Cash Retainer Fees for Committee Chair and Committee member positions are in addition to the Cash Retainer Fee for service as a Director.

“Cash Retainer” means the designated annual cash retainer, paid quarterly, for Non-Employee Directors established from time to time by the Board as annual compensation for services rendered, exclusive of compensation for service as a member of any committee designated by the Board or in connection with any meeting of the Board or special assignment, and exclusive of reimbursements for expenses incurred in performance of service as a Director.

A $35,000 annual cash retainer will be paid to each non-employee director for his or her service on the Board, and additional annual cash retainer(s) will be paid to the chairperson of the Board (if one is then appointed), each non-employee director chairperson of a committee of the Board, and each non-employee director serving as a member of a committee of the Board (other than as chairperson of such committee) as follows:

Effective January 1, 2018, compensation paid to non-employee directors of A. O. Smith Corporation is as follows: Directors will receive a cash annual retainer of $65,000, paid in quarterly amounts of $16,250. The lead director retainer of $20,000 annually remains unchanged. Each Personnel and Compensation Committee and Investment Policy Committee member receives an annual retainer of $13,000, paid quarterly, and each member of the Nominating and Governance Committee receives $10,500 annually, with the Chairperson of each of these Committees receiving an additional $7,000 annual retainer. Each Audit committee member receives an annual retainer of $22,000, paid quarterly with the Chairperson receiving an additional $5,000 annual retainer. The award of shares of Common Stock to each director remained unchanged. Each director receives Common Stock with a market value of $125,000 on the date of the award. The retainers were calculated to be comparable to the directors’ total compensation under the previous system, while simplifying record keeping and reporting.

“Annual Retainer” means the annual fee paid to Eligible Directors for service as a member of the Board and the annual fee paid to Eligible Directors who serve as chair of a Board committee for service as chair for the ensuing year. As of the effective date of this amended Plan, the Annual Retainer is paid in advance, in respect of the twelve-month period beginning in May and ending the following April and has typically been paid in April or May for such period. Annual Retainer shall not include fees paid for attending particular meetings of the Board or committees of the Board. The Annual Retainer (including any chairman retainer) is fully earned when paid and is not subject to remittance or recovery in whole or in part should the director receiving the Annual Retainer fail, for any reason, to serve for the entire period for which the retainer is paid.

Annual Retainer: You will be eligible for an annual cash retainer in the amount of $45,000. You will also be eligible for an additional annual cash retainer in the amount of $5,000 for service as the chairperson of any Board committee. The retainers will be paid quarterly in arrears and will be prorated for any partial quarter of service.

Annual Cash Retainer for Committee Service. In addition, an Independent Director shall be eligible to receive the following additional annual cash retainers for service in the following roles:

For service as Chair of the audit committee: an annual cash retainer of $15,000 (in addition to any annual cash retainers otherwise paid).

Committee Chairman Annual Retainer$10,000

Retainer. “Retainer” means the total cash fees paid to Participant for service on the Board (or any committee thereof), which may be payable on either a calendar quarter or fiscal quarter basis, in arrears.