 2020 Age: 50

• Flowserve Corporation | President, Flowserve Pumps Division (2020 – Present) • Norsk Titanium, a manufacturer of advanced titanium components | Chief Operating Officer (2018 – 2020) • Operations and Supply Chain Consultant | (2017 – 2018) • Baker Hughes, a multinational oilfield services company | President, Asia Pacific Region (2016 – 2017) • Baker Hughes | Vice President, North America Region (2013 – 2016) • Baker Hughes | Vice President, Global Supply Chain (2010 – 2013) • Pratt & Whitney, a global aircraft engine manufacturer | various roles of increasing responsibility (2006 – 2010) • Arthur Andersen LLP, a global accounting firm | Senior Auditor (1992 – 1996)

Amy Schwetz

SVP, CFO since: February 2020 Age: 46

• Flowserve Corporation | Senior Vice President and Chief Financial Officer (2020 – Present) • Peabody Energy, a global pure-play coal company serving power and steel customers | Executive Vice President and Chief Financial Officer (2015 – 2020). Peabody filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in April 2016. • Peabody Energy, Inc. | Senior Vice President, Finance & Administration – Australia (2013 – 2015) • Peabody Energy, Inc. | Senior Vice President, Finance & Administration – Americas (2012 – 2013) • Peabody Energy, Inc. | Vice President, Investor Relations (2011 – 2012) • Peabody Energy, Inc. | Vice President, Capital and Financial Planning (2009 – 2011) • Peabody Energy, Inc. | Various senior leadership roles (2005 – 2009) • Ernst & Young LLP, a global accounting firm | Audit Manager (1997 – 2005)

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Scott K. Vopni

VP, CAO since: June 2020 Age: 52

• Flowserve Corporation | Vice President, Chief Accounting Officer (2020 – Present) • Dean Foods Co., a food and beverage company | Senior Vice President – Finance, Chief Accounting Officer (2010 – 2019). Dean Foods filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in November 2019. • Dean Foods Co. | Interim Chief Financial Officer (2017 – 2018) • Dean Foods Co. | Senior Vice President – Finance (2016 – 2017) • Dean Foods Co. | Senior Vice President – Investor Relations (2015) • Dean Foods Co. | Vice President – Controller (2008 – 2010)

Kirk Wilson

President, FCD since: July 2019 Age: 54

• Flowserve Corporation | President, Flow Control Division (2019 – Present) • Flowserve Corporation | President, Aftermarket Services & Solutions (2015 – 2019) • Flowserve Corporation | President, Services & Solutions Operations (2012 – 2015) • Flowserve Corporation | Vice President and General Manager, Integrated Solutions Group (2008 – 2011) • Flowserve Corporation | Vice President, Marketing for Pump Division (2004 – 2008)

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation principles and the pay program we provided to our Named Executive Officers (“NEOs”) for 2020.

Contents

Company Overview, Strategy and Performance				Page 29
Compensation Program Philosophy and Principles				Page 32
Elements of the Executive Compensation Program				Page 35
Compensation Governance Policies				Page 49
Summary Compensation Table				Page 52

Named Executive Officers

During 2020, our NEOs were:

R. Scott Rowe President and Chief Executive Officer (“CEO”)

John E. (Jay) Roueche, III Vice President, Treasurer and Investor Relations (interim CFO from December 3, 2019 through February 23, 2020)

Amy B. Schwetz Senior Vice President, Chief Financial Officer (beginning February 24, 2020)

Lanesha T. Minnix Senior Vice President, Chief Legal Officer & Corporate Secretary

Keith E. Gillespie Senior Vice President, Chief Sales Officer

Elizabeth L. Burger Senior Vice President, Chief Human Resources Officer

For more information on the Named Executive Officers currently serving as executive officers, see “Executive Officers” on page 26.

Company Overview, Strategy and Performance

Company Overview

Flowserve is one of the world’s leading providers of fluid motion and control products and services with a significant global presence in the manufacturing of pumps, valves and seals. We have approximately 16,000 employees in more than 50 countries who are focused on our purpose and strong company values.

Impact of COVID-19 and Market Disruption on Executive Pay

While Flowserve continued to make substantial progress on our transformation initiatives, 2020 was a challenging year for Flowserve and its customers given the COVID-19 pandemic and general economic challenges around the globe. In the first quarter of 2020 the onset of the pandemic coupled with extreme volatility in global markets and commodity prices led to unexpectedly reduced capital budgets by our customers and resulting declines in demand for our products and new bookings. In addition, these impacts also caused our customers to defer spending in their repair and maintenance budgets, which led to reduced levels of activity in our aftermarket business.

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These global challenges disrupted the meaningful progress our management team and the Company made through our significant efforts in the Flowserve 2.0 Transformation and resulted in declining revenue, profitability, and share price performance. Despite these unprecedented challenges, the process improvements made as part of our Flowserve 2.0 Transformation allowed management and the O&C Committee to swiftly respond to the market disruption by:

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The O&C Committee took additional compensation actions in the first quarter of 2021 revising our incentive programs to address the continued uncertainty facing the Company, and to strengthen the retentive value of our compensation system, as well as motivate our key employees to continue to execute on our strategic transformation during this critical juncture for the Company. These additional actions include:

Company Strategy and Continued Organizational Transformation

In addition to executing on the short-term imperatives in 2020, our associates continued to drive significant transformation for Flowserve. We accelerated certain of our Flowserve 2.0 initiatives, improved upon our previous progress, and drove solid results given the disruption caused in the market. Refer to the “Flowserve 2.0 Transformation” beginning on page 7 for additional information about the transformation and accomplishments during 2020.

FLOWSERVE 2.0 — Implementing our Transformative Business Strategy

Alignment Of Our Compensation Programs With Our Strategy

Our compensation programs are aligned with our company strategy and the goal to create long-term shareholder value. Quantitative measurements for our key strategies are established and embedded in our annual and long-term incentive plan designs as shown in the table below. The measurement of the improvement of organizational health is included in the yearly performance assessment of our NEO’s.

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Pay for Performance Alignment

The alignment of pay and performance is one of the key components of our compensation philosophy as shown on the following page. The Company is committed to a rigorous target setting process, the careful selection of key performance measures aligned with our strategy and the creation of shareholder value.

The following charts illustrate the performance payouts under our various incentive plan components: The Company’s annual incentive plan (“AIP”) and contingent performance share units (“PSUs”).

Compensation Program Philosophy and Principles

The O&C Committee maintains a thoughtful approach to corporate governance practices for executive compensation. Below is a summary of those practices.

Compensation Philosophy

Our Compensation Philosophy is aligned with building long-term shareholder value and to achieve the following objectives:

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	ATTRACT & RETAIN	Attract and retain high-quality and high-performance leaders with a passion for our purpose, values, behaviors and achieving extraordinary business outcomes
	REINFORCE OUR STRATEGY	Align our incentive programs with our vision and key business strategies while maintaining a healthy balance between short and long-term rewards
	COMPETITIVE AND MARKET-BASED	Maintain a market-based strategy that provides a competitive total target compensation opportunity approximating the market median
	ALIGN PAY AND PERFORMANCE	Provide incentive programs that reward short-term and long-term performance leading to shareholder value growth and appropriate risk taking
	ALIGN WITH SHAREHOLDERS	Ensure that a majority of total compensation is ‘at risk’ and aligned with shareholder interests

Core Compensation Elements

Our core executive compensation elements are aligned with our executive compensation philosophy. These elements provide competitive market-based compensation that emphasize pay for performance and alignment with shareholders through heavy weighting of short- and long-term incentive compensation.

Philosophy Alignment
ATTRACT & RETAIN	REINFORCE OUR STRATEGY	COMPETITIVE AND MARKET-BASED	ALIGN PAY AND PERFORMANCE	ALIGN WITH SHAREHOLDERS

Compensation Mix

Our executive compensation program emphasizes performance-based compensation that is determined each year by the O&C Committee. As shown below, for 2020, the significant majority of our 2020 target total executive compensation (i.e., base salary, target annual incentive, and grant date value of RSUs and PSUs at target) was at-risk (86.3% for our President and CEO and an average of 68.9% for other Named Executive Officers other than Mr. Roueche, as noted below). See “Elements of the Executive Compensation Program” for additional details.

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Compensation Governance Practices

Results of 2020 Say-On-Pay Vote

At our 2020 Annual Meeting of Shareholders, over 95% of our shareholders voted to approve our Named Executive Officer compensation. Although our O&C Committee believes this affirms our shareholders’ overall support of our executive compensation program, we are constantly seeking to improve our program.

Compensation Alignment with Strategic Objectives

To achieve our program objectives and support the implementation of our strategy, we assess our compensation programs on an annual basis. The following compensation program design features were adopted in recent years:

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In light of the unprecedented challenges of the world-wide COVID-19 pandemic and the volatility of commodity prices as a result of the pandemic and disputes between the members of the Organization of Petroleum Exporting Companies, the O&C Committee approved certain changes to AIP in July 2020, including bifurcating the 2020 program for the first and second halves of the year, in order to provide focus on and reward the achievement of the Company’s evolving strategic priorities during an unprecedented period of global economic uncertainty and to help drive operational improvement. Additional discussion of the changes approved by the O&C Committee and the rationale for such changes is included below in “Elements of the Executive Compensation Program—Annual Incentive Opportunity.”

Elements of the Executive Compensation Program

Overview

Consistent with our philosophy, the primary elements of the Company’s executive compensation program in 2020 are discussed below:

ELEMENT	FORM OF COMPENSATION		PRIMARY OBJECTIVES
Base Salary	Cash		• Based on responsibilities of the position and performance • Provide stable source of income • Set at levels approximating the market median to attract and retain executive talent
Annual Incentive Opportunity	Cash		• Rewards for company achievement for pre-determined key operational and financial performance measures • Motivate and reward company and individual performance
Long-Term Incentive Compensation	• Restricted Stock Units (RSUs) • Performance Share Units (PSUs)		• Ensure alignment of executive with shareholders • RSUs help retain executive talent through three-year ratable vesting schedule • PSUs rewards long-term company performance based on set targets aligned with shareholder value creation over three-year performance period

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ELEMENT	FORM OF COMPENSATION		PRIMARY OBJECTIVES
Other Compensation	Retirement Benefits; Perquisites; Severance Benefits		• Provide market competitive benefits
ATTRACT & RETAIN	REINFORCE OUR STRATEGY	COMPETITIVE AND MARKET-BASED		ALIGN PAY AND PERFORMANCE	ALIGN WITH SHAREHOLDERS

Competitive Market-Based Compensation Approach

Aligned with our competitive and market-based executive compensation philosophy, the O&C Committee establishes a benchmark “compensation peer group” (“CPG”) on an annual basis. In addition, AON and Willis Towers Watson (“WTW”) Executive Compensation Survey Data is utilized to set compensation elements for positions that are not adequately covered by the CPG data. The CPG, AON Survey and WTW Survey are each considered in setting target executive compensation levels.

For 2020, our CPG consisted of the following companies, which includes one addition over 2019:

Elements of Compensation in Detail

Base Salary

The O&C Committee reviews and approves base salaries annually during the first quarter with a general goal to approximate the market median of companies within the CPG and the broader market as reflected in the AON Survey and WTW Survey. The base salaries paid to the Named Executive Officers during 2020 are shown below. In response to the onset of the COVID-19 pandemic and the downturn in markets generally, including the oil and gas markets, the Board elected not to implement any increases to base salary during 2020 other than a performance increase in base salary of 15% for Ms. Minnix in recognition of her high performance and the peer benchmark data for her position.

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Annual Incentive Opportunity

During the first quarter of each year, the O&C Committee also establishes each Named Executive Officers’ annual cash incentive opportunity under our Annual Incentive Plan (the “AIP”). When setting annual incentive opportunities, the O&C Committee approves: (i) the Company performance measures under the AIP; and (ii) an AIP target opportunity for each Named Executive Officer. Each NEO’s overall annual AIP target opportunity for 2020 remained unchanged from 2019 levels as a percentage of base salaries.

In response to the unfolding COVID-19 pandemic, the O&C Committee re-convened in July 2020 to review the 2020 AIP program and determined that it would be appropriate to measure the 2020 AIP as two separate performance periods: H1 (measured from January 1 through June 30, 2020) and H2 (measured from July 1 through December 31, 2020), which we refer to in this proxy statement as the H1 Plan and the H2 Plan respectively. The H1 Plan was determined based on the performance measures established in February 2020, and the H2 Plan was determined based on new performance measures established in July 2020 that aligned more closely to the Company’s evolving priorities and objectives. The final payout was determined by adding the overall attainment for each performance period, weighted 50% each.

In doing so, the O&C Committee considered the economic environment, the unanticipated impact that the reduction in our customers’ capital budgets had on our business, and the motivational aspect of the original 2020 AIP program. Using a set of guiding principles, the O&C Committee balanced our internal needs with external shareholder expectations. The O&C Committee considered a design for the H2 plan that:

In establishing this bifurcated approach, the O&C Committee sought to balance pay for performance considerations with retention and motivation factors, in an effort to maintain an AIP program that provided focus on and rewarded the achievement of the Company’s evolving strategic priorities during an unprecedented period of global economic uncertainty and to continue to drive operational improvement.

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The following table illustrates the 2020 AIP target opportunities and payouts for each NEO:

Rigorous Performance Measures

The O&C Committee, working with its compensation consultant and members of management, evaluates and approves the Company’s AIP performance measures. The O&C Committee also sets the weighting of each executive’s individual performance measures to be consistent with our business strategy and to tie to the achievement of important strategic objectives within each executive’s area of control.

The O&C Committee selects performance measures, with input from management, that support key strategies that we believe drive sustainable and profitable Company growth. The performance metrics were reviewed for the H1 Plan and the H2 Plan to ensure their importance in remaining successful during the downturn, our current strategic operational focus and alignment across the organization at all levels.

The H1 performance metrics were aligned with the Company’s historical focus on margin expansion through operating income, growth through revenue and bookings, capital efficiency through a focus on primary working capital as a percentage of sales and customer satisfaction through on-time delivery. We believe these metrics align our associate’s actions with outcomes that drive the success of the Company and align with shareholders’ interests.

Because our business outlook was impacted by the unanticipated reduction in our customers’ capital spending during 2020, we narrowed the focus of the H2 plan to metrics that were critical to managing the Company through the downturn. The O&C Committee approved performance measures that focused associates on maintaining the Company’s margin through the downturn with an increased focus on operating income, preserving liquidity and generating cash flow through primary working capital reduction and focusing on delivering on our past-due backlog to our customers in the back half of the year, except for Keith Gillespie, our Chief Sales Officer, who continued to focus on bookings instead of delivery of past-due backlog under the H2 plan.

The Company’s 2020 AIP performance measures for the H1 Plan as weighted for each executive were as follows:

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The Company’s 2020 AIP performance measures for the H2 Plan as weighted for each executive were as follows:

Achievement of the metrics was evaluated using pre-defined internal criteria, as adjusted by the O&C Committee within parameters it established at the beginning of each performance period, to exclude the effect of certain specified developments that occurred during the year and described further below.

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Measuring Performance and Establishing Payouts

In Q1 2020, the O&C Committee had set performance targets for financial metrics used in our AIP at definitive, challenging and objective levels that required significant effort and achievement by our Named Executive Officers for any payout to occur. The 2020 payout range under the AIP was 0% to 200% of each executive’s respective target award opportunity for both the H1 Plan and the H2 Plan for the respective time periods.

For fiscal 2020, the O&C Committee established an additional “stretch” opportunity for consolidated adjusted operating income, consolidated bookings, consolidated adjusted primary working capital as % of sales (H1 Plan only), primary working capital reduction (H2 Plan only), and past due backlog (H2 Plan only), which would result in a 115% payout. This provided the opportunity to achieve challenging goals and reward attainment accordingly.

For consolidated revenue and consolidated customer on-time delivery for the H1 Plan, no stretch goal was established for the 115% payout level.

The actual payout percentage was determined using a matrix that compares the Company’s actual performance against the established performance targets for the year (referred to as “plan”). The following tables show the percentage of target award that is paid at different levels of Company performance against plan, as well as actual performance and payout percentages for 2020.

The following sets forth the H1 Plan and H2 Plan performance metrics applicable to Mr. Rowe, Ms. Schwetz, Mr. Roueche, Ms. Minnix and Ms. Burger:

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The following sets forth the H1 Plan and H2 Plan performance metrics applicable to Mr. Gillespie:

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The Company has chosen not to disclose the Threshold, Target, Stretch, Maximum and Measured Performance data for the consolidated customer on-time delivery and the consolidated past due backlog metrics for all Named Executive Officers, as these metrics correspond to financial data that is not otherwise publicly disclosed and is used primarily to assess compensation for these Named Executive Officers. As such, the Company believes that the disclosure of such information would cause competitive harm to the Company without adding meaningfully to the understanding of its business.

Individual Personal Performance Adjustment

The O&C Committee may exercise judgment in assessing the personal performance factor for our annual incentive awards to determine annual cash incentive compensation payments. The O&C Committee considered individual performance of our executive officers and determined not to make any adjustments to their final annual incentive plan payouts for 2020.

Long-Term Incentives

Setting the Target Opportunity

Each year, the O&C Committee establishes a target dollar value of the long-term incentive package for each Named Executive Officer. In doing so, the committee considers individual performance, as well as data from the Company’s CPG and, for positions that are not adequately covered by the CPG data, the AON Survey and WTW Survey. For 2020, these target values were set at levels that approximate the market median of both the CPG and the broader market taken from the AON Survey and WTW Survey.

In addition, the O&C Committee considers the package’s potential dilutive effect on the Company’s outstanding shares in determining aggregate award values.

The share amount is determined by dividing each executive’s total long-term incentive value by the average closing price of the Company’s common stock reported on the NYSE during the last twenty trading days of prior to the grant date of February 20, 2020. Until vesting, holders of RSU and PSU awards do not have voting rights on the units, but the units are entitled to receive dividend equivalent accruals, if any, that payout only if and to the extent the underlying units vest.

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Contingent Performance Share Units (PSUs)

Aligned with our compensation objectives, these performance-based awards provide a strong incentive for our executives to achieve specific performance goals over the relevant performance periods that advance our business strategies, build long-term shareholder value and encourage executive retention. Contingent performance share units, or PSUs, are RSUs that vest, if at all, based on the Company’s achievement of pre-determined financial metrics, measured over a three-year performance period.

Rigorous Performance Measures and Targets

During the first quarter of each year, the O&C Committee, working with its compensation consultant and members of management, evaluates and approves the Company’s LTI performance measures consistent with our business strategy. The O&C determines performance goals at definitive, challenging and objective levels that require significant effort and achievement by our Named Executive Officers for payout to occur.

The O&C Committee believes that ROIC and TSR measures reward the progress towards Flowserve’s strategic focus on Growth, Margin Expansion and Capital Efficiency. ROIC and TSR are further directly correlated to Flowserve’s shareholder value creation.

The following table shows the performance measures for the 2018, 2019 and 2020 PSU grants:

The payout ranges for PSUs shown above are 0% below threshold performance, 50% at threshold, 100% at target and 200% at maximum, in each case of the NEO’s respective target award opportunity.

Performance Peer Group (PPG): The O&C Committee believes that the use of absolute performance measures alone yields an incomplete picture of Company performance and has determined to assess attainment of our PSU TSR metric against a performance peer group. During 2020, the performance peer group was reviewed to ensure continued alignment with Flowserve’s aspiration to become the leading company within the Flow Control Industry. The performance peer group was identified based, generally, on publicly traded companies that are: (1) industrial equipment manufacturers; (2) direct business peers of the Company; and (3) financially comparative to the Company. No changes were made to the performance peer group for 2020.

2021 PROXY STATEMENT      43

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2018 PSU Payout