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David C. Dauch Chairman of the Board and Chief Executive Officer |
– | Delivered on our key strategic objectives of profitable growth, diversification, outstanding financial performance, and technology leadership |
– | Launched our first e-AAM electric driveline system into regular production |
– | Achieved record sales for AAM |
– | Continued to fund significant capital and R&D investments in order to drive organic growth to meet our strategic goals |
– | Met key integration milestones including synergy attainment on recent acquisitions |
– | Continued to reduce our leverage by prepaying $200 million of Senior Notes |
– | Won several new business awards, including our 5th global EcoTrac® disconnecting all-wheel-drive program |
– | Named Supplier of the Year by General Motors for the second year in a row |
Samuel Valenti III Lead Independent Director |
– | Enhanced the experience, leadership and diversity of our Board with the appointments of Herbert K. Parker and Sandra E. Pierce in November 2018. These appointments were the result of active recruitment of women and minority candidates. |
– | Formalized our commitment to Board diversity by adopting a policy that requires director searches to include qualified women and minorities in future candidate pools for nomination to our Board. |
– | Adopted proxy access by-laws. |
– | Strengthened the governance of our sustainability program by assigning oversight responsibility to the Nominating/Corporate Governance Committee by amending its charter. This level of oversight reflects the importance of our sustainability program to AAM's overall business strategy. |
– | Continued to align the metrics and rigor of our incentive plans to drive achievement of AAM's business strategy. |
Notice of Annual Meeting |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS |
Meeting Information | Voting Information | ||
Time and Date | 8:00 a.m., local time, on Thursday, May 2, 2019 | Please vote your shares as soon as possible, even if you plan to attend the annual meeting. | |
Attend in Person | AAM World Headquarters Auditorium | Your broker will not be able to vote your shares on the election of directors and most of the other matters presented at the meeting unless you give your broker specific instructions to do so. We strongly encourage you to vote. | |
One Dauch Drive | |||
Detroit, MI 48211 | |||
Record Date | March 5, 2019 | You may vote via the internet, by telephone, or by mail. | |
You may vote if you owned shares on the record date. | See "Voting and Meeting Information" beginning on page 72 of this proxy statement for more information. | ||
Annual Meeting Agenda / Items of Business |
1. Election of three members of the Board of Directors to serve until the Annual Meeting of Stockholders in 2022 |
2. Advisory vote on named executive officer compensation |
3. Ratification of the appointment of Deloitte & Touche LLP as independent public accounting firm for 2019 |
4. Other business properly presented at the meeting |
Attending in Person |
* You do not need to attend the annual meeting to vote if you submit your proxy in advance. |
* To attend the annual meeting you will need to: |
- provide proof of your stock ownership as of the record date |
- provide government-issued photo identification (such as a driver's license) prior to entering the meeting |
* Doors open at 7:30 a.m. |
* Meeting starts at 8:00 a.m. |
Important Notice Regarding the Availability of Proxy Materials for the May 2, 2019 Stockholder Meeting: Our 2019 proxy statement and 2018 annual report and Form 10-K are available free of charge at www.envisionreports.com/axl. |
Proxy Summary | Ratification of Independent Registered Public Accounting Firm | ||||
Proxy Summary | Proposal 3 - Ratification of Independent Registered Public Accounting Firm | ||||
Policy for Pre-Approval of Audit and Non-Audit Services | |||||
Election of Directors | Independent Registered Public Accounting Firm's Fees | ||||
Proposal 1 - Election of Directors | Report of the Audit Committee | ||||
Corporate Governance | |||||
Compensation of Directors | Additional Information | ||||
Beneficial Stock Ownership | Voting and Meeting Information | ||||
Related Person Transactions Policy | Annual Report | ||||
Section 16(a) Beneficial Ownership Reporting Compliance | Electronic Delivery of Proxy Materials | ||||
2020 Stockholder Proposals and Nominations | |||||
Advisory Vote on Executive Compensation | Cost of Solicitation | ||||
Proposal 2 - Advisory Vote on Executive Compensation | |||||
Compensation Discussion and Analysis | |||||
Named Executive Officers | Appendix | ||||
Executive Summary | Appendix A - Non-GAAP Reconciliation | ||||
Compensation of Executive Officers | Appendix B - Director Independence Standards | ||||
Direct Compensation Elements | |||||
Indirect Compensation Elements | |||||
Other Compensation Matters | |||||
Compensation Committee Report | |||||
Executive Compensation Tables | |||||
CEO Pay Ratio | |||||
2019 AAM Proxy Statement | 1 |
Proxy Summary |
Your Vote is Important |
Voting Matters and Board Recommendations: | Votes Required | Board Vote Recommendation | More Information | |
Proposal 1 | Election of three members of the Board of Directors to serve until the Annual Meeting of Stockholders in 2022 | Majority of votes cast | FOR each nominee | Page 14 |
Each nominee brings a strong and diverse background and set of skills to the Board and has demonstrated sound judgment and integrity. | ||||
Proposal 2 | Advisory vote on named executive officer compensation | Majority of votes cast | FOR | Page 34 |
AAM's executive compensation program is market-based, performance driven and aligns with shareholder interests. | ||||
Proposal 3 | Ratification of the appointment of Deloitte & Touche LLP as independent public accounting firm for the year ending December 31, 2019 | Majority of votes cast | FOR | Page 69 |
All independence standards have been met and sound practices are employed to ensure independent financial governance. |
By Internet | By Telephone | By Mail | In Person | |||
Go to www.envisionreports.com/axl and follow the instructions. You will need the control number on your proxy card or voter instruction form. | Call the number shown on your proxy card or voter instruction form. You will need the control number on your proxy card or voting instruction form. | Complete, sign and date the proxy card or voting instruction form and return it in the envelope provided. | Attend the annual meeting and cast your ballot. | |||
2019 AAM Proxy Statement | 2 |
Proxy Summary |
Governance Highlights |
Independence | Tenure | Age | Diversity |
90% | 7 | 64 | 30% |
Independent | Average Years of Service | Average Age | Women or Minority |
2019 AAM Proxy Statement | 3 |
Proxy Summary |
Business & Financial Highlights |
2019 AAM Proxy Statement | 4 |
Proxy Summary |
2018 AAM Highlights | ||||
Delivered on our key strategic objectives of profitable growth, diversification, outstanding financial performance and technology leadership. | Record Annual Sales – Over $7 Billion for the first time in AAM History | |||
Strong cash flow generation and Over $200 Million in senior debt payments | AAM recognized as Fortune 500 Company | |||
Formed joint venture with Liuzhou Wuling in China | Met key Integration Milestones, including Synergy Attainment | |||
QUANTUMTM technology wins Altair and SAA Lightweighting Awards | 5th New Business Award for our EcoTrac® Disconnecting AWD Technology | |||
Sold Aftermarket division of our Powertrain business unit for $50 million | Named GM Supplier of the Year for 2nd consecutive year |
2019 AAM Proxy Statement | 5 |
Proxy Summary |
Shareholder Engagement |
Why we engage | ||
Provide transparency into our business strategy, corporate governance practices and executive compensation programs | Determine which issues are important to our shareholders and communicate each others' views on those topics | Identify emerging issues that may impact our business and influence our practices |
How we engage | ||
Investor Communication Program | We provide institutional investors with many opportunities to give feedback to senior management by participating in conferences, one-on-one and group meetings, investor visits to our manufacturing facilities and technical centers, and day-to-day interactions with individual investors throughout the year. In June 2018, AAM hosted an Investor Day at the New York Stock Exchange where our CEO and senior management gave an update on our business and strategic plans. | |
Proactive Shareholder Outreach Program | As part of our annual shareholder outreach program, we also engage with shareholders in conference calls or meetings outside the proxy season. These exchanges, which we initiate, cover our executive compensation program, risk management, ESG, strategic planning and corporate governance practices. Soliciting shareholder feedback is a key component of this program, which we do at least annually. As appropriate, we also engage with shareholders during proxy season. Our Board members, CFO and Investor Relations Director participate in these outreach meetings. | |
Board Involvement | The Chair of our Compensation Committee has participated in certain shareholder meetings. Our CFO conveys shareholders' feedback to the full Board and the Compensation Committee or Nominating/Corporate Governance Committee, depending on the subject of the feedback. The Board also receives any feedback we obtain from proxy advisory firms, such as ISS and Glass Lewis, as part of our outreach program. The Board gives management feedback on key aspects of AAM's investor relations communication plan and shareholder outreach program. |
2019 AAM Proxy Statement | 6 |
Proxy Summary |
Shareholder Engagement Topics | |||
þ | Sustainability program | þ | Incentive compensation metrics and goal rigor |
þ | Board diversity | þ | Selection process for Board candidates |
þ | Board evaluation process | þ | Board oversight of risk |
þ | Board refreshment | þ | Separation of Chairman and CEO roles |
þ | Shareholder rights | þ | Classified Board |
– | Enhanced the experience, leadership and diversity of our Board with the appointments of Herbert K. Parker and Sandra E. Pierce in November 2018. These appointments were the result of active recruitment of women and minority candidates. |
– | Formalized our commitment to Board diversity by adopting a policy that requires director searches to include women and minorities in the initial group of qualified candidates for every open Board seat. In February 2019, the Board amended our Corporate Governance Guidelines to include this policy. |
– | Strengthened the governance of our sustainability program by assigning oversight responsibility to the Nominating/Corporate Governance Committee of the Board. |
– | Increased the transparency of our sustainability program by continuing to improve the disclosure of ESG matters in our annual report to shareholders, corporate website and proxy statement. These efforts will continue on a longer-term basis as part of the sustainability journey, which is integral to our overall business strategy. |
– | Adopted proxy access by-laws. |
– | Continued to align the metrics and rigor of our incentive compensation plans to drive achievement of our business strategy. Our shareholders expressed support of our incentive compensation program and our transparency regarding the decision-making process through enhanced proxy statement disclosures. |
2019 AAM Proxy Statement | 7 |
Proxy Summary |
Sustainability Program |
– | Technology Leadership: AAM contributes to a better global environment through the development of innovative mobility solutions that improve fuel efficiency and reduce CO2 emissions. We have made significant investments in research and development to develop and advance products that reduce mass, increase efficiency, lower emissions and advance electrification. These technologies will help automakers meet global environmental emissions regulations while also increasing fuel efficiency. |
– | Global Environmental Policy: AAM's global operations are aligned to support our commitment to the environment. About 90% of all of our products are manufactured in facilities that are certified to ISO 14001-2015. During the last three years, we have more than tripled the number of manufacturing facilities that have earned the ISO 50001 Energy Management certification. We will continue to add more locations to the list of certified facilities and deploy best practices throughout our global operations. |
– | People-First Culture: We are focused on recruiting, developing and retaining the best and brightest talent globally. We provide our global associates with the tools to develop technically and grow professionally into the leaders that will guide AAM into the future. We strive to ensure inclusive hiring processes and work environments and support diversity and inclusion initiatives of our associates. Our human rights policy is designed to support universal human rights and the dignity of our associates and people in our communities and global supply chain. |
– | Safety Focus: Our most valuable asset is our global team of associates and we work hard each day to keep them safe at each of our facilities. With safety as a top priority, we designed and implemented our S4 system and safety culture, which is focused on developing, engaging, monitoring and continuously educating our associates on standardized procedures that keep them safe. Every AAM location uses the S4 system. |
– | Community Involvement: AAM and our associates have a long tradition of supporting the communities in which we live and work. We continued to have a positive impact during 2018 through a wide variety of corporate initiatives and individual activities. |
– | AAM committed significant resources to revitalize key Detroit neighborhoods near AAM's world headquarters as part of the City of Detroit Strategic Neighborhood Fund. Contributions from AAM and other Detroit organizations will be used to bring much-needed physical improvements to neighboring communities. Our associates will have the opportunity to participate in volunteer activities and make a difference in these vibrant but under-served neighborhoods. |
– | In Mexico, the Richard E. Dauch Education and Development Institute opened next to AAM's Guanajuato Manufacturing Complex. A joint initiative between AAM and the local government, the Institute will train current and future AAM associates with the latest technology and manufacturing |
2019 AAM Proxy Statement | 8 |
Proxy Summary |
– | We continued our work with charitable organizations committed to supporting local families, youth outreach, education, wellness and social equality, which include the Boy Scouts of America, the United Way, the Boys and Girls Clubs of Southeastern Michigan and St. Jude Children's Hospital. |
– | Across the globe, AAM supported opportunities for our associates to give back to their communities and those in need through charitable donations and numerous volunteer programs. |
– | Sustainability Working Group: In 2018, our corporate Policy Committee, which is chaired by the CEO, established a Sustainability Working Group to focus on and achieve objectives related to our sustainability program. The Sustainability Working Group is led by AAM's President (Environmental Factors), Vice President, Human Resources (Social Factors) and Vice President & General Counsel (Governance Factors) and is supported by cross-functional teams of subject matter experts and leaders. |
– | Board and Committee Oversight: In 2019, the Charter of the Nominating/Corporate Governance Committee was expanded to include oversight of our sustainability policies, programs and reporting. This level of oversight reflects the importance of our sustainability program to AAM's long-term business strategy and objectives. |
2019 AAM Proxy Statement | 9 |
Proxy Summary |
Compensation Highlights |
Supports Business Strategy | Market Competitive | Aligned with Shareholder Interests | |
– 86% of CEO compensation is variable and at risk– Rigorous performance goals as key drivers of enterprise value creation such as EBITDA, relative TSR and cash flow– Programs utilize metrics that emphasize company performance and are aligned with business strategy | – Attract and retain executive talent– Benchmark pay against a peer group of similarly sized companies– Target direct compensation at the 50th percentile– Ensure incentive plans reward for desired behaviors and pay outcomes align with results | – Mix of annual and long-term incentive programs balances focus between short-term results and long-term share appreciation– 66% of LTI is performance-based– Cap on payout of performance shares based on relative TSR if absolute TSR is negative– CEO stock ownership requirement of 6 times base salary | |
– | AAM's 2018 say-on-pay proposal received a favorable vote of 97% of votes cast. To gain this level of support, we engaged with our shareholders and implemented changes in response to their feedback. |
– | We increased the rigor of our annual and long-term incentive compensation targets for awards granted in 2018 and continued this practice to drive management performance at the highest levels. |
– | In April 2018, AAM amended the legacy Supplemental Executive Retirement Plan (SERP) and the Executive Deferred Compensation Plan to freeze further benefit accruals and new participation in the plans. Based on a benchmark analysis of executive retirement plan benefits, we adopted the Executive Retirement Savings Plan, a deferred compensation plan that reduces executive retirement benefits, provides cost savings to the Company as compared to the SERP, and further aligns our programs with prevailing market practices. |
– | In April 2018, AAM adopted the Executive Officer Severance Plan in order to provide severance other than in a change in control to executive officers with the purpose of retaining our executives and allowing them to focus on our business strategy. In addition, AAM amended its employment agreements with Mr. Dauch and Mr. Simonte to align severance payable under their employment agreements with the Severance Plan. |
2019 AAM Proxy Statement | 10 |
Proxy Summary |
Strategic Business Objective | Alignment | Incentive Metric |
Continue to strengthen the balance sheet; provide funding for organic growth, research and development, and other capital priorities | Free Cash Flow - 2018 LTI Performance Shares (50% metric of performance-based LTI) | |
Develop innovative technology, including electrification. Reinvest in research and development | Relative TSR - 2018 LTI Performance Shares (50% metric of performance-based LTI) | |
Create sustainable value for shareholders | ||
Achieve profitable growth, along with the ability to be flexible as the market changes, and reduce leverage | EBITDA - 2018 Annual Incentive Program (100% metric) | |
Deliver integration synergies from recent acquisitions |
2019 AAM Proxy Statement | 11 |
Proxy Summary |
– | Target performance was set at a level significantly higher than 2017 actual adjusted EBITDA performance. |
– | Achievement of target performance would result in the highest adjusted EBITDA performance in AAM history. |
– | Target performance is higher than the performance of a majority of our peer group companies. |
– | Free cash flow target performance for 2018 - 2020 was set at a level higher than the previous three years' performance. |
– | Achievement of target performance would result in the highest free cash flow in AAM history. |
– | Relative TSR payout is capped if absolute TSR is negative. |
2019 AAM Proxy Statement | 12 |
Proxy Summary |
Governance Point | ||
Payout capped if 3-year absolute TSR is negative. | ||
Actual Performance | ||
Average Adjusted EBITDA Performance from 2013 - 2015 | 13.9% | |
Peer Average Adjusted EBITDA Performance from 2013 - 2015 | 10.7% | |
2019 AAM Proxy Statement | 13 |
Election of Directors |
Proposal 1: Election of Directors |
þ | The Board unanimously recommends a vote FOR each of the nominees. |
Election of Directors |
Elizabeth A. Chappell | Executive Chairwoman, RediMinds, Inc. | ||
Current and Past Positions | Key Qualifications and Experience | ||
– Executive Chairwoman (co-founder)RediMinds, Inc. (data strategy, engineering and innovation firm) since December 2017 – President & Chief Executive OfficerDetroit Economic Club 2002 - 2017 – Executive Vice President, Corporate Communications & Investor RelationsCompuware Corporation 1997 - 2001 – President & Chief Executive Officerof a consulting firm she founded 1995 - 2000 – Various executive positions with increasing responsibility with AT&T for 16 years | Based on her professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Ms. Chappell should serve on AAM's Board: her leadership experience as President & CEO of the Detroit Economic Club; the breadth of her community outreach and corporate citizenship experience in her professional, civic and charitable endeavors; and her subject matter knowledge in the areas of investor relations, marketing and communications, business development and risk management. | ||
Current Directorships (non-profit) | |||
Age: 61 | Previous Directorship | – Detroit Economic Club– Detroit Regional Chamber– Detroit Zoo– Michigan Israel Business Accelerator (MIBA)– Michigan State University Capital Campaign– United Way of Southeastern Michigan | |
Director Since: 2004 | – Handleman Company1999 - 2009 – Compuware Corporation 1997 - 2002 | ||
Committees: | |||
Nominating/Corp Gov | |||
(Chair) | |||
Technology |
Election of Directors |
Herbert K. Parker | Retired Executive Vice President Harman International Industries | ||
Past Positions | Key Qualifications and Experience | ||
Positions at Harman International Industries, Inc.: – Executive Vice President, Operational ExcellenceJanuary 2015 - March 2017 – Executive Vice President and Chief Financial Officer2008 - January 2014 Positions at ABB, Inc. and related ABB companies: – Chief Financial Officer, North America2006 - 2008 – Chief Financial Officer, Automation Technologies Division2002 - 2005 – Various finance positions of increasing responsibility throughout Asia, Europe and North America1980 - 2002 | Based on his professional background and public company board and audit committee experience, the following qualifications led the Board to conclude that Mr. Parker should serve on AAM’s Board: his leadership and financial experience as the Chief Financial Officer of Harman International Industries, Inc. and of ABB; his responsibilities for mergers and acquisitions, information technology, internal audit and tax; the breadth of his management experience over global operating activities, capital allocation structures and developing and implementing strategic plans; and his subject matter knowledge in the areas of finance, investments, audit and accounting, strategic planning and risk management. | ||
Current Directorship (non-profit) | |||
– Stamford, Connecticut YMCA | |||
Age: 61 | Other Public Company Directorships | ||
Director Since: 2018 | – TriMas Corporation since March 2017– Apogee Enterprises, Inc. since May 2018– nVent Enterprises Plc. since May 2018 | ||
Committees: | |||
Audit | |||
Nominating/Corp Gov |
John F. Smith | Principal, Eagle Advisors LLC | ||
Current and Past Positions | Key Qualifications and Experience | ||
– Principal, Eagle Advisors LLC (strategy development and performance improvement consulting) since 2011Positions at General Motors: – Group Vice President, Corporate Planning and Alliances (most recent position)2000 - 2010 – General Manager, Cadillac Motor Car1997 - 1999 – President, Allison Transmission1994 - 1996 – Vice President, Planning; International Operations, Zurich Switzerland1989 - 1993 | Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Smith should serve on AAM's Board: his leadership experience in the automotive industry; the breadth of his management experience with General Motors international operations; and his subject matter knowledge in the areas of manufacturing, finance, innovation and technology, strategic planning and risk management. | ||
Current Directorship (non-profit) | |||
– Boy Scouts of America National Advisory Board | |||
Age: 68 | Other Public Company Directorships | ||
Director Since: 2011 | – TI Fluid Systems plc (TI Automotive)since October 2017 – CEVA Holdings LLC since 2013 | ||
Committees: | |||
Audit | Previous Directorships | ||
Technology (Chair) | – Covisint Corporation -- September 2016 - July 2017– Arnold Magnetics -- January 2015 - September 2016– Plasan Carbon Composites -- December 2013 - December 2014– Smith Electric Vehicles Corp. -- June 2012 - December 2013 | ||
Election of Directors |
James A. McCaslin | Retired President & Chief Operating Officer, Harley-Davidson Motor Co. | ||
Past Positions | Key Qualifications and Experience | ||
Positions at Harley-Davidson (Retired 2010): – President & Chief Operating Officer2001 - 2009 – Various senior executive positions1992 - 2001 Other Manufacturing Company Positions: – Manufacturing and Engineering executiveJI Case (agricultural equipment) 1989 - 1992 – Manufacturing and Quality executiveChrysler Corporation Volkswagen of America General Motors Corporation 1966 - 1989 | Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. McCaslin should serve on AAM's Board: his leadership experience as President & COO of Harley-Davidson Motor Company; the breadth of his manufacturing and engineering experience at global manufacturing companies; and his subject matter knowledge in the areas of engineering, innovation and technology, manufacturing and risk management. | ||
Age: 70 | |||
Director Since: 2011 | Previous Public Company Directorship | ||
Committees: | – Maytag Corporation2003 - 2006 | ||
Compensation (Chair) | |||
Nominating/Corp Gov | |||
Technology | |||
Executive |
Election of Directors |
William P. Miller II CFA | Head of Asset Allocation, Saudi Arabian Investment Company | ||
Current and Past Positions | Key Qualifications and Experience | ||
– Head of Asset AllocationSaudi Arabian Investment Company since October 2013 – Senior Managing Director & Chief Financial Officer Financial Markets International, Inc. April 2011 - October 2013 – Deputy Chief Investment OfficerOhio Public Employees Retirement System 2005 - 2011 – Senior Risk ManagerAbu Dhabi Investment Authority 2003 - 2005 – Independent Risk Oversight Officer and Chief Compliance OfficerCommonfund Group 1996 - 2002 | Based on his professional background and prior AAM Board and Audit Committee experience, the following qualifications led the Board to conclude that Mr. Miller should serve on AAM's Board: his leadership qualities developed from his experience as Head of Asset Allocation for the Saudi Arabian Investment Company and as an officer with oversight responsibilities for investments, risk and compliance since 1996; the breadth of his experience in serving on the boards of the Chicago Mercantile Exchange and the Dubai Mercantile Exchange; and his subject matter knowledge in the areas of finance, investments, audit and accounting, innovation and technology, regulatory matters and risk management. | ||
Age: 63 | |||
Director Since: 2005 | Advisory Boards (Previous) | ||
Committees: | Previous Directorships | – Public Company Accounting Oversight Board Standing Advisory Group– Golub CapitalInstitutional Investor Advisory Board | |
Audit (Chair) | – Chicago Mercantile Exchange2003 - May 2017 – Dubai Mercantile Exchange2011 - March 2017 | ||
Technology | |||
Sandra E. Pierce | Senior Executive Vice President Huntington Bank | ||
Current and Past Positions | Key Qualifications and Experience | ||
– Chair, Huntington Bank Michigan and Sr. Vice President, Private Client Group & Regional Banking Director since August 2016 – Vice Chair, First Merit Corporation and Chair and Chief Executive Officer, First Merit Michigan (acquired by Huntington Bank) 2013 - 2016 – President and Chief Executive Officer, Charter One, Midwest Regional Executive (RBS Citizens, N.A.)2005 - 2012 – Various banking and executive positions with increasing responsibility with JPMorgan Chase, Michigan (successor to Bank One, First Chicago NBD and NBD Bank, N.A.) 1978 - 2005 | Based on her professional background and public company board experience, the following qualifications led the Board to conclude that Ms. Pierce should serve on AAM’s Board: her leadership experience as Senior Executive Vice President - Private Client Group & Regional Banking Director, and Chair of Huntington Bank Michigan, and as chief executive officer of FirstMerit Michigan and Charter One; the breadth of her corporate marketing and community development experience in her professional, civic and charitable endeavors; and her subject matter knowledge in the areas of strategic planning, finance, public relations, business development, compensation/benefits and risk management. | ||
Age: 60 | Other Public Company Directorships | Current Directorships (non-profit) | |
Director Since: 2018 | – Penske Automotive Group since 2012 | – Federal Reserve Bank of Chicago, Detroit Branch– Business Leaders for Michigan, Vice-Chair– Detroit Economic Club– Detroit Regional Chamber– Detroit Riverfront Conservancy– Henry Ford Health System, Chair– United Way (Southeast Michigan) | |
Committees: | Private Company Directorships | ||
Audit | – Barton Malow Companysince January 2013 – ITC Holding Corp (subsidiary of Fortis, Inc.)since January 2017 | ||
Compensation | |||
Election of Directors |
Samuel Valenti III | Chairman & Chief Executive Officer, Valenti Capital LLC and World Capital Partners | ||
Current and Past Positions | Key Qualifications and Experience | ||
– Chairman & Chief Executive OfficerValenti Capital LLC and World Capital Partners (investment firms) since 2000 Positions at Masco Corporation (1968 - 2008) – President, Masco Capital Corporation1988 - 2008 – Vice President - InvestmentsMasco Corporation 1974 - 1998 | Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Valenti should serve on AAM's Board: his leadership experience as an executive of Masco for 40 years; the breadth of his management experience in diversified manufacturing businesses; and his subject matter expertise in the areas of strategic planning, finance, economics and asset management, and risk management. | ||
Age: 73 | Other Public Company Directorship | Current Directorships (non-profit) and Leadership Roles | |
Director Since: 2013 | – TriMas Corporation since 2002 | ||
Lead Independent Director | Previous Directorships | – Business Leaders for Michigan– Renaissance Venture Capital Fund (Michigan) Advisory Board Chairman | |
Committees: | – Horizon Global Corporation2015 - May 2018 – Masco Capital Corporation1988 - 2008 | ||
Audit | |||
Compensation | |||
Nominating/Corp Gov | |||
Executive |
Election of Directors |
David C. Dauch | Chairman of the Board & Chief Executive Officer, AAM | ||
Current and Past Positions at AAM | Key Qualifications and Experience | ||
– Chairman of the Boardsince August 2013 – Chief Executive Officersince September 2012 – President & Chief Executive Officer September 2012 - August 2015 – President & Chief Operating Officer 2008 - 2012 – Various positions of increasing responsibility1995 - 2008 | Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Dauch should serve on AAM's Board: his leadership experience as an officer of AAM since 1998; the breadth of his management experience within, and knowledge of, AAM's global operations; and his subject matter knowledge in the areas of innovation and technology, manufacturing, strategic planning and risk management. | ||
Age: 54 | Other Company Directorship | Current Directorships (non-profit) and Leadership Roles | |
Director Since: | – Amerisure Companies since 2014 | ||
2013 (Chairman) | Previous Directorship | – Business Leaders for Michigan– Detroit Economic Club– Detroit Regional Chamber– Great Lakes Council Boy Scouts of America– Boys & Girls Club of Southeastern Michigan– National Association of Manufacturers (NAM)– Original Equipment Suppliers Association (OESA)– Miami University Business Advisory Council– General Motors Supplier Council– FCA NAFTA Supplier Advisory Council | |
2009 | – Horizon Global CorporationJune 2015 - May 2018 | ||
Committees: | |||
Executive (Chairman) | |||
Election of Directors |
William L. Kozyra | President & Chief Executive Officer, TI Fluid Systems plc | ||
Current and Past Positions | Key Qualifications and Experience | ||
– President & Chief Executive OfficerTI Fluid Systems plc (TI Automotive) (fluid storage, carrying and delivery systems) since 2008 – President & Chief Executive OfficerContinental AG North America 1998 - 2008 – Member of Executive BoardContinental AG (DAX) 2006 - 2008 – Vice President & General ManagerBrake Products Division of Bosch Braking Systems 1995 - 1997 | Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Kozyra should serve on AAM's Board: his leadership experience as an officer of TI Automotive since 2008; the breadth of his international experience with global companies in the automotive industry; and his subject matter knowledge in the areas of engineering, manufacturing, innovation and technology, strategic planning and risk management. | ||
Age: 61 | Other Public Company Directorships | Current Directorships (non-profit) and Leadership Roles | |
Director Since: 2015 | |||
Committees: | – TI Fluid Systems plc (TI Automotive)since 2008 | – General Motors Supplier Council– Ford Motor Company Top 100 Supplier Forum– Notre Dame Preparatory School – Automotive Hall of Fame– Boy Scouts of America, Detroit– University of Detroit Alumni Council– Society of Automotive Engineers | |
Compensation | |||
Nominating/Corp Gov | |||
Technology | |||
Peter D. Lyons | U.S. Regional Managing Partner, Freshfields Bruckhaus Deringer US LLP | ||
Current and Past Positions | Key Qualifications and Experience | ||
– Attorney, U.S. Regional Managing PartnerFreshfields Bruckhaus Deringer US LLP New York, NY since September 2014 – Partner, Mergers & Acquisitions Group Shearman & Sterling LLPNew York, NY 1979 - 2014 | Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Lyons should serve on AAM's Board: his experience as an attorney of a major law firm since 1979; the breadth of his experience in advising global businesses on complex legal matters and transactions; and his subject matter knowledge in the areas of corporate governance, mergers and acquisitions, international business and risk management. | ||
Age: 63 | |||
Director Since: 2015 | |||
Committees: | |||
Compensation | |||
Nominating/Corp Gov |
Corporate Governance |
Independence | Accountability | |
– 9 of 10 independent directors (except our CEO)– Lead Independent Director – Committees comprised of only independent directors (except Executive Committee)– Independent directors meet regularly in executive session without management present | – Proactive shareholder engagement program– Proxy access by-laws– Majority vote for directors In uncontested elections, – Annual Board and committee evaluations– Commitment to Board refreshment |
Sound Practices | Risk Management | |
– In 2019, the Board adopted a policy to include women and minority candidates in the selection process– In 2019, the Board assigned oversight responsibility for AAM's sustainability program to the Nominating/ Corporate Governance Committee– Director orientation and education – Stock ownership requirements for directors and executive officers – Hedging or pledging AAM stock is prohibited | – Active Board oversight of AAM's overall risk management structure– Individual Board committees oversee risks related to their areas of responsibility– AAM has robust risk management processes throughout the company– The Board and its committees receive regular updates from management on top enterprise risks, and the steps management has taken or will take to mitigate these risks |
Why we engage | ||
Provide transparency into our business strategy, corporate governance practices and executive compensation programs | Determine which issues are important to our shareholders and communicate each others' views on those topics | Identify emerging issues that may impact our business and influence our practices |
How we engage | ||
Investor Communication Program | We provide institutional investors with many opportunities to provide feedback to senior management by participating in conferences, one-on-one and group meetings, investor visits to our manufacturing facilities and technical centers, and day-to-day interactions with individual investors throughout the year. In June 2018, AAM hosted an Investor Day at the New York Stock Exchange where our CEO and senior management gave an update on our business and strategic plans. | |
Proactive Shareholder Outreach Program | As part of our annual shareholder outreach program, we also engage with shareholders in conference calls or meetings outside the proxy season. These exchanges, which we initiate, cover our executive compensation program, risk management, ESG, strategic planning and corporate governance practices. Soliciting shareholder feedback is a key component of this program, which we do at least annually. As appropriate, we also engage with shareholders during proxy season. Our Board members, CFO and Investor Relations Director participate in these outreach meetings. Our shareholder outreach activities during 2018 - 2019 are described in the Proxy Summary and the Compensation Discussion & Analysis. | |
Board Involvement | The Chair of our Compensation Committee has participated in certain shareholder meetings. Our CFO conveys shareholders' feedback to the full Board and the Compensation Committee or Nominating/ Corporate Governance Committee, depending on the subject of the feedback. The Board also receives any feedback we obtain from proxy advisory firms, such as ISS and Glass Lewis, as part of our outreach program. The Board gives management feedback on key aspects of AAM's investor relations communication plan and shareholder outreach program. |
– | preside at executive sessions of independent directors; |
– | call special executive sessions of independent directors, as appropriate; |
– | serve as liaison between the independent directors and the Chairman & CEO; |
– | inform the Chairman & CEO of issues arising from executive sessions of the independent directors; and |
– | with Board approval, retain outside advisors who report to the full Board on matters of interest to the Board. |
Audit Committee | |
2018 Meetings: 4 Members: William P. Miller II (Chair) * Herbert K. Parker* Sandra E. Pierce John F. Smith* Samuel Valenti III *Financial Expert | – Oversees the independent auditors' qualifications, independence and performance |
– Oversees the quality and integrity of our financial statements | |
– Oversees the performance of our internal audit function | |
– Discusses with management the Company's risk assessment and risk management framework | |
– Approves audit and non-audit services provided by the independent auditors | |
– Oversees the Company's hedging and derivatives practices | |
*Financial Expert | – Provides oversight of the Company's ethics and compliance programs |
– Oversees our cybersecurity risk management program and receives quarterly reports by our Chief Information Officer | |
Compensation Committee | |
2018 Meetings: 5 Members: James A. McCaslin (Chair) William L. Kozyra Peter D. Lyons Sandra E. Pierce Samuel Valenti III | – Recommends the CEO's compensation to the Board and establishes the compensation of other executive officers |
– Recommends incentive compensation and equity-based plans to the Board | |
– Approves executive officer compensation to ensure that is designed to support achievement of the Company's business strategy and objectives while considering competitive market practices and shareholder interests | |
– Recommends non-employee director compensation to the Board | |
– Oversees management's risk assessment of the Company's policies and practices regarding compensation of executive officers and other associates | |
– Evaluates and approves corporate goals and objectives for executive officer compensation and evaluates performance in light of these criteria | |
– Oversees the preparation of the Compensation Discussion and Analysis (CD&A) and produces a Committee report for inclusion in our annual proxy statement | |
Nominating/Corporate Governance Committee | |
2018 Meetings: 4 Members: Elizabeth A. Chappell (Chair) William L. Kozyra Peter D. Lyons James A. McCaslin Herbert K. Parker Samuel Valenti III | – Identifies qualified individuals to serve on the Board and committees |
– Reviews our Corporate Governance Guidelines and Code of Business Conduct and recommends changes as appropriate | |
– Oversees succession planning for executive officers and other key executive positions and supports the Board's succession/contingency planning process for the CEO | |
– Oversees evaluation of the Board and its committees | |
– Reviews committee charters and recommends any changes to the Board | |
– Oversees our sustainability program policies, strategies and performance and reviews sustainability/corporate responsibility matters with management | |
Technology Committee | |
2018 Meetings: 3 Members: John F. Smith (Chair) Elizabeth A. Chappell William L. Kozyra James A. McCaslin William P. Miller II | – Advises the Board and management on the Company's strategy for innovation and technology |
– Maintains awareness of market demands for technology advancements relative to product, processes and systems | |
– Oversees and advises management regarding product, process and systems technologies | |
– Reviews technology opportunities as potential ways to increase productivity, efficiency, quality and warranty performance and to support the Company's goals and objectives | |
– Conducts strategy discussions with the full Board | |
Executive Committee | |
2018 Meetings: 1 Members: David C. Dauch (Chair) James A. McCaslin Samuel Valenti III | – Acts on matters requiring Board action between meetings of the full Board |
– Has authority to act on certain significant matters, limited by our by-laws | |
– All members other than Mr. Dauch are independent | |
Responsible Party | Primary Areas of Risk Oversight | |
Full Board | Oversees overall risk management function and regularly receives reports from the chairs of individual Board committees on risk-related matters falling within each committee's oversight responsibilities. Also receives reports from management on particular risks facing the Company, including through the review of AAM's strategic plan. | |
Audit Committee | Monitors financial, operational, and compliance risks by regularly reviewing reports and presentations given by management, Internal Audit, Company advisors and the independent auditors. Regularly reviews risk management practices and risk-related policies (for example, AAM's risk management process and cybersecurity strategy) and evaluates potential risks related to internal controls over financial reporting. Oversees cybersecurity risk management and risk controls. Receives quarterly reports from our Chief Information Officer on AAM's cybersecurity program, including AAM's monitoring, auditing, implementation and communication processes, controls and procedures. Monitors financial risks, including capital structure and liquidity risks, and reviews the policies and strategies for managing financial exposure and contingent liabilities. | |
Compensation Committee | Monitors potential risks related to the design and administration of our compensation plans, policies and programs, including our performance-based compensation programs, to promote appropriate incentives that do not encourage executive officers to take unnecessary and/or excessive risks. | |
Nominating / Corporate Governance Committee | Monitors potential risks related to our governance practices by, among other things, reviewing succession plans and performance evaluations of the Board and CEO and monitoring legal developments and trends regarding corporate governance practices. | |
Technology Committee | Monitors risks associated with the Company's product portfolio and our innovation and technology plans. |
– | high ethical character and shared values with AAM; |
– | high-level leadership experience and achievement at a policy-making level in business, educational or professional activities; |
– | breadth of knowledge of issues affecting AAM; |
– | special competencies, such as financial, technical, international business or other expertise, or industry knowledge; |
– | awareness of a director's vital role in AAM's good corporate citizenship and corporate image; and |
– | sufficient time and availability to effectively carry out a director's duties. |
Independence | Tenure | Age | Diversity |
90% | 7 | 64 | 30% |
Independent | Average Years of Service | Average Age | Women or Minority |
– | Corporate Governance Guidelines |
– | Code of Ethics for the CEO, CFO and other Senior Financial Executives (Code of Ethics) |
– | Charters of our Board Committees |
– | Code of Business Conduct |
Compensation of Directors |
Compensation of Directors |
– | recognize the significant investment of time and expertise required of directors; |
– | align the directors' interests with the long-term interests of our shareholders; and |
– | ensure that the compensation of directors is well perceived by our shareholders. |
Annual retainer | $ | 110,000 | |
Committee chair annual retainer: | |||
Audit Committee chair | 20,000 | ||
Compensation Committee chair | 15,000 | ||
Other committee chair | 10,000 | ||
Lead director annual retainer | 30,000 |
Compensation of Directors |
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | ||||
Elizabeth A. Chappell | 120,000 | 125,003 | 700 | 245,703 | ||||
William L. Kozyra | 110,000 | 125,003 | 700 | 235,703 | ||||
Peter D. Lyons | 110,000 | 125,003 | 800 | 235,803 | ||||
James A. McCaslin | 125,000 | 125,003 | 600 | 250,603 | ||||
William P. Miller II | 130,000 | 125,003 | 700 | 255,703 | ||||
Herbert K. Parker(4) | 18,333 | — | — | 18,333 | ||||
Sandra E. Pierce(4) | 9,167 | — | — | 9,167 | ||||
John F. Smith | 120,000 | 125,003 | 700 | 245,703 | ||||
George Thanopoulos(5) | 36,667 | — | — | 36,667 | ||||
Samuel Valenti III | 140,000 | 125,003 | 1,400 | 266,403 |
(1) | Fees earned in 2018 for services whether paid currently in cash or deferred. Non-employee directors may elect to defer, on a pre-tax basis, a portion of their retainer and meeting fees and receive tax-deferred earnings (or losses) on the deferrals under AAM’s Executive Deferred Compensation Plan. |
(2) | Reflects the full grant date fair value of RSUs granted on May 3, 2018 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined by applying the assumptions used in our financial statements. The grant date fair value of equity awards was calculated using the closing market price of AAM common stock on the grant date ($14.35). See Note 10 to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2018 for assumptions underlying the valuation of equity awards. |
(3) | The Company reimburses non-employee directors for travel and related out-of-pocket expenses in connection with attending Board, committee and stockholder meetings. From time to time, the Company invites spouses of non-employee directors to attend Company events associated with these meetings. The Company pays for spousal travel and certain other expenses and reimburses non-employee directors for taxes attributable to the income associated with this benefit. Amounts reflect reimbursement of taxes on this income. |
(4) | Mr. Parker joined the Board on November 1, 2018 and Ms. Pierce joined the Board on November 23, 2018. |
(5) | Mr. Thanopoulos resigned from the Board on May 7, 2018. |
Name | Restricted Stock Units Outstanding (#) | |
Elizabeth A. Chappell | 60,157 | |
William L. Kozyra | 23,573 | |
Peter D. Lyons | 27,585 | |
James A. McCaslin | 49,057 | |
William P. Miller II | 63,407 | |
Herbert K. Parker (1) | — | |
Sandra E. Pierce (1) | — | |
John F. Smith | 49,057 | |
Samuel Valenti III | 33,044 |
Beneficial Stock Ownership |
Beneficial Stock Ownership |
– | each person known to us who beneficially owns more than 5% of AAM common stock; |
– | each of our non-employee directors and nominees as of March 5, 2019; |
– | each of the named executive officers shown in the Summary Compensation Table; and |
– | all directors, nominees and executive officers as a group as of March 5, 2019. |
Shares Beneficially Owned | Percent of Shares Outstanding | |||
Greater Than 5% Owners | ||||
Blackrock, Inc.(1) | 16,410,999 | 14.70 | ||
55 East 52nd Street | ||||
New York, NY 10055 | ||||
The Vanguard Group(2) | 11,599,669 | 10.38 | ||
100 Vanguard Blvd. | ||||
Malvern, PA 19355 | ||||
Dimensional Fund Advisors LP(3) | 9,386,258 | 8.40 | ||
6300 Bee Cave Road | ||||
Austin, TX 78746 | ||||
Barrow, Hanley, Mewhinney & Strauss, LLC(4) | 6,146,108 | 5.50 | ||
6300 Bee Cave Road | ||||
Austin, TX 78746 | ||||
Non-Employee Directors (5) | ||||
Elizabeth A. Chappell | 66,133 | * | ||
William L. Kozyra | 27,585 | * | ||
Peter D. Lyons | 32,585 | * | ||
James A. McCaslin | 57,557 | * | ||
William P. Miller II | 74,607 | * | ||
Herbert K. Parker | — | — | ||
Sandra E. Pierce | — | — | ||
John F. Smith | 54,057 | * | ||
Samuel Valenti III | 43,044 | * | ||
Named Executive Officers | ||||
David C. Dauch(6) | 645,703 | * | ||
Christopher J. May | 38,668 | * | ||
Michael K. Simonte | 170,349 | * | ||
Alberto L. Satine | 34,733 | * | ||
Norman Willemse | 62,452 | * | ||
All Directors and Executive Officers as a Group (22 persons) | 1,425,508 | 1.3 |
(1) | Based on the Schedule 13G filed on January 24, 2019 by Blackrock, Inc., reporting sole voting power over 16,130,452 shares and sole investment power over 16,410,999 shares. |
(2) | Based on the Schedule 13G filed on February 11, 2019 by The Vanguard Group, reporting sole voting power over 111,941 shares, sole investment power over 11,487,466, shared voting power over 13,600 shares and shared investment power over 112,203 shares. |
(3) | Based on the Schedule 13G filed on February 8, 2019 by Dimensional Fund Advisors LP, reporting sole voting power over 9,009,327 shares and sole investment power over 9,386,258 shares. |
Beneficial Stock Ownership |
(4) | Based on the Schedule 13G filed on February 12, 2019 by Barrow, Hanley, Mewhinney & Strauss, LLC, reporting sole voting power over 4,286,382 shares and shared voting power over 1,859,726 shares and sole investment power over 6,146,108 shares. |
(5) | Includes vested RSUs awarded to non-employee directors that have been deferred. For the number of RSUs held by each non-employee director, see table included in Compensation of Directors. |
(6) | Includes 548 shares held in trusts for the benefit of Mr. Dauch’s children. |
Related Person Transactions Policy |
Section 16(a) Beneficial Ownership Reporting Compliance |
Advisory Vote on Executive Compensation |
Proposal 2: Advisory vote on Executive Compensation |
– | We increased the rigor of our annual and long-term compensation targets for awards granted in 2018 and continued this practice to drive management performance at the highest levels. |
– | We amended the Supplemental Executive Retirement Plan (SERP) and the Executive Deferred Compensation Plan to freeze further benefit accruals and freeze the plans to new participants. |
– | We adopted a deferred compensation plan, the Executive Retirement Savings Plan which reduces executive retirement benefits as compared to that of the legacy SERP, a defined benefit plan. |
þ | The Board unanimously recommends a vote FOR the approval of the compensation of our named executive officers. |
Compensation Discussion and Analysis |
Compensation Discussion and Analysis |
Named Executive Officers |
Named Executive Officers |
David C. Dauch Chairman & Chief Executive Officer |
Christopher J. May Vice President & Chief Financial Officer |
Michael K. Simonte President |
Alberto L. Satine President Electrification (title at 12/31/18) |
Norman Willemse President Metal Forming |
Compensation Discussion and Analysis |
Executive Summary |
þ | Delivered on our key strategic objectives of profitable growth, diversification, outstanding financial performance, and technology leadership. | þ | Strong cash flow generation and over $200 million in senior debt payments |
þ | Formed joint venture with Liuzhou Wuling in China | þ | Recognized as a Fortune 500 Company |
þ | QUANTUMTM technology wins Altair and SAA Lightweighting Awards | þ | Met key integration milestones, including synergy attainment from recent acquisitions |
þ | 5th new business award for our EcoTrac® disconnecting all-wheel-drive technology | þ | Named GM Supplier of the Year for 2nd consecutive year |
þ | Continued to fund significant capital and R&D investments in order to drive organic growth to meet our strategic goals | þ | Sold Aftermarket division of our Powertrain Business Unit for $50 million |
Compensation Discussion and Analysis |
Strategic Business Objective | Alignment | Incentive Metric |
Continue to strengthen the balance sheet; provide funding for organic growth, research and development, and other capital priorities | Free Cash Flow - 2018 LTI Performance Shares (50% metric of performance-based LTI) | |
Develop innovative technology, including electrification. Reinvest in research and development. | Relative TSR - 2018 LTI Performance Shares (50% metric of performance-based LTI) | |
Create sustainable value for shareholders | ||
Achieve profitable growth, along with the ability to be flexible as the market changes, and reduce leverage | EBITDA - 2018 Annual Incentive Program (100% metric) | |
Deliver integration synergies from recent acquisitions |
– | We increased the rigor of our annual and LTI compensation targets for awards granted in 2018 and continued this practice to drive management performance at the highest levels. |
Compensation Discussion and Analysis |
– | In April 2018, AAM amended the Supplemental Executive Retirement Plan (SERP) and the Executive Deferred Compensation Plan to freeze further benefit accruals and freeze the plans to new participants. At the same time, and to further align our benefit programs with prevailing market practices, AAM adopted the Executive Retirement Savings Plan (ERSP) to become effective January 1, 2019. The ERSP, a deferred compensation plan, reduces executive retirement benefits and provides cost savings to the Company as compared to the legacy SERP, a defined benefit plan. |
– | In April 2018, AAM adopted the Executive Officer Severance Plan (Severance Plan) in order to provide severance other than in a change in control to executive officers with the purpose of retaining our executives and allowing them to focus on our business strategy. In addition, AAM amended its employment agreements with Mr. Dauch and Mr. Simonte to align severance payable under their employment agreements with the Severance Plan. |
Compensation Discussion and Analysis |
Compensation of Executive Officers |
Supports Business Strategy | Market Competitive | Aligned with Shareholder Interests | |
– 86% of CEO compensation is variable and at risk– Rigorous performance goals as key drivers of enterprise value creation such as EBITDA, relative TSR and cash flow– Programs utilize metrics that emphasize company performance and are aligned with business strategy | – Attract and retain executive talent– Benchmark pay against a peer group of similarly sized companies– Target direct compensation at the 50th percentile– Ensure incentive plans reward for desired behaviors and pay outcomes align with results | – Mix of annual and long-term incentive programs balances focus between short-term results and long-term share appreciation– 66% of LTI is performance-based– Cap on payout of performance shares based on relative TSR if absolute TSR is negative– CEO stock ownership requirement of 6 times base salary | |
Component | Purpose | Characteristics |
Base Salary | Based on level of responsibility, experience, individual performance and internal pay equity | Fixed cash component generally targeted at the peer group median |
Annual Incentive Compensation | Incentive to drive short-term performance aligned with strategic goals | Cash award that is at-risk subject to the attainment of performance targets |
Long-Term Incentive Compensation | Incentive to drive long-term financial and strategic growth that creates shareholder value and supports retention of executives | Awarded in a combination of Performance Shares (66%) and RSUs (34%) tied to financial and share performance that drive sustainable results and shareholder value |
Retirement and Deferred Compensation | Provide income upon retirement | 401(k) and nonqualified defined benefit and deferred compensation plans |
Perquisites | Limited supplement to total direct compensation | Primary benefit is company-provided vehicles with AAM content |
Compensation Discussion and Analysis |
– | Company performance objectives and goals, which serve as a basis for incentive compensation; |
– | attracting, retaining and motivating executive officers; |
– | information regarding financial performance, budgets and forecasts as they pertain to compensation; and |
– | industry and market conditions affecting AAM's business strategy. |
Compensation Discussion and Analysis |
– | total revenue and market capitalization; |
– | competitors in industry segment; |
– | complexity of global business and operations; and |
– | competition for talent and investor capital. |
2017 Peers | 2017 to 2018 Changes | 2018 Peers | 2018 to 2019 Changes | ||||
Ametek Inc. Aptiv PLC BorgWarner Inc. Cooper-Standard Holdings Inc. Cummins Inc. Dana Incorporated Dover Corporation Federal-Mogul Corporation Flowserve Corporation Fluor Corp. Goodyear Tire & Rubber Company Lear Corporation Meritor, Inc. Illinois Tool Works Inc. Navistar International Corporation PACCAR Inc Parker-Hannifin Corporation Rockwell Automation Tenneco Inc. Terex Corporation Trinity Industries, Inc. Visteon Corporation | ADDITIONS | Ametek Inc. Aptiv PLC BorgWarner Inc. Cooper-Standard Holdings Inc. Cummins Inc. Dana Incorporated Dover Corporation Flowserve Corporation Fluor Corp. Goodyear Tire & Rubber Company Lear Corporation Meritor, Inc. Navistar International Corporation PACCAR Inc Parker-Hannifin Corporation Rockwell Automation Tenneco Inc. Terex Corporation Trinity Industries, Inc. Visteon Corporation | ADDITIONS | ||||
More closely aligned with the size and complexity of our business, our industry and competition for talent Adient plc Cooper Tire & Rubber Company Delphi Technologies Oshkosh Corporation | |||||||
À | No additions for 2018 | u | À | ||||
REMOVAL | REMOVAL | ||||||
Federal-Mogul Corporation - Acquired by Tenneco Illinois Tool Works Inc. - Removed due to size | No longer aligned with our size and business operations Ametek Inc. Cummins Inc. Dover Corporation Fluor Corp. PACCAR Inc. | ||||||
- | u | - | |||||
Compensation Discussion and Analysis |
Direct Compensation Elements |
2018 | 2017 | % Change | ||||||||
David C. Dauch | $ | 1,150,000 | $ | 1,150,000 | — | % | ||||
Christopher J. May | $ | 550,000 | $ | 500,000 | 10 | % | ||||
Michael K. Simonte | $ | 750,000 | $ | 750,000 | — | % | ||||
Alberto L. Satine | $ | 610,000 | $ | 610,000 | — | % | ||||
Norman Willemse | $ | 530,000 | $ | 530,000 | — | % |
– | 2018 target performance was set at a level significantly higher than 2017 actual adjusted EBITDA performance. |
– | Achievement of target performance would result in the highest adjusted EBITDA performance in AAM history. |
– | Target performance is higher than the performance of a majority of our competitor peer group companies. |
Compensation Discussion and Analysis |
Weighting | Threshold (Payout 50%) | Target (Payout 100%) | Maximum (Payout 200%) | 2018 Actual Performance | 2018 Actual Payout % | ||||||
Adjusted EBITDA | 100 | % | $956 million | $1,275 million | $1,466 million | $1,190.7(1) | 87% |
Target Annual Incentive Opportunity | ||||
2018 | 2017 | |||
David C. Dauch | 135 | % | 135 | % |
Christopher J. May | 80 | % | 80 | % |
Michael K. Simonte | 100 | % | 100 | % |
Alberto L. Satine | 80 | % | 80 | % |
Norman Willemse | 80 | % | 80 | % |
Compensation Discussion and Analysis |
Form of Award | ||||
Performance Shares | RSUs | |||
LTI Mix | 66 | % | 34 | % |
Objective | Drive and reward performance key to strategic business objectives | Encourage retention and ownership supporting shareholder alignment | ||
Performance Measure | 50% Free Cash Flow 50% RelativeTSR | Continued service with AAM | ||
Competitor Peer Group for Relative TSR | Autoliv Inc. BorgWarner Inc. Dana Incorporated Lear Corporation Magna International Inc. Meritor Inc, Tenneco Inc. Visteon Corporation | Not applicable | ||
Performance / Vesting Period | Subject to achievement of performance measures over the three-year performance period January 1, 2018 through December 31, 2020 | Cliff vest on the third anniversary of the grant date | ||
Settlement | Settled in AAM stock upon vesting | Settled in AAM stock upon vesting |
– | Free cash flow target performance for 2018 - 2020 was set at a level higher than the previous three years' performance. |
Compensation Discussion and Analysis |
– | Achievement of target performance would result in the highest free cash flow in AAM history. |
– | Relative TSR payout is capped if absolute TSR is negative. |
Free Cash Flow Performance Measure | Relative TSR Performance Measure | |||||
Performance Level | 3 Year Cumulative Free Cash Flow | Percent of Target Award Opportunity Earned | Company's TSR Percentile Rank | Percent of Target Award Opportunity Earned | ||
Threshold | $990 million | 50 | % | 35th | 50 | % |
Target | $1,325 million | 100 | % | 50th | 100 | % |
Maximum | $1,525 million | 200 | % | 75th | 200 | % |
2018 Target Long-Term Incentive Opportunity | 2017 Target Long-Term Incentive Opportunity | |||||||
($)(1) | %(2) | ($)(1) | %(2) | |||||
David C. Dauch | 5,750,000 | 500 | % | 5,175,000 | 450 | % | ||
Christopher J. May | 1,375,000 | 250 | % | 412,000 | 100 | % | ||
Michael K. Simonte | 2,250,000 | 300 | % | 1,516,160 | 230 | % | ||
Alberto L. Satine | 1,220,000 | 200 | % | 787,950 | 150 | % | ||
Norman Willemse | 1,060,000 | 200 | % | 695,250 | 150 | % |
Actual Performance | % of Target Shares Earned | Award Weighting | Weighted Payout | |||||||
Relative TSR | 11th percentile | 0 | % | 50 | % | 0 | % | |||
EBITDA Margin | 16.6%(1) | 200 | % | 50 | % | 200 | % | |||
Final Payout as a % of Target | 100 | % |
Compensation Discussion and Analysis |
Governance Point | ||
Payout capped if 3-year absolute TSR is negative. | ||
Actual Performance | ||
Average Adjusted EBITDA Performance from 2013 - 2015 | 13.9% | |
Peer Average Adjusted EBITDA Performance from 2013 - 2015 | 10.7% | |
Compensation Discussion and Analysis |
Indirect Compensation Elements |
Compensation Discussion and Analysis |
Other Compensation Matters |
Compensation Discussion and Analysis |
Multiple of Base Salary | ||
Chief Executive Officer | 6 | |
Chief Financial Officer; President | 3 | |
Other Executive Officers | 2 |
Compensation Committee Report |
Executive Compensation Tables |
Executive Compensation Tables |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(2) ($) | Options Awards ($) | Non-Equity Incentive Plan Compen- sation(3) ($) | Change in Pension Value And Nonqualified Deferred Compensation Earnings(4) ($) | All Other Compen- sation(5) ($) | Total ($) | ||||||||
David C. Dauch(1) Chairman & Chief Executive Officer | 2018 | 1,150,000 | — | 5,700,848 | — | 1,350,700 | 1,168,373 | 99,378 | 9,469,299 | ||||||||
2017 | 1,150,000 | — | 7,319,937 | — | 2,819,000 | 1,869,698 | 86,982 | 13,245,617 | |||||||||
2016 | 1,150,000 | — | 5,617,069 | — | 2,875,000 | 1,385,652 | 74,599 | 11,102,320 | |||||||||
Christopher J. May Vice President & Chief Financial Officer | 2018 | 550,000 | — | 1,363,250 | — | 382,800 | 278,969 | 47,939 | 2,622,958 | ||||||||
2017 | 478,003 | — | 582,790 | — | 693,800 | 397,791 | 44,586 | 2,196,970 | |||||||||
2016 | 391,667 | — | 488,450 | — | 480,000 | 231,058 | 47,641 | 1,638,816 | |||||||||
Michael K. Simonte President | 2018 | 750,000 | — | 2,230,775 | — | 652,500 | 517,163 | 66,424 | 4,216,862 | ||||||||
2017 | 727,300 | — | 2,144,593 | — | 1,387,500 | 720,741 | 56,779 | 5,036,913 | |||||||||
2016 | 640,000 | — | 1,797,486 | — | 1,280,000 | 397,940 | 50,836 | 4,166,262 | |||||||||
Alberto L. Satine President Electrification(6) | 2018 | 610,000 | — | 1,209,580 | — | 424,600 | 250,024 | 61,972 | 2,556,176 | ||||||||
2017 | 588,825 | — | 1,114,572 | — | 902,800 | 482,501 | 59,099 | 3,147,797 | |||||||||
2016 | 510,000 | — | 934,146 | — | 814,500 | 280,651 | 58,130 | 2,597,427 | |||||||||
Norman Willemse President Metal Forming(7) | 2018 | 530,000 | — | 1,050,955 | — | 368,900 | 227,486 | 50,203 | 2,227,544 | ||||||||
2017 | 513,378 | — | 983,438 | — | 784,400 | 380,281 | 34,521 | 2,696,018 | |||||||||
2016 | 450,000 | — | 824,283 | — | 720,000 | 236,980 | 33,925 | 2,265,188 |
(1) | Compensation of Mr. Dauch is based solely on employment as an executive officer. He received no compensation for serving as a director. |
(2) | Reflects the grant date fair value of restricted stock units and performance share awards made during fiscal year 2018 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based on applying the assumptions used in our financial statements. See Note 10 to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2018 regarding assumptions underlying the valuation of equity awards. Assuming the maximum performance levels are achieved for the performance share awards granted on March 2, 2018, the maximum value of performance share awards would be $7,590,048 for Mr. Dauch, $1,814,988 for Mr. May, $2,970,012 for Mr. Simonte, $1,610,441 for Mr. Satine and $1,399,212 for Mr. Willemse based on grant date fair value. These amounts may not reflect the actual value realized upon vesting or settlement, if any. |
(3) | Reflects amounts earned under the AAM Incentive Compensation Plan for Executive Officers for 2018. |
(4) | Reflects the annualized increase in pension value under the Salaried Retirement Program, the Albion Pension Plan and the Supplemental Executive Retirement Program (SERP). See Pension Benefits Table. There are no above-market or preferential earnings on compensation deferred under our Executive Deferred Compensation Plan. |
Executive Compensation Tables |
(5) | The components of All Other Compensation for 2018 are as follows: |
Name | Employer 401(k) Match Contributions(a) ($) | Retirement Contributions(b) ($) | Executive Life Insurance Premiums(c) ($) | Company-Provided Vehicles(d) ($) | Tax Gross Ups for Spousal Travel(e) ($) | Other(f) ($) | Total ($) | |||||||
David C. Dauch | 13,750 | 13,750 | 13,690 | 32,016 | 9,554 | 16,618 | 99,378 | |||||||
Christopher J. May | 13,750 | 13,750 | 3,229 | 16,587 | — | 623 | 47,939 | |||||||
Michael K. Simonte | 13,750 | 13,750 | 8,510 | 26,976 | — | 3,438 | 66,424 | |||||||
Alberto L. Satine | 13,750 | 13,750 | 11,884 | 20,555 | — | 2,033 | 61,972 | |||||||
Norman Willemse | 13,583 | 13,750 | 10,526 | 11,721 | — | 623 | 50,203 |
(d) | Includes personal use of Company-provided vehicles. The aggregate incremental cost of Company-provided vehicles is based on total vehicle cost if business use of the vehicle is less than 50%. For Mr. Dauch, includes the cost of personal use of a second Company-provided vehicle. |
(e) | Includes amounts reimbursed for taxes attributable to the income associated with the cost of travel for spouse accompanying the NEO to Company business meetings and events. |
(f) | For Mr. Dauch, includes $11,772 for the cost of travel for spouse accompanying him to Company business meetings or events, personal umbrella liability insurance premiums, cost of an executive physical and meals provided during business hours. For Mr. Simonte and Mr. Satine, includes the cost of personal umbrella liability insurance premiums and the cost of an executive physical. For Mr. May and Mr. Willemse, includes the cost of personal umbrella liability insurance premiums. |
Executive Compensation Tables |
Estimated Future Payouts under Non Equity Incentive Plan Awards(1) | Estimated Future Payouts under Equity Incentive Plan Awards(2) | |||||||||||||||||||
Name | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | Grant Date Fair Value of Stock and Option Awards(4) ($) | ||||||||||
David C. Dauch | ||||||||||||||||||||
Annual Incentive | — | — | 776,250 | 1,552,500 | 3,105,000 | — | — | — | — | — | ||||||||||
Performance Shares (TSR) | 3/2/2018 | 2/7/2018 | — | — | — | 66,440 | 132,879 | 265,758 | — | 1,848,347 | ||||||||||
Performance Shares (Free Cash Flow) | 3/2/2018 | 2/7/2018 | — | — | — | 66,440 | 132,879 | 265,758 | — | 1,897,512 | ||||||||||
Restricted Stock Units | 3/2/2018 | 2/7/2018 | — | — | — | — | — | — | 136,904 | 1,954,989 | ||||||||||
Christopher J. May | ||||||||||||||||||||
Annual Incentive | — | — | 220,000 | 440,000 | 880,000 | — | — | — | — | — | ||||||||||
Performance Shares (TSR) | 3/2/2018 | 2/7/2018 | — | — | — | 15,888 | 31,775 | 63,550 | — | 441,990 | ||||||||||
Performance Shares (Free Cash Flow) | 3/2/2018 | 2/7/2018 | — | — | — | 15,888 | 31,775 | 63,550 | — | 453,747 | ||||||||||
Restricted Stock Units | 3/2/2018 | 2/7/2018 | — | — | — | — | — | — | 32,739 | 467,513 | ||||||||||
Michael K. Simonte | ||||||||||||||||||||
Annual Incentive | — | — | 375,000 | 750,000 | 1,500,000 | — | — | — | — | — | ||||||||||
Performance Shares (TSR) | 3/2/2018 | 2/7/2018 | — | — | — | 25,998 | 51,996 | 103,992 | — | 723,264 | ||||||||||
Performance Shares (Free Cash Flow) | 3/2/2018 | 2/7/2018 | — | — | — | 25,998 | 51,996 | 103,992 | — | 742,503 | ||||||||||
Restricted Stock Units | 3/2/2018 | 2/7/2018 | — | — | — | — | — | — | 53,572 | 765,008 | ||||||||||
Alberto L. Satine | ||||||||||||||||||||
Annual Incentive | — | — | 244,000 | 488,000 | 976,000 | — | — | — | — | — | ||||||||||
Performance Shares (TSR) | 3/2/2018 | 2/7/2018 | — | — | — | 14,097 | 28,194 | 56,388 | — | 392,179 | ||||||||||
Performance Shares (Free Cash Flow) | 3/2/2018 | 2/7/2018 | — | — | — | 14,097 | 28,194 | 56,388 | — | 402,610 | ||||||||||
Restricted Stock Units | 3/2/2018 | 2/7/2018 | — | — | — | — | — | — | 29,047 | 414,791 | ||||||||||
Norman Willemse | ||||||||||||||||||||
Annual Incentive | — | — | 212,000 | 424,000 | 848,000 | — | — | — | — | — | ||||||||||
Performance Shares (TSR) | 3/2/2018 | 2/7/2018 | — | — | — | 12,248 | 24,496 | 48,992 | — | 340,739 | ||||||||||
Performance Shares (Free Cash Flow) | 3/2/2018 | 2/7/2018 | — | — | — | 12,248 | 24,496 | 48,992 | — | 349,803 | ||||||||||
Restricted Stock Units | 3/2/2018 | 2/7/2018 | — | — | — | — | — | — | 25,239 | 360,413 |
(1) | Reflects annual incentive awards granted under the AAM Incentive Compensation Program for Executive Officers. |
(2) | Reflects performance share awards granted under the 2012 Omnibus Incentive Plan. The awards are payable in common stock based on the Company's free cash flow and relative TSR performance, each weighted 50%, over the 3-year performance period January 1, 2018 through December 31, 2020. |
(3) | Reflects RSUs granted under the 2012 Omnibus Incentive Plan. The awards are payable in common stock, contingent upon continued employment through the 3-year vesting period. No options were granted in 2018. |
(4) | Reflects the full grant date fair value of performance share awards and RSUs made during fiscal year 2018 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based on applying the assumptions used in our financial statements. See Note 10 to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2018 regarding assumptions underlying the valuation of equity awards. |
Executive Compensation Tables |
CEO Employment Agreement | President Employment Agreement | |
Base Salary | $1,150,000 for 2018, subject to annual review and increase by the Compensation Committee | $750,000 for 2018, subject to annual review and increase by the Compensation Committee |
Annual Incentive | Participation in the annual incentive plan for executive officers. Target opportunity of 135% of base salary for 2018, subject to annual review and increase by the Compensation Committee | Participation in the annual incentive plan for executive officers. Target opportunity of 100% of base salary for 2018, subject to annual review and increase by the Compensation Committee |
Long-Term Incentive | Participation in the long-term incentive plans for executive officers. Target opportunity of 500% for 2018, subject to annual review and increase by the Compensation Committee | Participation in the long-term incentive plans for executive officers. Target opportunity of 300% for 2018, subject to annual review and increase by the Compensation Committee |
Other Benefits | Participation in plans applicable to executive officers. Retiree medical, dental and vision coverage equivalent to the benefit levels offered in the Company's group health care plans for salaried associates as of September 1, 2012 | Participation in plans applicable to executive officers |
Term | Initial term expired August 31, 2015. Additional one-year extensions unless either party provides 60 days' written notice of intent not to renew | Initial term expired July 31, 2018. Additional one-year extensions unless either party provides 60 days' written notice of intent not to renew |
Executive Compensation Tables |
Free Cash Flow | Relative TSR | ||||||||
Performance Level | 3-Year Cumulative Free Cash Flow | Percent of Target Award Opportunity Earned | Company TSR Percentile Rank | Percent of Target Award Opportunity Earned | |||||
Threshold | $990 million | 50 | % | 35th | 50 | % | |||
Target | $1,325 million | 100 | % | 50th | 100 | % | |||
Maximum | $1,525 million | 200 | % | 75th | 200 | % |
Executive Compensation Tables |
Stock Awards | |||||||
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market of Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(7) | |||
David C. Dauch | 101,361(2) | 1,125,107 | 43,082(5) | 478,210 | |||
88,774(3) | 985,391 | 172,326(5) | 1,912,819 | ||||
136,904(4) | 1,519,635 | 66,440(6) | 737,484 | ||||
— | — | 132,879(6) | 1,474,957 | ||||
Christopher J. May | 8,814(2) | 97,835 | 3,430(5) | 38,073 | |||
7,068(3) | 78,455 | 13,720(5) | 152,292 | ||||
32,739(4) | 363,403 | 15,888(6) | 176,357 | ||||
— | — | 31,775(6) | 352,703 | ||||
Michael K. Simonte | 32,436(2) | 360,040 | 12,622(5) | 140,104 | |||
26,009(3) | 288,700 | 50,488(5) | 560,417 | ||||
53,572(4) | 594,649 | 25,998(6) | 288,578 | ||||
— | — | 51,996(6) | 577,156 | ||||
Alberto L. Satine | 16,857(2) | 187,113 | 6,560(5) | 72,816 | |||
13,516(3) | 150,028 | 26,240(5) | 291,264 | ||||
29,047(4) | 322,422 | 14,097(6) | 156,477 | ||||
— | — | 28,194(6) | 312,953 | ||||
Norman Willemse | 14,874(2) | 165,101 | 5,788(5) | 64,247 | |||
11,927(3) | 132,390 | 23,152(5) | 256,987 | ||||
25,239(4) | 280,153 | 12,248(6) | 135,953 | ||||
— | — | 24,496(6) | 271,906 |
(1) | Reflects value of outstanding RSUs at $11.10, the closing price of AAM common stock on December 31, 2018. |
(2) | Reflects RSUs granted on March 4, 2016 that vested on March 4, 2019. |
(3) | Reflects RSUs granted on February 28, 2017. RSUs vest three years from the date of grant. |
(4) | Reflects RSUs granted on March 2, 2018. RSUs vest three years from the date of grant. |
(5) | Reflects performance shares granted on February 28, 2017 for the performance period January 1, 2017 through December 31, 2019 that would be paid out at the end of the performance period based on actual performance through December 31, 2018. The relative TSR award amounts reflect a threshold payout and the EBITDA margin award amounts reflect a maximum payout. Payouts will be determined at the end of the performance period based on actual performance. |
(6) | Reflects performance shares granted on March 2, 2018 for the performance period January 1, 2018 through December 31, 2020 that would be paid out at the end of the performance period based on actual performance through December 31, 2018. The relative TSR award amounts reflect a threshold payout and the free cash flow awards reflect a target payout. Payouts will be determined at the end of the performance period based on actual performance. |
(7) | Reflects the value of 2017 and 2018 performance shares based on performance through December 31, 2018 as described above in footnotes (5) and (6) multiplied by $11.10, the closing price of AAM common stock on December 31, 2018. |
Executive Compensation Tables |
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (1) (#) | Value Realized on Exercise (1) ($) | Number of Shares Acquired on Vesting(2) (#) | Value Realized on Vesting(3) ($) | ||||
David C. Dauch | — | — | 254,830 | 3,013,276 | ||||
Christopher J. May | — | — | 22,985 | 273,816 | ||||
Michael K. Simonte | — | — | 78,501 | 920,769 | ||||
Alberto L. Satine | — | — | 40,212 | 470,171 | ||||
Norman Willemse | 9,700 | 54,087 | 34,395 | 399,341 |
(1) | Reflects the number of shares acquired upon exercise of stock options. Value realized upon exercise is based on the difference between the market price of AAM common stock acquired upon exercise and the exercise price for such stock options on the exercise date. |
(2) | Reflects the number of shares vested in March 2018 under RSU awards granted in March 2015. Also includes the number of performance shares earned for the performance period ending December 31, 2018. |
(3) | Reflects the number of shares underlying vested RSUs multiplied by the closing market price of AAM common stock on the vesting date. Also includes the number of performance shares earned for the period ending December 31, 2018 multiplied by the closing market price of AAM common stock at December 31, 2018. See Compensation Discussion and Analysis for further detail of the payouts earned. |
Executive Compensation Tables |
Name | Plan Name | Number of Years of Credited Service(1) (#) | Present Value of Accumulated Benefit(2) ($) | ||
David C. Dauch | AAM Salaried Retirement Program | 11.5000 | 378,924 | ||
AAM Supplemental Executive Retirement Program | 22.8333 | 8,196,092 | |||
Christopher J. May | AAM Salaried Retirement Program | 12.5000 | 163,827 | ||
AAM Supplemental Executive Retirement Program | 23.8333 | 1,292,436 | |||
Michael K. Simonte | AAM Salaried Retirement Program | 8.0833 | 252,912 | ||
AAM Supplemental Executive Retirement Program | 19.4166 | 3,097,335 | |||
Alberto L. Satine(3) | AAM Salaried Retirement Program | 10.5833 | 680,327 | ||
AAM Supplemental Executive Retirement Program | 16.9166 | 1,475,886 | |||
Norman Willemse(4) | Albion Pension Plan | 6.3333 | 319,629 | ||
AAM Supplemental Executive Retirement Program | 17.0000 | 1,417,745 |
(1) | Benefits under the SRP were frozen effective December 31, 2006 for Mr. Dauch, Mr. May and Mr. Simonte. Benefits under the SRP were frozen effective December 31, 2011 for Mr. Satine. Benefits for Mr. Willemse under the Albion Pension Plan reflect his years of service with our UK subsidiary, Albion Automotive Limited. Credited service under the SERP reflects service through the freeze date of April 30, 2018. As a result, credited service under the SRP, the Albion Pension Plan and the SERP is less than actual service with the Company. |
(2) | The values shown are based on benefits deferred to the earliest age at which unreduced benefits are payable. The assumptions used to calculate the actuarial present value of accumulated benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2018 and assume continued employment until unreduced retirement age is attained. For material assumptions used, see Note 9 to the audited consolidated financial statements in our annual report on Form 10-K for the fiscal year ended December 31, 2018. |
(3) | Mr. Satine was eligible to retire on December 31, 2018 under both the SRP and the SERP. He qualifies for an unreduced benefit under the SRP and the lump sum benefit under the SERP. |
(4) | Mr. Willemse is not a participant in the SRP. Mr. Willemse was eligible to retire on December 31, 2018 under both the Albion Pension Plan and the SERP. He qualifies for the lump sum benefit under the SERP. |
Executive Compensation Tables |
Executive Compensation Tables |
Name | Executive Contributions in Last FY ($) | Registrant contributions in Last FY ($) | Aggregate Earnings In Last FY(1) ($) | Aggregate Withdrawals Distributions ($) | Aggregate Balance at Last FYE(2) ($) | |||||
David C. Dauch | — | — | (28,523 | ) | — | 453,948 | ||||
Christopher J. May | — | — | — | — | — | |||||
Michael K. Simonte | — | — | — | — | — | |||||
Alberto L. Satine | — | — | — | — | — | |||||
Norman Willemse | — | — | (8,891 | ) | — | 97,086 |
(1) | Reflects hypothetical accrued earnings or losses during 2018 on notional investments designed to track the performance of funds similar to those available under the Company’s 401(k) plan. None of the earnings shown in this column are reported as compensation in the Summary Compensation Table. |
(2) | Of the aggregate balance, the amounts reflect compensation previously reported in the Summary Compensation Table for the NEOs. |
– | Age 55 with 10 years of service; |
Executive Compensation Tables |
– | Age 60 with 5 years of service; or |
– | Age 65 |
Name of Fund | Rate of Return | Name of Fund | Rate of Return | |||
PIMCO Total Return Fund | (0.26 | )% | Hartford International Opportunities Fund | (18.74 | )% | |
PIMCO High Yield Fund | (2.49 | )% | Victory Sycamore Established Value Fund | (9.95 | )% | |
Dreyfus International Bond Fund | (5.79 | )% | FIAM Blend Target Date 2005 Fund | (2.22 | )% | |
Vanguard Total Bond Market Index Fund | (0.01 | )% | FIAM Blend Target Date 2010 Fund | (3.16 | )% | |
Fidelity 500 Index Fund | (4.40 | )% | FIAM Blend Target Date 2015 Fund | (4.02 | )% | |
MFS Value Fund | (9.87 | )% | FIAM Blend Target Date 2020 Fund | (4.76 | )% | |
Vanguard FTSE Social Index Fund | (3.38 | )% | FIAM Blend Target Date 2025 Fund | (5.45 | )% | |
Fidelity Growth Company Fund | (4.46 | )% | FIAM Blend Target Date 2030 Fund | (6.54 | )% | |
Fidelity Low-Priced Stock Fund | (10.68 | )% | FIAM Blend Target Date 2035 Fund | (7.83 | )% | |
Eaton Vance Atlanta Capital SMID Fund | (5.35 | )% | FIAM Blend Target Date 2040 Fund | (8.44 | )% | |
Vanguard External Market Index Fund | (9.35 | )% | FIAM Blend Target Date 2045 Fund | (8.46 | )% | |
American Beacon Small Cap Value Fund | (15.63 | )% | FIAM Blend Target Date 2050 Fund | (8.41 | )% | |
Janus Henderson Triton Fund | (5.04 | )% | FIAM Blend Target Date 2055 Fund | (8.39 | )% | |
Fidelity Diversified International Fund | (15.20 | )% | FIAM Blend Target Date 2060 Fund | (8.45 | )% | |
Fidelity International Index Fund | (13.52 | )% | FIAM Blend Target Date Income Fund | (1.45 | )% | |
Harding Loevner Institutional Emerging Market Fund | (18.63 | )% | Mass Mutual Diversified SAGIC Fund | 2.72 | % |
Executive Compensation Tables |
– | a material breach of his obligations under the agreement; |
– | the willful and continued failure or refusal to satisfactorily perform his duties; |
– | a conviction of or pleading guilty (or no contest) to a felony or to another crime involving dishonesty or moral turpitude or which reflects negatively upon the Company or impairs its operations; |
– | engaging in any misconduct, negligence, act of dishonesty (including any violation of federal securities laws) or violence that is materially injurious to the Company; |
– | a material breach of a restrictive covenant (i.e., non-competition, non-solicitation) or Company policy; |
– | refusal to follow the directions of the Board; or |
– | any other willful misconduct that is materially injurious to AAM's financial condition or business reputation. |
– | a material decrease in compensation or a failure by the Company to pay material compensation; |
– | a material diminution of responsibilities, positions or titles (other than solely as a result of the Company ceasing to be a publicly-traded company); |
– | relocation more than 50 miles outside the Detroit-metropolitan area; or |
– | a material breach by the Company of its obligations under the agreement. |
Executive Compensation Tables |
– | a cash amount equal to annual base salary and target annual bonus multiplied by up to 1.5 based on position; target annual bonus is determined as the target amount in the year of termination; |
– | a prorated annual bonus equal to the annual bonus for the performance year during which the qualifying termination occurs based on active employment during the performance year; |
– | reimbursement of outplacement service costs of up to $20,000; and |
– | continued participation in AAM's medical benefit plans for up to 1.5 years following termination of employment based on position, or, in certain cases, a cash amount equal to the value of the benefit continuation. |
– | a cash amount equal to annual base salary multiplied by two; |
– | a cash amount equal to target annual bonus multiplied by two, with target annual bonus determined as the greater of the target amount in the year of the CIC or the year of termination of employment; |
– | a prorated target annual bonus with the target annual bonus determined as the greater of the target amount in the year of the CIC or the year of termination of employment; |
– | reimbursement of outplacement service costs of up to $30,000 incurred within 24 months following termination of employment; and |
– | continued participation in AAM's medical benefit plans for two years following termination of employment, or, in certain cases, a cash amount equal to the value of the benefit continuation. |
Executive Compensation Tables |
– | directly or indirectly engaging in any business that competes with AAM; |
– | soliciting or inducing our employees to leave AAM or otherwise interfering with our relationship with our employees, agents or consultants; and |
– | using, exploiting or disclosing our confidential information to any third party without our prior written consent. |
David C. Dauch | For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Retirement ($) | Termination Upon a Change in Control(2) ($) | |||||
Compensation: | ||||||||||
Severance | 2,300,000(3) | 2,300,000(3) | — | — | 3,450,000(4) | |||||
Annual Incentive | 4,455,700(3) | 4,455,700(3) | 1,350,700(5) | — | 6,008,200(4) | |||||
Long Term Incentives: | ||||||||||
RSUs(6) | — | — | 3,630,133 | — | 3,630,133 | |||||
2016 Performance Share Awards(7) | — | 2,184,036 | 2,184,036 | — | 2,184,036 | |||||
2017 Performance Share Awards(8) | — | 1,275,212 | 1,275,212 | — | 1,912,819 | |||||
2018 Performance Share Awards(9) | — | 983,305 | 983,305 | — | 2,949,914 | |||||
Other Benefits: | ||||||||||
Retirement Plans | — | — | — | — | — | |||||
SERP | — | — | — | — | — | |||||
Welfare Benefit | — | — | — | — | — | |||||
Deferred Compensation(10) | 453,948 | 453,948 | 453,948 | — | 453,948 | |||||
Health Care(11) | 38,372 | 38,372 | 47,965 | — | 58,961 | |||||
Disability(12) | — | — | 6,387,336 | — | — | |||||
Life Insurance(13) | — | — | 16,373 | — | — | |||||
Outplacement Services(14) | 50,000 | 50,000 | — | — | 50,000 | |||||
Total | 7,298,020 | 11,740,573 | 16,329,008 | — | 20,698,011 |
Executive Compensation Tables |
Christopher J. May | For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Retirement ($) | Termination Upon a Change in Control(2) ($) | |||||
Compensation: | ||||||||||
Severance | 825,000(15) | 825,000(15) | — | — | 1,100,000(16) | |||||
Annual Incentive | 1,042,800(15) | 1,042,800(15) | 382,800(5) | — | 1,262,800(16) | |||||
Long Term Incentives: | ||||||||||
RSUs(6) | — | — | 539,693 | — | 539,693 | |||||
2016 Performance Share Awards(7) | — | 189,921 | 189,921 | — | 189,921 | |||||
2017 Performance Share Awards(8) | — | 101,528 | 101,528 | — | 152,292 | |||||
2018 Performance Share Awards(9) | — | 235,135 | 235,135 | — | 705,405 | |||||
Other Benefits: | ||||||||||
Retirement Plans | — | — | — | — | — | |||||
SERP | — | — | — | — | — | |||||
Welfare Benefit | — | — | — | — | — | |||||
Deferred Compensation | — | — | — | — | — | |||||
Health Care(17) | — | — | 40,424 | — | 32,339 | |||||
Disability(12) | — | — | 4,072,804 | — | — | |||||
Life Insurance(13) | — | — | 2,878 | — | — | |||||
Outplacement Services(18) | 20,000 | 20,000 | — | — | 30,000 | |||||
Total | 1,887,800 | 2,414,384 | 5,565,183 | — | 4,012,450 |
Michael K. Simonte | For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Retirement ($) | Termination Upon a Change in Control(2) ($) | |||||
Compensation: | ||||||||||
Severance | 1,500,000(3) | 1,500,000(3) | — | — | 1,500,000(4) | |||||
Annual Incentive | 2,152,500(3) | 2,152,500(3) | 652,500(5) | — | 2,152,500(4) | |||||
Long Term Incentives: | ||||||||||
RSUs(6) | — | — | 1,243,389 | — | 1,243,389 | |||||
2016 Performance Share Awards(7) | — | 698,900 | 698,900 | — | 698,900 | |||||
2017 Performance Share Awards(8) | — | 373,611 | 373,611 | — | 560,417 | |||||
2018 Performance Share Awards(9) | — | 384,770 | 384,770 | — | 1,154,311 | |||||
Other Benefits: | ||||||||||
Retirement Plans | — | — | — | — | — | |||||
SERP | — | — | — | — | — | |||||
Welfare Benefit | — | — | — | — | — | |||||
Deferred Compensation | — | — | — | — | — | |||||
Health Care(11) | 38,371 | 38,371 | 47,964 | — | 38,371 | |||||
Disability(12) | — | — | 4,067,667 | — | — | |||||
Life Insurance(13) | — | — | 11,204 | — | — | |||||
Outplacement Services(14) | 30,000 | 30,000 | — | — | 30,000 | |||||
Total | 3,720,871 | 5,178,152 | 7,480,005 | — | 7,377,888 |
Executive Compensation Tables |
Alberto L. Satine | For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement ($) | Retirement ($) | Termination Upon a Change in Control(2) ($) | |||||
Compensation: | ||||||||||
Severance | 915,000(15) | 915,000(15) | — | — | 1,220,000(16) | |||||
Annual Incentive | 1,156,600(15) | 1,156,600(15) | 424,600(5) | 424,600(5) | 1,400,600(16) | |||||
Long Term Incentives: | ||||||||||
RSUs(6) | — | — | 659,563 | 362,130 | 659,563 | |||||
2016 Performance Share Awards(7) | — | 363,214 | 363,214 | 363,214 | 363,214 | |||||
2017 Performance Share Awards(8) | — | 194,176 | 194,176 | 194,176 | 291,264 | |||||
2018 Performance Share Awards(9) | — | 208,636 | 208,636 | 208,636 | 625,907 | |||||
Other Benefits: | ||||||||||
Retirement Plans(19) | 680,327 | 680,327 | 567,817 | 680,327 | 680,327 | |||||
SERP(20) | 1,475,886 | 1,475,886 | 1,475,886 | 1,475,886 | 1,475,886 | |||||
Welfare Benefit(21) | — | — | 259,215 | 259,215 | — | |||||
Deferred Compensation | — | — | — | — | — | |||||
Health Care(17) | — | — | — | — | 50,254 | |||||
Disability | — | — | — | — | — | |||||
Life Insurance | — | — | — | — | — | |||||
Outplacement Services(18) | 20,000 | 20,000 | — | — | 30,000 | |||||
Total | 4,247,813 | 5,013,839 | 4,153,107 | 3,968,184 | 6,797,015 |
Norman Willemse | For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement ($) | Retirement ($) | Termination Upon a Change in Control(2) ($) | |||||
Compensation: | ||||||||||
Severance | 795,000(15) | 795,000(15) | — | — | 1,060,000(16) | |||||
Annual Incentive | 1,004,900(15) | 1,004,900(15) | 368,900(5) | 368,900(5) | 1,216,900(16) | |||||
Long Term Incentives: | ||||||||||
RSUs(6) | — | — | 577,644 | 318,332 | 577,644 | |||||
2016 Performance Share Awards(7) | — | 320,501 | 320,501 | 320,501 | 320,501 | |||||
2017 Performance Share Awards(8) | — | 171,325 | 171,325 | 171,325 | 256,987 | |||||
2018 Performance Share Awards(9) | — | 181,270 | 181,270 | 181,270 | 543,811 | |||||
Other Benefits: | ||||||||||
Retirement Plans(19) | 319,629 | 319,629 | 223,334 | 304,598 | 319,629 | |||||
SERP(20) | 1,417,745 | 1,417,745 | 1,417,745 | 1,417,745 | 1,417,745 | |||||
Welfare Benefit(21) | — | — | 210,855 | 210,855 | — | |||||
Deferred Compensation(10) | 97,086 | 97,086 | 97,086 | 97,086 | 97,086 | |||||
Health Care(17) | — | — | — | — | 50,255 | |||||
Disability | — | — | — | — | — | |||||
Life Insurance | — | — | — | — | — | |||||
Outplacement Services(18) | 20,000 | 20,000 | — | — | 30,000 | |||||
Total | 3,654,360 | 4,327,456 | 3,568,660 | 3,390,612 | 5,890,558 |
(1) | Assumes total and permanent disability on December 31, 2018. Because Mr. Dauch, Mr. May and Mr. Simonte are not eligible to retire on December 31, 2018, the amounts reflect disability payments until retirement at 65 or for health and life insurance for 30 months (6 months of short-term disability and 24 months of long-term disability). |
(2) | For Mr. Dauch and Mr. Simonte, amounts reflect CIC benefits under their employment agreements and outstanding LTI awards as of December 31, 2018. For other NEOs, amounts reflect payments and benefits under the CIC Plan and outstanding LTI awards as of December 31, 2018. |
(3) | Under their employment agreements, Mr. Dauch and Mr. Simonte are entitled to receive two years’ base salary and target bonus and accrued and unpaid compensation upon resignation for good reason or termination without cause. The annual bonus amount for each reflects the 2018 award paid in March 2019 and the 2018 target annual bonus for two years. |
Executive Compensation Tables |
(4) | Upon termination without cause or resignation for good reason on or within two years following a CIC, Mr. Dauch and Mr. Simonte are entitled to a multiple of base salary and annual bonus (Mr. Dauch, three times; Mr. Simonte, two times) plus a target annual bonus prorated through termination. The severance amount for each reflects base salary as of December 31, 2018 times the applicable multiple. The annual bonus amount for each reflects the 2018 award paid in March 2019 and the 2018 target bonus times the applicable multiple. |
(5) | In the event of disability or retirement, AAM’s Incentive Compensation Plan for Executive Officers provides a pro-rata award payout through the date of disability or retirement. The amounts reflect 2018 awards payable in March 2019 under a disability termination event and also upon retirement for Mr. Satine and Mr. Willemse. |
(6) | Outstanding RSUs vest upon termination of employment due to death, disability or upon a CIC. The value reflects the number of RSUs multiplied by the closing price of AAM common stock on December 31, 2018. In the event of retirement, RSUs vest pro-rata based on continued employment through retirement. In the event of retirement for Mr. Satine and Mr. Willemse, the amounts reflect the applicable pro-rata portion for each of their 2016-2018 RSU awards multiplied by the closing price of AAM common stock on December 31, 2018. |
(7) | The 2016 performance share awards payable in the event of a disability, retirement, termination without cause or upon a CIC are based on target performance and the pro-rata portion of employment during the performance period. The amounts reflect actual shares paid in March 2019 based on performance through December 31, 2018 multiplied by the closing price of AAM stock on December 31, 2018. |
(8) | The 2017 performance share awards payable in the event of a disability, retirement or termination without cause are based on target performance and reflect the pro-rata portion of employment during the performance period. As of December 31, 2018, approximately 2/3 of the performance period has lapsed. Amounts reflect pro-rata awards at the target amount of shares multiplied by the closing price of AAM common stock on December 31, 2018. The 2017 performance share awards vest in full upon termination without cause or resignation for good reason on or within two years following a CIC. |
(9) | The 2018 performance share awards payable in the event of a disability, retirement or termination without cause are based on target performance and reflect the pro-rata portion of employment during the performance period. As of December 31, 2018, approximately 1/3 of the performance period has lapsed. Amounts reflect pro-rata awards at the target amount of shares multiplied by the closing price of AAM common stock on December 31, 2018. The 2018 performance share awards vest in full upon termination without cause or resignation for good reason on or within two years following a CIC. |
(10) | Amounts reflect account balances in the Executive Deferred Compensation Plan as of December 31, 2018. |
(11) | Under their employment agreements, Mr. Dauch and Mr. Simonte are entitled to two years' health care benefits upon resignation for good reason or termination without cause. Upon termination on or within two years following a CIC, Mr. Dauch (three years) and Mr. Simonte (two years) are also entitled to health care benefits. In the event of disability, Mr. Dauch and Mr. Simonte receive health care benefits for a maximum of 30 months (6 months of short-term disability and 24 months of long-term disability). |
(12) | Reflects benefits equal to 100% of base salary for the first year of disability and 60% of base salary until retirement for Mr. Dauch, Mr. May and Mr. Simonte. |
(13) | Reflects basic and supplemental life insurance benefits through date of termination (30 months from date of disability). |
(14) | Under their employment agreements, Mr. Dauch ($50,000) and Mr. Simonte ($30,000) are entitled to reimbursement for outplacement services upon termination without cause, resignation for good reason or termination of employment on or within two years following a CIC. |
(15) | Under the Severance Plan, Mr. May, Mr. Satine and Mr. Willemse are entitled to a cash payment equal to 1.5 times annual base salary and annual bonus upon termination without cause or resignation for good reason plus a prorated annual bonus based on actual performance. The annual bonus amount is based on the target annual bonus for the year of termination. The severance amount reflects base salary as of December 31, 2018 times the severance multiplier of 1.5. The annual bonus amount reflects the 2018 award paid in March 2019 and the 2018 target annual bonus times the multiplier of 1.5. |
(16) | Under the CIC Plan, Mr. May, Mr. Satine and Mr. Willemse are entitled to a cash payment equal to two times annual base salary and annual bonus upon termination without cause or resignation for good reason on or within two years following a CIC. The annual bonus amount is based on the greater of the target annual bonus for the year of the CIC or for the year of termination. The severance amount reflects base salary as of December 31, 2018 for two years. The annual bonus amount reflects the 2018 award paid in March 2019 and the 2018 target annual bonus for two years. |
(17) | For Mr. May, Mr. Satine and Mr. Willemse, amounts reflect two years' health care benefits provided upon termination without cause or resignation for good reason on or within two years following a CIC. In the event of disability, Mr. May would receive health care benefits for a maximum of 30 months (6 months of short-term disability and 24 months of long- term disability). |
(18) | Under the CIC Plan, Mr. May, Mr. Satine and Mr. Willemse are entitled to reimbursement of up to $30,000 of outplacement services upon termination of employment without cause or resignation for good reason on or within two years of a CIC. Under the Severance Plan, each are entitled to reimbursement of up to $20,000 of outplacement services upon termination of employment without cause or resignation for good reason. |
(19) | Reflects a joint and survivor benefit payable monthly. |
(20) | Reflects the present value of the frozen SERP benefit calculated assuming a lump sum payment for Mr. Satine and Mr. Willemse. |
(21) | Reflects welfare benefits assuming retirement under the retiree welfare plan. |
CEO Pay Ratio |
Ratification of Independent Registered Public Accounting Firm |
Proposal 3: Ratification of Appointment of Independent |
Registered Public Accounting Firm for 2019 |
þ | The Board unanimously recommends a vote FOR ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2019. |
Pre-Approval Policy and Auditor Fees |
Policy for Pre-Approval of Audit and Non-Audit Services |
Independent Registered Public Accounting Firm's Fees |
December 31, | ||||||
2018 | 2017 | |||||
Audit Fees(1) | $ | 6,118,093 | $ | 5,014,534 | ||
Audit Related Fees(2) | 221,914 | 464,857 | ||||
Tax Fees(3) | 700,000 | 617,675 | ||||
All Other Fees(4) | 79,500 | — | ||||
Total | $ | 7,119,507 | $ | 6,097,066 |
(1) | Audit fees include fees for the audit of annual consolidated financial statements and internal controls over financial reporting, reviews of quarterly consolidated financial statements, statutory audits, consents and comfort letters, reviews of documents filed with the SEC and other services related to SEC matters. |
(2) | Audit-related fees are for services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements. |
(3) | Fees for tax services in 2018 and 2017 consisted of fees for tax compliance, tax advice and tax planning services. |
(4) | Other fees in 2018 are for non-tax related advisory and consulting services. |
Report of the Audit Committee |
Report of the Audit Committee |
Voting and Meeting Information |
Additional Information |
– | In person — attending the annual meeting and casting a ballot. |
– | By mail — using the proxy and/or voting instruction card provided. |
– | By telephone or over the Internet — following the instructions on your notice card, proxy and/or voting instruction card. |
– | revoking it by written notice to AAM’s Secretary at the address on the notice; |
– | voting in person at the annual meeting; or |
– | delivering a later-dated proxy vote by mail, telephone or over the internet. |
Voting and Meeting Information |
– | be counted as present for purposes of determining whether there are enough votes to establish a quorum; |
– | have no effect on the outcome of the election of directors; or |
– | count as a vote against any other proposal to be considered at the annual meeting. |
Additional Information |
Annual Report |
Electronic Delivery of Proxy Materials |
– | following the instructions provided on your proxy card, voter instruction form, or notice |
– | going to www.envisionreports.com/axl and following the instructions provided |
2020 Stockholder Proposals and Nominations |
Additional Information |
Cost of Solicitation |
Appendix A - Non-GAAP Reconciliation |
Appendix A |
2018 Annual Incentive Performance Metric | Twelve Months Ended | ||
December 31, 2018 | |||
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA: | (in millions) | ||
Net income | $ | (56.8 | ) |
Interest expense | (57.1 | ) | |
Income tax expense | 216.3 | ||
Depreciation and amortization | 528.8 | ||
EBITDA | $ | 631.2 | |
Restructuring and acquisition-related costs | 78.9 | ||
Debt refinancing and redemption costs | 19.4 | ||
Gain on sale of business | (15.5 | ) | |
Goodwill impairment | 485.5 | ||
Non-recurring items: | |||
Gain on settlement of capital lease | (15.6 | ) | |
Impact of financial performance for divestiture not included in target(1) | 6.8 | ||
Adjusted EBITDA | $ | 1,190.7 |
Appendix A - Non-GAAP Reconciliation |
2016 - 2018 Long-term Incentive Performance Metric | Twelve Months Ended | ||||||||||
December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA: | (in millions) | ||||||||||
Net income | $ | (56.8 | ) | $ | 337.5 | $ | 240.7 | ||||
Interest expense | (57.1 | ) | 195.6 | 93.4 | |||||||
Income tax expense | 216.3 | 2.5 | 58.3 | ||||||||
Depreciation and amortization | 528.8 | 428.5 | 201.8 | ||||||||
EBITDA | $ | 631.2 | $ | 964.1 | $ | 594.2 | |||||
Restructuring and acquisition-related costs | 78.9 | 110.7 | 26.2 | ||||||||
Debt refinancing and redemption costs | 19.4 | 3.5 | — | ||||||||
Gain on sale of business | (15.5 | ) | — | — | |||||||
Goodwill impairment | 485.5 | — | — | ||||||||
Non-recurring items: | |||||||||||
Gain on settlement of capital lease | (15.6 | ) | 24.9 | — | |||||||
Other | — | (0.5 | ) | (1.0 | ) | ||||||
Adjusted EBITDA | $ | 1,183.9 | $ | 1,102.7 | $ | 619.4 | |||||
Net sales, as reported | $ | 7,270.4 | $ | 6,266.0 | $ | 3,948.0 | |||||
Adjusted EBITDA margin | 16.3 | % | 17.6 | % | 15.7 | % | |||||
3-year cumulative EBITDA margin | 16.6 | % | — | — |
Appendix B - Director Independence Standards |
Appendix B |
• | the director was employed by AAM, or an immediate family member(2) served as an executive officer of AAM; |
• | the director received direct compensation from AAM, other than director and committee fees and pension or other forms of deferred compensation for prior service (and not contingent on continued service); |
• | an immediate family member received more than $120,000 per year in direct compensation from AAM; |
• | the director is affiliated with or employed by AAM’s independent auditor, or an immediate family member is affiliated with or employed in a professional capacity by AAM’s independent auditor; |
• | the director or any of his or her immediate family members has been part of an “interlocking directorate”‘ in which an executive officer of AAM serves on the compensation committee of another company that employs the director; |
• | the director is an executive officer or employee, or an immediate family member is an executive officer, of a company that makes payments to, or receives payments from, AAM for property or services in any single fiscal year, exceeding the greater of two percent (2%) of the annual consolidated gross revenue of that company or $1 million; or |
• | the director is an executive officer of a charitable organization that has received contributions from AAM in any single fiscal year of more than $1 million or two percent (2%) of the charitable organization’s consolidated gross revenues, whichever is greater. |
(1) | AAM includes American Axle & Manufacturing Holdings, Inc. and all of its direct and indirect subsidiaries. |
(2) | Immediate family member includes spouse, parents, stepparents, children, stepchildren, siblings, mothers and fathers-in-law, sons and daughters-in-law and brothers and sisters-in-law and anyone (other than tenants or employees) who share the director’s home. Immediate family member shall be defined in accordance with NYSE listing standards in effect at the time of any independence determination by the Board. |