DEF 14A of Ducommun Inc /De/
Filed Mar 13, 2024 · FY20230001308179-24-000122
Information About the Board of Directors
Information About the Board of Directors
Information About the Board of Directors
| Director | Age | Gender | Under- represented | Principal Occupation | Director Since | Term Expires | Independent? | Committees | | Nominees for election at the 2024 Annual Meeting | | | | | | | | | | Shirley G. Drazba | 66 | F | N | Former Corporate Vice President, Product Line Strategy and Innovation, IDEX Corporation | 2018 | 2024 | Yes | Comp Innovation (chair) | | Sheila G. Kramer | 64 | F | N | Chief Human Resources Officer, Donaldson Company, Inc. | 2021 | 2024 | Yes | Comp G&N | | David B. Carter | 66 | M | N | Former Senior Vice President, Engineering, Pratt & Whitney Company, Inc. | 2024* | 2024 | Yes | Innovation | | Continuing Directors | | | | | | | | | | Richard A. Baldridge | 65 | M | Y | Vice Chairman, Viasat, Inc. (Ret.) | 2013 | 2026 | Yes | Audit Innovation | | Robert C. Ducommun | 72 | M | N | Business Advisor | 1985 | 2025 | Yes | Audit G&N (chair) | | Dean M. Flatt Independent Lead Director | 73 | M | N | Former President, Defense & Space, Honeywell International | 2009 | 2025 | Yes | Comp (chair) G&N | | Stephen G. Oswald | 60 | M | N | Chairman, President and Chief Executive Officer, Ducommun Incorporated | 2017 | 2026 | No | Innovation | | Samara A. Strycker | 52 | F | N | Senior Vice President, Corporate Controller and Treasurer, Navistar International Corporation | 2021 | 2026 | Yes | Audit (chair) |
Information About the Board of Directors
| * Mr. Carter was elected as a Class 2025 Director by the Board effective February 1, 2024. On March 11, 2024, Mr. Carter tendered his resignation as a Class 2025 Director, subject to and effective upon his election as a Class 2027 Director at the Annual Meeting. See “Proposal 1 – Election of Directors” for additional information regarding the proposed change to Mr. Carter’s Director class. |
Information About the Board of Directors
Ducommun is very proud that women and an individual from an underrepresented background collectively comprise over 40% of our Board of Directors (the “Board”), and will collectively comprise 50% of our Board immediately following the election of directors at the Annual Meeting after the retirement of Mr. Jay Haberland. The tenure of our directors, our Board’s overall gender and racial diversity and its independence are summarized in the graphs below.
Information About the Board of Directors
| Directors’ Tenure (Pre-Annual Meeting) | Director Diversity & Independence (%) (Pre-Annual Meeting) | | | |
Information About the Board of Directors
| | | 2024 Proxy Statement 4 |
Information About the Board of Directors
| Directors’ Tenure (Post-Annual Meeting) | Director Diversity & Independence (%) (Post-Annual Meeting) | | | |
Proposal 1 Election of Directors
Proposal 1 Election of Directors Our Board is divided into three classes, with one class elected at each annual meeting of shareholders. Directors of each class are elected to serve for three-year terms. Pursuant to the Company’s Bylaws, the Board is authorized to fix by resolution from time to time the size of the Board, provided that the Board is no greater than nine and no less than six directors. The Board has by resolution fixed the size of the Board at nine directors effective until immediately prior to the election of directors at the Annual Meeting, at which time the Board has fixed the size of the Board at eight directors. Three directors (out of a total of eight) are to be elected at the Annual Meeting to serve for a three-year term ending at the Annual Meeting of Shareholders in 2027 and the election and qualification of their respective successors. In accordance with the Company’s Corporate Governance Guidelines, directors will generally not be nominated for election after attaining the age of 73, and accordingly, Mr. Jay Haberland will be retiring from the Board upon the election of directors at the Annual Meeting. The Board is most grateful to and thanks Mr. Haberland for his 15 years of service. In light of Mr. Haberland’s retirement, our Board class requirements under our Certificate of Incorporation, the vacancy that will emerge in our Class of 2027 Directors and other factors, on March 11, 2024, our Board, upon the recommendation of our Corporate Governance and Nominating Committee, determined that it was advisable to nominate Mr. David Carter to stand for election as a Class of 2027 Director at the Annual Meeting, subject to Mr. Carter agreeing to resign as a Class 2025 Director and subject to and effective upon his election as a Class 2027 Director at the Annual Meeting, which resignation Mr. Carter agreed to on March 11, 2024. Accordingly, at the Annual Meeting, shareholders will be asked to elect each of Ms. Drazba, Ms. Kramer and Mr. Carter to serve for a three-year term ending at the Annual Meeting of Shareholders in 2027 and until their respective successors have been duly elected and qualified, subject to their earlier death, resignation, or removal. Having Mr. Carter stand for election at the Annual Meeting also provides our shareholders with the opportunity to vote upon our newest Board member. In the absence of a contrary direction, proxies will be voted for the election of Ms. Drazba, Ms. Kramer and Mr. Carter. If any nominee becomes unable or unwilling to serve as a director at the time of the Annual Meeting, the individuals named as proxies may vote for a substitute nominee chosen by the present Board to fill the vacancy. Alternatively, the Board may reduce its size. We have no reason to believe that Ms. Drazba, Ms. Kramer or Mr. Carter will be unwilling or unable to serve for the stated term if elected as directors. In the event that anyone other than Ducommun’s three nominees is nominated for election as a director, the proxy holders are not required to vote for all of the nominees and in their discretion may cumulate votes.
Proposal 1 Election of Directors
| | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF MS. DRAZBA, MS. KRAMER AND MR. CARTER AS CLASS OF 2027 DIRECTORS. |
Proposal 1 Election of Directors
| | | 2024 Proxy Statement 8 |
Corporate Governance
Corporate Governance
Directors’ Skills and Diversity
Directors’ Skills and Diversity The Board of Directors believes that its members should possess a combination of skills, professional experience, and diversity of backgrounds necessary to oversee our management and support the interests of our shareholders. In addition, the Board has outlined in our Corporate Governance Guidelines certain attributes it believes every director should possess. Accordingly, the Board and its Corporate Governance and Nominating Committee consider the qualifications of directors and director candidates both individually and in the broader context of the Board’s overall composition and our current and future needs. The Corporate Governance and Nominating Committee is responsible for developing and recommending director membership criteria to the Board for approval. The current criteria include independent and sound judgment, integrity, the ability to commit sufficient time and attention to Board activities, and the absence of potential conflicts with our interests. In addition, the Corporate Governance and Nominating Committee periodically evaluates the composition of the Board to assess the skills, experience and perspectives that are currently represented, and to determine which of those attributes will be valuable in the future given our current state and strategic direction. As part of this periodic assessment, the Corporate Governance and Nominating Committee also evaluates the effectiveness of the overall Board dynamic, including our initiatives related to Board diversity. While we do not have a formal policy on Board diversity, Ducommun’s Corporate Governance Guidelines reflect the Board’s belief that a blend of different professional experiences and personal perspectives contribute to the quality of the Board’s oversight and are essential enablers of effective governance. With that, we are committed to the belief that Board diversity is not reflected solely in the variety of our directors’ professional backgrounds and experiences. We believe that the quality of our deliberations and decisions, and of our overall governance, is enhanced by the perspectives represented by directors with different personal characteristics, particularly, gender, race, cultural heritage and age. As a result, the Corporate Governance and Nominating Committee has been deliberate in striving to achieve a broad range of diversity in the pools from which qualified director candidates are selected, as it has worked over the past few years to identify successors to a group of very capable directors. Over that time and with the assistance of Spencer Stuart, an independent executive search firm, the Corporate Governance and Nominating Committee successfully identified and engaged Mmes. Drazba, Kramer and Strycker, and more recently, Mr. Carter, each from competitive pools of candidates, and recommended to the Board that they each be appointed as directors. We are very proud that women and a member from an underrepresented background currently comprise over 40% of our Board, and will collectively comprise 50% of our Board immediately following the election of directors at the Annual Meeting. The Corporate Governance and Nominating Committee supports the Board’s commitment to engaging a diverse field of director candidates. As Board seats become available, the Corporate Governance and Nominating Committee will continue to actively identify qualified women and individuals from underrepresented communities to include in the pool from which Board nominees are chosen. The Corporate Governance and Nominating Committee is confident that this commitment will contribute to better representation and higher visibility for individuals with diverse perspectives and personal characteristics.
Directors’ Skills and Diversity
| | | 2024 Proxy Statement 9 |
Directors’ Skills and Diversity
In evaluating director candidates and considering incumbent directors for re-nomination to the Board, the Corporate Governance and Nominating Committee has reviewed a variety of factors, including each nominee’s independence, financial literacy, personal and professional accomplishments, and experience. Below is a matrix of the skills represented by our director nominees and continuing directors.
Directors’ Skills and Diversity
| | Oswald | Baldridge | Carter | Drazba | Ducommun | Flatt | Kramer | Strycker | | Senior Leadership Significant experience leading organizations, developing business strategies and talent | | | | | | | | | | Global/International Global business and international experience necessary for expanding the footprint of the organization | | | | | | | | | | Financial Expertise with complex financial transactions and optimizing capital structures | | | | | | | | | | Aerospace & Defense Industry Industry experience that provides insight on issues unique to the A&D industry | | | | | | | | | | Manufacturing Experience managing the operations of a complex A&D business | | | | | | | | | | Technology Experience identifying technological advances that may affect our business | | | | | | | | | | Strategy, Business Development and M&A Experience with identifying M&A targets that will advance strategic objectives | | | | | | | | | | Product Marketing/Innovation Experience in new product development and growing market share | | | | | | | | | | Cybersecurity/Information Security Experience with successfully implementing and overseeing measures to prevent data breaches | | | | | | | | | | Human Capital Expertise in compensation design and managing human capital issues | | | | | | | | | | Sustainability Experience in the areas of environmental impact, corporate responsibility or sustainability strategies | | | | | | | | | | Public Company Board Understanding of the extensive and complex oversight responsibilities of public company boards to protect the interests of shareholders based on experience serving on other public company boards | | | | | | | | |
Directors’ Skills and Diversity
| | | 2024 Proxy Statement 10 |
Directors’ Backgrounds and Qualifications
Directors’ Backgrounds and Qualifications The following information is furnished as of March 13, 2024, with respect to each person who is a nominee for election to the Board, as well as our other five directors whose terms of office will continue after the Annual Meeting.
Nominees For Election
Nominees For Election
Nominees For Election
| | SHIRLEY G. DRAZBA Corporate Vice President, Product Line Strategy & Innovation, IDEX Corporation (Ret.) Age: 66 Director Since: 2018 Term Expires: 2024 Committees: • Compensation and Innovation (Chair) | Professional background Ms. Drazba served as Corporate Vice President, Product Line Strategy & Innovation for IDEX Corporation, which designs, manufactures and markets a range of pump products, dispensing equipment, and other engineered products, both domestically and abroad, from 2014 until her retirement in 2017. Before that, Ms. Drazba spent almost 20 years at Honeywell International, Inc., a manufacturer of aerospace products and services, control technologies, automotive products, turbochargers and specialty materials, in increasingly important technical and engineering leadership positions. Key qualifications As a long-time executive responsible for product strategy, innovation, and commercial excellence, Ms. Drazba contributes to the Board extensive experience in creating high value opportunities for Ducommun’s product lines, as well as experience in market positioning and leading strategic acquisitions to enhance product portfolios. |
Nominees For Election
| | SHEILA G. KRAMER Chief Human Resources Officer, Donaldson Company, Inc. Age: 64 Director Since: 2021 Term Expires: 2024 Committees: • Corporate Governance & Nominating and Compensation | Professional background Ms. Kramer has been the Chief Human Resources Officer of Donaldson Company, Inc., a provider of engine and industrial filtration solutions, since January 2020. Ms. Kramer joined Donaldson Company, Inc. in October 2015 as its Vice President, Human Resources. From 2013 to 2015, Ms. Kramer was Vice President, Human Resources of Taylor Corporation, a premier provider of interactive printing and marketing solutions to more than half of Fortune 500 companies. Before joining Taylor Corporation, Ms. Kramer spent approximately 22 years in various leadership roles at Lifetouch, Inc. one of the world’s largest employee-owned photography companies. Key qualifications As the current Chief Human Resources Officer of Donaldson Company, Inc., Ms. Kramer contributes to the Board extensive senior leadership experience as well as direction on human capital issues pertinent to Ducommun’s C&ER program. |
Nominees For Election
| | DAVID B. CARTER Senior Vice President, Engineering, Pratt & Whitney Company, Inc. (Ret.) Age: 65 Director Since: 2024 Term Expires: 2024 Committee: • Innovation | Professional background Mr. Carter is the retired Senior Vice President of Engineering, Pratt & Whitney Company, Inc., an aerospace manufacturer that is a subsidiary of Raytheon Technologies Corporation, a position he occupied for four years until his retirement in 2019. Mr. Carter was previously the Senior Vice President, Engineering, Operations and Quality at UTC Aerospace Systems from 2015 to 2016 and served as its Vice President, Engineering and Technology from 2012 to 2015. Key qualifications As former Senior Vice President, Engineering at Pratt & Whitney, Mr. Carter brings to the Board his experience in all aspects of technology development, product design and certification, and an understanding of the defense markets that Ducommun serves. |
Nominees For Election
| | | 2024 Proxy Statement 11 |
Continuing Directors
Continuing Directors
Continuing Directors
| | RICHARD A. BALDRIDGE Vice Chairman, Viasat, Inc. (Ret.) Age: 65 Director Since: 2013 Term Expires: 2026 Committees: • Audit and Innovation | Professional background Mr. Baldridge served as Vice Chairman of Viasat, Inc., a global communications company, from July 2022 until his retirement in June 2023. Mr. Baldridge joined Viasat in 1999, serving as Executive Vice President, Chief Financial Officer and Chief Operating Officer from 2000, as Executive Vice President and Chief Operating Officer from 2002, as President and Chief Operating Officer from 2003, and as President and Chief Executive Officer from November 2020 until June 2022. In July 2022, Mr. Baldridge was appointed Vice Chairman of Viasat until his retirement in June 2023. Before joining Viasat, Mr. Baldridge was Vice President and General Manager of Raytheon Corporation’s Training Systems Division, and he held executive roles with Hughes Information Systems and Hughes Training Inc. before they were acquired by Raytheon in 1997. Mr. Baldridge is also a director of EvoNexus, a non-profit business incubator. Key qualifications From his almost 25 years of experience in executive leadership roles at a leading provider of satellite communications systems and services, and secure networking systems, Mr. Baldridge contributes to the Board broad operational and financial experience and an understanding of the defense markets that Ducommun serves. Other public company directorships Viasat (since 2016) |
Continuing Directors
| | ROBERT C. DUCOMMUN Business Advisor Age: 72 Director Since: 1985 Term Expires: 2025 Committees: • Audit and Corporate Governance & Nominating (Chair) | Professional background Mr. Ducommun has been an independent business advisor for over 30 years. He was previously the Chief Financial Officer for several private companies and a management consultant with McKinsey & Company. Key qualifications As a former management consultant and Chief Financial Officer, Mr. Ducommun brings to the Board substantial financial acumen and leadership in setting the strategic direction for the Company, and also provides guidance on various corporate and environmental responsibility (“C&ER”) initiatives. |
Continuing Directors
| | STEPHEN G. OSWALD Chairman, President and Chief Executive Officer Age: 60 Director Since: 2017 Term Expires: 2026 Committee: • Innovation | Professional background Mr. Oswald has been the President and Chief Executive Officer of Ducommun since January 2017, and Chairman of the Board since May 2018. From 2012 to 2015, Mr. Oswald was Chief Executive Officer of Capital Safety Company, a manufacturer of fall protection, confined space, and rescue equipment. He elected to take time off from his career after the sale of Capital Safety Company to 3M Co. to manage personal investments. Before joining Capital Safety Company, Mr. Oswald spent approximately 15 years in various leadership roles at United Technologies Corporation, including as President of the Hamilton Sundstrand Industrial division. Key qualifications As Chairman, President and Chief Executive Officer, Mr. Oswald provides management’s perspective in Board discussions about Ducommun’s business and strategic direction. |
Continuing Directors
| | | 2024 Proxy Statement 12 |
Continuing Directors
| | DEAN M. FLATT LEAD DIRECTOR President, Defense & Space, Honeywell International, Inc. (Ret.) Age: 73 Director Since: 2009 Term Expires: 2025 Committees: • Corporate Governance & Nominating and Compensation (Chair) | Professional background Mr. Flatt is the retired President, Defense & Space of Honeywell International, Inc., a position he occupied for three years until his retirement in 2008. Mr. Flatt was previously President, Aerospace Electronic Systems and President, Performance Materials of Honeywell. Key qualifications As the former President of several divisions of one of the world’s largest avionics manufacturers, Mr. Flatt contributes to the Board diverse operational experience and understanding of technologies relevant to the Company’s business. Other public company directorships Curtiss-Wright Company (since 2012) |
Continuing Directors
| | SAMARA A. STRYCKER Senior Vice President, Corporate Controller and Treasurer, Navistar International Corporation Age: 52 Director Since: 2021 Term Expires: 2026 Committee: • Audit (Chair) | Professional background Ms. Strycker has been the Senior Vice President, Corporate Controller and Treasurer of Navistar International Corporation, a leading manufacturer and solutions provider for commercial trucks and engines, since January 2022. Previously, Ms. Strycker was the Senior Vice President and Corporate Controller of Navistar International Corporation between August 2014 and January 2022. Between 2008 and 2014, Ms. Strycker served in various controllership roles at General Electric’s Healthcare Division. Before joining General Electric, Ms. Strycker spent approximately 15 years as an auditor with PricewaterhouseCoopers LLP. Key qualifications As Senior Vice President, Corporate Controller and Treasurer of Navistar International Corporation, Ms. Strycker contributes to the Board extensive senior leadership experience and financial expertise. |
Compensation of Directors
Compensation of Directors In 2023, non-employee directors were paid a mix of cash and equity for their service on our Board, as shown below.
Compensation of Directors
| Type of compensation | Amount $ | | How paid | | Cash Annual retainer | $70,000 | | Cash, paid in equal increments on a quarterly basis. | | Equity-Based Annual retainer | 100,000 | | Restricted stock units for a number of shares (rounded to the nearest 100 shares) equal to the stated dollar amount divided by the average closing price of our common stock on the NYSE on the five trading days immediately preceding the date of grant, which typically occurs on or shortly after the date of our annual meeting. Restricted stock units vest on the one-year anniversary of the date of grant. | | Additional retainer for Lead Director | 30,000 | | Cash, paid in equal increments on a quarterly basis. | | Additional retainer for committee chairs: | | | Cash, paid in equal increments on a quarterly basis. | | Audit | 17,500 | | | | Compensation | 12,500 | | | | Corporate Governance and Nominating | 7,500 | | | | Innovation | 7,500 | | | | Fees for committee meetings | 2,000 | per meeting | Cash, paid in equal increments on a quarterly basis. |
Compensation of Directors
| | | 2024 Proxy Statement 22 |
Compensation of Directors
Based on various factors, including the Company’s strong operational performance, the fact that director compensation has remained unchanged since 2018 and after consultation with an independent compensation consultant, effective January 1, 2024, non-employee directors will be paid a mix of cash and equity more in line with competitive market levels for their service on our Board as depicted in the following table.
Compensation of Directors
| Type of compensation | Amount $ | | How paid | | Cash Annual retainer | $80,000 | | Cash, paid in equal increments on a quarterly basis. | | Equity-Based Annual retainer | 135,000 | | Restricted stock units for a number of shares (rounded to the nearest 100 shares) equal to the stated dollar amount divided by the average closing price of our common stock on the NYSE on the five trading days immediately preceding the date of grant, which typically occurs on or shortly after the date of our annual meeting. Restricted stock units vest on the one-year anniversary of the date of grant. | | Additional retainer for Lead Director | 30,000 | | Cash, paid in equal increments on a quarterly basis. | | Additional retainer for committee chairs: | | | Cash, paid in equal increments on a quarterly basis. | | Audit | 17,500 | | | | Compensation | 12,500 | | | | Corporate Governance and Nominating | 7,500 | | | | Innovation | 7,500 | | | | Fees for committee meetings | 2,500 | per meeting | Cash, paid in equal increments on a quarterly basis. |
Compensation of Directors
Our non-employee directors are also eligible to participate in the Directors’ Deferred Income and Retirement Plan. Under this plan, a director may elect to defer payment of all or part of his or her fees for service as a director until he or she retires from service on the Board. Deferred directors’ fees may be notionally invested, at the election of the director, in a fixed interest account or a phantom stock account that tracks the value of our common stock including dividends (if any). All deferred amounts and related earnings will be paid in a lump sum when the director retires. Upon retirement from the Board, Mr. Ducommun will receive an annual retainer fee of $25,000 for the shorter of his life or a period of twelve years.
2023 Director Compensation Table
2023 Director Compensation Table The following table presents the compensation earned by, or paid to, the non-employee directors for the year ended December 31, 2023 for their services to Ducommun.
2023 Director Compensation Table
| | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | Total ($) | | Richard A. Baldridge | 92,000 | 100,000 | – | 192,000 | | Shirley G. Drazba | 93,500 | 100,000 | – | 193,500 | | Robert C. Ducommun | 99,500 | 100,000 | $0(5) | 199,078 | | Dean M. Flatt | 128,500 | 100,000 | – | 228,500 | | Jay L. Haberland | 104,750 | 100,000 | – | 204,750 | | Sheila G. Kramer | 78,500 | 100,000 | – | 178,500 | | Samara A. Strycker | 94,750 | 100,000 | – | 194,750 | | Director Stock Ownership Policy | 5x Annual Baseline Cash Retainer Plus Committee Meeting Fees | | | |
2023 Director Compensation Table
| (1) During fiscal year 2023, 2,000 restricted stock units were granted to each of Mmes. Drazba, Kramer and Strycker, and Messrs. Baldridge, Ducommun, Flatt, and Haberland. Other than as set forth herein, our non-employee directors did not hold any other outstanding equity awards. | | (2) These amounts represent the aggregate grant date fair value of stock awards granted in 2023 as calculated pursuant to Financial Accounting Standards Board’s Accounting Standards Codification Topic 718. The methodology and assumptions used in the valuation of stock awards are contained in Footnote 11 to our consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. | | (3) Restricted stock units for a number of shares (rounded to the nearest 100 shares) equal to the stated dollar amount divided by the average closing price of our common stock on the NYSE on the five trading days immediately preceding the date of grant. Restricted stock units vest on the one-year anniversary of the date of grant. | | (4) A description of the Director Deferred Income and Retirement Plan can be found above. Amounts represent the year-over-year change in present value of the director’s account based on actuarial tables. | | (5) The value of Mr. Ducommun’s Pension and Nonqualified Deferred Compensation earnings decreased by $422 in 2023. |
2023 Director Compensation Table
| | | 2024 Proxy Statement 23 |
Relative Total Shareholder Return vs. Proxy Talent Peer Group(3)
Relative Total Shareholder Return vs. Proxy Talent Peer Group(3) Our relative total shareholder return consistently outperformed those of our proxy talent peer group in each year in which such group was used as a benchmark for our compensation practices due to management’s demonstrated track-record of strong operational leadership and effective cost management.
Relative Total Shareholder Return vs. Proxy Talent Peer Group(3)
| (1) Approximately $8.39 of the increase in 2021 was attributable to Ducommun’s completion of a sale-leaseback transaction involving its Gardena performance center. | | (2) Adjusted EBITDA, Adjusted EBITDA Margin. Adjusted Operating Income and Backlog are non-GAAP financial measures. For a discussion of these measures and for reconciliation to the nearest comparable GAAP measures, see Appendix A to this Proxy Statement. | | (3) Please see the “Benchmarking and Proxy Talent Peer Group” section of the Compensation Discussion and Analysis section for a list of the proxy talent peer group used to determine 2023 compensation. The proxy talent peer group used to determine 2023 compensation for our PEO and other NEOs included: AAR Corp., AeroVironment, Inc., Astronics Corporation, Barnes Group Inc., CIRCOR International, Inc., Heico Corporation, Hexcel Corporation, Kaman Corporation, Kratos Defense & Security Solutions, Inc., Mercury Systems, Inc., RBC Bearings Incorporated and Triumph Group, Inc. |
Relative Total Shareholder Return vs. Proxy Talent Peer Group(3)
| | | 2024 Proxy Statement 40 |
Shareholder Value
The following graph and table compare the total shareholder return on $100 invested in Ducommun common stock with the total shareholder return on $100 invested in the Russell 2000 Index and companies identified in the “Benchmarking and Proxy Talent Peer Group” section of this Compensation and Disclosure Analysis, for the five-year period from 2019 through 2023, with the year ended December 31, 2018, serving as the base period. The Russell 2000 Index measures the performance of approximately 2,000 small-capitalization companies in the Russell 3000 Index, a larger index of publicly traded companies that represents almost 98% of the investable U.S. stock market. The total returns include the reinvestment of cash dividends.
Total Shareholder Return vs. Proxy Talent Peers, Russell 2000 and Selected Indices
| * Data for each year depicted in the graph above is as of December 31 of each year. | | ** For information about our proxy talent peer group, see “Compensation Discussion and Analysis – Benchmarking and Proxy Talent Peer Group.” |
Pay for Performance Philosophy
| * “Final Payout Determination for Performance Shares Granted in 2021,” Willis Towers Watson, January 19, 2024. |
Compensation Program Overview
| Type of compensation | Compensation element | Purpose | How paid | For more information | | Fixed | Base Salary | Compensate named executive officers for their role and level of responsibility, as well as individual performance. | Cash; paid bi-weekly. | Page 48 | | Performance- based and variable | Annual Cash Incentive | Designed to reward the achievement of annual financial goals based on our actual financial performance compared to targets for adjusted operating income, revenue, and adjusted cash flow from operations; actual financial performance compared to a minimum adjusted net income goal; and individual performance. | Cash; typically paid in the first quarter of the year following the year for which the incentive is earned. | Page 48 | | | Performance Stock Units and Performance-Based Long-Term Incentive Cash Awards | Designed to reward the achievement of long-term growth in our adjusted diluted earnings per share, relative total shareholder return, and for the CEO, revenue targets. | Cliff vest at the end of the three-year performance period to the extent earned; paid in shares of common stock and cash in the first quarter of the year after the conclusion of the performance period. | Page 50 | | Time-Based | Restricted Stock Units | Designed to reward the achievement of long-term growth in our stock price and to provide a long-term retention incentive. | Shares vest ratably in annual increments over three years. | Page 50 | | Perquisites and Retirement Benefits (Other Compensation) | Automobile allowance; non-qualified deferred compensation plan; medical, dental, life and other insurance benefits, and 401(k) matching contributions provided on a non-discriminatory basis | Designed to provide limited perquisite and retirement benefits necessary for the attraction and retention of key executives. | Benefits paid bi-weekly; non-qualified deferred compensation plan and 401(k) matching annually. | Page 55 |
Compensation Best Practices
| What We Do | | What We Don’t Do | | | | A significant majority of target total direct compensation for the named executive officers was based on performance | | We do not provide any pension or supplemental retirement benefits | | | We have a clawback policy in place for all incentive- based compensation | | We do not provide excise tax gross-ups | | | Executives and directors are subject to demanding stock ownership guidelines | | We do not provide for any “single-trigger” equity vesting in the event of a change in control | | | We provide only modest perquisites | | We do not permit option repricing without shareholder approval | | | Our Compensation Committee engages an independent compensation consultant | | We do not grant stock options with an exercise price below 100% of fair market value | | | We prohibit executives and directors from pledging Ducommun stock or engaging in hedging transactions involving Ducommun stock | | |
Compensation Objectives
Compensation Objectives Our compensation programs are designed to provide competitive levels of compensation that link pay to the achievement of our financial goals, assist Ducommun in attracting and retaining qualified executives, and recognize individual initiative and performance. We intend for overall compensation of the named executive officers to be at levels that are broadly competitive with other companies of similar size and complexity of operations. We do not target any specific mix of cash versus non-cash compensation for our named executive officers. Instead, each element of compensation (salary, annual cash incentive and performance-based long-term equity and cash incentives) is awarded and targeted at amounts that are intended to be market-competitive, consistent with our compensation principles, and reflect internal pay equity considerations. The Compensation Committee decided to continue to primarily rely on the grant of performance-based awards (in the form of both performance stock units and performance-based long-term incentive cash awards) when awarding variable compensation to executives. This approach provides consistency with our philosophy of creating pay-for-performance compensation opportunities to enhance alignment between executives’ interests and those of shareholders.
Compensation Consultant
Compensation Consultant The Compensation Committee retained Willis Towers Watson (“WTW”) as an independent compensation consultant, which did not provide any services to us in 2023 other than with respect to executive compensation. The Compensation Committee reviewed WTW’s independence and completed an assessment of any potential conflicts of interest raised by WTW’s work by considering the following six factors, as well as others it deemed relevant: (i) whether WTW provides other services to us; (ii) the annual dollar value of fees paid to WTW, as a percentage of WTW’s total revenue; (iii) the policies and procedures of WTW that are designed to prevent conflicts of interest; (iv) any business or personal relationships between WTW consultants and members of the Compensation Committee; (v) whether any WTW consultants own Ducommun stock and if so, how much; and (vi) any business or personal relationships between WTW consultants or WTW with any of our executive officers. As a result of this review, the Compensation Committee concluded that WTW is independent and there are no such conflicts of interest.
Benchmarking and Proxy Talent Peer Group
Benchmarking and Proxy Talent Peer Group The table below identifies the proxy talent peer group companies in the aerospace and defense, and industrial machinery sectors of the Global Industry Classification Standard that were referenced by WTW and the Compensation Committee as market comparators in setting target direct compensation for our named executive officers in 2023 based on 2022 revenues:
Benchmarking and Proxy Talent Peer Group
| | | 2024 Proxy Statement 46 |
2023 Proxy Talent Peer Group
2023 Proxy Talent Peer Group
2023 Proxy Talent Peer Group
| Company Name | GICS Sector | 2022 Revenue ($ in millions)* | | AAR Corporation | 2010-1010 (Aerospace & Defense) | $1,820.0 | | AeroVironment, Inc. | 2010-1010 (Aerospace & Defense) | $445.7 | | Astronics Corporation | 2010-1010 (Aerospace & Defense) | $534.9 | | Barnes Group, Inc. | 2010-6020 (Industrial Machinery) | $1,261.9 | | CIRCOR International, Inc. | 2010-6020 (Industrial Machinery) | $787.0 | | Heico Corporation | 2010-1010 (Aerospace & Defense) | $2,208.3 | | Hexcel Corporation | 2010-1010 (Aerospace & Defense) | $1,577.7 | | Kaman Corporation | 2010-1010 (Aerospace & Defense) | $687.9 | | Kratos Defense & Security Solutions, Inc. | 2010-1010 (Aerospace & Defense) | $898.3 | | Mercury Systems, Inc. | 2010-1010 (Aerospace & Defense) | $988.2 | | RBC Bearings, Inc. | 2010-6020 (Industrial Machinery) | $942.9 | | Triumph Group, Inc. | 2010-1010 (Aerospace & Defense) | $1,459.9 |
2023 Proxy Talent Peer Group
| 75th Percentile (in $ millions) | Median (in $ millions) | 25th Percentile (in $ millions) | | $1,489.3 | $965.5 | $762.2 | | Ducommun 2022 Revenue (in $ millions) | | Ducommun Percentile Rank | | $712.5 | | 20.4% |
2023 Proxy Talent Peer Group
Additionally, the Compensation Committee has the compensation consultant prepare a formal executive compensation assessment every year. For the 2023 fiscal year, WTW assessed our executive compensation compared to the proxy disclosures for a specific proxy talent peer group and to broader published survey compensation data and recommended appropriate changes to our executive compensation program (the “WTW compensation assessment”). Specifically, and as noted above, we generally target the 50th percentile of proxy talent peer group data and the 50th to 75th percentile of published survey compensation in assessing and establishing compensation for our named executive officers. Moreover, the WTW compensation assessment compared our executive compensation to published survey compensation data for general industry and manufacturing companies with annual revenues of between $500 million and $1 billion, based on WTW’s advice that such compensation survey data would provide a reasonable basis for benchmarking our executive compensation. The compensation survey data was gathered from the General Industry Executive Compensation Survey – U.S., Durable Products Manufacturing or All Industry data cuts, published by Willis Towers Watson Services, and the U.S. Mercer Benchmark Database – Total Remuneration Survey, published by William M. Mercer. Aggregate compensation data from the surveys was provided to the Compensation Committee. When making compensation decisions regarding the CEO, SVP CFO and SVP Electronics and Structural Systems, the Compensation Committee reviews and relies upon both proxy talent peer group data and published survey compensation data. When making compensation decisions regarding the other executive officers, the Compensation Committee primarily relies on the published survey compensation data included in the WTW compensation assessment because the data provided for comparable positions within our proxy talent peer group companies is considered insufficient. In reviewing proxy talent peer group and published survey compensation data, the Compensation Committee evaluates the relative percentile ranking of the CEO and the other executive officers with respect to salary, total cash compensation, and total direct compensation. The Compensation Committee also considers each named executive officer’s scope of responsibility, years of experience, demonstrated performance and marketability, and impact level within Ducommun relative to other executives in making compensation decisions.
2023 Proxy Talent Peer Group
| * Based on proxy talent peer group 2023 FYE Form 10-K filings with the SEC |
2023 Proxy Talent Peer Group
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Annual Cash Incentives
Annual Cash Incentives Annual cash incentives are awarded based on our actual financial performance compared to targets for three performance metrics, operating income, net revenues, and cash flow from operations, so long as Ducommun exceeds an adjusted net income threshold of $10M. The performance metrics and their weightings are shown below. The Compensation Committee chose these performance measures because it believes that growth along those metrics is essential to our objective of providing superior long-term total shareholder return. The Compensation Committee approves the threshold, target, and maximum goals for the financial performance measures, and the formula for funding the bonus pool at the beginning of each year. These performance goals are set in line with our annual operating plan for the year, and the 2023 annual operating plan approved by the Board contemplated that attainment of the maximum level of net revenue and operating income metrics would be the highest in years for Ducommun, thereby aligning management’s interests with those of shareholders. The Compensation Committee establishes a target annual cash incentive award for each named executive officer, expressed as a percentage of base salary. In setting the annual cash incentive target amounts, ranging from 100% of target base salary for our CEO and between 45% and 60% of target base salary for our other NEOs, the Compensation Committee considered the WTW compensation assessment, which indicated our annual cash incentive target percentages were appropriate relative to the market. Annual cash incentive payouts can range from zero to a maximum of three times the targeted percentage, depending on performance. The maximum is considered appropriate in recognition of the stretch nature of the performance goals, and the benefit bestowed upon shareholders should they be attained.
Achievement of Performance Goals in 2023
Achievement of Performance Goals in 2023 In determining actual payouts under the 2023 annual incentive plan, the Compensation Committee and Board first determined that Ducommun exceeded the adjusted net income threshold of $10M. The Compensation Committee then reviewed Ducommun’s performance against each metric established under the annual incentive plan to determine the award’s funding by metric, applied the appropriate weight to each metric and calculated the actual funding for the 2023 annual incentive plan.
Achievement of Performance Goals in 2023
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Achievement of Performance Goals in 2023
The table below depicts the threshold, target, and maximum goals for each metric under the 2023 annual incentive plan and our actual performance.
Achievement of Performance Goals in 2023
| ($ millions) | Threshold | Target | Maximum | Actual(1) | FY 2023 Award Funding by Metric | Annual Incentive Plan Metric \ Weighting | Total Earned (as % of Target) | | Operating Income(2) | 54.9 | 61.0 | 67.1 | 64.5(2) | 214% | 70% | 150% | | Net Revenues | 710.5 | 725.0 | 739.5 | 757.0 | 300% | 10% | 30% | | Cash Flow (as adjusted) | 36.0 | 40.0 | 44.0 | 43.3 | 270% | 20% | 54% | | Actual Funding | | | | | | | 234% |
Achievement of Performance Goals in 2023
| (1) Includes adjustments consistent with historical practices. | | (2) Operating Income (as adjusted) includes adjustments relating to the impact of severance-related costs and restructure expenses. |
Achievement of Performance Goals in 2023
The Compensation Committee also reviewed and noted several significant achievements and milestones, which are summarized below. No individual weightings were assigned to any one of these factors:
Achievement of Performance Goals in 2023
| • | On a year-over-year basis, revenues increased by approximately 6% and our market capitalization increased by more than 25%, resulting in shareholders realizing over $150 million in value in 2023 and demonstrating the effectiveness of our pay-for-performance compensation philosophy in aligning our executives’ interests with those of shareholders; | | • | Our relative total shareholder return consistently outperformed those of our proxy talent peer group through the volatile period covering the aftermath of the COVID-19 pandemic due to management’s demonstrated track-record of strong operational leadership and effective cost management; | | • | Established a new all-time revenue record of approximately $757M with healthy year-over-year top line growth of approximately 6% and surpassing the prior record of $747M in 2012, as Ducommun continued to benefit from offloading with the right product portfolio, strong operating discipline and by leveraging our lean, highly focused performance center concept, with the percentage of net revenue per employee increasing by double digits over the prior year; | | • | Management competed for and closed the acquisition of BLR Aerospace, LLC in April 2023 through a competitive auction process, our fifth and largest acquisition since 2017 and which was an important step towards our strategic goal of building our electronic and structural product portfolios with more engineered products and aftermarket revenue; | | • | In the first full year after announcing our Vision 2027 Strategy in December 2022, our engineered products businesses continued to deliver in operating income, revenue and cash flow, with their percentage of overall revenue increasing significantly on a year-over-year basis; | | • | We raised over $85M in net proceeds by completing a follow-on stock offering in a high-interest rate environment to help pay for the BLR acquisition, and which brought a new cadre of investors, doubled the trading volume on a year-over-year basis and increased the Company’s visibility to public markets with Citi and Goldman Sachs now covering the stock; | | • | Management oversaw a meaningful 130 bps increase in gross profit margins, and which is another great example of our operating process, Company culture, dedicated employees and strong leadership; and | | • | The continued implementation of a restructuring initiative to consolidate our footprint that will result in the closure of two factories, and is expected to generate $11-$13M in annualized savings beginning in the second half of 2024, enhance margins and expand our low-cost capabilities to help accelerate the achievement of our strategic goals and better position the Company for stronger performance in the future; | | • | MagSeal LLC, a leading provider of high-impact, military-proven magnetic seals for critical systems in aerospace and defense applications, which we acquired in December 2021, and Nobles Worldwide, a premier global provider of high performance ammunition delivery and handling systems, which we acquired in October 2019, both had record years, demonstrating the success and effectiveness of the strategic plan we announced in December 2022; | | • | Management continued to proactively navigate supply chain issues and labor shortages to maintain an outstanding record of on-time deliveries and quality to customers, as evidenced by our backlog of nearly $1 billion; | | • | Several customers recognized Ducommun’s excellence in on-time delivery and quality during the year, including being recognized by Airbus as a top Detail Parts Partner Specialist due to our outstanding performance, operational reliability and delivering on shared commitments; being nominated by Boeing for its Supplier of the Year award; and being awarded the Partner2Win Gold Medallion award from BAE Systems in recognition of Ducommun’s exceptional performance and commitment to operational excellence, all of which are expected to generate significant value for shareholders; and | | • | SG&A expense increased slightly on a year-over-year basis, as we invested in the business coming out of several lean years from the COVID-19 pandemic and the commercial aerospace recovery but was still among the lowest of our proxy talent peer group companies when viewed as a percentage of revenue based on those firms’ most recent Form 10-K filings. Moreover, at Ducommun’s corporate headquarters the number of vice presidents at the Company decreased by nearly 60% since 2016, demonstrating management’s continued strong cost management and effective spending controls. |
Achievement of Performance Goals in 2023
The Compensation Committee incorporated these considerations into the final annual cash incentive awards that recognized the significant individual and team performance that drove our results in 2023. Moreover, the Compensation Committee believes that our continued growth, with year-over- year increases in market capitalization, revenue, gross profit margins and a nearly $1 billion backlog positions Ducommun and its shareholders favorably for further success going forward.
Achievement of Performance Goals in 2023
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Achievement of Performance Goals in 2023
For 2023, target annual incentive award targets and annual cash incentive determination for each of the named executive officers is reflected in the table below.
Achievement of Performance Goals in 2023
| | Target Award ($) | Target as % of Base Salary | Payout % of Target | Total Payout ($)* | | Mr. Oswald | 959,707 | 100 | 234 | 2,247,000 | | Mr. Mookerji | 309,850 | 65 | 234 | 726,000 | | Ms. Gonzalez | 115,791 | 45 | 234 | 271,000 | | Mr. Redondo | 271,236 | 55 | 234 | 635,000 | | Mr. Tata | 152,820 | 45 | 234 | 358,000 | | Mr. Wampler | 205,200 | 50 | 234 | 481,000 |
Achievement of Performance Goals in 2023
| * We have a convention of rounding payout amounts up to the nearest thousand. |
Achievement of Performance Goals in 2023
The graphs below show the changes in our named executive officers’ annual incentive compensation between 2021 and 2023.
Achievement of Performance Goals in 2023
| CEO Annual Incentive Compensation 2021-2023 | NEO Annual Incentive Compensation 2021-2023 | | | |
Achievement of Performance Goals in 2023
| * Values for Ms. Gonzalez in 2021 and Mr. Mookerji in 2021 and 2022 are not applicable due to their promotions to VP, Chief Human Resources Officer in September 2022 and SVP, CFO in May 2023, respectively. |
Long-Term Incentives
Long-Term Incentives In fiscal 2023, Ducommun granted long-term incentives to its CEO in the form of performance stock units (“PSU”s), performance-based cash awards (“Cash LTIPs”) based on earnings per share (“EPS”) with a relative total shareholder return (“rTSR”) modifier and revenue, and time-based restricted stock units (“RSUs”). Additionally, Ducommun granted long-term incentives to its other named executive officers in the form of PSUs and Cash LTIPs based on EPS and a rTSR modifier, as well as RSUs. The allocation between the equity and cash components of the long-term incentive awards was determined after deliberations with the Compensation Committee involving the evaluation of multiple scenarios and considerations, including ensuring that our executives’ long-term interests remained aligned with those of shareholders and the desire to be judicious with our grant practices to preserve shares under our Amended 2020 Stock Incentive Plan, thereby mitigating the dilutive effect of our long-term equity compensation practices on shareholders. Accordingly,
Long-Term Incentives
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Long-Term Incentives
to ensure alignment between executives’ and shareholders’ interests, the amount of cash that our NEOs may earn pursuant to the Cash LTIP awards will be based on performance against the same metrics used for the equity components of the PSU awards. The overall mix of long-term incentives granted to our NEOs in 2023, along with a breakdown of the applicable amount of PSUs, Cash LTIPs and RSUs payable in shares of common stock and cash, respectively, are depicted below:
Long-Term Incentives
| CEO LTI Mix at Target | Other NEO LTI Mix at Target | | | |
Long-Term Incentives
PSU and Cash LTIP awards encourage executives to focus on specific financial and other goals that the Compensation Committee believes will contribute to long-term shareholder value. Restricted stock units provide a direct ownership interest in Ducommun and a long-term incentive for the named executive officers to remain employed with us. PSU, Cash LTIP, PRSU, and RSU awards are the only forms of long-term compensation afforded to our executives as Ducommun does not maintain a pension plan for our NEOs. In determining the aggregate value of long-term incentives to grant for 2023, the Compensation Committee considered the results of the WTW compensation assessment as to the value of long-term incentives provided at the 50th to 75th percentiles of our proxy talent peer group data and the 75th percentile of the published survey compensation data. In keeping with those considerations, the long-term incentive awards to our CEO and other named executive officers reflected a mix of performance- and time-based long-term incentives that were generally consistent with the market and prevailing business conditions, and were intended to incentivize our executive officers to achieve the performance metrics thereunder. The Compensation Committee also considered the existing equity holdings of our NEOs and the number of shares both outstanding and available under our long-term incentive plans when granting awards in 2023. The Compensation Committee made the following target long-term incentive awards to the named executive officers in 2023:
Long-Term Incentives
| | PSUs (Shares at Target)(1) | Cash LTIP – EPS/rTSR ($ at Target) | Cash LTIP – Revenue ($ at Target) | RSUs (Shares at Target) | Target Value of PSUs, Cash LTIPs and RSU Grants Combined ($)(2) | | Mr. Oswald | 46,622 | 1,647,240 | 534,240 | 15,400 | 5,371,125 | | Mr. Mookerji | 6,586 | 311,012 | – | 6,985 | 1,003,994 | | Ms. Gonzalez | 1,778 | 83,961 | – | 1,886 | 271,057 | | Mr. Redondo | 4,261 | 201,230 | – | 4,519 | 649,567 | | Mr. Tata | 3,507 | 165,614 | – | 3,720 | 534,648 | | Mr. Wampler(3) | – | – | – | – | – |
Long-Term Incentives
| (1) Includes performance restricted stock unit (“PRSU”) grants issued to our CEO. | | (2) Based on grant date fair values, and assuming target performance with respect to PRSUs, PSUs and Cash LTIPs. | | (3) Mr. Wampler assumed a non-executive role with the Company in May 2023 and accordingly, did not receive any long-term incentive awards for that year. He will be involuntarily separated from the Company in Q1 2024, at which time he will receive payments and benefits as required by the terms of his Key Executive Severance Agreement. Please see the discussions under “Severance and Change in Control Agreements and Practices” on page 55 and “Potential Payments Upon Termination or Change in Control” on page 64 for further information. |
Long-Term Incentives
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Long-Term Incentives
The target value of long-term incentives granted to our CEO in 2023 increased in a manner reflective of the more than 25%, or over $150 million, year-over-year increase in our market capitalization, our record level of revenue, and consistent with our philosophy of incentivizing performance in relation to the value realized by shareholders. The Compensation Committee believes this decision remains consistent with our pay-for-performance compensation philosophy and maintains the alignment between executives’ interests and those of our shareholders by ensuring that the majority of our CEO’s total target compensation is dependent on performance, thereby incentivizing continued increases in earnings, revenues and operating income, all to shareholders’ benefit. The target value of the long-term incentives granted to our CEO and named executive officers over the past three years is depicted in the graphs below:
Long-Term Incentives
| CEO Long-Term Incentive Compensation 2021-2023 | NEO Long-Term Incentive Compensation 2021-2023 | | | |
Long-Term Incentives
| * Values for Ms. Gonzalez in 2021 and Mr. Mookerji in 2021 and 2022 are not applicable due to their promotions to VP, Chief Human Resources Officer in September 2022 and SVP, CFO in May 2023, respectively. | | ** Mr. Wampler assumed a non-executive role with the Company in May 2023 and accordingly, did not receive any long-term incentive awards for that year. He will be involuntarily separated from the Company in Q1 2024, at which time he will receive payments and benefits as required by the terms of his Key Executive Severance Agreement. Please see the discussions under “Severance and Change in Control Agreements and Practices” on page 55 and “Potential Payments Upon Termination or Change in Control” on page 64 for further information. |
CEO Performance Restricted Stock Unit Grant (FY2023-FY2025 Performance Period)
CEO Performance Restricted Stock Unit Grant (FY2023-FY2025 Performance Period) In 2023, our CEO was awarded Performance Restricted Stock Units (“PRSUs”) and a Cash LTIP that may vest based upon the achievement of revenue targets, shown below, in the last year of a three-year performance period (from January 1, 2023, to December 31, 2025). Although revenue is used as a metric in both our short-term and long-term PRSU incentive programs, it accounts for 10% of performance in the current reporting year under the former incentive, while it is utilized in the third year of the performance period under the PRSU program and requires our CEO to implement measures three years in advance to attain the revenue levels specific to the award, which also aligns with shareholders’ interests. As such, the weighting and relevance of the revenue metric under the two incentive programs are quite different. In order to preserve shares under our Amended 2020 Stock Incentive Plan and manage share dilution, the grants will be payable, if at all, in both shares and cash. Based on our 2023 revenues of $757 million, revenues would need to increase by approximately 9% for our CEO to achieve the maximum payout at the end of the performance period, which would provide significant shareholder value.
Three-Year Revenue Goal
| Performance Level | Performance (%) | Performance ($M) | Payout % | | Maximum | 104.0 | 825 | 200 | | Target | 100.0 | 785 | 100 | | Threshold | 96.0 | 755 | 50 | | <Threshold | <96.0 | <755 | — |
Performance Stock Units (FY2023-FY2025 Performance Period)
Performance Stock Units (FY2023-FY2025 Performance Period) The performance-based long-term incentive awards granted in 2023, including Cash LTIPs, may be earned based upon the achievement of annual adjusted diluted EPS targets during each year of a three-year performance period, subject to a rTSR modifier. The Compensation Committee chose adjusted diluted EPS as the performance metric to tie executive compensation directly to the annual and long-term growth in Ducommun’s earnings. As discussed further below, an rTSR modifier can also be applied to the number of vested PSUs and Cash LTIP amounts to further align executive compensation with shareholder value creation. The PSUs granted in 2023 will cliff vest at the end of the three-year performance period in an amount between 0% and 200% of the target units or target dollar amounts (as applicable), as shown below.
Adjusted Diluted Earnings Per Share for Awards*
| * The same metrics apply to the PSUs and Cash LTIPs. | | ** Assuming performance remains at the same level for all three years of the performance period. |
Adjusted Diluted Earnings Per Share for Awards*
The Compensation Committee set the threshold and target adjusted diluted EPS levels to be consistent with the annual operating plan, with the target level increasing by 6% each year of the performance period, thereby ensuring management is incentivized to improve adjusted diluted earnings per share relative to the end of 2022. In the event our performance falls between two of the data points listed in the table above, the percentage of target performance stock units and target dollar amounts, as applicable, that are earned will be determined by linear interpolation between the two data points, rounded to the nearest whole unit in the case of the performance stock units. Adjusted diluted EPS is calculated, as determined by the Compensation Committee, by adjusting our diluted EPS to reflect changes in accounting standards, discontinued operations to exclude gain or loss on the sale of any business or product line, and to reflect any asset impairment write-offs or charges (whether of goodwill, intangible or tangible assets), transaction-related costs or expenses (including but not limited to the effects of Financial Accounting Standards Board Accounting Standards Codification Topic 805), debt refinancing costs, and restructuring and other non-recurring expenses.
Relative Total Shareholder Return Modifier
Relative Total Shareholder Return Modifier After the end of the three-year performance period of our PSU and Cash LTIP awards our rTSR will be calculated as compared to the Russell 2000 Index for the same period. As depicted in the table below, the total number of PSUs and Cash LTIPs earned will then be determined by multiplying the equity and cash earned, respectively, on the adjusted diluted EPS metric by a modifier between 0.75-1.25. The rTSR modifier will not be greater than 1.0 unless our absolute total shareholder return over the three-year performance period is positive, regardless of our relative ranking. In total, the maximum funding for PSU and Cash LTIP awards based on the achievement of adjusted diluted EPS levels and application of the rTSR modifier is 250% of target.
CEO Performance Restricted Stock Unit Grant (FY2021-FY2023 Performance Period)
CEO Performance Restricted Stock Unit Grant (FY2021-FY2023 Performance Period) In 2021, our CEO was awarded performance restricted stock units (“2021 PRSUs”) subject to vesting based upon the achievement of revenue targets in the last year of a three-year performance period (from January 1, 2021 to December 31, 2023) to incentivize the long-term growth of the business. The Compensation Committee determined the amount of revenue that was achieved relative to its strategic plan in the last year of the performance period, and the percentage and number of the performance restricted stock units earned as a result thereof. The revenue target for the performance period was established based on our 2021 revenues of $645 million, and the Compensation Committee contemplated that revenues would need to increase by approximately 25% for our CEO to achieve the maximum payout at the end of the performance period in 2023, the attainment of which would provide significant shareholder value. The following table summarizes the original revenue targets as a percentage and dollar value at threshold, target and maximum performance levels and the resulting payout levels:
CEO Revenue Goal Achievement (FY 2021 - FY 2023 Performance Period)
| Performance Level | Performance (%) | Performance ($M) | Actual ($M) | Payout % | | Maximum | 104.4 | 804.0 | | 200.0 | | Target | 100.0 | 770.0 | | 100.0 | | Threshold | 95.5 | 735.0 | | 50.0 | | <Threshold | <95.5 | <735.0 | | | | Actual | | | 757.0 | 82.0 |
Performance Stock Units (FY2021-FY2023 Performance Period)
Performance Stock Units (FY2021-FY2023 Performance Period) The three-year performance period for performance stock units awarded in 2021 ended on December 31, 2023. The threshold, target, and maximum performance levels for performance stock units awarded in 2021, and the actual performance in each of the years 2021 to 2023, were as follows:
Adjusted Diluted EPS ($) and rTSR Modifier for Performance Stock Unit Determination
Adjusted Diluted EPS ($) and rTSR Modifier for Performance Stock Unit Determination
Adjusted Diluted EPS ($) and rTSR Modifier for Performance Stock Unit Determination
| | Threshold (10.0% payout each year) | Target (33.3% payout each year) | Maximum (66.6% payout each year) | Actual | % Earned | | 2021 | 2.62 | 2.78 | 3.01 | 11.06* | 66% | | 2022 | 2.62 | 2.94 | 3.46 | 3.30 | 56% | | 2023 | 2.62 | 3.12 | 3.98 | 3.23 | 38% | | TSR Modifier | | 50th Percentile Performance | | | 1.00 | | | | Total shares awarded (%) | | | 160% |
Adjusted Diluted EPS ($) and rTSR Modifier for Performance Stock Unit Determination
| * Approximately $8.39 of 2021 Adjusted EPS was attributable to Ducommun’s completion of a sale-leaseback transaction involving its Gardena, CA performance center. |
Adjusted Diluted EPS ($) and rTSR Modifier for Performance Stock Unit Determination
Our relative total shareholder return compared to the Russell 2000 Index was at the 50th percentile, generating a payout multiple of 1.0 and therefore, the number of total shares earned was not adjusted due to the impact of the modifier despite Ducommun achieving a diluted EPS of $3.23 a share, a significant increase in shareholder value compared to the beginning of the performance period.
Timing of Long-Term Incentive Awards
Timing of Long-Term Incentive Awards The Compensation Committee has implemented a process whereby all normal cycle long-term incentives are awarded in the spring of each year and long-term equity incentive grants in 2023 were generally consistent with this process. However, long-term incentive grants may be made at other times in the event of the new hire of an executive officer or a special award to recognize individual performance. In addition, the timing of the award of normal cycle long-term equity incentives may be changed in the future, as needed, to meet changing circumstances.
Timing of Long-Term Incentive Awards
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Severance and Change in Control Agreements and Practices
Severance and Change in Control Agreements and Practices Ducommun has entered into a key executive severance agreement with each of the executive officers. These agreements (which are all substantially the same) provide for cash severance and double trigger equity acceleration if there is a qualifying termination in connection with a change in control, and limited cash severance if there is a qualifying termination outside the context of a change in control. Key executive severance agreements are considered to be a necessary in the recruitment and retention of qualified executives. We believe having severance agreements in place allows our executives to focus on shareholder interests when considering strategic alternatives because they provide some financial security in the event of an involuntary termination of employment. We do not provide gross-ups for taxes under these agreements. Please refer to the section entitled “Potential Payments Upon Termination or Change in Control” below for further discussion of these agreements. Mr. Wampler assumed a non-executive role with the Company in May 2023 and accordingly, did not receive any long-term incentive awards in 2023. He will be involuntarily separated from the Company in Q1 2024, at which time he will receive payments and benefits as required by the terms of his Key Executive Severance Agreement.
Compensation Risk Assessment
| Compensation Feature | Compensation Practices | | Philosophy | An appropriate compensation philosophy based on proxy talent peer group, pay for performance, and other market compensation data. | | Balanced Approach | An effective balance between cash and equity-based compensation. An appropriate mix of short- and long-term performance measures, and maximum payouts under annual cash incentive and performance stock unit programs. Multi-year vesting of long-term stock and cash compensation awards. An appropriate mix of time- and performance-based vesting schedules. Financial measures as well as discretion to recognize individual performance. | | Alignment of Interests with Shareholders | Stock ownership guideline for key executive officers. | | Perquisites and Retirement Benefits | Limited perquisites and retirement benefits. |
Tax Deductibility and Gross-Ups
Tax Deductibility and Gross-Ups Section 162(m) of the Internal Revenue Code places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, it believes that it is in the best interests of our shareholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives. The change in control provisions described in the section entitled “Severance and Change in Control Agreements and Practices” could subject an executive to an excise tax on an “excess parachute payment” under Internal Revenue Code Section 4999. Ducommun does not provide any gross-up to its executives for any excise tax due under this section of the Internal Revenue Code.
2023 Summary Compensation Table
2023 Summary Compensation Table The Summary Compensation Table and the other tables which follow disclose (in accordance with SEC rules) the compensation for the years ended December 31, 2023, 2022 and 2021 awarded to, earned by or paid to the Named Executive Officers. Columns have been omitted from the table when there has been no compensation awarded to, earned by or paid to any of the Named Executive Officers required to be reported in that column in any year covered by the table.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Named Executive Officers | | | | | | | | | | (NEO) | | | | | | | | | | Stephen G. Oswald | 2023 | 959,707 | – | 5,001,609 | – | 2,247,436 | 72,191 | 8,280,943 | | Chairman, President & Chief Executive Officer | 2022 | 924,128 | – | 3,914,313 | – | 1,783,567 | 93,759 | 6,715,767 | | | 2021 | 897,211 | – | 4,370,320 | – | 987,000 | 44,636 | 6,299,099 | | Suman B. Mookerji | 2023 | 476,692 | – | 1,035,095 | – | 725,605 | 28,934 | 2,266,326 | | Senior Vice President, Chief Financial Officer | 2022 | – | – | – | – | – | – | – | | | 2021 | – | – | – | – | – | – | – | | Laureen S. Gonzalez | 2023 | 289,477 | – | 279,453 | – | 271,158 | 27,113 | 867,201 | | Vice President, Chief Human Resources Officer | 2022 | 231,687 | – | 269,310 | – | 178,863 | 11,941 | 691,801 | | | 2021 | – | – | – | – | – | – | – | | Jerry L. Redondo | 2023 | 493,156 | – | 669,690 | – | 635,178 | 28,981 | 1,827,005 | | Senior Vice President, Operations | 2022 | 471,502 | – | 613,160 | – | 500,500 | 28,193 | 1,613,355 | | | 2021 | 450,660 | – | 588,988 | – | 248,000 | 27,698 | 1,315,209 | | Rajiv A. Tata | 2023 | 339,600 | – | 551,209 | – | 357,873 | 37,518 | 1,286,200 | | Vice President, General Counsel & Secretary | 2022 | 323,428 | – | 504,598 | – | 280,897 | 35,429 | 1,144,352 | | | 2021 | 307,176 | – | 516,464 | – | 153,000 | 26,081 | 1,001,773 | | Christopher D. Wampler | 2023 | 410,400 | – | – | – | 480,536 | 28,228 | 919,164 | | Former Vice President, Chief Financial Officer, Controller and Treasurer | 2022 | 402,646 | – | 575,196 | – | 388,553 | 31,763 | 1,398,157 | | | 2021 | 353,459 | – | 516,464 | – | 195,000 | 30,259 | 1,094,585 |
2023 Summary Compensation Table
| (1) These columns show the grant date fair value of awards granted to Messrs. Oswald, Mookerji, Redondo, Tata and Ms. Gonzalez computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The methodology and assumptions used in the valuation of stock option awards, performance stock units (“PSUs”) payable in shares and cash, Performance Restricted Stock Units payable in shares (“PRSUs”) and restricted stock units (“RSUs”) are contained in Footnote 11 to Ducommun’s consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. | | (2) The awards included in the Stock Awards column for our CEO consisted of PRSUs payable in shares, RSUs and PSUs, and for our named executive officers, PSUs and RSUs in 2023. The grant date fair value of RSUs issued in May 2023 was $48.70. The value of PRSUs payable in shares and PSUs, each of which are subject to performance conditions, are shown in the table above based on the probable outcome of the performance conditions as of the grant date for the award. The following table shows the maximum values for the PSUs, payable in cash and equity, and PRSUs, payable in equity to Mr. Oswald, both as of the grant date year of the award: |
2023 Summary Compensation Table
| | | 2024 Proxy Statement 57 |
2023 Summary Compensation Table
| Name | Year of Award | Maximum Performance Stock Unit Grant Date Fair Value ($) | | Stephen G. Oswald | 2023 | 8,503,259 | | | 2022 | 9,531,387 | | | 2021 | 8,043,268 | | Suman B. Mookerji | 2023 | 1,389,850 | | Laureen S. Gonzalez | 2023 | 375,209 | | | 2022 | 395,625 | | Jerry L. Redondo | 2023 | 899,230 | | | 2022 | 1,008,899 | | | 2021 | 995,083 | | Rajiv A. Tata | 2023 | 740,091 | | | 2022 | 830,176 | | | 2021 | 872,060 | | Christopher D. Wampler | 2023 | – | | | 2022 | 946,390 | | | 2021 | 872,060 |
2023 Summary Compensation Table
| (3) Non-equity incentive plan compensation was earned for each year ended and was paid in the first quarter of the following year. | | (4) The following table discloses each item included in the “All Other Compensation” column for 2023: |
2023 Summary Compensation Table
| Name | Automobile Allowance ($)(a) | Life Insurance Premiums ($) | Ducommun Contributions to 401(k) Plan ($) | Ducommun Contributions to NQDCP ($)(b) | Total ($) | | Stephen G. Oswald | 18,024 | 1,080 | 9,900 | 43,187 | 72,191 | | Suman B. Mookerji | 18,024 | 1,010 | 9,900 | – | 28,934 | | Laureen S. Gonzalez | 18,024 | 622 | 8,467 | – | 27,113 | | Jerry L. Redondo | 18,024 | 1,057 | 9,900 | – | 28,981 | | Rajiv A. Tata | 18,024 | 727 | 8,214 | 10,553 | 37,518 | | Christopher D. Wampler | 7,510 | 887 | 9,900 | 9,931 | 28,228 |
2023 Summary Compensation Table
| (a) Equates to a payment of $1,502 per month for automobile-related travel expenses such as lease payments, fuel and insurance. | | (b) Includes amounts equal to the 10 Year U.S. Treasury Bill Rate plus three hundred basis points based on participants’ annual contributions to the Plan, which will vary from year-to-year. |
2023 Summary Compensation Table
| | | 2024 Proxy Statement 58 |
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table provides information on the 2023 Bonus Plan and the award of performance stock units (“PSU”s), Cash LTIPs and restricted stock units (“RSU”s) to the named executive officers during 2023:
2023 Grants of Plan-Based Awards Table
| | | Estimated Future Payments Under Non-Equity Incentive Plan Awards | | | Estimated Future Payments Under Equity Incentive Plan Awards | | | All Other Stock | All Other Option | Exercise | Grant Date Fair Value of | | Name | Grant Date | Threshold ($) | Target ($)(1) | Maximum ($)(1) | Threshold (#) | Target (#)(2) | Maximum (#) | Awards: Number of Shares of Stock or Units (#) | Awards: Number of Securities Underlying Options (#) | or Based Price of Option Awards ($/Sh) | Stock and Option Awards ($)(3) | | Stephen G. Oswald | | | | | | | | | | | | | 2023 Bonus Plan | | | 959,707 | 2,879,121 | | | | | | | | | Performance Stock Units - EPS/rTSR | 5/08/2023 | | | | | 34,738 | 86,845 | | | | 1,860,915 | | Cash LTIP - EPS/rTSR | 5/08/2023 | | | | | 1,647,240 | 4,118,100 | | | | 1,811,964 | | Performance Restricted Stock Units - Revenue | 5/08/2023 | | | | | 11,884 | 23,768 | | | | 578,751 | | Cash LTIP - Revenue | 5/08/2023 | | 534,240 | 1,068,480 | | | | | | | | | Restricted Stock Units | 5/08/2023 | | | | | | | 15,400 | | | 749,980 | | Suman B. Mookerji | | | | | | | | | | | | | 2023 Bonus Plan | | | 309,850 | 929,550 | | | | | | | | | Performance Stock Units – EPS/rTSR(4) | 5/08/2023 | | | | | 6,586 | 16,465 | | | | 352,812 | | Cash LTIP – EPS/rTSR(4) | 5/08/2023 | | | | | 311,012 | 777,530 | | | | 342,113 | | Restricted Stock Units | 5/08/2023 | | | | | | | 6,985 | | | 340,170 | | Laureen S. Gonzalez | | | | | | | | | | | | | 2023 Bonus Plan | | | 115,791 | 347,373 | | | | | | | | | Performance Stock Units - EPS/rTSR | 5/08/2023 | | | | | 1,778 | 4,445 | | | | 95,247 | | Cash LTIP - EPS/rTSR | 5/08/2023 | | | | | 83,961 | 209,903 | | | | 92,357 | | Restricted Stock Units | 5/08/2023 | | | | | | | 1,886 | | | 91,848 | | Jerry L. Redondo | | | | | | | | | | | | | 2023 Bonus Plan | | | 271,236 | 813,707 | | | | | | | | | Performance Stock Units - EPS/rTSR | 5/08/2023 | | | | | 4,261 | 10,653 | | | | 228,262 | | Cash LTIP - EPS/rTSR | 5/08/2023 | | | | | 201,230 | 503,075 | | | | 221,353 | | Restricted Stock Units | 5/08/2023 | | | | | | | 4,519 | | | 220,075 | | Rajiv A. Tata | | | | | | | | | | | | | 2023 Bonus Plan | | | 152,820 | 458,460 | | | | | | | | | Performance Stock Units - EPS/rTSR | 5/08/2023 | | | | | 3,507 | 8,768 | | | | 187,870 | | Cash LTIP - EPS/rTSR | 5/08/2023 | | | | | 165,614 | 414,035 | | | | 182,175 | | Restricted Stock Units | 5/08/2023 | | | | | | | 3,720 | | | 181,164 | | Christopher D. Wampler(5) | | | | | | | | | | | | | 2023 Bonus Plan | | | 205,200 | 615,600 | | | | | | | | | Performance Stock Units - EPS/rTSR | | | | | | | | | | | | | Cash LTIP - EPS/rTSR | | | | | | | | | | | | | Restricted Stock Units | | | | | | | | | | | |
2023 Grants of Plan-Based Awards Table
| (1) The target and maximum amounts of awards are based on either: (i) the bonus-eligible salary of each of the named executive officers at December 31, 2023, or (ii) the target value of cash-based awards under the Ducommun Incorporated Amended and Restated 2020 Stock Incentive Plan. In the case of Mr. Oswald, Cash LTIPs - Revenue does not fall within the scope of Financial Accounting Standards Board Accounting Standards Codification Topic 718. | | (2) The fair value for performance-based Cash LTIPs - EPS/rTSR are depicted in dollar amounts and fall within the scope of Financial Accounting Standards Board Accounting Standards Codification Topic 718. | | (3) The fair value of the PSUs – EPS/rTSR are shown based on the probable outcome of the performance conditions as of the date of grant of the awards. | | (4) Sixty-six percent (66%) of Mr. Mookerji’s long terms incentives in connection with his promotion to Senior Vice Present, Chief Financial Officer are performance based. | | (5) Mr. Wampler assumed a non-executive role with the Company in May 2023 and accordingly, did not receive any long-term incentive awards for that year. He will be involuntarily separated from the Company in Q1 2024, at which time he will receive payments and benefits as required by the terms of his Key Executive Severance Agreement. Please see the discussions under “Severance and Change in Control Agreements and Practices” on page 55 and “Potential Payments Upon Termination or Change in Control” on page 64 for further information. |
2023 Grants of Plan-Based Awards Table
| | | 2024 Proxy Statement 59 |
2023 Outstanding Equity Awards at Fiscal Year-End Table
2023 Outstanding Equity Awards at Fiscal Year-End Table The following table provides information on unexercised stock options (“SOs”) and unvested PSUs and RSUs granted to the named executive officers that were outstanding on December 31, 2023:
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | Option Awards | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)(4) | Equity Incentive Plan Awards: Market or Payout Values of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Stephen G. Oswald | | | | | | | | | | | SOs | 5/14/2018 | 32,500 | – | 32.90 | 5/14/2028 | | | | | | SOs | 6/17/2019 | 35,000 | – | 42.25 | 6/17/2029 | | | | | | PRSUs | 1/23/2017 | | | | | | | 26,667 | 1,388,284 | | PRSUs | 6/22/2022 | | | | | | | 12,091 | 629,457 | | PRSUs | 5/08/2023 | | | | | | | 11,884 | 618,681 | | PSUs | 6/22/2022 | | | | | | | 46,585 | 2,425,212 | | PSUs | 6/22/2022 | | | | | | | 45,359 | 2,361,389 | | PSUs | 5/08/2023 | | | | | | | 67,160 | 3,496,357 | | PSUs | 5/08/2023 | | | | | | | 65,394 | 3,404,386 | | RSUs | 2/17/2021 | | | | | 6,120 | 318,607 | | | | RSUs | 5/08/2023 | | | | | 15,400 | 801,724 | | | | Suman B. Mookerji | | | | | | | | | | | SOs | 6/17/2019 | 4,700 | – | 42.45 | 6/17/2029 | | | | | | SOs | 10/10/2019 | 7,500 | – | 40.44 | 10/10/2029 | | | | | | PSUs | 6/22/2022 | | | | | | | 2,762 | 143,781 | | PSUs | 6/22/2022 | | | | | | | 7,797 | 405,904 | | PSUs | 5/08/2023 | | | | | | | 12,733 | 662,877 | | PSUs | 5/08/2023 | | | | | | | 12,347 | 642,775 | | RSUs | 2/17/2021 | | | | | 1,126 | 58,620 | | | | RSUs | 6/22/2022 | | | | | 3,116 | 162,219 | | | | RSUs | 8/30/2022 | | | | | 1,334 | 69,448 | | | | RSUs | 5/08/2023 | | | | | 6,985 | 363,639 | | | | Laureen S. Gonzalez | | | | | | | | | | | PSUs | 4/22/2022 | | | | | | | 3,042 | 158,349 | | PSUs | 5/08/2023 | | | | | | | 3,437 | 178,955 | | PSUs | 5/08/2023 | | | | | | | 3,333 | 173,524 | | RSUs | 1/11/2021 | | | | | 408 | 21,240 | | | | RSUs | 12/08/2021 | | | | | 334 | 17,388 | | | | RSUs | 4/22/2022 | | | | | 1,334 | 69,448 | | | | RSUs | 5/08/2023 | | | | | 1,886 | 98,185 | | |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | | 2024 Proxy Statement 60 |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | Option Awards | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)(4) | Equity Incentive Plan Awards: Market or Payout Values of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Jerry L. Redondo | | | | | | | | | | | SOs | 6/17/2019 | 4,700 | – | 42.25 | 6/17/2029 | | | | | | PSUs | 6/22/2022 | | | | | | | 2,944 | 153,282 | | PSUs | 6/22/2022 | | | | | | | 8,312 | 432,709 | | PSUs | 5/08/2023 | | | | | | | 8,238 | 428,867 | | PSUs | 5/08/2023 | | | | | | | 7,989 | 415,886 | | RSUs | 2/17/2021 | | | | | 1,170 | 60,910 | | | | RSUs | 6/22/2022 | | | | | 3,321 | 172,891 | | | | RSUs | 5/08/2023 | | | | | 4,519 | 235,259 | | | | Rajiv A. Tata | | | | | | | | | | | SOs | 5/14/2018 | 1,833 | – | 32.90 | 5/14/2028 | | | | | | SOs | 6/17/2019 | 5,840 | – | 42.25 | 6/17/2029 | | | | | | SOs | 10/10/2019 | 2,500 | – | 40.44 | 10/10/2029 | | | | | | PSUs | 6/22/2022 | | | | | | | 2,422 | 126,109 | | PSUs | 6/22/2022 | | | | | | | 6,841 | 356,123 | | PSUs | 5/08/2023 | | | | | | | 6,780 | 352,977 | | PSUs | 5/08/2023 | | | | | | | 6,575 | 342,278 | | RSUs | 2/17/2021 | | | | | 1,027 | 53,466 | | | | RSUs | 6/22/2022 | | | | | 2,734 | 142,332 | | | | RSUs | 5/08/2023 | | | | | 3,720 | 193,663 | | | | Christopher D. Wampler | | | | | | | | | | | RSUs | 2/17/2021 | | | | | 1,027 | 53,466 | | |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (1) The unexercisable stock options become exercisable in increments on the anniversary date of the date of grant such that for stock options granted in 2019, one-third vested and became exercisable in each of 2020, 2021 and 2022. | | (2) The unvested restricted stock units vest as follows: (i) with respect to grants in 2020, one-third vested in each of 2021, 2022 and 2023; (ii) with respect to grants in 2021, one-third vested in each of 2022 and 2023, and one-third will vest in 2024; (iii) with respect to grants in 2022, one-third vested in 2023, and one-third will vest in each of 2024 and 2025; and (iv) with respect to grants in 2023, the award will vest in equal installments of one-third in each of 2024, 2025 and 2026. | | (3) Performance stock units are shown based on our actual achievement of performance measures for periods through 2023 and at the maximum number of shares eligible to vest for performance periods that end after 2023. The performance stock units will vest if the performance conditions are met as follows: (i) grants in 2021 vested based on achievement of the performance metrics on December 31, 2023 and were settled in the first quarter of 2024, (ii) grants in 2022 will vest, if at all, based on achievement of the performance metrics on December 31, 2024 and will be settled in the first quarter of 2025, and (iii) grants in 2023 will vest, if at all, based on achievement of the performance metrics on December 31, 2025 and will be settled in the first quarter of 2026. | | (4) The amounts for PRSUs and PSUs are calculated based on the number of unvested PRSUs and PSUs, respectively, and the closing price of our common stock on the NYSE on the last trading day of 2023 ($52.06). |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | | 2024 Proxy Statement 61 |
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table provides information on the exercise of stock options and vesting of stock for the Named Executive Officers during 2023:
2023 Option Exercises and Stock Vested Table
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Stephen G. Oswald | – | – | 77,471(1) | 3,775,162 | | Suman B. Mookerji | – | – | 14,732(2) | 713,623 | | Laureen S. Gonzalez | 1,408 | 74,765 | 1,712(3) | 89,458 | | Jerry L. Redondo | 9,000 | 425,430 | 14,656(2) | 712,277 | | Rajiv A. Tata | – | – | 12,623(2) | 613,853 | | Christopher D. Wampler | 8,900 | 449,361 | 9,087(2) | 441,108 |
2023 Option Exercises and Stock Vested Table
| (1) The number of shares reflects: (a) restricted stock units that vested during the year, (b) PSUs from the 2021 grant, for which the performance period ended on December 31, 2023, and (c) PRSUs from the 2021 grant, for which the performance period ended on December 31, 2023. | | (2) The number of shares reflects: (a) restricted stock units that vested during the year, and (b) PSUs from the 2021 grant, for which the performance period ended on December 31, 2023. | | (3) The number of shares reflects restricted stock units that vested during the year. |
2023 Pension Benefits Table
2023 Pension Benefits Table We do not provide any pension benefits to any of our named executive officers.
2023 Pension Benefits Table
| | | 2024 Proxy Statement 62 |
2023 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
2023 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans We offer a nonqualified defined contribution and nonqualified deferred compensation plan (the “Plan”) to certain members of our management, including the named executive officers. Participants may elect to receive all or a portion of any Plan year’s deferral balance while they are still employed by Ducommun under various conditions as set forth in the Plan. Participants who separate from Ducommun will have their deferral balances paid within ninety (90) days after their employment ends, unless specific retirement guidelines are met. Participants who meet our retirement guidelines can elect to have their distributions made in either a lump sum or in two to ten annual installments, depending on the payment method selected. Participants with deferred amounts less than $100,000 will be paid out in a lump sum upon departing from Ducommun. Scheduled in-service distributions are also paid in a lump sum. If a participant terminates prior to or while receiving a scheduled in-service distribution, or if a participant has elected to have the deferral balance paid after employment ends, the distribution will be paid (or installments will commence) in the month following separation from service. However, for certain specified employees, post-employment distributions generally cannot be paid until six months after separation of service, except in the event of death. Additionally, limited portions of a participant’s account may be distributed in accordance with the Plan in the event the participant suffers a sudden, unexpected and severe financial hardship. We may credit additional amounts under the Plan on behalf of eligible employees in an amount equal to the 10 Year U.S. Treasury Bill Rate plus three hundred basis points based on participants’ annual contributions to the Plan. The table below summarizes participants’ contributions to the Plan for 2023:
2023 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE ($) | | Stephen G. Oswald | 673,001 | 43,187 | 140,091 | – | 2,431,511 | | Suman B. Mookerji | – | – | 135,244 | – | 135,244 | | Laureen S. Gonzalez | – | – | – | – | – | | Jerry L. Redondo | – | – | – | – | – | | Rajiv A. Tata | 212,896 | 10,553 | 66,677 | – | 478,088 | | Christopher D. Wampler | 175,763 | 9,931 | 17,884 | – | 361,550 |
2023 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
| (1) Executive contributions represent a percentage of Salary and Non-Equity Incentive Plan Compensation amounts identified in the Summary Compensation Table. Amounts related to unvested PSUs and RSUs are excluded and, if deferred, will be reported as a contribution in the year of vesting. | | (2) Registrant contributions are reported in “All Other Compensation” in the Summary Compensation Table. |
2023 Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans
| | | 2024 Proxy Statement 63 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control We have entered into key executive severance agreements with each of our executive officers. The key executive severance agreements provide that if a change in control of Ducommun occurs and there is qualifying termination of employment of the named executive officer within the three months prior to or 24 months following that change in control, the named executive officer will be entitled to receive payment in a single lump sum of an amount equal to the sum of (i) two times the annual base salary of the executive officer prior to the change in control and (ii) two times the target annual cash incentive of the executive officer under our annual cash incentive plan in effect during the year prior to the change in control. Further, with respect to long-term equity incentives granted to such executive officers, (x) stock options become fully exercisable immediately, (y) performance stock units become vested immediately based on our actual achievement of performance measures for periods through the date of termination of employment and at the target number of shares for periods after the date of termination of employment, and (z) restricted stock units vest immediately. As used herein, a change in control of Ducommun is generally deemed to have occurred in the event of certain tender offers, mergers or consolidations, the sale, exchange or transfer of substantially all of our assets, the acquisition by a person or group of certain percentages of our outstanding voting securities, the consummation of a plan of liquidation or dissolution of Ducommun, or certain changes in the members of the Board. The key executive severance agreements also provide that if there is a qualifying termination of employment of the named executive officer at any time other than in connection with a change in control of Ducommun as described above, the named executive officer shall be entitled to receive payment of his or her full salary for a period of one year (or, two years in the case of the CEO), together with payment of the amount of any annual cash incentive for a past year that has not yet been awarded or paid and continuation of benefits for a period of one year (or, two years in the case of the CEO). A qualifying termination of employment includes any termination of employment other than a termination for cause, except for death, disability or retirement. Termination for cause is defined in the key executive severance agreements as termination by Ducommun upon (i) the willful and continued failure by the executive to substantially perform his or her duties with Ducommun other than any such failure resulting from the executive’s incapacity due to physical or mental illness, after a demand for substantial performance is delivered to the executive by the chief executive officer or the Compensation Committee that specifically identifies the manner in which the executive has not substantially performed his or her duties, or (ii) the willful engaging by the executive in misconduct that is materially injurious to Ducommun, monetarily or otherwise, and that constitutes on the part of the executive common law fraud or a felony. For purposes of this definition, no act or failure to act, on the part of an executive, is considered “willful” unless done, or omitted to be done, by the executive not in good faith and without reasonable belief that the action or omission was in the best interest of Ducommun. In the event of a change in an executive’s position or duties, a reduction in the executive’s salary, a removal from eligibility to participate in our annual cash incentive plan, or other events as described in the key executive severance agreements, then the executive will have the right to treat such event as a termination of his or her employment by Ducommun without cause and to receive the payments and benefits described above. If a change in control of Ducommun occurs and there is a qualifying termination of employment of a named executive officer within the three months prior to or 24 months following the change in control of Ducommun, the named executive officer would receive the amounts in the table below in the column “Termination of Employment in Connection with Change in Control.” If there is a qualifying termination of employment of the named executive officer under other circumstances, the named executive officer would receive the amounts in the table below in the column “Other Termination of Employment.” The information in the table below assumes that a triggering event occurred on December 31, 2023.
Potential Payments Upon Termination or Change in Control
| Name | Benefits | Termination of Employment in Connection with a Change in Control ($) | Other Termination of Employment | | Stephen G. Oswald | Salary(1) | 1,930,838 | 1,930,838 | | | Bonus(1) | 1,919,414 | – | | | Benefits | – | 27,304 | | | Stock Options | – | – | | | Performance Stock Units(3) | 11,944,177 | – | | | Restricted Stock Units(4) | 1,120,331 | – | | | Total | 16,914,760 | 1,958,142 |
Potential Payments Upon Termination or Change in Control
| | | 2024 Proxy Statement 64 |
Potential Payments Upon Termination or Change in Control
| Name | Benefits | Termination of Employment in Connection with a Change in Control ($) | Other Termination of Employment | | Suman B. Mookerji | Salary(2) | 1,013,906 | 506,953 | | | Bonus(2) | 619,700 | | | | Benefits | – | 23,809 | | | Stock Options | – | | | | Performance Stock Units(3) | 1,405,112 | | | | Restricted Stock Units(4) | 653,926 | | | | Total | 3,692,644 | 530,762 | | Laureen S. Gonzalez | Salary(2) | 582,400 | 291,200 | | | Bonus(2) | 231,582 | – | | | Benefits | – | 26,602 | | | Stock Options | – | – | | | Performance Stock Units(3) | 389,283 | – | | | Restricted Stock Units(4) | 206,262 | – | | | Total | 1,409,527 | 317,802 | | Jerry L. Redondo | Salary(2) | 994,548 | 497,274 | | | Bonus(2) | 542,471 | – | | | Benefits | – | 37,458 | | | Stock Options | – | – | | | Performance Stock Units(3) | 1,139,478 | – | | | Restricted Stock Units(4) | 469,061 | – | | | Total | 3,145,558 | 534,732 | | Rajiv A. Tata | Salary(2) | 684,212 | 342,106 | | | Bonus(2) | 305,640 | – | | | Benefits | – | 25,663 | | | Stock Options | – | – | | | Performance Stock Units(3) | 937,717 | – | | | Restricted Stock Units(4) | 389,461 | – | | | Total | 2,317,030 | 367,769 | | Christopher D. Wampler | Salary(2) | 820,800 | 410,400 | | | Bonus(2) | 410,400 | – | | | Benefits | – | 24,229 | | | Stock Options | – | – | | | Performance Stock Units(3) | – | – | | | Restricted Stock Units(4) | 53,466 | – | | | Total | 1,284,666 | 434,629 |
Potential Payments Upon Termination or Change in Control
| (1) The amount of salary continuation for the Chairman, President and CEO is equal to two times his base salary as of December 31, 2023 plus two times his target bonus. | | (2) The amounts of salary continuation are equal to two times the base salary as of December 31, 2023 plus two times the target annual bonus of the named executive officer under our Bonus Plan in effect during the year prior to the change in control. | | (3) The amounts for PSUs are calculated based on the number of unvested PSUs payable in shares and the closing price of our common stock on the NYSE on the last trading day of 2023 ($52.06). The number of unvested PSUs includes Cash-LTIPs and has been calculated based on our actual achievement of performance measures for periods through year-end 2023 plus the target number of shares for periods after year-end 2023. PSUs granted in 2021 are not included since they are considered to be fully vested at December 31, 2023. The number of unvested PRSUs payable in shares and cash granted to Mr. Oswald are included in these amounts based on the closing price of our common stock on the NYSE on the last trading day of 2023 ($52.06). | | (4) The amounts for RSUs are calculated based on the number of unvested RSUs and the closing price of our common stock on the NYSE on the last trading day of 2023 ($52.06). |
Potential Payments Upon Termination or Change in Control
| | | 2024 Proxy Statement 65 |
Pay Ratio Disclosure
Pay Ratio Disclosure Mr. Oswald’s 2023 annual total compensation was $8,280,943 and the 2023 annual total compensation of the median compensated employee as of December 31, 2023, other than our CEO, Stephen G. Oswald, was $70,402. The ratio of these amounts was 118-to-1. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on payroll records and the methodology described below. For these purposes, we identified the median compensated employee using base annual pay, excluding overtime, for calendar year 2023, which we annualized for any permanent employee who did not work for the entire year. As permitted by SEC rules, we excluded approximately 2 employees located in Thailand, who in the aggregate represented less than 5% of our 2,265 employees. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above.
Pay Versus Performance Table
Pay Versus Performance Table The Pay Versus Performance Table, associated narratives and other tables which follow, describe how compensation actually paid to our Named Executive Officers aligns to our financial performance for the years ended December 31, 2023, 2022, 2021 and 2020, as required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K.
Pay versus Performance Table
Pay versus Performance Table
Pay versus Performance Table
| | | | (d) Average of Summary | (e) Average | Value of Initial Fixed $100 Investment Based On: | | | | | (a) Year | (b) Summary Compensation Table Total for PEO(1) | (c) Compensation Actually Paid to PEO(2) | Compensation Table Total for Non-PEO NEOs(3) | Compensation Actually Paid to Non-PEO NEOs(4) | (f) Total Shareholder Return(5) | (g) Peer Group Total Shareholder Return(6) | (h) Net Income(11) | (i) Operating Income(12) | | 2023 | $8,280,943 | $8,341,624 | $1,433,179 | $1,406,159 | $103 | $102(7) | $15.9M | $28.9M | | 2022 | $6,715,767 | $7,935,272 | $1,211,916 | $1,337,524 | $99 | $73(8) | $28.8M | $39.8M | | 2021 | $6,299,099 | $5,443,103 | $1,150,893 | $984,658 | $93 | $87(9) | $25.5M | $48.8M | | 2020 | $4,977,506 | $8,347,343 | $1,021,275 | $1,455,593 | $106 | $98(10) | $29.2M | $45.5M |
Pay versus Performance Table
| (1) The dollar amounts reported are the total compensation reported in the Summary Compensation Table for our PEO. Our PEO for all four years covered by the Pay Versus Performance table was Stephen G. Oswald. |
Pay versus Performance Table
| (2) The dollar amounts reported represent the amount of “compensation actually paid” to Mr. Oswald, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with SEC rules, the following adjustments were made to total compensation to determine the compensation actually paid: |
Pay versus Performance Table
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Compensation Actually Paid to PEO(c) | | 2023 | $8,280,943 | $5,001,609 | $5,062,290 | $8,341,624 | | 2022 | $6,715,767 | $3,914,313 | $5,133,818 | $7,935,272 | | 2021 | $6,299,099 | $4,370,320 | $3,514,324 | $5,443,103 | | 2020 | $4,977,506 | $2,251,772 | $5,621,609 | $8,347,343 |
Pay versus Performance Table
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. | | (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows: |
Pay versus Performance Table
| | | 2024 Proxy Statement 66 |
Pay versus Performance Table
| Year | Year End Fair Value of Equity Awards Granted in the Year that were Unvested at Year End | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Change in Fair Value from Prior Fiscal Year End until the Vesting Date for Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | Total Equity Award Adjustments | | 2023 | $5,314,566 | $(469,578) | – | $217,302 | – | – | $5,062,290 | | 2022 | $4,984,375 | $176,717 | – | $(27,274) | – | – | $5,133,818 | | 2021 | $3,551,870 | $(861,732) | – | $824,186 | – | – | $3,514,324 | | 2020 | $4,632,761 | $996,722 | – | $(7,874) | – | – | $5,621,609 |
Pay versus Performance Table
| (c) In accordance with SEC rules, the amount in this column for each covered year has been calculated by subtracting the amount reported in the “Reported Value of Equity Awards” column for such covered year from the amount reported in the “Reported Summary Compensation Table Total for PEO” column for such covered year and then adding to such figure the amount reported in the “Equity Award Adjustments” column for such covered year. |
Pay versus Performance Table
| (3) The dollar amounts reported represent the average of the amounts reported for our NEOs as a group (excluding our CEO)(“Non-PEO NEOs”) in the “Total” column of the Summary Compensation Table in each applicable year. Non-PEO NEOs in 2023 included: Suman B. Mookerji, Jerry L. Redondo, Laureen S. Gonzalez, Rajiv A. Tata and Christopher D. Wampler. Non-PEO NEOs in 2022 included: Jerry L. Redondo, Laureen S. Gonzalez, Rajiv A. Tata and Christopher D. Wampler. Non-PEO NEOs in 2021 included: Jerry L. Redondo, Rose F. Rogers, Rajiv A. Tata and Christopher D. Wampler. Non-PEO NEOs in 2020 included: Jerry L. Redondo, Rose F. Rogers, Rajiv A. Tata and Christopher D. Wampler. |
Pay versus Performance Table
| (4) The dollar amounts reported represent the average amount of “compensation actually paid” to the Non-PEO NEOs as a group, as computed in accordance with SEC rules. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the Non-PEO NEOs as a group during the applicable year. In accordance with the SEC rules, the following adjustments were made to average total compensation for the Non-PEO NEOs as a group for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
Pay versus Performance Table
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments(a) | Average Compensation Actually Paid to Non-PEO NEOs(b) | | 2023 | $1,433,179 | $507,089 | $480,069 | $1,406,159 | | 2022 | $1,211,916 | $490,566 | $616,174 | $1,337,524 | | 2021 | $1,150,893 | $534,595 | $368,360 | $984,658 | | 2020 | $1,021,275 | $328,671 | $762,989 | $1,455,593 |
Pay versus Performance Table
| (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
Pay versus Performance Table
| Year | Average Year End Fair Value of Equity Awards Granted in the Year that were Unvested at Year End | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Average Change in Fair Value from Prior Fiscal Year End until the Vesting Date for Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value | Total Average Equity Award Adjustments | | 2023 | $539,098 | $(43,358) | – | $(15,670) | – | – | $480,069 | | 2022 | $603,136 | $29,751 | – | $(16,713) | – | – | $616,174 | | 2021 | $408,433 | $(94,674) | – | $54,601 | – | – | $368,360 | | 2020 | $696,886 | $112,329 | – | $(46,226) | – | – | $762,989 |
Pay versus Performance Table
| (b) In accordance with SEC rules, the amount in this column for each covered year has been calculated by subtracting the amount reported in the “Average Reported Value of Equity Awards” column for such covered year from the amount reported in the “Average Reported Summary Compensation Table Total for Non-PEO NEOs” column for such covered year and then adding to such figure the amount reported in the “Average Equity Award Adjustments” column for such covered year. |
Pay versus Performance Table
| (5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. | | (6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. | | (7) Please see the “Benchmarking and Proxy Talent Peer Groups” section of the Compensation Discussion and Analysis section for a list of the proxy talent peer group used to determine 2023 compensation. Cubic Corporation was removed due to the completion of its acquisition by private equity firms and was replaced by AeroVironment, Inc. and Triumph Group, Inc. |
Pay versus Performance Table
| | | 2024 Proxy Statement 67 |
Pay versus Performance Table
| (8) The proxy talent peer group used to determine 2022 compensation for our PEO and non-PEO NEOs included: AAR Corporation, Astronics Corporation, Barnes Group, Inc., CIRCOR International, Cubic Corporation, HEICO Corporation, Hexcel Corporation, Kaman Corporation, Kratos Defense & Security Solutions, Inc., Mercury Systems, Inc., RBC Bearings, Inc. | | (9) The proxy talent peer group used to determine 2021 compensation for our PEO and non-PEO NEOs included: AAR Corp., Aerojet Rocketdyne Holdings, Inc., Astronics Corporation, Barnes Group Inc., CIRCOR International, Inc., Cubic Corporation, Heico Corporation, Kaman Corporation, Kratos Defense & Security Solutions, Inc., Mercury Systems, Inc. and RBC Bearings Incorporated. | | (10) The proxy talent peer group used to determine 2020 compensation for our PEO and non-PEO NEOs included: AAR Corp., Aerojet Rocketdyne Holdings, Inc., Astronics Corporation, Barnes Group, Inc., CIRCOR International, Inc., Cubic Corporation, Heico Corporation, Kaman Corporation, Kratos Defense & Security Solutions, Inc., Mercury Systems, Inc. and RBC Bearings Incorporated. | | (11) 2021 Net Income excludes $110M attributable to Ducommun’s completion of a sale-leaseback transaction involving its Gardena, CA performance center. | | (12) Operating income mainly decreased due to $11.9 million in restructure expenses related to the repositioning of production at three of our performance centers in conjunction with our 2022 restructure plan to enhance the cost structure of our operations. |
Pay versus Performance Table
As described in more detail above in our “2023 Compensation Discussion and Analysis”, we use various measures to align the compensation of our named executive officers with Company performance. The following tabular list identifies, in alphabetical order, the financial measures we have determined to be the most important to link compensation actually paid to both our PEO and NEOs for the most recently completed fiscal year:
Pay versus Performance Table
| Cash Flow from Operations | Net Revenue | | Diluted Earnings per Share | Operating Income | | Net Income | |
Pay versus Performance Table
Not all of these measures are presented in the Pay versus Performance table. The Company has generally sought to incentivize long-term performance, and therefore has not specifically aligned the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with such rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Pay versus Performance Table
| (1) Total Shareholder Return: Company versus Proxy Talent Peer Group and (2) “Compensation Actually Paid” versus Company Total Shareholder Return |
Pay versus Performance Table
The graphs below illustrate our TSR compared to our proxy talent peer group’s TSR over the period 2020 to 2023:
Pay versus Performance Table
| DCO TSR vs. Talent Peer Group TSR(1) | Compensation Actually Paid vs. DCO TSR(2) | | | |
Pay versus Performance Table
As the above graphs illustrate, Ducommun’s TSR outperformed that of its proxy talent peer group over the period covered by the Pay versus Performance Table, despite the changes to our proxy talent peer group in each of 2021, 2022 and 2023. In addition, the Compensation Actually Paid to our PEO was proportionately aligned with the Company’s TSR over the same prior four-year period.
Pay versus Performance Table
| (3) “Compensation Actually Paid” versus Net Income and Operating Income |
Pay versus Performance Table
| | | 2024 Proxy Statement 68 |
Pay versus Performance Table
The graph below illustrates the relationship between our net income, operating income and compensation actually paid to our PEO and non-PEO NEOs: