DEF 14A of Curtiss Wright Corp
Filed Mar 22, 2024 · FY20230000930413-24-000963
Director Nominees
Director Nominees Set forth below is summary information concerning the Company’s Director Nominees who are being voted on at the Annual Meeting.
Director Nominees
| Name | Age | Director Since | Principal Occupation | Independent | | Lynn M. Bamford | 60 | 2021 | Chair and Chief Executive Officer, Curtiss-Wright Corporation | No | | Dean M. Flatt | 73 | 2012 | Former President and Chief Operating Officer, Honeywell International’s Defense and Space business | Yes | | Bruce D. Hoechner | 64 | 2017 | Former President and Chief Executive Officer, Rogers Corporation | Yes | | Glenda J. Minor | 67 | 2019 | Chief Executive Officer and Principal, Silket Advisory Services | Yes | | Anthony J. Moraco | 64 | 2021 | Former Chief Executive Officer and member of the Board of Directors, Science Applications International Corporation | Yes | | Admiral (Ret.) William F. Moran | 65 | 2023 | President, WFM Advisors, LLC; Former Vice Chief of Naval Operations | Yes | | Robert J. Rivet | 69 | 2011 | Former Executive Vice President, Chief Operations and Administrative Officer, Advanced Micro Devices, Inc. | Yes | | Peter C. Wallace | 69 | 2016 | Former Chief Executive Officer, Gardner Denver Inc. | Yes | | Lieutenant General (Ret.) Larry D. Wyche | 66 | 2023 | Chief Executive Officer, Wyche Leadership and Federal Contracting Consulting; Former Deputy Commanding General, U.S. Army Materiel Command | Yes |
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS
General Information
General Information At the date of this Proxy Statement, the Board of Directors of the Company (the “Board” or “Board of Directors”) consists of ten members, nine of whom are non-employee Directors. However, S. Marce Fuller, who is presently a Director of the Company, has advised the Board of her decision to retire from the Board with more than 24 years of distinguished service and leadership at Curtiss-Wright, which includes serving as Lead Independent Director for the past three years. Ms. Fuller’s term will expire just prior to the Annual Meeting. Ms. Fuller served on the Board with great distinction. The Committee on Directors and Governance of the Board of Directors has recommended, and our full Board of Directors has nominated Lynn M. Bamford, Dean M. Flatt, Bruce D. Hoechner, Glenda J. Minor, Anthony J. Moraco, William F. Moran, Robert J. Rivet, Peter C. Wallace, and Larry D. Wyche, each currently serving Directors, to be elected to the Board for a one-year term. In the event that any nominee should become unavailable for election, the persons named in the proxy may vote for the election of a substitute nominee. Directors will be elected by a plurality of votes properly cast (in person or by proxy) at the Annual Meeting. This means that a person will be elected who receives the first through ninth highest number of votes, even if he or she receives less than a majority of the votes cast. Therefore, stockholders who do not vote or withhold their vote from one or more of the proposed nominees and do not vote for another person, will not affect the outcome of the election provided that a quorum is present at the Annual Meeting. However, under our corporate governance guidelines, in an uncontested election of Directors where the only nominees are those recommended by the Board (which is the case for the election of Directors at this Annual Meeting), any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election (a “Majority Withheld Vote”) is required to tender his or her resignation following certification of the stockholder vote. The Committee on Directors and Governance must promptly consider the resignation offer and a range of possible responses based on the circumstances that led to the Majority Withheld Vote, if known, and make a recommendation to the Board. The Board will act on the Committee on Directors and Governance recommendation within 90 days following certification of the stockholder vote. Thereafter, the Board will promptly disclose its decision-making process and decision regarding whether to accept the Director’s resignation (or the reason(s) for rejecting the resignation offer, if applicable) in a Form 8-K filed with the SEC. Any Director who tenders his or her resignation pursuant to this provision will not participate in the Committee on Directors and Governance recommendation or the Board action regarding whether to accept or reject the resignation offer. As further discussed in the section titled “Broker non-votes” on page 10 of this Proxy Statement, if you own shares of Common Stock through a bank, broker or other holder of record, you must instruct your bank, broker, or other holder of record how to vote in order for them to vote your shares of Common Stock so that your vote can be counted on this Proposal One.
Overview of Curtiss-Wright’s Current Board of Directors
Overview of Curtiss-Wright’s Current Board of Directors The Board believes there are general requirements for service as a member of the Board that are applicable to all directors as laid out below, and other specialized characteristics that should be represented on the Board as a whole but not necessarily by each director. The specific qualifications, skills, experiences, and backgrounds of our director nominees are detailed in the section titled “Director Qualifications, Experiences, Backgrounds, and Diversity” on page 13 of this Proxy Statement.
Overview of Curtiss-Wright’s Current Board of Directors
| Our Directors Exhibit: High integrity Loyalty to the Company and commitment to its success Proven record of success Knowledge of corporate governance and practices Our Directors Bring to the Boardroom: High level of leadership experience Specialized industry experience Financial expertise Extensive knowledge of the Company | Board Composition: Independent Directors: 9 of 10 Average Company Board Tenure: 6 years Average Age: 66 years Diversity of gender, race, ethnicity, or sexual orientation: 3 Female 2 African American 1 LGBTQ community member |
Director Qualifications, Experiences, Backgrounds, and Diversity
Director Qualifications, Experiences, Backgrounds, and Diversity The Company’s director nominees have substantial leadership, management, and industry experience and expertise in various fields. Three of the Company’s nine director nominees self-identify as having diverse characteristics (race, gender, ethnicity or sexual orientation). This diversity of experience and background of our director nominees, illustrated in the skills matrix and director nominees’ biographies that follow, is brought to bear in Board deliberations, during which multiple perspectives are considered in developing dynamic solutions to achieve the Company’s strategic priorities to reduce complexity, drive returns, and advance sustainably. The skills matrix below summarizes the specific qualifications, skills, experiences, and backgrounds of each director nominee. While each director nominee is generally knowledgeable in each of these areas, an “X” in the skills matrix below indicates that the item is a specific qualification, skill, experience or attribute that the director nominee brings to the Board. The lack of an “X” for a particular item does not mean that the director nominee does not possess that qualification, skill, experience or attribute. Because the skills matrix is only a summary, it does not include all the qualifications, skills, experiences, backgrounds, and diversity that each director nominee offers.
Director Qualifications, Experiences, Backgrounds, and Diversity
| | Qualifications/Experiences/Backgrounds/Diversity | | | | | | | | | Director | Audit Committee Financial Expert | Extensive Knowledge of Company’s Business and Industry | Extensive M&A Experience | Broad International Experience | Other Public Company Board Experience | Current or Former CEO | Senior Leadership Experience | Gender/Ethnic/ Race/Sexual Orientation Diversity (a) | | Lynn M. Bamford | | X | | | | X | X | X | | Dean M. Flatt | | X | X | | X | | X | | | Bruce D. Hoechner | | X | X | X | X | X | X | | | Glenda J. Minor | X | X | X | X | X | | X | X | | Anthony J. Moraco | | X | X | | X | X | X | | | William F. Moran | | X | | X | | | X | | | Robert J. Rivet | X | X | X | X | X | | X | | | Peter C. Wallace | | X | X | X | X | X | X | | | Larry D. Wyche | | X | | X | | | X | X |
Director Qualifications, Experiences, Backgrounds, and Diversity
| (a) Self-identifies as having diverse characteristics (race, gender, ethnicity, or sexual orientation). |
Director Qualifications, Experiences, Backgrounds, and Diversity
In addition to gender, ethnic, race, and sexual orientation diversity, the Company also recognizes the value of other diverse attributes that directors may bring to the Board, including veterans of the U.S. military. The Company is proud to report that of our nine director nominees, three are also military veterans with over 77 years of combined service.
Information Regarding Nominees
Information Regarding Nominees Set forth below is information with respect to the nominees for Directors. Such information includes the principal occupation of each nominee for Director during, at least, the past five years, as well as a brief description of the particular experience, qualifications, attributes or skills that qualify the nominee to serve as a Director of the Company.
Information Regarding Nominees
| | Lynn M. Bamford Chair and Chief Executive Officer Curtiss-Wright Corporation Age: 60 Director Since: 2021 Other Public Company Directorships: None Career Highlights: Ms. Bamford has served as Chair of the Board of Directors of the Company since May 2022 and Chief Executive Officer of the Company since January 1, 2021. She has served as a member of the Board of Directors of the Company since January 1, 2021. She also formerly held the title of President of the Company from January 1, 2021 to May 5, 2022. Prior to this, she served as President and Chief Executive Officer of the Company from January 2021. She also served as President of the Company’s Defense and Power Segments from January 2020 and served as Senior Vice President and General Manager of the Company’s Defense Solutions and Nuclear divisions from 2018, and Senior Vice President and General Manager of the Company’s Defense Solutions division from 2013. Shortly after joining the Company in 2004, she assumed the position of Vice President, Product Development and Marketing, for the Company’s former Controls segment, and ascended to Vice President and General Manager of the Company’s Embedded Computing business. Reasons for Election to the Board of Curtiss-Wright: Ms. Bamford has been an employee of the Company for more than 18 years, serving in increasing levels of strategic, operational, and managerial responsibility. Ms. Bamford’s ability to grow the Company’s Defense and Power segments, as evidenced by the Company’s Defense and Power segments strong growth during her leadership, and in-depth knowledge of all the Company’s business segments and industries in which they operate, provides the Company a competitive advantage in continuing to improve long-term performance and increase stockholder value. |
Information Regarding Nominees
| | Dean M. Flatt Retired President and Chief Operating Officer Honeywell International Inc., Defense and Space Business Age: 73 Director Since: 2012 Committees: Finance (Chair); Executive Compensation Other Public Company Directorships: Ducommun Incorporated (2009 – present) Career Highlights: Mr. Flatt served as President and Chief Operating Officer of Honeywell International Inc.’s Defense and Space business from July 2005 to July 2008. Prior to that, he served as President of Honeywell International Inc.’s Aerospace Electronics Systems business from December 2001 to July 2005 and served as President of Honeywell International Inc.’s Specialty Materials and Chemicals business from July 2000 to December 2001. Further, he serves as a director of Ducommun Incorporated since January 2009 where he currently serves as Chairman of the Compensation Committee and as Lead Director. Ducommun is a leading provider of engineered products and aftermarket services across various industries, including aerospace and defense. He formerly served as a director of National Technical Systems, Inc. from January 2014 until September 2022 (he formerly served as non-executive Chairman from January 2014 until January 2018). National Technical Systems is a leading provider of engineering and testing services across various industries, including aerospace and defense. He formerly served as a director of Industrial Container Services, Inc. from January 2012 until April 2017. Reasons for Election to the Board of Curtiss-Wright: Mr. Flatt has an in-depth understanding of the aerospace and defense industries, evidenced by his past employment in high-level managerial positions at Honeywell International Inc., a leading global supplier of aerospace and defense products, two of the Company’s major markets. In addition, Mr. Flatt has extensive experience in evaluating new business opportunities gained while serving on the executive board of a private equity firm. Furthermore, Mr. Flatt has extensive managerial experience in operating a business at the director level, serving as a current director of Ducommun Incorporated and a previous director of National Technical Systems, Inc. Mr. Flatt’s ability to lead a company at one of the highest levels of management, coupled with his in-depth knowledge of the aerospace and defense industries and private equity investing provides the Company with a competitive advantage in seeking new opportunities and platforms for its aerospace and defense industry products and services, as well as strengthening the ability of the Company to select strategic acquisitions. |
Information Regarding Nominees
| | Bruce D. Hoechner Retired President and Chief Executive Officer Rogers Corporation Age: 64 Director Since: 2017 Committees: Committee on Directors and Governance; Finance Other Public Company Directorships: Ingevity Corporation (2023 – present) Rogers Corporation (2011 – 2023) Career Highlights: Mr. Hoechner served as President and Chief Executive Officer of Rogers Corporation, a NYSE-listed company from October 2011 until his retirement on December 31, 2022. He also served as a member of the Board of Directors of Rogers Corporation until retirement from such Board on March 31, 2023. Rogers Corporation is a leading global provider of engineered materials and components for mission critical applications serving telecommunications, automotive, defense and aerospace, and consumer markets. Mr. Hoechner also serves as a director of Ingevity Corporation since February 2023. Ingevity is a leading manufacturer of specialty chemicals. From October 2009 to October 2011, Mr. Hoechner served as President, Asia Pacific region, based in Shanghai, China, for Dow Chemical Company, a global diversified chemical and material company, and before that held positions of increasing responsibility in the U.S. and internationally during his 27-year career with Rohm and Haas Company, a leading manufacturer of specialty chemicals, which was purchased by Dow. Reasons for Election to the Board of Curtiss-Wright: Mr. Hoechner has many years of broad leadership experience across numerous geographies, businesses, and functions with particularly strong international experience at leading multinational organizations. In his prior capacity as CEO and President of Rogers Corporation, Mr. Hoechner led a business transformation that significantly improved revenues and profitability, and resulted in a substantial increase in the company’s market cap. Mr. Hoechner brings to our Board international executive experience in technology manufacturing, with relevant industry exposure, as well as extensive strategic and financial acumen, which enhances Mr. Hoechner’s contributions and value to the Company’s Board. |
Information Regarding Nominees
| | Glenda J. Minor Chief Executive Officer and Principal Silket Advisory Services Age: 67 Director Since: 2019 Committees: Audit; Committee on Directors and Governance Other Public Company Directorships: Albermarle Corporation (2019 – present) Radius Recycling, Inc. f/k/a Schnitzer Steel Industries, Inc. (2020 – present) Career Highlights: Ms. Minor has served as Chief Executive Officer and Principal of Silket Advisory Services, a privately owned consulting firm, since 2016. Silket Advisory Services advises companies on financial, strategic, and operational initiatives. From 2010 – 2015, Ms. Minor was Senior Vice President and Chief Financial Officer of Evraz North America Limited, a leading steel manufacturer. Prior to this, Ms. Minor held both domestic and international executive finance roles at increasing levels of managerial responsibility at Visteon Corporation, a leading global automotive supplier, and DaimlerChrysler, a leading global automotive manufacturer, as well as financial management roles at General Motors Corporation, a leading global automotive manufacturer, and General Dynamics Corporation, a leading global aerospace and defense company. Ms. Minor currently serves on the Board of Directors of Albemarle Corporation, a leading global specialty chemical company; Radius Recycling, Inc., one of the largest manufacturers and exporters of recycled metal products in North America; and the Capital Area United Way, a non-profit organization, where she serves as the Treasurer and Finance Committee chair. Ms. Minor has previously served on the board of several other non-profit organizations. Reasons for Election to the Board of Curtiss-Wright: Ms. Minor has many years of broad financial and international leadership experience across different industries and different continents, which have provided her with an in-depth understanding of the preparation and analysis of financial statements, and invaluable experience in capital market transactions, accounting, treasury, investor relations, financial and strategic planning, and business expansion. She is also financially literate in accordance with NYSE listing standards and an “audit committee financial expert” in accordance with SEC regulations. Ms. Minor’s extensive financial knowledge will be an invaluable asset to the Board in its oversight of the integrity of the Company’s financial statements and the financial reporting process. Additionally, Ms. Minor’s experience in mergers and acquisitions and business expansion provides the Company a competitive advantage in seeking new strategic business opportunities and platforms for its products and services. |
Information Regarding Nominees
| | Anthony J. Moraco Retired Chief Executive Officer and former Director Science Applications International Corporation Age: 64 Director Since: 2021 Committees: Executive Compensation; Finance Other Public Company Directorships: Science Applications International Corporation (2013 – 2019) Career Highlights: Mr. Moraco served as Chief Executive Officer and a member of the Board of Directors of Science Applications International Corporation (SAIC), a NYSE-listed company, from September 2013 to July 2019, after its separation from its former parent Leidos Holdings, Inc. SAIC is a leading provider of technical, engineering, and enterprise information technology (IT) solutions and services primarily to the U.S. government. Prior to this time, he served in various leadership positions at Leidos (legacy SAIC), including serving as President of its Government Solutions Group in 2013, as Group President of its Intelligence, Surveillance and Reconnaissance organization from 2012 to 2013, as its Executive Vice President for Operations and Performance Excellence from 2010 to 2012, and as Senior Vice President and General Manager of its Space and Geospatial Intelligence Business Unit from 2007 to 2010. Leidos is a leading science, engineering and IT company that provides services and solutions in the defense, intelligence, civil and health markets. Reasons for Election to the Board of Curtiss-Wright: Mr. Moraco has an in-depth understanding of the aerospace and defense industry, evidenced by his past employment at SAIC and Leidos, as well as his previous leadership roles at the Boeing Company Space & Intelligence Mission Systems and Phantom Works. In addition, Mr. Moraco has extensive experience in U.S. government contracting. Mr. Moraco’s market knowledge, leadership skills, financial acumen, and operational management ability proven during his tenure as CEO of SAIC and as an executive of Leidos, along with his prior public company board experience, enhances Mr. Moraco’s contributions and value to the Company’s Board. |
Information Regarding Nominees
| | Admiral (Ret.) William F. Moran President WFM Advisors, LLC Age: 65 Director Since: 2023 Committees: Executive Compensation; Finance Other Public Company Directorships: None Career Highlights: Admiral Moran has served at WFM Advisors, LLC, a privately-owned consulting firm, since 2019. WFM Advisors advises companies in the areas of Aerospace and Defense, training and education, artificial intelligence and technology. Prior to this, Admiral Moran had a long, distinguished career in the U.S. Navy serving at various times in increased senior leadership positions. From 2016 to 2019, he served as Vice Chief of Naval Operations; from 2013 to 2016, he served as Chief of Naval Personnel; from 2010 to 2013, he served as Director of Air Warfare; and from 1981 to 2010 he held various other leadership roles. Admiral Moran currently serves on the Board of Directors of USAA, and also serves on its audit and compensation and workforce committees. USAA is a Fortune 500 diversified financial services group of companies offering banking and insurance to people and families who serve, or served, in the United States Armed Forces. Reasons for Election to the Board of Curtiss-Wright: Admiral Moran has many years of broad leadership and operational experience while serving in the U.S. Navy. He is familiar with financial management, leadership development, operations, and strategic planning. This experience, coupled with an in-depth understanding of the U.S. Navy’s operational needs and U.S. government contracting and spending, provides the Company a competitive advantage in developing new operational leaders and new strategic business opportunities and platforms for its naval defense business’ products and services. |
Information Regarding Nominees
| | Robert J. Rivet Retired Executive Vice President, Chief Operations and Administrative Officer Advanced Micro Devices, Inc. Age: 69 Director Since: 2011 Committees: Audit (Chair); Executive Compensation Other Public Company Directorships: None Career Highlights: Mr. Rivet served as Executive Vice President, Chief Operations and Administrative Officer of Advanced Micro Devices, Inc., a leading global semiconductor company, from October 2008 to February 2011, and has served as Executive Vice President, Chief Financial Officer of Advanced Micro Devices, Inc. from September 2000 until October 2009. From 2009 to 2011, he also served as a Director of GlobalFoundries Inc., a semiconductor foundry. Prior to this, Mr. Rivet was senior Vice President at Motorola, a leading communication and semiconductor manufacturer in executive finance roles both domestically and internationally, which included a three-year assignment in Geneva, Switzerland, as the European Semiconductor CFO. Mr. Rivet has been elected to serve as Lead Independent Director of the Board effective May 2024 for a term of one-year or until his successor is appointed. Reasons for Election to the Board of Curtiss-Wright: Mr. Rivet has 35 years of broad financial and international leadership experience across different technology industries, which has provided him an in-depth understanding of the preparation and analysis of financial statements, and an in depth understanding of our supply chain, including nine years as Chief Financial Officer of Advanced Micro Devices. In addition, Mr. Rivet led numerous acquisitions, divestitures, and capital market activities while at Advanced Micro Devices. He is also financially literate in accordance with NYSE listing standards and an “audit committee financial expert” in accordance with SEC regulations. Mr. Rivet’s extensive financial knowledge will be an invaluable asset to the Board providing comprehensive oversight over the integrity of the Company’s financial statements and the financial reporting process. Additionally, his in-depth understanding of high-technology industries such as the semiconductor business, and experience in mergers, acquisitions, and capital markets provides the Company a competitive advantage in addressing supply chain issues and seeking new strategic business opportunities and acquisitions. |
Information Regarding Nominees
| | Peter C. Wallace Retired Chief Executive Officer and former Director Gardner Denver Age: 69 Director Since: 2016 Committees: Committee on Directors and Governance (Chair); Finance Other Public Company Directorships: Applied Industrial Technologies, Inc. (2005 – present) Rogers Corporation (2010 – present) Career Highlights: Mr. Wallace served as Chief Executive Officer and a Director of Gardner Denver Inc. from June 2014 until his retirement as of January 1, 2016. Gardner Denver (now merged with Ingersoll Rand’s Industrial segment and renamed Ingersoll Rand Inc.) is an industrial manufacturer of compressors, blowers, pumps, and other fluid control products used in numerous global end markets. Prior to joining Gardner Denver, Mr. Wallace was President and Chief Executive Officer, and a Director, of Robbins & Myers, Inc., from 2004 until it was acquired in February 2013 by National Oilwell Varco, Inc. Robbins & Myers was a leading designer, manufacturer, and marketer of highly engineered, application-critical equipment and systems for energy, chemical, pharmaceutical, and industrial markets worldwide. Mr. Wallace is also non-executive Chairman of the Board of Applied Industrial Technologies, Inc., a leading provider of industrial products and fluid power components, and non-executive Chairman of the Board of Rogers Corporation, a leading provider of engineered materials and components for mission critical applications across various markets. Mr. Wallace also serves on the board of a private manufacturing firm engaged in packaging equipment and industrial markets and serves as a board member of a private equity backed firm engaged in transitional energy markets. Reasons for Election to the Board of Curtiss-Wright: Mr. Wallace has a wide and varied background as a senior executive, including having served as CEO of several leading companies in global industrial equipment manufacturing, serving a wide range of end markets, including aerospace, energy, and industrial. During his career, Mr. Wallace transformed businesses by developing clear strategies that included acquiring and merging companies, along with divestitures to free up resources that could be redeployed to create long-term shareholder value. He also led major organization changes, and in doing so recruited top talent and developed others in key areas, including strategic account planning, key account management, lean implementation, and facility rationalization, to improve profitability. Mr. Wallace has extensive experience in evaluating business opportunities and management teams as he has been engaged by several private equity firms to evaluate business plans. He has been a senior advisor to private equity firms, and has served as CEO of a private equity backed portfolio company. Mr. Wallace brings to the Board the perspective of someone familiar with all facets of worldwide business operations, including the experience of leading a NYSE-listed company. This broad and extensive experience in senior leadership roles, including his board experience in both public and private companies, and experience in mergers, acquisitions, and divestitures, provides the Company a competitive advantage in creating long-term shareholder value and seeking new strategic business opportunities and acquisitions. |
Information Regarding Nominees
| | Lieutenant General (Ret.) Larry D. Wyche Chief Executive Officer Wyche Leadership and Federal Contracting Consulting Age: 66 Director Since: 2023 Committees: Audit; Committee on Directors and Governance Other Public Company Directorships: None Career Highlights: Lt. Gen. Wyche serves as Chief Executive Officer of Wyche Leadership and Federal Contracting Consulting, a privately-owned consulting firm, since 2017. Prior to this, Lt. Gen. Wyche had a long, distinguished career in the U.S. Army serving at various times in increased senior leadership positions. From 2015 to 2017, he served as Deputy Commanding General, U.S. Army Materiel Command; from 2012 to 2014, he served as Commanding General, Combined Arms Support Command; from 2010 to 2012, he served as Deputy Chief of Staff for Operations, U.S. Army Materiel Command; from 2008 to 2010, he served as Commanding General, Joint Munitions Command; and from 2002 to 2008, he completed two tours at the Pentagon serving as Director for Supply Chain Strategy & Integration, and Chief of Supply Chain & Logistics Programs. He currently serves as a Director at Ready One Industries, a non-profit organization. Reasons for Election to the Board of Curtiss-Wright: Lt. Gen. Wyche has many years of broad leadership and operational experience while serving in the U.S. Army. He is familiar with the U.S. military supply chain, emerging technologies, cyber assurance, human capital management, financial management, operations, and strategic planning. This experience, coupled with an in-depth understanding of U.S. government acquisition, contracting and spending, especially defense and defense products, provides the Company a competitive advantage in addressing supply chain issues, cyber threats, and workforce matters, as well as seeking new strategic business opportunities and platforms for the Company’s defense industry products and services. |
Compensation of Directors
Compensation of Directors For information concerning compensation of our Directors, please see “Compensation of Directors” on page 75 of this Proxy Statement.
Board Membership Criteria and Selection Process for Director Nominees
Board Membership Criteria and Selection Process for Director Nominees In addition to stockholder nominations for Directors, the Committee on Directors and Governance also considers candidates for Board membership as recommended by Directors or executive management. The Committee on Directors and Governance uses the same criteria to evaluate all candidates for Board membership, whether recommended by Directors, executive management, or stockholders. As it deems necessary, the Committee on Directors and Governance may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees. The Committee on Directors and Governance seeks candidates with the highest professional and personal ethics and values and who will operate in accordance with the Company’s Code of Conduct and corporate governance guidelines. The Committee on Directors and Governance also assesses a candidate’s ability to make independent analytical inquiries, and willingness to devote adequate time to Board duties. Prospective candidates should be committed to representing the long-term interests of the Company’s stockholders. Moreover, a potential candidate must exhibit an inquisitive and objective perspective, an ability to think strategically, an ability to identify practical problems, and an ability to assess alternative courses of action that contribute to the long-term success of the business. Director nominees should possess at least the following experience, attributes, and characteristics:
Board Membership Criteria and Selection Process for Director Nominees
| Experience (in one or more of the following): | | | • | High level leadership experience; | | • | Specialized expertise in the industries in which the Company competes; | | • | Demonstrated business acumen or special technical skills or expertise (e.g., auditing, financial, law and aerospace/defense); | | • | Breadth of knowledge about issues affecting the Company; | | • | Ability and willingness to contribute special competencies to Board activities; and | | • | Expertise and experience that is useful to the Company and complementary to the background and experience of other Board members, so that an optimal balance and diversity of Board members may be achieved and maintained. | | Personal attributes and characteristics: | | | • | Personal integrity; | | • | Loyalty to the Company and concern for its success and welfare, and willingness to apply sound independent business judgment; | | • | Awareness of a director’s vital part in the Company’s good corporate citizenship and corporate image; and | | • | Willingness to assume fiduciary responsibilities. |
Board Membership Criteria and Selection Process for Director Nominees
The Committee on Directors and Governance annually evaluates the performance of the Board, each of the committees, and each of the members of the Board. It also reviews the size of the Board and whether it would be beneficial to add additional members and/or any new skills or expertise, considering the overall operating efficiency of the Board and its committees. If the Board has a vacancy, or if the Committee determines that it would be beneficial to add an additional member, the Committee will consider the factors identified above and all other factors, which the Committee in its best judgment deems relevant at such time. Once an individual has been identified by the Committee on Directors and Governance as a potential candidate, the Committee, as an initial matter, may collect and review publicly available information regarding the individual to assess whether the individual should be considered further. Generally, if the individual expresses a willingness to be considered and to serve on the Board, and the Committee believes that the individual has the potential to be a good candidate, the Committee would seek to gather information from or about the individual, review the individual’s accomplishments and qualifications in light of any other candidates that the Committee might be considering, and, as appropriate, conduct one or more interviews with the individual. In certain instances, Committee members may contact one or more references provided by the candidate or may contact other members of the business community or other individuals that may have greater first-hand knowledge of the candidate’s accomplishments. The Committee’s evaluation process does not vary based on whether a prospective candidate is recommended by a stockholder, although, as stated above in the section titled “Stockholder Nominations for Directors” on page 34 of this Proxy Statement, the Board may take into consideration the number of shares held by the recommending stockholder and the length of time that such shares have been held.
2023 Company Financial Performance
| ● | Driving operational excellence to improve key financial metrics such as (a) short-term financial metrics, including (i) adjusted operating income, (ii) organic sales growth, and (iii) working capital as a percentage of sales, and (b) long-term financial metrics, including (iv) total sales growth, (v) adjusted earnings per share growth, and (vi) relative total shareholder return; and |
2023 Incentive Payouts
2023 Incentive Payouts As discussed in the section titled “2023 Company Financial Performance” on page 40 of this CD&A, the Committee believes incentive awards earned by the NEOs for fiscal 2023 reflect the Company’s commitment to pay for performance.
2023 Incentive Payouts
| ● | 2023 annual incentive awards were paid on average at 180% of target for the NEOs with incentives based on Company financial objectives (80%) and individual (20%) performance. |
2023 Incentive Payouts
| ● | Cash-based performance units for the NEOs for the 2021-2023 performance period were paid at maximum or 200% of target, based on 3-year average total sales growth and 3-year average adjusted earnings-per-share growth. |
2023 Incentive Payouts
| ● | Performance Share Units payout for the 2021-2023 performance period was at maximum or 200% of target, attributable to the Company’s relative TSR performance to the S&P MidCap 400. |
Overview of the 2023 Executive Compensation Program
| ● | Curtiss-Wright’s vision of achieving top quartile performance compared to its peer group |
Overview of the 2023 Executive Compensation Program
| ● | Long-Term Incentives (LTI) including equity as a key component thereby aligning 70% of NEO’s LTI grant value with shareholder interests through 3-year performance-based vehicles |
Overview of the 2023 Executive Compensation Program
While the Committee reviews both peer group data and nationally recognized survey data from third party sources, the Committee primarily relies on peer group data for the CEO and CFO, while placing more focus on nationally recognized executive survey data from third party sources for the other NEOs. The Committee believes that due to the smaller number of peer matches and more robust sample size of the surveys, the latter provides more robust and reliable compensation data for roles other than the CEO and CFO. Roles in determining 2023 Executive Compensation Summarized in the table below are roles and responsibilities for executive compensation:
Overview of the 2023 Executive Compensation Program
| Groups Involved | Roles and Responsibilities | | Executive Compensation Committee | ● Determines the compensation levels for all participants including the executive officers annually ● Oversees the administration of the Company’s incentive compensation programs and executive officer salaries. ● Reviews competitiveness and business fit of overall incentive compensation plans, philosophy and policies ● Oversees cost and design of the Company’s retirement plans and recommends changes to the full Board ● Selects, oversees, and directs the activities of the external executive compensation consultant and ensures the independence of such consultant ● Reviews and evaluates compensation plans and arrangements to assess whether they could encourage undue risk taking ● Reviews and approves the personal and financial annual and long-term goals and objectives for the executive officers and the Company, evaluates the executive officers and the Company’s performance in light of those goals and objectives, and determines and approves all annual and long-term incentive compensation of the executive officers based on this evaluation | | Board Members | ● Oversee design and cost changes to the retirement plans | | Independent Committee Consultant | ● Provides advice on officer and board of directors compensation matters · Provides information on competitive market trends in general executive compensation as it impacts officers ● Provides proposals for officer compensation programs, program design, including measures, goal-setting, and pay and performance alignment and other topics as the Committee deems appropriate ● Is directly accountable to the Committee, which has sole authority to engage, dismiss, and approve the terms of engagement of the compensation consultant | | CEO | ● Evaluates performance of the executive officers other than her own ● Makes recommendations to the Committee regarding base salary, annual incentive compensation targets, long-term cash incentive compensation targets, and long-term equity compensation for the executive officers other than herself as well as all other participants in the Company’s incentive plans | | Other Executives: CFO, GC | ● Makes recommendations to the CEO and Committee regarding officer annual and long-term incentive plan design and performance metrics ● Provides officer compensation analysis in collaboration with the Committee’s independent consultant ● Provides information and recommendations regarding board of director pay with oversight by the Committee’s independent consultant and the Committee on Directors and Governance |
2023 Compensation Components
| Compensation Component | Role in the Executive Compensation Program | | Base Salary | ● Provides fixed compensation based on responsibility level, position held, job duties performance, years of experience in the position, and market value | | Annual Incentive Compensation | ● Motivates and rewards achieving annual financial and operational business objectives that are linked to the Company’s overall short-term business strategy | | Long-Term Incentive Program | ● Motivates participants to achieve longer-term financial goals that drive shareholder value through three components: 1. Performance-based restricted stock units (metric = relative TSR against the peer group – 40% weighted (provided to certain senior level executives) 2. Cash-based performance units (metrics = total sales growth and adjusted EPS growth) – 30% weighted (provided to all participants), and 3. Time-based restricted stock units (provided to all participants) – 30% weighted ● Promotes stock ownership and aligns incentive awards with stockholder interests ● Rewards achievement of longer-term (three year) business objectives that are linked to the Company’s overall longer-term business strategy and total return to stockholders; whereas the time-based restricted stock unit award encourages retention | | Employee Stock Purchase Plan | ● Allows substantially all full-time employees the ability to set aside money to purchase stock of the Company ● Promotes stock ownership and aligns employees with stockholder interests | | Executive Deferred Compensation Plan | ● Permits deferral of compensation in excess of 401(k) statutory limits for tax advantaged savings ● Provides officers and other executives with a savings opportunity comparable to other employees | | Traditional Defined Benefit Pension Plan | ● Promotes the long-term retention and financial health of employees to remain competitive with industry peers ● Provides a defined benefit taking into consideration years of service, age and compensation | | | Note: The Company’s traditional defined benefit pension plan is closed to new entrants. It will cease to provide accruals to existing participants at the end of 2028. |
2023 Compensation Decisions and the Basis for Decisions
2023 Compensation Decisions and the Basis for Decisions Base Salary Base salary is intended to compensate employees, including our NEOs, for performance of core job responsibilities and duties. Base salary drives other pay components in that it is used to determine target values for annual incentive compensation, long-term incentive compensation, retirement benefit calculations, severance protection, and change-in-control benefits. The Committee determines and approves NEO salaries annually that reflect the value of the position measured by competitive market data, the NEOs’ individual performance, and the individual’s longer-term intrinsic value to the Company. For 2023, the NEO’s base salaries were increased as shown in the table below:
2023 Compensation Decisions and the Basis for Decisions
Annual Incentive Compensation For 2023, the NEOs participated in the Curtiss-Wright Incentive Compensation Plan, as amended (“ICP”), which is a broad-based management incentive plan that was last approved by the Company’s stockholders in May 2023. The Company believes that an important portion of the overall cash compensation for all participants in the incentive programs should be contingent upon the successful achievement of certain annual corporate financial and individual goals and objectives that contribute to enhanced shareholder value over time. Accordingly, 80% of each participant’s annual incentive target is tied to financial performance, while the remaining 20% is tied to significant individual goals and objectives. Similar to the process described above to determine annual base salaries, the Committee annually establishes a target bonus opportunity for each NEO. For 2023, each NEO had the following target bonus opportunity:
2023 Compensation Decisions and the Basis for Decisions
| NEO | 2023 Target Bonus (% of Base Salary) | | Ms. Bamford | 120% | | Mr. Rayment | 80% | | Mr. Farkas | 80% | | Mr. Ferdenzi | 70% | | Mr. Watts | 50% |
Payout = (30% of Target x OI Performance Rating) + (20% of Target x OSG Rating) + (30% of Target x WC Rating)
Payout = (30% of Target x OI Performance Rating) + (20% of Target x OSG Rating) + (30% of Target x WC Rating)
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| NEO | Target % of Base Salary | Goal | Weight | Actual Result | 2023 ICP Payout as % of Target | 2023 ICP Target ($) | 2023 ICP Payout ($) | | Ms. Bamford | 120% | Individual Portion | 20% | 3.8 | 140% | $240,000 | $336,000 | | | | OI Portion | 30% | $494M | 199% | $360,000 | $716,400 | | | | OSG Portion | 20% | 10.7% | 200% | $240,000 | $480,000 | | | | WC Portion | 30% | 23.8% | 200% | $360,000 | $720,000 | | | | Total Payout | | | | | $2,252,400 | | Mr. Rayment | 80% | Individual Portion | 20% | 3.2 | 110% | $99,840 | $109,824 | | | | OI Portion | 30% | $494M | 199% | $149,760 | $298,022 | | | | OSG Portion | 20% | 10.7% | 200% | $99,840 | $199,680 | | | | WC Portion | 30% | 23.8% | 200% | $149,760 | $299,520 | | | | Total Payout | | | | | $907,046 | | Mr. Farkas | 80% | Individual Portion | 20% | 3.5 | 125% | $93,280 | $116,600 | | | | OI Portion | 30% | $494M | 199% | $139,920 | $278,441 | | | | OSG Portion | 20% | 10.7% | 200% | $93,280 | $186,560 | | | | WC Portion | 30% | 23.8% | 200% | $139,920 | $279,840 | | | | Total Payout | | | | | $861,441 | | Mr. Ferdenzi | 70% | Individual Portion | 20% | 3.9 | 145% | $74,620 | $108,199 | | | | OI Portion | 30% | $494M | 199% | $111,930 | $222,741 | | | | OSG Portion | 20% | 10.7% | 200% | $74,620 | $149,240 | | | | WC Portion | 30% | 23.8% | 200% | $111,930 | $223,860 | | | | Total Payout | | | | | $704,040 | | Mr. Watts | 50% | Individual Portion | 20% | 4.0 | 150% | $38,300 | $57,450 | | | | OI Portion | 30% | $494M | 199% | $57,450 | $114,326 | | | | OSG Portion | 20% | 10.7% | 200% | $38,300 | $76,600 | | | | WC Portion | 30% | 23.8% | 200% | $57,450 | $114,900 | | | | Total Payout | | | | | $363,276 | | | | Aggregate Payout | | | | | $5,088,203 |
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Key Changes to the Annual Incentive Compensation Design for 2024 There were no changes made to the ICP metrics and weightings for 2024. They will remain working capital as a percent of sales (30%), operating income (30%), organic sales growth (20%), and individual goals (20%). Long-Term Incentive Program The Company’s long-term incentive plan (“LTIP”) is designed to ensure its executive officers and key management employees are focused on longer-term stockholder value creation through incentive compensation that rewards for longer-term (i.e., three years or more) performance. In determining the 2023 LTIP grants, the Committee considered the following factors:
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| NEO | 2023 LTIP Value as % of Base Salary | | Ms. Bamford | 430% | | Mr. Rayment | 225% | | Mr. Farkas | 210% | | Mr. Ferdenzi | 165% | | Mr. Watts | 75% |
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If the NEOs drive Company performance that achieves target levels, payouts will result in values that approximate market median LTIP payments. 2023 Long-Term Incentive Compensation The Committee believes the award mix summarized in the table below provides the proper amount of leverage in the LTIP program. The LTIP components will balance the multiple interests of 1) significant pay at risk, 2) stockholder interests, 3) retention, and 4) internal and external performance goals. The three components chosen will each accomplish a different “mission” in terms of incenting NEO performance. LTIP equity awards are typically made in March, during an open trading window after the Company’s February release of year-end earnings. Awards are neither timed to relate to the price of our stock nor to correspond with the release of material non-public information.
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| Long-Term Incentive Component (Weight) | Performance Condition/Vesting Schedule | Objective of Design | | PSUs (40%) | ● Three-year relative TSR against the peer group | ● Aligns pay with relative TSR ● Aligns NEOs’ with shareholders’ interests | | PUPs (30%) | ● Three-year average total sales growth (weighted 60%) and three-year average adjusted EPS growth (weighted 40%) against objectives | ● Focus on internal goals linked to long-term business strategy ● Use of cash to mitigate dilution and burn rate concerns ● Aligns NEOs’ with shareholders’ interests | | RSUs (30%) | ● Cliff vest 100% on the third anniversary of the date of grant | ● Retention ● Stock ownership ● Strengthens alignment with shareholders |
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Performance Share Units The target number of PSUs granted is calculated by multiplying the total dollar value of the LTIP grant by the percentage of LTIP grant allocated to PSUs and dividing by the closing price of the Company’s common stock as reported on the New York Stock Exchange on the date of the grant. The payout is determined based on the table below in relation to peer performance. The Company has capped payout at 100% if absolute TSR is negative.
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| | PSUs 2023-2025 Performance Period | | | | TSR vs. Peer Group | Payout as a % of Target (1) | | Maximum | ≥ 75th | 200% | | Target | 50th | 100% | | Threshold | 25th | 50% | | Below Threshold | < 25th | 0% |
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(1) Linear interpolation will apply for performance between disclosed payout levels. Cash-Based Performance Units The target number of PUPs granted is calculated by multiplying the total dollar value of the LTIP grant by the percentage of LTIP grant allocated to PUs. The number of units vesting can range from 0% to 200% of target. Performance targets for each goal are established at the beginning of the performance period. Restricted Stock Units The number of RSUs granted is calculated by multiplying the total dollar value of the LTIP grant by the percentage of LTIP grant allocated to RSUs and dividing by the closing price of the Company’s common stock as reported on the New York Stock Exchange on the date of the grant. RSUs cliff vest in three years. 2021-2023 Long-Term Incentive Compensation Payouts Performance Share Units In February 2024, a PSU payout was made to the NEOs for the February 2021 PSU grants covering performance for 2021-2023. The payout for PSUs for the performance period 2021-2023 was a 200% payout based on achievement of relative TSR at the 87th percentile of the S&P MidCap 400. Cash-Based Performance Units In February 2024, a cash-based performance unit payout was made to the NEOs based on the cash-based performance unit grants covering the 2021-2023 performance period. The 2021-2023 performance targets were based 60% on three-year average total sales growth and 40% on three-year average adjusted earnings per share (EPS) growth. The Company believes that total sales growth and adjusted EPS growth metrics are long-term drivers of stockholder value. No incentive is paid if performance falls below Threshold, and payouts are capped and may not exceed 200% of target.
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| NEO | Target Performance Units | Payout Percent | Performance Unit Payout | | Ms. Bamford | $701,250 | 200% | $1,402,500 | | Mr. Rayment | $330,000 | 200% | $660,000 | | Mr. Farkas | $213,750 | 200% | $427,500 | | Mr. Ferdenzi | $225,525 | 200% | $451,050 | | Mr. Watts | $57,852 | 200% | $115,704 |
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Key Changes to the 2024 LTIP Design and Grants There were no changes made to the LTIP award mix, metrics, and weightings for 2024. LTIP grants consisted of equity-based performance share units (“PSUs”), cash-based performance units (“PUPs”), and time-based restricted stock units (“RSUs”). Employee Stock Purchase Plan The Company’s NEOs, along with substantially all other full time Company employees, are eligible to participate in the Curtiss-Wright Corporation Employee Stock Purchase Plan (“ESPP”). The purpose of the ESPP is to encourage employees of the Company and its subsidiaries to increase their ownership in our Common Stock. To achieve this purpose, the ESPP provides all participating employees with the opportunity to purchase our Common Stock through a payroll deduction at a 15% discount of the market value of the stock, unless (i) the employee owns more than 5% of our Common Stock or (ii) the employee has the right to purchase our Common Stock under the plan that would accrue at a rate which exceeds $25,000 in fair market value for each calendar year in which such right to purchase is outstanding. The ESPP is offered in six-month “offering periods” commencing on January 1 and ending on June 30 (or if on a weekend the preceding trading day) and commencing on July 1 and ending on December 31 (or if on a weekend the preceding trading day) of each year. At the end of each offering period, participant contributions are used to purchase a number of shares of Common Stock (subject to IRS limits), in an amount equal to 85% of the fair market value of the Common Stock on the last day of each offering period. An employee who elects to participate in the ESPP will have payroll deductions made on each payday during the six-month period. During 2023, Ms. Bamford and Messrs. Farkas, Ferdenzi, and Watts participated in the ESPP, purchasing 114, 124, 126, and 66 shares of Common Stock under the plan, respectively. These share purchases are equivalent to the maximum annual contribution limit under the plan for each participating executive. Executive Deferred Compensation Plan The NEOs are also eligible to participate in the Company’s non-qualified executive deferred compensation plan that allows participants to defer compensation in excess of certain statutory limits that apply to qualified retirement plans. Each participant may defer up to 25% of their base salary; 50% of their annual performance bonus; and 50% of the cash portion of their long-term cash award. The rate of interest is determined each year according to the average rate on 30-year Treasury bonds for November of the previous calendar year, plus 2.0%. Thus, the rate fluctuates annually. The average 30-year Treasury bond rate for November 2022 was 4.0% and money in the Plan earned 6.0% for 2023. Earnings begin accruing upon deposit and are compounded daily. Earnings are posted to the participants account on the final day of each month. See “Deferred Compensation Plans” section on page 66 in this Proxy Statement. In 2023, Ms. Bamford and Mr. Ferdenzi participated in the executive deferred compensation plan. Pension Plans The NEOs (except Mr. Rayment(1)) also participate in the Curtiss-Wright Corporation Retirement Plan (the “Retirement Plan”) and the Curtiss-Wright Corporation Retirement Benefits Restoration Plan (the “Restoration Plan”). This is consistent with the Company’s philosophy that compensation should promote the long-term retention and financial health of its employees and be competitive with industry peers. The Company’s retirement plans integrate other components of the Company’s executive compensation program by generally including base salary and cash incentive compensation in determining retirement plan benefits. The Retirement Plan is a tax qualified, defined benefit plan made up of two separate benefits: (1) a traditional, final average pay (FAP) formula component (this benefit was closed to new entrants as of February 1, 2010 and has a 15-year sunset period commencing on January 1, 2014) and (2) a cash balance component (this benefit was closed to future participants and pay credits ceased as of January 1, 2014, although interest continues to accrue on accounts). Both plans are non-contributory and employees hired prior to its close participate in one or both of the benefits, including the NEOs. On September 1, 1994, the Company amended and restated the Retirement Plan, and any benefits accrued as of August 31, 1994 were transferred into the amended Retirement Plan. The Retirement Plan, as amended, provides for an annual benefit at age 65 of 1.5% times the five-year final average compensation in excess of social security covered compensation, plus 1% of the five-year final average compensation up to social security covered compensation, in each case multiplied by the participant’s years of service after September 1, 1994, not to exceed 35. Funds contributed to the Cash Balance portion of the Plan before it was frozen are credited to a notional cash balance account that grows with interest based on the rates each December for 30-Year Treasury Bonds. As of January 1, 2015, no NEO had accrued any pension benefits prior to the plan merger in 1994: Ms. Bamford, Mr. Farkas, Mr. Ferdenzi, and Mr. Watts commenced their employment with the Company after September 1, 1994, and therefore did not accrue a monthly pension under the Retirement Plan prior to September 1, 1994; however, all NEOs continue to accrue a benefit under the amended Retirement Plan. The Company maintains an unfunded, non-qualified defined benefit Restoration Plan under which participants in the Retirement Plan whose compensation or benefits exceed the limits imposed by I.R.C. Sections 401(a) (17) and 415 will receive a supplemental retirement benefit that restores the amount that would have been payable under the Retirement Plan except for the application of such limits. Since the Company provides a traditional final average pay benefit under the Retirement Plan to Ms. Bamford and Messrs. Farkas, Ferdenzi, and Watts, the Company did not offer any Company-source contributions to these NEO’s under the Company’s 401(k) savings Plan. Because Mr. Rayment transferred to the United States after the FAP component of the Retirement Plan was closed to new entrants, he is eligible for employer matching contributions of 50% on 8% contributed to the Curtiss-Wright Savings and Investment Plan (the “S&I Plan”). The S&I Plan does not match contributions above 8%. In addition to the matching contribution in the S&I Plan, the S&I Plan also provides a 3% non-elective contribution to all non-union, domestic employees hired on or after February 1, 2010 that do not participate in the Retirement Plan. The Company maintains an unfunded, non-qualified defined contribution Restoration Plan under which participants in the S&I Plan whose compensation or benefits exceed the limits imposed by I.R.C. Sections 401(a) (17) and 415 will receive a supplemental retirement benefit that restores the 3% non-elective contribution amount that would have been payable under the S&I Plan except for the application of such limits. Since the Restoration Plan benefits are not funded, in the event of a change-in-control, the Company has agreed to fund a Rabbi Trust in place through an agreement between the Company and
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PNC Bank, N.A., dated January 30, 1998, which provides for the payment of the Company’s obligation under the Restoration Plan. NEO’s can elect to defer up to 75% of their own annual cash compensation per year on a tax-deferred basis subject to the IRS Elective Deferral limit within the Company’s 401(k) savings Plan. For 2023, the combined pre-tax and Roth contribution limit was 10.0%, and the after-tax contribution limit for a highly compensated employee was limited to 3.0%. Executive Perquisites In addition to the standard benefit plans offered to all employees, the NEOs are eligible for a limited number of executive perquisites. Perquisites include financial planning and income tax preparation, a Company automobile or automobile allowance, and executive physicals for the executive and his or her spouse. With the assistance of the Committee’s independent compensation consultant, the Committee has determined that the overall level of perquisites the Company provides to its NEOs is reasonable and consistent with that of its peers. Policies concerning equity-based and other long-term incentive compensation Equity Ownership and Other Requirements for Senior Executives To further align the linkage between the interests of the NEOs and those of its stockholders, the Company requires the CEO and all other NEOs to own Company stock denominated as a multiple of their annual salaries as follows: five times annual salary for the CEO, three times annual salary for NEOs that directly report to the CEO, and two times annual salary for all other NEOs. All share-based long-term incentive plan grants, including any vested stock options (post-2005 grants), are subject to the Guidelines, and 50% of the net proceeds of a stock-based grant vested or exercised (current market value of shares less the strike price) must be retained in Company stock. There is no fixed timeframe to achieve the Guidelines. However, until the Guidelines are satisfied, the NEO is only permitted to sell 50% of the vesting award to cover the NEO’s income tax obligations. Once the ownership thresholds are fully met and maintained, the holding limits are removed on any and all earned and vested shares above the ownership guideline. Clawback Policies The Company’s general employee incentive compensation recoupment, or “clawback” policy provides that in the event the amount of any incentive compensation award is based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria, or if a participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 and has committed an offense subject to forfeiture under such statute, the participant must reimburse the Company that portion of the incentive compensation award that was based on the inaccurate data or as provided for in such statute. In September 2023, the Committee adopted a separate executive incentive compensation clawback policy to comply with the requirements of the Dodd-Frank Walls Street Reform and Consumer Protection Act of 2010, as implemented by New York Stock Exchange listing standards and the SEC’s rules and regulation, which applies to current and certain former Section 16 executive officers (the “Dodd-Frank Clawback Policy”). The Dodd-Frank Clawback Policy requires the Company to recover certain cash or equity-based incentive compensation payments or awards made or granted to such executive officers in the event the Company is required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (an “Accounting Restatement”). The Dodd-Frank Clawback Policy covers cash or equity-based compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Company financial reporting measure (including stock price or total shareholder return). Recovery under the Dodd-Frank Clawback Policy applies to incentive compensation subject to the policy that is received (i) on or after December 1, 2023, (ii) by a person after such individual became an executive officer, and (iii) during the three completed fiscal years immediately preceding the date on which the Company is required to prepare the Accounting Restatement. The incentive compensation to be recovered is the amount in excess of what would have been paid based on the restated results. Recovery will be required on a “no fault” basis, without regard to whether any misconduct occurred and without regard to whether an executive officer was responsible for the erroneous financial statements. Furthermore, under the Dodd-Frank Clawback Policy, the Company is prohibited from indemnifying any executive officer or former executive officer against the loss of erroneously awarded incentive-based compensation. During the third quarter of 2023, the Company identified an error related to a single long-term contract within a subsidiary of its Naval & Power segment. The error primarily impacted 2020 and 2021, whereby certain events occurring during the pandemic, including constructive changes to the contract as well as labor inefficiencies and hiring delays due to a facility relocation, were not reflected in the contract’s estimated costs of completion. In accordance with Staff Accounting Bulletin (“SAB”) Nos. 99 and 108, the Company evaluated this error and, based on an analysis of quantitative and qualitative factors, determined that it was not material to any one of the prior reporting periods affected and, therefore, amendment of previously filed reports with the Securities and Exchange Commission was not required. However, if the adjustment to correct the cumulative effect of the aforementioned error had been recorded in the three and nine months ended September 30, 2023, the impact would have been qualitatively material to the Condensed Consolidated Statements of Earnings of the Company for those respective periods. Therefore, in accordance with SAB 108, the Company revised the applicable prior period financial statements included within its quarterly report on Form 10-Q for the third quarter ended September 30, 2023, as summarized below. The net impact of the error resulted in an overstatement of previously reported total net sales and net earnings of approximately $5 million and $4 million, respectively, for the year ended December 31, 2021, and an overstatement of previously reported total net sales and net earnings of approximately $8 million and $7 million, respectively, for the year ended December 31, 2020. The impact of the error on previously reported total net sales and net earnings was inconsequential for the year ended December 31, 2022. The Company revised its consolidated financial statements as of December 31, 2022 and for the year ended December 31, 2021 in its Form 10-K for the year ended December 31, 2023 filed with the SEC on February 20, 2024.
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The Committee, the Company’s outside legal counsel, and FW Cook performed an analysis of the impact that the immaterial restatement discussed immediately above (the “Immaterial Restatement”) had on the Company’s past and future payouts under its incentive compensation plans, and whether recovery of such incentive compensation payouts is required under its Dodd-Frank Clawback Policy. Because the Dodd-Frank Clawback Policy only applied to incentive compensation payments received after December 1, 2023, any incentive compensation received prior to such date would not be subject to recoupment under the policy. Accordingly, only annual and long-term incentive compensation received in early 2024 under the Company’s ICP and LTIP for financial performance of the Company against pre-established financial performance measures for the 2023 performance period (ICP) and 2021 – 2023 performance period (LTIP), would be subject to the policy. As noted above, the Committee determined that since the Immaterial Restatement did not impact the 2023 performance period (only impacting prior year periods 2020 through 2022), the receipt of annual incentive compensation under the ICP in early 2024 was not required to be recovered under the Dodd-Frank Clawback Policy. With respect to the receipt of LTIP, the payment of cash-based performance units (PUPs) in early 2024 was based on Company performance against pre-established financial performance measures for the 2021 – 2023 performance period. Based on Company financial performance resulting from the Immaterial Restatement against its performance targets during such performance period, it was determined that Company performance would have resulted in a maximum payout against target with or without the Immaterial Restatement. Therefore, because payment of PUPs was at maximum with giving effect to the Immaterial Restatement, no excess incentive compensation was received by the Section 16 executive officers based on the Immaterial Restatement, and therefore, no recovery was required under the Dodd-Frank Clawback Policy. The receipt of performance share units (PSUs) under the LTIP in early 2024 was based on Company total shareholder return (TSR) relative to its peer group for the 2021 – 2023 performance period. The Company performed an analysis assessing the impact of the Immaterial Restatement on its TSR and the payouts associated with its TSR. After reviewing the relatively minor financial impacts to 2021 and 2022 performance the Committee reasonably estimated that the Immaterial Restatement was immaterial to the overall financial results of the Company during this period, and reasonably concluded that the restated financials resulting from the Immaterial Restatement would not have impacted the Company’s TSR and PSU payouts. Additionally, the Committee, after advice from the Company’s outside legal counsel and FW Cook, determined that the payouts would have been 200% of target regardless due to the high levels of Company financial performance even as restated. Therefore, because payment of PSUs was 200% of target without giving effect to the Immaterial Restatement, no excess PSUs were received by the Section 16 executive officers based on the Immaterial Restatement, and therefore, no recovery was required under the Dodd-Frank Clawback Policy. Finally, a recovery analysis was also performed under the Company’s general employee incentive compensation recoupment policy discussed above, which has a one-year look back period. Because the general policy only mandates a clawback in the event of a full restatement of financials and the overall Company financial performance was nominally impacted for the 2022 performance period under the ICP and 2020 – 2022 performance period under the LTIP, the Committee determined that no excess incentive compensation was received by the Section 16 executive officers in early 2023 based on the Immaterial Restatement and therefore no recovery was required under the Company’s general employee incentive compensation recoupment policy. Prohibition of Insider Trading, Hedging, and Pledging The Company is committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules, and regulations. As part of this commitment, the Company has adopted an insider trading policy for all its employees (including the NEOs and other officers) and members of the Board of Directors, and all members of their immediate families and households that prohibits the purchase, sale, and/or other disposition of Company equity securities or in the securities of other companies with which the Company does business while being aware of material, non-public information as well as the disclosure of such information to others who may trade in such equity securities. The insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the New York Stock Exchange listing standards applicable to the Company. A copy of the Company’s insider trading policy was filed as Exhibit 19.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s Code of Conduct prohibits all employees (including the NEOs and other officers) from purchasing, selling or otherwise utilizing financial instruments, including but not limited to, prepaid variable forward contracts, instruments for the short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a change in the market price of the Company’s equity securities. Additionally, the Company’s 2014 Omnibus Incentive Plan prohibits members of the Board of Directors and all employees (including the NEOs and other officers) from engaging in the following transactions with respect to Company equity securities from awards under the plan:
Risk Consideration in the Overall Compensation Program for 2023
| • | Limits on annual and long-term performance awards, thereby defining and capping potential payouts | | • | Proportionately greater award opportunity derived from the long-term incentive program compared to annual incentive plan, creating a greater focus on sustained Company performance over time, and providing alignment with shareholder interests | | • | Use of three distinct long-term equity incentive vehicles—restricted stock units, long-term cash-based performance units, and performance shares—that vest over several years, thereby providing strong incentives for sustained operational and financial performance | | • | Use of balanced measures, including top and bottom-line measures, income and balance sheet statement measures, and short- and long-term measurement periods | | • | Stock ownership guidelines for senior executives that ensure alignment with stockholder interests over the long term | | • | Incorporation of an individual performance score, ranging from one 1.0 to five 5.0, as a key factor in the total annual incentive calculation, thereby enabling the Committee to direct a zero payout for the 20% individual-performance component to any executive in any year if the individual executive is deemed to have sufficiently poor performance or is found to have engaged in activities that pose a financial, operational or other undue risk to the Company | | • | Robust clawback policies for incentive compensation, including the adoption of an incentive compensation clawback policy for Section 16 officers pursuant to Dodd-Frank in the event of certain accounting restatements | | • | Pre-determined commission schedules on sales representatives, thereby defining potential commission payouts |
Risk Consideration in the Overall Compensation Program for 2023
For the foregoing reasons, the Committee has concluded that the Company’s compensation policies and practices do not encourage excessive and unnecessary risk-taking, and that the level of risk is appropriate for the best interests of stockholders. Post-Employment Agreements Severance Agreements The Company has At-will severance agreements with Ms. Bamford and Messrs. Rayment, Farkas, Ferdenzi, and Watts. In the case of involuntary termination of employment other than termination for cause (as defined in the agreements), failure to comply with the terms and conditions of the agreement, voluntary resignation of employment by the employee, and voluntary retirement by the employee, these agreements provide in the case of Ms. Bamford two years’ base salary and annual target bonus as the payment of severance pay, and, in the case of Messrs. Rayment, Farkas, Ferdenzi and Watts, the equivalent of one year’s base salary and annual target bonus to be paid at the time of termination, as well as the continued availability of certain employee health and welfare benefits for a minimum period of one year following termination. The agreements provide that such pay and benefits also would be made available in the case of voluntary retirement or termination of employment that is the direct result of a significant change in the terms or conditions of employment, including a reduction in compensation or job responsibilities. At the employee’s option, the severance pay may be received over the two-year period following termination, in which case the employee benefits would continue in effect for the same period. The agreements further provide that the payment of severance pay and the availability of benefits are contingent upon a number of conditions, including the employee’s performance of his or her obligations pursuant to the agreement, specifically to provide consulting services, release the Company from any employment related claims, and not compete with the Company for a period of 12 months. Change-in-Control Agreements The Company has Change-in-Control severance protection agreements with Ms. Bamford and Messrs. Rayment, Farkas, Ferdenzi, and Watts. The agreement with Ms. Bamford provides for payment of severance pay equal to three times while Messrs. Rayment, Farkas, Ferdenzi, and Watts provides for two and one-half times the sum of the executive’s base salary and the greater of (i) the annual target incentive grant in the year the executive is terminated or (ii) the annual incentive paid under the annual incentive plan immediately prior to the executive’s termination. These amounts shall be paid in a single lump sum cash payment within ten (10) days after the executive’s termination date. The agreements also call for the continued availability of certain employee benefits for a period of two to three years following termination of employment. All agreements have a double trigger, i.e., severance may be paid in the event that (1) there is a change-in-control of the Company, as that term is defined in the agreements, and (2) the covered executive’s employment is formally or constructively terminated by the Company in the case of Ms. Bamford, within twenty-four months following the change-in-control, and in the case of the other NEOs, within twelve months following the change-in-control. Accordingly, if the Company terminates the employment without “cause” of Ms. Bamford and the other NEOs during the two-year period and one-year period, respectively, following a change-in-control, or if the NEO terminates the NEO’s employment with the Company with “good reason,” then the NEO is entitled to certain compensation and benefits provided for in the agreement. The agreements define “cause” as (a) a conviction of a felony, (b) intentionally engaging in illegal or willful misconduct that demonstrably and materially injures the Company, or (c) intentional and continual failure to substantially perform assigned duties which failure continues after written notice and a 30-day cure period. The agreements also define “good reason” as (a) adverse change in status, title, position, or responsibilities, (b) reduction in salary, (c) relocation of more than 25 miles, (d) the Company’s failure to pay the covered individual in accordance with its compensation policies; or (e) a reduction in benefits. All NEO agreements must be renewed on an annual basis by the Executive Compensation Committee. Consistent with best practices, all future executive officer change-in-control agreements elected as executive officers after January 1, 2008, must be approved and renewed annually by the Executive Compensation Committee.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| | | | | | | | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings (f) | | | | | | | | Stock Awards ($) | | | Non-Equity Incentive | | | | | | | | | | Performance | Restricted | | Plan Compensation | | | All Other | | | Name and Principal Position | Year | Salary (a) | Bonus | Share Units (b) | Stock Units (c) | Option Awards | Annual Plan (d) | Long-Term Plan (e) | | Compensation (g) | Total (h) | | Lynn M. Bamford – | 2023 | $989,231 | $0 | $1,720,000 | $1,290,000 | $0 | $2,252,400 | $1,402,500 | $864,041 | $44,139 | $8,562,311 | | Chair and Chief | 2022 | $917,692 | $0 | $1,394,984 | $1,046,275 | $0 | $843,975 | $111,228 | $110,837 | $37,707 | $4,462,698 | | Executive Officer | 2021 | $843,654 | $0 | $935,000 | $701,250 | $0 | $1,291,150 | $45,291 | $639,485 | $35,981 | $4,491,811 | | Kevin M. Rayment – | 2023 | $620,308 | $0 | $561,600 | $421,200 | $0 | $907,046 | $660,000 | $0 | $52,968 | $3,223,122 | | Vice President and | 2022 | $592,308 | $0 | $515,994 | $386,958 | $0 | $367,200 | $102,672 | $0 | $71,114 | $2,036,246 | | Chief Operating Officer | 2021 | $548,654 | $0 | $439,979 | $330,014 | $0 | $626,588 | $37,200 | $0 | $66,404 | $2,048,839 | | K. Christopher Farkas – | 2023 | $577,923 | $0 | $489,720 | $367,290 | $0 | $861,441 | $427,500 | $329,106 | $39,381 | $3,092,361 | | Vice President and | 2022 | $542,308 | $0 | $439,941 | $329,956 | $0 | $341,000 | $75,348 | $0 | $29,694 | $1,758,247 | | Chief Financial Officer | 2021 | $496,154 | $0 | $284,947 | $963,800 | $0 | $531,650 | $21,450 | $228,358 | $30,375 | $2,556,734 | | Paul J. Ferdenzi – | 2023 | $530,231 | $0 | $351,780 | $263,835 | $0 | $704,040 | $451,050 | $275,176 | $33,139 | $2,609,251 | | Vice President, General | 2022 | $512,692 | $0 | $319,240 | $239,467 | $0 | $272,178 | $100,597 | $0 | $24,143 | $1,468,317 | | Counsel, and Corporate Secretary | 2021 | $497,692 | $0 | $300,690 | $975,578 | $0 | $493,675 | $41,655 | $0 | $25,886 | $2,335,176 | | John C. Watts – | 2023 | $381,000 | $0 | $114,900 | $86,175 | $0 | $363,276 | $115,704 | $117,011 | $34,172 | $1,212,238 | | Vice President, Strategy | 2022 | $362,881 | $0 | $111,027 | $83,196 | $0 | $139,675 | $25,834 | $0 | $18,021 | $740,634 | | and Corporate Development | | | | | | | | | | | |
Summary Compensation Table
| (a) Includes amounts deferred under the Company’s Savings and Investment Plan and Executive Deferred Compensation Plan. | | (b) Includes grants of performance share units as part of the Company’s Long Term Incentive Plan. The values shown represent the grant date fair value of the grants at target. Performance share units have a maximum payout of 200% of target. The assumptions used in determining the amounts in this column are set forth in Note 16 to our Consolidated Financial Statements in our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 20, 2024. | | (c) Includes grants of time-based restricted stock units as part of the Company’s Long Term Incentive Plan. The values shown represent the grant date fair value of the grants. The assumptions used in determining the amounts in this column are set forth in Note 16 to our Consolidated Financial Statements in our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 20, 2024. | | (d) Includes payments made based on the Company’s annual Incentive Compensation Plan for performance during the year. | | (e) Includes the maturity of cash-based performance unit grants made under the Company’s Long-Term Incentive Plan. | | (f) Represents annual change in the actuarial accumulated present value (APV) of accumulated pension benefits. Mr. Rayment does not participate in the U.S. defined benefit plans because he transferred from the United Kingdom to the United States after those plans were closed to new entrants. |
Summary Compensation Table
| (g) Includes personal use of company car, payments for executive physicals, financial counseling, premium payments for executive life insurance paid by the Company during the covered fiscal year for term life insurance and accidental death and disability insurance. Also includes 2023 company contributions from the qualified contribution plan for Mr. Rayment. | | (h) Amounts are rounded to the nearest dollar. |
Summary Compensation Table
The Company’s executive officers are not employed through formal employment agreements. It is the philosophy of the Committee to promote a competitive at-will employment environment, which would be impaired by lengthy employment arrangements. The Committee provides proper long-term compensation incentives with competitive salaries and bonuses to ensure that senior management remains actively and productively employed with the Company. The Company believes perquisites for executive officers should be limited in scope and value and aligned with peer group practices as described earlier. As a result, the Company has historically given nominal perquisites. The below table generally illustrates the perquisites the Company provides to its NEOs. The Company also maintains a policy concerning executive automobiles under which certain officers of the Company are eligible to use Company leased automobiles or receive an equivalent automobile allowance. The NEOs participate in this program. The Company maintains the service and insurance on Company leased automobiles. In addition to the Company automobile policy, the Company also provides all executive officers with financial planning and tax preparation services through The Ayco Company, LP and Ernst & Young Americas LLC. Not all executive officers utilize these services on an annual basis. Finally, all executive officers and their spouses are provided annual physicals through the Mayo Clinic at any one of the clinic’s three locations.
Grants of Plan-Based Awards
Grants of Plan-Based Awards
Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards | | Name | Plan Name | Grant Date | Number of Units | Threshold ($) | Target ($) | Max ($) | Threshold (#) | Target (#) | Max (#) | | | | | | Lynn M. Bamford | ICP (a) | 3/16/2023 | | $600,000 | $1,200,000 | $2,400,000 | | | | | | | | | | LTI (b) | 3/16/2023 | 1,290,000 | $645,000 | $1,290,000 | $2,580,000 | | | | | | | | | | LTI (c) | 3/16/2023 | | | | | 5,067 | 10,134 | 20,268 | | | | $1,720,000 | | | LTI (d) | 3/16/2023 | | | | | | | | 7,600 | | | $1,290,000 | | Kevin M. Rayment | ICP (a) | 3/16/2023 | | $249,600 | $499,200 | $998,400 | | | | | | | | | | LTI (b) | 3/16/2023 | 421,200 | $210,600 | $421,200 | $842,400 | | | | | | | | | | LTI (c) | 3/16/2023 | | | | | 1,655 | 3,309 | 6,618 | | | | $561,600 | | | LTI (d) | 3/16/2023 | | | | | | | | 2,482 | | | $421,200 | | K. Christopher Farkas | ICP (a) | 3/16/2023 | | $233,200 | $466,400 | $932,800 | | | | | | | | | | LTI (b) | 3/16/2023 | 367,290 | $183,645 | $367,290 | $734,580 | | | | | | | | | | LTI (c) | 3/16/2023 | | | | | 1,443 | 2,885 | 5,770 | | | | $489,720 | | | LTI (d) | 3/16/2023 | | | | | | | | 2,164 | | | $367,290 | | Paul J. Ferdenzi | ICP (a) | 3/16/2023 | | $186,550 | $373,100 | $746,200 | | | | | | | | | | LTI (b) | 3/16/2023 | 263,835 | $131,918 | $263,835 | $527,670 | | | | | | | | | | LTI (c) | 3/16/2023 | | | | | 1,037 | 2,073 | 4,146 | | | | $351,780 | | | LTI (d) | 3/16/2023 | | | | | | | | 1,554 | | | $263,835 | | John C. Watts | ICP (a) | 3/16/2023 | | $95,750 | $191,500 | $383,000 | | | | | | | | | | LTI (b) | 3/16/2023 | 86,175 | $43,088 | $86,175 | $172,350 | | | | | | | | | | LTI (c) | 3/16/2023 | | | | | 339 | 677 | 1,354 | | | | $114,900 | | | LTI (d) | 3/16/2023 | | | | | | | | 508 | | | $86,175 |
Grants of Plan-Based Awards
| (a) Values in this row represent the Company’s annual Incentive Compensation Plan, which were approved on March 16, 2023 for performance during fiscal 2023. The incentive plan threshold, target and maximum are subject to change as salaries change. | | (b) Values in this row represent annual grants of cash-based performance units made under the Company’s Long-Term Incentive Plan. | | (c) Values in this row represent annual grants of performance share units as part of the Company’s Long-Term Incentive Plan. | | (d) Values in this row represent annual grants of restricted stock units as part of the Company’s Long-Term Incentive Plan. |
Grants of Plan-Based Awards
The NEOs are given dividend credits on their restricted stock unit awards only. These dividends credits are reinvested into the restricted stock unit awards and are subject to the same limitations and restrictions as the original restricted stock unit award. The plan specifically prohibits the re-pricing of options and requires that any equity-based grants be issued based on the closing price of our Common Stock as reported by the NYSE on the date of the grant. The Committee granted cash-based performance units, performance shares, and restricted stock units in March 2023 to the NEOs. The cash-based performance units and performance shares units will mature in December 2025 and will be paid in early 2026, if the financial goals are attained, and the restricted stock units will vest in March 2026. The values shown in the table reflect the potential value at a target value of one dollar per unit payable at the end of the three-year performance period and one stock unit convertible into one share of Common Stock if the objectives are attained. The chart also reflects the fact that each stock unit may be worth a maximum of approximately two dollars or two shares if all performance targets are substantially exceeded, or nothing at all if performance thresholds are not met. The following table sets forth the outstanding equity awards of the NEOs. Some of the grants disclosed below are not yet vested and are subject to forfeiture under certain conditions.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) (a) | Market Value of Shares or Units that Have Not Vested ($) (a) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Lynn M. Bamford | 8,609 | 1,917,999(e) | | | | | 5,835 | 1,299,980 | 7,780 | 1,733,306(b) | | | 7,030 | 1,566,214 | 9,373 | 2,088,211(c) | | | 7,600 | 1,693,204 | 10,134 | 2,257,754(d) | | Kevin M. Rayment | 8,609 | 1,917,999(e) | | | | | 2,746 | 611,781 | 3,661 | 815,634(b) | | | 2,600 | 579,254 | 3,467 | 772,413(c) | | | 2,482 | 552,965 | 3,309 | 737,212(d) | | K. Christopher Farkas | 1,779 | 396,343 | 2,371 | 528,235(b) | | | 5,660 | 1,260,991(e) | | | | | 2,217 | 493,925 | 2,956 | 658,567(c) | | | 2,164 | 482,118 | 2,885 | 642,749(d) | | Paul J. Ferdenzi | 1,877 | 418,177 | 2,502 | 557,421(b) | | | 5,660 | 1,260,991(e) | | | | | 1,609 | 358,469 | 2,145 | 477,885(c) | | | 1,554 | 346,216 | 2,073 | 461,844(d) | | John C. Watts | 481 | 107,162 | 642 | 143,031(b) | | | 559 | 124,540 | 746 | 166,201(c) | | | 508 | 113,177 | 677 | 150,829(d) |
Outstanding Equity Awards at Fiscal Year-End
| (a) Represents unvested restricted stock units granted as part of the Company’s Long-Term Incentive Plan. Stock price used to determine value is $222.79, the closing price of Company common stock on December 31, 2023. | | (b) Represents cash value at target of outstanding performance-based share units granted March 18, 2021 as part of the Company’s Long Term Incentive Plan. Stock price used to determine value is $222.79, the closing price of Company common stock on December 31, 2023. Performance-based share units will be earned as common stock early in 2024 contingent upon the extent to which previously established performance objectives are achieved over the three-year period ending at the close of business on December 31, 2023. | | (c) Represents cash value at target of outstanding performance-based share units granted March 17, 2022 as part of the Company’s Long Term Incentive Plan. Stock price used to determine value is $222.79, the closing price of Company common stock on December 31, 2023. Performance-based share units will be earned as common stock early in 2025 contingent upon the extent to which previously established performance objectives are achieved over the three-year period ending at the close of business on December 31, 2024. | | (d) Represents cash value at target of outstanding performance-based share units granted March 16, 2023 as part of the Company’s Long Term Incentive Plan. Stock price used to determine value is $222.79, the closing price of Company common stock on December 31, 2023. Performance-based share units will be earned as common stock early in 2026 contingent upon the extent to which previously established performance objectives are achieved over the three-year period ending at the close of business on December 31, 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (e) Represents retention grants of restricted stock units for the noted Executives. Stock price used to determine value is $222.79, the closing price of Company common stock on December 31, 2023. |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding options exercised and stock vested during calendar year 2023.
Option Exercises and Stock Vested
Option Exercises and Stock Vested
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards (a) | | | Name | Number of Shares Acquired Upon Exercise (#) | Value Realized Upon Exercise ($) | Number of Shares Acquired Upon Vesting (#) | Value Realized Upon Exercise ($) | | Lynn M. Bamford | 0 | $0 | 7,969 | $1,329,622 | | Kevin M. Rayment | 0 | $0 | 7,356 | $1,227,278 | | K. Christopher Farkas | 0 | $0 | 5,398 | $900,696 | | Paul J. Ferdenzi | 0 | $0 | 7,207 | $1,202,457 | | John C. Watts | 0 | $0 | 1,851 | $308,733 |
Option Exercises and Stock Vested
| (a) Stock Awards includes the vesting of the March 19, 2020 Restricted Stock Unit and Performance Share Unit grant (for performance period 2020-2022). |
Non-Qualified Deferred Compensation Table
Non-Qualified Deferred Compensation Table
Non-Qualified Deferred Compensation Table
| Name | Executive Contributions in Last Fiscal Year ($) (a) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last Fiscal Year End ($) | | Lynn M. Bamford | $381,195 | $0 | $89,135 | | 0 | $1,659,069 | | Kevin M. Rayment | $0 | $0 | $0 | | 0 | $0 | | K. Christopher Farkas | $0 | $0 | $0 | | 0 | $0 | | Paul J. Ferdenzi | $145,986 | $0 | $131,589 | -$ | 72,327 | $2,307,863 | | John C. Watts | $0 | $0 | $0 | | 0 | $0 |
Non-Qualified Deferred Compensation Table
| (a) Amounts reported in this column represent salary and incentive payments deferred in 2023, and such amounts are also included in the corresponding columns of the Summary Compensation Table. |
PAY RATIO DISCLOSURE RULE
PAY RATIO DISCLOSURE RULE In accordance with rules adopted by the Securities and Exchange Commission, the Company is providing the following information concerning the ratio of the Company’s median employee’s annual total compensation to the total annual compensation of the Company’s principal executive officer (“PEO”). For fiscal year 2023, the Company’s PEO is Lynn M. Bamford. The Committee does not use this ratio as it considers appropriate compensation for the PEO. Management does not use this ratio when determining compensation for the rest of the workforce. The Company identified the median employee by utilizing base salary as of December 1, 2023 and adding any target bonus to that amount, for all individuals, excluding the PEO, who were employed by the Company on December 31, 2023, the last day of the Company’s payroll year (whether employed on a full-time, part-time, or seasonal basis). In addition, the Company also excluded all independent contractors. The Company further converted all other currencies to U.S. dollars as of December 1, 2023, irrespective of currency fluctuations over the course of the year. Finally, the Company elected to use the de minimis exemption for non-U.S. employees to exclude 4.5% of the Company’s non-U.S. employees. The list of jurisdictions for which these employees are excluded, the approximate number of employees excluded from each jurisdiction, the total number of U.S. and non-U.S. employees irrespective of any exemption, and the total number of U.S. and non-U.S. employees used for the de minimis calculation are set forth in the table below.
PAY RATIO DISCLOSURE RULE
| Jurisdictions | Approximate Number of non-U.S. Employees Excluded | Total Number of U.S. and non-U.S. Employees irrespective of any exemption | Total Number of U.S. and non-U.S. Employees used for de minimis calculation | | India | 131 | 8,737 | 8,308 | | Costa Rica | 104 | | | | Portugal | 33 | | | | Sweden | 40 | | | | Singapore | 43 | | | | Spain | 21 | | | | Poland | 11 | | | | Netherlands | 13 | | | | Belgium | 5 | | | | Brazil | 6 | | | | Taiwan | 5 | | | | Korea | 6 | | | | Hong Kong | 1 | | | | Hungary | 10 | | |
PAY RATIO DISCLOSURE RULE
After identifying the median employee, the Company calculated annual total compensation for such employee using the same methodology the Company uses for the named executive officers as set forth in the 2023 Summary Compensation Table in this Proxy Statement. The total compensation amount for the median employee for 2023 was determined to be $72,282. This total compensation amount was then compared to the total compensation of the PEO disclosed in the Summary Compensation Table, of $8,526,311. Based on this information for 2023, the ratio of the PEO’s annual total compensation to the annual total compensation of the median employee was 118:1. The Company believes that the ratio calculated above is not reflective of compensation awarded to our PEO in 2023. The total compensation of our PEO disclosed in the Summary Compensation Table includes the change in the actuarial present value of our PEO’s retirement benefits shown under column “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” of the Summary Compensation Table. The pension values for fiscal year 2023 reflect the impact of changes in interest rates on actuarial present value calculations. Excluding this change in actuarial present value of the PEO’s pension benefit, the ratio would be 106:1.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following table shows the total compensation for our NEOs for the past four fiscal years, the “compensation actually paid” to our PEO and prior PEO and, on an average basis, our other NEOs (in each case, as determined under SEC rules), our TSR, the TSR of the Aerospace & Defense Select Industry Index over the same period, our Net Income, and our financial performance measure for compensatory purposes, Adjusted Operating Income.
PAY VERSUS PERFORMANCE
| | | | | | | | Value of Initial $100 Investment Based On: | | | Company- Selected Measure | | Fiscal Year (a) | Summary Compensation Table (SCT) Total for PEO (b) | Summary Compensation Table (SCT) Total for Prior PEO (b) | Compensation Actually Paid to PEO (CAP) (c) | Compensation Actually Paid to Prior PEO (CAP) (c) | Average Summary Compensation Table (SCT) Total for Non- PEO Named Executive Officers (d) | Average Compensation Actually Paid to Non-PEO Named Executive Officers (CAP) (e) | Company Total Shareholder Return ($) (f) | Peer Group Total Shareholder Return ($) (g) | Net Income (in thousands, $) (h) | Adjusted Operating Income (in thousands, $) (i) | | 2023 | $8,562,311 | | $13,007,261 | | $2,534,244 | $3,872,036 | $161.65 | $129.25 | $354,509 | $493,800 | | 2022 | $4,462,698 | | $7,890,517 | | $4,654,705 | $6,383,850 | $120.65 | $104.16 | $294,348 | $443,078 | | 2021 | $4,491,811 | | $4,925,333 | | $2,753,543 | $3,265,294 | $99.69 | $109.35 | $267,159 | $420,423 | | 2020 | | $8,922,118 | | $6,497,412 | $2,138,218 | $1,253,639 | $83.17 | $106.45 | $201,392 | $375,495 |
PAY VERSUS PERFORMANCE
| (a) The Pay Versus Performance table reflects required disclosures for fiscal years 2023, 2022, 2021 and 2020. | | (b) For fiscal years 2023, 2022 and 2021, Lynn M. Bamford was the Principle Executive Officer (PEO) for the Company. For fiscal year 2020, David C. Adams was the Principle Executive Officer (PEO) for the Company. | | (c) The Compensation Actually Paid (CAP) was calculated beginning with the PEO’s Summary Compensation Table (SCT) total then deducting the aggregate change in actuarial present value of her/his accumulated benefit under all defined benefit and actuarial pension plans reported in the SCT; deducting the amounts reported in the SCT for performance share and restricted stock unit awards; adding the pension service cost; adding the fair value as of the end of the covered fiscal year of all awards granted during the fiscal year that are outstanding and unvested as of the fiscal year-end; adding the amount equal to the change in fair value as of the end of the covered fiscal year, whether positive or negative, of any awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year; and adding the amount equal to the change in fair value as of the vesting date, whether positive or negative, of any award granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year. Relative to the PEO’s CAP, the following amounts were deducted from and added to SCT total compensation: |
PAY VERSUS PERFORMANCE
PEO SCT Total to CAP Reconciliation:
PAY VERSUS PERFORMANCE
| Fiscal Year | Summary Compensation Table Total | Deductions from SCT Total for Equity Awards (i) | | Deductions from SCT Total for Pension Benefits (ii) | | Additions to SCT Total for Equity Awards (iii) | Additions to SCT Total for Pension Service Costs (iv) | CAP | | 2023 | $8,562,311 | -$ | 3,010,000 | -$ | 864,041 | $7,958,761 | $360,230 | $13,007,261 | | 2022 | $4,462,698 | -$ | 2,441,259 | -$ | 110,837 | $5,568,041 | $411,874 | $7,890,517 | | 2021 | $4,491,811 | -$ | 1,636,250 | -$ | 639,485 | $2,416,502 | $292,755 | $4,925,333 | | 2020 | $8,922,118 | -$ | 2,309,978 | -$ | 3,461,735 | $2,676,941 | $670,066 | $6,497,412 |
PAY VERSUS PERFORMANCE
| (i) Represents the grant date fair value of equity-based awards granted each year. |
PAY VERSUS PERFORMANCE
| (ii) | Represents the aggregate change in the actuarial present value of accumulated benefit under pension. | | (iii) | The additions to the SCT Total reflect the value of equity calculated in accordance with the SEC methodology for determining CAP for each year shown. | | (iv) | The additions to the SCT Total reflect the pension service cost calculated in accordance with the SEC methodology for determining CAP for each year shown. |
Supplemental
| Fiscal Year | Summary Compensation Table Total (i) | Deductions from SCT Total for Equity Awards (ii) | | Deductions from SCT Total for Pension Benefits (iii) | | Additions to SCT Total for Equity Awards (iv) | Additions to SCT Total for Pension Service Costs (v) | CAP | | 2023 | $2,534,244 | -$ | 664,125 | -$ | 180,323 | $2,083,304 | $98,936 | $3,872,036 | | 2022 | $4,654,705 | -$ | 485,155 | -$ | 131,443 | $2,106,528 | $239,215 | $6,383,850 | | 2021 | $2,753,543 | -$ | 1,086,255 | -$ | 57,090 | $1,381,658 | $273,438 | $3,265,294 | | 2020 | $2,138,218 | -$ | 360,814 | -$ | 975,281 | $232,461 | $219,055 | $1,253,639 |
Compensation Actually Paid versus Total Shareholder Return
Compensation Actually Paid versus Total Shareholder Return The following graph compares the compensation actually paid to our PEO(s) and the average of the compensation actually paid to our non-PEOs with the Company’s Net Income.
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Net Income The following graph compares the compensation actually paid to our PEO(s) and the average of the compensation actually paid to our non-PEOs with the Company’s Adjusted Operating Income.
Compensation Actually Paid versus Adjusted Operating Income
Compensation Actually Paid versus Adjusted Operating Income
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS The following table sets forth certain information regarding the compensation earned by or granted to each non-employee director who served on the Company’s Board of Directors in 2023. Ms. Bamford, the only current director who is an employee of the Company, is not compensated for her services as a Board member.
Director Compensation
Director Compensation
Director Compensation
| Name | Fees Earned or Paid in Cash ($) (a) | Stock Awards ($) (b) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Compensation Earnings ($) | All Other Compensation ($) | Total | | David C. Adams (c) | $18,750 | $135,000 | — | — | — | — | $153,750 | | Dean M. Flatt | $112,500 | $135,000 | — | — | — | — | $247,500 | | S. Marce Fuller | $140,000 | $135,000 | — | — | — | — | $275,000 | | Bruce D. Hoechner | $100,000 | $135,000 | — | — | — | — | $235,000 | | Glenda J. Minor | $100,000 | $135,000 | — | — | — | — | $235,000 | | Anthony J. Moraco | $100,000 | $135,000 | — | — | — | — | $235,000 | | William F. Moran | $75,000 | $35,000 | — | — | — | — | $110,000 | | John B. Nathman (c) | $25,000 | $135,000 | — | — | — | — | $160,000 | | Robert J. Rivet | $122,500 | $135,000 | — | — | — | — | $257,500 | | Peter C. Wallace | $112,500 | $135,000 | — | — | — | — | $247,500 | | Larry D. Wyche | $75,000 | $35,000 | — | — | — | — | $110,000 |
Director Compensation
| (a) Represents all fees earned or paid for services as a director, including annual retainer, lead director fee, committee membership fee, and committee chairman retainers, and includes amounts deferred. Directors have a choice to receive all or a portion of their director fees paid in cash, stock, or a combination of the two. Directors also have a choice to defer all or a portion of director fees paid in cash or stock. For fiscal 2023, Messrs. Adams and Moraco elected to receive all of their director fees in stock, as set forth in the table below. |
Director Compensation
| Name | Stock Award (#)* | Grant Date Fair Value ($) | Pay Date | | Mr. Adams | 106 | $18,750 | March 31, 2023 | | Mr. Moraco | 18 | $3,125 | March 31, 2023 | | | 18 | $3,125 | March 31, 2023 | | | 106 | $18,750 | March 31, 2023 | | | 17 | $3,125 | June 30, 2023 | | | 17 | $3,125 | June 30, 2023 | | | 102 | $18,750 | June 30, 2023 | | | 16 | $3,125 | September 30, 2023 | | | 16 | $3,125 | September 30, 2023 | | | 96 | $18,750 | September 30, 2023 | | | 14 | $3,125 | December 31, 2023 | | | 14 | $3,125 | December 31, 2023 | | | 84 | $18,750 | December 31, 2023 |
Director Compensation
| * Shares rounded up to the next whole number of shares |
Director Compensation
| (b) The values shown represent the aggregate grant date fair value for 2023 computed in accordance with FASB ASC Topic 718. In February 2023, each then non-employee Director was awarded 787 shares of restricted Common Stock as annual stock grant, each having a full fair value of $135,000 based on the market value of the Common Stock on the grant date pursuant to FASB ASC Topic 718. In May 2023, Messrs. Moran and Wyche received 214 shares of restricted Common Stock as an award for a newly elected member of the Board, having a full fair value of $35,000 based on the market value of the Common Stock on the grant date pursuant to FASB ASC Topic 718, The aggregate number of stock awards outstanding as of December 31, 2023 are |
Director Compensation
| as follows: Ms. Minor – 308; Mr. Moraco – 1,057; Mr. Moran – 214; Mr. Rivet – 787; and Mr. Wyche – 214. | | (c) Messrs. Adams and Nathman retired from the Board and did not stand for election effective as of May 4, 2023. |
Director Compensation
In 2023, each non-employee Director of the Company was paid an annual retainer of $75,000 plus $12,500 for each committee for which such director is a member. The chairpersons of the Audit Committee, Committee on Directors and Governance, Executive Compensation Committee, and Finance Committee of the Board of Directors were paid an additional annual retainer of $22,500, $12,500, $15,000, and $12,500, respectively. The Lead Independent Director was paid an additional annual retainer of $25,000. Director compensation is reviewed every other year. Based on peer and market data and advise from FW Cook, in November 2023 the Board approved the following changes to Director compensation for 2024: (i) the annual Board retainer was increased to $85,000, (ii) the annual equity award was increased to $145,000, (iii) the Lead Independent Director annual retainer was increased to $30,000, and (iv) the annual retainers for the chairpersons of the Audit Committee, Committee on Directors and Governance, Executive Compensation Committee, and Finance Committee were increased to $25,000, $15,000, $20,000, and $15,000, respectively. The next Director compensation review will occur in November 2025 for compensation to be paid in 2026. Pursuant to the Company’s 2014 Omnibus Incentive Plan, the Company’s non-employee Directors may elect to receive their annual retainer, Chairperson fee, committee membership fees, and Lead Independent Director fee in the form of our Common Stock, cash, or both and may elect to defer the receipt of such stock or cash. In addition to the annual retainer and meeting fees described above, under the Company’s 2014 Omnibus Incentive Plan, the Company, acting through the Committee on Directors and Governance, has the discretionary authority to make equity grants to non-employee Directors. With respect to fiscal 2024, each non-employee Director was granted 641 shares of restricted Common Stock effective February 2024 based on a market value of $145,000 on the grant date with such shares subject to forfeiture based upon failing to remain on the Board for a one-year period. In addition to the foregoing, the Company’s policy is to award each newly appointed Director upon appointment a grant of restricted Common Stock valued at $35,000 based on the market value of the Common Stock on the grant date with such shares subject to forfeiture based upon failing to remain on the Board for a five-year period. Each Director must also accumulate a total position in the Common Stock with a value of five times the annual retainer.