DEF 14A of Vse Corp
Filed Mar 25, 2025 · FY20240000102752-25-000029
DIRECTOR NOMINEES
DIRECTOR NOMINEES
DIRECTOR NOMINEES
| Name | Director Since | Occupation | Committee Membership | | Ralph E. Eberhart | 2007 | Non-Executive Chairman; General, U.S. Air Force (Ret.), formerly Commander of several major Commands and Unified Commands, including, Commander of U.S. Northern Command and North American Aerospace Defense Command (NORAD) | | | John A. Cuomo | 2019 | President and Chief Executive Officer | | | Anita D. Britt | 2022 | Former Chief Financial Officer at Perry Ellis International | AC*; CHRC | | Edward P. Dolanski | 2022 | Former President, U.S. Government Services at Boeing Global Services and Former CEO at Aviall, Inc. | AC, CHRC | | Mark E. Ferguson III | 2017 | Admiral, US Navy (Ret.), Former Commander of the U.S. Naval Forces Europe/Africa and Vice Chief of Naval Operations | AC, NCGC* | | Lloyd E. Johnson | 2022 | Former Global Managing Director, Finance and Internal Audit, Accenture Corporation | CHRC, NCGC | | John E. Potter | 2014 | President and CEO of the Metropolitan Washington Airports Authority | CHRC*, NCGC | | Bonnie K. Wachtel | 1991 | Principal and Director of Wachtel & Co., Inc. | AC, NCGC |
DIRECTOR NOMINEES
*= Chair of committee; AC= Audit Committee; CHRC= Compensation and Human Resources Committee; NCGC= Nominating and Corporate Governance Committee
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| What am I voting on? Stockholders are being asked to elect each of the eight director nominees named in this Proxy Statement to hold office until the annual meeting of stockholders in 2026 and until his or her successor is elected and qualified. Voting Recommendation: FOR the election of each of the eight director nominees. Vote Required: A director will be elected by a plurality of the votes cast, subject to the Company's director voting policy as discussed in this proposal. Broker Discretionary Voting Allowed? No, broker non-votes have no effect. Withheld Votes: No effect. |
ELECTION OF DIRECTORS
Director Skills, Qualifications and Experience The Board has identified key skills, qualifications and experience that are important to be represented on the Board as a whole in light of the Company's current business strategy and expected needs. The Nominating and Corporate Governance Committee believes that the Board is currently well-balanced and able to address the Company’s needs. As evidenced by the summary of key skills and biographical information provided for VSE's director nominees, its directors have significant and diverse experiences that continue to enhance their contribution to the Board.
ELECTION OF DIRECTORS
| Skills and Qualifications | | Ralph Eberhart | John Cuomo | Anita Britt | John Potter | Bonnie Wachtel | Mark Ferguson III | Edward Dolanski | Lloyd Johnson | | | Executive Leadership | | | | | | | | | | | Public Company Board | | | | | | | | | | | Aviation Industry | | | | | | | | | | | Finance | | | | | | | | | | | Accounting | | | | | | | | | | | Strategy | | | | | | | | | | | M&A and Integrations | | | | | | | | | | | Cybersecurity/IT | | | | | | | | | | | Human Capital | | | | | | | | | | | Corporate Governance | | | | | | | | | | | Risk Management | | | | | | | | | | | ESG | | | | | | | | |
ELECTION OF DIRECTORS
Director Nominees Each nominee listed below is currently serving as a VSE director and was elected by the stockholders at the 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”). Each nominee elected as a director will serve until the next annual meeting of stockholders and until his or her successor is elected and qualified. If any nominee should become unable to serve for any reason, the proxies will be voted for such substitute nominee as shall be designated by the Board. The Company's director voting policy provides that in an uncontested election, any nominee for director who is a current director and who receives a greater number of votes “withheld” from their election than votes “for” their election shall tender their resignation as a director to the Board promptly following the certification of the election results. The Nominating and Corporate Governance Committee will consider each resignation tendered and recommend to the Board whether to accept or reject it. The eight nominees for election as VSE directors, their committee assignments, if elected, following the Annual Meeting and certain information regarding them are as follows:
ELECTION OF DIRECTORS
| JOHN CUOMO | | | Age: 51 Director Since: 2019 Other public company boards: None | Background: Chief Executive Officer, President and Director of VSE since April 2019. Mr. Cuomo brings over 25 years of experience in the aerospace, distribution and services market industry. Prior to joining VSE, Mr. Cuomo served as Vice President and General Manager of Boeing Distribution Services Inc., an aircraft parts and consumables distributor and subsidiary of The Boeing Company, from October 2018 to March 2019. Prior to Boeing’s acquisition of the Aerospace Solutions Group of KLX Inc., a commercial aerospace and defense distributor of fasteners and consumables, Mr. Cuomo served as Group President and General Manager for KLX Aerospace Solutions from December 2014 to October 2018. Previously, Mr. Cuomo served in multiple roles and functions at B/E Aerospace from April 2000 to December 2014, including Vice President & General Manager and Senior Vice President, Global Sales, Marketing & Business Development. He has a Bachelor of Science degree in International Business from Florida Atlantic University, a Juris Doctorate degree from the University of Miami, a Master of Business Administration degree from the University of Florida and is a graduate of the Harvard Business School Advanced Management Program. In addition to his role at VSE, Mr. Cuomo serves on the Board of Directors for FDH Aero, an Audax Group private equity portfolio company and global aerospace and defense supply chain solutions provider, specialized in hardware, electrical, consumables and expendable products for global OEM and aftermarket customers. | | | Key Qualifications and Skills: Experience includes 25+ years as a public company leader in the aerospace, distribution and services market industry, including as an officer of Boeing Distribution Services Inc., KLX Aerospace Solutions and B/E Aerospace. |
ELECTION OF DIRECTORS
| ANITA D. BRITT | | | Age: 61 Director Since: 2022 Independent Board Committees: •Audit (Chair) •Compensation & Human Resources Other public company boards: •urban-gro, Inc. •Smith & Wesson Brands, Inc. | Background: Former Chief Financial Officer at Perry Ellis International from 2009 to 2017. Previously, Ms. Britt held senior financial leadership positions at Jones Apparel Group and Urban Brands and served on the Board of Delta Apparel, Inc. She currently serves on the Board of Directors of urban-gro and Smith & Wesson Brands. Ms. Britt is a Certified Public Accountant; a Board Leadership Fellow as designated by the National Association of Corporate Directors; and holds a Carnegie Mellon Cybersecurity Oversight Certification and a Harvard Kennedy School Executive Education Certificate in Cybersecurity: The Intersection of Policy and Technology. | | | Key Qualifications and Skills: Ms. Britt has extensive corporate finance and capital markets experience, including mergers and acquisitions, in both public and private sectors. She brings board and business leadership experience. Ms. Britt is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. |
ELECTION OF DIRECTORS
| EDWARD P. DOLANSKI | | | Age: 57 Director Since: 2022 Independent Board Committees: •Audit •Compensation & Human Resources Other public company boards: None | Background: Mr. Dolanski held a variety of senior leadership roles at The Boeing Company. During his 13 years with Boeing, Mr. Dolanski served as President, U.S. Government Services at Boeing Global Services; President, Boeing Global Services & Support; and President and Chief Executive Officer of Aviall Inc., a Boeing subsidiary and the world's largest provider of new aviation parts and related aftermarket services. Before joining Boeing, Mr. Dolanski was with the Raytheon Company for 8 years in a variety of roles, including Vice President, Mission Support, Network Centric Systems; Vice President, Aftermarket Businesses and Customer Support, Raytheon Aircraft Company (Hawker & Beechcraft); and Chief Information Officer, Aircraft Integration Systems. His experience also includes 14 years with Walmart Stores where he held progressively senior positions at the corporate office within information technology and supply chain management. Mr. Dolanski holds a Corporate Governance certification from The Wharton School. Mr. Dolanski serves on several private company boards including Valence Surface Technologies, Lynx Software Technologies and as Chairman of MD Helicopters. | | | Key Qualifications and Skills: Experience in commercial aftermarket aerospace, business and general aviation distribution and maintenance, repair and overhaul (MRO) through senior leadership roles at Boeing and Raytheon in a career spanning more than 30 years. Governance experience as a member of the Catalyze Partners Board of Advisors, Business Executives for National Security (BENS) and the Texas Blockchain Council Advisory Board, and as a member of the Texas Diversity Council board of directors where he has been recognized with several diversity awards, including DiversityFIRST and CEO Champions of Diversity. Mr. Dolanski serves on several private company boards including Valence Surface Technologies, Lynx Software Technologies and as Chairman of MD Helicopters. |
ELECTION OF DIRECTORS
| RALPH E. EBERHART | | | Age: 78 Director Since: 2007 Independent - Board Chair Other public company boards: •Amentum Holdings, Inc. | Background: General, U.S. Air Force (Ret.), formerly Commander of several major Commands and Unified Commands, including Commander of U.S. Northern Command, North American Aerospace Defense Command (NORAD), U.S. Space Command, Air Force Space Command, Air Combat Command & U.S. Forces, Japan. He also served as Vice Chief of the U.S. Air Force. General Eberhart retired from the U.S. Air Force in 2005 after 36 years of military service. He was then appointed as President (2004-2020), and served as Chair, of the Armed Forces Benefit Association (AFBA), a non-profit association, and as Chair of its related enterprise, 5Star Life Insurance Co. until 2022. General Eberhart has served on the Boards of several private and public companies, including Jacob Solutions, Inc., Terma North America, Inc., Triumph Group, Inc. (Chair of the Board) and Rockwell Collins. He currently serves on the Board of Amentum Holdings Inc., the American Air Museum in Britain (Chair of the Board), Segs4Vets, Palmer Land Conservancy and the Air Force Academy Endowment. | | | Key Qualifications and Skills: Experience as President (2004-2020) and Chair of the Armed Forces Benefit Association (until 2022) providing insight into challenges associated with managing complex organizations and holding management accountable for company performance. Expertise in the defense industry due to 36 years of experience in the U.S. Air Force, serving as Commander of several major Commands and Unified Commands, including Commander of U.S. Northern Command, North American Aerospace Defense Command (NORAD), U.S. Space Command, Air Force Space Command, Air Combat Command & U.S. Forces, Japan. He has also served as Vice Chief of the U.S. Air Force. |
ELECTION OF DIRECTORS
| MARK E. FERGUSON III | | | Age: 68 Director Since: 2017 Independent Board Committees: •Audit •Nominating & Corporate Governance (Chair) Other public company boards: •Pacific Gas and Electric Corporation | Background: Admiral, US Navy (Ret.), formerly the Commander of the U.S. Naval Forces Europe and Africa and Vice Chief of Naval Operations, he retired from the US Navy after 38 years of service. He served as a senior advisor at McKinsey & Company in the Aerospace and Defense practice from 2016 to 2020. Admiral Ferguson has served as the Chief Executive Officer of MK3 Global LLC, a private consulting firm since July 2016. | | | Key Qualifications and Skills: Expertise in the defense industry due to 38 years of experience in the U.S. Navy and senior positions in the U.S. military, including service as Commander, U.S. Naval Forces Europe, and Africa, and as Commander, NATO Joint Force Command, Naples, Italy. He also served as the Vice Chief of Naval Operations from 2011 to 2014. Expertise in commercial aerospace and defense with McKinsey & Company from 2016 to 2020. Holds a master’s degree in Computer Science from the Naval Postgraduate School and has expertise in cyber defense, congressional and regulatory affairs, strategic planning, and personnel and operations management. Graduate of the National Association of Corporate Directors (NACD) Cyber Risk Oversight Program; Holds a certificate in Cyber Security Oversight from Carnegie Mellon University. Serves as Chair of the People and Compensation Committee at Pacific Gas and Electric Corporation. |
ELECTION OF DIRECTORS
| LLOYD E. JOHNSON | | | Age: 70 Director Since: 2022 Independent Board Committees: •Compensation & Human Resources •Nominating & Corporate Governance Other public company boards: •Haemonetics Corporation •Apogee Enterprises •Beazer Homes USA | Background: Former Global Managing Director, Finance and Internal Audit at Accenture Corporation from 2004 to 2015. Prior to that, Mr. Johnson served as Executive Director, M&A and General Auditor for Delphi Automotive PLC from 1999 to 2004 and held senior financial leadership positions at Emerson Electric Corporation, Sara Lee Corporation and Shaw Food Services. Mr. Johnson is a Certified Public Accountant and holds the National Association of Corporate Directors Directorship Certification designation. Mr. Johnson also serves as national board chair of AARP, and a trustee on the Business Partnership Foundation at the Darla Moore School of Business at the University of South Carolina. | | | Key Qualifications and Skills: Board financial expert with experience in accounting, finance, and audit. Experience on numerous company boards, with expertise in corporate governance, ethics, and risk management, as well as experience in ESG, cybersecurity, mergers and acquisitions, manufacturing, and distribution. |
ELECTION OF DIRECTORS
| JOHN E. POTTER | | | Age: 69 Director Since: 2014 Independent Board Committees: •Compensation & Human Resources (Chair) •Nominating & Corporate Governance Other public company boards: None | Background: President and Chief Executive Officer of the Metropolitan Washington Airports Authority, an independent airport authority, since July 2011. He served as the United States Postmaster General and Chief Executive Officer of the United States Postal Service from 2001 to 2010. | | | Key Qualifications and Skills: Extensive management experience, leadership ability and record of accomplishment having served as United States Postmaster General for 10 years and held various management positions within the United States Postal Service prior to such appointment. More than 13 years of experience as President and Chief Executive Officer of the Metropolitan Washington Airports Authority, managing large, complex, and multifaceted transportation infrastructure projects. Provides insight into manufacturing, supply and distribution practices of large supply chain management organizations. |
ELECTION OF DIRECTORS
| BONNIE K. WACHTEL | | | Age: 69 Director Since: 1991 Independent Board Committees: •Audit •Nominating & Corporate Governance Other public company boards: None | Background: Principal and Director, Wachtel & Co., Inc., since September 1984. Ms. Wachtel has served on the board of six Nasdaq listed companies, including WaveDancer, Inc., a provider of IT services and software, and The ExOne Company, a 3D printing solutions provider. Prior experience includes ten years served on the hearing panel for NASDAQ Listing Qualifications from 2006 to 2016. Ms. Wachtel is a Chartered Financial Analyst and member of the District of Columbia Bar. | | | Key Qualifications and Skills: Experience as Supervisory Control Principal and Director of Wachtel & Co., Inc., which provides management experience in financial systems, people, and processes. Service with the Listing Qualifications Panel of NASDAQ and holding of Chartered Financial Analyst certification provides expertise in the functioning of capital markets and insight into the enhancement of stockholder value. |
ELECTION OF DIRECTORS
The Board unanimously recommends that Stockholders vote “FOR” the election of each of the eight persons nominated to serve as a Director of VSE for the ensuing year. Board, Committees and Corporate Governance As of the date of this Proxy Statement, the Board consists of eight members, all of whom were elected by the stockholders in 2024. All of the nominees for directors are “independent” as defined by the applicable rules of The NASDAQ Stock Market, Inc. (“NASDAQ”), except for Mr. Cuomo. The Company's Chair is an independent director and, accordingly, the Company does not have a lead independent director. The independent directors who served during 2024 regularly had the opportunity to meet without any management members present. During 2024, there were five regular and nine special Board meetings. Each of the directors attended at least 75% of the total number of Board meetings (in person or by telephone) and at least 75% of the meetings of Board committees on which he or she served in 2024. The Company does not have a specific policy regarding attendance at the annual stockholders meeting. All directors, however, are encouraged to attend if available, and the Company tries to ensure that at least one independent director attends the annual stockholders meeting and is available to answer stockholder questions. All directors who served during 2024 virtually attended VSE's 2024 Annual Meeting of stockholders. Board Committees and Membership The Board has an Audit Committee, a Nominating and Corporate Governance Committee, and a Compensation and Human Resources Committee. The current charters for each of the Board committees are available on the Company's website, www.vsecorp.com. The Board committee members, as of the date of this 2025 Proxy Statement, are identified in the following table.
ELECTION OF DIRECTORS
| Director | Audit Committee | Compensation and Human Resources Committee | Nominating and Corporate Governance Committee | | Anita D. Britt | Chair | ✓ | | | Ralph E. Eberhart | | | | | Edward P. Dolanski | ✓ | ✓ | | | Mark E. Ferguson III | ✓ | | Chair | | Lloyd E. Johnson | | ✓ | ✓ | | John E. Potter | | Chair | ✓ | | Bonnie K. Wachtel | ✓ | | ✓ |
ELECTION OF DIRECTORS
Audit Committee The primary purpose of the Audit Committee is to oversee the Company's accounting and financial reporting processes and the audits of the Company's financial statements. The Audit Committee is directly responsible for, among other things, the appointment, compensation, retention, and oversight of the Company's independent registered public accounting firm. The Audit Committee also provides oversight of the Company's enterprise risk management framework, including review of the Company's guidelines and policies with respect to risk assessment and risk management, specifically the Company's risk exposures in the areas of independent audit, financial reporting, internal controls, disclosure controls and internal audit, and evaluates the action management has taken to identify, monitor and control such exposures. The Board and Audit Committee have oversight responsibility for cybersecurity risks and incidents, including compliance with disclosure requirements, collaborating with law enforcement in connection with any incidents, and assessing related effects on financial and other risks. Findings and recommendations are reported, as deemed appropriate, to the full Board. Senior management, including the Company's Chief Information Security Officer (CISO), engages in regular discussions with the Audit Committee regarding cybersecurity risks, trends, and any potentially material incidents that may arise. Furthermore, the Board receives briefings on cybersecurity matters from the CISO on VSE's cybersecurity and information security policies and practices. Each Audit Committee member has the ability, experience, and skills to read and understand fundamental financial statements, including the Company's consolidated balance sheet and consolidated statements of income, comprehensive income, stockholders’ equity and cash flows. The Board has determined that the Audit Committee's Chair, Ms. Britt, is an “audit committee financial expert” as defined in SEC Regulation S-K Item 407(d)(5). All of the Audit Committee members during 2024 were independent in accordance with applicable rules of the SEC and NASDAQ. The Audit Committee met five times during 2024. As of the Annual Meeting, the Audit Committee will be comprised of Ms. Britt (Chair), Mr. Dolanski, Mr. Ferguson and Ms. Wachtel. Compensation and Human Resources Committee The primary purpose of the Compensation and Human Resources Committee (the "Compensation Committee") is to oversee the Company's compensation structure, to review and provide guidance to the Board regarding the compensation of VSE’s directors and executive officers, to review and provide guidance regarding employment agreements, to administer equity and other compensation plans, to administer the Company's clawback policy, to manage succession planning for the executive team, and to perform such other duties and responsibilities as are consistent with the committee’s charter. The Compensation Committee oversees the Company's risk management guidelines with respect to VSE's risk exposures related to compensation of directors and executive officers and the administration of VSE's incentive compensation and employee benefit plans, and evaluates the actions management has taken to identify, monitor and control such exposures. The Compensation Committee has the authority to retain outside counsel or other experts or consultants as needed. The Compensation Committee may form and delegate authority to subcommittees, or to one or more designated members of the Compensation Committee, to make equity compensation awards to non-officer employees under the VSE Corporation 2006 Restricted Stock Plan. Additional information on the role and responsibilities of the Compensation Committee, as well as the role of compensation consultants and executive officers in determining or recommending the amount or form of executive compensation, is provided below in the “Compensation Discussion and Analysis” section. All of the Compensation Committee members during 2024 were independent in accordance with applicable rules of the SEC and NASDAQ. The Compensation Committee met seven times during 2024. As of the Annual Meeting, the Compensation Committee will be comprised of Mr. Potter (Chair), Ms. Britt, Mr. Dolanski, and Mr. Johnson. Nominating and Corporate Governance Committee The primary purpose of the Nominating and Corporate Governance Committee is to make recommendations to the Board with respect to nominees to be proposed for election as directors and to review corporate policies regarding, among other things, business conduct, securities trading, indemnification of VSE directors and officers, and conflicts of interest involving VSE directors, officers and employees. The Nominating and Corporate Governance Committee oversees the Company's risk management guidelines with respect to VSE's risk exposures in the areas of corporate governance, compliance and ethics, as well as succession planning, and the actions management has taken to identify, monitor and control such exposures. In addition, the Nominating and Corporate Governance Committee oversees the annual review and evaluation of the Board's performance and the performance of the Board's committees. All of the Nominating and Corporate Governance Committee members are independent in accordance with applicable rules of the SEC and NASDAQ. The Nominating and Corporate Governance Committee met four times during 2024. As of the Annual Meeting, the Nominating and Corporate Governance Committee will be comprised of Mr. Ferguson (Chair), Mr. Johnson, Mr. Potter and Ms. Wachtel. Oversight of Risk Management The Board has overall responsibility for oversight of the Company's risk management plans, policies and practices. Each Board committee has been assigned oversight of certain risks associated with its respective activities as discussed in this 2025 Proxy Statement, and each committee’s charter reflects these risk oversight responsibilities. The Board has approved a risk management policy that delineates the risk oversight responsibilities of management, the Board and its committees. The Company has also adopted an enterprise risk management framework that continuously monitors and evaluates the Company's business and operational risks and is a key driver of VSE's overall risk mitigation efforts. The Company's Audit Committee reviews and oversees the Company's enterprise risk management process. Director Nominations and Qualifications Stockholders may recommend persons to be nominated for election as directors of VSE at the annual meeting of stockholders. To be considered, such recommendation must be submitted in accordance with VSE’s by-laws and must be received in writing by VSE’s Corporate Secretary no later than 90 days before the date which corresponds to the date on which the annual meeting was held during the immediate prior year. Nominations for the 2026 Annual Meeting of Stockholders (the “2026 Annual Meeting”) should be received by the Corporate Secretary no later than February 7, 2026. Such recommendation shall be accompanied by the proposing stockholder’s name, evidence that such stockholder is a beneficial owner of Stock, and the candidate’s name, biographical data and qualifications. The policy of the Nominating and Corporate Governance Committee is to consider properly submitted stockholder nominations for candidates for Board membership as described below. In evaluating such nominations, the Nominating and Corporate Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the directorship criteria discussed below.
ELECTION OF DIRECTORS
Under these criteria for Board nominations, Board members should have the highest professional and personal ethics and values, consistent with longstanding VSE values and standards. Factors discussed by the Board as relevant to the selection of Board nominees may include nature and length of business experience, including experience in business areas related to VSE's two business segments, and background and skills that promote alignment of the Board with the interests of stockholders. Board members should be committed to enhancing stockholder value and have sufficient time to satisfy their duties as VSE directors and provide insight and practical wisdom based on experience. A Board member’s service as a member of other boards of directors of publicly traded companies should be limited so that the director is able, given his or her individual circumstances, to effectively perform his or her duties as a Board member. The Nominating and Corporate Governance Committee periodically reviews Board succession. The Nominating and Corporate Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. This committee periodically assesses the appropriate size of the Board, and whether any Board vacancies are expected due to retirement or otherwise. If vacancies are anticipated or otherwise arise, the Nominating and Corporate Governance Committee will consider various potential candidates for director. Candidates may come to the attention of the Nominating and Corporate Governance Committee through Board members, professional search firms, stockholders or other persons. These candidates are evaluated by the Nominating and Corporate Governance Committee and may be considered at any point during the year. As described above, the Nominating and Corporate Governance Committee will consider properly submitted stockholder nominations for candidates for Board membership. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by the Nominating and Corporate Governance Committee at a regularly scheduled meeting. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to the Nominating and Corporate Governance Committee. This committee also will review materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder. Board Composition Pursuant to its charter, the Nominating and Governance Committee assesses whether the group of Board nominees is comprised of individuals with diverse skills to ensure that the Board as a whole is best positioned to serve the interests of the Company and its stockholders. The Board considers diversity in broad terms, including, but not limited to, competencies, experience, background, geography, and personal characteristics, with the goal of obtaining diverse perspectives, viewpoints, backgrounds and professional experiences. Leadership Structure of the Board The positions of Chair of the Board and VSE’s Chief Executive Officer (“CEO”) are separated at VSE. The Board believes that this separation of positions best serves the Company’s current needs and effectively maintains independent oversight of management. Communications with the Board Individuals may communicate with the Board by submitting an email to the Board at board@vsecorp.com. Communications to the Board by mail can be addressed to the Board of Directors or a particular Board member c/o VSE Corporation, 3361 Enterprise Way, Miramar, Florida 33025. Code of Business Conduct and Ethics The Board has adopted a Code of Business Conduct and Ethics that applies to all of VSE’s directors, officers, including VSE’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and employees. The Code of Business Conduct and Ethics is posted on VSE’s website at www.vsecorp.com. VSE intends to satisfy the disclosure requirements regarding any waiver or amendment of the Code of Business Conduct and Ethics with respect to VSE’s principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions, by posting such required information on VSE’s website. Corporate Governance Guidelines The Board has adopted Corporate Governance Guidelines, which together with the Certificate of Incorporation, bylaws, committee charters and other key governance practices and policies, provide the framework for the Company’s corporate governance. The Board recognizes that ensuring that the Company observes good corporate governance practices is an ongoing endeavor. As a result, the Company's Corporate Governance Guidelines and governance practices and policies are subject to annual review by the Board to determine if they continue to promote the best interests of the Company and its stockholders and comply with all applicable laws, regulations and NASDAQ requirements. VSE has adopted an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to the Company’s directors, officers, employees, and other covered persons. VSE also follows procedures for the repurchase of its securities. The Company believes that its insider trading policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to VSE. The Corporate Governance Guidelines, by-laws and committee charters are posted on VSE’s website at www.vsecorp.com. Compensation Committee Interlocks and Insider Participation During 2024, the Compensation Committee consisted of four non-employee directors (Mr. Potter, Mr. Johnson, Ms. Britt and Mr. Dolanski). No committee member was at any time during 2024 or at any other time an officer or employee of VSE. No executive officer of VSE serves or has served as a member of the compensation committee (or other committee performing similar functions) of another entity that had an executive officer who served on VSE’s Compensation Committee during 2024. No executive officer of VSE served on the board of directors or compensation committee (or other committee performing similar functions) of any entity that had one or more executive officers serving as members of the Board or Compensation Committee during 2024. Certain Relationships and Related Transactions There is no family relationship between any director or executive officer of VSE and any other director or executive officer of VSE. Pursuant to the Company’s policies, including the Code of Business Conduct and Ethics, any related party transactions would be subject to the prior consideration and approval of the Board, including a majority vote of the disinterested directors. 2024 Director Compensation Compensation of Non-Employee Directors for 2024 For 2024, the Company paid each non-employee director an annual cash retainer of $80,000 (increased from 2023 fee of $75,000). The Chair of the Board was paid an additional annual fee of $100,000 (increased from 2023 fee of $75,000) for his service as Chair. The Chairs of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee were each paid an additional annual fee of $20,000, $15,000 and $12,500, respectively, for their service as Chairs of the committees. Cash retainer fees are paid quarterly in arrears. Non-employee directors do not receive fees for attending Board or committee meetings.
ELECTION OF DIRECTORS
Each non-employee director was also eligible for an annual equity grant with a targeted value of $110,000 (increased from 2023 value of $100,000). As a result, each non-employee director was granted 1,737 shares of Stock on January 2, 2024 pursuant to the Company's 2006 Restricted Stock Plan. The closing price of VSE's Stock was $63.35 per share on January 2, 2024. No compensation is paid to any non-employee director for personal services rendered to VSE pursuant to a consulting or similar agreement between the director and VSE, or any of VSE’s subsidiaries, unless authorized as a special assignment by the Board. No such authorization was requested for or on behalf of any director in 2024. The foregoing procedures do not restrict reimbursement for expenses incurred by a director for attending meetings of the Board or Board committees. The following table provides information related to the compensation of each of the Company’s non-employee directors for fiscal year 2024.
ELECTION OF DIRECTORS
| Name | Fees earned or paid in cash ($) (1) | Stock awards ($) (2) | Total ($) | | Ralph E. Eberhart | 180,000 | 110,039 | 290,039 | | Mark E. Ferguson III | 92,500 | 110,039 | 202,539 | | John E. Potter | 95,000 | 110,039 | 205,039 | | Bonnie K. Wachtel | 80,000 | 110,039 | 190,039 | | Edward P. Dolanski | 80,000 | 110,039 | 190,039 | | Anita D. Britt | 100,000 | 110,039 | 210,039 | | Lloyd E. Johnson | 80,000 | 110,039 | 190,039 | | Calvin Koonce (3) | 143,333 | — | 143,333 |
ELECTION OF DIRECTORS
Notes to Director Compensation Table 1.General Eberhart elected to have $10,000 of his cash compensation for services as a VSE director in each quarter of 2024 be paid in Stock. As a result, General Eberhart received 126 shares of Stock in lieu of cash on March 25, 2024, 116 shares of Stock in lieu of cash on June 24, 2024, 115 shares of Stock in lieu of cash on September 17, 2024, and 87 shares of Stock in lieu of cash on December 11, 2024. In accordance with SEC rules, the total dollar amount associated with such elections ($40,155) is reflected in this column but the amount recognized by the Company for financial statement reporting purposes, in accordance with Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718, is based on the closing price of VSE's Stock on March 25, 2024 ($79.37 per share), June 24, 2024 ($86.50 per share), September 17, 2024 ($87.57 per share), and December 11, 2024 ($115.51 per share), as applicable. Mr. Ferguson elected to have $10,000 of his cash compensation for services as a VSE director in each quarter of 2024 be paid in Stock. As a result, Mr. Ferguson received 126 shares of Stock in lieu of cash on March 25, 2024, 116 shares of Stock in lieu of cash on June 24, 2024, 115 shares of Stock in lieu of cash on September 17, 2024, and 87 shares of Stock in lieu of cash on December 11, 2024. In accordance with SEC rules, the total dollar amount associated with such elections ($40,155) is reflected in this column but the amount recognized by the Company for financial statement reporting purposes, in accordance with FASB ASC Topic 718, is based on the closing price of VSE's Stock on March 25, 2024 ($79.37 per share), June 24, 2024 ($86.50 per share), September 17, 2024 ($87.57 per share), and December 11, 2024 ($115.51 per share), as applicable. Mr. Dolanski elected to have $5,000 of his cash compensation for services as a VSE director in each quarter of 2024 be paid in Stock. As a result, Mr. Dolanski received 63 shares of Stock in lieu of cash on March 25, 2024, 58 shares of Stock in lieu of cash on June 24, 2024, 58 shares of Stock in lieu of cash on September 17, 2024, and 44 shares of Stock in lieu of cash on December 11, 2024. In accordance with SEC rules, the total dollar amount associated with such elections ($20,179) is reflected in this column but the amount recognized by the Company for financial statement reporting purposes, in accordance with FASB ASC Topic 718, is based on the closing price of VSE's Stock on March 25, 2024 ($79.37 per share), June 24, 2024 ($86.50 per share), September 17, 2024 ($87.57 per share), and December 11, 2024 ($115.51 per share), as applicable. 2. Pursuant to the 2006 Restricted Stock Plan, each non-employee director was granted an award of 1,737 shares of Stock on January 2, 2024. The grant date fair value for purposes of FASB ASC Topic 718 (Compensation-Stock Compensation) is based on the closing price of VSE's Stock on January 2, 2024 ($63.35 per share). None of the non-employee directors held option awards or unvested stock awards as of December 31, 2024. 3. Calvin Koonce served as an independent director until the 2024 Annual Meeting. He received $110,000 in cash in lieu of his 2024 director equity grant. Director Stock Ownership Guidelines To help ensure alignment of the interests of VSE's non-employee directors with those of VSE's stockholders, the Company's non-employee directors are required to comply with the Company’s Stock Ownership Guidelines. Each current non-employee director is required to maintain ownership of Stock with a market value equal to five times the director’s annual cash retainer. New directors and officers will be expected to retain their Stock grants to achieve over time the required thresholds referenced above, but they will not be required to purchase Stock on the open market to achieve such thresholds. All of the Company's non-employee directors are currently in compliance with the stock ownership guidelines.
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Cohn joined the Company on September 3, 2024. (2) Mr. Thomas was appointed as Chief Operating Officer on February 26, 2025. Prior to such appointment, he served as President of the Company’s Aviation segment. (3) Mr. Sharma served as interim CFO from May 27, 2024 to September 3, 2024. Mr. Sharma is a NEO for purposes of this proxy statement as a result of service as interim CFO during 2024. The design of Mr. Sharma's compensation components differs from the other NEOs, as further described below. (4) Mr. Griffin separated from employment with the Company on May 29, 2024 and continued to provide consulting and advisory services until August 31, 2024. (5) Mr. Wheeler separated from employment with the Company on November 5, 2024 and will continue to provide consulting services for up to one year thereafter. 2024 Key Business Highlights In 2024, the Company successfully advanced its strategic transformation from a diversified industrial business to a leading provider of aftermarket distribution and maintenance, repair, and overhaul (“MRO”) services for air and land transportation assets across commercial and government markets. Throughout the year, the Company accelerated its portfolio transformation, expanded its geographic reach, introduced new distribution products and service capabilities, implemented newly awarded programs, and enhanced margins within its core aviation business. Additionally, the Company divested the Federal and Defense business, a non-core business segment, sharpening its focus on higher-growth, higher-margin business areas. These strategic milestones not only strengthened VSE’s market position but also directly influenced executive compensation decisions, reinforcing the Company's robust pay-for-performance philosophy and aligning executive rewards with shareholder value creation. The achievement of these objectives contributed to above-target payouts under the Annual Incentive Plan and strong long-term incentive plan vesting outcomes, reflecting alignment between strategic goals and stockholder value. The Company's key business achievements in 2024 included, among others: Aviation ▪Generated record full year segment revenue of $786.3 million; ▪Acquired two leading commercial aviation aftermarket businesses, Turbine Controls and Kellstrom Aerospace Group, Inc. ("Kellstrom"), to expand into the higher-growth aerospace engine aftermarket; ▪Completed the integration of Desser Aerospace’s U.S. distribution business; ▪Executed on and scaled the Pratt & Whitney Canada program in Europe, the Middle East, and Africa; ▪Opened a new Center of Excellence distribution facility in Hamburg, Germany; ▪Launched a new manufacturing capability to support original equipment manufacturing (“OEM”) licensed products; ▪Initiated the launch of a new e-commerce site; and ▪Awarded Top Shop awards for “Best Accessories Class I, II, and III Repair” for VSE Aviation’s South Florida facility, “Best Galley Components Repair” for VSE Aviation’s Kentucky facility, and “Most Improved Supplier for 2024,” for Turbine Controls' South Florida facility, as recognized by Collins Aerospace. Fleet ▪Supported United States Postal Service (“USPS”) following their transition to a new Fleet Management Information System (“FMIS”); ▪Scaled Memphis distribution facility to support Commercial e-commerce fulfillment operations; ▪Continued above-market revenue growth in commercial and e-commerce segments, further supporting long-term customer diversification strategy; and ▪Conducted a strategic review of the segment, culminating in the Company signing a definitive agreement in February 2025 to divest of the Fleet segment. Corporate ▪Divested and separated the Company's Federal & Defense Services segment; ▪Completed two follow-on equity offerings with aggregate net proceeds to the Company of approximately $325.8 million; and ▪Relocated the Company’s corporate headquarters to Miramar, Florida. Executive Compensation Program Overview Executive Compensation Philosophy and Objectives The primary goal of VSE’s compensation program is to closely align the interests of executives and other key employees with those of stockholders as the executive team focuses on revenue growth, profit expansion, stronger free-cash flow conversion, and enhanced total stockholder returns. In 2024, the Company's executive compensation program used a robust pay-for-performance model balancing both near- and long-term financial and business goals to help maximize stockholder value. The executive compensation program is designed to: •Attract, motivate, and retain a highly qualified and experienced executive team in a very competitive market; •Incentivize and reward the achievement of both the strategic and financial goals of the Company, with an emphasis on long-term business goals driving higher stockholder returns; •Utilize compensation elements that are directly linked to achievement of stockholder value creation, corporate near- and long-term objectives, and individual performance; •Maintain flexibility to ensure that awards remain competitive within the Company's peer group; and •Promote adherence to strong corporate governance, company policies and values. Executive Compensation Governance Practices The following highlights executive compensation governance practices and compensation program key principles used to promote the Company's overall compensation objectives and to align executive compensation with the interests of stockholders, as well as the practices the Company avoids:
COMPENSATION DISCUSSION AND ANALYSIS
| Compensation Program Key Principles: | | | What the Company Does: | | | ✓ | Alignment with Stockholders. Long-term incentive awards vest over a period of several years to reward sustained Company performance over time. | | ✓ | Pay for Performance. Executive compensation program is weighted heavily towards performance-based variable compensation. | | ✓ | Share Ownership Guidelines. NEOs must hold equity of a value equivalent to multiples of their base salaries (5x for CEO and 3x for all other NEOs). | | ✓ | Annual “Say-on-Pay” Vote. Seek an annual non-binding advisory vote from stockholders to approve compensation paid to NEOs as disclosed in the Proxy Statement. | | ✓ | Clawback Policy. Maintain a Nasdaq-compliant compensation clawback policy that provides for the recovery of certain incentive-based compensation of executive officers if an accounting restatement is required due to material noncompliance with any financial reporting requirement under the securities laws. | | ✓ | Double-Trigger Severance. Provide only double-trigger change-in-control cash severance and equity acceleration. | | ✓ | Annual Risk Assessments. The Compensation Committee analyzes business and market risks in setting executive compensation each year. | | ✓ | Peer Group Comparison. The Compensation Committee annually analyzes executive compensation relative to peer companies, with the support of an independent compensation consultant. | | ✓ | Decisions by Independent Compensation Committee. Executive compensation is approved by the Compensation Committee which is comprised solely of independent directors. | | ✓ | Independent Compensation Consultant. The Compensation Committee retains its own independent compensation consultant to advise on compensation matters. |
COMPENSATION DISCUSSION AND ANALYSIS
| What the Company Does Not Do: | | | ✗ | No Tax Gross-Ups in Change in Control Agreements. There is no executive employment or other agreement which provides excise tax gross ups in connection with a change in control. | | ✗ | No Hedging and Pledging of Company Stock. Company policies prohibit the hedging and pledging of Company Stock by executives and directors. | | ✗ | No Excessive Perquisites. No excessive perquisites are provided to NEOs. | | ✗ | No Dividends on Unvested Equity. Dividends are not accrued, earned or paid on restricted stock units until units are vested. |
COMPENSATION DISCUSSION AND ANALYSIS
Key Elements of 2024 Executive Compensation Program The VSE NEO compensation program currently has three forms of direct compensation: base salary, annual cash incentive awards, and long-term incentives. Long-term incentives include time and performance equity-based incentive awards and deferred supplemental compensation. Below is an overview of the program’s structure:
COMPENSATION DISCUSSION AND ANALYSIS
| Element | Type | Form | Key Characteristics | Purpose | | Base Salary | Fixed | Cash | Annual adjustments based on individual performance, market pay levels and internal pay equity. | Attracts, retains and rewards NEOs by providing a competitive fixed amount of compensation for service reflecting skill, responsibility, and experience. | | Annual Cash Incentive | Variable | Cash | Variable cash compensation, based on pre-established financial, strategic, and operational goals and individual performance. | Focuses NEOs on achievement of short-term financial, operational, and strategic goals. Aligns interests of NEOs with stockholders by promoting strong revenue, operating profit, free cash flow, and achievement of other key strategic corporate objectives. | | Long-Term Incentive | Variable | Restricted Stock Units | Service-based restricted stock units (“RSUs”) that vest annually over a three-year period. | Helps retain NEOs through multi-year vesting of equity and deferred compensation awards. Motivates and rewards NEOs for the achievement of long-term corporate performance. Aligns NEOs’ interests with long-term stockholder interests. | | | | Performance Restricted Stock Units | Performance-based restricted stock units (“PRSUs”) that vest based on pre-established financial goals over a three-year performance period. | | | | | Deferred Supplemental Compensation | Annual award of up to 15% of base salary with total funding capped based on a pre-established financial goal. | |
COMPENSATION DISCUSSION AND ANALYSIS
2024 Target Total Compensation Mix The Compensation Committee strives to achieve an appropriate mix and balance between fixed and variable compensation and cash versus equity-based compensation awards to meet executive compensation program objectives. In determining the mix of compensation among these elements, the Compensation Committee does not assign specific ratios or other relative measures that dictate the total compensation mix to be awarded to the executive team, or the portion that is either at-risk or otherwise subject to performance. As illustrated by the charts below, in 2024, the Compensation Committee continued to structure executive compensation so that a significant portion of the target total compensation of the CEO, the CFO and the other NEOs was “at-risk” or performance-based, with the actual value realized subject to the achievement of short-term and/or long-term corporate and financial performance goals. This mix is designed to balance short-term operational focus with long-term strategic growth objectives, reinforcing accountability and sustained performance. By aligning a significant portion of the executives’ compensation to performance, the Compensation Committee emphasized incentive-based variable pay, which is consistent with the Company's pay-for-performance philosophy and creates a strong alignment with long-term stockholder value. The following pie charts illustrate the 2024 target total compensation mix. The CFO pie chart represents Mr. Cohn's annualized total target compensation mix for 2024 and excludes both Mr. Sharma's compensation, given the interim nature of his service as Chief Financial Officer, and Mr. Griffin's compensation, given his departure from the Company in May 2024. The other NEOs pie chart represents the average of Mr. Thomas and Ms. Tehrani's annualized total target compensation mix for 2024 and excludes Mr. Wheeler's compensation given his departure as an employee from the Company in November 2024. The Compensation Committee typically grants equity-based awards, including time-based restricted stock units and performance-based restricted stock units, to executive officers and other employees on an annual grant cycle in March of each year. The Compensation Committee also makes off cycle awards from time to time on an as-needed basis. The Company does not currently grant stock options or stock appreciation rights. The Company does not time the disclosure of material non-public information for the purpose of affecting the value of executive compensation. Oversight of Executive Compensation Role of the Compensation Committee The Compensation Committee has oversight responsibility in administering and providing guidance over the Company’s executive compensation programs. The following is a summary of the Compensation Committee’s key responsibilities regarding executive compensation: •To establish and review the overall compensation philosophy of the Company; •To review and approve the Company’s corporate goals and objectives relevant to the compensation for the CEO and other executive officers, including annual performance objectives; •To evaluate the performance of the CEO and other executive officers (in consultation with the CEO) in light of those goals and objectives and, based on such evaluation, approve, or recommend to the full Board the approval of, the annual salary, bonus, long-term incentive compensation, and other benefits for the CEO and other executive officers; •To oversee the administration of the Company’s stock-based compensation plans; •To oversee the Company's Clawback Policy (as defined below); •To review and assess stockholders’ say-on-pay and consider results of the most recent say-on-pay vote in evaluating and determining executive compensation; and •To review and evaluate the Company's executive succession plan. The Compensation Committee meets throughout the year to review the performance and compensation of the CEO and other NEOs. The Compensation Committee generally uses a consistent approach to determine the compensation of each NEO by using the same suite of compensation components to maintain alignment amongst the executive team. In addition, the Compensation Committee engages with the Compensation Committee's independent compensation consultant to select an appropriate peer group and obtain market data and compensation analysis on the Company's total executive compensation mix relative to the peer group. In making compensation decisions for the executives as a group, the Compensation Committee sets total compensation, including long-term incentives, based on numerous factors, including company performance, competitive market pay comparison and individual responsibilities, experience and performance. Role of Management To satisfy its responsibilities, the Compensation Committee works with management, including the CEO. The management team assists the Compensation Committee by providing information on current market forecasts, corporate and individual performance, as well as management’s perspective on compensation matters and market compensation data provided by the Compensation Committee's independent compensation consultant. Annually, the CEO provides the Compensation Committee with an evaluation of his own performance that is based mainly upon the Company’s financial performance and achievement of annual operating plan objectives. The Compensation Committee evaluates the CEO on these and other criteria without the presence of the CEO. The total compensation package for the CEO is determined by the Compensation Committee and approved by the Board, based on the Compensation Committee’s complete evaluation, input from the independent compensation consultant, the CEO's performance, the Company's performance, and competitive industry practices. In addition, the CEO annually evaluates each of the NEOs and makes compensation recommendations for such NEOs to the Compensation Committee. In developing recommendations, the CEO considers each NEO’s performance against Company goals, and, as applicable, business segment or functional department performance goals and the performance of each NEO relative to key business goals for each applicable year, as further described below. The independent compensation consultant reviews and provides comments to the Compensation Committee on the CEO’s recommendations. The Compensation Committee has discretion in approving, disapproving, or modifying any of the CEO’s recommended salary adjustments, annual bonus targets or proposed equity awards to the other NEOs, subject to final Board approval. Role of the Independent Compensation Consultant In determining compensation for 2024, the Compensation Committee retained NFP Compensation Consulting (“NFP”), an independent national compensation consulting firm, as the Committee's independent compensation consultant to advise on executive and director compensation matters. In April 2024, NFP was acquired by Aon plc ("Aon"), an independent global compensation consulting firm. Prior to the acquisition by Aon, NFP assisted the Compensation Committee in developing a competitive total compensation program that is consistent with the VSE executive compensation program philosophy of goal-oriented pay-for-performance and that allows the Company to attract, retain, and motivate talented executives. Following the acquisition, Aon Human Capital Solutions practice, a division of Aon, became the Compensation Committee's independent compensation consultant.
COMPENSATION DISCUSSION AND ANALYSIS
Generally, the Company's compensation consultant provides various services to the Compensation Committee, including the review, analysis, and update of the compensation peer group; the annual review and analysis of the NEO compensation against competitive market data based on the companies in the peer group; the design of the long-term equity incentive program; the annual risk assessment for executive compensation; review and analysis of the non-employee director compensation; and insight into emerging compensation trends. NFP provided these services to the Compensation Committee until April 2024 when it was acquired by Aon, and Aon has provided these services starting in May 2024. The Compensation Committee reviews the compensation consultant's independence on an annual basis. For 2024, the Compensation Committee determined that there were no conflicts of interest as a result of any current or historical engagement with NFP or Aon. Stockholder engagement In 2024, the Company's longstanding practices of regular engagement with stockholders continued, covering a range of topics including company strategy, business performance, corporate governance, and other relevant matters. Senior management participated in numerous investor meetings, calls, and conferences. These interactions provided investors with opportunities to meet key executives, ask questions, and share perspectives. Relevant feedback from stockholder outreach efforts is communicated to the Board or appropriate Committees for consideration, helping to ensure that input from stockholders informs decisions and strategic direction. The viewpoints of proxy advisory firms representing the interests of various stockholders are also considered, guiding the actions of the Board and Compensation Committee in enhancing the executive compensation program. Say-on-Pay Vote of Stockholders As part of the compensation-setting process, the Compensation Committee considers the results of the stockholder advisory vote to approve the NEO compensation from the prior year. Approximately 83% of the votes cast at the Company's 2024 annual meeting of stockholders were voted in favor of the Company's NEO compensation. After considering the results of this advisory vote, the Compensation Committee determined that these results demonstrated a strong level of support for the Company's executive compensation program. The Compensation Committee did not make any changes to the compensation decisions and policies for 2024 that were specifically driven by the advisory vote. Compensation Practices Related to Risk Management The Company's compensation programs are designed to be balanced and strategically focused on long-term value creation. This structure helps ensure that the highest levels of compensation are achievable only through consistent, superior performance over sustained periods. Additionally, certain compensation components are deferred or become realizable only after vesting periods, promoting long-term management and discouraging excessive short-term risk-taking. The targeted compensation mix is purposefully balanced among current cash payments, deferred cash payments, and equity awards. Stock Ownership Guidelines further mitigate risk by requiring NEOs to maintain meaningful stock ownership, aligning executive interests with stockholders’ objectives for long-term value enhancement. The Compensation Committee conducts regular reviews of the relationship between the Company's risk management policies and practices and the incentive compensation provided to NEOs. This helps ensure that compensation incentives promote prudent risk-taking while discouraging unnecessary and excessive risks. The Compensation Committee also examines the alignment between risk management policies, corporate strategy, and senior executive compensation. Management conducts an annual assessment of the Company's overall compensation structure and presents its findings to the Compensation Committee. This evaluation considers factors such as the overall mix of compensation, performance metrics used in incentive programs, vesting periods, and the relationship between compensation programs and business risk. In March 2024, an independent compensation consultant conducted a comprehensive risk assessment of the Company’s compensation structure. Based on this assessment, the Compensation Committee concluded that the Company’s compensation policies and practices do not create risks reasonably likely to have a material adverse effect on the Company. Peer Group and Competitive Market Analysis Each year, the Compensation Committee, in consultation with management and supported by its independent compensation consultant, reviews and approves a peer group to provide relevant market context for executive compensation decisions. The Compensation Committee does not use a formulaic approach to set NEO compensation at a specific level or percentile relative to this peer group. However, peer group compensation data is periodically reviewed to evaluate the competitiveness of executive compensation practices, structures, and levels. For 2024 compensation decisions, the Compensation Committee utilized a peer group recommended by compensation consultant NFP in mid-2023, which included certain peers also used by Institutional Shareholder Services (ISS). Given the Company’s strategic business transformation initiatives, including the divestiture of its Federal and Defense business segment, NFP recommended adjustments to the existing compensation peer group to better align with the Company’s evolving market focus in the Aviation and Fleet markets. 2024 Compensation Peer Group Adjustments To reflect this strategic shift, NFP recommended the removal of the following companies from the prior peer group: •AeroVironment, Inc. •CRA International, Inc. •Horizon Global Corporation •Huron Consulting Group Inc. •Kratos Defense & Security Solutions, Inc. These companies were removed due to the divestiture of the Company’s Federal and Defense business segments. Conversely, NFP recommended the addition of the following companies to better represent the Company’s increased focus in the aerospace sector and growth in market capitalization: •Air Transport Services Group, Inc. •Barnes Group Inc. •Hexcel Corporation •Triumph Group, Inc. The revised peer group comprised publicly traded companies of comparable size (based on revenue, market capitalization, enterprise value, asset size, and total stockholder return) within the diversified support services industry, specifically including aerospace and automotive trading companies and distributors. NFP advised that these changes positioned the Company at approximately the 42nd percentile on average for revenue, market capitalization, enterprise value, asset size, and three-year total shareholder return relative to the peer group. The Compensation Committee determined that the revised peer group was consistent with the Company’s operational markets. Review and Adjustments for 2025 Compensation Peer Group In July 2024, the Compensation Committee, with support from compensation consultant Aon, reviewed the existing 2024 Compensation Peer Group to prepare for 2025 compensation decisions. This review considered the impact of the Company’s Federal and Defense business divestiture, the Company’s increased revenue and market capitalization, and the growing contribution of revenue and earnings from the Company’s Aviation segment. Aon’s peer selection process focused on publicly traded companies involved in parts and distribution, with an emphasis on commercial and professional services, diversified support services, capital goods (including aviation manufacturing), and automotive and components industries. The selection criteria included: •Revenues ranging from approximately one-third to three times the Company’s revenue
COMPENSATION DISCUSSION AND ANALYSIS
•Market capitalization ranging from approximately 0.2 times to five times the Company’s market capitalization •Comparable total shareholder returns 2025 Compensation Peer Group Adjustments Aon recommended the following adjustments to the 2024 Compensation Peer Group: Removal of: •Heritage-Crystal Clean, Inc. (acquired and de-listed) •Kaman Corporation (acquired and de-listed) Addition of: •Albany International Corp. •FTAI Aviation Ltd. •Woodward, Inc. These additions were selected for their alignment with industry focus and size criteria. Aon advised that the revised peer group appropriately aligns with the Company’s industry positioning, size, and total shareholder return performance relative to peer companies. Based on this review, the Compensation Committee approved the recommended adjustments, resulting in the 2025 Compensation Peer Group. The following chart includes the Company's 2024 and 2025 Compensation Peer Groups:
COMPENSATION DISCUSSION AND ANALYSIS
| Peer Company | 2024 Compensation Peer Group (1) | 2025 Compensation (2) Peer Group | | AAR Corp. | ✓ | ✓ | | AerSale Corporation | ✓ | ✓ | | Astronics Corporation | ✓ | ✓ | | Dorman Products, Inc. | ✓ | ✓ | | Ducommun Incorporated | ✓ | ✓ | | H&E Equipment Services, Inc. | ✓ | ✓ | | Heritage-Crystal Clean, Inc | ✓ | | | ICF International, Inc. | ✓ | ✓ | | Kaman Corporation | ✓ | | | Motorcar Parts of America, Inc. | ✓ | ✓ | | Standard Motor Products, Inc. | ✓ | ✓ | | Stoneridge, Inc. | ✓ | ✓ | | Air Transport Services Group, Inc. | ✓ | ✓ | | Barnes Group Inc. | ✓ | ✓ | | Hexcel Corporation | ✓ | ✓ | | Triumph Group, Inc. | ✓ | ✓ | | Albany International Corp. | | ✓ | | FTAI Aviation Ltd. | | ✓ | | Woodward, Inc. | | ✓ |
COMPENSATION DISCUSSION AND ANALYSIS
(1) For the 2024 Compensation Peer Group, as compared to the prior peer group, based on NFP's recommendation, the Company removed AeroVironment, Inc., CRA International, Inc., Horizon Global Corporation, Huron Consulting Group Inc. and Kratos Defense & Security Solutions, Inc., because of the divestiture of the Company's Federal and Defense segment, and added Air Transport Services Group, Inc., Barnes Group Inc., Hexcel Corporation, and Triumph Group, Inc., because of the increase in the Company's market capitalization and additional focus on the aviation sector. (2) For the 2025 Compensation Peer Group, based on Aon's recommendation, the Company removed Heritage-Crystal Clean, Inc. and Kaman Corporation because they were no longer public companies, and added Albany International Corp., FTAI Aviation Ltd. and Woodward, Inc. as new members of the peer group because they met the industry focus (aviation), market and size criteria, and had strong one-year and three-year TSR performance. 2024 Components of Executive Compensation The three key elements of the Company's executive compensation program are base salary, annual cash incentive awards, and long-term incentives. The long-term incentives include time and performance equity-based incentive awards and deferred supplemental compensation. The following sets forth the program design and, where applicable, metrics and 2024 payouts with respect to each component of the 2024 NEO compensation program. Base Salary Base salary is the principal “fixed” cash element of executive compensation. The Company's compensation program supports competitive base salaries as a necessary element of overall compensation to attract and retain highly qualified executive officers. The Compensation Committee also believes that it is important that each NEO receives a market-competitive base salary as compared to like executives in the peer group. In addition, while the compensation for the executive team is weighted towards long-term equity compensation, the need to broadly align salaries with the peer group and other private and public industry competitors is recognized. The initial base salary of each NEO was established at hire date. The Compensation Committee reviews base salaries on an annual basis and may adjust them from time to time, with a goal of providing competitive, fixed cash compensation to the executive officers. The Compensation Committee generally references base salaries at or slightly above the median for comparable positions in the peer group when making base salary determinations. For 2024, based on the 2024 Compensation Peer Group data and the recommendation of NFP, the Compensation Committee approved increases to the base salaries of Messrs. Cuomo, Thomas, Griffin and Wheeler to reflect a market adjustment to align base salaries to an average of approximately 7% above the 2024 Compensation Peer Group median. For Mr. Thomas, the increase in base salary was also in recognition of the expansion of the size and scope of the Aviation business segment relative to 2023. Mr. Sharma’s base salary was increased because of expanded and additional responsibilities associated with the Chief Accounting Officer position. The Compensation Committee determined that the changes to certain NEOs' base salary would allow the Company to be market competitive, provide for incentives that are intended to attract, retain and motivate the current executive officers and help align executive and shareholder value creation over the medium and long term. The 2024 base salaries for the NEOs (which were effective as of January 1, 2024), as compared to their year-end 2023 base salaries, are set forth below:
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Cohn joined the Company on September 3, 2024. His actual salary for 2024 was $183,333, which was pro-rated for his employment term for 2024. (2) In addition to his base salary, Mr. Sharma also received $12,000 per month during the period he served as interim CFO from May 27, 2024 to September 3, 2024. Annual Incentive Award NEOs are eligible to earn an annual cash incentive designed to reward and promote the achievement of the Company’s short-term annual business objectives while enhancing stockholder value. The 2024 annual incentive award program (the “2024 AIP”) was based primarily on achieving certain annual financial results established by the Compensation Committee and approved by the Board at the beginning of the year. The Compensation Committee maintains discretion on AIP allocation for all NEOs. The key financial performance metrics for the 2024 AIP were: revenue, adjusted operating profit, and adjusted free cash flow. The Compensation Committee selected revenue, adjusted operating profit, and adjusted free cash flow because they are key financial and operational metrics that measure the Company performance as aligned with current market conditions, peer group comparison and shareholder value creation. The performance metrics for the 2024 AIP also include an individual component for each NEO, which was based on key business goals and performance as well as contribution to the management team’s execution of the overall operating and strategic plan for the Company. The NEOs' key business goals under the 2024 AIP program included the following: (i) implementation, expansion and scaling of the new engine part distribution program in Europe; (ii) divestiture of the Company's Federal and Defense business segment and post-closing separation; (iii) implementation of the OEM solutions licensed manufacturing program and supporting revenue/profit realization; (iv) completion of the integration of the acquired Desser U.S. distribution business; and (v) customer diversification and above market revenue growth in the Fleet segment's commercial business, and support for the Fleet segment's USPS’s fleet management information system conversion. For purposes of the 2024 AIP, adjusted operating profit means operating income before taxes and interest adjusted for items identified as part of the Company's publicly reported adjusted EBITDA. For purposes of the 2024 AIP, adjusted free cash flow means cash provided from operating activities less capital expenditures adjusted for items identified as part of the Company’s reported adjusted EBITDA. Except for adjusted free cash flow, which is measured on a consolidated basis for the Company, each of the other metrics for the segment presidents are based on segment performance. In establishing the goals for each metric, the Compensation Committee considered how achievement of the performance goals could be impacted by events expected to occur in the future, and how likely it would be for the goals to be achieved. The target goals were established at levels that were appropriately challenging to attain, aligned with market and customer conditions, and required considerable effort on the part of each NEO to achieve. Achievement of above-target goals (where applicable) is considered to be a “stretch” target given market conditions. The weightings utilized for each metric are detailed below. Corporate. The 2024 AIP for Messrs. Cuomo, Cohn, Sharma, Griffin and Ms. Tehrani consisted of four weighted elements as illustrated in the table below:
COMPENSATION DISCUSSION AND ANALYSIS
Target 2024 Annual Incentive Award After reviewing the 2024 Compensation Peer Group data and in consultation with NFP, the Compensation Committee set the target bonus percentages and amounts for each NEO for the 2024 AIP. To receive a payout under the 2024 AIP, an NEO must be an employee during the fiscal year that the bonus payment is earned and at the time when the bonus payment is made. The NEOs’ threshold, target, and maximum opportunities under the 2024 AIP awards (expressed as dollar amounts and as percentages of base salary) were as follows:
COMPENSATION DISCUSSION AND ANALYSIS
(1) 2024 AIP threshold, target, and maximum opportunities amounts for Mr. Cohn were based on his 2024 pro-rated salary of $183,333. (2) 2024 AIP threshold, target, and maximum opportunities amounts for Mr. Sharma were based on his 2024 pro-rated salary of $298,750. His award opportunity was also pro-rated based on the change to his target percentage of base salary from 40% to 45% upon his appointment as Chief Accounting Officer. During 2024, Mr. Sharma's base salary was $280,000 from January 1, 2024 to May 15, 2024, and $310,000 from May 16, 2024 to December 31, 2024. (3) Mr. Griffin and Mr. Wheeler were not eligible for a payout with respect to their 2024 AIP as a result of their separation from employment with VSE on May 29, 2024 and November 5, 2024, respectively. For 2024, based on the 2024 Compensation Peer Group data and the recommendation of NFP, Mr. Thomas’ AIP target opportunity was increased from 50% of base salary to 60% of base salary. For each of the other NEOs, their respective AIP target opportunities (as percentages of base salary) remained the same as in 2023. All NEOs, other than Mr. Sharma, can earn between 50% (at threshold) and 200% (at maximum) of their target opportunity based on achievement of applicable performance goals. Mr. Sharma can earn between 50% (at threshold) and 150% (at maximum) of his target opportunity based on achievement of applicable performance goals. 2024 Annual Incentive Award Payouts Financial Metrics For 2024, the Compensation Committee reviewed the performance for each financial metric to determine the level at which the annual incentive award would be paid out for the year. For purposes of the 2024 AIP, the Compensation Committee approved non-recurring one-time adjustments to revenue, operating profit and free cash flow. Operating profit and free cash flow adjustments included items identified as part of the Company’s reported adjusted EBITDA in accordance with the program design and as publicly disclosed in the Company's earnings releases. Adjusted EBITDA represents net income before interest expense, income taxes, amortization of intangible assets and depreciation and other amortization adjusted for discrete items such as acquisition, integration and restructuring costs (primarily related to the acquisition of Turbine Controls and Kellstrom, and the Fleet strategic process, as described above), severance costs related to Fleet workforce reduction, lease exit costs related to the Company's Alexandria, Virginia headquarter relocation as a result of the divestiture of the Federal and Defense segment, and restructuring costs related to the Federal and Defense segment divestiture. When evaluating achievements against adjusted operating profit and adjusted free cash flow objectives, the Compensation Committee excluded any financial impact of Kellstrom which was acquired in December 2024 due to the short period of ownership. The Compensation Committee also approved other adjustments to revenue, operating profit and free cash flow for purposes of the 2024 AIP, and to adjusted ROE and adjusted EBITDA for purposes of outstanding PRSU awards, based on the occurrence of certain events throughout 2024, including the following: Federal and Defense Segment Divestiture In July 2024, in recognition of the completion of the divestiture of the Company's Federal and Defense segment in February 2024, the Compensation Committee determined that it was appropriate to adjust the target goal level for VSE adjusted free cash flow for purposes of the 2024 AIP, to exclude the impact to free cash flow for the Federal and Defense business segment since it was no longer a part of the Company. This resulted in a reduction to the threshold, target and maximum goal levels for VSE adjusted free cash flow. Acquisition of Turbine Controls Also in July 2024, in recognition of the acquisition of Turbine Controls, the Compensation Committee determined that it was appropriate to further adjust the target goal levels for VSE revenue and VSE adjusted operating profit for purposes of the 2024 AIP, the target goal levels for adjusted EBITDA for purposes of the 2024 tranches of the 2024 and 2023 PRSU awards, and the target goal levels for adjusted ROE for purposes of the 2024 tranche of the 2022 PRSU awards, to account for and include the expected contributions of the Turbine Controls business following the acquisition. This resulted in an increase to the threshold, target and maximum goal levels for such metrics. USPS Impact on Fleet Segment Financial Results In December 2024, the Compensation Committee reviewed the impact to the Fleet segment's financial results caused by a decline in revenue from a significant customer, the USPS. This decline was primarily caused by USPS’ internal challenges related to its transition to a new Fleet Management Information System ("FMIS"), which significantly disrupted their repair capacity and therefore requirements for repair parts. As a result, the expected volume of business from this key customer was not realized, leading to a temporary but significant decline in the Fleet segment's financial performance, which was outside of management's control. Based on the decline in the USPS business, the financial results for the Fleet segment were unexpectedly and significantly lower than the 2024 AIP target goals and metrics that were established by the Compensation Committee in February 2024. The Compensation Committee conducted a detailed review of the negative impact of the Fleet financial results on the Corporate and Aviation segments. After due consideration, and with the recommendation of the Compensation Committee's independent compensation consultant, the Compensation Committee determined that it was appropriate to make adjustments to account for the impact to VSE revenue, VSE adjusted operating profit and VSE adjusted free cash flow targets for purposes of the 2024 AIP, and to adjusted EBITDA, for the purpose of the 2024 tranche of the 2024 PRSU award, from the USPS revenue decline. This resulted in a decrease to the threshold, target and maximum goal levels for such metrics. The Compensation Committee determined that the decline in the 2024 financial results for the Fleet segment was outside of the NEOs' control and that the executive team made reasonable efforts to mitigate the effects on the business and to continue supporting the USPS through this challenging period and, as such, the adjustments made by the Compensation Committee would be consistent with the Company's pay-for-performance philosophy to avoid penalizing the NEOs for unexpected events out of their control. In support of their decision, the Compensation Committee also considered several other factors including (i) the corporate management team's successful efforts over the last few years to diversify the Fleet segment's business from USPS accounting for approximately 90% of the business to approximately 40% of the business; (ii) the corporate and Fleet team's successful efforts in increasing the growth in other commercial customer base, driven by growth in e-commerce fulfillment and commercial fleet sales resulting in a significant increase in non-USPS revenue as a percentage of total Fleet segment revenue over the past few years; (iii) the increase in the Company's 2024 share price by approximately 50%, exceeding industry benchmarks, resulting from the management team's commitment to enhancing shareholder value as the Company continues to execute on its strategic priorities; and (iv) the Company’s diversified business model and strong performance in the Aviation segment, which more than compensated for the short-term setback in the Fleet segment. Individual Key Business Goals
COMPENSATION DISCUSSION AND ANALYSIS
| 2024 Annual Incentive Award Performance | | | | | | | | Name | Segment | Revenue | Adjusted Operating Profit | VSE Adjusted Free Cash Flow | Individual Business Goals | Actual as a % of Target | | John Cuomo | Corporate | Above Target | Above Target | Below Target | Maximum | 133% | | Adam R. Cohn | Corporate | Above Target | Above Target | Below Target | Maximum | 133% | | Benjamin Thomas | Aviation Segment | Above Target | Above Target | Below Target | Maximum | 144% | | Farinaz S. Tehrani | Corporate | Above Target | Above Target | Below Target | Maximum | 133% | | Tarang Sharma | Corporate | Above Target | Above Target | Below Target | Maximum | 113% |
COMPENSATION DISCUSSION AND ANALYSIS
| Name | 2024 Base Salary | Target ($) | Total Actual 2024 AIP Payout | Actual as a % of Target | Actual as a % of Salary | | John A. Cuomo | $900,000 | $900,000 | $1,197,000 | 133% | 133% | | Adam R. Cohn (1) | $183,333 | $137,500 | $182,875 | 133% | 100% | | Benjamin Thomas | $450,000 | $270,000 | $388,800 | 144% | 86% | | Farinaz Tehrani | $371,000 | $185,500 | $246,715 | 133% | 67% | | Tarang Sharma (2) | $298,750 | $129,188 | $145,982 | 113% | 49% |
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Cohn's 2024 AIP target was based on his 2024 pro-rated salary of $183,333. (2) Mr. Sharma's 2024 AIP target was based on his 2024 pro-rated salary of $298,750 and his pro-rated target percentage of 43.2% (based on his target of 40% of base salary prior to his appointment as Chief Accounting Officer and his target of 45% of base salary following such appointment). In addition to the 2024 AIP award described above, Mr. Cohn also received a cash sign-on bonus equal to $200,000 in connection with his hire, which amount was paid to him in October 2024. Long-term Incentive Award Each year, NEOs are granted long-term incentive awards in the form of equity and cash-based awards. The two components of the Company’s 2024 long-term incentive program are the LTI Program (as defined below) and the Deferred Supplemental Compensation Plan (“DSC Plan”). The Compensation Committee determines the amount of these awards, as well as the mix or weighting of these awards. Long-term Incentive Equity Program In 2024, NEOs were eligible to receive restricted stock units, consisting of both service-based restricted stock units ("RSUs") that vest over a three-year vesting period and performance-based RSUs ("PRSUs") that are earned based on performance over three individual performance years during a three-year performance period. The RSU and PRSU awards comprise the current long-term incentive equity program for the NEOs (the “LTI Program”). Time and service-based RSUs provide a retention incentive, and PRSUs both provide a retention incentive and align compensation to financial performance. For 2022 PRSU awards, performance is earned and aligned based on an adjusted return on equity (“ROE”) metric and for 2023 and 2024 PRSU awards, performance is earned and aligned based on an adjusted EBITDA metric. The Compensation Committee approved a change to the PRSU awards beginning in 2023 to shift from adjusted ROE to adjusted EBITDA as reported with the Company’s quarterly earnings to better align with the peer group, and with total shareholder returns as the Company is measured in the public equity markets on a multiple of adjusted EBITDA. The following illustrates VSE’s 2024 LTI Program structure:
COMPENSATION DISCUSSION AND ANALYSIS
| | TIME-BASED (1) | | | | Restricted Stock Units (RSUs) 120% of Base Salary for CEO 60% of Base Salary for CFO 50% of Base Salary for COO 45% of Base Salary for other NEOs | RETENTION Fixed number of RSUs that vest ratably over three years | | LONG-TERM EQUITY INCENTIVE AWARDS | | | | | PERFORMANCE-BASED (1) | | | | Performance-based Restricted Stock Units (PRSUs) 180% of Base Salary for CEO 85% of Base Salary for CFO 72.5% of Base Salary for COO 62.5% of Base Salary for other NEOs | PERFORMANCE/GROWTH Conditional number of shares payable based on VSE's adjusted ROE for 2022 awards and adjusted EBITDA for 2023 and 2024 awards; one-third eligible to vest during each year of the three-year performance period |
COMPENSATION DISCUSSION AND ANALYSIS
(1) The time-based RSU and PRSU for the CFO refers to Mr. Cohn's RSU and PRSU opportunity. When considering the total long-term equity-based incentive award amount granted to each NEO, the Compensation Committee reviews the comparison to the peer group, the relative value of each compensation element, VSE’s recent performance, the expense of such awards, and the impact on dilution. Time-based RSUs. The Compensation Committee grants time-based RSUs to assist in retaining NEOs and increase equity ownership, which further aligns NEOs’ interests with those of stockholders. The following table sets forth the time-based RSUs that were granted to the NEOs in March of 2024. The units generally vest in three equal installments in March 2025, 2026, and 2027, subject to continuous employment.
COMPENSATION DISCUSSION AND ANALYSIS
| Executive | Base Salary | Target % of Salary | Target RSU Award Value | # of RSUs Granted | | John A. Cuomo | $900,000 | 120% | $1,080,000 | 14,077 | | Adam R. Cohn | $550,000 | 60% | $330,000 | 3,959 | | Benjamin Thomas | $450,000 | 50% | $225,000 | 2,933 | | Farinaz S. Tehrani | $371,000 | 45% | $166,950 | 2,176 | | Tarang Sharma | $310,000 | 29% | $89,900 | 1,146 | | Stephen D. Griffin (1) | $495,000 | 55% | $272,250 | 3,549 | | Chad M. Wheeler (1) | $408,554 | 45% | $183,849 | 2,396 |
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Griffin and Mr. Wheeler forfeited each of their respective 2024 RSU awards in connection with their departure from VSE on May 29, 2024 and November 5, 2024, respectively. For 2024, based on the 2024 Compensation Peer Group data and the recommendation of NFP, the Compensation Committee increased the time-based RSU target value for Mr. Cuomo (from 100% of base salary to 120% of base salary), Mr. Thomas (from 45% of base salary to 50% of base salary), and Mr. Griffin (from 50% of base salary to 55% of base salary) to continue to align target long term incentive award values more closely with the 2024 Compensation Peer Group median. The Compensation Committee determined that this alignment would allow the Company to be market competitive, provide for awards that are intended to attract, retain, and motivate the current executive officers and align executive and shareholder wealth creation over the long term. In addition to the grants summarized in the table above, Mr. Cohn received a special grant of time-based RSUs valued at approximately $2,000,000 in connection with his employment agreement to serve as the Company's Chief Financial Officer and in recognition of equity- and cash-based compensation forfeited from his prior employer. This award will generally vest as to 25% of the award on each of the first two anniversaries of the grant date and as to the remainder on the third anniversary of the grant date. Also, in connection with entering into an amended employment agreement in December 2024, Mr. Cuomo became entitled to an additional special grant of time-based RSUs valued at approximately $1,500,000, which RSUs generally vest in substantially equal installments on December 31, 2026 and December 31, 2027. Such grant to Mr. Cuomo was not made until January 1, 2025 however, so it does not appear in the 2024 Summary Compensation Table below, pursuant to applicable SEC disclosure rules. In connection with the assumption of his Chief Accounting Officer role in May 2024, Mr. Sharma became eligible for additional equity award amounts including time-based RSUs and PRSUs. These grants were made in February 2025 and will generally vest according to same schedule as RSUs and PRSUs granted to other NEOs in 2024. The RSU award for Mr. Sharma was valued at $77,500 and the PRSU award was valued at $116,229 although such grants are not included in the 2024 Summary Compensation Table because they were not granted in the 2024 fiscal year. The PRSU award differs from the PRSUs awarded to the other NEOs in 2024 in that its maximum payout level is 150% of target rather than 200% of target. Performance-based RSUs. The performance-based RSUs are equity awards that may be earned based on achievement with respect to pre-established financial goals. PRSUs are subject to a three-year performance period, with one-third of the opportunity eligible to vest based on financial performance during each year of the performance period. The PRSU program also includes a “catch up” opportunity for the second and third year of the performance period based on cumulative performance through the end of such year. For example, after the end of the second year of the performance period, performance from the beginning of the first year of the performance cycle through the end of the second year of the performance cycle will be measured. The resulting cumulative performance will then be used to determine a cumulative payout percentage (as measured against the second-year targets). If the cumulative payout percentage exceeds the actual number of PRSUs earned for years one and two of the performance cycle, then the excess shares will be earned by the NEOs. A similar process will be applied after the end of the third year of the performance period. The number of PRSUs earned for each performance year vests in the first quarter of the subsequent year based on achievement of the performance metrics and continued service. Description of 2024 PRSU Awards The 2024 PRSU award is based on the Company’s adjusted EBITDA performance for the three-year period from 2024 to 2026. For each year of the performance period, an adjusted EBITDA performance metric is set such that at the target 100% of the award would be earned, with a threshold below which 0% of such year’s opportunity would be earned, and with a maximum at or above which 200% of such year’s opportunity would be earned, with the actual number of units earned determined based on where actual performance falls between those levels based on linear interpolation. The Compensation Committee initially established goals for all three performance years in the first quarter of 2024. For purposes of the PRSU awards for 2024, adjusted EBITDA reflects adjustments approved by the Compensation Committee to reflect extraordinary or non-recurring items identified as part of the Company's reported adjusted EBITDA. 2024 PRSU Opportunity In March 2024, participants were initially granted a target number of unvested units. The following tables sets forth the target PRSU award granted to each of the NEOs in March of 2024:
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Sharma did not receive any PRSU awards in 2024, but as noted above he received awards in March 2025 that are intended to serve as his 2024 PRSU award opportunity. (2) Mr. Griffin and Mr. Wheeler forfeited each of their respective 2024-2026 PRSU awards in connection with their departure from VSE on May 29, 2024 and November 5, 2024, respectively. For 2024, based on the 2024 Compensation Peer Group data and the recommendation of NFP, certain NEO's PRSU target values were increased from their respective 2023 PRSU target values as follows: Mr. Cuomo's PRSU target value was increased from 150% of base salary to 180% of base salary; Mr. Thomas' PRSU target value was increased from 62.5% of base salary to 72.5% of base salary; and Mr. Griffin's PRSU target value was increased from 70% of base salary to 80% of base salary. Mr. Wheeler and Ms. Tehrani's PRSU target value remained the same as their respective 2023 PRSU target value of 62.5% of base salary, respectively. The awards granted in 2024 have a potential maximum value equivalent to 200% of target for the applicable NEOs, subject to the achievement of the applicable performance goals. These changes were intended to continue to align target long-term incentive award values and design features more closely with the 2024 Compensation Peer Group median. The Compensation Committee determined that this alignment would allow the Company to be market competitive, provide for awards that are intended to attract, retain and motivate the current executive officers and help align executive and shareholder wealth creation over the long term. Description of Prior Year Awards for 2023 and 2022 The 2023 PRSU award is based on the Company’s adjusted EBITDA performance for the three-year period from 2023 to 2025. For each year of the performance period, an adjusted EBITDA performance metric is set such that at the target 100% of the award would be earned, with a threshold below which 0% of such year’s opportunity would be earned, and with a maximum at or above which 200% of such year’s opportunity would be earned, with the actual number of units earned determined based on where actual performance falls between those levels based on linear interpolation. The Compensation Committee initially established goals for all three performance years in the first quarter of 2023. For purposes of the PRSU awards for 2024, adjusted EBITDA reflects adjustments approved by the Compensation Committee to reflect extraordinary or non-recurring items identified as part of the Company's reported adjusted EBITDA. The 2022 PRSU awards are based on the Company's adjusted ROE performance for the three-year period from 2022 to 2024. For each year of the performance period, an adjusted ROE performance metric is set at the threshold (below which 0% of such year’s opportunity would be earned) and the maximum (at or above which 100% of such year’s opportunity would be earned), with the actual number of units earned determined based on straight-line interpolation if actual performance falls between those levels. The Compensation Committee initially established goals for all three performance years in the first quarter of 2022. ROE is calculated by dividing net income by beginning shareholders equity. For purposes of the 2022 PRSU awards for 2024, adjusted ROE reflects adjustments approved by the Compensation Committee to reflect extraordinary or non-recurring events items identified as part of the Company's reported adjusted EBITDA. The 2023 and 2022 PRSU awards include a "catch-up" feature that is substantially similar to that applicable to the 2024 PRSU awards. PRSU Payouts for 2024 Performance Year 2024-2026 PRSU Award Payouts for 2024 Performance Year In early 2025, the Compensation Committee recommended, and the Board approved, the PRSU payouts for the 2024 performance year under the 2024-2026 PRSU awards, based on 2024 adjusted EBITDA performance of $136.3 million. In addition, as described above under "2024 Annual Incentive Award Payouts — Acquisition of Turbine Controls" and "- USPS Impact on Fleet Segment Financial Results," the Compensation Committee determined that it was appropriate to further adjust the threshold, target and maximum goal levels for adjusted EBITDA for purposes of the 2024 performance year to include the expected contributions of Turbine Controls and take into account the decrease in revenue for the Fleet segment. This resulted in a decrease to the threshold, target and maximum goal levels for the 2024 PRSU awards with respect to the 2024 performance year. Based on the adjusted EBITDA performance and the additional adjustments described above, the 2024-2026 PRSU payout resulted in the NEOs earning 197% of the target number of units allocated to the 2024 performance year. The following table details the number of PRSUs earned under the 2024-2026 PRSU awards for the 2024 performance year that vest in March of 2025:
COMPENSATION DISCUSSION AND ANALYSIS
| Executive | Maximum Potential 2024-2026 PRSUs Vesting in 2025 | Actual 2024-2026 PRSUs Vesting in 2025 | | | (# of Shares) | (# of Shares) | | John A. Cuomo | 14,077 | 13,865 | | Adam R. Cohn | 3,739 | 3,682 | | Benjamin Thomas | 2,835 | 2,791 | | Farinaz S. Tehrani | 2,015 | 1,984 | | Tarang Sharma (1) | — | — | | Stephen D. Griffin (2) | 3,441 | — | | Chad M. Wheeler (2) | 2,219 | — |
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Sharma did not receive any PRSU awards for 2024. (2) Mr. Griffin and Mr. Wheeler forfeited each of their respective 2024-2026 PRSU awards in connection with their departure from VSE on May 29, 2024 and November 5, 2024, respectively. 2023-2025 PRSU Award Payouts for 2024 Performance Year In early 2025, the Compensation Committee recommended, and the Board approved, the PRSU payouts for the 2024 performance year under the 2023-2025 PRSU awards, based on 2024 adjusted EBITDA performance of $136.3 million. In addition, as described above under "2024 Annual Incentive Award Payouts — Acquisition of Turbine Controls," the Compensation Committee determined that it was appropriate to further adjust the threshold, target and maximum goal levels for adjusted EBITDA for purposes of the 2024 performance year to include the expected contributions of Turbine Controls. This resulted in an increase to the threshold, target and maximum goal levels for the 2023-2025 PRSU awards with respect to the 2024 performance year. Based on the adjusted EBITDA performance and the additional adjustments described above, the 2023-2025 PRSU payout resulted in the NEOs earning 200% of the target number of units allocated to the 2024 performance year. The following table details the number of PRSUs earned under the 2023-2025 PRSU awards for the 2024 performance year that generally vest in March of 2025:
COMPENSATION DISCUSSION AND ANALYSIS
| Executive | Maximum Potential 2023-2025 PRSUs Vesting in 2025 | Actual 2023-2025 PRSUs Vesting in 2025 | | | (# of Shares) | (# of Shares) | | John A. Cuomo | 20,081 | 20,081 | | Adam R. Cohn (1) | — | — | | Benjamin Thomas | 3,640 | 3,640 | | Farinaz S. Tehrani | 3,661 | 3,661 | | Tarang Sharma (2) | — | — | | Stephen D. Griffin (3) | 5,132 | — | | Chad M. Wheeler (3) | 3,876 | — |
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Cohn did not receive any PRSU awards for 2023 because he was not employed by the Company during 2023. (2) Mr. Sharma did not receive any PRSU awards for 2023 because he was not in a position that was eligible for such awards in 2023. (3) Mr. Griffin and Mr. Wheeler forfeited each of their respective 2023-2025 PRSU awards in connection with their departure from VSE on May 29, 2024 and November 5, 2024, respectively. In early 2025, the Compensation Committee recommended, and the Board approved, the PRSU payouts for the 2024 performance year under the 2022-2024 PRSU awards, based on 2024 adjusted ROE performance of 8.9%. In addition, as described above under "2024 Annual Incentive Award Payouts — Acquisition of Turbine Controls," the Compensation Committee determined that it was appropriate to further adjust the threshold, target and maximum goal levels for adjusted ROE for purposes of the 2024 performance year to include the expected contributions of Turbine Controls. This resulted in an increase to the threshold, target and maximum goal levels for the 2022-2024 PRSU awards with respect to the 2024 performance year. Based on such adjusted ROE performance and the additional adjustments described above, the 2022-2024 PRSU payout resulted in the eligible NEOs earning 100% of the maximum number of units allocated to the 2024 performance year. The following table details the number of PRSUs earned under the 2022-2024 PRSU awards for the 2024 performance year, and under the “catch-up” feature for the prior performance years, that generally vest in March of 2025:
COMPENSATION DISCUSSION AND ANALYSIS
| Executive | Maximum Potential 2022-2024 PRSUs Vesting in 2025 | 2022-2024 PRSUs Vesting in 2025 Performance Year | | | (# of Shares) | (# of Shares) | | John A. Cuomo | 8,006 | 8,006 | | Adam R. Cohn (1) | — | — | | Benjamin Thomas | 1,474 | 1,474 | | Farinaz S. Tehrani | 1,482 | 1,482 | | Tarang Sharma (2) | — | — | | Stephen D. Griffin (3) | 1,821 | — | | Chad M. Wheeler (3) | 1,599 | — |
COMPENSATION DISCUSSION AND ANALYSIS
(1) Mr. Cohn's 2024 DSC Plan allocation was based on his 2024 pro-rated salary in the amount of $183,333. (2) Mr. Sharma is not a participant in the VSE DSC Plan. (3) In connection with their departure from VSE, Mr. Griffin and Mr. Wheeler did not receive any DSC Plan contribution for 2024. As of December 31, 2024, Mr. Griffin is expected to receive $143,803 for his vested DSC allocation on May 29, 2026, and Mr. Wheeler is expected to receive $1,323,287 for his vested DSC allocation on November 5, 2026. Other Compensation In addition to the elements of total direct compensation described above, the executive compensation program includes other elements of compensation that are designed primarily to attract, motivate, and retain executives critical to the Company's long-term success and to provide a competitive compensation structure. VSE executive officers, including the NEOs, are eligible to participate in the VSE Employee 401(k) Plan, which is an Internal Revenue Service qualified plan available to all eligible employees. During 2024, VSE paid a 401(k) matching contribution equal to 100% of the employee deferral on the first 3% of the employee pay deferred and 50% of the employee deferral on the next 2% of the employee pay deferred, with all such contributions fully vested when made. Specific amounts contributed to the VSE 401(k) Plan on behalf of the NEOs are included in the “2024 Summary Compensation Table” under the heading “All Other Compensation” set forth below. The Company offers an employee stock purchase plan to employees (including the NEOs) that generally allows participants to purchase VSE common stock at a discount. This plan further enhances the alignment between the interests of employees (including NEOs) with those of stockholders. Employment Agreements and Severance Arrangements During 2024, the Company was a party to employment agreements with each of the NEOs other than Mr. Sharma. These agreements provide for severance benefits that are payable upon a termination without “cause” or for “good reason,” either prior to or in connection with a change in control of the Company. In general, the severance provisions under these agreements are designed to promote the stability and continuity of senior management. The actual severance benefits set forth in the employment agreements were determined based on the Compensation Committee’s judgment and advice received by the Compensation Committee from its independent compensation consultant. Information regarding the key terms of these agreements is summarized in the “Executive Compensation” section below under the caption “Potential Payments Upon Termination or Change in Control.” On May 22, 2024, the Company entered into a Consulting Agreement with Mr. Griffin to provide consulting and advisory services following his separation of employment from VSE from May 29, 2024 until August 31, 2024. On August 16, 2024, the Company entered into an Employment Agreement with Mr. Cohn in connection with his commencement of employment with VSE effective September 3, 2024. On November 6, 2024, the Company entered into a Consulting Agreement with Mr. Wheeler to provide consulting services following his separation of employment from VSE effective November 5, 2024, and will continue to provide consulting services for up to one year thereafter. On December 17, 2024, the Company entered into an amended and restated employment agreement with Mr. Cuomo. Information regarding the key terms of each of these agreements is summarized in the “Executive Compensation” section below under the caption “Potential Payments Upon Termination or Change in Control.” Stock Ownership Guidelines The Compensation Committee believes that meaningful stock ownership by executive officers is important in aligning management’s interests with the interests of stockholders. Stock ownership guidelines are implemented to require continuing NEOs to maintain consistent ownership of VSE common stock based on a multiple of the executive’s annual base salary as set forth below:
EXECUTIVE COMPENSATION
| Item and Value Added (Deducted) | 2024 | | For Mr. Cuomo: | | | - change in actuarial present value of pension benefits | $— | | + service cost of pension benefits | $— | | + prior service cost of pension benefits | $— | | - Summary Compensation Table “Stock Awards” column value | $(2,699,987) | | - Summary Compensation Table “Option Awards” column value | $— | | + Covered Year-end fair value of outstanding equity awards granted in Covered Year | $5,334,907 | | +/- change in fair value (from prior year-end to Covered Year-end) of equity awards outstanding at Covered Year-end that were granted in prior years | $2,370,207 | | + vesting date fair value of equity awards granted and vested in Covered Year | $— | | +/- change in fair value (from prior year-end to vest date in Covered Year) of prior-year equity awards vested in Covered Year | $581,091 | | -prior year-end fair value of prior-year equity awards forfeited in Covered Year | $— | | +includable dividends/earnings paid or accrued on equity awards during Covered Year | $— |
EXECUTIVE COMPENSATION
| Item and Value Added (Deducted) | 2024 | | For Non-PEO NEOs (Average): | | | - change in actuarial present value of pension benefits | $— | | + service cost of pension benefits | $— | | + prior service cost of pension benefits | $— | | - Summary Compensation Table “Stock Awards” column value | $(844,585) | | - Summary Compensation Table “Option Awards” column value | | | + Covered Year-end fair value of outstanding equity awards granted in Covered Year | $964,816 | | +/- change in fair value (from prior year-end to Covered Year-end) of equity awards outstanding at Covered Year-end that were granted in prior years | $160,432 | | + vesting date fair value of equity awards granted and vested in Covered Year | $— | | +/- change in fair value (from prior year-end to vest date in Covered Year) of prior-year equity awards vested in Covered Year | $105,086 | | - prior year-end fair value of prior-year equity awards forfeited in Covered Year | $(302,902) | | + includable dividends/earnings paid or accrued on equity awards during Covered Year | $— |