AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 19/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Accumulated intellectual property and industrial software expertise, corroborated by realized pricing, support differentiated offerings. Comparative superiority and exclusionary barriers remain unquantified.
durability · 2/4 · Continued patent applications and diversified intellectual property support persistence. Technological change and potential circumvention constrain confidence in long-term protection.
customer dependency · 2/4 · The reported installed base, software renewals and contractual backlog indicate embedded customer use and committed demand. This is indirect evidence; replacement difficulty and customer switching costs are not demonstrated, and some offerings use open architectures.
erosion resilience · 2/4 · Actual tariff recovery through pricing supports resilience under cost pressure. Competitive intensity and technological transitions remain possible erosion channels, while tariff refunds complicate interpretation of recent margin improvement.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Fiscal 2024 Software and Control achieved 3% higher price with 5% higher volume. Fiscal 2026 targeted pricing more than offset tariffs, and subsequent commentary reports favorable pricing relative to net material inflation. These are demonstrated outcomes, although their strength varies by segment and period.
retention · 2/4 · Installed-base support, observed contract renewals, positive volume alongside pricing and remaining contractual obligations provide indirect evidence of continuing customer demand. They do not establish a retention rate or prove that backlog comes from existing customers.
margin resilience · 2/4 · Price actions recovered tariff costs, but gross margin still declined 0.4 percentage points in the second quarter because of tariff-related dilution and renewal timing. Later improvement includes favorable price versus inflation and substantial tariff refunds. Resilience is demonstrated but mixed.
contractual freedom · 3/4 · Posted terms demonstrate strong contractual control for the specified Emerson Process Management sellers: conditional 30-day price validity, repricing when authorization is delayed, shipment-date pricing for third-party manufactured items, optional tax pass-through, and restrictions on buyer cancellation or suspension. Freedom is bounded by the stated price-validity conditions; these terms do not establish unrestricted repricing of accepted orders or coverage across all Emerson businesses. This supports strong, rather than exceptional, contractual freedom.
Predictability83
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 14.29
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 5.52
Financial strength—
Missing required inputs: netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 44.03
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 10.09
- Debt / FCF (x)
- 4.92
- Current ratio (x)
- 0.88
- cashInterestPaid
- 221.00
- cashInterestCoverage
- 14.02
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -1.65
- 3-year average SBC / revenue (%)
- 1.53
- cashConversionGrade
- 33.49
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Free cash flow increased in fiscal 2025 and the first nine months of fiscal 2026; latest-period cash generation covered capital spending and reported dividends and repurchases. However, acquisition financing raised total debt from $7.687 billion to $13.116 billion in fiscal 2025, and acquisition returns are not established. Cash generation is strong, while acquisition discipline remains mixed.
incentive alignment · 3/4 · Actual compensation arrangements link annual incentives to adjusted EPS and operating cash flow and long-term awards to adjusted EPS and cumulative free cash flow, with targets fixed at grant. Performance shares comprise 55% of annual long-term awards, and disclosed actual executive ownership exceeds guidelines. Adjusted EPS exclusions and substantial time-based awards limit alignment; outstanding awards are not assumed vested.
execution · 3/4 · Fiscal 2025 underlying sales and free cash flow grew, management reported meeting or exceeding initial cash-flow and adjusted-EPS objectives, and nine-month fiscal 2026 free cash flow increased further. These operating outcomes support strong execution indirectly. Rising realized restructuring costs and accounting or tariff benefits temper the earnings record; acquisition returns remain unproven.
governance · 2/4 · An independent chair, nine independent continuing directors out of ten, independent committees, proxy access and disclosed clawback and anti-hedging policies support oversight. The classified board and 85% approval threshold that defeated prior declassification proposals constrain shareholder accountability. The December 2025 proposal does not establish subsequent adoption.
Evidence
PATENTS, TRADEMARKS AND LICENSES The Company maintains an intellectual property portfolio it has developed or acquired over a number of years, including patents, trademarks and licenses.
Business: patents, trademarks and licenses · Filed 10/11/2025
New patent applications are continuously filed to protect the Company’s ongoing research and development activities and the Company periodically reviews the continued utility of patent assets.
Business: ongoing patent applications and patent reviews · Filed 10/11/2025
AspenTech combines decades of modeling, simulation and optimization capabilities with industrial operations expertise and applies advanced analytics to improve the profitability and sustainability of production assets.
Business: AspenTech modeling, simulation and industrial expertise · Filed 10/11/2025
This transformation enables us to serve new customers while also supporting our extensive installed base with innovative technology.
Shareholder letter: management description of installed base · Filed 12/12/2025
Underlying sales increased 8 percent on 5 percent higher volume and 3 percent higher price.
MD&A: Software and Control, fiscal 2024 underlying volume and price · Filed 10/11/2025
Gross margin was negatively impacted by tariffs, which were more than offset by targeted price actions but diluted margins, and the timing of software renewals.
MD&A: second-quarter fiscal 2026 tariff recovery through targeted pricing · Filed 05/05/2026
Gross margin increased primarily due to favorable price less net material inflation and tariff refunds of $82 ($0.11 per share), partially offset by the negative impact related to the timing of software renewals.
MD&A: nine-month fiscal 2026 gross-margin drivers · Filed 04/08/2026
Business and Operational Risks We Operate in Businesses That Are Subject to Competitive Pressures That Could Affect Prices or Demand for Our Products Our businesses operate in markets that are highly competitive and potentially volatile, and we compete on the basis of product performance, quality, service and/or price across the industries and markets served.
Risk factors: competitive markets and bases of competition · Filed 10/11/2025
Some of our competitors have substantially greater sales, assets and financial resources than our Company and we also compete with many smaller companies.
Risk factors: competitors' financial resources · Filed 10/11/2025
Our businesses are affected by varying degrees of technological change, such as, among others, artificial intelligences and machine learning, and corresponding shifts in customer demand, which result in unpredictable product transitions, shortened life cycles and increased importance of being first to market with new products and services.
Risk factors: technological change and shortened product life cycles · Filed 10/11/2025
This intellectual property may be subject to challenge, infringement, invalidation or circumvention by third parties.
Risk factors: challenges to intellectual property rights · Filed 10/11/2025
Featuring open software architectures, flexible hardware systems and expert services, Test & Measurement enables customers to connect data and automation, optimize testing processes and assist in reliable performance.
Business segments: Test & Measurement open software architectures · Filed 04/08/2026
Furthermore, we may not realize the degree, or timing, of anticipated benefits including, among others, increasing rates of profitability and growth.
Risk factors: uncertain realization of transaction benefits · Filed 10/11/2025
While this proprietary intellectual property portfolio is important to the Company in the aggregate, management does not regard any of its segments as being dependent on any single patent, trademark registration or license.
Business: aggregate importance and diversification of intellectual property · Filed 10/11/2025
As of June 30, 2026, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $9.6 billion.
Revenue note: June 2026 remaining contractual performance obligations · Filed 04/08/2026
Earnings for Software and Control were $827, an increase of $545, or 193 percent, and margin increased 9.3 percentage points to 14.5 percent, reflecting leverage on higher Control Systems & Software sales (including a benefit related to the timing of AspenTech contract renewals), higher price, savings from cost reduction actions (primarily at Test & Measurement and AspenTech), lower intangibles amortization, and lower restructuring and related costs compared to the prior year.
MD&A: fiscal 2025 Software and Control earnings and renewal timing · Filed 10/11/2025
Gross margin increased primarily due to the tariff refunds discussed above.
MD&A: third-quarter gross-margin increase primarily attributable to tariff refunds · Filed 04/08/2026
Cost of sales for the second quarter of fiscal 2026 were $2,140, an increase of $79 compared with 2025, and gross margin of 53.1 percent decreased 0.4 percentage points.
MD&A: second-quarter fiscal 2026 gross-margin decline · Filed 05/05/2026
Free cash flow from continuing operations (operating cash flow less capital expenditures) was $3,245 in 2025, up 12 percent, reflecting the increase in operating cash flow.
Financial position: fiscal 2025 free cash flow · Filed 10/11/2025
Free cash flow of $2,618 in the first nine months of fiscal 2026 (operating cash flow of $2,902 less capital expenditures of $284) increased $217 compared to free cash flow of $2,401 in 2025 (operating cash flow of $2,664 less capital expenditures of $263), reflecting the increase in operating cash flow.
Financial position: nine-month fiscal 2026 operating cash flow and capital expenditure · Filed 04/08/2026
& SUBSIDIARIES Nine Months Ended June 30, 2025 and 2026 (Dollars in millions; unaudited) Nine Months Ended June 30, 2025 2026 Operating activities Net earnings $ 1,609 1,942 Earnings from discontinued operations, net of tax (7) — Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,139 1,105 Stock compensation 198 181 Changes in operating working capital (80) (320) Other, net (195) (6) Cash from continuing operations 2,664 2,902 Cash from discontinued operations (576) — Cash provided by operating activities 2,088 2,902 Investing activities Capital expenditures (263) (284) Purchases of businesses, net of cash and equivalents acquired (36) — Other, net (94) (38) Cash used in investing activities (393) (322) Financing activities Net increase in short-term borrowings 1,419 1,434 Proceeds from short-term borrowings greater than three months 5,292 6,229 Payments on short-term borrowings greater than three months (1,349) (7,028) Proceeds from long-term debt 1,544 — Payments of long-term debt (503) (588) Dividends paid (895) (935) Purchases of common stock (1,147) (898) Purchase of noncontrolling interest (7,244) — Settlement of AspenTech share awards (76) — Other, net (60) (134) Cash used in financing activities (3,019) (1,920) Effect of exchange rate changes on cash and equivalents (45) (24) Increase (decrease) in cash and equivalents (1,369) 636 Beginning cash and equivalents 3,588 1,544 Ending cash and equivalents $ 2,219 2,180 Changes in operating working capital Receivables $ 19 20 Inventories (91) (311) Other current assets (113) (194) Accounts payable (62) 221 Accrued expenses 167 (56) Total changes in operating working capital $ (80) (320) See accompanying Notes to Consolidated Financial Statements.
Consolidated cash flows: acquisitions, shareholder distributions and financing · Filed 04/08/2026
Total debt, which includes long-term debt, current maturities of long-term debt, commercial paper and other short-term borrowings, was $13,116, $7,687 and $8,157 as of September 30, 2025, 2024 and 2023, respectively.
Financial position: fiscal 2023–2025 total debt · Filed 10/11/2025
The increase in 2025 reflects increased short-term borrowings and long-term debt to fund the AspenTech transaction.
Financial position: borrowing to fund AspenTech transaction · Filed 10/11/2025
Annual Cash Incentive. In determining 2025 annual cash incentives, the Committee continued using a formulaic structure with pay dependent on the Company’s progress toward objective pay criteria utilizing certain financial metrics, consisting of adjusted EPS (weighted at 70%) and operating cash flow (weighted at 30%).
Executive compensation: actual fiscal 2025 annual incentive structure · Filed 12/12/2025
Beginning in fiscal 2024, 55% of the annual long-term stock compensation awards were granted in the form of performance shares and 45% of the awards were in the form of time-based restricted stock units.
Executive compensation: performance-share and time-based award mix · Filed 12/12/2025
The Committee utilizes adjusted earnings per share and cumulative free cash flow (operating cash flow less capital expenditures) as the metrics most appropriate to drive growth and to align with the supplemental reporting of results to our shareholders.
Executive compensation: long-term performance metrics · Filed 12/12/2025
Targets are set once at grant and are not reset each year during the three-year performance period.
Executive compensation: targets fixed at grant · Filed 12/12/2025
Stock Ownership: NEOs’ actual ownership greatly exceeds stock ownership guidelines
Executive compensation: disclosed actual ownership relative to guidelines · Filed 12/12/2025
Through this transformative year, we have continued to deliver strong operational performance, exceeding or meeting the free cash flow and adjusted earnings per share objectives we set at the beginning of the year, with operating cash flow up 11%, free cash flow up 12%, earnings per share up 43% and adjusted earnings per share up 9%.
Shareholder letter: fiscal 2025 outcomes versus beginning-of-year objectives · Filed 12/12/2025
Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were also up 3 percent.
MD&A: fiscal 2025 underlying sales growth · Filed 10/11/2025
Restructuring expense by business segment follows: Three Months Ended June 30, Nine Months Ended June 30, 2025 2026 2025 2026 Control Systems & Software $ 8 6 $ 19 10 Test & Measurement — 12 3 14 Software & Systems 8 18 22 24 Sensors 2 9 5 23 Final Control 8 48 18 76 Intelligent Devices 10 57 23 99 Safety & Productivity (1) 9 2 12 Corporate 20 3 23 6 Total $ 37 87 $ 70 141 Details of the change in the liability for restructuring costs during the nine months ended June 30, 2026 follow: Sept 30, 2025 Expense Utilized/Paid June 30, 2026 Severance and benefits $ 116 123 83 156 Other 4 18 20 2 Total $ 120 141 103 158 The tables above do not include $12 and $4 of costs related to restructuring actions incurred for the three months ended June 30, 2026 and 2025, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses; year-to-date amounts are $23 and $11, respectively.
Restructuring note: realized fiscal 2026 restructuring costs · Filed 04/08/2026
Acquisitions Divestitures & Strategic Reviews Emerson completed the acquisition of the remaining 43% of AspenTech Fiscal Year 2025 March 12, 2025 Fiscal Year 2025 SAFETY & PRODUCTIVITY Concluded a review process to explore alternatives for the Safety & Productivity segment Proposal to acquire all remaining shares of common stock of AspenTech not already owned by Emerson Fiscal Year 2025 November 5, 2024 August 13, 2024 COPELAND Completed the sale of Seller's Note and 40% common equity in Copeland (formerly Climate Technologies) Completed the acquisition of NI, diversifying Emerson's technology into test and measurement automation October 11, 2023 Completed the acquisition of Afag, an innovative leader in electric linear motion, feeding and handling automation solutions September 6, 2023 Completed the acquisition of Flexim, a global leader in clamp-on ultrasonic flow measurement for liquids, gases and steam August 31, 2023 May 31, 2023 CLIMATE TECHNOLOGIES Completed the sale of a majority stake in the Climate Technologies business (the new standalone business is named Copeland) October 31, 2022 INSINKERATOR Completed the sale of the InSinkErator business Acquired leader in the life science industry that uses software and modern technology architectures to accelerate speed to market for new therapies, drugs and vaccines July 1, 2022 May 31, 2022 THERM-O-DISC Completed the sale of the sensing and protection technologies business Announced successful closing of combination of Emerson's industrial software business with AspenTech May 16, 2022 Strengthened presence in renewable energy sector with acquisition of leader in the control automation business for wind power generation December 16, 2021 July 12, 2021 DANIEL Completed divestment of Daniel Measurement and Control PROXY STATEMENT FOR EMERSON 2026 ANNUAL MEETING OF SHAREHOLDERS 5 Proxy Statement Summary Additional Highlights Director Independence •Independent Board Chair •9 of 10 continuing Directors are independent •All Board Committees are independent pursuant to requirements of the NYSE and our governance documents •Regular executive sessions attended by non-management Directors only Supermajority Voting Provisions •In response to shareholder requests, we amended our Restated Articles of Incorporation to reduce supermajority voting requirements to majority voting requirements with respect to the terms of certain preferred stock Management Proposal to Declassify Board of Directors •In response to shareholder requests, we are once again submitting a management proposal to amend our Restated Articles of Incorporation to declassify our Board of Directors People and Community •Since its inception in 2021, the Support Our People Fund has awarded 629 grants across 18 countries, helping employees in times of need, and supporting communities around the world.
Proxy summary: board independence and governance changes · Filed 12/12/2025
•Completed company-wide employee engagement survey with 91% employee participation, reporting 79% favorable engagement Three Audit Committee Financial Experts •The Board has determined that three members of the Audit Committee are Audit Committee Financial Experts under SEC rules Proxy Access Bylaw •A shareholder, or group of up to 20, holding 3% of Company stock for 3 years may place a limited number of Director nominees in the Company’s proxy statement for election Board Refreshment •40% of the continuing Directors joined the Board within the last 5 years •Balance of new and continuing Directors, with average tenure for all Directors of 7.8 years •Average Director age of 61.5 Environmental Sustainability •Goal to achieve Net Zero value chain emissions by 2045 from a 2021 base year •Reduced Scope 1 and 2 GHG absolute emissions by 48% since 2021, progressing toward our goal to achieve Net Zero Operations by 2030 •Achieved a 30% reduction in energy intensity from a 2021 base year, making progress on our goal to reduce energy intensity by 35% by 2030 •Goal to achieve 10% water use reduction by 2032 from a 2022 base year Other Governance Practices •Directors elected by majority voting •Comprehensive new Director orientation •Directors overboarding policy •Director term limits •No shareholder rights plan or “poison pill” •Stock ownership, blackout, clawback, pledging and anti-hedging policies •Annual environmental sustainability, government relations, risk management, trade association memberships, and political spending reports •Recently created Technology and Environmental Sustainability Committee and amended Audit, Compensation, and Governance and Nominating Committee Charters 6 PROXY STATEMENT FOR EMERSON 2026 ANNUAL MEETING OF SHAREHOLDERS Proxy Item No.
Proxy summary: shareholder rights, governance safeguards and refreshment · Filed 12/12/2025
The 2025, 2024, 2020 and 2013 proposed amendments to declassify our Board required a vote of 85% of outstanding shares in favor for approval and they did not attain the required approval level.
Board governance: failed declassification proposals and approval threshold · Filed 12/12/2025
Adjusted EPS excludes amortization of intangibles, acquisition and divestiture activity, the amortization of acquisition-related inventory step-up, restructuring and related costs, and other discrete tax items.
Executive compensation: exclusions from adjusted EPS incentive metric · Filed 12/12/2025
Gross margin was negatively impacted by tariffs, which were more than offset by targeted price actions but diluted margins, and the timing of software renewals.
Fiscal 2026 second-quarter gross-margin discussion · Filed 05/05/2026
As of June 30, 2026, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $9.6 billion.
Remaining performance obligations as of June 30, 2026 · Filed 04/08/2026
The Company expects to recognize approximately 75 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the following two years.
Expected recognition timing of remaining performance obligations · Filed 04/08/2026
Fisher Controls International LLC, Rosemount Inc., Fisher-Rosemount Systems Inc., or other Emerson Process Management Group Company) hereinafter the Seller, and the buyer, hereinafter Buyer, and constitutes the entire agreement (Agreement) between Buyer and Seller for the provision of services (Services) and/or the sale of goods (Goods) including (except as provided in Section 10) firmware incorporated therein.
Seller and goods/services scope · Retrieved 19/10/2026
1. PRICES: Unless otherwise specified by Seller, Seller's price for the Goods and/or Services shall remain in effect for thirty (30) days after the date of Seller's quotation or acceptance of the order for the Goods/Services, whichever is delivered first, provided an unconditional, complete authorization for the immediate manufacture and shipment of the Goods and/or provision of Services pursuant to Seller's standard order processing procedures is received and accepted by Seller within such time period.
Section 1: Prices; 30-day price validity and authorization conditions · Retrieved 19/10/2026
If such authorization is not received by Seller within such thirty (30) day period, Seller shall have the right to change the price for the Goods/Services to Seller's price in effect for the Goods/Services at the time the order is released to final manufacture.
Section 1: Prices; repricing after delayed authorization · Retrieved 19/10/2026
Notwithstanding the foregoing, the price for Goods/Services sold by Seller, but manufactured by others, shall be Seller's price in effect at the time of shipment to Buyer.
Section 1: Prices; third-party manufactured goods/services · Retrieved 19/10/2026
4. TERMINATION AND SUSPENSION BY BUYER: Buyer may terminate or suspend its order for any or all of the Goods/Services covered by the Agreement only upon Seller’s written consent or pursuant to Seller’s applicable policy or practices covering such termination or suspension.
Section 4: Termination and suspension by buyer · Retrieved 19/10/2026
8. TAXES: Any tax or governmental charge payable by the Seller because of the manufacture, sale or delivery of the Goods, or provision of Services, may at Seller's option be added to the price herein specified.
Section 8: Taxes · Retrieved 19/10/2026
