|
|
Compensation of Directors
|
The Compensation Committee has authority to develop and recommend to the full Board the compensation policies and programs for non-employee directors. The committee retained Meridian Compensation Partners LLC (Meridian) to advise when setting non-employee director compensation to ensure it is market-based, aligned with shareholder interests and consistent with our compensation principles.
AAM's compensation program for our non-employee directors is designed to meet the following objectives:
|
|
–
|
recognize the significant investment of time and expertise required of directors to oversee AAM's global affairs;
|
|
|
–
|
align the directors' interests with the long-term interests of our shareholders; and
|
|
|
–
|
ensure that their compensation is well perceived by our shareholders.
|
In connection with AAM's acquisition of MPG in April 2017, which nearly doubled the size of the Company, the Committee recommended, and the Board approved, changes to director compensation to reflect updated market information provided by Meridian and to continue to align compensation levels with that of our comparative peer group. Additional information regarding Meridian and our 2017 comparative peer group is provided in
Compensation Philosophy, Process and Market Analysis.
2017 Annual Retainer and Committee Chair Retainers
|
|
|
|
|
Annual retainer
|
$
|
110,000
|
|
Committee chair annual retainer:
|
|
Audit Committee chair
|
20,000
|
|
Compensation Committee chair
|
15,000
|
|
Other committee chair
|
10,000
|
|
Lead director annual retainer
|
30,000
|
|
The only change in cash compensation for 2017 was an increase in the annual retainer for the Compensation Committee Chair from $10,000 to $15,000, effective April 1, 2017.
Annual Equity Grant
Non-employee directors serving on the Board on the date of the 2017 annual meeting received a grant of Restricted Stock Units (RSUs) of 7,513, or a grant date value of $125,000. This amount reflected an increase in value from $110,000 based on Meridian's updated benchmarking analysis. The awards are payable in stock and vest in one year, unless vesting is accelerated upon death, disability or a change in control. Non-employee directors may elect to defer settlement of RSUs until after termination of service from the Board.
Director Stock Ownership Guidelines
In connection with the MPG acquisition and updated market analysis, the Compensation Committee had Meridian review our stock ownership guidelines for non-employee directors. Based on this analysis, the committee recommended and the Board approved an increase in the multiple from three times to five times the annual cash retainer. Non-employee directors are expected to meet the guidelines within five years from the date of election to the Board. Shares owned directly, deferred RSUs and unvested RSUs count toward the guidelines. Each non-employee director has met, or is on track to meet, these ownership guidelines. Current stock ownership of non-employee directors is shown in the
Beneficial Stock Ownership
section below.
Anti-hedging and Anti-pledging policy
Non-employee directors are prohibited from entering into transactions that may result in a financial benefit if our stock price declines, or any hedging transaction involving our stock, including the use of financial derivatives, short sales or any similar transactions. Pledging of AAM stock is also prohibited.
|
|
|
|
Compensation of Directors
|
Total 2017 compensation of our non-employee directors is shown below.
|
|
|
|
|
|
|
|
|
|
Name
|
Fees Earned or
Paid in Cash
(1)
($)
|
|
Stock Awards
(2)
($)
|
|
All Other Compensation
(3)
($)
|
|
Total
($)
|
|
Elizabeth A. Chappell
|
120,000
|
|
125,016
|
|
1,400
|
|
246,416
|
|
Loren Easton
(4)
|
77,917
|
|
125,016
|
|
—
|
|
202,933
|
|
William L. Kozyra
|
110,000
|
|
125,016
|
|
1,500
|
|
236,516
|
|
Peter D. Lyons
|
110,000
|
|
125,016
|
|
800
|
|
235,816
|
|
James A. McCaslin
|
131,250
|
|
125,016
|
|
500
|
|
256,766
|
|
William P. Miller II
|
130,000
|
|
125,016
|
|
700
|
|
255,716
|
|
Kevin Penn
(4)
|
77,917
|
|
125,016
|
|
—
|
|
202,933
|
|
John F. Smith
|
120,000
|
|
125,016
|
|
1,900
|
|
246,916
|
|
George Thanopoulos
|
82,500
|
|
125,016
|
|
—
|
|
207,516
|
|
Samuel Valenti III
|
132,500
|
|
125,016
|
|
1,600
|
|
259,116
|
|
|
|
(1)
|
Fees earned in 2017 for services whether paid in cash or deferred. Non-employee directors may elect to defer, on a pre-tax basis, a portion of their retainer and meeting fees and receive tax-deferred earnings (or losses) on the deferrals under AAM’s Executive Deferred Compensation Plan.
|
|
|
(2)
|
Reflects the full grant date fair value of restricted stock unit awards granted on May 4, 2017 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based on applying the assumptions used in our financial statements. The grant date fair value of equity awards is calculated using the closing market price of AAM common stock on the grant date of $16.64. See Note 9 to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2017 regarding assumptions underlying the valuation of equity awards.
|
|
|
(3)
|
The Company reimburses non-employee directors for travel and related out-of-pocket expenses in connection with attending Board, committee and stockholder meetings. From time to time, the Company invites spouses of non-employee directors to attend Company events associated with these meetings. The Company pays for spousal travel and certain other expenses and reimburses non-employee directors for taxes attributable to the income associated with this benefit. Amounts reflect reimbursement of taxes on this income.
|
|
|
(4)
|
Mr. Easton and Mr. Penn resigned from the Board on December 15, 2017 after completion of the sale by American Securities LLC of its interest in the Company. Outstanding equity awards were forfeited upon their resignation. Mr. Easton and Mr. Penn had been designated by American Securities LLC to serve on the Board in connection with the Company's acquisition of MPG on April 6, 2017.
|
As of December 31, 2017, each non-employee director had the following number of outstanding RSUs (including those deferred). No options were outstanding as of December 31, 2017.
|
|
|
|
Name
|
Restricted Stock
Units Outstanding
(#)
|
|
Elizabeth A. Chappell
|
51,446
|
|
William L. Kozyra
|
14,862
|
|
Peter D. Lyons
|
18,874
|
|
James A. McCaslin
|
40,346
|
|
William P. Miller II
|
54,696
|
|
John F. Smith
|
40,346
|
|
George Thanopoulos
|
7,513
|
|
Samuel Valenti III
|
24,333
|
|
|
|
|
|
Beneficial Stock Ownership
|
|
|
Beneficial Stock Ownership
|
The following tables show the number of shares of AAM common stock beneficially owned by:
|
|
–
|
each person known to us who beneficially owns more than 5% of AAM common stock;
|
|
|
–
|
each of our non-employee directors and nominees as of March 6, 2018;
|
|
|
–
|
each of the named executive officers shown in the Summary Compensation Table
;
and
|
|
|
–
|
all directors, nominees and executive officers as a group as of March 6, 2018.
|
A beneficial owner of stock is a person who has voting power (the power to control voting decisions) or investment power (the power to cause the sale of the stock). All individuals listed below have sole voting and investment power over the shares (unless otherwise noted).The beneficial ownership calculation includes 111,655,962 shares of AAM common stock outstanding on March 6, 2018 (record date).
|
|
|
|
|
|
|
Shares Beneficially
Owned
|
|
Percent of Shares
Outstanding
|
|
Greater Than 5% Owners
|
|
|
Blackrock, Inc.
(1)
|
12,973,513
|
|
11.70
|
|
55 East 52nd Street
|
|
|
New York, NY 10055
|
|
|
The Vanguard Group
(2)
|
9,188,924
|
|
8.25
|
|
100 Vanguard Blvd.
|
|
|
Malvern, PA 19355
|
|
|
Dimensional Fund Advisors LP
(3)
|
8,503,164
|
|
7.64
|
|
6300 Bee Cave Road
|
|
|
Austin, TX 78746
|
|
|
Non-Employee Directors
(4)
|
|
|
Elizabeth A. Chappell
|
53,422
|
|
*
|
|
William L. Kozyra
|
18,874
|
|
*
|
|
Peter D. Lyons
|
23,874
|
|
*
|
|
James A. McCaslin
|
44,346
|
|
*
|
|
William P. Miller II
|
62,396
|
|
*
|
|
John F. Smith
|
45,346
|
|
*
|
|
George Thanopoulos
|
298,713
|
|
*
|
|
Samuel Valenti III
|
34,333
|
|
*
|
|
Named Executive Officers
|
|
|
David C. Dauch
(5)
|
393,036
|
|
*
|
|
Christopher J. May
|
19,464
|
|
*
|
|
Michael K. Simonte
|
102,684
|
|
*
|
|
Alberto L. Satine
|
40,382
|
|
*
|
|
Gregory S. Deveson
|
—
|
|
*
|
|
All Directors and Executive Officers as a Group (19 persons)
|
1,227,566
|
|
1.1
|
|
(*)
Less than 1% of the outstanding shares of AAM common stock.
|
|
(1)
|
Based on the Schedule 13G filed on January 17, 2018 by Blackrock, Inc., reporting sole voting power over 12,723,854 shares and sole investment power over 12,973,513 shares.
|
|
|
(2)
|
Based on the Schedule 13G filed on February 7, 2018 by The Vanguard Group, reporting sole voting power over 110,493 shares, sole investment power over 9,076,668, shared voting power over 11,000 shares and shared investment power over 112,256 shares.
|
|
|
(3)
|
Based on the Schedule 13G filed on February 9, 2018 by Dimensional Fund Advisors LP, reporting sole voting power over 8,143,183 shares and sole investment power over 8,503,164 shares.
|
|
|
(4)
|
Includes vested RSUs awarded to non-employee directors that have been deferred. For the number of RSUs held by each non-employee director, see table included in
Compensation of Directors
.
|
|
|
(5)
|
Includes 548 shares held in trusts for the benefit of Mr. Dauch’s children.
|
|
|
Related Person Transactions Policy
|
The Board has adopted a written policy and procedure for the review, approval and ratification of transactions involving AAM and any “related person” as defined in the policy. This policy supplements AAM’s other conflict of interest policies in our Code of Business Conduct. The Audit Committee is responsible for reviewing, approving and ratifying all related person transactions.
For purposes of this policy, a related person transaction includes any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which AAM is or is expected to be a participant, the amount involved exceeds $120,000, and a related person has or will have a material interest. A related person includes directors and executive officers and their immediate family members, stockholders owning more than five percent of the Company's outstanding common stock as of the last completed fiscal year, and any entity owned or controlled by any one of these persons.
The Audit Committee makes a determination whether a related person's interest in a transaction is material based on a review of the facts and circumstances. In deciding whether to approve or ratify a related person transaction, the Audit Committee will take into account, among other factors it deems appropriate, (1) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and (2) the significance of the related person's interest in the transaction.
A member of the Audit Committee may not participate in the review or vote concerning any related person transaction in which the Audit Committee member or his or her immediate family member is involved.
The policy also provides that certain types of transactions are deemed to be pre-approved by the Audit Committee and do not require separate approval or ratification. During fiscal year 2017 and as of the date of this proxy statement, the Company has not engaged in any reportable related person transactions.
|
|
Section 16(a) Beneficial Ownership Reporting Compliance
|
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of our common stock. Based solely on our review of these reports, and written representations from such reporting persons, we believe that the Section 16(a) filing requirements for such reporting persons were met during 2017.
|
|
|
|
Advisory Vote on Executive Compensation
|
|
|
Proposal 2: Advisory vote on Executive Compensation
|
AAM is seeking a non-binding advisory vote from our stockholders to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis (CD&A) and narrative and tabular disclosures in this proxy statement. In the CD&A, we provide a detailed description of our compensation programs, including our compensation philosophy and objectives, the individual elements of executive pay, and how the programs are administered. We encourage you to review the CD&A, together with the other narrative and tabular disclosures, in considering your advisory vote on our named executive officers’ compensation (say-on-pay).
Pay for Performance Philosophy
Our executive officer compensation program is designed to reward performance that supports the achievement of our business objectives and creates long-term stockholder value. The Compensation Committee considers the following fundamental objectives, among others, in determining our compensation programs:
|
|
–
|
Compensation and benefit programs should attract, motivate and retain experienced executives who are vital to our short-term and long-term success, profitability and growth;
|
|
|
–
|
Compensation and benefit programs should reward Company and individual performance; and
|
|
|
–
|
Compensation and benefit programs should foster the long-term focus required to deliver value to our shareholders.
|
Our executive officer compensation program also reflects an externally competitive compensation structure based on a market study of executive compensation programs in AAM's comparative peer group. In order to ensure that our compensation program drives performance in support of our strategic objectives and cultural values, we regularly compare our compensation practices against market best practices and shareholder feedback.
Responsiveness to Shareholder Feedback
Prior to 2017, we consistently received strong shareholder support of our say-on-pay proposal, averaging more than 97% approval from 2014 through 2017. At our 2017 annual meeting, approximately 38% of our shareholders voted in favor of our executive compensation programs. Our Board and Compensation Committee took this matter very seriously and sought to better understand what drove this decline in the say-on-pay vote.
We contacted our 25 largest shareholders representing approximately 80% of our then-outstanding shares and were able to speak with shareholders representing over 50% of outstanding shares and with proxy advisors ISS and Glass Lewis. We describe the feedback we received and our response in the Proxy Summary and in the CD&A of this proxy statement. We encourage you to consider our actions in response to shareholder feedback in deciding how to vote on this proposal.
Although your vote on this proposal is advisory and non-binding, the Board and the Compensation Committee will continue to carefully consider the voting results when making future compensation decisions.
|
|
|
þ
|
The Board unanimously recommends a vote FOR the approval of the compensation of our named executive officers.
|
|
|
|
|
Compensation Discussion and Analysis
|
|
|
Compensation Discussion and Analysis
|
Our executive compensation program is designed to attract, motivate and retain the high quality leaders that are necessary to manage a company of AAM's size and complexity. In designing the Company's executive compensation program, the Compensation Committee (Committee) strives to align the incentives of our named executive officers (NEOs) with the interests of our shareholders by using performance metrics and challenging goals that tie directly to our business strategy. We believe consistent execution of our strategy will drive long-term value creation.
The Compensation Discussion and Analysis (CD&A) provides a description of our executive compensation programs, including the underlying philosophy, the individual pay elements, the methodology and processes used by the Board and the Committee to make compensation decisions and the relationship between AAM's performance and compensation delivered in 2017. Our NEOs for the fiscal year ending December 31, 2017 are shown below.
|
|
Named Executive Officers
|
|
David C. Dauch
Chairman & Chief Executive Officer
|
|
Christopher J. May
Vice President & Chief Financial Officer
|
|
Michael K. Simonte
President
|
|
Alberto L. Satine
President Driveline
|
|
Gregory S. Deveson
President Powertrain
|
|
|
|
|
Compensation Discussion and Analysis
|
|
|
Shareholder Engagement and Our Response
|
Refinements to AAM's Executive Compensation Program and
Adoption of Proxy Access
Prior to 2017, we consistently received strong shareholder support on our say-on-pay proposal, averaging more than 97% approval from 2014 through 2016. In 2017, approximately 38% of our shareholders voted in favor of our executive compensation programs. The Board and the Committee took this matter very seriously and sought to better understand what drove this decline in the say-on-pay vote.
It is AAM's practice to meet with investors throughout the year in various formats. However, following the 2017 annual meeting, the Committee and management conducted a targeted shareholder outreach program to discuss and obtain feedback regarding our executive compensation program and other governance matters. We contacted our 25 largest shareholders representing approximately 80% of our then-outstanding shares. As a result of this outreach, we spoke with shareholders representing over 50% of outstanding shares and with proxy advisors ISS and Glass Lewis. The Chair of the Committee participated throughout this process, along with our CFO and Investor Relations Director.
The information we received from shareholders was shared with the Board on multiple occasions. The Committee and the full Board had robust discussions and thoughtfully considered our shareholders' constructive feedback. Below is a summary of the feedback we received and our response.
|
|
|
|
Shareholder Feedback
|
|
Response
|
|
|
|
Shareholders generally believe our executive compensation program is aligned with shareholder interests.
|
ð
|
Significant design improvements have been made over the last several years including:
|
- no discretionary incentive payments
- double-trigger equity vesting
- clawback policy
- 66% of LTI compensation is performance based
- prohibit excise tax gross ups
- no excessive executive severance arrangements
-
New in 2017
: increased stock ownership requirements for CEO, CFO and outside directors
|
These programs will continue to be reinforced.
|
|
|
|
|
Compensation Discussion and Analysis
|
|
|
|
|
Shareholder Feedback
|
|
Response
|
|
|
|
Incentive metrics
• Goal rigor
• Alignment with strategy
• Enhanced disclosure
|
ð
|
Goal Rigor
: Although our goals contained the appropriate rigor to accomplish our strategic objectives, we heard shareholder concerns and increased the rigor of new awards in 2018 to achieve a level of performance that would be the highest in our history.
Alignment with strategy
: To continue alignment with AAM's strategic goals, the Committee changed annual incentive pay metrics in 2018 to focus senior leadership on EBITDA, a key valuation/leverage reduction driver. The LTI program was also modified to emphasize cash flow and capital deployment strategies, which are key to value creation.
Enhanced disclosure
: We enhanced our disclosure of our goal-setting process for better understanding and transparency. We re-designed our proxy statement to include a proxy summary, letters from our Chairman & CEO and lead independent director, and other features that enable us to more effectively communicate AAM's business strategy and the Board's ongoing efforts to represent the interests of our shareholders.
|
|
|
|
Alignment of CEO compensation with total shareholder return
|
ð
|
While AAM's financial and operational performance has been strong, our TSR performance has lagged in comparison to our comparative peer group over the last few years.
AAM has increased EBITDA margin performance each year to a level that is one of the best in the industry and grown revenues to nearly $7 billion from $2.9 billion 5 years ago, while transforming AAM to become more diversified, with greater scale and increased global reach to support our customers with products that meet market demands. We believe this operational performance and growth will drive long-term value for our shareholders.
|
|
|
Ratio of fixed and variable pay of the CEO as compared to the other NEOs
|
ð
|
The Committee believes that the CEO's pay should be more variable than that of the other NEOs. As the leader of the Company, the CEO should have the highest level of pay at risk, which we believe drives superior performance.
|
|
|
Proxy access
|
ð
|
We adopted proxy access in February 2018.
|
|
|
|
In addition to this outreach effort, we engaged in our regular investor communications, which included equity and high-yield credit conferences, on-site investor visits, road shows, and individual and group conference calls. In light of the recent transformation of our company, we also engaged a third party to conduct an investor perception study. We incorporated many of the recommendations we received into our investor relations program.
Throughout all of our engagement activities, we strengthened our relationships with our investors by receiving candid, constructive feedback that we shared with our Board. Our Board believes that fostering long-term relationships with our shareholders and maintaining their trust and goodwill is critical to AAM's achievement of our strategic objectives and shareholder value creation.
|
|
|
|
Compensation Discussion and Analysis
|
|
|
Business & Financial Highlights
|
Driving Long-Term Shareholder Value
AAM is a global Tier 1 supplier to the automotive, commercial and industrial markets, with broad capabilities across multiple product lines. Our mission is to deliver efficient, powerful and innovative solutions for our customers while leading the industry in quality, operational excellence and technology to maximize shareholder value. Our Board believes that AAM is well positioned to deliver long-term shareholder value by utilizing the following fundamental elements of our business:
AAM's 2017 Highlights
|
|
|
|
|
þ
|
Delivered on our key strategic objectives of profitable growth, diversification, outstanding financial performance and technology leadership
|
þ
|
Following the MPG acquisition, reduced our debt leverage on both a gross and net basis, including the prepayment of $200 million of Senior Notes
|
|
|
|
|
þ
|
Closed on the acquisition of MPG, nearly doubling our size and scale
|
þ
|
Won several new business awards, including further commercialization of our e-AAM hybrid and electric driveline systems
|
|
|
|
|
þ
|
Achieved record sales and profitability for AAM
|
þ
|
Realized over 50% of our sales from customers other than General Motors for the first time in AAM history — a key strategic milestone
|
|
|
|
|
þ
|
Generated Adjusted Free Cash Flow of over $300 million
|
þ
|
Successfully launched approximately 75 programs and facilities across the globe
|
|
|
|
|
þ
|
Continued to fund significant capital and R&D investments in order to drive organic growth to meet our strategic goals
|
þ
|
Received several global quality and operations excellence awards from our customers, including being named a Supplier of the Year by General Motors
|
|
|
|
|
Compensation Discussion and Analysis
|
Acquisition of Metaldyne Performance Group, Inc.
Our transformational acquisition of MPG in April 2017 nearly doubled the size of the Company and was supported by powerful industrial logic focused on driving long-term value for all shareholders through the benefits listed below. We have already begun to realize many of the key benefits from this transaction and they are evident in our financial results for 2017.
|
|
|
Acquisition Benefit
|
FY 2017 Result
|
|
|
Greater scale and financial profile
|
Pro forma sales of over $6.9 billion, an increase of over 75% compared to
AAM's 2016 sales
|
|
|
Accelerated business diversification
|
Non-GM sales made up more than 50% of total sales
Greater exposure to commercial and industrial business as those markets
strengthened in 2017
|
|
|
Enhanced profitability and free cash flow generation
|
AAM achieved Adjusted EBITDA of approximately $1.1 billion
AAM generated over $300 million of Adjusted Free Cash Flow
|
|
|
Synergy attainment and value capture
|
AAM recognized > $30 million of cost reduction synergies in 2017 and expects an annualized synergy attainment run rate of $73 million in January 2018
On track to meet our target of $120 million of annual run rate cost reduction synergies
by 1Q 2019 and 70% of this total by 1Q 2018
|
|
|
2017 Compensation Overview
|
C
omponents of Compensation Program
The primary components of AAM’s executive compensation program are summarized below.
|
|
|
|
Component
|
Purpose
|
Characteristics
|
|
|
|
Base Salary
|
Based on level of responsibility, experience, individual performance and internal pay equity
|
Fixed cash component generally targeted at the peer group median
|
|
|
|
Annual Incentive Compensation
|
Incentive to drive short-term performance aligned with strategic goals
|
Cash award that is at-risk subject to the attainment of performance targets
|
|
|
|
Long-Term Incentive Compensation
|
Reward for creating shareholder value
|
Awarded in a combination of Performance Shares (66%) and RSUs (34%) tied to financial and share performance that drive sustainable results and shareholder value
|
|
|
|
Retirement Benefits
|
Provide income upon retirement
|
401(k) and nonqualified defined benefit plans
|
|
|
|
Perquisites
|
Limited supplement to total direct compensation
|
Primary benefit is company-provided vehicles with AAM content
|
|
|
|
|
Compensation Discussion and Analysis
|
Total NEO Direct Compensation Pay Mix
Total direct compensation consists of base salary plus target annual and long-term incentive compensation. Total direct compensation for each NEO may be above or below the 50
th
percentile of our comparative peer group based on various factors, including an individual's level of responsibility, demonstrated skills and experience, significance of position, contribution to Company performance, time in position, potential for advancement and internal pay equity considerations. The Committee generally sets performance objectives for annual and long-term incentive compensation so that targeted total direct compensation levels can be achieved only when target performance objectives are met. Consequently, actual pay may vary from targeted levels based on achieved performance against pre-established performance objectives.
The following chart illustrates the allocation of 2017 total direct compensation components at target for our CEO and for our other NEOs as a group as of December 31, 2017. This analysis highlights the Company's emphasis on long-term and at-risk compensation.
|
|
|
|
Compensation Discussion and Analysis
|
|
|
Compensation Philosophy, Process
and Market Analysis
|
Executive Compensation Philosophy
AAM is committed to a compensation philosophy that incorporates the principles of supporting business strategy and performance, aligning with stockholder interests, and paying competitively based on a framework of best governance practices. The Committee reviews and recommends to the full Board AAM's overall compensation philosophy and executive compensation programs to support our business strategy and objectives.
|
|
|
|
|
Compensation Principle
|
Objective
|
How we achieve our objective
|
|
|
|
Support of Business Strategy and Performance
|
Compensation is variable and at risk
|
–
|
86% of CEO compensation is variable and at risk
|
Utilize metrics that emphasize company performance that are aligned with business strategy
|
–
|
Performance goals include key drivers of enterprise value creation such EBITDA, Relative TSR and Cash Flow.
|
|
|
|
|
Alignment with Stockholder Interests
|
Balance focus between short-term results and long-term share appreciation
|
–
|
Mix of annual and long-term incentive programs
|
–
|
66% of LTI is performance based
|
|
–
|
Cap on payout of performance shares based on relative TSR if absolute TSR is negative
|
|
–
|
CEO stock ownership requirement of 6 times base salary
|
|
|
|
|
Market Competitive Pay
|
Attract and retain executive talent
|
–
|
Benchmark pay against a peer group of similarly sized companies
|
Align pay and performance
|
–
|
Target direct compensation at the 50
th
percentile
|
|
–
|
Ensure incentive plans reward for desired behaviors and pay outcomes align with results
|
|
|
|
|
Best Governance Practices
|
Implement best governance practices into compensation programs
|
–
|
Clawback policy
|
–
|
Anti-hedging policy
|
|
–
|
Double-trigger equity vesting and severance
in a change in control
|
|
–
|
Annually review risks associated with compensation programs
|
|
–
|
Retain independent compensation consultant
|
|
–
|
Prohibit excise tax gross-ups
|
|
–
|
No excessive executive perquisites
|
Decision-Making Process
Comprised solely of independent, non-employee directors, the Committee oversees the compensation and benefits programs for our executive officers, including the NEOs. In its oversight of our 2017 executive compensation program, the Committee worked with its independent compensation consultant, and with the CEO, the President, the CFO, and the Vice President, Human Resources. The CEO and the other officers provided information and recommendations with respect to:
|
|
–
|
Company performance objectives and goals, which serve as a basis for incentive compensation;
|
|
|
–
|
attracting, retaining and motivating executive officers;
|
|
|
|
|
Compensation Discussion and Analysis
|
|
|
–
|
information regarding financial performance, budgets and forecasts as they pertain to compensation; and
|
|
|
–
|
industry and market conditions affecting AAM's business strategy.
|
The Committee exercises its independent judgment to approve the compensation level for the CEO. For all other executive officers, the Committee considers the CEO's recommendation for setting compensation levels. The compensation approved for the CEO and other executives is aligned with the Company's overall compensation philosophy. For 2017, the Committee made pay decisions based on Meridian's market analysis, Company performance and specific factors about each NEO, including individual performance, experience, internal equity, scope and responsibility of position, retention and other factors described in more detail below.
Role of the Compensation Consultant
The Committee has retained Meridian Compensation Partners LLC as its independent compensation consultant. Meridian provides the Committee with independent advice and ongoing recommendations on compensation matters related to our executive officers and non-employee directors. Meridian also provides the Committee with competitive market data, peer group analyses and updates on compensation trends and regulatory developments. Meridian also worked with the Company in evaluating its incentive programs and the selection of performance measures in response to shareholder feedback.
In the course of fulfilling its responsibilities, Meridian frequently communicates with the Chair of the Committee both prior to and following Committee meetings. Meridian also meets with management to gather information, prepare materials and review proposals to be made to the Committee. Meridian provides no other services to the Company and has no other direct or indirect business relationships with AAM or any of its subsidiaries or affiliates. Based on information provided by Meridian, the Committee assessed Meridian's independence pursuant to NYSE and SEC rules and concluded that no conflict of interest exists that prevents Meridian from independently advising the Committee.
Peer Group and Market Analysis
The Committee annually reviews the composition of our comparative peer group and makes adjustments to reflect changes in our business, as well as industry and market conditions. The overall purpose of this peer group is to provide a market frame of reference for evaluating our compensation arrangements, understanding compensation trends among comparable companies and reviewing other compensation and governance-related topics. The companies are selected primarily based on the following criteria:
|
|
–
|
total revenue and market capitalization;
|
|
|
–
|
competitors in industry segment;
|
|
|
–
|
complexity of global business and operations; and
|
|
|
–
|
competition for talent and investor capital.
|
In April 2017, we completed the transformational acquisition of MPG. This transaction nearly doubled the size of the Company and significantly changed the complexity of our business operations. Based on these changes, the Committee requested Meridian to recommend a comparative peer group to reflect the size and complexity of the combined Company. This new peer group was used to benchmark executive compensation upon the closing of the MPG acquisition. AAM's revenues are at approximately the median of the new comparative peer revenues. The new peer group consists of the following companies:
|
|
|
|
2017 Comparative Peer Group
|
|
|
Ametek Inc.
|
Fluor Corp.
|
Navistar International Corp.
|
BorgWarner Inc.
|
Flowserve Corporation
|
Rockwell Automation
|
Cooper-Standard Holdings, Inc.
|
Goodyear Tire & Rubber Co
|
Tenneco Automotive Inc.
|
Cummins Inc.
|
Illinois Tool Works, Inc.
|
Terex Corporation
|
Dana Inc.
|
Lear Corporation
|
Trinity Industries, Inc.
|
Delphi Automotive plc
|
Meritor Inc.
|
Visteon Corporation
|
Dover Corporation
|
PACCAR Inc.
|
|
Federal-Mogul Corporation
|
Parker-Hannifin Corporation
|
|
|
|
|
|
Compensation Discussion and Analysis
|
The comparative peer group above reflects the following changes made by the Committee:
|
|
|
|
|
2017 Changes
|
Companies
|
Rationale
|
Additions
|
Ametek Inc.
|
Goodyear Tire & Rubber Co.
|
More closely aligned with the size and complexity of our business
|
|
Cummins Inc.
|
Illinois Tool Works, Inc.
|
|
Delphi Automotive plc
|
PACCAR Inc.
|
|
Dover Corporation
|
Parker-Hannifin Corporation
|
|
Fluor Corp.
|
|
Removals
|
A.O. Smith Corporation
|
Tower International Inc.
|
No longer aligned with our size and business operations
|
|
Briggs & Stratton
|
USG Corporation
|
|
Donaldson Company, Inc.
|
Valmont Industries, Inc.
|
|
Kennametal Inc.
|
Woodward Inc.
|
|
Regal-Beloit Corporation
|
|
|
|
Direct Compensation Elements
|
Base Salary
In connection with AAM's acquisition of MPG in April 2017, which nearly doubled the size of the Company, the Committee adjusted NEO base salaries to reflect the size and complexity of the combined companies considering their greater levels of responsibilities resulting from the acquisition. Taking the market median of the new comparative peer group into consideration, the Committee increased base salaries effective April 1, 2017 for the NEOs, except for the CEO. Mr. Deveson's base salary took effect on April 17, 2017 when he joined AAM. NEO base salaries as of December 31, 2017 and 2016 are shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
% Change
|
|
David C. Dauch
|
|
$
|
1,150,000
|
|
|
$
|
1,150,000
|
|
—
|
%
|
Christopher J. May
|
|
$
|
500,000
|
|
|
$
|
400,000
|
|
25
|
%
|
Michael K. Simonte
|
|
$
|
750,000
|
|
|
$
|
640,000
|
|
17
|
%
|
Alberto L. Satine
|
|
$
|
610,000
|
|
|
$
|
510,000
|
|
20
|
%
|
Gregory S. Deveson
|
|
$
|
530,000
|
|
|
$
|
—
|
|
—
|
%
|
The Committee increased Mr. May's base salary for 2017, recognizing that his base salary had been below the market median since his appointment as CFO in 2015. Since that time, the Committee periodically reviewed Mr. May's compensation in consideration of his professional development and strong performance in the position. The increases for Mr. Simonte and Mr. Satine also reflect that they had not received a base salary increase since 2015.
In October 2017, the Committee determined that base salaries for the CEO and the NEOs (other than Mr. May) will remain unchanged for 2018. The Committee decided to increase Mr. May's 2018 base salary to $550,000 in consideration of his performance and pay level relative to the market median. The
Summary Compensation Table
shows the base salary earned in 2017 for each NEO.
|
|
|
|
Compensation Discussion and Analysis
|
Incentive Compensation
Compensation Program Metrics Link to Strategic Business Objectives
The Committee utilizes both short- and long-term financial metrics relative to our business objectives, as well as relative TSR as a long-term metric. The following chart demonstrates how our incentive compensation metrics correlate to our strategic business objectives.
|
|
|
|
Strategic Business Objective
|
Alignment
|
Incentive Metric
|
|
|
|
Continue to strengthen the balance sheet; provide funding for organic growth, research and development, and other capital priorities.
|
|
Cash Flow
- 2017 Annual Incentive Plan
(50% component)
- 2018 LTI Performance Shares
(50% component)
|
|
|
Develop innovative technology, including electrification. Reinvest in research and development.
|
Relative TSR
-
LTI Performance Shares, including 2018 (50% component)
|
|
Create sustainable value for shareholders.
|
|
|
Achieve profitable growth, along with the ability to be flexible as the market changes, and reduce leverage.
|
EBITDA
- 2017 LTI Performance Shares
(50% component)
- 2018 Annual Incentive Plan
(100% component)
Operating Income Margin
-
2017 Annual Incentive Plan
(50% component)
|
|
Deliver integration synergies from recent acquisitions.
|
Goal Rigor
The Committee annually reviews performance metrics, targets and payouts to ensure that they are challenging, stretch goals and are designed to mitigate risk.
Annual Incentive Compensation
Each NEO's annual incentive compensation is based on achieved results against financial targets approved by the Committee under AAM’s Incentive Compensation Plan for Executive Officers. Payment of annual cash incentive awards is permitted to the extent the Company meets or exceeds threshold performance levels and reports positive net income.
The Committee approved the use of net operating cash flow and operating income margin for determining 2017 annual cash incentives considering their alignment to our strategic business objectives. In February 2017, taking into consideration the then-pending MPG acquisition, the Committee set the target level for each performance metric based on the 2017 financial objectives for the combined companies, which included anticipated integration synergies. Recognizing the importance of achieving integration synergies, the Committee increased the rigor of the threshold, target and maximum performance levels in order to drive management to achieve the key benefits of this transformational acquisition. In addition, these performance levels were set above our 2016 actual performance.
|
|
|
|
Compensation Discussion and Analysis
|
The operating income margin target was also compared to that of our competitor peer group for the three most recent fiscal years. This target was set to drive a level of performance to exceed the top one-third of our competitor peer group. The following table describes the performance levels and results for 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighting
|
|
|
Threshold (Payout 50%)
|
|
Target
(Payout 100%)
|
|
|
Maximum (Payout 200%)
|
|
|
2017 Actual Performance
|
Net Operating Cash Flow
|
50
|
%
|
|
$195 million
|
|
$260 million
|
|
|
$300 million
|
|
|
$340.9 million
(1)
|
|
|
|
|
|
|
|
|
|
|
Operating Income Margin
|
50
|
%
|
|
8.1%
|
|
10.75
|
%
|
|
11.25
|
%
|
|
11.10%
(2)
|
(1) Excludes the impact of cash paid for restructuring and acquisition-related costs of $169.1 million. See
Reconciliation of Non-GAAP and GAAP Information
.
(2) Excludes the impact of restructuring and acquisition-related costs of $152.6 million. See
Reconciliation of Non-GAAP and GAAP Information.
Based on the weighting of each performance metric, the 2017 annual incentive awards resulted in a payout of 185% of target. No discretionary increases were made to 2017 annual incentive payouts for any NEO. The amounts paid are shown in the
Summary Compensation Table
.
Target Annual Incentive Award Opportunities
The table below shows the 2017 target annual incentive opportunities for our NEOs, stated as a percentage of base salary.
|
|
|
|
|
|
|
Target Annual Incentive Opportunity
|
|
|
2017
|
|
2016
|
|
David C. Dauch
|
135
|
%
|
125
|
%
|
Christopher J. May
|
80
|
%
|
60
|
%
|
Michael K. Simonte
|
100
|
%
|
100
|
%
|
Alberto L. Satine
|
80
|
%
|
80
|
%
|
Gregory S. Deveson (effective April 17, 2017)
|
80
|
%
|
—
|
%
|
In connection with the acquisition of MPG and based on market data, the Committee increased Mr. Dauch's annual incentive target, effective April 1, 2017, to reflect his new challenges in leading a much larger, more complex organization.
For Mr. May, the Committee increased his annual incentive target opportunity, recognizing that his bonus target had been below the market median since his appointment as CFO in 2015. Since that time, the Committee periodically reviewed Mr. May's compensation in consideration of his professional development and strong
|
|
|
|
Compensation Discussion and Analysis
|
performance in the position. As a result, the Committee decided to increase his annual incentive target to 80% effective April 1, 2017.
In October 2017, the Committee determined that the annual incentive target opportunities for each NEO will remain unchanged for 2018.
2018 Changes to Annual Incentive Compensation Program
During our shareholder outreach, emphasis was placed on our continuing to align performance measures with our business strategy. The Committee considered this feedback in selecting absolute EBITDA dollars as the sole metric for determining 2018 annual incentive payouts. Strong EBITDA performance positions AAM to generate cash, reduce debt and provide funding for profitable growth and other capital priorities. The selection of EBITDA dollars as the sole performance measure emphasizes its importance to our business strategy.
For 2018, the Committee set the annual incentive target at a level that drives management to continue to perform at a high level, achieve integration synergies, implement productivity improvements and successfully launch new product programs.
Long-Term Incentive Compensation
Our LTI program for executive officers is designed to reward NEOs for creating sustained shareholder value, to encourage ownership of Company stock, and to retain and motivate executives while aligning their interests with those of our shareholders. AAM generally makes equity grants to its executive officers and other executives on an annual basis, subject to the approval of the Committee. Grants are typically made in the first quarter of each year to coincide with the communication to executive officers of their annual cash incentive awards for the previous year’s performance. This timing increases the impact of the awards by strengthening the link between pay and performance.
2017 LTI Award Overview
|
|
|
|
|
|
|
Form of Award
|
|
Performance Shares
|
|
RSUs
|
|
LTI Mix
|
66
|
%
|
34
|
%
|
|
|
|
Objective
|
Drive and reward performance key to strategic business objectives
|
|
Encourage retention and ownership supporting shareholder alignment
|
|
|
|
|
Performance Measure
|
50% EBITDA Margin
50% RelativeTSR
|
|
Continued service with AAM
|
|
|
|
|
Competitor Peer Group for Relative TSR
|
Autoliv Inc.
Borg Warner Inc.
Dana Inc.
Lear Corporation
Magna International Inc
Meritor Inc,
Tenneco Automotive, Inc.
Visteon Corporation
|
|
Not applicable
|
|
|
|
|
Performance / Vesting Period
|
Subject to achievement of performance measures over the three-year performance period January 1, 2017 through December 31, 2019
|
|
Cliff vest on the third anniversary of the grant date
|
|
|
|
|
Conversion
|
Converted to AAM stock upon vesting
|
|
Converted to AAM stock upon vesting
|
|
Our competitor peer group is used to assess relative performance for establishing long-term incentive award performance levels. The competitor peer group consists of companies that compete with AAM for capital and operate in similar markets. This group of eight companies serves as an appropriate benchmark for long-term incentives because of the likelihood that these companies will experience similar business conditions over a three-year cycle.
|
|
|
|
Compensation Discussion and Analysis
|
The Committee approved the use of EBITDA margin and relative TSR as the 2017 LTI performance share measures considering their alignment to our strategic business objectives as described above. The target performance was set above the median of our competitor peer group based on estimated performance for the period 2015 to 2017. The maximum performance level was set above the 75th percentile of the competitor peer group in order to drive superior performance. The following table shows the threshold, target and maximum EBITDA margin and relative TSR performance levels to be used in determining the payouts for these awards for the performance period January 1, 2017 through December 31, 2019.
|
|
|
|
|
|
|
|
|
|
EBITDA Margin Performance Measure
|
|
Relative TSR Performance Measure
|
|
Performance Level
|
3 Year Cumulative
EBITDA Margin
|
|
Percent of
Target Award
Opportunity Earned
|
|
Company's TSR Percentile Rank
|
Percent of
Target Award
Opportunity Earned
|
|
Threshold
|
10
|
%
|
25
|
%
|
35
th
|
50
|
%
|
Target
|
12
|
%
|
100
|
%
|
50
th
|
100
|
%
|
Maximum
|
15
|
%
|
200
|
%
|
75
th
|
200
|
%
|
LTI Award Values
The table below shows the 2017 target long-term incentive opportunities for our NEOs.
|
|
|
|
|
|
|
|
2017 Target Long-Term Incentive Opportunity
|
|
|
($)
(1)
|
|
|
%
(2)
|
|
David C. Dauch
|
5,175,000
|
|
|
450
|
%
|
Christopher J. May
|
412,000
|
|
|
100
|
%
|
Michael K. Simonte
|
1,516,160
|
|
|
230
|
%
|
Alberto L. Satine
|
787,950
|
|
|
150
|
%
|
Gregory S. Deveson
|
1,060,000
|
|
|
200
|
%
|
(1) Amounts reflect the value the Committee considered when granting the awards for 2017. These amounts differ from the value of the awards shown in the 2017
Summary Compensation Table
and
Grants of Plan-Based Awards Table
because those tables reflect the probable outcome of the performance metrics for the performance shares.
(2) Stated as a percentage of base salary.
In connection with the acquisition of MPG and based on the market median of the new comparative peer group, the Committee increased the 2018 LTI target opportunities for the NEOs (except for Mr. Deveson) to reflect the significant increase in size and complexity of the Company. The Committee also considered the greater levels of responsibility and challenges ahead for each of the NEOs to deliver expected results. Mr. Deveson's 2018 LTI target was set when he joined AAM on April 17, 2017, after the MPG acquisition.
|
|
|
|
|
2018 Target Long-Term Incentive Opportunity
|
|
|
%
|
|
David C. Dauch
|
500
|
%
|
Christopher J. May
|
250
|
%
|
Michael K. Simonte
|
300
|
%
|
Alberto L. Satine
|
200
|
%
|
Gregory S. Deveson
|
200
|
%
|
For Mr. May, the Committee increased his LTI target opportunity, recognizing that his target had been below the market median since his appointment as CFO in 2015. Since that time, the Committee periodically reviewed Mr. May's compensation in consideration of his professional development and strong performance in the position. Accordingly, the Committee made incremental increases to Mr. May's 2018 target, resulting in the total amount shown above.
|
|
|
|
Compensation Discussion and Analysis
|
Payout of 2015 Performance Share Awards
The performance period for 2015 performance awards ended on December 31, 2017. The number of shares earned was based on relative TSR and EBITDA margin over the three-year performance period as shown below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Performance
|
|
% of Target Shares Earned
|
|
|
Award Weighting
|
|
|
Weighted Payout
|
|
Relative TSR
|
11
th
percentile
|
|
0
|
%
|
|
50
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
EBITDA Margin
|
16.2%
(1)
|
|
200
|
%
|
|
50
|
%
|
|
100
|
%
|
|
|
|
Final Payout as a % of Target
|
|
|
100
|
%
|
(1) Excludes the restructuring and acquisition-related costs and debt refinancing costs. See
Reconciliation of Non-GAAP and GAAP information
.
Payouts under the relative TSR performance share awards resulted in a zero payout to senior management because the threshold performance level was not achieved. Our shareholders did not realize value on our stock over this time period. Consequently, our senior management team did not receive any value for these awards.
|
|
|
|
Governance Point
|
|
|
Payout capped at 50% if 3-year absolute TSR is negative.
|
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
|
The performance targets for the EBITDA margin performance share awards were determined in consideration of AAM's historical EBITDA margins in 2012 - 2014. The maximum performance level was set to drive performance significantly above our peers and encourage EBITDA margin growth. Over this period, management delivered a result well in excess of targets and prior actual performance. This outstanding financial performance allowed us to reduce debt and position AAM for the strategic actions we took in 2017.
2018 Changes to LTI Program
The Committee evaluated the performance measures for 2018 LTI performance share awards to ensure that the measures are aligned with our business strategy. In 2017, AAM acquired MPG to drive a much stronger long-term business profile. We incurred higher debt levels to finance this strategic acquisition. A key objective of the Company is to strengthen our balance sheet and continue to provide for profitable growth, research and development of innovative technology and other capital priorities. As a result, free cash flow is a key driver to reduce gross leverage and ultimately convert value to shareholders through the valuation process. Accordingly, the Committee replaced the EBITDA margin performance measure with free cash flow for the 2018 LTI performance share awards. The Committee believes that relative TSR continues to be an important measure of performance because of its alignment with shareholder value creation.
Based on these considerations, the 2018 performance share awards will be based 50% on free cash flow and 50% on relative TSR. Significantly, achievement of the 2018 LTI free cash flow target would represent the highest free cash flow performance in AAM's history.
Summary of Direct Compensation
The Committee believes each pay element of direct compensation is consistent with our compensation philosophy. The Committee reviews direct compensation for each NEO and compares each compensation element to the market data of our comparative peer group. The Committee also considers individual performance, experience, internal equity, scope and responsibility of position, retention and other factors.
Direct compensation for our CEO is higher than for the other NEOs due to the CEO's breadth of executive and operating responsibilities for the entire global enterprise. The Committee does not target CEO pay as a certain multiple of the pay of the other NEOs.
For 2017, the Committee set total direct compensation for Mr. Dauch, Mr. Simonte and Mr. Satine at approximately the 50
th
percentile of the peer group. For Mr. May, who was appointed CFO in August 2015, the Committee set total direct compensation below the 50
th
percentile based on his limited time in this position. The level of total direct compensation for Mr. Deveson was determined in consideration of internal pay equity for his position as a business unit leader and was set between the 50
th
and the 75
th
percentiles.
|
|
|
|
Compensation Discussion and Analysis
|
|
|
Indirect Compensation Elements
|
Retirement and Other Benefits
Our NEOs participate in the same medical and 401(k) plans as our U.S. salaried associates. A group of approximately 60 senior executives, including the NEOs, also receive supplemental life, supplemental disability and umbrella liability insurance benefits. Our NEOs are eligible to participate in AAM’s nonqualified defined benefit pension plan and a nonqualified deferred compensation plan. These plans are described in the
Pension Benefits
and
Nonqualified Deferred Compensation
sections below.
Perquisites
AAM provides a very limited number of perquisites to senior executives, including our NEOs. Senior executives are eligible for the use of a Company-provided vehicle with AAM content. Mr. Dauch has the use of two Company-provided vehicles. Occasionally, the Company invites spouses of AAM executives to attend Company business events and pays for the spouse’s travel and related non-business expenses. AAM reimburses the executive for taxes attributable to the income associated with this benefit. We do not otherwise provide tax gross ups for executives except for those available for all salaried associates generally. Perquisites are further described in the footnotes to the
Summary Compensation Table.
|
|
Other Compensation Matters
|
Employment Agreements
The terms of Mr. Dauch's and Mr. Simonte's employment agreements are described in the
Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table
and
Potential Payments Upon Termination or Change in Control.
Change in Control Plan
The AAM Executive Officer Change in Control (CIC) Plan provides eligible executive officers severance payments and benefits in the event of termination of employment on or within two years following a CIC. Mr. Dauch and Mr. Simonte do not participate in the CIC Plan due to the severance payments and benefits provided under each of their employment agreements. The Board believes the CIC Plan enhances stockholder value by encouraging executive officers to consider CIC transactions that may be in the best interests of the Company and our stockholders while keeping them neutral to potential job loss. The Board also believes that the CIC Plan is aligned with competitive market practices and will help to retain key talent. Severance benefits provided to our NEOs are described under
Potential Payments Upon Termination or Change in Control.
Executive Compensation Recoupment (Clawback) Policy
The clawback policy authorizes the Committee to determine whether to require recoupment of performance-based incentive compensation actually paid or awarded to any executive officer if certain conditions are met. For purposes of this policy, performance-based compensation includes all annual and long-term incentive awards, whether paid in cash or equity, to the extent the awards are based on the Company's financial performance.
The Committee may require recoupment if the executive officer engaged in fraud or intentional misconduct that caused or contributed to the need for a material restatement of the Company's financial statements filed with the SEC. If the Committee determines that any performance-based compensation paid or awarded to the executive officer would not have been awarded or would have been awarded at a lower amount had it been calculated based on such restated financial statements (adjusted compensation), the Committee may seek to recover for the benefit of the Company the excess of the awarded compensation over the adjusted compensation (excess compensation). In deciding whether to seek recovery of excess compensation from the executive officer, the Committee will consider the factors it deems relevant under the circumstances and whether the assertion of a claim is in the best interests of the Company.
|
|
|
|
Compensation Discussion and Analysis
|
Executive Officer Stock Ownership Requirements
A fundamental objective of our compensation program is for executive officers to own AAM stock in order to align their interests with those of our stockholders and to reinforce the importance of making sound long-term decisions. In 2017, the Committee requested Meridian to provide an analysis of the stock ownership requirements of our peer group. Based on this analysis, the Committee increased the stock ownership requirements for the CEO from five times to six times base salary and from two times to three times base salary for the Chief Financial Officer. The Company's current stock ownership requirements are shown below.
|
|
|
|
|
Multiple of
Base Salary
|
|
Chief Executive Officer
|
6
|
|
Chief Financial Officer; President
|
3
|
|
Other Executive Officers
|
2
|
|
Executive officers have five years to meet these requirements or, for new executive officers, five years from the date of appointment. Shares owned directly, unvested RSUs and performance shares (at target) count toward the requirement. These ownership levels must be maintained as long as the person is an executive officer of AAM. NEOs who have not met these requirements may not sell shares. The Committee annually reviews each executive officer’s stock ownership level according to this policy. Each NEO has met or is on track to meet the ownership requirements established for his position.
Anti-Hedging and Anti-Pledging Policy
AAM prohibits employees and non-employee directors from entering into transactions that may result in a financial benefit if our stock price declines, or any hedging transaction involving our stock, including the use of financial derivatives, short sales or any similar transactions. Pledging of AAM stock is also prohibited.
Risk Assessment of Compensation Policies and Practices
We conducted an annual risk assessment for the Committee to determine whether the risks arising from our fiscal year 2017 compensation practices are reasonably likely to have a material adverse effect on the Company. The risk assessment considered AAM’s annual and long-term incentive programs and pay mix, performance measures used to calculate payouts, and pay philosophy and governance. Our annual assessment focuses on the program for executive officers in light of their decision-making authority and influence, but also considers the compensation of other salaried associates. Our methodology was reviewed by the Committee and Meridian.
We have designed our compensation programs with specific features to address potential risks while rewarding our executive officers and other associates for achieving long-term financial and strategic objectives through prudent business judgment and appropriate risk taking. Based on our risk assessment and consideration of various mitigating factors, we concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
Tax Deductibility of Compensation
Section 162(m) of the Code (Section 162(m)) generally disallows a tax deduction to public companies for compensation over $1 million paid to certain “covered employees,” which historically included a company's CEO and the three other most highly compensated executive officers, other than the CFO, employed by the company at year end. Pursuant to the Tax Cuts and Jobs Act, enacted on December 22, 2017, the definition of “covered employees” under Section 162(m) was amended to include the CFO. Once an officer is a “covered employee,” the officer’s pay will remain subject to Section 162(m) for so long as the officer is receiving compensation from the company. Further, the Tax Cuts and Jobs Act repealed the exclusion for “qualified performance‑based compensation” under Section 162(m) effective January 1, 2018, except for compensation payable pursuant to a written binding contract in place before November 2, 2017 that is not materially modified thereafter (a grandfathered arrangement). For 2017, although we had plans in place that were intended to permit the award of qualified performance-based compensation under Section 162(m), the Committee did not necessarily limit executive compensation to deductible amounts. Beginning in 2018, there will be no qualified performance-based compensation exemption, other than for grandfathered arrangements. Outstanding awards that previously qualified for the performance-based compensation exclusion under Section 162(m) may or may not qualify as grandfathered awards.
|
|
|
|
Compensation Discussion and Analysis
|
Reconciliation of Non-GAAP and GAAP Information
AAM has included in the proxy statement adjusted operating income margin, adjusted net operating cash flow and adjusted EBITDA margin, which are financial metrics used in our Incentive Compensation Plan for Executive Officers and the 2012 Omnibus Incentive Plan. These metrics are non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in the tables below in accordance with SEC rules.
Management believes that these non-GAAP financial measures are useful to both management and its shareholders in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures, as presented by AAM, may not be comparable to similarly titled measures reported by other companies.
|
|
|
|
|
2017 Annual Incentive Performance Metrics
|
Twelve Months Ended
|
|
|
December 31, 2017
|
|
Adjusted Operating Income Margin:
|
(in millions)
|
|
Operating income, as reported
|
$
|
543.0
|
|
Restructuring and acquisition-related costs
|
110.7
|
|
Non-recurring items:
|
|
Acquisition-related fair value inventory adjustment
|
24.9
|
|
Other
(1)
|
(0.5
|
)
|
Adjustment for purchase accounting (primarily depreciation and amortization) for the acquisition of MPG and USM Mexico not included target
|
35.7
|
|
Impact of financial performance for acquisitions not included in target
|
(18.2
|
)
|
Adjusted operating income
|
$
|
695.6
|
|
|
|
Net sales, as reported
|
$
|
6,266.0
|
|
|
|
Adjusted operating income margin
(2)
|
11.10
|
%
|
|
|
Net Operating Cash Flow:
|
|
Cash provided by operations, as reported
|
$
|
647.0
|
|
Purchases of property, plant and equipment, net of proceeds from sale of property, plant and equipment and from government grants
|
(475.2
|
)
|
Cash payments for restructuring and acquisition-related costs
|
109.3
|
|
Acquisition-related settlement of pre-existing accounts payable balances with acquired entities
|
35.2
|
|
Interest payments upon settlement of acquired company debt
|
24.6
|
|
Net operating cash flow
(2)
|
$
|
340.9
|
|
|
|
(1) Includes the impact of a change in accounting principle and a pension settlement.
(2) The Committee established the performance goals for our annual incentive plan prior to the closing of the MPG and USM Mexico acquisitions. As a result, the impact of purchase accounting adjustments and the financial impact of USM Mexico were not known at the time that the performance goals were established. Accordingly, our GAAP reported operating income and net operating cash flow, for purposes, of calculating performance achievements under the annual incentive plan, were adjusted for certain restructuring and acquisition-related costs and non-recurring items as detailed above.
|
|
|
|
Compensation Discussion and Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Long-term Incentive Performance Metric
|
Twelve Months Ended
|
|
|
December 31,
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA:
|
(in millions)
|
|
Net income
|
$
|
337.5
|
|
|
$
|
240.7
|
|
|
$
|
235.6
|
|
Interest expense
|
195.6
|
|
|
93.4
|
|
|
99.2
|
|
Income tax expense
|
2.5
|
|
|
58.3
|
|
|
37.1
|
|
Depreciation and amortization
|
428.5
|
|
|
201.8
|
|
|
198.4
|
|
EBITDA
|
$
|
964.1
|
|
|
$
|
594.2
|
|
|
$
|
570.3
|
|
Restructuring and acquisition-related costs
|
110.7
|
|
|
26.2
|
|
|
—
|
|
Debt refinancing and redemption costs
|
3.5
|
|
|
—
|
|
|
0.8
|
|
Non-recurring items:
|
|
|
|
|
|
Acquisition-related fair value inventory adjustment
|
24.9
|
|
|
—
|
|
|
—
|
|
Other
(1)
|
(0.5
|
)
|
|
(1.0
|
)
|
|
—
|
|
Adjusted EBITDA
|
$
|
1,102.7
|
|
|
$
|
619.4
|
|
|
$
|
571.1
|
|
|
|
|
|
|
|
Net sales, as reported
|
$
|
6,266.0
|
|
|
$
|
3,948.0
|
|
|
$
|
3,903.1
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
17.6
|
%
|
|
15.7
|
%
|
|
14.6
|
%
|
|
|
|
|
|
|
3-year cumulative EBITDA margin
|
16.2
|
%
|
|
|
|
|
(1) For 2017, includes the impact of a change in accounting principle and a pension settlement.
|
|
|
|
Compensation Committee Report
|
Will I receive a copy of AAM's Annual Report?
We have either mailed the annual report to you with this proxy statement or sent you a notice with the web address for accessing the annual report online.
How can I receive a copy of AAM's 10-K?
There are three ways to obtain, free of charge, a copy of our annual report on Form 10-K for the fiscal year ended December 31, 2017.
1. Visit the Investor Relations section of our website at
www.aam.com
2. Write to our Investor Relations Department at One Dauch Drive, Detroit, Michigan 48211-1198
3. Search the SEC's EDGAR database at
www.sec.gov
|
|
Electronic Delivery of Proxy Materials
|
Can I access AAM's proxy solicitation materials electronically?
Most stockholders can elect to view future proxy statements and annual reports online instead of receiving copies in the mail. You can choose this option and save us the cost of printing and mailing these documents by:
|
|
–
|
following the instructions provided on your proxy card, voter instruction form, or notice
|
|
|
–
|
going to
www.envisionreports.com/axl
and following the instructions provided
|
If you choose to receive future proxy statements and annual reports electronically, you will receive an e-mail message next year containing the Internet address to access these documents as well as voting instructions.
|
|
2019 Stockholder Proposals and Nominations
|
Proposals for Inclusion in 2019 Proxy Statement
If you intend to present a proposal at next year's annual meeting and you wish to have the proposal included in the proxy statement for that meeting, the Secretary of AAM must receive your proposal in writing, at the address below, no later than November 20, 2018.
Director Nomination for Inclusion in 2019 Proxy Statement
In February 2018, our Board amended AAM's by-laws to permit a shareholder or a group of up to 20 shareholders that has owned at least 3% of our outstanding common stock for at least three years to nominate and include in our proxy statement candidates for our Board, subject to certain requirements. Written notice of any such nomination must be received by the Company's Secretary on or before January 5, 2019 but no earlier than December 5, 2018. The requirements for such notice are set forth in our by-laws, a copy of which can be found on our website at
http://investor.aam.com/governance.
Other Proposals and Nominations
In addition, AAM’s by-laws require stockholders intending to present any matter for consideration at the 2019 annual meeting of stockholders, other than through inclusion in our proxy materials, to notify AAM’s Secretary in writing at the address below on or before February 23, 2019, but no earlier than February 3, 2019.
Where to Send All Proposals and Nominations
Proponents must submit stockholder proposals and recommendations for nomination as a director in writing to the
Secretary, American Axle & Manufacturing Holdings, Inc.,One Dauch Drive, Detroit, Michigan 48211-1198
.
The Secretary will forward the proposals and recommendations to the Nominating/Corporate Governance Committee for consideration.
The Board is soliciting your proxy, and the expense of soliciting proxies will be borne by AAM. Proxy materials were distributed by mail by Computershare Trust Company, N.A. In addition, AAM will reimburse brokers, banks and other holders of record for their expenses in forwarding proxy materials to stockholders.
We have retained Georgeson Inc. to assist in the solicitation of proxies for an estimated fee of $20,000, plus reasonable and customary expenses. Georgeson may be contacted at (866) 413-5899. In addition, our officers and other employees may solicit proxies personally or by telephone or e-mail. They will receive no special compensation for these services.
We do not know of any other matters that will be considered at the annual meeting. If any other appropriate business should properly come before the meeting, the individuals named in the accompanying proxy card will have discretionary authority to vote according to their best judgment.
For the Board of Directors,
David E. Barnes
Vice President, General Counsel & Secretary
Detroit, Michigan
March 22, 2018
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
Appendix
American Axle & Manufacturing Holdings, Inc.
2018 Omnibus Incentive Plan
ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
1.1 Establishment
. American Axle & Manufacturing Holdings, Inc., a Delaware corporation, establishes an incentive compensation plan to be known as the Amended and Restated American Axle & Manufacturing Holdings, Inc. 2018 Omnibus Incentive Plan, as set forth in this document. This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards. This Plan shall become effective on May 3, 2018 (the “
Effective Date
”) and shall remain in effect as provided in Section 1.3.
1.2 Purpose of this Plan
. The purpose of this Plan is to foster and promote the long-term financial success of the Company and materially increase shareholder value by (a) motivating superior performance by means of performance-related incentives, (b) encouraging and providing for the acquisition of an ownership interest in the Company by Employees as well as Non-Employee Directors, and (c) enabling the Company to attract and retain qualified and competent persons to serve as members of an outstanding management team and the Board of Directors of the Company upon whose judgment, interest, and performance are required for the successful and sustained operations of the Company.
1.3 Duration of this Plan
. Unless sooner terminated as provided herein, this Plan shall terminate ten (10) years from the Effective Date. After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions.
ARTICLE 2. DEFINITIONS
Whenever used in this Plan, the following terms shall have the meanings set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.
2.1 “Annual Award Limit
” or “
Annual Award Limits
” have the meaning set forth in Section 4.3.
2.2
“
Award
” means, individually or collectively, a grant under this Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards or Other Stock-Based Awards, in each case subject to the terms of this Plan.
2.3 “Award Agreement
”
means either (i) a written or electronic agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under this Plan, including any amendment or modification thereof, or (ii) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, Internet or other non-paper Award Agreements, and the use of electronic, Internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant. The Committee shall have the exclusive authority to determine the terms of an Award Agreement evidencing an Award granted under this Plan, subject to the provisions herein. The terms of an Award Agreement need not be uniform among all Participants or among similar types of Awards.
2.4
“
Beneficial Owner
” or “
Beneficial Ownership
” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.5
“
Board
” or
“
Board of Directors
” means the Board of Directors of the Company.
2.6
“
Cash-Based Award
” means an Award, denominated in cash, granted to a Participant as described in Article 12.
2.7
“
Code
” means the U.S. Internal Revenue Code of 1986, as amended from time to time and the applicable regulations and guidance promulgated thereunder and any successor or similar provision.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
2.8
“
Committee
” means the Compensation Committee of the Board or a subcommittee thereof or any other committee designated by the Board to administer this Plan. The members of the Committee shall be appointed from time to time by and shall serve at the discretion of the Board. If the Committee does not exist or cannot function for any reason, the Board may take any action under this Plan that would otherwise be the responsibility of the Committee in which case references to the “Committee” shall be deemed references to the Board. The Committee shall be constituted to comply with the requirements of Rule 16(b) of the Exchange Act and any applicable listing or governance requirements of any securities exchange on which the Shares are listed;
provided
,
however
, that, if any Committee member is found not to have met the qualification requirements of Section 16(b) of the Exchange Act, any actions taken or Awards granted by the Committee shall not be invalidated by such failure to so qualify.
2.9
“
Change in Control
” means any one of the following:
(a) any person or entity, including a “group” as defined in Section 13(d)(3) of the Exchange Act other than the Company or a wholly owned Subsidiary thereof or any employee benefit plan of the Company or any of its Subsidiaries, becomes the beneficial owner of the Company’s securities having 30% or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of Directors of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business);
(b) as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, less than a majority of the combined voting power of the then outstanding securities of the Company or any successor corporation or entity entitled to vote generally in the election of the Directors of the Company or such other corporation or entity after such transaction are held in the aggregate by the holders of the Company’s securities entitled to vote generally in the election of Directors of the Company immediately prior to such transaction;
(c) during any period of two consecutive years, individuals who at the beginning of any such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of each Director of the Company first elected during such period was approved by a vote of at least two-thirds of the Directors of the Company then still in office who were Directors of the Company at the beginning of any such period; or
(d) the stockholders of the Company approve a plan of complete liquidation of the Company or the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a liquidation of the Company into a wholly owned subsidiary.
2.10
“
Common Stock
” means the common stock of the Company, par value $0.01 per share, or such other class of share or other securities as may be applicable under Section 4.4 of this Plan.
2.11
“
Company
” means American Axle & Manufacturing Holdings, Inc., and any successor thereto as provided in Section 23.23.
2.12
“
Director
” means any individual who is a member of the Board of Directors of the Company.
2.13 “Disability”
means
either of the following: (a) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering Employees.
2.14
“
Dividend Equivalent
” has the meaning set forth in Article 18.
2.15 “Effective Date
” has the meaning set forth in Section 1.1.
2.16 “Employee
” means any individual performing services for the Company or a Subsidiary and designated as an employee of the Company or the Subsidiary on its payroll records. An Employee shall not include any individual during any period he or she is classified or treated by the Company or Subsidiary as an independent contractor, a consultant or an employee of an employment, consulting or temporary agency or any other entity other than the Company or Subsidiary, without regard to whether such individual is subsequently determined to have been, or is subsequently retroactively reclassified, as a common-law employee of the Company or Subsidiary during such period. An individual shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
Company or between the Company or any Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91st day of such leave, any Incentive Stock Option held by a Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonqualified Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.
2.17
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto and the regulations and guidance promulgated thereunder.
2.18 “Fair Market Value
”
or “
FMV
” means, with respect to a Share, the fair market value thereof as of the relevant date of determination, as determined in accordance with the valuation methodology approved by the Committee (based on objective criteria) from time to time. In the absence of any alternative valuation methodology approved by the Committee, Fair Market Value shall be deemed to be equal to the closing selling price of a Share on the trading day immediately preceding the date on which such valuation is made on the New York Stock Exchange (“
NYSE
”), or such established national securities exchange as may be designated by the Committee or, in the event that the Common Stock is not listed for trading on the NYSE or such other national securities exchange as may be designated by the Committee but is quoted on an automated system, in any such case on the valuation date (or, if there were no sales on the valuation date, the average of the highest and lowest quoted selling prices as reported on said composite tape or automated system for the most recent day during which a sale occurred). The definition of FMV may differ depending on whether FMV is in reference to the grant, exercise, vesting, settlement or payout of an Award.
2.19
“
Grant Date
” means the date an Award is granted to a Participant pursuant to this Plan.
2.20
“
Grant Price
” means the price established at the time of grant of an SAR pursuant to Article 7.
2.21
“
Incentive Stock Option
”
or “
ISO
” means an Award granted pursuant to Article 6 that is designated as an Incentive Stock Option and that is intended to meet the requirements of Code Section 422 or any successor provision.
2.22
“
Insider
” shall mean an individual who is, on the relevant date, an officer (as defined in Rule 16a-1(f) of the Exchange Act (or any successor provision)) or Director of the Company, or a more than 10% Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.
2.23
“
Non-Employee Director
” means a Director who is not an Employee.
2.24
“
Nonqualified Stock Option
”
or “
NQSO
” means an Award granted pursuant to Article 6 that is not intended to meet the requirements of Code Section 422, or that otherwise does not meet such requirements.
2.25
“
Option
” means an Award granted to a Participant pursuant to Article 6, which Award may be an Incentive Stock Option or a Nonqualified Stock Option.
2.26
“
Option Price
” means the price at which a Share may be purchased by a Participant pursuant to an Option.
2.27
“
Other Stock-Based Award
” means an equity-based or equity‑related Award not otherwise described by the terms of this Plan that is granted pursuant to Article 12.
2.28
“
Participant
” means any eligible individual as set forth in Article 5 to whom an Award is granted.
2.29
“
Performance Measures
” means measures, as described in Article 14, upon which performance goals are based.
2.30
“
Performance Period
” means the period of time during which performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.
2.31
“
Performance Share
” means an Award granted pursuant to Article 10.
2.32
“
Performance Unit
” means an Award granted pursuant to Article 11.
2.33
“
Period of Restriction
” means the period when Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals or upon the occurrence of other events as determined by the Committee, in its discretion) as provided in Articles 8 and 9.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
2.34 “Person
”
shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
2.35
“
Plan
” means the American Axle & Manufacturing Holdings, Inc. 2018 Omnibus Incentive Plan, as may be amended from time to time.
2.36
“
Restricted Stock
” means an Award granted pursuant to Article 8.
2.37
“
Restricted Stock Unit
” means an Award granted pursuant to Article 9.
2.38 “Retirement”
means the Participant’s voluntary resignation at any time (i) after attaining age 65, (ii) after attaining age 55 but prior to age 65 with ten or more years of continuous service with the Company or a Subsidiary or (iii) after attaining age 60 but prior to age 65 with five or more years of continuous service with the Company or a Subsidiary.
2.39
“
Share
” means a share of Common Stock.
2.40
“
Stock Appreciation Right
” or “
SAR
”
means an Award granted pursuant to Article 7.
2.41
“
Subsidiary
” means (i) a corporation or other entity (domestic or foreign) with respect to which the Company, directly or indirectly, has the power, whether through the ownership of voting securities, by contract or otherwise, to elect at least a majority of the members of such corporation’s board of directors or analogous governing body, or (ii) any other corporation or entity in which the Company, directly or indirectly, has an equity or similar interest and which the Committee designates as a Subsidiary for purposes of this Plan.
2.42
“
Successor
”
has the meaning set forth in Section 23.23.
2.43
“
Termination of Employment
” means the termination of the Participant’s employment with the Company and the Subsidiaries, regardless of the reason for the termination of employment.
2.44
“
Termination of Directorship
” means the time when a Non‑Employee Director ceases to be a Non-Employee Director for any reason, including, but not by way of limitation, a termination by resignation, failure to be elected or death.
2.45
“
Third-Party Service Provider
” means any consultant, agent, advisor or independent contractor who renders bona fide services to the Company or a Subsidiary that (a) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction, (b) do not directly or indirectly promote or maintain a market for the Company’s securities, and (c) are provided by a natural person who has contracted directly with the Company or Subsidiary to render such services.
ARTICLE 3. ADMINISTRATION
3.1 General
. The Committee shall be responsible for administering this Plan, subject to this Article 3 and the other provisions of this Plan. The Committee may employ attorneys, consultants, accountants, agents and other individuals, any of whom may be an Employee, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any such individuals. No member of the Committee shall be liable for any action taken or not taken in reliance upon any such information and/or advice. All actions taken and all interpretations and determinations made by the Committee shall be made in its sole discretion and shall be final, binding and conclusive upon the Participants, the Company or Subsidiary, and all other interested individuals.
3.2 Authority of the Committee
. Subject to any express limitations set forth in this Plan, the Committee shall have full and exclusive discretionary power and authority to take such actions as it deems necessary and advisable with respect to the administration, interpretation and implementation of this Plan including, but not limited to, the following:
(a) To determine from time to time which of the persons eligible under the Plan shall be granted Awards, when and how each Award shall be granted, what type or combination of types of Awards shall be granted, the provisions of each Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Shares pursuant to an Award and the number of Shares subject to an Award;
(b) To construe and interpret this Plan and Awards granted under it, and to establish, amend, and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in this Plan or in an Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make this Plan fully effective;
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
(c) To approve forms of Award Agreements for use under this Plan;
(d) To determine Fair Market Value of a Share in accordance with Section 2.18 of this Plan;
(e) To amend this Plan, an Award or any Award Agreement after the date of grant subject to the terms of this Plan;
(f) To adopt sub-plans and/or special provisions applicable to stock awards regulated by the laws of a jurisdiction other than and outside of the United States. Such sub-plans and/or special provisions may take precedence over other provisions of this Plan, but unless otherwise superseded by the terms of such sub-plans and/or special provisions, the provisions of this Plan shall govern;
(g) To authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Board;
(h) To determine whether Awards will be settled in Shares, cash or in any combination thereof;
(i) To determine whether Awards will provide for Dividend Equivalents;
(j) To establish a program whereby Participants designated by the Committee may elect to receive Awards under this Plan in lieu of compensation otherwise payable in cash; and
(k) To impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by a Participant or other subsequent transfers by a Participant of any Shares, including, without limitation, restrictions under an insider trading policy and restrictions as to the use of a specified brokerage firm for such resales or other transfers.
3.3 Delegation
. To the extent not prohibited by applicable laws, rules and regulations, the Committee may delegate to (i) one or more of its members, (ii) one or more officers of the Company or any Subsidiary or (iii) one or more agents or advisors such administrative duties or powers as it may deem appropriate or advisable under such conditions and limitations as the Committee may set at the time of such delegation or thereafter. The Committee or any individuals to whom it has delegated duties or powers as aforesaid may employ one or more individuals to render advice with respect to any responsibility the Committee or such individuals may have under this Plan. Notwithstanding the foregoing, the Committee may not delegate its authority (i) to make Awards to Employees (A) who are Insiders or (B) who are officers of the Company who are delegated authority by the Committee hereunder, or (ii) pursuant to Section 21 of this Plan. For purposes of this Plan, reference to the Committee shall be deemed to refer to any subcommittee, subcommittees, or other persons or groups of persons to whom the Committee delegates authority pursuant to this Section 3.3.
ARTICLE 4. SHARES SUBJECT TO THIS PLAN AND MAXIMUM AWARDS
4.1 Number of Shares Authorized and Available for Awards
. Subject to adjustment as provided under the Plan, the maximum number of Shares that are available for Awards under this Plan shall be 3,600,000 Shares plus (i) any reserved Shares not issued or subject to outstanding grants under the Amended and Restated 2012 Omnibus Incentive Plan (the "Prior Plan") on the Effective Date and (ii) the number of Shares underlying any award granted under the Prior Plan that expires, terminates, or is canceled or forfeited and which the shares related thereto are again available for grant under the terms of the Prior Plan. Such Shares may be authorized and unissued Shares, Shares that have been reacquired by the Company, treasury Shares or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee. Any of the authorized Shares may be used for any type of Award under this Plan, and any or all of the Shares may be allocated to Incentive Stock Options.
4.2 Share Usage
. The number of Shares remaining available for issuance will be reduced by the number of Shares subject to outstanding Awards and, for Awards that are not denominated by Shares, by the number of Shares actually delivered upon settlement or payment of the Award. For purposes of determining the number of Shares that remain available for issuance under this Plan, the number of Shares related to an Award granted under this Plan that terminates by expiration, forfeiture, cancellation or otherwise without the issuance of the Shares, are settled through the issuance of consideration other than Shares (including cash), shall be available again for grant under this Plan. The following Shares, however, shall not be available again for grant under this Plan;
(a) Shares not issued or delivered as a result of net settlement of an outstanding Option or SAR;
(b) Shares delivered to or withheld by the Company to pay the exercise price of or withholding taxes with respect to an Option or a SAR; and
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
(c) Shares repurchased with proceeds from the payment of the exercise price of an Option or a SAR.
4.3 Annual Award Limits
. Subject to adjustments pursuant to Section 4.4 and, in the case of Non-Employee Directors, Section 16.1:
(a) the maximum number of Shares that may be issued pursuant to Options and SARs granted to any Participant in any calendar year shall be 2,000,000 Shares;
(b) the maximum number of Shares that may be paid to any Participant in any calendar year under an Award of Restricted Stock, Restricted Stock Units, Performance Shares or Other Stock Based Awards shall be 2,000,000 Shares determined as of the date of grant; and
(c) the maximum aggregate amount that may be paid to any Participant in any calendar year under an Award of Performance Units, Cash-Based Awards or any other Award that is payable in cash shall be $6,000,000, determined as of the date of grant.
4.4 Adjustments in Authorized Shares
. Adjustment in authorized Shares available for issuance under this Plan or under an outstanding Award and adjustments in Annual Award Limits shall be subject to the following provisions:
(a) In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, separation, reclassification, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, distribution of stock or property of the Company, combination of Shares, exchange of Shares, dividend in kind, extraordinary cash dividend, rights offering to purchase Shares at a price that is substantially below FMV or any other similar corporate event or transaction (“
Corporate Transactions
”), the Committee, in order to preserve, but not increase, Participants’ rights under this Plan, shall substitute or adjust, as applicable, (1) the number and kind of Shares that may be issued under this Plan or under particular forms of Awards, (2) the number and kind of Shares subject to outstanding Awards (including by payment of cash to a Participant), (3) the Option Price or Grant Price applicable to outstanding Awards, and (4) the Annual Award Limits and other value determinations applicable to outstanding Awards. The Committee, in its discretion, shall determine the methodology or manner of making such substitution or adjustment subject to applicable laws, rules and regulations.
(b) In addition to the adjustments permitted under paragraph 4.4(a) above, the Committee, in its sole discretion, may make such other adjustments or modifications in the terms of any Award that it deems appropriate to reflect any Corporate Transaction, including, but not limited to, modifications of performance goals and changes in the length of Performance Periods, subject to the limitations set forth in Section 14.2.
(c) The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan. Unless otherwise determined by the Committee, such adjusted Awards shall be subject to the same restrictions and vesting or settlement schedule to which the underlying Award is subject.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility to Receive Awards
. Individuals eligible to participate in this Plan include all Employees, Directors and Third-Party Service Providers.
5.2 Participation in this Plan
. Subject to the provisions of this Plan, the Committee may, from time to time, select from all individuals eligible to participate in this Plan, those individuals to whom Awards shall be granted and shall determine, in its sole discretion, the nature of any and all terms permissible by law and the amount of each Award.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options
. Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of an Option shall be evidenced by an Award Agreement which shall specify whether the Option is in the form of a Nonqualified Stock Option or an Incentive Stock Option.
6.2 Option Price
. The Option Price for each grant of an Option shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement evidencing such Option;
provided
,
however
, the Option Price must be at least equal to 100% of the FMV of a Share as of the Option’s Grant Date, subject to adjustment as provided for under Section 4.4.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
6.3 Term of Option
. The term of an Option granted to a Participant shall be determined by the Committee, in its sole discretion;
provided
,
however
, no Option shall be exercisable later than the tenth anniversary date of its grant. If upon the expiration of the term of an Option (other than an Incentive Stock Option), a Participant is prohibited from trading in the Shares by applicable laws, rules or regulations or the Company’s insider trading plan as in effect from time to time, the term of the Option shall be automatically extended to the 30th day following the expiration of such prohibition;
provided
,
however
, that this provision shall not apply if prohibited by applicable laws, rules and regulations in effect from time to time.
6.4 Exercise of Option
. An Option shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.
6.5 Payment of Option Price
. An Option shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures that may be authorized by the Committee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares. A condition of the issuance of the Shares as to which an Option shall be exercised shall be the payment of the Option Price. The Option Price of any exercised Option shall be payable to the Company in accordance with one of the following methods:
(a) in cash or its equivalent;
(b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the Option Price;
(c) by a cashless (broker-assisted) exercise in accordance with procedures authorized by the Committee from time to time;
(d) through net share settlement or similar procedure involving the withholding of Shares subject to the Option with a value equal to the Option Price;
(e) by any combination of (a), (b), (c) and (d); or
(f) any other method approved or accepted by the Committee in its sole discretion.
Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars or Shares, as applicable.
6.6 Special Rules Regarding ISOs
. The terms of any Incentive Stock Option (“
ISO
”) granted under this Plan shall comply in all respects with the provisions of Code Section 422, or any successor provision thereto, as amended from time to time. Notwithstanding any provision of the Plan to the contrary, an Option granted in the form of an ISO to a Participant shall be subject to the following rules:
(a) Special ISO definitions
:
(i) “
Parent Corporation
” shall mean as of any applicable date a corporation in respect of the Company that is a parent corporation within the meaning of Code Section 424(e).
(ii) “
ISO Subsidiary
” shall mean as of any applicable date any corporation in respect of the Company that is a subsidiary corporation within the meaning of Code Section 424(f).
(iii) A “
10% Owner
” is an individual who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or its Parent Corporation or any ISO Subsidiary.
(b) Eligible Employees
. An ISO may be granted solely to eligible Employees of the Company, Parent Corporation, or ISO Subsidiary.
(c) Specified as an ISO
. An Award Agreement evidencing the grant of an ISO shall specify that such grant is intended to be an ISO.
(d) Option Price
. The Option Price for each grant of an ISO shall be determined by the Committee in its sole discretion and shall be specified in the Award Agreement;
provided
,
however
, the Option Price must be at least equal 100% of the Fair Market Value of a Share as of the ISO’s Grant Date (in the case of 10% Owners, the Option Price may not be less than 110% of such Fair Market Value), subject to adjustment provided for under Section 4.4.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
(e) Right to Exercise
. Any ISO granted to a Participant shall be exercisable during his or her lifetime solely by such Participant.
(f) Exercise Period
. The period during which a Participant may exercise an ISO shall not exceed ten years (five years in the case of a Participant who is a 10% Owner) from the date on which the ISO was granted.
(g) Termination of Employment
. In the event a Participant terminates employment due to death or Disability (as defined in Code Section 22(e)(3)), the Participant (or, in the case of death, the person(s) to whom the Option is transferred by will or the laws of descent and distribution) shall have the right to exercise the Participant’s ISO award during the period specified in the applicable Award Agreement solely to the extent the Participant had the right to exercise the ISO on the date of his death or Disability; as applicable,
provided
,
however
, that such period may not exceed one year from the date of such termination of employment or if shorter, the remaining term of the ISO. In the event a Participant terminates employment for reasons other than death or Disability, the Participant shall have the right to exercise the Participant’s ISO during the period specified in the applicable Award Agreement solely to the extent the Participant had the right to exercise the ISO on the date of such termination of employment;
provided
,
however
, that such period may not exceed three months from the date of such termination of employment or if shorter, the remaining term of the ISO.
(h) Dollar Limitation
. To the extent that the aggregate Fair Market Value of (i) the Shares with respect to which Options designated as Incentive Stock Options plus (ii) the shares of stock of the Company, Parent Corporation and any ISO Subsidiary with respect to which other Incentive Stock Options are exercisable for the first time by a holder of such Incentive Stock Options during any calendar year under all plans of the Company and ISO Subsidiary exceeds $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of the preceding sentence, Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the time the Option or other incentive stock option is granted.
(i) Duration of Plan
. No ISO may be granted more than ten years after the earlier of (a) adoption of this Plan by the Board and (b) the Effective Date.
(j) Notification of Disqualifying Disposition
. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO, such Participant shall notify the Company of such disposition within 30 days thereof. The Company shall use such information to determine whether a disqualifying disposition as described in Code Section 421(b) has occurred.
(k) Transferability
. No ISO may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution;
provided
,
however
, that at the discretion of the Committee, an ISO may be transferred to a grantor trust under which Participant making the transfer is the sole beneficiary.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 Grant of SARs
. SARs may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of SARs shall be evidenced by an Award Agreement.
7.2 Grant Price
. The Grant Price for each grant of an SAR shall be determined by the Committee and shall be specified in the Award Agreement evidencing the SAR;
provided
,
however
, the Grant Price must be at least equal to 100% of the FMV of a Share as of the Grant Date, subject to adjustment as provided for under Section 4.4.
7.3 Term of SAR
. The term of an SAR granted to a Participant shall be determined by the Committee, in its sole discretion;
provided
,
however
, no SAR shall be exercisable later than the tenth anniversary date of its grant.
7.4 Exercise of SAR
. An SAR shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which terms and restrictions need not be the same for each grant or for each Participant.
7.5 Notice of Exercise
. An SAR shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Committee, or by complying with any alternative procedures that may be authorized by the Committee, setting forth the number of Shares with respect to which the SAR is to be exercised.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
7.6 Settlement of SARs
. Upon the exercise of an SAR, pursuant to a notice of exercise properly completed and submitted to the Company in accordance with Section 7.5, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of (a) and (b) below:
(a) The excess of the Fair Market Value of a Share on the date of exercise over the Grant Price.
(b) The number of Shares with respect to which the SAR is exercised.
Payment shall be made in cash, Shares or a combination thereof as specified in the Award Agreement.
ARTICLE 8. RESTRICTED STOCK
8.1 Grant of Restricted Stock
. Restricted Stock may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of Restricted Stock shall be evidenced by an Award Agreement.
8.2 Nature of Restrictions
. Each grant of Restricted Stock shall subject to a Restriction Period that shall lapse upon the satisfaction of such conditions and restrictions as are determined by the Committee in its sole discretion and set forth in an applicable Award Agreement. Such conditions or restrictions may include, without limitation, one or more of the following:
(a) A requirement that a Participant pay a stipulated purchase price for each Share of Restricted Stock;
(b) Restrictions based upon the achievement of specific performance goals;
(c) Time-based restrictions on vesting following the attainment of the performance goals;
(d) Time-based restrictions; and/or
(e) Restrictions under applicable laws and restrictions under the requirements of any stock exchange or market on which such Shares are listed or traded.
8.3 Issuance of Shares
. To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions or restrictions applicable to such Shares have been satisfied or lapse. Shares of Restricted Stock covered by each Restricted Stock grant shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapsed (including satisfaction of any applicable tax withholding obligations).
8.4 Shareholder Rights
. Unless otherwise determined by the Committee and set forth in a Participant’s applicable Award Agreement, to the extent permitted or required by law a Participant holding Shares of Restricted Stock granted hereunder shall be granted full rights as a shareholder (including voting rights) with respect to those Shares during the Period of Restriction.
ARTICLE 9. RESTRICTED STOCK UNITS
9.1 Grant of Restricted Stock Units
. Restricted Stock Units may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, in its sole discretion. A grant of a Restricted Stock Unit or Restricted Stock Units shall not represent the grant of Shares but shall represent a promise to deliver a corresponding number of Shares or the value of each Share based upon the completion of service, performance conditions, or such other terms and conditions as specified in the applicable Award Agreement over the Restriction Period. Each grant of Restricted Stock Units shall be evidenced by an Award Agreement.
9.2 Nature of Restrictions
. Each grant of Restricted Stock Units shall be subject to a Restriction Period that shall lapse upon the satisfaction of such conditions and restrictions as are determined by the Committee in its sole discretion and set forth in an applicable Award Agreement. Such conditions or restrictions may include, without limitation, one or more of the following:
(a) A requirement that a Participant pay a stipulated purchase price for each Restricted Stock Unit;
(b) Restrictions based upon the achievement of specific performance goals;
(c) Time-based restrictions on vesting following the attainment of the performance goals;
(d) Time-based restrictions; and/or
(e) Restrictions under applicable laws or under the requirements of any stock exchange on which Shares are listed or traded.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
9.3 Settlement and Payment Restricted Stock Units
. Unless otherwise elected by the Participant or otherwise provided for in the Award Agreement, Restricted Stock Units shall be settled upon the date such Restricted Stock Units vest. Such settlement may be made in Shares, cash or a combination thereof, as specified in the Award Agreement.
ARTICLE 10. PERFORMANCE SHARES
10.1 Grant of Performance Shares
. Performance Shares may be granted to Participants in such number, and upon such terms and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of Performance Shares shall be evidenced by an Award Agreement.
10.2 Value of Performance Shares
. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the Grant Date. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met over the specified Performance Period, shall determine the number of Performance Shares that shall be paid to a Participant.
10.3 Earning of Performance Shares
. After the applicable Performance Period has ended, the number of Performance Shares earned by the Participant over the Performance Period shall be determined as a function of the extent to which the applicable corresponding performance goals have been achieved. This determination shall be made solely by the Committee.
10.4 Form and Timing of Payment of Performance Shares
. The Committee shall pay at the close of the applicable Performance Period, or as soon as practicable thereafter, any earned Performance Shares in the form of cash or in Shares or in a combination thereof, as specified in a Participant’s applicable Award Agreement. Any Shares paid to a Participant under this Section 10.4 may be subject to any restrictions deemed appropriate by the Committee.
ARTICLE 11. PERFORMANCE UNITS
11.1 Grant of Performance Units
. Subject to the terms and provisions of this Plan, Performance Units may be granted to a Participant in such number, and upon such terms and at any time and from time to time as shall be determined by the Committee, in its sole discretion. Each grant of Performance Units shall be evidenced by an Award Agreement.
11.2 Value of Performance Units
. Each Performance Unit shall have an initial notional value equal to a dollar amount determined by the Committee, in its sole discretion. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met over the specified Performance Period, will determine the number of Performance Units that shall be settled and paid to the Participant.
11.3 Earning of Performance Units
. After the applicable Performance Period has ended, the number of Performance Units earned by the Participant over the Performance Period shall be determined as a function of the extent to which the applicable corresponding performance goals have been achieved. This determination shall be made solely by the Committee.
11.4 Form and Timing of Payment of Performance Units
. The Committee shall pay at the close of the applicable Performance Period, or as soon as practicable thereafter, any earned Performance Units in the form of cash or in Shares or in a combination thereof, as specified in a Participant’s applicable Award Agreement. Any Shares paid to a Participant under this Section 11.4 may be subject to any restrictions deemed appropriate by the Committee.
ARTICLE 12. OTHER STOCK-BASED AWARDS AND CASH-BASED AWARDS
12.1 Grant of Other Stock-Based Awards and Cash-Based Awards
(a) The Committee may grant Other Stock-Based Awards not otherwise described by the terms of this Plan, including, but not limited to, the grant or offer for sale of unrestricted Shares and the grant of deferred Shares or deferred Share units, in such amounts and subject to such terms and conditions, as the Committee shall determine, in its sole discretion. Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares.
(b) The Committee, at any time and from time to time, may grant Cash-Based Awards to a Participant in such amounts and upon such terms as the Committee shall determine, in its sole discretion.
12.2 Value of Other Stock-Based Awards and Cash-Based Awards
.
(a) Each Other Stock-Based Award shall be expressed in terms of Shares or units based on Shares, as determined by the Committee, in its sole discretion.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
(b) Each Cash-Based Award shall specify a payment amount or payment range as determined by the Committee, in its sole discretion. If the Committee exercises its discretion to establish performance goals, the value of Cash-Based Awards paid to the Participant will depend on the extent to which such performance goals are met.
12.3 Payment of Other Stock-Based Awards and Cash-Based Awards
. Payment, if any, with respect to Cash-Based Awards and Other Stock-Based Award shall be made in accordance with the terms of the applicable Award Agreement, in cash, Shares or a combination of both as determined by the Committee in its sole discretion.
ARTICLE 13. TRANSFERABILITY OF AWARDS AND SHARES
13.1 Transferability of Awards
. Except as provided in Section 13.2, during a Participant’s lifetime, Options and SARs shall be exercisable only by the Participant. Awards shall not be transferable other than by will or the laws of descent and distribution or pursuant to a domestic relations order entered into by a court of competent jurisdiction. No Awards shall be subject, in whole or in part, to attachment, execution or levy of any kind. Any purported transfer in violation of this Section 13.1 shall be null and void.
13.2 Committee Action
. Notwithstanding Section 13.1, the Committee may, subject to applicable laws, rules and regulations and such terms and conditions as it shall specify, determine that any or all Awards shall be transferable, for no consideration to a Permitted Transferee. Any Award transferred to a Permitted Transferee shall be further transferable only by last will and testament or the laws of descent and distribution or, for no consideration, to another Permitted Transferee of the Participant. “
Permitted Transferees
” include (i) a Participant’s family member, (ii) one or more trusts established in whole or in part for the benefit of one or more of such family members, (iii) one or more entities which are beneficially owned in whole or in part by one or more such family members, or (iv) a charitable or not-for-profit organization. No Award may be transferred for value without shareholder approval.
13.3 Restrictions on Share Transferability.
The Committee may impose such restrictions on any Shares acquired by a Participant under this Plan as it may deem advisable, including, without limitation, minimum holding period requirements, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed or traded or under any blue sky or state securities laws applicable to such Shares.
ARTICLE 14. PERFORMANCE MEASURES
14.1 Performance Measures
. Any Award to a Participant may be subject to performance goals as determined at the discretion of the Committee, which may include, but are not limited to, any of the following:
(a) Book value or earnings per Share;
(b) Cash flow, free cash flow or operating cash flow;
(c) Earnings before or after any of, or any combination of, interest, taxes, depreciation, or amortization;
(d) Expenses/costs;
(e) Gross, net or pre-tax income (aggregate or on a per-share basis);
(f) Net income as a percentage of sales;
(g) Gross or net operating margins or income, including operating income;
(h) Gross or net sales or revenues;
(i) Gross profit or gross margin;
(j) Improvements in capital structure, cost of capital or debt reduction;
(k) Market share or market share penetration;
(l) Growth in managed assets;
(m) Reduction of losses, loss ratios and expense ratios;
(n) Asset turns, inventory turns or fixed asset turns;
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
(o) Operational performance measures;
(p) Profitability ratios (pre or post tax);
(q) Profitability of an identifiable business unit or product;
(r) Return measures (including return on assets, return on equity, return on investment, return on capital, return on invested capital, gross profit return on investment, gross margin return on investment, economic value added or similar metric);
(s) Share price (including growth or appreciation in share price and total shareholder return);
(t) Strategic business objectives (including objective project milestones);
(u) Transactions relating to acquisitions or divestitures; or
(v) Working capital.
Any Performance Measure(s) may, as the Committee in its sole discretion deems appropriate, (i) relate to the performance of the Company or any Subsidiary as a whole or any business unit or division of the Company or any Subsidiary or any combination thereof, (ii) be compared to the performance of a group of comparator companies, or published or special index, (iii) be based on change in the Performance Measure over a specified period of time and such change may be measured based on an arithmetic change over the specified period (e.g., cumulative change or average change), or percentage change over the specified period (e.g., cumulative percentage change, average percentage change or compounded percentage change), (iv) relate to or be compared to one or more other Performance Measures, or (v) any combination of the foregoing. Subject to Section 23.1, the Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to any Performance Measures.
14.2 Evaluation of Performance
. The Performance Measures shall, to the extent possible, be determined in accordance with generally accepted accounting principles consistently applied on a business unit, divisional, subsidiary or consolidated basis or any combination thereof. The Committee may provide in any Award that any evaluation of performance may include or exclude the impact, if any, on reported financial results of any events that occurs during a Performance Period including, but not limited to: (a) asset write-downs, (b) litigation or claim judgments or settlements, (c) changes in tax laws, accounting principles or other laws or provisions, (d) reorganization or restructuring programs, (e) acquisitions or divestitures, (f) foreign exchange gains and losses and (g) gains and losses that are treated as unusual or infrequently occurring items within the meaning of the accounting standards of the Financial Accounting Standard Board or such comparable successor term.
14.3 Adjustment of Awards
. The Committee shall retain the discretion to adjust any Awards, either on a formula or discretionary basis or any combination, as the Committee determines, in its sole discretion.
ARTICLE 15. TERMINATION OF EMPLOYMENT; TERMINATION OF DIRECTORSHIP AND TERMINATION AS A THIRD-PARTY SERVICE PROVIDER
The Committee shall specify at or after the time of grant of an Award the provisions governing the disposition of an Award in the event of a Participant’s Termination of Employment or Termination of Directorship. Subject to applicable laws, rules and regulations, in connection with a Participant’s termination, as well as Section 23.1, the Committee shall have the discretion to accelerate the vesting, exercisability or settlement of, eliminate the restrictions and conditions applicable to, or extend the post-termination exercise period of an outstanding Award. Such provisions shall be determined by the Committee in its sole discretion and may be specified in the applicable Award Agreement or determined at a subsequent time. The Committee’s decisions need not be uniform among all Award Agreements and Participants and may reflect distinctions based on the reasons for termination. In addition, the Committee shall determine, in its sole discretion, the circumstances constituting a termination as a Third-Party Service Provider and shall set forth those circumstances in each Award Agreement entered into with each Third‑Party Service Provider.
ARTICLE 16. NON-EMPLOYEE DIRECTOR AWARDS
16.1 Awards to Non-Employee Directors
. The Board or Committee shall determine and approve all Awards to Non-Employee Directors. The terms and conditions of any grant of any Award to a Non-Employee Director shall be set forth in an Award Agreement. The aggregate maximum Fair Market Value (determined as of the Grant Date) of the Shares with respect to Awards granted under this Plan in any calendar year to any
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
Non-Employee Director when added to retainer fees, meeting fees and any other compensation earned in respect of services as a Non-Employee Director for such a year shall not exceed $1,000,000.
16.2 Awards in Lieu of Fees
. The Board or Committee may permit a Non-Employee Director the opportunity to receive an Award in lieu of payment of all or a portion of future director fees (including but not limited to cash retainer fees and meeting fees) or other type of Awards pursuant to such terms and conditions as the Board or Committee may prescribe and set forth in an applicable sub-plan or Award Agreement.
ARTICLE 17. EFFECT OF A CHANGE IN CONTROL
17.1 Change in Control
. Subject to Section 23.1,
if a Participant has in effect an employment, retention, Change in Control, severance or similar agreement with the Company or any Subsidiary or is subject to a policy or plan that discusses the effect of a Change in Control on a Participant’s Awards, then such agreement, plan or policy shall control. In all other cases, unless provided otherwise in an Award agreement or by the Committee prior to the date of the Change in Control, in the event of a Change in Control:
(a) If a Successor so agrees, some or all outstanding Awards shall be assumed, or replaced with the same type of award with similar terms and conditions, by a Successor in the Change in Control transaction. If applicable, each Award that is assumed by a Successor shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities that would have been issuable to a Participant upon the consummation of such Change in Control had the Award been exercised, vested or earned immediately prior to such Change in Control, and other appropriate adjustments in the terms and conditions of the Award shall be made. Subject to Section 23.1, upon the termination of a Participant’s employment with a Successor in connection with or within twenty-four (24) months following the Change in Control for any reason other than an involuntary termination by a Successor for cause or a voluntary termination by the Participant without good reason (as cause and good reason (or analogous terms) are defined by an applicable employment agreement or a change in control plan or policy (including, without limitation, the AAM Executive Officer Change in Control Plan) or, if not applicable, the policies generally applicable to employees of a Successor), all of the Participant’s Awards that are in effect as of the date of such termination shall be vested in full or deemed earned in full (assuming the target performance goals provided under such Award were met, if applicable) effective on the date of such termination.
(b) Subject to Section 23.1, to the extent a Successor in the Change in Control transaction does not assume the Awards or issue replacement awards as provided in clause (a), then, unless provided otherwise in an Award agreement or by the Committee, immediately prior to the date of the Change in Control all Awards that are then held by Participants shall be cancelled in exchange for the right to receive the following:
(i) For each Option or SAR, a cash payment equal to the excess of the Change in Control price of the Shares covered by the Option or SAR that is so cancelled over the purchase or grant price of such Shares under the Award;
(ii) For each Share of Restricted Stock and each Restricted Stock Unit, the Change in Control price per Share in cash or such other consideration as the Company or the shareholders of the Company receive in such Change in Control;
(iii) For all Performance Shares and/or Performance Units that are earned but not yet paid, a cash payment equal to the value of the Performance Share and/or Performance Unit;
(iv) For all Performance Shares and Performance Units for which the performance period has not expired, a cash payment equal to the product of (x) and (y) where (x) is the Award the Participant would have earned based on target performance and (y) is a fraction, the numerator of which is the number of calendar months that the Participant was employed by the Company during the performance period (with any partial month counting as a full month for this purpose) and the denominator of which is the number of months in the performance period;
(v) For all other Awards that are earned but not yet paid, a cash payment equal to the value of the other Awards;
(vi) For all other Awards that are not yet earned, a cash payment equal to either the amount that would have been due under such Award(s) if any performance goals (as measured at the time of the Change in Control) were to be achieved at the target level through the end of the performance period or a cash payment based on the value of the Award as of the date of the Change in Control; and
(vii) For all Dividend Equivalents, a cash payment equal to the value of the Dividend Equivalents as of the date of the Change in Control.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
If the value of an Award is based on the Fair Market Value of a Share, Fair Market Value shall be deemed to mean the per share Change in Control price. The Committee shall determine the per share Change in Control price paid or deemed paid in the Change in Control transaction.
ARTICLE 18. DIVIDENDS AND DIVIDEND EQUIVALENTS
The Committee may provide Participants with the right to receive dividends or payments equivalent to dividends (“
Dividend Equivalents
”) or interest with respect to an outstanding Award, which payments can either be paid in cash or deemed to have been reinvested in Shares, or a combination thereof, as the Committee shall determine, in each case, subject to all applicable laws, rules and regulations, including, without limitation, Code Section 409A. Dividends or Dividend Equivalents with respect to Awards that vest based on the achievement of Performance Measures shall be accumulated until such Award is earned and vested, and the dividends or Dividend Equivalents shall not be paid if the Performance Measures and time-based vesting restrictions are not satisfied. Dividends or Dividend Equivalents with respect to Awards that are subject to time-based vesting restrictions shall be accumulated until such Awards vest in accordance with their terms, and the dividends or Dividend Equivalents shall not be paid if the time-based vesting restrictions are not satisfied. Notwithstanding the foregoing, no dividends or Dividend Equivalents shall be paid with respect to Options or Stock Appreciation Rights.
ARTICLE 19. BENEFICIARY DESIGNATION
Each Participant under this Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Plan is to be paid in case of his death before he receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such beneficiary designation, benefits remaining unpaid or rights remaining unexercised at the Participant’s death shall be paid to or exercised by the Participant’s executor, administrator or legal representative.
ARTICLE 20. RIGHTS OF PARTICIPANTS
20.1 Employment
. Nothing in this Plan or an Award Agreement shall (a) interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant’s employment with the Company or any Subsidiary at any time or for any reason not prohibited by law or (b) confer upon any Participant any right to continue his employment or service as a Director or Third-Party Service Provider for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company or any Subsidiary and, accordingly, subject to Articles 3 and 21, this Plan and the benefits hereunder may be amended or terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, any Subsidiary, the Committee or the Board.
20.2 Participation
. No individual shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award. The Committee may grant more than one Award to a Participant and may designate an individual as a Participant for overlapping periods of time.
20.3 Rights as a Shareholder
. Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date on which the Participant becomes the record holder of the Shares.
ARTICLE 21. AMENDMENT AND TERMINATION
21.1 Amendment and Termination of this Plan and Awards
. Subject to applicable laws, rules and regulations and Section 21.3 of this Plan, the Board may at any time amend or terminate this Plan or amend or terminate any outstanding Award. Notwithstanding the foregoing, no amendment of this Plan shall be made without shareholder approval if shareholder approval is required pursuant to rules promulgated by any stock exchange or quotation system on which Shares are listed or quoted or by applicable U.S. state corporate laws or regulations, applicable U.S. federal laws or regulations and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under this Plan.
21.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events
. Subject to Section 14.4, the Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under this Plan. By accepting an Award under this Plan, a Participant agrees to any adjustment to the Award made pursuant to this Section 21.2 without further consideration or action.
21.3 Awards Previously Granted
. Notwithstanding any other provision of this Plan to the contrary, other than Sections 21.2, 21.4 and 23.15, no termination or amendment of this Plan or an Award Agreement shall adversely affect in any material way any Award previously granted under this Plan, without the written consent of the Participant holding such Award.
21.4 Amendment to Conform to Law
. Notwithstanding any other provision of this Plan to the contrary, the Committee shall have the broad authority to amend this Plan, an Award or an Award Agreement, to take effect retroactively or otherwise, as deemed necessary or advisable in order to comply with, take into account changes in, or interpretations of, applicable tax laws, securities laws, employment laws, accounting rules and other applicable laws, rules, rulings and regulations promulgated thereunder. By accepting an Award under this Plan, a Participant agrees to any amendment made pursuant to this Section 21.4 to this Plan and any Award without further consideration or action.
21.5 Repricing of Options and Stock Appreciation Rights
. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of Shares), the terms of outstanding Awards may not be amended, without stockholder approval, to reduce the exercise price of outstanding Options or Stock Appreciation Rights, or to cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards, or Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options or Stock Appreciation Rights.
ARTICLE 22. TAX WITHHOLDING
22.1 Tax Withholding
. The Company may require any individual entitled to receive a payment of an Award to remit to the Company prior to payment, an amount sufficient to satisfy any applicable federal, state, local and foreign tax withholding requirements. The Company shall also have the right to deduct from all cash payments made to a Participant (whether or not such payment is made in connection with an Award) any applicable taxes required to be withheld with respect to such Award.
22.2 Share Withholding
. With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, upon the settlement of Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of an Award granted hereunder (collectively and individually referred to as a “
Share Payment
”), the Committee may permit or require a Participant to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares from a Share Payment (or repurchase Shares that were previously issued) having a Fair Market Value on the date the withholding is to be determined equal to the minimum statutory withholding requirement or such other rate as will not result in any adverse accounting consequences, as determined by the Company in its sole discretion.
ARTICLE 23. GENERAL PROVISIONS
23.1 Minimum Vesting
. All Awards shall be subject to a minimum time-based vesting restriction or Performance Period, as applicable, of not less than one year; provided, however, the requirements set forth in this sentence shall not apply (i) to acceleration in the event of a Termination of Employment or Termination of Directorship on or following a Change in Control, or due to Retirement, death or Disability, (ii) to substitute Awards subject to time-based vesting restrictions no less than the restrictions of the Awards being replaced, and (iii) Awards involving an aggregate number of Shares not in excess of 5% of the total shares authorized for issuance under this Plan.
23.2 Forfeiture Events
. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events as determined by the Committee in its sole discretion.
23.3 Legend
. All certificates for Shares delivered under this Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any exchange upon which the Shares are then
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
listed, and any applicable securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
23.4 Gender and Number
. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.
23.5 Severability
. In the event any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
23.6 Requirements of Law
. The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
23.7 Delivery of Title
. The Company shall have no obligation to issue or deliver evidence of title for Shares issued under this Plan prior to:
(a) Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and
(b) Completion of any registration or other qualification of the Shares under any applicable national, state or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.
23.8 Inability to Obtain Authority
. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
23.9 Investment Representations
. The Committee may require any individual receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.
23.10 Employees Based Outside of the United States
. Notwithstanding any provision of this Plan to the contrary, subject to Section 23.1, in order to comply with the laws in other countries in which the Company or any Subsidiaries operate or have Employees, Directors or Third-Party Service Providers, the Committee, in its sole discretion, shall have the power and authority to:
(a) Determine which Subsidiaries shall be covered by this Plan;
(b) Determine which Employees, Directors or Third-Party Service Providers outside the United States are eligible to participate in this Plan;
(c) Modify the terms and conditions of any Award granted to Employees, Directors or Third-Party Service Providers outside the United States to comply with applicable foreign laws;
(d) Establish sub-plans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any sub-plans and modifications to Plan terms and procedures established under this Section 23.10 by the Committee shall be attached to this Plan document as appendices; and
(e) Take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.
Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate applicable law.
23.11 Uncertificated Shares
. To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be affected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
23.12 Unfunded Plan
. Participants shall have no right, title or interest whatsoever in or to any investments that the Company or any Subsidiaries may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other individual. To the extent that any individual acquires a right to
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
receive payments from the Company or any Subsidiary under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company or the Subsidiary, as the case may be. All payments to be made hereunder shall be paid from the general funds of the Company, or the Subsidiary, as the case may be, and no special or separate fund shall be established, and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in this Plan.
23.13 No Fractional Shares
. No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
23.14 Retirement and Welfare Plans
. Neither Awards made under this Plan nor Shares or cash paid pursuant to such Awards may be included as “compensation” for purposes of computing the benefits payable to any Participant under the Company’s or any Subsidiary’s retirement plans (both qualified and nonqualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.
23.15 Deferrals
.
(a) Notwithstanding any contrary provision in this Plan or an Award Agreement, if any provision of this Plan or an Award Agreement contravenes any regulations or guidance promulgated under Code Section 409A or would cause an Award to be subject to additional taxes, accelerated taxation, interest and/or penalties under Code Section 409A, such provision of this Plan or Award Agreement may be modified by the Committee without consent of the Participant in any manner the Committee deems reasonable or necessary. In making such modifications the Committee shall attempt, but shall not be obligated, to maintain, to the maximum extent practicable, the original intent of the applicable provision without contravening the provisions of Code Section 409A. Moreover, any discretionary authority that the Committee may have pursuant to this Plan shall not be applicable to an Award that is subject to Code Section 409A to the extent such discretionary authority would contravene Code Section 409A or the guidance promulgated thereunder.
(b) If a Participant is a “specified employee” as defined under Code Section 409A and the Participant’s Award is to be settled on account of the Participant’s separation from service (for reasons other than death) and such Award constitutes “deferred compensation” as defined under Code Section 409A, then any portion of the Participant’s Award that would otherwise be settled during the six-month period commencing on the Participant’s separation from service shall be settled as soon as practicable following the conclusion of the six-month period (or following the Participant’s death if it occurs during such six-month period).
(c) In accordance with the procedures authorized by, and subject to the approval of, the Committee, Participants may be given the opportunity to defer the payment or settlement of an Award to one or more dates selected by the Participant;
provided
,
however
, that the terms of any deferrals must comply with all applicable laws, rules and regulations, including, without limitation, Code Section 409A. No deferral opportunity shall exist with respect to an Award unless explicitly permitted by the Committee on or after the time of grant.
23.16 Nonexclusivity of this Plan
. The adoption of this Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.
23.17 No Constraint on Corporate Action
. Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or a Subsidiary to take any action that such entity deems to be necessary or appropriate. The proceeds received by the Company from the sale of Shares pursuant to Awards will be used for general corporate purposes.
23.18 Conflicts
. In the event of any conflict or inconsistency between the Plan and any Award Agreement, this Plan shall govern and the Award Agreement shall be interpreted to minimize or eliminate any such inconsistency.
23.19 Recoupment
. Notwithstanding anything in this Plan to the contrary, all Awards granted under this Plan and any payments made under this Plan shall be subject to claw-back or recoupment as permitted or mandated by applicable law, rules, regulations or Company policy as enacted, adopted or modified from time to time. For the avoidance of doubt, this provision shall apply to any gains realized upon exercise or settlement of an Award.
|
|
|
|
Appendix A - Omnibus Incentive Plan
|
23.20 Delivery and Execution of Electronic Documents
. To the extent permitted by applicable law, the Company may (i) deliver by email or other electronic means (including posting on a website maintained by the Company or by a third party under contract with the Company) all documents relating to this Plan or any Award thereunder (including without limitation, prospectuses and other securities requirements) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements) and (ii) permit Participants to electronically execute applicable Plan documents (including, but not limited to, Award Agreements) in a manner prescribed to the Committee.
23.21 No Representations or Warranties Regarding Tax Effect
. Notwithstanding any provision of this Plan to the contrary, the Company, Subsidiaries, the Board and the Committee neither represent nor warrant the tax treatment under any federal, state, local or foreign laws and regulations thereunder (individually and collectively referred to as the “
Tax Laws
”) of any Award granted or any amounts paid to any Participant under this Plan including, but not limited to, when and to what extent such Awards or amounts may be subject to tax, penalties and interest under the Tax Laws.
23.22 Indemnification
. Subject to applicable laws, rules and regulations and the Company’s Certificate of Incorporation as it may be amended from time to time, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Article 3, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any good faith action taken or failure to act under this Plan, (ii) any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his/her own behalf. Notwithstanding the foregoing, no individual shall be entitled to indemnification if such loss, cost, liability or expense is a result of his/her own willful misconduct. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Articles of Incorporation or By-laws, as a matter of law or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
23.23 Successors
. Subject to Article 17, all obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company (each, a “
Successor
”), whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
23.24 Governing Law
. The Plan and each Award Agreement shall be governed by the laws of the State of Delaware excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan to the substantive law of another jurisdiction.
|
|
|
|
|
|
|
|
|
|
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on May 3, 2018.
|
|
|
|
Vote by Internet
• Go to
www.envisionreports.com/axl
• Or scan the QR code with your smartphone
• Follow the steps outlined on the secure website
|
|
|
Vote by telephone
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
• Follow the instructions provided by the recorded message
|
Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
|
x
|
|
|
|
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
|
Proposals —
|
The Board of Directors recommends a vote
FOR
all nominees listed in Proposal 1, FOR Proposal 2, FOR Proposal 3, and FOR Proposal 4.
|
1
|
Election of Directors:
|
For
|
Against
|
Abstain
|
|
|
For
|
Against
|
Abstain
|
|
For
|
Against
|
Abstain
|
+
|
|
01 - David C. Dauch
|
o
|
o
|
o
|
02 - William L. Kozyra
|
o
|
o
|
o
|
03 - Peter D. Lyons
|
o
|
o
|
o
|
|
|
|
|
|
For
|
Against
|
Abstain
|
|
|
|
For
|
Against
|
Abstain
|
|
2
|
Approval on an advisory basis, of the compensation of the Company's named executive officers.
|
|
o
|
o
|
o
|
3
|
Approval of the American Axle & Manufacturing Holdings, Inc. 2018 Omnibus Incentive Plan
|
o
|
o
|
o
|
|
|
|
|
|
1 Year
|
2 Years
|
3 Years
|
Abstain
|
|
|
|
|
|
|
4
|
Ratification of appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the year ending December 31, 2018.
|
o
|
o
|
o
|
o
|
|
|
|
|
|
|
|
In their discretion, the proxies are authorized to the extent permitted by law to vote on any and all other matters as may properly come before the meeting, including the authority to vote to adjourn the meeting.
|
|
|
|
|
|
|
|
|
|
|
|
B
|
Non-Voting Items
|
|
|
|
|
Change of Address
— Please print new address below.
|
Meeting Attendance
|
|
|
|
|
|
Mark box to the right if you plan to attend the Annual Meeting.
|
|
|
|
|
|
|
|
C
|
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
|
|
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
This section must be completed for your instructions to be executed.
|
|
Date (mm/dd/yyyy) — Please print date below.
|
Signature 1 — Please keep signature within the box.
|
Signature 2 — Please keep signature within the box.
|
|
/ /
|
|
|
|
|
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
Proxy — American Axle & Manufacturing Holdings, Inc.