DEF 14A of Aar Corp

Filed Aug 5, 2025 · FY20250001140361-25-028758

Open on EDGAR

Election of director nominees
Election of director nominees
Election of director nominees
| Proposal 1 | | Election of four director nominees named in this proxy statement | | Board recommendation | | | | | Our Board unanimously recommends that you vote FOR each director nominee. | |
Proposal summary
Proposal summary We are asking you to elect four directors named in this proxy statement at this annual meeting. The director nominees are: Jeffrey N. Edwards, John M. Holmes, Ellen M. Lord and Marc J. Walfish. Each director nominee is currently serving as a director of the Company. Three of the four director nominees have been determined by the Board to be “independent” within the meaning of the rules of the New York Stock Exchange (“NYSE”) and the SEC.
Director skills & qualifications
Director skills & qualifications The Nominating and Governance Committee believes that the Board is currently well-balanced and able to address our Company’s needs. The recent addition of Ms. Widhani increases the Board’s breadth of experience and prepares us for the continued execution of our strategy. As evidenced by the biographical information provided below, our directors have significant experience in chief executive or other senior-level operating, financial and international management positions. Six of our director nominees and continuing directors currently serve as a director of other public companies, which provides them with a range of experiences that can enhance their contribution to our Board. Set forth below is information regarding the nominees for election as directors and the directors in each class continuing in office after the annual meeting. Also discussed below are specific experiences, qualifications, attributes and skills of our directors considered by the Nominating and Governance Committee as part of its review of our Board’s membership and in connection with its nomination of the candidates for election to the Board at the annual meeting.
Director skills & qualifications
| | | Michael R. Boyce | John W. Dietrich | Jeffrey N. Edwards | John M. Holmes | Robert F. Leduc | Ellen M. Lord | Duncan J. McNabb | Billy J. Nolen | Peter Pace | Jennifer L. Vogel | Marc J. Walfish | Hema Widhani | | | CEO experience | | | | | | | | | | | | | | | Finance | | | | | | | | | | | | | | | Accounting | | | | | | | | | | | | | | | Commercial aerospace | | | | | | | | | | | | | | | Military aerospace | | | | | | | | | | | | | | | Services | | | | | | | | | | | | | | | International business | | | | | | | | | | | | | | | Sales & marketing | | | | | | | | | | | | | | | Supply chain & logistics | | | | | | | | | | | | | | | Operating | | | | | | | | | | | | | | | M&A | | | | | | | | | | | | | | | Manufacturing | | | | | | | | | | | | | | | Government contracting | | | | | | | | | | | | | | | Information technology / cyber / innovation | | | | | | | | | | | | | | | Human resources | | | | | | | | | | | | | | | Risk management | | | | | | | | | | | | | | | Corporate governance | | | | | | | | | | | | | | | Safety | | | | | | | | | | | | | | | Female directors | | | | | | | | | | | | | | | Male directors | | | | | | | | | | | | |
Director skills & qualifications
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Information about our director nominees and our continuing directors
Information about our director nominees and our continuing directors Information about our director nominees and our continuing directors whose terms expire in future years is set forth below.
Our director nominees
Our director nominees Class II Directors whose terms expire at the 2025 annual meeting:
Our director nominees
| Age: 64 Director since: 2024 Committees: • Nominating and Governance (Chair) • Audit • Executive Other public company directorships: • American Water Works Company, Inc. • Raymond James Financial, Inc. | Jeffrey N. Edwards Independent Director Expertise relevant to our business and strategy • Extensive expertise in finance, capital markets and business growth with more than 40 years in the financial services sector • Served in various senior executive roles at financial services firms including Vice Chairman at Merrill Lynch & Co. • Experience in strategic planning, international business development, operations and corporate governance • Current director of two S&P 500 companies Career highlights • Partner and Vice Chairman of New Vernon Capital, an investment advisory firm (2024 – present); Chief Operating Officer (2009 – 2024) • Vice Chairman, Merrill Lynch & Co., a leading global capital markets and financial services firm (2007 – 2009); Chief Financial Officer (2005 – 2007); various other senior executive positions related to origination, capital markets, equity and investment banking over 24 years at the firm Skills and qualifications • Finance, Accounting, Services, International business, Sales & marketing, Operating, M&A, Risk management, Corporate governance |
Our director nominees
| Chairman, President and Chief Executive Officer of AAR CORP. Age: 48 Director since: 2017 Committees: • Executive Other public company directorships: • GATX Corporation | John M. Holmes Chairman of the Board Expertise relevant to our business and strategy • Demonstrated leadership and management abilities as our President and Chief Executive Officer and in other senior officer positions at the Company • Knowledge of our businesses, portfolio of services and the markets in which we compete • Customer and supplier relationships developed over 20+ years at the Company • Continues to grow the Company through multiple acquisitions, including Trax and Triumph Group’s Product Support business • Senior leadership and board experience at public companies Career highlights • Chairman of the Board (2023 – present) • President and Chief Executive Officer (2018 – present) • President and Chief Operating Officer (2017 – 2018) • Positions of increasing responsibility at AAR prior thereto Skills and qualifications • CEO experience, Finance, Commercial aerospace, Services, International business, Sales & marketing, Supply chain & logistics, Operating, M&A, Human resources, Risk management, Corporate governance, Safety |
Our director nominees
| Age: 65 Director since: 2021 Committees: • Nominating and Governance • Human Capital and Compensation • Aviation Safety and Training Other public company directorships: • Parsons Corporation • SES S.A. Other public company directorships held in the past five years: • Comtech Telecommunications Corp. | Ellen M. Lord Independent Director Expertise relevant to our business and strategy • Leadership, management and strategic planning expertise acquired while serving as the Under Secretary of Defense for Acquisition and Sustainment for the U.S. Department of Defense • Experience in procurement, contract administration, logistics, and environmental matters • Experience in the private sector as the Chief Executive Officer of Textron Systems, where she led a multi-billion-dollar company with products and services supporting defense, homeland security, aerospace and infrastructure protection Career highlights • Under Secretary of Defense for Acquisition and Sustainment for the U.S. Department of Defense (2017 – 2021) • President and Chief Executive Officer of Textron Systems (2012 – 2017); other leadership positions at Textron Systems and related companies • Currently serves as Vice Chair of the U.S. Naval Institute and advises multiple defense technology companies and not-for-profit organizations • Former Vice Chair of the Congressional Planning, Programming, Budgeting and Execution (PPBE) Commission Skills and qualifications • CEO experience, Finance, Commercial aerospace, Military aerospace, Services, International business, Sales & marketing, Supply chain & logistics, Operating, M&A, Manufacturing, Government contracting, Information technology / cyber / innovation, Risk management, Safety |
Our director nominees
| Age: 73 Director since: 2003 Committees: • Nominating and Governance • Audit (Chair) • Executive Other public company directorships: • None | Marc J. Walfish Lead Independent Director Expertise relevant to our business and strategy • Familiar with navigating the unique economic cycles that impact the Company • Experience in the finance industry, including as a founding partner of Merit Capital Partners, which manages partnerships with over $1 billion in committed capital • Knowledge of capital markets, complex M&A transactions and portfolio management • Expertise in corporate finance, strategic planning and risk management • Held responsibility for managing Midwest offices and portfolio of over $2 billion as a senior executive at Prudential Capital Corporation Career highlights • Founding Partner of Merit Capital Partners, a mezzanine investor company formerly known as William Blair Mezzanine Capital Partners (1991 – present) • Senior Vice President, Prudential Capital Corporation and various other positions at The Prudential Insurance Company of America (1978 – 1991) Skills and qualifications • Finance, Accounting, Sales & marketing, M&A, Risk management |
Our director nominees
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Our director nominees
Class III Directors whose terms expire at the 2026 annual meeting:
Our director nominees
| Age: 60 Director since: 2023 Committees: • Human Capital and Compensation • Audit • Aviation Safety and Training Other public company directorships: • First Horizon Corp. Other public company directorships held in the past five years: • Atlas Air Worldwide Holdings, Inc. | John W. Dietrich Independent Director Expertise relevant to our business and strategy • More than 30 years’ experience with multinational public companies, including all facets of aviation and airline management • Currently Chief Financial Officer of FedEx Corporation where he advances corporate initiatives to foster greater efficiencies, manage costs, and provide innovative solutions • Former Chief Executive Officer of one of the world’s largest airfreight operators, Atlas Air Worldwide Holdings, Inc., a $4 billion public company • Extensive knowledge of commercial and government aircraft services • Expertise in operations, supply chain, legal, human resources and risk management Career highlights • Executive Vice President and Chief Financial Officer, FedEx Corporation, a global provider of transportation, e-commerce and business services (2023 – present) • President, Chief Executive Officer and Director, Atlas Air Worldwide Holdings, Inc., a leading global provider of outsourced aircraft and aviation operating services (2020 – 2023); President and Chief Operating Officer (2019 – 2020); Executive Vice President and Chief Operating Officer (2006 – 2019); Senior Vice President, General Counsel and Corporate Secretary and Associate General Counsel (1999 – 2006) Skills and qualifications • CEO experience, Finance, Accounting, Commercial aerospace, Military aerospace, Services, International business, Sales & marketing, Supply chain & logistics, Operating, M&A, Government contracting, Human resources, Risk management, Corporate governance, Safety |
Our director nominees
| Age: 69 Director since: 2020 Committees: • Human Capital and Compensation • Audit • Aviation Safety and Training Other public company directorships: • JetBlue Airways Corporation • Howmet Aerospace, Inc. | Robert F. Leduc Independent Director Expertise relevant to our business and strategy • Extensive experience in the aviation sector • Operational expertise, including managing through various down cycles Significant experience in enhancing brands and managing talent, including roles of increasing leadership responsibility in program management, strategy and customer support, at a large international company • Experience serving on other public company boards in the aviation industry Career highlights • President of Pratt & Whitney, an aerospace manufacturer and a subsidiary of United Technologies Corporation (2016 – 2020) • Various senior executive roles at United Technologies Corporation over 38 years, including President of Sikorsky Aircraft, a helicopter manufacturer (2015 – 2016) • Leadership positions at Hamilton Sundstrand and UTC Aerospace Systems (prior to 2015) Skills and qualifications • CEO experience, Finance, Commercial aerospace, Military aerospace, Services, International business, Sales & marketing, Supply chain & logistics, Operating, M&A, Manufacturing, Government contracting, Human resources, Risk management, Corporate governance, Safety |
Our director nominees
| Age: 73 Director since: 2017 Committees: • Nominating and Governance • Aviation Safety and Training (Chair) • Executive Other public company directorships: • None Other public company directorships held in the past five years: • Atlas Air Worldwide Holdings, Inc. | Duncan J. McNabb Independent Director Expertise relevant to our business and strategy • Expertise in government resourcing and government affairs at the highest levels gained from decades of service with the U.S. Air Force, including service as Commander of the U.S. Transportation Command (“US TRANSCOM”), the single manager for global air, land and sea transportation for the U.S. Department of Defense (“DOD”) • Strategic planning, operations, supply chain and leadership skills honed while overseeing DOD’s end-to-end supply chain, transportation and distribution to U.S. forces worldwide • Held responsibility for operational logistics and strategic mobility support to the Chairman of the Joint Chiefs of Staff and the Secretary of Defense • Former Director and Chairman of the Board of Atlas Air Worldwide Holdings, Inc., one of the world’s largest international airfreight companies Career highlights • Co-Founder and Managing Partner of Ares Mobility Solutions Inc., a privately-held logistics business (2011 – present) • General, U.S. Air Force (Retired) after 37 years of active commissioned service; former Commander, U.S. Air Mobility Command, 33rd Vice Chief of Staff of the U.S. Air Force and Former Commander of US TRANSCOM; Director for Logistics on the Joint Staff; U.S. Air Force Deputy Chief of Staff for Plans and Programs with responsibility for all Air Force Programs Skills and qualifications • Commercial aerospace, Military aerospace, Services, Supply chain & logistics, Operating, Government contracting, Risk management, Corporate governance, Safety |
Our director nominees
| Age: 79 Director since: 2011 Committees: • Human Capital and Compensation • Audit Other public company directorships: • None Other public company directorships held in the past five years: • Qualys, Inc. • Rigetti Computing, Inc. | Peter Pace Independent Director Expertise relevant to our business and strategy • Leadership and management skills and experience from over 40 years of service with the U.S. Marine Corps and retiring from the most senior position in the U.S. Armed Forces • Extensive government experience gained while serving as the principal military advisor to the President, the Secretary of Defense, the National Security Council and the Homeland Security Council in his role as Chairman of the Joint Chiefs of Staff • Deep understanding of the government and defense markets • Cybersecurity expertise • Prior service as a director of other public companies Career highlights • General, U.S. Marine Corps (Retired) • Chairman of the Joint Chiefs of Staff, the most senior position in the U.S. Armed Forces (2005 – 2007); Vice Chairman of the Joint Chiefs of Staff (2001 – 2005) Skills and qualifications • Commercial aerospace, Military aerospace, Services, Supply chain & logistics, Operating, Government contracting, Information technology / cyber / innovation, Human resources, Risk management, Corporate governance, Safety |
Our director nominees
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Our director nominees
Class I Directors whose terms expire at the 2027 annual meeting:
Our director nominees
| Age: 77 Director since: 2005 Committees: • Nominating and Governance • Audit • Aviation Safety and Training Other public company directorships: • None Other public company directorships held in the past five years: • Stepan Company | Michael R. Boyce Independent Director Expertise relevant to our business and strategy • Chairman and CEO of a company that has successfully acquired multiple businesses • Extensive international management experience leading two global industrial organizations • Insight into global manufacturing, supply and distribution practices • International business development skills Career highlights • Chairman, Chief Executive Officer and Managing Director of Peak Investments, LLC, an operating and acquisition company (2018 – present) • Retired Chairman of the Board of PQ Corporation, a specialty chemicals and catalyst company (2017 – 2019); Chairman and Chief Executive Officer (2005 – 2017) • Previously held various senior executive roles at industrial chemical companies worldwide Skills and qualifications • CEO experience, Finance, International business, Sales & marketing, Supply chain & logistics, Operating, M&A, Manufacturing, Risk management, Corporate governance, Safety |
Our director nominees
| Age: 67 Director since: 2023 Committees: • Human Capital and Compensation • Aviation Safety and Training Other public company directorships: • None | Billy J. Nolen Independent Director Expertise relevant to our business and strategy • More than 30 years of experience in the aviation industry, corporate safety, regulatory affairs and flight operations • Revamped certification requirements and airport-focused safety management systems while serving as Acting Administrator at the Federal Aviation Administration (“FAA”) • Knowledge of commercial and government aircraft services • Expertise in operations, safety, human resources and risk management Career highlights • Chief Regulatory Affairs Officer of Archer Aviation Inc., an aerospace company (2023 – present) • Acting Administrator at the FAA, the government agency that regulates civil aviation activities in the U.S., where he led certification reform and new safety management systems for airports (2022 – 2023); Associate Administrator of Aviation Safety (2022) • Vice President, Safety, Security and Quality at WestJet Airlines, a large airline in Canada (2020 – 2021); Executive Manager of Group Safety and Health for Qantas, a large airline in Australia (2018 – 2019); Senior Vice President – Safety, Security & Operations, Airlines for America (A4A) (2015 – 2018); Managing Director – Corporate Safety & Regulatory Affairs, American Airlines Inc. (2011 – 2015) • Captain, U.S. Army (1989 – 2015); served as pilot and trained pilots Skills and qualifications • Commercial aerospace, Military aerospace, Services, International business, Operating, Government contracting, Human resources, Risk management, Safety |
Our director nominees
| Age: 63 Director since: 2016 Committees: • Nominating and Governance • Human Capital and Compensation (Chair) • Executive Other public company directorships: • Sun Country Airlines Holdings, Inc. | Jennifer L. Vogel Independent Director Expertise relevant to our business and strategy • Experience as a highly successful corporate executive with over 25 years of leadership experience in the airline and energy industries, including her leadership positions with Continental Airlines • Legal and corporate governance expertise • Experience in regulatory issues, mergers and acquisitions, ethics and compliance matters • Experience as a director of other public companies including as Chair of the Board of Sun Country Airlines Holdings, Inc. Career highlights • Co-founder and owner of InVista Advisors, an advisory firm focused on legal department effectiveness, leadership, compliance, crisis readiness and risk management (2012 – 2020) • Senior Vice President, General Counsel, Secretary and Chief Compliance Officer of Continental Airlines, Inc. (2003 – 2010) Skills and qualifications • Commercial aerospace, Services, International business, M&A, Government contracting, Human resources, Risk management, Corporate governance, Safety |
Our director nominees
| Age: 47 Director since: 2025 Committees: • Not yet appointed Other public company directorships: • None | Hema Widhani Independent Director Expertise relevant to our business and strategy • Expertise in digital customer experience, including information technology and innovation, on an international scale through her various senior leadership roles at leading global financial services companies • Experience in digital transformations, data analytics and insights, and artificial intelligence • Led several Generative AI initiatives for Prudential’s global insurance and retirement business Career highlights • Principal and Chief Experience, Brand and Marketing Officer, Edward Jones, a leading financial services firm (June 2025 – present) • Chief Marketing and Digital Officer at Prudential Financial, Inc., a global financial services leader and investment manager (2023 – June 2025); Chief Customer Officer (2019 – 2023); Digital Product and Direct-to-Consumer Marketing Officer (2015 – 2019) • Various digital, data, and customer-focused leadership roles at E*Trade, Citibank, Citicards and the WPP Group Skills and qualifications • Finance, services, international business, sales and marketing, operating, information technology / cyber/ innovation, and risk management |
Our director nominees
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Director compensation
Director compensation The Board reviews director compensation annually to ensure that it is fair, appropriate and in line with AAR’s peer group companies. The Board’s policy is to periodically undertake an in-depth analysis of the type and amount of each element of director compensation in consultation with the Human Capital and Compensation Committee’s independent compensation consultant. The Fiscal Year 2025 director compensation program, as approved by the Board, consists of the following compensation elements:
Director compensation
| Compensation element | Fiscal Year 2025 non-employee director compensation program | | Board chair additional annual retainer | None* | | Non-employee director annual retainer | $95,000 | | Lead independent director additional annual retainer | $30,000 | | Audit Committee chair annual retainer | $20,000 | | All other Committee chair additional annual retainer | $15,000 | | Annual restricted stock award | Shares of common stock with a total grant date dollar value of $135,000 (vesting after one year)** |
Director compensation
| * Our current Chairman, John M. Holmes, does not receive any director-related compensation because he is an employee of the Company. |
Director compensation
| ** The amount shown was the total grant date dollar value of the annual restricted stock award granted on June 1, 2024, which was the beginning of Fiscal Year 2025. |
Director compensation
All retainers are paid quarterly. The annual stock award for Fiscal Year 2025 had an effective date of June 1, 2024, and a vesting date of June 1, 2025, subject to the director’s continued service through such date. Each non-employee director, upon being elected a director, receives term life insurance coverage of $200,000 (unless or until they notify the Company that they wish to opt out of coverage and sign a waiver) and is eligible (along with their spouse, as applicable) to participate in a Company-paid annual physical program. The Company also reimburses its non-employee directors for travel, lodging and related expenses that they incur in attending Board and committee meetings and for other Company business expenses.
Cap on director compensation
Cap on director compensation Our stock plan, as approved by the Company’s stockholders, caps the annual compensation of non-employee directors at $500,000 per director. This cap takes into account all cash and non-cash compensation (including the grant date fair value of all stock awards) paid in a single fiscal year. The reasons for this cap on director compensation are to protect against conflicts of interest given that the directors approve their own compensation and to ensure that directors receive fair and reasonable, but not excessive, compensation for their services.
Ability to defer director compensation
Ability to defer director compensation Non-employee directors may elect to defer receipt of their compensation under the Company’s Non-Employee Directors’ Deferred Compensation Plan (the “Director Plan”). Under the Director Plan, non-employee directors may defer retainers and stock awards into (a) a stock account, with the deferred compensation converted into stock units equivalent to shares of common stock based on the then current stock price, or (b) a cash account, with the deferred compensation credited with interest quarterly based on the 10-year United States Treasury Bond rate. Distributions of deferred compensation are made, at the participant’s election, in cash or in shares of common stock. Distribution occurs upon termination of service on the Board or on other dates as specified by the participant.
Ability to defer director compensation
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Director compensation table
Director compensation table
Fiscal Year 2025 director compensation
Fiscal Year 2025 director compensation The table below sets forth all compensation paid to each non-employee director for Fiscal Year 2025.
Fiscal Year 2025 director compensation
| Name(1) | Fees earned or paid in cash ($)(2) | Stock awards ($)(3) | Option awards ($)(4) | All other compensation ($)(5) | Total ($) | | Anthony K. Anderson | 32,637 | 134,952 | — | 622 | 168,211 | | Michael R. Boyce | 95,000 | 134,952 | — | 6,933 | 236,885 | | John W. Dietrich | 95,000 | 134,952 | — | 1,865 | 231,817 | | Jeffrey N. Edwards | 105,591 | 134,952 | — | — | 240,543 | | Robert F. Leduc | 95,000 | 134,952 | — | — | 229,952 | | Ellen M. Lord | 95,000 | 134,952 | — | 11,251 | 241,203 | | Duncan J. McNabb | 110,000 | 134,952 | — | 10,687 | 255,639 | | Billy J. Nolen | 95,000 | 134,952 | — | 1,865 | 231,817 | | Peter Pace | 95,000 | 134,952 | — | 1,865 | 231,817 | | Jennifer L. Vogel | 110,000 | 134,952 | — | — | 244,952 | | Marc J. Walfish | 145,000 | 134,952 | — | 1,865 | 281,817 | | Hema Widhani | 19,361 | 21,892 | — | — | 41,253 |
Fiscal Year 2025 director compensation
| 1 | Mr. Holmes is not included in this table because, as an employee director of the Company, he received no additional compensation for his service as a director in Fiscal Year 2025. Mr. Holmes’s compensation is set forth in the Summary Compensation Table in this proxy statement. Mr. Anderson resigned from the Board effective September 17, 2024. Ms. Widhani’s compensation for Fiscal Year 2025 was pro-rated based on her appointment to the Board on March 18, 2025. |
Fiscal Year 2025 director compensation
| 2 | The following table provides a breakdown of director fees earned or paid in cash for Fiscal Year 2025. Messrs. Leduc and Walfish elected to defer their retainers pursuant to the Company’s Non-Employee Directors’ Deferred Compensation Plan. |
Fiscal Year 2025 director compensation
| Name | Annual retainer ($) | Committee chair retainer fees(6) ($) | Lead director fee ($) | Total ($) | | Anthony K. Anderson | 28,187 | 4,451 | — | 32,637 | | Michael R. Boyce | 95,000 | — | — | 95,000 | | John W. Dietrich | 95,000 | — | — | 95,000 | | Jeffrey N. Edwards | 95,000 | 10,591 | — | 105,591 | | Robert F. Leduc | 95,000 | — | — | 95,000 | | Ellen M. Lord | 95,000 | — | — | 95,000 | | Duncan J. McNabb | 95,000 | 15,000 | — | 110,000 | | Billy J. Nolen | 95,000 | — | — | 95,000 | | Peter Pace | 95,000 | — | — | 95,000 | | Jennifer L. Vogel | 95,000 | 15,000 | — | 110,000 | | Marc J. Walfish | 95,000 | 20,000 | 30,000 | 145,000 | | Hema Widhani | 19,361 | — | — | 19,361 |
Fiscal Year 2025 director compensation
| 3 | The amounts in this column reflect the aggregate grant date fair value of the Fiscal Year 2025 stock award of 1,901 shares of time-based restricted stock granted on June 1, 2024, to each non-employee director computed in accordance with FASB ASC Topic 718 (except that Ms. Widhani received 391 shares). These shares subsequently vested on June 1, 2025. General McNabb, Mr. Nolen and Ms. Widhani elected to defer their stock awards. |
Fiscal Year 2025 director compensation
| 4 | No stock options were granted to non-employee directors in Fiscal Year 2025. No current non-employee director held any stock options as of May 31, 2025. |
Fiscal Year 2025 director compensation
| 5 | This column includes the cost of the annual physical program, reimbursements for travel, lodging and hotel expenses in connection with the annual physical program, and the cost of term life insurance coverage. |
Fiscal Year 2025 director compensation
| 6 | Mr. Edwards received a prorated chair retainer payment in the second quarter of Fiscal Year 2025 because he became chair of the Nominating and Governance Committee on September 17, 2024. |
Pay-for-performance and stockholder alignment
| • | Annual cash bonuses are linked to two key performance metrics critical to the success of our business strategy: adjusted diluted earnings per share from continuing operations (80%) and adjusted net working capital turns (20%). |
Pay-for-performance and stockholder alignment
| • | The Fiscal Year 2025 long-term incentive program is 100% equity based, consisting of performance-based restricted stock (60%), stock options (20%) and restricted stock awards (20%). |
Pay-for-performance and stockholder alignment
| • | Performance-based restricted stock for Fiscal Year 2025 is linked to three key performance metrics: adjusted income from continuing operations (70%), return on invested capital (20%) and relative total stockholder return (10%). |
Pay-for-performance and stockholder alignment
Performance-based restricted stock under the Fiscal Year 2025 long-term incentive plan
Our executive compensation goals and philosophy
| Compensation element | Target | | | | Base salary | ± | 10% | of market median | | “Total annual cash compensation” (base salary + target annual cash bonus) | ± | 10% | of market median | | “Total direct compensation” (base salary + target annual cash bonus + the grant date value of annual stock awards) | ± | 15% | of market median |
Executive compensation practices
| What We Do Not Do | | | | No tax gross-ups | | | No repricing of stock options | | | No dividends or dividend equivalents paid on stock or stock unit awards unless vesting conditions are met |
Executive compensation practices
| * All agreements with our named executive officers contain “double trigger” change-in-control provisions with the exception of the vesting of equity awards under a legacy agreement with our Chairman, President and Chief Executive Officer that was entered into in 2018. |
compensation program
| | Compensation element | Form of compensation | Performance period | Performance measures | | Purposes of the compensation element | | | Base salary | Cash | 1 year | Individual performance and contributions Qualifications and responsibilities Experience and tenure with the Company Competitive salary considerations | | Rewards individual performance and contributions consistent with an individual’s position and responsibilities Provides competitive compensation Balances risk-taking concerns associated with performance-based compensation | | | Annual cash bonus | Cash | 1 year | | Adjusted diluted earnings per share from continuing operations | Promotes retention of executive talent Provides short-term, cash-based incentive Measures performance against key corporate goals | | | | | | | Adjusted net working capital turns | | | | Stock options (20%) | Stock | 3 years (vesting period) Up to 10 years (option term) | | Stock price | Promotes retention of executive talent Aligns payout directly with stockholder interests | | | Time-based restricted stock (20%) | Stock | 3 years | | Stock price | Promotes retention of executive talent Aligns payout directly with stockholder interests | | | Performance-based restricted stock (60%) | Stock | 3 years | | Adjusted income from continuing operations | Promotes retention of executive talent Ties payout to achievement of key corporate goals Aligns payout directly with stockholder interests | | | | | | | Average return on invested capital | | | | | | | | Relative shareholder return | |
decision-making process for Fiscal Year 2025
| March 2024 | | | | Reviewed and approved the Company’s Fiscal Year 2025 peer group. |
decision-making process for Fiscal Year 2025
| June and July 2024 | | | | Assessed the Company’s prior year’s target executive compensation against the target executive compensation of the Company’s peer group companies and of other aerospace and defense companies. | | | Assessed the Company’s prior year performance against the performance of peer group companies. | | | Considered other information available at the time relevant to the Fiscal Year 2025 executive compensation program (e.g., prior year say-on-pay results and the CEO’s recommendations). | | | Assessed the overall structure of the executive compensation program, including the pay mix and types of awards appropriate for Fiscal Year 2025 compensation, based on competitive benchmarking, surveys, independent compensation consultant guidance and stockholder feedback. | | | Set target Fiscal Year 2025 compensation — base salaries, annual cash bonuses and stock awards — for the Company’s executive officers. |
decision-making process for Fiscal Year 2025
| July 2025 | | | | Approved Fiscal Year 2025 annual cash bonuses based on the Company’s performance in Fiscal Year 2025. |
CEO pay in Fiscal Year 2025
| • | A competitive pay analysis prepared by the Human Capital and Compensation Committee’s independent compensation consultant in June 2024; and |
Fiscal Year 2025 cash bonuses
Fiscal Year 2025 cash bonuses
Fiscal Year 2025 short-term incentive plan – setting targets
Fiscal Year 2025 short-term incentive plan – setting targets In July 2024, the Human Capital and Compensation Committee approved the Fiscal Year 2025 short-term incentive plan for the named executive officers. The Fiscal Year 2025 short-term incentive plan used two performance goals to determine annual cash bonuses: (1) the Company’s earnings per share from continuing operations as adjusted (weighted 80%), and (2) the Company’s adjusted net working capital turns (weighted 20%). The following table shows each of the two performance goals at the threshold, target and maximum levels:
Fiscal Year 2025 short-term incentive plan – setting targets
| Performance goal | | Threshold | Target | Maximum | | 80% | Adjusted diluted earnings per share from continuing operations (weighting) | $2.93 | $3.90 | $4.29 | | 20% | Adjusted net working capital turns (weighting) | 2.48 | 3.31 | 4.14 |
Fiscal Year 2025 short-term incentive plan – setting targets
The adjusted diluted earnings per share from continuing operations target ($3.90) for Fiscal Year 2025 represents a 28% increase from the prior year’s target of $3.05 and a 17% increase from the prior year’s actual performance of $3.33. The adjusted net working capital turns target (3.31) represents a 9% increase from the prior year’s target of 3.04 and a 2% increase from the prior year’s actual performance of 3.26. The net working capital turns target is developed based on our business plan and incorporates necessary investments in inventory. The net working capital turns target would not necessarily be expected to increase every year as it could be impacted by the inventory investments necessary to drive growth. The Human Capital and Compensation Committee believes adjusted diluted earnings per share from continuing operations and adjusted net working capital turns are critical performance measures of the Company’s financial success. Adjusted diluted earnings per share from continuing operations measures the Company’s performance in delivering earnings to stockholders, and adjusted net working capital turns measures the Company’s effectiveness in using its working capital and, in particular, in using its cash.
Fiscal Year 2025 short-term incentive plan – setting targets
| • | “Adjusted diluted earnings per share from continuing operations” is defined under the Fiscal Year 2025 short-term incentive plan as adjusted diluted earnings per share from continuing operations as disclosed by the Company in its earnings release furnished with the SEC, excluding non-GAAP items included on the Company’s quarterly earnings releases, special charges or unusual or infrequent items incurred during the performance period, and as may be adjusted for changes in generally accepted accounting principles. |
Fiscal Year 2025 short-term incentive plan – setting targets
| • | “Adjusted net working capital turns” is defined under the Fiscal Year 2025 short-term incentive plan as net sales divided by adjusted average working capital, where working capital is defined as net accounts receivable plus net inventories minus accounts payable, excluding non-GAAP items included on the Company’s quarterly earnings releases, special charges or unusual or infrequent items incurred during the performance period, including changes in the Company’s accounts receivable financing program, and as may be adjusted for changes in generally accepted accounting practices. |
Fiscal Year 2025 short-term incentive plan – setting targets
In calculating adjusted diluted earnings per share from continuing operations and adjusted net working capital turns, the Human Capital and Compensation Committee has the discretion to exclude special charges or unusual or infrequent items incurred during the performance period and to adjust for changes in GAAP if it determines that such exclusions or adjustments are appropriate. The Committee exercises this discretion with respect to special charges infrequently, typically limiting it to situations where the special charge was non-recurring or unforeseen and not within the control of management. In addition, the Committee maintains the discretion to adjust amounts further downward. The Fiscal Year 2025 annual cash bonus opportunities (in dollar amounts and as a percentage of base salary), at the threshold, target and maximum levels for the named executive officers are set forth in the table below, with performance between threshold and target levels and between target and maximum levels resulting in proportionate straight-line payouts:
Fiscal Year 2025 short-term incentive plan – setting targets
| | Threshold | | Target | | Maximum | | | Named executive officer | Dollar amount ($) | Percent of base salary (%) | Dollar amount ($) | Percent of base salary (%) | Dollar amount ($) | Percent of base salary (%) | | John M. Holmes | 649,200 | 60 | 1,298,400 | 120 | 2,596,800 | 240 | | Sean M. Gillen | 254,500 | 50 | 509,000 | 100 | 1,018,000 | 200 | | Jessica A. Garascia | 231,750 | 50 | 463,500 | 100 | 927,000 | 200 | | Christopher A. Jessup | 254,500 | 50 | 509,000 | 100 | 1,018,000 | 200 | | Eric S. Pachapa | 143,250 | 38 | 286,500 | 75 | 573,000 | 150 |
Fiscal Year 2025 short-term incentive plan – approving payouts
Fiscal Year 2025 short-term incentive plan – approving payouts For Fiscal Year 2025, we reported adjusted diluted earnings per share of $3.91 and achieved adjusted net working capital turns of 3.29. As noted, the Human Capital and Compensation Committee has the discretion under the short-term incentive plan to exclude or add back one-time special charges that it considers unusual or unforeseen and outside of management’s control. The adjusted net working capital turns of 3.29 resulted in a payout of 99% for that portion of the metric. Adjusted diluted earnings per share was $3.91, which has been adjusted to exclude non-GAAP adjustments externally reported of $3.56, which include losses related to sale and exit of business/joint venture of $1.97, FCPA settlement and investigation costs of $1.84, acquisition, integration, and amortization expenses of $0.74, government COVID-related subsidy liability of $0.02, Russian bankruptcy court judgment reversal of $(0.31), and the tax effect on adjustments of $(0.70). The Human Capital and Compensation Committee determined that these adjustments were appropriate as they are the same adjustments made and reported in connection with the Company’s earnings releases. The resulting payout for this metric was 103%.
Fiscal Year 2025 short-term incentive plan – approving payouts
| 51 | | |
Fiscal Year 2025 short-term incentive plan – approving payouts
Giving weighting to all of these items, the total payout under the short-term incentive plan was 102%, and the resulting bonuses for each named executive officer are listed below.
Fiscal Year 2025 short-term incentive plan – approving payouts
| | Fiscal Year 2025 short-term incentive plan | | | Named executive officer | Target bonus ($) | Actual bonus ($) | | John M. Holmes | 1,298,400 | 1,324,368 | | Sean M. Gillen | 509,000 | 519,180 | | Jessica A. Garascia | 463,500 | 472,770 | | Christopher A. Jessup | 509,000 | 519,180 | | Eric S. Pachapa | 286,500 | 292,230 |
Fiscal Year 2025 stock awards
Fiscal Year 2025 stock awards In July 2024, the Human Capital and Compensation Committee approved awards of performance-based restricted stock, time-based restricted stock and stock options to our named executive officers under the Fiscal Year 2025 long-term incentive plan. Consistent with Fiscal Year 2024, 60% of the target value of the Fiscal Year 2025 annual stock awards was in the form of performance-based restricted stock. The Human Capital and Compensation Committee determined the types and dollar amounts of stock awards to be granted for Fiscal Year 2025, based on a number of factors, including:
Fiscal Year 2025 stock awards
Annual stock awards for named executive officers The Human Capital and Compensation Committee’s use of performance-based restricted stock is intended to motivate executives to drive corporate performance, specifically with respect to adjusted income from continuing operations performance, adjusted return on invested capital performance and relative total stockholder return. The performance-based restricted stock is forfeited unless the Company achieves these performance goals at designated threshold levels over the three-year performance period. The Committee’s use of stock options is intended to focus executives on stock price appreciation. Stock options only have value to an executive if the Company’s stock price increases above its grant date value, thus providing a “win-win” for the executives and the Company’s stockholders. The Committee’s use of time-vested restricted stock is intended to promote retention and align the interests of our named executive officers with those of our stockholders. In these ways, the stock component of the Company’s executive compensation program fully reflects a pay-for-performance emphasis.
Performance-based restricted stock
Performance-based restricted stock The Human Capital and Compensation Committee approved the following grants of performance-based restricted stock awards for Fiscal Year 2025:
Performance-based restricted stock
| | Fiscal Year 2025 performance-based restricted stock | | | Named executive officer | Number of shares at target | Grant date fair value ($) | | John M. Holmes | 45,120 | 3,023,942 | | Sean M. Gillen | 13,180 | 883,324 | | Jessica A. Garascia | 7,325 | 490,922 | | Christopher A. Jessup | 13,180 | 883,324 | | Eric S. Pachapa | 3,925 | 263,054 |
Performance-based restricted stock
The grant date fair value in the table above was based on the $67.02 closing price of the Common Stock on the July 22, 2024 date of grant. The Human Capital and Compensation Committee designated adjusted income from continuing operations (weighted 70%), adjusted average return on invested capital (weighted 20%) and relative total stockholder return (10%) as the three performance goals for the performance-based restricted stock under the Fiscal Year 2025 long-term incentive plan. The Committee believes these three measures are appropriate because they capture critical elements of the Company’s performance over the three-year performance period beginning June 1, 2024 and ending May 31, 2027.
Performance-based restricted stock
| • | “Adjusted income from continuing operations” is defined as adjusted income from continuing operations as disclosed by the Company in its earnings releases furnished with the Securities and Exchange Commission, excluding non-GAAP items included on the Company’s quarterly earnings releases, special charges, unusual or infrequent items incurred during the performance period, acquisitions/divestitures, and as may be adjusted for changes in generally accepted accounting principles. |
Performance-based restricted stock
| • | “Adjusted average return on invested capital” is defined as tax-effected operating profit adjusted for non-GAAP items included by the Company in its earnings releases furnished with the Securities and Exchange Commission, excluding non-GAAP items included on the Company’s quarterly earnings releases, special charges or unusual or infrequent items incurred during the performance period, and as may be adjusted for changes in generally accepted accounting principles, divided by average net invested capital from continuing operations, excluding cash over the performance period, excluding special charges, unusual or infrequent items incurred during the performance period, acquisitions/divestitures, and as may be adjusted for changes in generally accepted accounting principles. |
Performance-based restricted stock
| • | “Relative stockholder return” is defined as stockholder return in the performance period relative to the list of companies in the comparator group set forth below. |
Performance-based restricted stock
The performance-based restricted stock generally vests on July 31, 2027, subject to performance conditions. The Human Capital and Compensation Committee believes that performance-based restricted stock serves a valuable purpose aligning executive pay with the interests of stockholders. The Fiscal Year 2025 long-term incentive plan provides that: performance below the threshold level results in a 0% payout; performance at the threshold level results in a 50% payout of the shares of performance-based restricted stock; performance at the target level results in a 100% payout; and performance at or above the maximum level results in a 200% payout. Performance between the threshold and target levels and between the target and maximum levels results in proportionate straight-line payouts. The relative total shareholder return performance goal is 25th percentile at the threshold level, 55th percentile at the target level, and 80th percentile at the maximum level. The relative total shareholder return comparator group is a custom group of companies that derive a significant portion of their revenues from commercial aviation-linked businesses. For Fiscal Year 2025, this group included AerSale Corporation, Alaska Air Group, Allegiant Travel Company, American Airlines Group Inc., Delta Air Lines, Inc., Hawaiian Holdings, Inc., Heico Corporation, Hexcel Corporation, JetBlue Airways Corporation, Moog Inc., Southwest Airlines Co., Spirit AeroSystems Holdings, Inc., Spirit Airlines, Inc., The Boeing Company, Triumph Group, Inc., United Airlines Holdings, Inc., and Woodward, Inc.
Performance-based restricted stock
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Time-based restricted stock
Time-based restricted stock The Human Capital and Compensation Committee approved the following grants of time-based restricted stock awards for Fiscal Year 2025:
Time-based restricted stock
| | Fiscal Year 2025 restricted stock | | | Named executive officer | Number of shares | Grant date fair value ($) | | John M. Holmes | 15,040 | 1,007,981 | | Sean M. Gillen | 4,395 | 294,553 | | Jessica A. Garascia | 2,440 | 163,529 | | Christopher A. Jessup | 4,395 | 294,553 | | Eric S. Pachapa | 1,310 | 87,796 |
Time-based restricted stock
The grant date fair value in the table above was based on the $67.02 closing price of the Common Stock on the July 22, 2024 date of grant. The restricted stock vests 100% on July 31, 2027. The Human Capital and Compensation Committee believes that time-based restricted stock serves a valuable purpose in helping to retain executives and reward them for building a career with the Company.
Stock options
Stock options The Human Capital and Compensation Committee approved the following grants of stock option awards for Fiscal Year 2025, subject to time-based vesting:
Stock options
| | Fiscal Year 2025 stock options | | | Named executive officer | Number of shares | Grant date fair value ($) | | John M. Holmes | 39,510 | 1,007,900 | | Sean M. Gillen | 11,540 | 294,385 | | Jessica A. Garascia | 6,415 | 163,647 | | Christopher A. Jessup | 11,540 | 294,385 | | Eric S. Pachapa | 3,440 | 87,754 |
Stock options
The grant date fair value in the table above was based on a Black-Scholes valuation, using the $67.02 closing price of the Common Stock on the July 22, 2024 date of grant. The stock options vest 33(1)∕3% on each of July 31, 2025, July 31, 2026 and July 31, 2027. The Human Capital and Compensation Committee believes that stock options serve a valuable purpose in aligning executive pay with the interests of stockholders. Stock options, once vested, remain subject to the retention requirements under the Company’s stock ownership guidelines.
Performance-based restricted stock – approving Fiscal Year 2023 award payouts
Performance-based restricted stock – approving Fiscal Year 2023 award payouts In July 2025, the Human Capital and Compensation Committee approved the payouts of shares of performance-based restricted stock under the Fiscal Year 2023 long-term incentive program (these grants were previously disclosed in the Company’s 2023 proxy statement). The payout for these grants could range from 0% to 250% for performance at or above the maximum performance level. The payout was determined by the Company’s adjusted income from continuing operations, adjusted return on invested capital and total shareholder return performance for the three-year performance period that began on June 1, 2022 and ended on May 31, 2025 versus target performance goals as set forth below.
Performance-based restricted stock – approving Fiscal Year 2023 award payouts
| Performance Goal* | Target | Actual** | | Adjusted income from continuing operations (70%) | $306.9 million | $359.8 million | | Adjusted return on invested capital (20%) | 8.06% | 9.44% | | Relative total shareholder return (10%) | 50th percentile | 59th percentile |
Performance-based restricted stock – approving Fiscal Year 2023 award payouts
| * Performance goals were adjusted to incorporate the Product Support business (which was acquired in Fiscal Year 2024 after performance goals were initially set for the performance period) as follows: (1) the original target for adjusted income from continuing operations was increased from $302.0 million to $306.9 million, and (2) the original target for adjusted return on invested capital was changed from 8.40% to 8.06%. Relative total shareholder return was unchanged. |
Performance-based restricted stock – approving Fiscal Year 2023 award payouts
| ** Adjusted income from continuing operations has been adjusted as permitted under the plan to exclude “special charges” and unusual items of $211.2 million, consisting of non-GAAP adjustments externally reported which include FCPA settlement and investigation costs of $80.5 million, acquisition, integration and amortization expenses of $76.5 million, losses related to sale and exit of businesses/joint venture of $73.8 million, pension settlement and severance charges of $27.3 million, contract termination/restructuring costs and loss provisions, net of $7.0 million, Russian bankruptcy court judgment of $1.9 million, customer bankruptcy charges of $1.5 million, loss on equity investments, net of $0.1 million, cost reversals related to strategic projects of $(0.2) million, and government COVID-related subsidies, net of $(0.8) million all net of the tax impact on the adjustments of $(56.4) million. Where applicable, return on invested capital has been adjusted for the certain of the special charges and unusual items listed above in addition to the impact of our accounts receivable financing program and Product Support business results, including its invested capital. The amount achieved for the adjusted income from continuing operations metric and the amount achieved for the adjusted return on invested capital metric resulted in a payout of 229% for each of these metrics. The 59th percentile achieved for relative total shareholder return resulted in the payout of 146% for this metric. The peer group used for relative shareholder return is the same as the peer group noted earlier for Fiscal Year 2025 performance-based stock awards. |
Performance-based restricted stock – approving Fiscal Year 2023 award payouts
Based on the Company’s cumulative adjusted income from continuing operations, adjusted return on invested capital and total stockholder return for the performance period, as adjusted as outlined above, the Fiscal Year 2023 performance-based restricted shares had an overall achievement percentage of 221% of target and therefore were paid out as of the vesting date of July 31, 2025, as follows:
Performance-based restricted stock – approving Fiscal Year 2023 award payouts
| Named executive officer | Target number of shares granted in Fiscal Year 2023 | Total shares paid out | | John M. Holmes | 43,580 | 96,312 | | Sean M. Gillen | 10,150 | 22,432 | | Jessica A. Garascia | 5,970 | 13,194 | | Christopher A. Jessup | 10,150 | 22,432 | | Eric S. Pachapa | 4,810 | 10,630 |
Fiscal Year 2025 peer group
Fiscal Year 2025 peer group The Human Capital and Compensation Committee believes that total compensation opportunities for the Company’s key executives, including the named executive officers, should be competitive with those offered by other companies competing for talent in the Company’s employment market. The goal of the Human Capital and Compensation Committee is to assemble a set of peer group companies that provide relevant pay and performance comparisons with the Company. The Committee and its independent compensation consultant recognize that any peer group of the Company will be imprecise given the Company’s unique characteristics, the variety of its businesses and the range of the markets in which the Company operates. They further recognize that there will be larger-sized and smaller-sized companies in the Company’s peer group; companies that are competitors in some but not all of the Company’s businesses; and other financial, business or market attributes that the peer group companies may or may not share with the Company. When determining the Fiscal Year 2025 peer group, the Human Capital and Compensation Committee used the following criteria: company type; industry classification (using Standard and Poor’s GICS codes); companies of comparable size to the Company by annual revenue (with secondary consideration given to market value); and business focus (organizations that conducted business similar in nature to that conducted by the Company). Following its review and analysis, the Human Capital and Compensation Committee recommended and the Board approved a Fiscal Year 2025 peer group consisting of the following 17 companies:
Fiscal Year 2025 peer group
| • Air Lease Corporation | • Heico Corporation | • TriMas Corporation | | • Applied Industrial Technologies, Inc. | • Hexcel Corporation | • Triumph Group, Inc. | | • Barnes Group Inc. | • Moog Inc. | • V2X, Inc. | | • Crane Co. | • MSC Industrial Direct Co., Inc. | • VSE Corporation | | • Curtiss-Wright Corporation | • Spirit AeroSystems Holdings, Inc. | • Woodward, Inc. | | • Ducommun Incorporated | • The Timken Company | |
Fiscal Year 2025 peer group
The Fiscal Year 2025 peer group is the same as the Fiscal Year 2024 peer group except that it reflects: (1) the removal of Aerojet Rocketdyne Holdings, Inc. and Kaman Corporation, which were removed due to the impact of M&A (no longer standalone public companies), and (2) the addition of Air Lease Corporation, V2X, Inc., and VSE Corporation, which were added to maintain a robust sample size with close business alignment and within a reasonable range of AAR’s scale. The Human Capital and Compensation Committee noted the following reasons supporting its selection of the Fiscal Year 2025 peer group:
Fiscal Year 2025 peer group
| • | The business and financial comparability of the peer group, on balance, to the Company; |
Fiscal Year 2025 peer group
| • | The importance of year-to-year consistency in the comparisons of executive compensation; |
Fiscal Year 2025 peer group
| • | The fact that six of the 17 companies in the Company’s peer group were also listed as peer group companies by both ISS and Glass Lewis, which are large proxy advisory firms. |
Employment, severance and other agreements
Employment, severance and other agreements The Company has an employment agreement with Mr. Holmes, its President and Chief Executive Officer, and as of May 31, 2025, had severance and change-in-control agreements in place with the remainder of the named executive officers. See “Potential payments upon a termination of employment or a change-in-control of the Company — Employment agreement with Mr. Holmes” for a description of the employment agreement between the Company and Mr. Holmes and “Potential payments upon a termination of employment or a change-in-control of the Company – Severance and change-in-control agreements” for a description of the severance and change-in-control agreements with the remainder of the named executive officers. The rationale for the employment agreement and the severance and change-in-control agreements is to provide an appropriate measure of security and incentive to the executive officers in line with market practice and to promote the Company’s goal of senior leadership stability. The Company has no tax gross-up provisions in any agreement with any executive officer and all executive agreements contain double trigger change-in-control provisions (except that the CEO’s employment agreement contains a single trigger change-in-control provision for the vesting of equity, which has been in the agreement since its June 1, 2018 effective date).
Employment, severance and other agreements
| 57 | | |
Equity grant practices
Equity grant practices The Human Capital and Compensation Committee meets from time to time to consider and act with respect to equity compensation awards for the Company’s executive officers. As described, the Committee typically approves annual stock awards at its July meeting. The Committee — or the Chief Executive Officer pursuant to authority delegated by the Committee — also grants stock awards to newly hired or newly promoted employees at other times during the year. The grant date is the date on which the Committee acts to approve the award, unless the Committee establishes the grant date at a specified future date, such as following the release of earnings or other potentially material non-public information. For example, in Fiscal Year 2025, the annual stock awards, including stock options, were approved at the Committee’s regularly scheduled meeting in July to be granted at the end of the second full trading day (based on such closing stock price) following the release of our earnings for Fiscal Year 2024 and the filing of our Form 10-K. Board and Human Capital and Compensation Committee meetings are generally scheduled a year in advance. The Company does not time the granting of its equity compensation awards to affect the value of its executive compensation. During Fiscal Year 2025, the Company did not grant stock options (or similar awards) to any named executive officer during any period beginning four business days before and ending one business day after the filing of any Company periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of any Company Form 8-K that disclosed any material non-public information.
Risk management
| • | Fiscal Year 2025 short-term incentive plan awards — performance-based cash compensation — were based on two different performance metrics: adjusted diluted earnings per share from continuing operations and adjusted net working capital turns, each of which provide benefits to the Company’s stockholders. In any year, regardless of the Company’s performance against these metrics, the Human Capital and Compensation Committee retains (and has exercised) the discretion to reduce any annual cash bonus for any reason. |
Risk management
| • | The balance built into the Fiscal Year 2025 short-term incentive plan was also reflected in the Fiscal Year 2025 long-term incentive plan awards, which consisted of performance-based restricted stock, stock options and time-based restricted stock. Each of these long-term equity-based incentive awards contains vesting periods designed to promote employee retention. They also are linked to the value of the Company’s common stock, thus aligning the executives’ interests with the interests of the Company’s stockholders. |
Risk management
| • | The Human Capital and Compensation Committee, its independent compensation consultant and senior management work together to ensure that the aggregate level of executive compensation fits within the Company’s budget. |
Role of the independent compensation consultant
Role of the independent compensation consultant Semler Brossy served as the independent compensation consultant to the Human Capital and Compensation Committee in Fiscal Year 2025. Semler Brossy provides research, data analysis, market information and compensation plan design expertise and experience to the Human Capital and Compensation Committee. Semler Brossy assisted with the design and implementation of the Fiscal Year 2025 short-term and long-term incentive plans for the Company’s senior executives and the development of the Company’s peer group for executive compensation purposes. Semler Brossy also kept the Committee apprised of regulatory developments and market trends related to executive compensation practices. Representatives of Semler Brossy attended all meetings of the Human Capital and Compensation Committee in Fiscal Year 2025. The Human Capital and Compensation Committee considered the independence of Semler Brossy in Fiscal Year 2025. The Human Capital and Compensation Committee’s consideration of Semler Brossy’s independence focused on the following factors:
Role of the independent compensation consultant
| • | Semler Brossy provides no other services to the Company and received no other fees from the Company apart from its compensation for consulting with the Human Capital and Compensation Committee; |
Role of the independent compensation consultant
| • | The conflicts of interest policies and procedures of the Company and of Semler Brossy; |
Role of the independent compensation consultant
| • | The fact that the Semler Brossy employees who provided compensation consulting services did not own any shares of the Company’s common stock; |
Role of the independent compensation consultant
| • | The lack of any relationships between Semler Brossy and members of the Company’s Board; and |
Role of the independent compensation consultant
| • | The lack of any relationships between Semler Brossy and any of the Company’s executive officers. |
Role of the independent compensation consultant
Based on this assessment, the Human Capital and Compensation Committee concluded that no conflicts of interest existed with respect to Semler Brossy and that Semler Brossy was independent of the Company.
Summary compensation table(1)
Summary compensation table(1) The following table sets forth compensation information for our named executive officers for Fiscal Year 2025, Fiscal Year 2024 and Fiscal Year 2023, as applicable:
Summary compensation table(1)
| Name and principal position | Year | Salary ($)(2) | Bonus ($) | Stock awards ($)(3) | Option awards ($)(4) | Non-equity incentive plan compensation ($)(5) | Change in pension value and non-qualified deferred compensation earnings ($)(6) | All other compensation ($)(7) | Total ($) | | John M. Holmes President and Chief Executive Officer | 2025 | 1,082,000 | — | 4,031,923 | 1,007,900 | 1,324,368 | — | 699,933 | 8,146,124 | | | 2024 | 1,050,000 | — | 3,272,152 | 818,019 | 2,242,800 | 222 | 482,257 | 7,865,450 | | | 2023 | 1,000,000 | — | 2,737,486 | 912,550 | 1,370,000 | 864 | 688,239 | 6,709,139 | | Sean M. Gillen Senior Vice President and Chief Financial Officer | 2025 | 509,000 | — | 1,177,877 | 294,385 | 519,180 | — | 191,580 | 2,692,022 | | | 2024 | 494,000 | — | 680,302 | 169,957 | 879,320 | — | 161,438 | 2,385,017 | | | 2023 | 480,000 | — | 637,623 | 212,465 | 657,600 | — | 165,573 | 2,153,261 | | Jessica A. Garascia Senior Vice President, General Counsel, Chief Administrative Officer and Secretary | 2025 | 463,500 | — | 654,451 | 163,647 | 472,770 | — | 154,404 | 1,908,772 | | | 2024 | 450,000 | — | 540,163 | 135,029 | 801,000 | — | 128,839 | 2,055,031 | | | 2023 | 430,000 | — | 375,036 | 125,031 | 589,100 | — | 137,961 | 1,657,128 | | Christopher A. Jessup Senior Vice President, Chief Commercial Officer | 2025 | 509,000 | — | 1,177,877 | 294,385 | 519,180 | — | 211,503 | 2,711,945 | | | 2024 | 494,000 | — | 680,302 | 169,957 | 879,320 | — | 182,799 | 2,406,378 | | | 2023 | 480,000 | — | 637,623 | 212,465 | 657,600 | — | 194,827 | 2,182,515 | | Eric S. Pachapa Vice President, Controller and Chief Accounting Officer | 2025 | 382,000 | — | 350,850 | 87,754 | 292,230 | — | 109,125 | 1,221,959 | | | 2024 | 371,000 | — | 322,525 | 80,612 | 495,285 | — | 101,971 | 1,363,968 | | | 2023 | 360,000 | — | 302,374 | 100,641 | 369,900 | — | 108,927 | 1,241,842 |
Summary compensation table(1)
| 1 | General. The Summary Compensation Table provides specific compensation information for the Company’s named executive officers in accordance with applicable SEC rules. Please read the “Compensation discussion and analysis” section of this proxy statement for a more detailed explanation of the Company’s executive compensation program in Fiscal Year 2025. |
Summary compensation table(1)
| 2 | Salary. In Fiscal Year 2025, each named executive officer received a base salary increase of 3% as stated in the “Compensation discussion and analysis” section of the proxy statement. |
Summary compensation table(1)
| 3 | Stock Awards. The amounts in this column for Fiscal Year 2025 reflect the grant date fair values of the time-based restricted stock awards as well as the value of performance-based restricted stock awards at their target levels. These values were computed in accordance with FASB ASC Topic 718 based on the fair market value of the underlying common stock on the date of grant. The grant date fair values of the performance-based stock awards, assuming the performance conditions are met at the maximum level (200% payout) as opposed to the target level (100% payout) included in the table as required by SEC rules, are as follows: Mr. Holmes: $6,047,884; Mr. Gillen: $1,766,648; Ms. Garascia: $981,844; Mr. Jessup: $1,766,648; and Mr. Pachapa: $526,108. In July 2024, the Human Capital and Compensation Committee made grants of time-based restricted stock awards and performance-based restricted stock awards pursuant to the Company’s Fiscal Year 2025 Long Term Incentive Compensation Program to each named executive officer. The time-based restricted stock generally vests on July 31, 2027. |
Summary compensation table(1)
The grant date fair values represent the Company’s accounting expense for the grants made to the named executive officers in a given year. These amounts do not represent the actual value that may be realized by the named executive officers because an award may be forfeited or may not vest or may vest at a lower or higher level. The “Compensation discussion and analysis” section of this proxy statement contains additional information about the awards of performance-based restricted stock in Fiscal Year 2025. Vesting information is presented under “Executive Compensation — Outstanding equity awards at Fiscal Year 2025 year-end — Vesting.”
Summary compensation table(1)
| 4 | Option Awards. The amounts in this column for Fiscal Year 2025 reflect the grant date fair value of the stock option awards computed in accordance with FASB ASC Topic 718. In July 2024, the Human Capital and Compensation Committee made grants of stock options pursuant to the Company’s Fiscal Year 2025 Long Term Incentive Compensation Program to each named executive officer. The stock awards vest in 1/3 installments beginning on July 31, 2025. See Note 7 to the Consolidated Financial Statements contained in the Company’s 2025 Form 10-K for an explanation of the assumptions made by the Company in the valuation of these awards. |
Summary compensation table(1)
The grant date fair values represent the Company’s accounting expense for the grants of stock options made to the named executive officers in a given year. These amounts do not represent the actual value that may be realized by the named executive officers because a stock option may be forfeited, may not be exercised or may not vest. The “Compensation discussion and analysis” section of this proxy statement contains additional information about the awards of stock options granted in Fiscal Year 2025. Vesting information is presented under “Executive Compensation — Outstanding equity awards at Fiscal Year 2025 year-end — Vesting.”
Summary compensation table(1)
| 5 | Non-Equity Incentive Plan Compensation. The Fiscal Year 2025 amounts in this column are the performance-based cash bonuses earned by each of the named executive officers under the Company’s Fiscal Year 2025 short-term incentive plan. The “Compensation discussion and analysis” section of this proxy statement contains additional information about the Fiscal Year 2025 bonuses. |
Summary compensation table(1)
| 6 | Change in Pension Value and Non-Qualified Deferred Compensation Earnings. This column shows the increased pension value under the Retirement Plan for Mr. Holmes, who is the only named executive officer with a benefit under the Retirement Plan. As part of the Retirement Plan termination, Mr. Holmes received a distribution of his plan benefit in July 2023. This column does not include any preferential or above-market earnings on deferred compensation as the Company does not pay such earnings on the deferred compensation of its named executive officers. |
Summary compensation table(1)
| 61 | | |
Summary compensation table(1)
| 7 | All other compensation. The table below provides a breakdown, by type and amount, of the totals shown in the “All other compensation” column for each named executive officer in Fiscal Year 2025. As required by the SEC rules, the Company values perquisites based on the aggregate incremental cost to the Company. From time to time, executive officers may use our tickets to sporting venues for personal use. We believe there is no incremental cost associated with our executive officers using our tickets to sporting venues for personal use because the tickets are purchased in advance for the entire season with the intention that they be used for business purposes, they cannot be returned for a refund if they are unused and use for personal purposes occurs only if the tickets have not been reserved for use for a business purpose. |
Summary compensation table(1)
| Named executive officer | Company 401(k) plan contributions ($) | Company SKERP contributions ($) | Perquisites and Other Personal Benefits* ($) | Total ($) | | John M. Holmes | 20,922 | 603,329 | 75,682 | 699,933 | | Sean M. Gillen | 15,715 | 157,186 | 18,679 | 191,580 | | Jessica A. Garascia | 10,521 | 128,088 | 15,795 | 154,404 | | Christopher A. Jessup | 20,890 | 172,736 | 17,877 | 211,503 | | Eric S. Pachapa | 20,840 | 83,990 | 4,295 | 109,125 |
Summary compensation table(1)
| * Amounts include club dues and expenses, financial planning, executive physicals, and travel-related benefits, including personal use of corporate aircraft and spousal travel, each of which was provided to one or more of our NEOs. The cost of any category of the listed perquisites and other personal benefits did not exceed the greater of $25,000 or 10% of total perquisites and other personal benefits for any NEO, except $51,178 for club dues and expenses for Mr. Holmes. |
Fiscal Year 2025 grants of plan-based awards
Fiscal Year 2025 grants of plan-based awards The following table sets forth information for each named executive officer with respect to:
Fiscal Year 2025 grants of plan-based awards
| • | Estimated possible payouts under non-equity incentive plan award opportunities for Fiscal Year 2025; |
Fiscal Year 2025 grants of plan-based awards
| • | Estimated future payouts under equity incentive plan award opportunities for Fiscal Year 2025; |
Fiscal Year 2025 grants of plan-based awards
| • | Other stock awards made in Fiscal Year 2025; and |
Fiscal Year 2025 grants of plan-based awards
| • | Stock options granted in Fiscal Year 2025. |
Fiscal Year 2025 grants of plan-based awards
| Named executive officer | Grant date(1) | Approval date(1) | Estimated possible payouts under non-equity incentive plan awards(2) | | | Estimated future payouts under equity incentive plan awards(3) | | | All other stock awards: number of shares of stock or units (#)(4) | All other option awards: number of securities underlying options (#)(5) | Exercise or base price of option awards ($/sh) | Grant date fair value of stock and option awards ($)(6) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | John M. Holmes | | | 649,200 | 1,298,400 | 2,596,800 | | | | | | | | | | 7/22/24 | 7/9/24 | | | | | | | 15,040 | | | 1,007,981 | | | 7/22/24 | 7/9/24 | | | | 22,560 | 45,120 | 90,240 | | | | 3,023,942 | | | 7/22/24 | 7/9/24 | | | | | | | | 39,510 | 67.02 | 1,007,900 | | Sean M. Gillen | | | 254,500 | 509,000 | 1,018,000 | | | | | | | | | | 7/22/24 | 7/9/24 | | | | | | | 4,395 | | | 294,553 | | | 7/22/24 | 7/9/24 | | | | 6,590 | 13,180 | 26,360 | | | | 883,324 | | | 7/22/24 | 7/9/24 | | | | | | | | 11,540 | 67.02 | 294,385 | | Jessica A. Garascia | | | 231,750 | 463,500 | 927,000 | | | | | | | | | | 7/22/24 | 7/9/24 | | | | | | | 2,440 | | | 163,529 | | | 7/22/24 | 7/9/24 | | | | 3,663 | 7,325 | 14,650 | | | | 490,922 | | | 7/22/24 | 7/9/24 | | | | | | | | 6,415 | 67.02 | 163,647 | | Christopher A. Jessup | | | 254,500 | 509,000 | 1,018,000 | | | | | | | | | | 7/22/24 | 7/9/24 | | | | | | | 4,395 | | | 294,553 | | | 7/22/24 | 7/9/24 | | | | 6,590 | 13,180 | 26,360 | | | | 883,324 | | | 7/22/24 | 7/9/24 | | | | | | | | 11,540 | 67.02 | 294,385 | | Eric S. Pachapa | | | 143,250 | 286,500 | 573,000 | | | | | | | | | | 7/22/24 | 7/9/24 | | | | | | | 1,310 | | | 87,796 | | | 7/22/24 | 7/9/24 | | | | 1,963 | 3,925 | 7,850 | | | | 263,054 | | | 7/22/24 | 7/9/24 | | | | | | | | 3,440 | 67.02 | 87,754 |
Fiscal Year 2025 grants of plan-based awards
| 1 | The Human Capital and Compensation Committee approved the annual stock award grants under the Company’s Fiscal Year 2025 long-term incentive plan at its meeting on July 9, 2024, with a grant date of July 22, 2024. |
Fiscal Year 2025 grants of plan-based awards
| 2 | Annual cash bonuses under the Company’s Fiscal Year 2025 short-term incentive plan were subject to performance in Fiscal Year 2025, which has now occurred. The information in these columns reflects the range of potential payouts at the time the performance goals were set by the Human Capital and Compensation Committee at its meeting on July 9, 2024 and based on salary increases for Fiscal Year 2025 that were effective as of June 1, 2024. |
Fiscal Year 2025 grants of plan-based awards
| 3 | The information in these columns shows the range of performance-based restricted stock grants that could be earned by the named executive officers under the Fiscal Year 2025 long-term incentive plan. The actual number of shares of performance-based restricted stock granted under the Fiscal Year 2025 long-term incentive plan is listed in the “Target” column. See the “Compensation discussion and analysis” section of this proxy statement for a description of the performance-based restricted stock awards under the Fiscal Year 2025 long-term incentive plan. |
Fiscal Year 2025 grants of plan-based awards
| 4 | This column shows the number of shares of time-based restricted stock granted to the named executive officers under the Company’s Fiscal Year 2025 long-term incentive plan on July 22, 2024. |
Fiscal Year 2025 grants of plan-based awards
| 5 | This column shows the number of shares subject to stock options granted to the named executive officers under the Company’s Fiscal Year 2025 long-term incentive plan on July 22, 2024. |
Fiscal Year 2025 grants of plan-based awards
| 6 | The grant date fair values of the restricted stock awards and the stock option awards were computed in accordance with FASB ASC Topic 718. |
Fiscal Year 2025 grants of plan-based awards
| 63 | | |
Outstanding equity awards at Fiscal Year 2025 year-end
Outstanding equity awards at Fiscal Year 2025 year-end The following table sets forth information for each named executive officer with respect to:
Outstanding equity awards at Fiscal Year 2025 year-end
| • | Each stock option that remained outstanding as of May 31, 2025; and |
Outstanding equity awards at Fiscal Year 2025 year-end
| • | Each award of restricted stock that was not vested and remained outstanding as of May 31, 2025. |
Outstanding equity awards at Fiscal Year 2025 year-end
| | Option awards(1) | | | | | Stock awards | | | | | Named executive officer | 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 ($) | Option expiration date | Number of shares or units of stock that have not vested (#)(2) | Market value of shares or units of stock that have not vested ($)(3) | Equity incentive plan awards: number of unearned shares, units, or other rights that have not vested (#)(4) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(5) | | John M. Holmes | 82,300 | — | — | 48.09 | 07/09/28 | 50,865 | 3,123,620 | 130,815 | 8,033,349 | | | 78,225 | — | — | 37.66 | 07/08/29 | — | — | — | — | | | 23,950 | — | — | 37.74 | 07/12/31 | — | — | — | — | | | 312 | — | — | 50.93 | 03/25/32 | — | — | — | — | | | 34,546 | 17,274 | — | 41.88 | 07/18/32 | — | — | — | — | | | 10,773 | 21,547 | — | 58.27 | 07/24/33 | — | — | — | — | | | — | 39,510 | — | 67.02 | 07/22/34 | — | — | — | — | | Sean M. Gillen | 47,870 | — | — | 18.94 | 07/13/30 | 12,390 | 760,870 | 32,085 | 1,970,340 | | | 7,970 | — | — | 37.74 | 07/12/31 | — | — | — | — | | | 8,042 | 4,023 | — | 41.88 | 07/18/32 | — | — | — | — | | | 2,238 | 4,477 | — | 58.27 | 07/24/33 | — | — | — | — | | | — | 11,540 | — | 67.02 | 07/22/34 | — | — | — | — | | Jessica A. Garascia(6) | 1,559 | — | — | 37.74 | 07/12/31 | 6,364 | 390,813 | 17,097 | 1,049,927 | | | 1,183 | 1,579 | — | 41.88 | 07/18/32 | — | — | — | — | | | 889 | 2,965 | — | 58.27 | 07/24/33 | | | | | | | — | 6,415 | — | 67.02 | 07/22/34 | — | — | — | — | | Christopher A. Jessup | 2,528 | — | — | 37.74 | 07/12/31 | 12,390 | 760,870 | 32,085 | 1,970,340 | | | 59 | — | — | 50.93 | 03/25/32 | — | — | — | — | | | 8,042 | 4,023 | — | 41.88 | 07/18/32 | — | — | — | — | | | 2,238 | 4,477 | — | 58.27 | 07/24/33 | — | — | — | — | | | — | 11,540 | — | 67.02 | 07/22/34 | — | — | — | — | | Eric S. Pachapa | 7,674 | — | — | 18.94 | 07/13/30 | 5,105 | 313,498 | 12,885 | 791,268 | | | 1,620 | — | — | 37.74 | 07/12/31 | — | — | — | — | | | 7 | — | — | 50.93 | 03/25/32 | — | — | — | — | | | 1,905 | 1,905 | — | 41.88 | 07/18/32 | — | — | — | — | | | 1,061 | 2,124 | — | 58.27 | 07/24/33 | — | — | — | — | | | — | 3,440 | — | 67.02 | 07/22/34 | — | — | — | — |
Outstanding equity awards at Fiscal Year 2025 year-end
| 1 | These columns show the number, option exercise price and option expiration date of outstanding stock options held by the named executive officers at the end of Fiscal Year 2025. The first column shows this information for exercisable stock options, and the second column shows this information for unexercisable stock options. |
Outstanding equity awards at Fiscal Year 2025 year-end
The table below shows the vesting dates for these unexercisable options.
Outstanding equity awards at Fiscal Year 2025 year-end
| Vesting date | Mr. Holmes | Mr. Gillen | Ms. Garascia | Mr. Jessup | Mr. Pachapa | | 07/31/25 | 41,217 | 10,107 | 5,199 | 10,107 | 4,112 | | 07/31/26 | 23,944 | 6,085 | 3,621 | 6,085 | 2,209 | | 07/31/27 | 13,170 | 3,848 | 2,139 | 3,848 | 1,148 |
Outstanding equity awards at Fiscal Year 2025 year-end
| 2 | This column shows the number of unvested shares of time-based restricted stock held by the named executive officers at the end of Fiscal Year 2025. The table below shows the vesting dates for these unvested shares. |
Outstanding equity awards at Fiscal Year 2025 year-end
| Vesting date | Mr. Holmes | Mr. Gillen | Ms. Garascia | Mr. Jessup | Mr. Pachapa | | 07/31/25 | 21,785 | 5,075 | 1,990 | 5,075 | 2,410 | | 07/31/26 | 14,040 | 2,920 | 1,934 | 2,920 | 1,385 | | 07/31/27 | 15,040 | 4,395 | 2,440 | 4,395 | 1,310 |
Outstanding equity awards at Fiscal Year 2025 year-end
| 3 | This column shows the market value of the unvested shares of time-based restricted stock held by the named executive officers based on a price of $61.41 per share (the closing price of the common stock on May 31, 2025). |
Outstanding equity awards at Fiscal Year 2025 year-end
| 4 | This column shows the number of unvested shares of performance-based restricted stock at the target level held by the named executive officers at the end of Fiscal Year 2025. The table below shows the vesting dates for these unvested shares: |
Outstanding equity awards at Fiscal Year 2025 year-end
| Vesting date | Mr. Holmes | Mr. Gillen | Ms. Garascia | Mr. Jessup | Mr. Pachapa | | 07/31/25 | 43,580 | 10,150 | 3,980 | 10,150 | 4,810 | | 07/31/26 | 42,115 | 8,755 | 5,792 | 8,755 | 4,150 | | 07/31/27 | 45,120 | 13,180 | 7,325 | 13,180 | 3,925 |
Outstanding equity awards at Fiscal Year 2025 year-end
| 5 | This column shows the market value of the unvested shares of performance-based restricted stock at the target level held by the named executive officers based on a price of $61.41 per share (the closing price of the common stock on May 31, 2025). |
Outstanding equity awards at Fiscal Year 2025 year-end
| 6 | Equity award numbers are net of the portions where the economic interest has been transferred in a transaction exempt from Section 16 pursuant to Rule 16a-12 of the Exchange Act. |
Fiscal Year 2025 option exercises and stock vested
Fiscal Year 2025 option exercises and stock vested The following table sets forth information for each named executive officer concerning:
Fiscal Year 2025 option exercises and stock vested
| • | The exercise of options during Fiscal Year 2025; |
Fiscal Year 2025 option exercises and stock vested
| • | The dollar amount realized on exercise of the options; |
Fiscal Year 2025 option exercises and stock vested
| • | The number of shares of restricted stock that vested during Fiscal Year 2025; and |
Fiscal Year 2025 option exercises and stock vested
| • | The value of those vested shares. |
Fiscal Year 2025 option exercises and stock vested
| | Option awards | | Stock awards | | | Named executive officer | Number of shares acquired on exercise (#) | Value realized on exercise(1) ($) | Number of shares acquired on vesting (#) | Value realized on vesting(2) ($) | | John M. Holmes | 108,427 | 4,089,429 | 195,045 | 13,323,615 | | Sean M. Gillen | 17,385 | 647,882 | 31,800 | 2,054,280 | | Jessica A. Garascia | — | — | 19,885 | 1,284,571 | | Christopher A. Jessup | 26,893 | 1,384,229 | 25,869 | 1,720,153 | | Eric S. Pachapa | — | — | 13,879 | 914,324 |
Fiscal Year 2025 option exercises and stock vested
| 1 | These amounts represent the difference between the closing market price of the common stock on the date of exercise and the exercise price, multiplied by the number of shares covered by the option. |
Fiscal Year 2025 option exercises and stock vested
| 2 | These amounts represent the closing market price of the common stock on the date of vesting, multiplied by the number of shares that vested. |
Non-qualified deferred compensation (SKERP)
Non-qualified deferred compensation (SKERP) The Company provides non-qualified deferred compensation benefits under the Company’s SKERP. The SKERP covers certain executives and key employees designated by the Human Capital and Compensation Committee. All of the named executive officers participated in the SKERP in Fiscal Year 2025. The material terms and conditions of the SKERP include the following.
Potential payments upon a termination of employment or a change-in-control of the Company
Potential payments upon a termination of employment or a change-in-control of the Company The Company provides certain benefits to eligible employees upon certain types of termination of employment, including a termination of employment involving a change-in-control of the Company. These benefits are in addition to the benefits to which the employees would be entitled upon a termination of employment generally (i.e., vested retirement benefits accrued as of the date of termination, stock options and restricted stock that are otherwise vested as of the date of termination and the right to elect continued health coverage pursuant to COBRA). These benefits as they pertain to the named executive officers are as described and set forth in the tables beginning on page 71.
Tables of potential payments upon a termination of employment or a change-in-control of the Company
Tables of potential payments upon a termination of employment or a change-in-control of the Company The tables below quantify the benefits described above that would be paid to each current named executive officer under the following termination of employment or change-in-control events, assuming a change-in-control or a termination of employment occurred on May 31, 2025. Equity vesting – in connection with a change in control
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| Named executive officer | Vesting of restricted stock ($)(1) | Vesting of stock options ($)(2) | | John M. Holmes | 11,156,969 | 405,019 | | Sean M. Gillen | 2,731,210 | 92,627 | | Jessica A. Garascia | 1,440,740 | 40,148 | | Christopher A. Jessup | 2,731,210 | 92,627 | | Eric S. Pachapa | 1,104,766 | 43,874 |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 1 | Under Mr. Holmes’ employment agreement, all restricted stock (both performance-based and time-based) vests (with performance achieved at the higher of target or actual performance) upon the occurrence of a change-in-control of the Company. Under the Company’s severance and change-in-control agreements, all restricted stock (both performance-based and time-based) vests (with performance achieved at the higher of target or actual performance) upon a qualifying termination of employment that occurs within 18 months following a change-in-control. Under the Company’s stock plan award agreements, all restricted stock (both performance-based and time-based) vests (with performance achieved at target) upon a qualifying termination of employment that occurs within two years following a change-in-control. The amounts shown reflect the number of shares that would have vested upon a change-in-control and/or a qualifying termination of employment on May 31, 2025, based on the number of shares multiplied by $61.41 (the closing price of the common stock on May 31, 2025). |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 2 | Under Mr. Holmes’ employment agreement, all stock options vest upon the occurrence of a change-in-control of the Company. Under the Company’s severance and change-in-control agreements, all stock options vest upon a qualifying termination of employment that occurs within 18 months following a change-in-control. Under the Company’s stock plan award agreements, all stock options vest upon a qualifying termination of employment that occurs within two years following a change-in-control. The amounts shown reflect the number of option shares that would have vested upon a change-in-control and/or a qualifying termination of employment on May 31, 2025, based on the number of shares multiplied by the difference (but not less than zero) between the option exercise price and $61.41 (the closing price of the common stock on May 31, 2025). |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 71 | | |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
Qualifying termination of employment – prior to, or more than 18 months after, a change in control
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| | Other than cause | | | | | Disability | | | Death | | Named executive officer | Salary ($)(1) | Bonus ($)(2) | Restricted stock ($)(3) | Stock options ($)(4) | Health and welfare ($) | Health and welfare ($)(5) | Restricted stock ($)(6) | Stock options ($)(7) | Restricted stock ($)(6) | | John M. Holmes | 2,164,000 | 3,567,168 | — | — | — | 53,240 | 6,924,694 | 371,188 | 6,924,694 | | Sean M. Gillen | 509,000 | 519,180 | — | — | — | 53,240 | 1,620,969 | 85,597 | 1,620,969 | | Jessica A. Garascia | 463,500 | 472,770 | — | — | — | 49,934 | 802,768 | 35,491 | 802,768 | | Christopher A. Jessup | 509,000 | 519,180 | — | — | — | 53,240 | 1,620,969 | 85,597 | 1,620,969 | | Eric S. Pachapa | 382,000 | 292,230 | — | — | — | 53,240 | 715,768 | 40,536 | 715,768 |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 1 | Reflects continued salary for 24 months for Mr. Holmes under his employment agreement and 12 months for the remainder of the named executive officers under their severance and change-in-control agreements. |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 2 | Reflects (i) in the case of Mr. Holmes, two times the average of the non-equity incentive compensation paid to him for Fiscal Year 2025 and Fiscal Year 2024 and (ii) in the case of the remainder of the named executive officers, the non-equity incentive compensation paid to them for Fiscal Year 2025, in each case as shown in the Summary Compensation Table. |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 3 | At May 31, 2025, no current named executive officer was eligible for continued vesting upon termination due to Retirement; accordingly, all named executive officers would forfeit their restricted stock upon termination of employment due to Retirement. |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 4 | At May 31, 2025, no current named executive officer was eligible for continued vesting upon termination due to Retirement; accordingly, all named executive officers would forfeit their stock options upon termination of employment due to Retirement. |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 5 | Available if termination is due to Disability under the employment agreement for Mr. Holmes and the severance and change-in-control agreements for other named executives. |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 6 | The amounts in these columns reflect the value of the restricted stock that would vest upon termination due to Disability or death at May 31, 2025, based on the number of shares, multiplied by $61.41 (the closing price of the common stock on May 31, 2025). |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 7 | The amounts in this column reflect the value of continued vesting of options pursuant to the Company’s stock plans for one year following termination if termination is due to Disability at May 31, 2025, based on the difference between the exercise price and $61.41 (the closing price of the common stock on May 31, 2025). |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
Qualifying termination of employment – within 18 months after a change in control(1)
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| Named executive officer | Salary(2) ($) | Bonus(3) ($) | Health and welfare continuation ($) | Outplacement services ($) | | John M. Holmes | 3,246,000 | 8,052,768 | 81,720 | — | | Sean M. Gillen | 1,018,000 | 2,277,820 | 53,240 | 97,182 | | Jessica A. Garascia | 927,000 | 2,074,770 | 49,934 | 88,515 | | Christopher A. Jessup | 1,018,000 | 2,277,820 | 53,240 | 97,182 | | Eric S. Pachapa | 764,000 | 1,282,800 | 53,240 | 61,410 |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 1 | These benefits are in addition to the vesting of stock awards shown above in the table for “Equity Vesting — in connection with a change in control.” |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 2 | Reflects three times salary for Mr. Holmes and two times salary for the remainder of the named executive officers. |
Tables of potential payments upon a termination of employment or a change-in-control of the Company
| 3 | Reflects (i) in the case of Mr. Holmes, the non-equity incentive plan compensation bonus paid to him for Fiscal Year 2025 as shown in the Summary Compensation Table, plus three times his non-equity incentive plan compensation bonus paid to him for Fiscal Year 2024 and (ii) in the case of the remainder of the named executive officers, the non-equity incentive compensation plan bonus paid to them for Fiscal Year 2025 as shown in the Summary Compensation Table, plus two times the non-equity incentive plan compensation bonus for either the most recently completed fiscal year prior to termination or the preceding fiscal year, whichever produces the higher amount. |
CEO pay ratio
CEO pay ratio A public company must disclose in its annual proxy statement its CEO pay ratio, defined as the ratio of the annual total compensation of its chief executive officer to the annual total compensation of its median employee. Our median employee is selected once every three years unless there has been a change in our employee population or employee compensation arrangements that would result in a significant change to our pay ratio disclosure. For Fiscal Year 2025, we do not believe that we have had a change in our employee population or employee compensation arrangements that would require selecting a new median employee. However, our median employee selected in Fiscal Year 2024 had a significant increase in compensation such that it would have an effect on the pay ratio disclosure. Therefore, we have selected a new median employee whose compensation is substantially similar to the original median employee. We used the following methodology to determine our CEO pay ratio for Fiscal Year 2025:
CEO pay ratio
| STEP 1: | We determined that as of March 1, 2024 we had a total employee population of 5,845 employees. | | STEP 2: | Of this group, we identified a selected employee group of 5,631 employees, representing all of our U.S. employees (4,559) plus our employees in Canada (614), Thailand (225), the United Kingdom (129) and the Netherlands (104). | | STEP 3: | As permitted by SEC rules, we excluded a total of 214 of our employees in all other non-U.S. jurisdictions as these employees together represented less than 5% of our total employee population. The number of employees excluded in non-U.S. jurisdictions at the March 1, 2024 determination date were: Australia (2), Belgium (15), Brazil (1), China (7), Costa Rica (13), France (5), Germany (10), Hungary (1), India (1), Iraq (11), Ireland (1), Japan (1), Malaysia (4), New Zealand (2), Panama (36), Peru (47), Philippines (1), Poland (20), Portugal (1), Singapore (28), and United Arab Emirates (7). | | STEP 4: | For our selected employee group, we determined each domestic employee’s total cash compensation based on W-2 (Box 5) compensation (or its equivalent for non-U.S. employees) for the 2023 calendar year, as reflected in our payroll records and systems. | | STEP 5: | We identified our median employee from our selected employee group (excluding the Chief Executive Officer). | | STEP 6: | Once we identified our median employee, we calculated the annual total compensation of this median employee for Fiscal Year 2024, using the same methodology that we used to calculate the annual total compensation of our named executive officers, including our Chief Executive Officer, in the Summary Compensation Table. |
CEO pay ratio
The following table shows the ratio of the annual total compensation of our Chief Executive Officer compared to that of our median employee for Fiscal Year 2025:
CEO pay ratio
| Annual total compensation of our CEO for Fiscal Year 2025 | $8,146,124 | | Annual total compensation of our median employee for Fiscal Year 2025 | $76,613 | | Ratio of annual total compensation of our CEO to the annual total compensation of our median employee for Fiscal Year 2025 | 106 to 1 |
CEO pay ratio
| 73 | | |
Pay versus performance
Pay versus performance The following table sets forth additional compensation information of our Principal Executive Officer (PEO) and our non-PEO NEOs along with total shareholder return, net income, and adjusted diluted earnings per share from continuing operations performance results for our fiscal years ended May 31, 2025, 2024, 2023, 2022 and 2021:
Pay versus performance
| | | | | | Value of Initial Fixed $100 Investment Based On:(5) | | | | | Year(1) | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO2, 3 ($) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs2, 3 ($) | Company Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | Net Income ($) | Adjusted Diluted Earnings per Share from Continuing Operations ($)(6) | | 2025 | 8,146,124 | 7,451,224 | 2,133,675 | 1,943,607 | 214.91 | 315.46 | 12,500,000 | 3.91 | | 2024(4) | 7,865,450 | 16,870,229 | 2,167,868 | 3,457,905 | 351.96 | 243.30 | 46,300,000 | 3.33 | | 2023 | 6,709,139 | 10,703,256 | 1,808,687 | 2,732,276 | 248.44 | 165.54 | 90,200,000 | 2.86 | | 2022 | 12,327,343 | 13,416,164 | 1,793,579 | 2,238,871 | 239.07 | 149.29 | 78,700,000 | 2.38 | | 2021 | 4,123,426 | 12,752,734 | 1,509,276 | 3,211,723 | 206.99 | 162.00 | 35,800,000 | 1.31 |
Pay versus performance
| 1 | For each year presented above except for 2024, the NEOs included in the compensation columns reflect John M. Holmes as our PEO and Sean M. Gillen, Jessica A. Garascia, Christopher A. Jessup, and Eric Pachapa as our non-PEOs. For 2024, Tracey Patterson was included in place of Eric Pachapa. |
Pay versus performance
| 2 | Fair value or change in fair value, as applicable, of equity awards in the “Actually Paid” columns was determined by reference to (1) for time-based restricted stock awards, closing price on applicable year-end date(s) or, in the case of vesting dates, the actual vesting price, (2) for performance-based restricted stock awards, the estimated payout used to recognize our expense in accordance with FASB ASC Topic 718 except using the closing price on applicable year-end date(s) or, in the case of vesting dates, the actual vesting price, and (3) for stock options, a Black-Scholes fair value as of the applicable year-end or vesting date(s), determined based on the same methodology as used to determine grant date fair value but using the closing stock price on the applicable revaluation date as the current market price and with an expected life equal to the original ratio of expected life relative to the ten year contractual life multiplied times the remaining life as of the applicable revaluation date, and in all cases based on updated volatility, risk free rates, and expected dividend rates determined as of the revaluation dates. |
Pay versus performance
| 3 | For the portion of “Actually Paid” compensation that is based on year-end stock prices, the following prices were used: 2025 - $61.41 (13.5% decrease from prior year), 2024 - $70.99 (41.7% increase from prior year), 2023 – $50.11 (3.9% increase from prior year), 2022 – $48.22 (15.5% increase from prior year), and 2021 – $41.75 (107.0% increase from prior year). |
Pay versus performance
| 4 | 2025 compensation “Actually Paid” to PEO and the average Actually Paid to non-PEOs reflects the following adjustments from Total compensation reported in the Summary Compensation Table: |
Pay versus performance
| | PEO ($) | Average Non-PEO ($) | | Total Reported in 2025 Summary Compensation Table (SCT) | 8,146,124 | 2,133,675 | | Less, value of stock awards and option awards reported in SCT | (5,039,823) | (1,050,307) | | Plus, year-end value of awards granted in fiscal year that are unvested and outstanding | 4,500,035 | 937,814 | | Plus, change in fair value of prior year awards that are outstanding and unvested | 578,931 | 99,391 | | Plus, change in fair value (from prior year-end) of prior year awards that vested this year | (734,043) | (176,966) | | Total adjustments | (694,900) | (190,068) | | Actual compensation paid for Fiscal Year 2025 | 7,451,224 | 1,943,607 |
Pay versus performance
| 5 | Each year reflects what the cumulative value of $100 would be, including reinvestment of dividends, if such amount were invested on June 1, 2020. Peer group TSR reflects the Company’s “2025 peer group” as reflected in our 2025 Annual Report on Form 10-K pursuant to Item 201(e) of Regulation S-K and “Fiscal Year 2025 peer group” in this proxy statement. The Fiscal Year 2025 peer group is the same as the Fiscal Year 2024 peer group except that it reflects the removal of Aerojet Rocketdyne Holdings, Inc. and Kaman Corporation and the addition of Air Lease Corporation, V2X, Inc., and VSE Corporation. The new peer group displayed is therefore different from our prior year proxy statement. The old peer group TSR amounts for the years ended May 31, 2025, 2024, 2023, 2022, and 2021 were $315.46, $236.45, $162.52, $145.93, and $158.75, respectively. |
Pay versus performance
| 6 | Adjusted diluted earnings per share from continuing operations, a non-GAAP financial measure, is our GAAP diluted earnings per share from continuing operations adjusted to exclude items of an unusual nature including but not limited to acquisition costs including integration and amortization expenses from recent acquisitions, business divestitures, workforce actions, subsidies and costs, impairment and exit charges, facility consolidation and repositioning costs, FCPA settlement and investigation costs, purchase accounting and legal settlements, strategic project costs, equity investments gains and losses, pension settlements, and significant customer events such as early terminations, contract restructurings, forward loss provisions and bankruptcies. We use this non-GAAP financial measure in our compensation structure as it illustrates our core operating performance unaffected by the impact of certain items that management does not believe are indicative of our ongoing and core operating activities. |
Pay versus performance
Required supplemental graphs showing relationship between:
Compensation actually paid (CAP) and Company total shareholder return (TSR)
Compensation actually paid (CAP) and Company total shareholder return (TSR) The graph below illustrates the relationship between the CAP to our CEO and the other NEOs and the Company’s TSR during the period covered under the “Pay versus performance disclosure” above. The CAP figures shown below are calculated as required by SEC requirements, which include unvested and unpaid amounts. Each year of Company TSR reflects what the cumulative value of $100 would be, including reinvestment of dividends, if such amount were invested on June 1, 2020. As shown in the “Pay versus performance disclosure” above and below in the Company TSR vs. Peer Group TSR graph, the value of $100 invested in the Peer Group on June 1, 2020 would be $162.00 at the end of Fiscal Year 2021, $149.29 at the end of Fiscal Year 2022, $165.54 at the end of Fiscal Year 2023, $243.30 at the end of Fiscal Year 2024, and $315.46 at the end of Fiscal Year 2025. Compensation Actually Paid vs. Company TSR
Compensation actually paid (CAP) and net income
Compensation actually paid (CAP) and net income The graph below illustrates the relationship between the CAP to our CEO and the other NEOs and the Company’s net income during the period covered under the “Pay versus performance disclosure” above. The CAP figures shown below are calculated as required by SEC requirements, which include unvested and unpaid amounts. Compensation Actually Paid vs. Net Income
Compensation actually paid (CAP) and net income
| 75 | | |
Compensation actually paid (CAP) and adjusted diluted earnings per share from
Compensation actually paid (CAP) and adjusted diluted earnings per share from
Security ownership of our board and management
| 3 | Represents stock units held by directors who defer all or a portion of their director compensation under the Non-Employee Directors’ Deferred Compensation Plan. Each stock unit represents the right to receive one share of common stock upon termination of service on the Board or the happening of certain other events, as specified in the Plan. Mr. Nolen elected to receive a deferred cash payment in lieu of an annual restricted stock award for Fiscal Year 2026. |

DEF 14A of Aar Corp

Election of director nominees

Election of director nominees

Proposal summary

Director skills & qualifications

Director skills & qualifications

Director skills & qualifications

Information about our director nominees and our continuing directors

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Our director nominees

Director compensation

Director compensation

Director compensation

Director compensation

Director compensation

Cap on director compensation

Ability to defer director compensation

Ability to defer director compensation

Director compensation table

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Fiscal Year 2025 director compensation

Pay-for-performance and stockholder alignment

Pay-for-performance and stockholder alignment

Pay-for-performance and stockholder alignment

Pay-for-performance and stockholder alignment

Our executive compensation goals and philosophy

Executive compensation practices

Executive compensation practices

compensation program

decision-making process for Fiscal Year 2025

decision-making process for Fiscal Year 2025

decision-making process for Fiscal Year 2025

CEO pay in Fiscal Year 2025

Fiscal Year 2025 cash bonuses

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – setting targets

Fiscal Year 2025 short-term incentive plan – approving payouts

Fiscal Year 2025 short-term incentive plan – approving payouts

Fiscal Year 2025 short-term incentive plan – approving payouts

Fiscal Year 2025 short-term incentive plan – approving payouts

Fiscal Year 2025 stock awards

Fiscal Year 2025 stock awards

Performance-based restricted stock

Performance-based restricted stock

Performance-based restricted stock

Performance-based restricted stock

Performance-based restricted stock

Performance-based restricted stock

Performance-based restricted stock

Performance-based restricted stock

Time-based restricted stock

Time-based restricted stock