March 2016

To Our Shareholders

2015 was a transformative year for Masco. We achieved a number of milestones, including creating a “new” Masco. This transformation, combined with a clear strategy and focused execution, resulted in solid returns for our shareholders.

THE “NEW” MASCO

We successfully spun off 100 percent of our Installation and Other Services businesses into an independent, publicly-traded company (TopBuild Corp.) through a tax-free distribution to our shareholders on June 30, 2015. This was a turning point for our Company, as it transformed Masco into a home improvement and building products company where our distinct advantages—brand and innovation—are key success factors. The spin-off also reduced our dependence on North American new home construction, making our business less cyclical, while increasing the proportion of our business that is global.

Our center-led model, which was initiated in 2014 to align our corporate structure to our strategy, is driving decision-making to our business units, increasing our effectiveness and flexibility and helping to lower costs. In 2015, we further developed our model and strengthened our leadership by refining our corporate and business unit management teams. We believe that this leaner operating model, combined with each business unit’s disciplined execution of the Masco Operating System—our methodology to drive growth and productivity—is improving every aspect of our performance.

Clear Strategic Focus

Over the past two years, we have positioned our Company for profitable growth by developing and executing a clear strategy that is focused on driving our businesses to their full potential, leveraging opportunities across our businesses and actively managing our portfolio. Our portfolio of well-known brands is a key component of driving the full potential of our businesses. A majority of our brands are #1 or #2 in their respective product categories. This strong brand equity provides us with an advantage in the marketplace, allowing us to continue to grow our customer base through category and geographical expansion and the introduction of exciting new products and service capabilities.

Combining innovation and design, in 2015, Delta Faucet launched the Delta® Essa™ collection featuring a Euro-inspired design with TempSense™ technology, an LED light at the faucet base that changes color as the temperature of the water changes. Behr elevated its fulfillment capabilities to the professional painting contractor in 2015 by launching pro super centers. Located inside several of Behr’s large, regional distribution centers, pro super centers provide highly-efficient, high-volume tinting capability that allow us to process and deliver large orders directly to contractors. These examples illustrate why our brand leadership and product and process innovations have been the hallmarks of our success. We will continue to invest in products and solutions that matter to our customers.

During 2015, we continued to leverage opportunities across our portfolio through a number of activities, ranging from value engineering and packaging redesign on the cost side to urban market and commercial penetration tools and best business practices on the revenue side. Perhaps most importantly, we are moving leaders across our business units to further develop talent and facilitate operational improvements. By leveraging opportunities for talent development, purchasing, branding, innovation and selling across our businesses, each of our companies has greater growth potential as a result of being part of the Masco family.

We are also actively managing our portfolio to generate shareholder value. We remain disciplined in this area and are focused on making selective acquisitions that accelerate our strategies. As an example, in 2015, we acquired Endless Pools, Inc., which allows us to expand our offering into the aquatic fitness category, open new channels of distribution and access a new customer base.

Delivering Results

Our strong 2015 results demonstrate that our strategies are working. We returned our cabinet business to profitability in 2015, exceeding our initial profitability targets and positioning this business for disciplined growth. In our Plumbing Products group, Delta Faucet and Hansgrohe each achieved another record year in sales and profits. Illustrating their continued commitment to excellence, Hansgrohe was recognized with numerous international design awards and Delta Faucet received the 2015 WaterSense Sustained Excellence Award, the highest partner recognition from the U.S. Environmental Protection Agency, for its exemplary efforts to support water efficiency.

Importantly, we continued our trend of operating margin expansion and strong cash flow generation, which allowed us to create solid returns for our shareholders. Consistent with our balanced capital allocation strategy, we returned over $580 million to shareholders, on a combined basis, by repurchasing over 17 million shares of stock and paying dividends, which increased by six percent in 2015. As we pursue long-term consistent growth in revenue and profitability, we remain committed to returning a portion of our cash flow to our shareholders.

The transformative actions we took in 2015 reflect our unwavering commitment to excellence and enhancing shareholder value. We have demonstrated that we have the ability to capitalize on the improving market dynamics and to leverage our industry-leading positions. We enter 2016 with momentum and expect to continue to leverage our industry-leading positions, robust innovation pipeline and Masco Operating System to successfully execute on our long-term growth strategies. I am confident that Masco is positioned for even greater success and would like to extend my appreciation to our customers, suppliers, employees and shareholders for their ongoing support.