DEF 14A of Aecom
Filed Jan 29, 2024 · FY20230001104659-24-007786
Proposal 1 Election of Directors
Proposal 1 Election of Directors We are nominating 9 directors for election to our Board, all of whom are current members of our Board that are standing for re-election at the 2024 Annual Meeting. Directors elected at the 2024 Annual Meeting will serve until the 2025 Annual Meeting of Stockholders and until their successors are duly elected and qualified. If a quorum is present at our 2024 Annual Meeting, the directors will be elected by a majority of the votes cast, which means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director, with any director who is not elected by a majority of the votes cast being expected to tender his or her resignation to the Nominating Committee. The Nominating Committee will recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken. The Board will act on the Nominating Committee’s recommendation within 90 days following certification of the election results. Shares represented by proxies will be voted, if authority to do so is not withheld, for the election of each of the director nominees named in this Proxy Statement. Proxies cannot be voted for a greater number of persons than the number of nominees named. Each of the nominees has consented to serve as a director if elected, and management has no reason to believe that any nominee will be unable or unwilling to serve if elected as a director, except as set forth in the remainder of this paragraph. In the event that any nominee is unavailable for re-election as a result of an unexpected occurrence, shares will be voted for the election of such substitute nominee as our Board may propose.
Director Qualifications
Director Qualifications The Board believes that its members should collectively possess a combination of the skills, professional experience and diversity of backgrounds necessary to oversee the Company’s business. The Nominating Committee is responsible for developing and recommending Board membership criteria to the full Board for approval. The criteria, which are set forth in the Company’s Corporate Governance Guidelines, include the highest professional and personal ethics and values, commitment to enhancing stockholder value with sufficient time to effectively carry out his or her duties and business acumen. In considering director candidates, the Nominating Committee looks for business experience and skills, judgment, integrity, an understanding of such areas as finance, marketing, regulation and public policy and the absence of potential conflicts with the Company’s interests. In particular, the Nominating Committee seeks candidates that have skills/experience in the following areas, each of which it is views as particularly important: senior leadership experience, industry experience, public company experience, financial expertise, government/regulatory expertise and international expertise. The Nominating Committee believes that it is essential that Board members represent diverse viewpoints and backgrounds. The Nominating Committee periodically reviews the appropriate skills and characteristics required of Board members in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of the Company’s stockholders. In conducting this assessment, the Nominating Committee considers diversity, skills and such other factors as it deems appropriate to maintain a balance of knowledge, experience and capabilities. This periodic assessment enables the Board to update the skills and experience it seeks in the Board, as a whole and in individual directors, as the Company’s needs evolve over time and to assess the effectiveness of efforts at pursuing diversity. From time to time, while identifying director candidates, the Nominating Committee may establish specific skills and experience that it believes the Company should seek to constitute a balanced and effective Board. Further, the Company’s Corporate Governance Guidelines provide that the Board should be comprised of individuals with diverse backgrounds and perspectives and should include representation of individuals from underrepresented communities, including people of different genders, experiences, ages, races and ethnic backgrounds.
Board Skills and Experience
Board Skills and Experience Board members should possess a combination of the skills, professional experience and diversity of backgrounds necessary to oversee AECOM’s business. The following sections summarize the specific skills, professional experience and background information of each director nominee that led the Board of Directors to conclude that each such person should serve on the Board of Directors.
Board Skills and Experience
| | Bradley W. Buss | Lydia H. Kennard | Derek J. Kerr | Kristy Pipes | Troy Rudd | Douglas W. Stotlar | Daniel R. Tishman | Sander van ’t Noordende | General Janet C. Wolfenbarger | | Corporate Governance Considerations | | | | | | | | | | | Independent Director | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | ✓ | ✓ | | Financially Literate (NYSE Rules) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Experience | | | | | | | | | | | Senior Leadership | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Chief Executive Officer (CEO) | | ✓ | | | ✓ | ✓ | ✓ | ✓ | | | Public Company (Board or Executive) | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Government | | ✓ | | | | | | | ✓ | | International Operations | ✓ | | ✓ | ✓ | ✓ | ✓ | | ✓ | ✓ | | Strategic Experience | | | | | | | | | | | Financial | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Industry / Project Delivery | | ✓ | | | ✓ | | ✓ | ✓ | ✓ | | Infrastructure | | ✓ | ✓ | | ✓ | | ✓ | | | | Regulatory | | ✓ | ✓ | | ✓ | ✓ | ✓ | | ✓ | | Strategy & Business Development | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Customer Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | | Talent & Organization Development | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Risk Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
Nominees for Election at the 2024 Annual Meeting
Nominees for Election at the 2024 Annual Meeting
Board Diversity
Board Diversity
Board Diversity
| As part of our efforts to promote diversity of background and experience on our Board, nominees for election as directors at the 2024 Annual Meeting include three women, including one African American woman, and one director who self-identifies as LGBTQ+. | |
Nominees for Directors
Nominees for Directors The following section sets forth certain background information on the 9 nominees for election as directors as well as each individual’s specific experience, qualifications and skills that led our Board to conclude that each such director nominee should serve on our Board.
Nominees for Directors
| Bradley W. Buss Age: 60 Director Since: 2020 Board Committees: • Audit • Compensation and Organization • Nominating and Governance (Chair) | Mr. Buss brings to our Board executive experience and extensive financial and accounting expertise with both public and private technology-focused companies in diverse industries. Mr. Buss’ prior experience as the Chief Financial Officer of publicly-traded companies and his prior and current service on public company boards enable him to provide valuable insight to our Board on issues that impact public companies. Business Experience SolarCity Corporation • Chief Financial Officer (2014 – 2016) Cypress Semiconductor Corporation • Chief Financial Officer (2005 to 2014) Public Boards QuantumScape Corporation (2020 – Present) Marvell Technology, Inc. (2018 – Present) TuSimple (2020 – 2022) Advance Auto Parts, Inc. (2016 – 2021); Tesla, Inc. (2009 – 2019) Private Boards and Community Service CelLink Corp (2022 – Present) Diamond Foundry (2018 – Present) Education Bachelor of Arts, Economics (McMaster University) Business Administration Degree, Majoring in Finance and Accounting (University of Windsor) |
Nominees for Directors
| Lydia H. Kennard Age: 69 Director Since: 2020 Board Committee: • Nominating and Governance | Ms. Kennard brings to our Board more than 40 years of executive and operational experience in real estate development and construction management. From her service on multiple public company boards, she adds important insights into operational requirements and challenges faced by public companies. Business Experience KDG Construction Consulting • Founder and Chief Executive Officer (1980 – 1994 and 2007 – Present) KDG Aviation, LLC • Principal (2007 – Present) Quality Engineering Solutions • President and CEO (2021 – Present) Los Angeles World Airports • Executive Director (1999 – 2003 and 2005 – 2007) Public Boards Vulcan Materials Company (2022 – Present) Freeport-McMoRan Inc. (2013 – Present) Prologis, Inc. (2004 – Present) Healthpeak Properties, Inc. (2018 – 2022) URS Corporation (2007 – 2014) Intermec Corporation (2003 – 2013) Private Boards and Community Service The University of Southern California, Life Trustee Audit Committee of the Annenberg Foundation (2015 – Present) Unihealth Foundation (1995 – Present) California Air Resources Board (2004 – 2011) Education Bachelor of Arts, Urban Planning and Management (Stanford University) Master’s Degree, City Planning (Massachusetts Institute of Technology) Juris Doctor (Harvard Law School) |
Nominees for Directors
| Derek J. Kerr Age: 59 Director Since: 2023 Board Committee: • Audit | Mr. Kerr brings to our Board extensive executive, finance and accounting expertise having previously served several leadership roles at the American Airlines Group, Inc., most recently as Vice Chair of American Airlines and President of American Eagle. In addition, Mr. Kerr previously served as Executive Vice President and Chief Financial Officer of American Airlines, which has provided him with substantial knowledge dealing with complex financial and accounting matters associated with a large publicly-traded company, as well as risk management oversight. Business Experience American Airlines • Vice Chair (2022 – 2023) • Chief Financial Officer (2002 – 2022) • Various Finance Positions (1991 – 2002) American Eagle • President (2020 – 2023) Public Boards Comerica Bank (2023 – Present) Private Boards and Community Service Cotton Bowl Board of Directors (2018 – Present) Knight Commission of Intercollegiate Athletics (2016 – Present) Dallas Regional Chamber (2015 – 2023) Education Bachelor of Science, Aerospace Engineering (University of Michigan) Master of Business Administration (University of Michigan) |
Nominees for Directors
| Kristy Pipes Age: 64 Director Since: 2022 Board Committee: • Audit (Chair) | Ms. Pipes brings to our Board extensive management, financial and accounting experience, having held several senior leadership positions throughout her career including most recently as Managing Director and CFO at Deloitte Consulting. From her service on multiple public company boards across a variety of sectors, she adds valuable insights into operational requirements and the unique challenges faced by public companies. Business Experience Deloitte Consulting • Managing Director and Chief Financial Officer (2015 – 2019) • Various leadership roles (1999 – 2014) Transamerica Life Companies • Vice President and Manager, Finance Division (1996 – 1999) Public Boards Public Storage (2020 – Present) EXLService (2021 – Present) Savers Value Village (2021 – Present) PS Business Parks (2019 – July 2022) Education Bachelor of Arts, Business Economics (University of California, Los Angeles) Master of Business Administration (University of California, Los Angeles) |
Nominees for Directors
| Troy Rudd Age: 59 Director Since: 2020 | Mr. Rudd brings to our Board a critical vantage point as Chief Executive Officer of the Company and, accordingly, the director closest to the Company’s day-to-day operations. Mr. Rudd has extensive executive experience in the engineering, design and construction sector, professional services sector, finance, public company matters, international business, strategic planning, and mergers and acquisitions. Business Experience AECOM • Chief Executive Officer and Director (2020 – Present) • Chief Financial Officer (2015 – 2020) • Chief Operating Officer, Design Consulting Services (“DCS”) Americas and Chief Financial Officer, DCS Global (2014 to 2015) • Senior Vice President, Corporate Finance and Treasurer (2012 – 2015) • Various Financial Leadership Roles (2009 – 2012) KPMG LLP (1998 – 2009) • Partner Public Boards AECOM (2020 – Present) Private Board and Community Service SMU Lyle School of Engineering Executive Board (2023 – Present) Sustainable Markets Initiative (2023 – Present) Education Bachelor of Science (University of British Columbia) Master of Science, Taxation (Golden Gate University) |
Nominees for Directors
| Douglas W. Stotlar Age: 63 Director Since: 2014 • Chairman of the Board Board Committee: • Audit • Compensation and Organization | Mr. Stotlar brings to our Board substantial knowledge of the transportation sector. As a former Chief Executive Officer of a public company, Mr. Stotlar contributes valuable experience with corporate governance practices, labor and stockholder relations matters, as well as current legal and regulatory requirements and trends. Business Experience Con-way Inc. • President, Chief Executive Officer and Director (2005 – 2015) Con-way Transportation Services Inc. • President and Chief Executive Officer (2004 – 2005) • Executive Vice President and Chief Operating Officer (2002 – 2004) • Executive Vice President of Operations (1997 – 2002) Public Boards Reliance Steel & Aluminum Co. (2016 – Present) LSC Communications, Inc. (2016 – 2021) URS Corporation (2007 – 2014) Private Board and Community Service Reddy Ice (2019 – Present) Mauser Packaging Solutions (2017 – Present) Stone Canyon Industries, LLC (2016 – Present) Grieve Well (2009 – Present) Education Bachelor of Science, Business (The Ohio State University) |
Nominees for Directors
| Daniel R. Tishman Age: 68 Director Since: 2010 Board Committee: • Compensation and Organization (Chair) • Nominating and Governance | Mr. Tishman brings to our Board strong knowledge, management, and operational experience in the real estate and construction management industry in particular on large-scale development projects such as the rebuilding of the World Trade Center site in New York City and other major projects. Business Experience Tishman Holdings Corporation • Chairman and Executive Vice President (1997 – Present) Tishman Construction Corporation • Chairman of the Board and Chief Executive Officer (1991 – 2010) AECOM • Vice-Chairman (2010 – March 2018) Private Boards and Community Service Montefiore Medicine (2018 – Present) Real Estate Board of New York (2014 – Present) NexWave Capital Partners LLC (2008 – Present) National September 11 Memorial & Museum (2005 – Present) Education Bachelor of Science, Ecology and Planning (Evergreen State College) Master of Science, Environmental Studies (Lesley College) |
Nominees for Directors
| Sander van ’t Noordende Age: 60 Director Since: 2021 Board Committee: • Compensation and Organization • Nominating and Governance | As the CEO of Randstad, a global talent company, Mr. van ’t Noordende brings to our Board deep leadership experience in the human and professional services sectors. Before Randstad he served on Accenture’s global management committee for 13 years. Business Experience Randstad • CEO (2022 – Present) • Member of Executive Board (Jan – March 2022) • Member of Supervisory Board (2021) Accenture • Products Operating Group, Group Chief Executive (2013 – 2020) • Management Consulting, Group Chief Executive (2011 – 2013) • Resources Operating Group, Group Chief Executive (2006 – 2011) • Various leadership roles (1987 – 2006) Public Boards Randstad (2021 – Present) Micro Focus (2020 – 2022) Private Board and Community Service Virtusa (5/2021 – 12/2021) Out and Equal (2021) Education Master’s Degree, Industrial Engineering, specializing in Finance and Marketing (Eindhoven University of Technology, Netherlands) |
Nominees for Directors
| Gen. Janet C. Wolfenbarger Age: 65 Director Since: 2015 Board Committee: • Audit • Nominating and Governance | General Wolfenbarger brings to our Board a distinguished career as a senior leader in the military, including serving as the Air Force’s first female four-star general. In addition to significant international experience, these qualifications provide our Board with valuable government-related expertise supportive of our global business operations and public-sector client roster. Public Service Air Force Materiel Command, Wright-Patterson Air Force Base • Commander, Air Force Materiel Command (2012 – 2015) • Commander, C17 Systems Group for the Aeronautical Systems Center (2002 – 2005) • Director, B2 System Program Office (2000 – 2002) Pentagon • Military Deputy to the Assistant Secretary of the Air Force for Acquisition (2011 – 2012) • Service’s Director of the Acquisition Center of Excellence (2005 – 2006) Private Boards and Community Service FIRST (For Inspiration and Recognition of Science and Technology) (2022 – Present) Massachusetts Institute of Technology Corporation (2020 – Present) Falcon Foundation (2016 – Present) KPMG LLP (2018 – 2023) Education Bachelor of Science, Engineering Sciences (U.S. Air Force Academy) Master of Science, Aeronautics and Astronautics (Massachusetts Institute of Technology) Master of Science, National Resource Strategy (National Defense University) |
Nominees for Directors
Directors are elected by a majority of the votes cast for and against by holders of shares entitled to vote at the 2024 Annual Meeting. This means that for each director the number of votes cast “FOR” the director must exceed the number of votes cast “AGAINST” the director. Abstentions and broker non-votes will not be considered votes cast.
Nominees for Directors
| The Board of Directors recommends that you vote FOR the election of each nominee for director. |
Director Compensation
Director Compensation Information regarding the compensation of our non-employee directors is discussed below in “Directors’ Compensation for Fiscal year 2023.”
Executive Summary
| Why approve our Say-on- Pay proposal? | ✓ Our 2023 executive pay is aligned with the Company’s strong financial performance, successes on long-term goals and strong stockholder value creation ✓ We continuously engage with our stockholders and implement thoughtful and responsive changes to our executive pay programs when we conclude such changes will drive long-term shareholder value. |
Fiscal Year 2023 Executive Pay Design Supports Strategy
| | | Pay Element | What It Does | How It Links to Performance | | Fixed | | Base Salary | Provides competitive fixed cash compensation reflective of an executive’s role, responsibility, and experience | • Salary is tied to performance in the role and the growth of the employee along with the Company. • Salary increases are not guaranteed and are evaluated annually by the Compensation Committee. | | Short-Term Incentives | Performance-Based Compensation | Annual Cash Bonus | Rewards achievement of the Company’s annual financial plan, as well as the specific qualitative goals included in the Company’s strategic plan | • Financial metrics for fiscal year 2023 include Adjusted EBITDA, NSR Segment Adjusted Operating Margin % and Free Cash Flow, performance on which is a key element of value creation. • Strategic non-financial measures include safety, leadership development, and sustainability and ED&I goals, which drive employee satisfaction and retention. • Financial targets align with external guidance. • Payments may range from 0% to 200% of target based on actual performance and are not guaranteed. | | Long Term Incentives | | Performance-Based Equity | Aligns long-term interests of executive and stockholders Rewards achievement of performance related to the Company’s long-term objectives and stockholder value creation Retains key talent and rewards creation of long-term stockholder value | 60% of long-term equity incentives • Performance metrics for fiscal year 2023 include ROIC, Adjusted EPS growth, and Relative TSR to align compensation with long-term profitable growth, manage risk, and create stockholder value. • The value of the performance-based equity award is determined by AECOM’s performance against key value determining metrics as well as total stockholder return. • Payments may range from 0% to 200% of target based on actual performance and are not guaranteed. | | | | Time-Based Equity | Aligns long-term interests of executive and stockholders Retains key talent and rewards creation of long-term stockholder value | 40% of long-term equity incentives • Time-based vesting with three-year continued service required to vest. • The value of the time-based equity award links directly to AECOM’s stock price increases and decreases. |
Compensation Process
| • Provides the committee with market data with respect to NEO benchmark pay levels and input on executive compensation plans and program design |
Compensation Process
The Compensation Committee, which is composed solely of independent directors, has been authorized to determine and approve compensation for AECOM’s executive officers. As part of the annual compensation planning process for NEOs, the Compensation Committee reviews their base salary, short-term and long-term incentive compensation, with a focus on the total reward package. As further described below, the Compensation Committee looks to a peer group of companies, as well as the broader market, as a baseline for compensation decisions for NEOs. However, AECOM does not target executive officer compensation at a specific level or percentage relative to compensation provided by the companies in the compensation peer group or broader market. Instead, when determining compensation for executive officers, the Compensation Committee takes into account a broad array of factors, including the experience level of the individuals in their current positions, the overall financial and strategic performance of the Company during the year and the performance and contribution of each executive during the year relative to individual, predefined goals and objectives. Differences in compensation levels for our NEOs are driven by the Compensation Committee’s assessment, in its judgment, of each of our executive’s responsibilities, experience and compensation levels for similar positions at peer companies. Except as otherwise noted in this Compensation Discussion & Analysis, the Compensation Committee’s determinations are subjective and the result of business judgment informed by members’ experiences, analysis of peer company data, input from the independent consultant, and overall compensation trends.
Compensation Process
– Reviews the Company’s financial, strategic and operational metrics and goals, compensation peer group and approves the performance objectives of the CEO and other executive officers. – Approves design changes to the executive compensation program, as applicable. – Reviews full year Company financial and strategic performance to understand accomplishments relative to established objectives. – Evaluates the CEO’s performance in light of the review of Company performance. – Discusses with the CEO his evaluation of the performance of each of the other executive officers relative to their individual performance objectives. – Determines compensation amounts for the CEO and each of the other executive officers, taking into account: • Prior year’s compensation; • Performance assessments; • Market considerations; • Individual performance and retention considerations; • Input from the Compensation Committee’s independent compensation consultant; and • For the other NEOs, the CEO’s recommendations. – Reviews and approves the grants and payouts of long-term incentive equity awards, including certification of the financial results that support awards made under the annual and long-term incentive programs. With respect to individual long-term incentive equity awards, the Compensation Committee considers individual performance, market data, including compensation for comparable positions at peer companies, and the strategic importance of the NEO’s position to determine a dollar denominated long-term incentive equity value to be awarded to each NEO. The dollar value awarded by the Compensation Committee to each NEO is then converted into a specific number of units, based on the fair market value of AECOM common stock on the date of grant.
Compensation and Organization Committee’s Independent Compensation Consultant
Compensation and Organization Committee’s Independent Compensation Consultant The Compensation Committee has the authority to retain the services of outside consultants to assist it in performing its responsibilities. The Compensation Committee engaged the services of the consulting firm Exequity LLP. During fiscal year 2023, the consultant provided data on the compensation and relative performance of compensation peer group companies as well as general industry data to the Compensation Committee, made presentations on regulatory and legislative matters affecting executive compensation, provided advice on the degree to which compensation arrangements are consistent with market practices, and consulted on other executive compensation matters as needed. Exequity LLP does not provide any services to the Company other than advising the Compensation Committee on executive and non-employee director compensation matters. The Compensation Committee has assessed the independence of Exequity LLP, considering the following six factors and other factors that it deemed relevant: (1) other services provided to the Company by Exequity LLP, (2) the amount of fees paid by the Company to Exequity LLP as a percentage of Exequity LLP’s total revenue, (3) the policies or procedures maintained by Exequity LLP that are designed to prevent conflicts of interest, (4) any business or personal relationships between the individual employees of Exequity LLP involved in the engagement and a member of the Compensation Committee, (5) any AECOM stock owned by Exequity LLP’s employees involved in the engagement and (6) any business or personal relationships between our executive officers and Exequity LLP or the employees of Exequity LLP involved in the engagement. Following such assessment, the Compensation Committee concluded that Exequity LLP is independent and that Exequity LLP’s work raises no conflicts of interest.
Fiscal Year 2023 Compensation Peer Group
Fiscal Year 2023 Compensation Peer Group In connection with the ongoing transformation of the Company into a Professional Services business, the Compensation Committee refreshed the Company’s compensation peer group (the “Compensation Peer Group”) in 2022 to align with the Company’s strategic profile by identifying the Company’s competitors for talent and taking into consideration other various measures of size, scope, and complexity, with a focus on revenue, enterprise value, and net service revenue. The 2023 peer group was unchanged.
Fiscal Year 2023 Compensation Peer Group
| Booz Allen Hamilton | Leidos Holdings | Stantec | | EMCOR Group | MasTec | Tetra Tech | | Fluor | Parsons | WSP Global | | Jacobs Solutions Inc. | Quanta Services | | | KBR | SNC-Lavalin Group | |
Annual Incentives
Annual Incentives Our Compensation Committee establishes a short-term incentive award opportunity to be paid to each NEO upon achieving certain annual individual and company performance goals under the Executive Incentive Plan (“EIP”). For fiscal year 2023, the Compensation Committee approved the following targets, shown as a percentage (%) of base salary and in dollar amounts ($), for the NEOs:
Annual Incentives
| Annual Target Incentives (NEOs) | 2022(1) | | 2023(1) | | | Troy Rudd | 125% | $1,510,000 | 125% | $1,593,750 | | Gaurav Kapoor | 100% | $720,000 | 100% | $770,400 | | Lara Poloni | 110% | $858,000 | 110% | $880,363 | | David Gan | 100% | $575,000 | 100% | $586,500 | | Todd Battley | 100% | $475,000 | 100% | $487,400 |
Annual Incentives
(1) Bonus targets reflect amounts approved as part of the annual compensation planning process for the fiscal year. For fiscal year 2023, the Compensation Committee approved performance measures for our NEOs as set forth in the table below to support our strategy for attaining long-term profitable growth and stockholder value creation. The targets for each of the financial metrics align with the earnings guidance provided to our stockholders and our financial plan.
Annual Incentives
| Metric | Why Selected | | Free Cash Flow | Free cash flow both measures and incentivizes allocation of capital in a disciplined manner to high-return investments and encourages working capital conversion. Free cash flow is also critical to our capital allocation policy, which is to return substantially all available cash flow to stockholders, and contributes to ROIC, another key metric. Because free cash flow is a key metric for our investors and is included in our financial guidance, we selected it as a performance measure in fiscal 2023 to replace operating cash flow. | | Adjusted EBITDA | Adjusted EBITDA incentivizes achievement of the our annual financial plan, which includes delivering high-value organic revenue growth, margin expansion, and disciplined investments in growth initiatives, employee development programs, and innovation. | | NSR Segment Adjusted Operating Margin % | NSR Segment Adjusted Operating Margin% focuses on underlying operational performance, including executing our strategy, which emphasizes profitable growth, and investing through our margins to deliver for today and deliver more in the future. | | Key Performance Indicator (“KPI”) Assessment | KPI Assessment encourages focus on the achievement of the Company’s non-financial strategic objectives including sustainability and ESG goals. These KPIs are developed for each NEO and, in the instance of our CEO, include such non-financial strategic objectives as: • Total recordable incident rate of no greater than 0.11, which would continue to lead the industry • Percentage of women in leadership of greater than 20%, consistent with the Company’s near-term targets included in its Sustainable Legacies strategy • Voluntary attrition of high-performers of less than 10%, which would exceed benchmark levels • Employee satisfaction as reflected by the percentage of employees that would recommend AECOM as a great place to work as indicated in the Company’s bi-annual all-employee survey of at least 70%, which would continue to significantly exceed industry benchmark levels |
Annual Incentive Calculations
Annual Incentive Calculations For fiscal year 2023, each of the NEOs was measured on the following financial metrics and performance results:
Annual Incentive Calculations
| Financial Metrics* | Weighting Percentage | Threshold Amount($) (0% Payout) | Target Amount($) (100% Payout) | Maximum Amount($) (200% Payout) | Actual Amount($) | Earned Percentage** | | Free Cash Flow | 30% | $460.0 | $575.0 | $690.0 | $590.7 | 34.1% | | Adjusted EBITDA | 30% | $864.0 | $960.0 | $1,056.0 | $963.9 | 31.2% | | NSR Segment Adjusted Operating Margin % | 20% | 13.2% | 14.7% | 16.2% | 14.7% | 20.5% | | KPIs | 20% | Varies by Individual NEO | | | | See below |
Annual Incentive Calculations
* See Annex A, Reconciliation of Non-GAAP Items. ** Linear interpolation is applied for outcomes between those shown in the illustration. Additionally, each NEO received KPI assessment results based on their individual contributions to the Company’s strategic plan. Total earned percentage payouts were determined based on the combined earned percentages from both the financial metrics and KPI results as follows:
Annual Incentive Calculations
| | Individual KPIs | | Earned Percentage of Financial Metrics (See above) | Total Annual Incentive Earned Percentage (Sum of KPI plus Financial Metrics) | | KPIs | KPI Score | KPI Score 20% Weighting | Score Weighting | | | Troy Rudd | 100.0% | 20.0% | 85.8% | 105.8% | | Gaurav Kapoor | 100.0% | 20.0% | 85.8% | 105.8% | | Lara Poloni | 100.0% | 20.0% | 85.8% | 105.8% | | David Gan | 100.0% | 20.0% | 85.8% | 105.8% | | Todd Battley | 100.0% | 20.0% | 85.8% | 105.8% |
Long-Term Incentives
Long-Term Incentives Long-term incentive equity awards reward the creation of long-term stockholder value and achievement of key metrics over a longer-term period, aligning our NEOs’ interests with those of our stockholders by linking the value of our NEOs’ compensation to AECOM’s stock price. The PEP awards are subject to performance metrics that drive the successful execution of our long-term strategy to build sustainable profitable growth and stockholder value, and both the PEP awards and RSU awards serve as a retention tool for our NEOs with 3-year continued service vesting requirements.
Long-Term Equity Incentive Award
Long-Term Equity Incentive Award As part of its review of fiscal year 2023 performance, the Compensation Committee analyzed the role and responsibilities of each NEO, including their past and current performance history, and prevailing market practices with respect to our Compensation Peer Group and across industries. Based on these factors (as well as taking into consideration the Compensation Committee’s collective experience regarding appropriate annual equity grant levels), the Compensation Committee approved the following equity awards in fiscal year 2023:
Long-Term Equity Incentive Award
| NEOs | 2022 | 2023 | % Change | | Troy Rudd | $5,778,000 | $7,700,000 | 33.3% | | Gaurav Kapoor | $1,750,000 | $2,000,000 | 14.3% | | Lara Poloni | $1,900,000 | $2,100,000 | 10.5% | | David Gan | $1,200,000 | $1,250,000 | 4.2% | | Todd Battley | $750,000 | $900,000 | 20.0% |
Long-Term Equity Incentive Award
For fiscal year 2023, the long-term incentive equity award received by each NEO was comprised of the following:
Long-Term Equity Incentive Award
| Type | Weighting Percentage | Performance Measures and Vesting Requirements | | PEP | 60% | Metrics: – 1/3rd to vest based on 3-year Relative TSR – 1/3rd to vest based on 3-year average ROIC(1) achievements – 1/3rd to vest based on 1-year, 2-year average, and 3-year average Adjusted EPS Growth(2) | | RSU | 40% | Continued service over 3-years |
Long-Term Equity Incentive Award
Defined as the 3-Year Average Annual Adjusted NOPAT divided by the 3-Year Average Quarterly Invested Capital. Adjusted NOPAT is Adjusted Attributable Net Income plus Adjusted Interest Expense net of Interest Income (tax effected at a normalized 28.5% rate). Adjusted Attributable Net Income is defined as Net Income Available to Common Stockholders excluding foreign exchange gains/losses on forward contracts related to financing, acquisition and integration related expenses, transaction related expenses, transformational restructuring related expenses, financing charges in interest expense, the amortization of intangible assets, and financial impacts associated with expected and actual dispositions of non-core businesses and assets. Adjusted Interest Expense excludes financing charges in interest expense. Invested Capital is Attributable Shareholders Equity plus Total Debt less Cash and Cash Equivalents (all per balance sheet). Quarterly Invested Capital is defined as the beginning and ending balance of each respective quarter excluding (1) any balance with respect to all at-risk businesses to be sold and (2) changes to Accumulated Other Comprehensive Loss (i.e., held flat at Q4 FY2023 ending actuals). Adjusted EPS Growth is calculated as (a) Adjusted Attributable Net Income (as defined in footnote 1) divided by (b) the Weighted Average Number of Common Shares Outstanding, on a diluted basis, for a fiscal year, including any impact from share repurchases. The Compensation Committee sets performance targets that it believes to be rigorous and challenging. The targets for ROIC and Adjusted EPS included in our PEP design constitute competitively sensitive information. Accordingly, the targets are not disclosed here but align with the Company’s long-term plan and/or guidance provided to stockholders at the time the targets were approved. The Relative TSR goals measure performance against the Compensation Peer Group and are as follows:
Long-Term Equity Incentive Award
| Metric | Threshold | Target | Maximum | | Relative TSR | 25th percentile | 55th percentile | 75th percentile |
Performance Earnings Program — 2023 Achievements and Payouts
Performance Earnings Program — 2023 Achievements and Payouts
Fiscal Year 2021 (PEP21)
| Fiscal Years 2021 – 2023 | Threshold (0% Payout) | Target (100% Payout) | Maximum (200% Payout) | Actual | Actual Payout (%) | | ROIC | 12.6% | 14.0% | 15.4% | 16.2% | 200.0% | | Relative TSR | 25th percentile | 55th percentile | 75th percentile | 57th percentile | 110.7% | | Adjusted EPS Growth | | | | | | | 1-Year | 14.2% | 17.8% | 21.3% | 22.0% | 200.0% | | 2-Year | 9.7% | 12.1% | 14.5% | 19.2% | 200.0% | | 3-Year | 8.0% | 10.0% | 12.0% | 12.4% | 200.0% |
Fiscal Year 2021 (PEP21)
Prior to approving the PEP21 payout, the Compensation Committee reviewed the Company’s stock price performance and Relative TSR as compared to the peer group during the PEP21 performance period to confirm alignment between pay and performance. The Compensation Committee determined that the Company’s stock price performance supported the PEP21 payout as the Company’s market capitalization increased by approximately $4.7 billion or 71% over the performance period. Importantly, as shown below, the Company’s stock also outperformed the broader stock market, as represented by the S&P 500 index, over that time period by nearly 50%. The Committee also determined the Company’s Relative Total Stockholder Return during the PEP21 performance period of 52.6% compared to our ISS peer group and 57.1% compared to our fiscal year 2021 proxy peer group supported the PEP21 payout.
Fiscal Years 2022 (PEP22) and 2023 (PEP23)
Fiscal Years 2022 (PEP22) and 2023 (PEP23) PEP22 and PEP23 have three-year performance periods to measure ROIC and Relative TSR, and a 1-year, 2-year, and 3-year performance period to measure average Adjusted EPS Growth. The Compensation Committee sets performance targets that it believes to be rigorous and challenging. Because pre-established targets for financial metrics are competitively sensitive, they are not disclosed here. However, all targets align with the Company’s long-term plan and/or guidance to stockholders and are designed to drive performance that further enhances long-term stockholder value creation. For both PEP22 and PEP23, the Relative TSR goals are as follows:
Fiscal Years 2022 (PEP22) and 2023 (PEP23)
| Metric | Threshold (0% Payout) | Target (100% Payout) | Maximum (200% Payout) | | Relative TSR | 25th percentile | 55th percentile | 75th percentile |
Fiscal Years 2022 (PEP22) and 2023 (PEP23)
100% target payout for Relative TSR requires outperformance against the current Compensation Peer Group at the end of the performance period at the 55th percentile. There is no payout below the 25th percentile and Relative TSR of 75th percentile or higher would result in a 200% payout. Linear interpolation is applied for outcomes between those shown in the illustration above.
Employment Agreements, Severance Benefits and Change in Control Provisions
Employment Agreements, Severance Benefits and Change in Control Provisions See the “Payments and Benefits upon Termination or Change in Control” section of this Proxy Statement for a description of the benefits provided to our NEOs under the AECOM Senior Leadership Severance Plan, the AECOM Technology Corporation Change in Control Severance Policy for Key Executives, as well as agreements with certain of our NEOs.
Summary Compensation Table for Fiscal Years 2023, 2022 and 2021
Summary Compensation Table for Fiscal Years 2023, 2022 and 2021
Summary Compensation Table for Fiscal Years 2023, 2022 and 2021
| Name and Principal Position | Year | Salary (1) | Stock Awards (2) | Non Equity Incentive Plan Compensation (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | Troy Rudd CEO | 2023 | $1,254,387 | $8,306,165 | $1,686,948 | $7,840 | $204,612(4) | $11,459,952 | | | 2022 | $1,190,463 | $6,278,345 | $1,747,358 | $4,062 | $281,964 | $9,502,192 | | | 2021 | $1,000,002 | $3,125,010 | $1,896,626 | $3,847 | $499,195 | $6,524,680 | | Gaurav Kapoor Chief Financial & Operations Officer | 2023 | $754,894 | $2,157,570 | $815,451 | $0 | $37,556(5) | $3,765,471 | | | 2022 | $703,079 | $1,901,606 | $833,177 | $0 | $19,701 | $3,457,563 | | | 2021 | $575,000 | $1,375,303 | $901,198 | $0 | $22,773 | $2,874,274 | | Lara Poloni(9) President | 2023 | $757,776 | $2,265,426 | $931,844 | $0 | $261,408(6) | $4,216,454 | | | 2022 | $774,935 | $2,064,668 | $950,004 | $0 | $21,160 | $3,810,767 | | | 2021 | $750,262 | $1,134,893 | $1,209,314 | $0 | $15,957 | $3,110,426 | | David Gan Chief Legal Officer | 2023 | $582,962 | $1,348,425 | $620,797 | $0 | $42,120(7) | $2,594,304 | | | 2022 | $589,424 | $1,303,964 | $607,885 | $0 | $29,645 | $2,530,918 | | | 2021 | $535,578 | $1,163,730 | $834,515 | $0 | $21,049 | $2,554,872 | | Todd Battley(9) Chief Strategy Officer | 2023 | $453,832 | $970,882 | $487,259 | $0 | $21,303(8) | $1,933,276 | | | 2022 | $469,996 | $815,087 | $502,202 | $0 | $18,463 | $1,805,748 | | | 2021 | $416,616 | $529,008 | $493,729 | $0 | $15,957 | $1,455,310 |
Summary Compensation Table for Fiscal Years 2023, 2022 and 2021
(1) Includes any amounts deferred under our qualified defined contribution plan or our non-qualified deferred compensation plan. For more information regarding amounts deferred into the non-qualified deferred compensation plan, please refer to the “EXECUTIVE NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL YEAR 2023” table. The fiscal year 2023, 2022, and 2021 compensation amounts are for a 52-week fiscal year. (2) These amounts represent the grant date fair value of the stock awards granted during the applicable fiscal year, calculated in accordance with FASB ASC Topic 718 as described below and in the “Grants of Plan-Based Awards for Fiscal Year 2023” table. The grant date fair value amounts in this column for fiscal year 2023 are based on the following calculations: • The grant date fair value of PEP awards subject to financial performance vesting conditions is calculated based upon the number of target PEP units granted multiplied by 66.7% and by the common stock price of $83.67 on the day of grant for the awards issued on December 15, 2022. The grant date fair value of PEP awards subject to relative TSR market conditions is calculated based upon the number of target PEP units granted multiplied by 33.3% and by the Monte Carlo value of $116.60 on December 15, 2022. • The annual RSU awards granted on December 15, 2022 are calculated based upon the number of RSUs granted multiplied by the closing common stock price of $83.67 on the grant date. With respect to the PEP awards, these amounts represent the value based on the target performance as of the grant date. As discussed in the Compensation Discussion and Analysis, two thirds, or 66.7%, of the PEP2023 awards are subject to performance vesting conditions (ROIC and Adjusted EPS Growth) and one third, or 33.3%, are subject to a market condition (Relative TSR). The value of the financial metrics portion (66.7%) of the PEP2023 awards based on maximum performance is as follows: Mr. Rudd — $6,160,009 (55,217 PEP2023 units granted × 66.7% × $83.67 grant price × 200% maximum payout), Mr. Kapoor — $1,600,105 (14,343 PEP2023 units granted × 66.7% × $83.67 grant price × 200% maximum payout), Ms. Poloni — $1,680,094 (15,060 PEP2023 units granted × 66.7% × $83.67 grant price × 200% maximum payout), Mr. Gan — $1,000,024 (8,964 PEP2023 units granted × 66.7% × $83.67 grant price × 200% maximum payout), and Mr. Battley — $720,008 (6,454 PEP2023 units granted × 66.7% × $83.67 grant price × 200% maximum payout). PEP2023 awards cliff vest after a three-year performance period on December 15, 2025 based on cumulative performance against performance goals and continued employment over that period (except in the case of certain qualifying terminations). RSU awards cliff vest on the third anniversary of the grant date (December 15, 2025), subject to continued employment through the applicable vesting date (except in the case of certain qualifying terminations). The “Grants of Plan-Based Awards for Fiscal Year 2023,” “Outstanding Equity Awards for Fiscal Year End 2023” and the “Option Exercises and Stock Vested for Fiscal Year 2023” tables include additional information with respect to all awards outstanding as of September 30, 2023. These amounts represent the annual bonus/short term incentive compensation earned by the NEOs in their respective fiscal years. See “Compensation Discussion and Analysis — 2023 Elements of our Named Executive Compensation” for a description of this short-term incentive program. These figures include any amounts deferred under the Company’s qualified defined contribution and nonqualified deferred compensation plan. This amount includes a Company match in the AECOM Retirement and Savings Plan (“RSP”), executive life insurance and long-term disability premiums, $111,679 dividend payments from vested shares, and $79,740 in membership dues. (5) This amount includes executive life insurance premiums, membership dues, Company-paid charitable match, and $12,542 dividend payments from vested shares. (6) This amount includes executive life insurance premiums, Australian superannuation payments, $42,612 dividend payments from vested shares, and $209,140 in relocation expenses. Costs related to relocation arise from the move of the Company’s President from Melbourne, Australia to corporate headquarters in Dallas, TX. (7) This amount includes a Company match in the RSP, executive life insurance and long-term disability premiums, Company-paid parking, entertainment, Company-paid charitable match, and $15,607 dividend payments from vested shares. (8) This amount includes $17,121 in Australian superannuation payments. (9) The amounts for fiscal 2023 reported in this table for Ms. Poloni and Mr. Battley that are paid in AUD have been converted to USD using the average exchange rate for fiscal year 2023 (1 AUD = 0.663121 USD).
Grants of Plan Based Awards for Fiscal Year 2023
Grants of Plan Based Awards for Fiscal Year 2023 The Compensation Committee typically considers and approves nonequity incentive (“STI”) targets and long-term incentive equity awards in the first quarter of each fiscal year at regular meetings. The following table sets forth information with respect to nonequity incentive targets and long-term incentive equity awards granted to NEOs during the fiscal year ended September 30, 2023.
Grants of Plan Based Awards for Fiscal Year 2023
| Name and Principal Position | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares or Stock/ Units | Grant Date Fair Value of Stock and Option Awards(3) | | | Grant Type | Grant Date | Threshold ($) | Target ($) | Max. ($) | Threshold (#) | Target (#) | Max. (#) | | | | William T. Rudd CEO | STI | 10/1/2022 | $0 | $1,593,750 | $3,187,500 | — | — | — | — | $0 | | | PEP | 12/15/2022 | — | — | — | 0 | 55,217 | 110,434 | — | $5,226,105 | | | RSU | 12/15/2022 | — | — | — | — | — | — | 36,812 | $3,080,060 | | Gaurav Kapoor CFO | STI | 10/1/2022 | $0 | $770,400 | $1,540,800 | — | — | — | — | $0 | | | PEP | 12/15/2022 | — | — | — | 0 | 14,343 | 28,686 | — | $1,357,517 | | | RSU | 12/15/2022 | — | — | — | — | — | — | 9,562 | $800,053 | | Lara Poloni President | STI | 10/1/2022 | $0 | $880,363 | $1,760,726 | — | — | — | — | $0 | | | PEP | 12/15/2022 | — | — | — | 0 | 15,060 | 30,120 | — | $1,425,379 | | | RSU | 12/15/2022 | — | — | — | — | — | — | 10,040 | $840,047 | | David Gan Chief Legal Officer | STI | 10/1/2022 | $0 | $586,500 | $1,173,000 | — | — | — | — | $0 | | | PEP | 12/15/2022 | — | — | — | 0 | 8,964 | 17,928 | — | $848,413 | | | RSU | 12/15/2022 | — | — | — | — | — | — | 5,976 | $500,012 | | Todd Battley Chief Strategy Officer | STI | 10/1/2022 | $0 | $487,400 | $974,800 | — | — | — | — | $0 | | | PEP | 12/15/2022 | — | — | — | 0 | 6,454 | 12,908 | — | $610,850 | | | RSU | 12/15/2022 | — | — | — | — | — | — | 4,303 | $360,032 |
Grants of Plan Based Awards for Fiscal Year 2023
(1) See “Compensation Discussion and Analysis — 2023 Elements of our Named Executive Compensation” for a description of this short-term incentive program. (2) The target for the PEP2023 awards is 100% of the granted PEP units. The maximum for the PEP2023 awards is 200% of the granted PEP units. (3) The grant date fair value amounts in this column are based on the following calculations: • The grant date fair value of PEP awards subject to financial performance vesting conditions is calculated based upon the number of target PEP units granted multiplied by 66.7% and by the common stock price of $83.67 on the day of grant for the awards issued on December 15, 2022. The grant date fair value of PEP awards subject to relative TSR market conditions is calculated based upon the number of target PEP units granted multiplied by 33.3% and by the Monte Carlo value of $116.60 on December 15, 2022. These PEP awards will cliff vest 100% on December 15, 2025, following the close of the three-year vesting period, provided the performance conditions are achieved, subject to continued employment through the vesting date (except in the case of certain qualifying terminations). The annual RSU awards granted on December 15, 2022 are calculated based upon the number of RSUs granted multiplied by the closing common stock price of $83.67 on the grant date. These annual RSU awards will cliff vest 100% on December 15, 2025, subject to continued employment through the vesting date (except in the case of certain qualifying terminations).
Outstanding Equity Awards at Fiscal Year-End 2023
Outstanding Equity Awards at Fiscal Year-End 2023 The following table sets forth information with respect to all outstanding equity awards held by the NEOs as of September 30, 2023.
Outstanding Equity Awards at Fiscal Year-End 2023
| Name | Option Award | | | | | Stock Award | | | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Shares or Units of Stock That Have Not Vested | | | Equity Incentive Plan Awards: Unearned Shares or Units That Have Not Vested | | | | | | | | | | | Number (#)(1) | Market Value ($)(2) | | Number (#)(3) | Market or Payout Value ($)(4) | | Troy Rudd | 0(5) | 106,194(5) | 0(5) | $38.72 | 8/15/2027 | RSU2023 | 36,812 | $3,056,868 | | | | | | | | | | | RSU2022 | 30,940 | $2,569,258 | | | | | | | | | | | PEP2023 | 12,270 | $1,018,938 | PEP2023 | 42,947 | $3,566,319 | | | | | | | | PEP2022 | 17,828 | $1,480,473 | PEP2022 | 44,052 | $3,658,078 | | | | | | | | PEP2021 | 101,310 | $8,412,782 | | | | | Gaurav Kapoor | | | | | | RSU2023 | 9,562 | $794,028 | | | | | | | | | | | RSU2022 | 9,371 | $778,168 | | | | | | | | | | | RSU2021 | 10,861 | $901,897 | | | | | | | | | | | PEP2023 | 3,187 | $264,676 | PEP2023 | 11,156 | $926,394 | | | | | | | | PEP2022 | 5,400 | $448,416 | PEP2022 | 13,343 | $1,108,003 | | | | | | | | PEP2021 | 27,728 | $2,302,533 | | | | | Lara Poloni | | | | | | RSU2023 | 10,040 | $833,722 | | | | | | | | | | | RSU2022 | 10,175 | $844,932 | | | | | | | | | | | PEP2023 | 3,347 | $277,907 | PEP2023 | 11,713 | $972,648 | | | | | | | | PEP2022 | 5,863 | $486,856 | PEP2022 | 14,486 | $1,202,917 | | | | | | | | PEP2021 | 36,793 | $3,055,291 | | | | | David Gan | | | | | | RSU2023 | 5,976 | $496,247 | | | | | | | | | | | RSU2022 | 6,426 | $533,615 | | | | | | | | | | | RSU2021 | 9,190 | $763,138 | | | | | | | | | | | PEP2023 | 1,992 | $165,416 | PEP2023 | 6,972 | $578,955 | | | | | | | | PEP2022 | 3,703 | $307,483 | PEP2022 | 9,149 | $759,733 | | | | | | | | PEP2021 | 23,463 | $1,948,368 | | | | | Todd Battley | | | | | | RSU2023 | 4,303 | $357,321 | | | | | | | | | | | RSU2022 | 4,017 | $333,572 | | | | | | | | | | | RSU2021 | 4,178 | $346,941 | | | | | | | | | | | PEP2023 | 1,434 | $119,098 | PEP2023 | 5,020 | $416,861 | | | | | | | | PEP2022 | 2,315 | $192,197 | PEP2022 | 5,718 | $474,823 | | | | | | | | PEP2021 | 10,665 | $885,622 | | | |
Outstanding Equity Awards at Fiscal Year-End 2023
(1) This column represents the aggregate number of shares subject to RSU2023, RSU2022, RSU2021, PEP2023, PEP2022, and PEP2021 awards that were subject only to service-based vesting as of September 30, 2023. For PEP2023, the number of earned PEP units reflects fiscal year 2023 adjusted EPS growth performance of 200%. For PEP2022, the number of earned PEP units reflects fiscal year 2022 adjusted EPS growth performance of 200% and fiscal year 2023 two-year average adjusted EPS growth performance of 145.7%. For PEP2021, the number of earned PEP units is based on the actual performance of 170.2%. (2) This column represents the aggregate number of shares subject to RSU2023, RSU2022, RSU2021, PEP2023, PEP2022, and PEP2021 awards that were subject only to service-based vesting as of September 30, 2023, multiplied by the September 29, 2023 common stock price of $83.04 per share. (3) This column represents the number of shares subject to PEP2023 and PEP2022 units that were unearned and unvested as of September 30, 2023. The number of PEP units is based on estimated performance at target of 100% for PEP2023. For PEP2022, the number of PEP units is based on the estimated performance of 150% for two thirds, or 66.7%, of the awards that are subject to performance vesting conditions (ROIC and Adjusted EPS Growth) and on estimated performance at target of 100% for one third, or 33.3%, of the awards that are subject to a market condition (Relative TSR). This column represents the number of PEP2023 and PEP2022 units that were not vested as of September 30, 2023. The number of PEP units is based on estimated performance at target of 100% for PEP2023, multiplied by the September 29, 2023 common stock price of $83.04 per share. For PEP2022, the number of PEP units is based on the estimated performance of 150% for two thirds, or 66.7%, of the awards that are subject to performance vesting conditions (ROIC and Adjusted EPS Growth) and on estimated performance at target of 100% for one third, or 33.3%, of the awards that are subject to a market condition (Relative TSR), multiplied by the September 29, 2023 common stock price of $83.04 per share. This reflects the special performance stock option award granted on August 15, 2020 to Mr. Rudd in connection with his appointment to the position of CEO. The performance stock option is subject to both service and stock price vesting conditions, which must each be satisfied for the option to vest as to the underlying shares. The service vesting requirement is satisfied in five (5) equal installments on each anniversary of the grant date, subject to continued employment through the applicable vesting date except in connection with certain qualifying terminations. The performance vesting requirement is also satisfied in five (5) equal installments, upon our volume-weighted average price during a 20-day consecutive trading day period achieving each of the following stock price hurdles:
Outstanding Equity Awards at Fiscal Year-End 2023
| Target Stock Price | % Eligible to Vest | Status | | Exercise Price plus 20% ($46.46) | 20% | Vested as of August 15, 2021 | | Exercise Price plus 40% ($54.21) | 20% | Vested as of August 15, 2022 | | Exercise Price plus 60% ($61.95) | 20% | Vested as of August 15, 2023 | | Exercise Price plus 80% ($69.70) | 20% | Performance achieved; will vest on August 15, 2024 | | Exercise Price plus 100% ($77.44) | 20% | Performance achieved; will vest on August 15, 2025 |
Outstanding Equity Awards at Fiscal Year-End 2023
The table below provides information on the vesting schedules associated with the outstanding long-term incentive equity awards listed above:
Outstanding Equity Awards at Fiscal Year-End 2023
| Award Type | Expiration Date | Vesting Schedule | | Option | 8/15/2027 | The option vests over five (5) years subject to achievement of certain stock price performance goals. | | RSU2023 | — | The RSUs vest 100% on December 15, 2025*. | | RSU2022 | — | The RSUs vest 100% on December 15, 2024*. | | RSU2021 | — | The RSUs for Mr. Rudd and Ms. Poloni vested on August 15, 2023. The RSUs for all other NEO’s vested on December 15, 2023. | | PEP2023 | — | The PEPs will vest on December 15, 2025*. | | PEP2022 | — | The PEPs will vest on December 15, 2024*. | | PEP2021 | — | The PEPs vested on December 15, 2023. |
Outstanding Equity Awards at Fiscal Year-End 2023
* The vesting of the RSU awards and PEP awards is subject to continued employment through the applicable vesting date (except in the case of certain qualifying terminations).
Option Exercises and Stock Vested for Fiscal Year 2023
Option Exercises and Stock Vested for Fiscal Year 2023 The following table sets forth information about the value realized by the NEOs upon the exercise of stock options and for stock awards that vested during the fiscal year ended September 30, 2023.
Option Exercises and Stock Vested for Fiscal Year 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting ($)(1) | | Troy Rudd | 159,293 | $7,285,218 | 141,967 | $12,001,361 | | Gaurav Kapoor | | | 20,904 | $1,730,224 | | Lara Poloni | | | 54,981 | $4,641,843 | | David Gan | | | 26,011 | $2,152,930 | | Todd Battley | | | 6,969 | $576,824 |
Option Exercises and Stock Vested for Fiscal Year 2023
The values in this column reflect amounts vested from the PEP2020 and RSU2020 awards granted on December 16, 2019. The value of the PEP2020 units is based on units earned at 200% performance and the December 16, 2022 common stock price of $82.77. The value of the RSU2020 units is based on the December 16, 2022 common stock price of $82.77. For Ms. Poloni and Mr. Rudd, the values in this column also reflect amounts vested from the RSU2021 awards granted on August 15, 2020 in connection with their promotions to President and CEO, respectively. The value of the RSU2021 units is based on the August 15, 2023 common stock price of $87.88.
Executive Nonqualified Deferred Compensation for Fiscal Year 2023
Executive Nonqualified Deferred Compensation for Fiscal Year 2023 The following table sets forth information with respect to activity in the AECOM Executive Deferred Compensation Plan (“EDCP”) during the fiscal year ended September 30, 2023. The EDCP is a non-qualified plan that enables eligible employees to defer compensation in excess of amounts that may be contributed to the tax-qualified RSP. As with the RSP, participants are allowed to defer base salary into the EDCP. The EDCP also permits deferral of sign on bonuses and annual incentive bonuses. Up to 50% of base salary and 100% of any eligible bonus may be deferred into the EDCP. The EDCP offers a fixed rate of return, which is determined based on the September 30, 2022 Prime Rate.
Executive Nonqualified Deferred Compensation for Fiscal Year 2023
| Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FY ($)(2) | | Troy Rudd | $0 | $0 | $19,758 | $0 | $370,070 |
Executive Nonqualified Deferred Compensation for Fiscal Year 2023
(1) Earnings were calculated using the rate of 6.25% and, to the extent exceeding 120% of the Applicable Federal Rate, were included in the Nonqualified Deferred Compensation Earnings column of the “Summary Compensation Table”. (2) $27,048 of this amount was reported as an executive contribution or earnings above the Applicable Federal Rate in the “SUMMARY COMPENSATION TABLE” in prior year proxy statements. The information in this footnote is provided to clarify the extent to which amounts payable as deferred compensation represent compensation reported in our prior proxy statements, rather than new deferrals of compensation.
Payments and Benefits Upon Termination or Change in Control
Payments and Benefits Upon Termination or Change in Control Payments and benefits that would be provided to each NEO in addition to those received by all employees (such as payout of accrued salary and paid time off) as a result of certain termination events are set forth in the table below. The amounts shown assume a qualifying termination of employment effective as of the last day of our fiscal year ended September 30, 2023.
Estimated Potential Payments
Estimated Potential Payments
Estimated Potential Payments
| Name | Plan Name | Death | Disability | Voluntary Termination | Retirement | Involuntary Termination for Cause | Involuntary Termination Without Cause | Involuntary Termination Upon Change of Control(1) | | Troy Rudd | Long term Incentive(2) | $23,714,659 | $23,714,659 | $0 | $2,353,277 | $0 | $16,072,570 | $23,714,659 | | | Severance Payment | $0 | $0 | $0 | $0 | $0 | $4,143,750 | $7,357,835 | | | Health and Welfare Benefit | $0 | $0 | $0 | $0 | $0 | $38,644 | $38,644 | | Gaurav Kapoor | Long term Incentive(2) | $6,185,234 | $6,185,234 | $0 | $0 | $0 | $2,254,702 | $6,185,234 | | | Severance Payment | $0 | $0 | $0 | $0 | $0 | $1,540,800 | $3,111,164 | | | Health and Welfare Benefit | $0 | $0 | $0 | $0 | $0 | $19,493 | $29,239 | | Lara Poloni | Long term Incentive(2) | $5,991,668 | $5,991,668 | $0 | $0 | $0 | $3,907,364 | $5,991,668 | | | Severance Payment | $0 | $0 | $0 | $0 | $0 | $1,680,693 | $3,652,271 | | | Health and Welfare Benefit | $0 | $0 | $0 | $0 | $0 | $33,966 | $50,950 | | David Gan | Long term Incentive(2) | $4,482,499 | $4,482,499 | $0 | $0 | $0 | $3,241,882 | $4,482,499 | | | Severance Payment | $0 | $0 | $0 | $0 | $0 | $1,173,000 | $2,548,050 | | | Health and Welfare Benefit | $0 | $0 | $0 | $0 | $0 | $18,772 | $28,158 | | Todd Battley(3) | Long term Incentive(2) | $2,594,419 | $2,594,419 | $0 | $0 | $0 | $1,701,157 | $2,594,419 | | | Severance Payment | $0 | $0 | $0 | $0 | $0 | $974,800 | $1,965,448 | | | Health and Welfare Benefit | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Estimated Potential Payments
(1) Under the Change in Control Severance Policy in the event that any benefit payable constitutes a “parachute payment” within the meaning of Internal Revenue Code Section 280G and would be subject to excise tax imposed by Section 4999 of the Internal Revenue Code, then payments shall be provided either in full or reduced to an amount in which no portion of the benefits would be subject to excise tax, whichever provides the greatest after-tax benefit to the executive. The amounts in the table represent the benefits without consideration of reduction to avoid excise tax and based on assumption of a double-trigger event. (2) All calculations in this row are based on the AECOM common stock closing price as of September 29, 2023, which was $83.04 per share. In accordance with the Battley Agreement, Mr. Battley may also receive an additional payment of up to $121,850 in lieu of three months’ notice of termination.
CEO Pay Ratio
CEO Pay Ratio
Pay Ratio
Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the “Regulation,” below we provide disclosure of the ratio of our CEO’s annual total compensation to that of our median compensated employee.
Pay Ratio
| | Total Compensation | | CEO | $11,459,952 | | Median Employee | $72,712 | | Ratio | 157.6 |
Pay Versus Performance
Pay Versus Performance The following table sets forth information concerning the compensation actually paid to our CEO and to our other NEOs compared to Company performance for the years ended September 30, 2023, 2022, and 2021. The Compensation Committee did not consider the pay versus performance data presented below in making its pay decisions for any of the years shown.
Pay Versus Performance
| Year | Summary Compensation Table Total for CEO(1)(2) | CAP to CEO(3) | Average Summary Compensation Table Total Pay for other NEOs(1)(2) | Average CAP to other NEOs(3) | Value of Initial Fixed $100 Investment Based On: | | Net Income(5) | Adj. EPS(6) | Adj. EPS CAGR(7) | | | | | | | AECOM TSR(4) | Peer Group TSR(4) | | | | | 2023 | $11,459,952 | $19,077,083 | $3,127,376 | $4,442,441 | $201 | $141 | $100,141 | $3.71 | 21% | | 2022 | $9,502,192 | $14,790,471 | $2,901,249 | $3,716,795 | $164 | $122 | $334,702 | $3.40 | 28% | | 2021 | $6,524,680 | $20,557,469 | $2,498,721 | $4,486,501 | $151 | $144 | $202,980 | $2.81 | 34% |
Pay Versus Performance
(1) For 2023, 2022, and 2021 the CEO was Troy Rudd and the other NEOs were Gaurav Kapoor, Lara Poloni, David Gan, and Todd Battley. (2) The values reflected in this column reflect the “Total Compensation” set forth in the Summary Compensation Table (“SCT”) for fiscal years 2023, 2022, and 2021 on page 50 of this Proxy Statement. See the footnotes to the SCT for further detail regarding the amounts in this column. (3) “Total Compensation Actually Paid” (“CAP”) to our CEO and “Average Total CAP” to our other NEOs was computed as follows:
Pay Versus Performance
| | CEO | | | | | | Average Non-CEO NEOs | | | | | | | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | | SCT Total | | 11,459,952 | | 9,502,192 | | 6,524,680 | | 3,127,376 | | 2,901,249 | | 2,498,721 | | Minus SCT Stock Awards | ($ | 8,306,165) | ($ | 6,278,345) | ($ | 3,125,010) | ($ | 1,685,576) | ($ | 1,521,331) | ($ | 1,050,734) | | Plus Year-End Fair Value of Unvested Equity Awards Granted in Year | | 7,435,208 | | 5,705,027 | | 4,233,148 | | 1,508,831 | | 1,382,408 | | 1,412,978 | | Plus Change in Value of Unvested Equity Awards Granted in Prior Years | | 5,224,777 | | 3,762,823 | | 11,720,698 | | 1,043,713 | | 688,460 | | 1,572,809 | | Plus Change in Value of Vested Equity Awards Granted in Prior Years | | 3,149,553 | | 1,954,757 | | 1,203,953 | | 414,680 | | 231,571 | | 52,727 | | Plus Change in Value of Dividend Equivalent Units Accumulated on Unvested Equity Awards | | 113,758 | | 144,017 | | 0 | | 33,417 | | 34,438 | | 0 | | Total CAP | | 19,077,083 | | 14,790,471 | | 20,557,469 | | 4,442,441 | | 3,716,795 | | 4,486,501 |
Pay Versus Performance
(4) Reflects the cumulative total stockholder return of the Company and the peer group, represented by the S&P 400 MidCap index, respectively, for the year ended September 30, 2021, the two-years ended September 30, 2022, and the three years ended September 30, 2023, assuming a $100 investment at the closing price on September 30, 2020 and the reinvestment of all dividends. (5) Amounts in thousands. (6) See Annex A to this Proxy Statement for our definition of Adjusted EPS and a reconciliation of this non-GAAP financial measure. (7) Represents the compound annual growth rate for each respective fiscal year since fiscal 2020. The information provided is supplemental to the information required under Item 402(v) and is included to demonstrate compounding earnings growth consistent with the Company’s strategy to maximize shareholder value. See Annex A for a reconciliation of non-GAAP measures. The following is provided to describe the relationship between CAP and Net Income and Adjusted EPS as well as the relationship between the Company’s TSR and the TSR for the index, in each case over the years covered in the table above. All values other than EPS and TSR are in thousands.
Compensation Actually Paid versus TSR
Compensation Actually Paid versus TSR
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Adjusted EPS
Compensation Actually Paid versus Adjusted EPS
Directors’ Compensation
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(6) | All Other Compensation ($)(3) | Total($) | | Bradley W. Buss | $135,500 | $167,544 | $1,447 | $304,491 | | Robert G. Card(4) | $56,000 | $0 | $1,913 | $57,913 | | Diane C. Creel(4) | $60,750 | $0 | $2,009 | $62,759 | | Lydia H. Kennard | $100,000 | $167,544 | $11,447 | $278,991 | | Kristy Pipes | $125,000 | $247,537 | $386 | $372,923 | | Clarence T. Schmitz(5) | $33,625 | $0 | $0 | $33,625 | | Douglas W. Stotlar | $271,500 | $190,057 | $11,447 | $473,004 | | Daniel R. Tishman | $129,750 | $167,544 | $1,447 | $298,741 | | Sander van ’t Noordende | $114,250 | $167,544 | $1,447 | $283,241 | | General Janet C. Wolfenbarger | $115,500 | $167,544 | $10,447 | $293,491 |