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| ¨ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||
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| One Dauch Drive Detroit, Michigan 48211-1198 www.aam.com |
April 28, 2011May 2, 2013
American Axle & Manufacturing Holdings, Inc. (AAM)
Time and Place | 3:00 p.m., local time, on Thursday, | |
| May 2, 2013 | ||
| AAM World Headquarters Auditorium, One Dauch Drive, Detroit, Michigan | ||
Items of Business | (1) Elect | |
2016; (2) | ||
officer compensation; (3) | ||
(4) Attend to other business properly presented at the meeting. | ||
Record Date | You may vote if you were an AAM stockholder at the close of business on March | |
Meeting Admission | Admission may be limited to AAM stockholders as of the record date and holders of valid proxies. Please be prepared to present identification for admittance. Stockholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras and recording devices will not be permitted. | |
Proxy Materials | We have elected to furnish materials for the | |
| Important Notice Regarding Internet Availability of Proxy Materials for the | ||
By Order of the Board of Directors,
David E. Barnes
General Counsel & Legal and Secretary
March 18, 2011
21, 2013
PROXY STATEMENT
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Annual Meeting of Stockholders
To Be Held April 28, 2011May 2, 2013
American Axle & Manufacturing Holdings, Inc. (AAM or the Company) is providing proxy materials electronically via the Internet, instead of mailing printed copies of those materials to each stockholder. On March This electronic delivery process is designed to expedite stockholder receipt of proxy materials, lower the cost of the Annual Meeting of Stockholders (annual meeting), and conserve natural resources. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Availability of Proxy Materials. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials bye-mail unless you elect otherwise. If you received a printed copy of proxy materials by mail and would like to view future proxy materials over the Internet, you can do so by accessing the Internet atwww.envisionreports.com/AXL.18, 2011,21, 2013, we mailed to our stockholders (other than those who previously requestede-mail or paper delivery) a Notice of Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and 20102012 Annual Report onForm 10-K. The Notice of Availability of Proxy Materials provides instructions on how you may submit your proxy over the Internet or by telephone.
Why am I receiving this proxy statement? You received these proxy materials because you owned shares of AAM common stock on March Who is entitled to vote? Holders of AAM common stock on the record date are entitled to one vote per share. You are a holder of record if your shares are held directly in your name with AAM’s transfer agent, Computershare Trust Company, N.A. If your shares are held in the name of a broker, bank, trustee or other record holder, you are a street name holder. If you hold shares in more than one account, each notice, proxyand/or voting instruction card you receive that has a unique control number must be voted so that all your shares are voted. How do I vote? You may vote by any of the following methods:3, 20115, 2013 (record date). AAM’s Board of Directors (Board) is soliciting your proxy to vote your shares at the annual meeting. By use of a proxy, you can vote whether or not you attend the meeting. This proxy statement includes information that we are required to provide to you and is designed to assist you in voting your shares.
| • | In person— attending the annual meeting and casting a ballot. |
| • | By mail— using the proxyand/or voting instruction card provided. |
| • | By telephone or |
If you vote by telephone or viaover the Internet, have your notice card or proxyand/or voting instruction card available. The control number on your card is necessary to process your vote. A telephone or Internet vote authorizes the named proxies to vote in the same manner as if you marked, signed and returned the card by mail. If you hold shares in street name, refer to the voting instructions provided by your broker, bank, trustee or other record holder.
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As of March 3, 2011,5, 2013, we had 75,301,26374,839,567 shares of common stock outstanding and entitled to vote. Under AAM’s by-laws, a majority of these shares must be present in person or by proxy to hold the annual meeting and take any action during the meeting.
Can I change my vote?
You may change your vote at any time before the annual meeting by:
revoking it by written notice to AAM’s Secretary at the address on the cover of this proxy statement;
voting in person at the annual meeting; or
delivering a later-dated proxy vote by mail, telephone or over the Internet.
What are the Board’s recommendations on how I should vote my shares?
The Board recommends that you vote your shares as follows:
Proposal 1 — | |
Proposal 2 —FOR approval, on an advisory basis, of the compensation of AAM’s named executive officers as described in the Compensation Discussion and Analysis, tables and related narrative; and
Proposal 3 —FOR ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013.
What are my choices when voting?
Proposal 1 — You may vote for or withhold your vote on one or more of the nominees.
Proposal 2 — You may vote for or against the proposal to approve the compensation of our named executive officers, or you may abstain from voting your shares.
Proposal 3 — You may vote for or against the proposal to ratify the appointment of the Company’s independent registered public accounting firm, or you may abstain from voting your shares.
What vote is required to approve each proposal?
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Proposal 1 — A plurality of the votes cast to elect a director, which means that nominees with the most affirmative votes will be elected to fill the available seats.
Proposal 2 — An affirmative vote of a majority of the shares voted in person or by proxy must be cast in favor of the advisory vote to approve the compensation of AAM’s named executive officers.
Proposals 2 and 3 are advisory votes only and, as discussed in more detail in each proposal, the voting results are not binding on AAM. However, with respect to proposal 2, the Board and the Compensation Committee will consider the outcome of the votesvote in making future determinations concerning the compensation of our named executive officers andofficers. With respect to proposal 3, the frequencyAudit Committee will consider whether the appointment of Deloitte & Touche LLP is in thesay-on-pay vote.
Who will count the votes?
Representatives of Computershare Trust Company, N.A., AAM’s transfer agent, will count the votes and serve as our inspector of election. The inspector of election will attend the annual meeting.
What if I “withhold” my vote or “abstain”?
Votes withheld and abstentions will be counted as present for purposes of determining whether a majority of shares is present to establish a quorum and hold the annual meeting. Abstentions will not be counted in the tally of votes for or against any proposal. A withheld vote has the same effect as an abstention.
What if I do not vote and do not attend the annual meeting?
If you are a holder of record and you do not vote your shares at the annual meeting or by proxy, your shares will not be voted. If you sign and return your proxy card without specific voting instructions, your shares will be voted as recommended by the Board.
Under New York Stock Exchange (NYSE) rules, brokers have discretionary power to vote your shares only on “routine” matters. Brokers do not have discretionary power to vote your shares on “non-routine” matters. If you hold shares in street name, and you do not give your bank, broker, or other holder of record specific voting instructions for your shares, your record holder can only vote your shares on the ratification of the Company’s independent registered public accounting firm (proposal 4)3), a “routine” matter.
Without your specific instructions, your record holder cannot vote your shares on the election of directors the advisory vote on executive compensation(say-on-pay),and the advisory vote on the frequency ofsay-on-pay proposals.named executive officer compensation. For each of these matters, if you do not instruct your record holder how to vote, the record holder may not vote your shares. Shares not voted will be broker non-votes and will not be counted in determining the outcome of the vote for proposals 1 2 and 3.2. Broker non-votes will have no impact on the outcome of these proposals. We urge you to give your record holder voting instructions on each proposal being presented at the annual meeting.
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Information not incorporated into this proxy statement.
The information on our website (www.aam.com) is not, and shall not be deemed to be, a part of this proxy statement nor, by reference or otherwise, incorporated into any other filings we make with the SEC.
The Board proposes that the fourthree directors standing for re-election as Class IIIII directors, Richard E. Dauch, JamesElizabeth A. McCaslin, William P. Miller II,Chappell, Steven B. Hantler and Larry K. Switzer,John F. Smith, be elected to the Board for terms expiring at the annual meeting in 2014.
The Board is divided into three classes. Directors serve for staggered three-year terms. Class I and Class III each consists of four positions and Class II consists of three positions. The Board believes that the staggered election of directors helps to maintain continuity and ensures that a majority of directors at any given time will have in-depth knowledge of the Company.
The Board unanimously approved the nominations of our Class IIIII directors based on their outstanding achievements, special competencies and integrity. Each nominee brings a strong and unique background and set of skills to the Board. Collectively, the Board has high levels of competence and experience in a variety of areas, including manufacturing, engineering, finance, international business, management, restructuring, law, risk management, strategic business development and the global automotive industry. A summary of the principal occupation, professional background and specific qualificationsand/or skills ofthat qualify each nominee and returning director to serve on our Board is provided in the following pages of this proxy statement.
The Board unanimously recommends a vote FOR each of the nominees.
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Class II — Directors to hold office until the 2016 Annual Meeting of Stockholders
 | ELIZABETH A. CHAPPELL Age 55 Elizabeth A. (Beth) Chappell has served as President and Chief Executive Officer of the Detroit Economic Club since 2002. Previously, she served as Executive Vice President, Corporate Communications & Investor Relations for Compuware Corporation. From 1995 to 2000, Ms. Chappell was President and Chief Executive Officer of a consulting firm she founded, The Chappell Group, Inc. For 16 years, Ms. Chappell held executive positions at AT&T. From 1999 to 2009, Ms. Chappell served on the Board of Directors of the Handleman Company. She also serves on a number of civic boards, including Brother Rice High School, Citizens Research Council, Detroit Regional Chamber, Airport Authority-Citizen’s Review Council, United Way Tocqueville Committee and Michigan Economic Development Corporation and has served on the Charter One Regional Advisory Board (Midwest) since 2001. Ms. Chappell is a former board member of the Karmanos Cancer Institute, Michigan Economic Growth Authority and Hospice of Michigan. Ms. Chappell’s demonstrated leadership skills, entrepreneurial business experience and service on various Boards of Directors enhance her contributions to the Board on matters of significance to AAM’s strategic business development. | Director since 2004 | ||
 | STEVEN B. HANTLER Age 60 Mr. Hantler is Director of Policy Initiatives for The Marcus Family Office. In this capacity, he advises Home Depot co-founder, Bernie Marcus, in the areas of government affairs, legal and regulatory policy, national security, free enterprise and higher education. Previously, he had a 27-year career with Chrysler Corporation, where he held positions as Assistant General Counsel, Manufacturing Group Counsel, and Senior Trial Attorney. Prior to joining Chrysler, Mr. Hantler was engaged in private law practice. Mr. Hantler is a Senior Fellow at the Pacific Research Institute and a member of the Legal Policy Advisory Board of the Washington Legal Foundation. Previously, Mr. Hantler served as Chair of the State Government Leadership Foundation, which educates state leaders on public policy issues, Chair of the Advisory Board of the National Judicial College, and on the Board of Directors of the New York University Law School Center for Labor and Employment. Mr. Hantler’s leadership experience and expertise in law, public relations and government affairs provide the Board with knowledge and insight in these areas of importance to the Board’s oversight of AAM’s global business growth and strategic initiatives. | Director since 2011 | ||
 | JOHN F. SMITH Age 62 Mr. Smith is principal of Eagle Advisors LLC, a consulting firm in Bloomfield Hills, Michigan that specializes in strategy development and performance improvement. From 2000 to 2010, Mr. Smith served in positions of increasing responsibility with General Motors Corporation in sales and marketing, product planning and corporate strategy, most recently as Group Vice President, Corporate Planning and Alliances. During his 42-year career in the automotive industry, Mr. Smith also served as General Manager of Cadillac Motor Car, President of Allison Transmission, and Vice President, Planning at General Motors International Operations in Zurich, Switzerland. In June 2012, Mr. Smith joined the Board of Directors of Smith Electric Vehicles (no relation), a manufacturer of all-electric commercial vehicles and the Advisory Board of VNG.CO, a developer of compressed natural gas refueling stations. In January 2013, Mr. Smith joined the Advisory Board of Palogix International, a provider of in-bound logistics and container management solutions. Mr. Smith also serves on the boards of several nonprofit organizations, including the National Advisory Board of Boy Scouts of America and St. John’s Providence Health System in Michigan. Mr. Smith’s extensive experience in manufacturing, finance, business development, international operations, sales and marketing, product development and mergers and acquisitions is aligned with AAM’s key business objectives, including continued global business growth and diversification. | Director since 2011 |
Class III — DirectorDirectors to hold office until the 2014 Annual Meeting of Stockholders
 | ||||
 | RICHARD E. DAUCH Age Richard E. Dauch is Co-Founder & Executive Chairman of the Board | Director since 1994 |
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 | JAMES A. McCASLIN Age Mr. McCaslin retired from Harley Davidson, Inc. in April 2010. Mr. McCaslin joined Harley Davidson in 1992 and held various senior executive leadership positions, including President and Chief Operating Officer of Harley-Davidson Motor Company, from 2001 to 2009. From 1989 to 1992, he held manufacturing and engineering positions with JI Case, a manufacturer of agricultural equipment. Previously, he held executive positions in manufacturing and quality with Chrysler Corporation, Volkswagen of America and General Motors Corporation, where he began his 40-year career in manufacturing. From 2003 to 2006, he served on the Board of Directors of Maytag Corporation. Mr. McCaslin has served on a number of civic boards, including Boys and Girls Clubs of Greater Milwaukee, Manufacturing Skill Standards Council and Kettering University. Mr. McCaslin’s extensive operational expertise and experience in multiple manufacturing industries in the original equipment and aftermarket product markets | Director since 2011 | ||
 | ||||
 | WILLIAM P. MILLER II, CFA Age Mr. Miller, Chartered Financial Analyst, is the Senior Managing Director & Chief Financial Officer of Financial | Director since 2005 | ||
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 | LARRY K. SWITZER Age Larry K. Switzer retired as Chief Executive Officer of DANKA PLC, London, England, a global independent distributor of office equipment, in 2000. From 1994 to 1998, Mr. Switzer was Senior Executive Vice President and Chief Financial Officer of Fruit of the Loom, Inc. Previously, he served as Executive Vice President and Chief Financial Officer for Alco Standard Corporation and, from 1989 to 1992, Senior Vice President and Chief Financial Officer for S.C. Johnson & Son, Inc. Mr. Switzer has also held senior executive positions at Bendix Corp., White Motor Corp. and Gencorp. As a former chief financial officer, Mr. Switzer serves as a valued resource to the Board in finance, accounting and tax matters and provides significant expertise and | Director since 2005 |
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 | DAVID C. DAUCH Age David C. Dauch is President & Chief | Director since 2009 | ||
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 | FOREST J. FARMER Age Forest J. Farmer has served as Chairman of the Board, Chief Executive Officer & President of The Farmer Group, a holding company for | Director since 1999 | ||
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 | RICHARD C. LAPPIN Age Richard C. Lappin is Executive Chairman of VOKAL Interactive, a maker of mobile applications for business. From 2007 to 2010, he served as Chairman of the Board & Chief Executive Officer of Clear Sky Power, an alternative energy company. Mr. Lappin retired in 2004 as Chairman of the Board of Haynes International, Inc. Previously, Mr. Lappin served as Senior Managing Director of The Blackstone Group L.P., where he was a member of the Private Equity Group from 1998 to 2002. He also helped monitor the operations of Blackstone Capital Partners portfolio companies and evaluated business strategy options. From 1989 to 1998, Mr. Lappin served as President of Farley Industries, which included West Point-Pepperell, Inc., Acme Boot Company, Inc., Tool and Engineering, Inc., Magnus Metals, Inc. and Fruit of the Loom, Inc. He also served as President & Chief Executive Officer of Doehler-Jarvis and Southern Fastening Systems, and he has held senior executive positions with Champion Spark Plug Company and RTE Corporation. Mr. Lappin’s experience as a CEO and his financial expertise | Director since 1999 | ||
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 | THOMAS K. WALKER Age Thomas K. Walker is Chairman of the Board & Chief Executive Officer of Lackawanna Acquisition Corporation and is the former President of Amcast Automotive, where from 1995 to 1999 he directed all activities for the $300 million automotive group. Previously, he held senior executive positions with ITT Automotive and Allied-Signal Automotive Catalyst Co. He also served in various manufacturing and engineering leadership positions with Volkswagen of America and with General Motors Corporation, where he began his | Director since 1999 | ||
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Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines that meet or exceed the requirements of the NYSE listing standards. AAM’s Corporate Governance Guidelines are available on our website athttp://www.aam.com/investors/corporategovernance.investor.aam.com.
Director Independence
AAM’s Corporate Governance Guidelines provide that at least a majority of the members of the Board and each member of the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee meet the independence criteria of the NYSE listing standards. In addition, the Board has established Director Independence Guidelines to assist in determining the independence of our directors for purposes of the NYSE independence standards. The Director Independence Guidelines are included in AAM’s Corporate Governance Guidelines, which are available on our website athttp://www.aam.com/investors/corporategovernanceinvestor.aam.com..
The Board reviews and determines, on the recommendation of the Nominating/Corporate Governance Committee, whether any director has a material relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. When assessing materiality, the Board considers relevant facts and circumstances of which it is aware. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company.
The Board has affirmatively determined that the following ninenominees and returning directors have no material relationships with AAM and are independent: Salvatore J. Bonanno, Sr., Elizabeth A. Chappell, Forest J. Farmer, Steven B. Hantler, Richard C. Lappin, James A. McCaslin, William P. Miller II, John F. Smith, Larry K. Switzer and Thomas K. Walker and Dr. Henry T. Yang.Walker. Richard E. Dauch,Co-Founder Chairman of the Board & CEO,Executive Chairman and David C. Dauch, President & COO,CEO, are not independent due to their employment with AAM. Mr. D.C. Dauch is the son of Mr. R.E. Dauch.
In making these director independence determinations, the Board considered certain business relationships that were found to be immaterial under applicable independence standards. Mr. Bonanno serves onMs. Chappell’s position as President & CEO of the BoardDetroit Economic Club, in light of and has a minority interest in a supplier that receives payments for sales made to AAM. Ms. Chappell is an officer of a non-profit organization that receivesthe sponsorship fees from AAM. PriorAAM pays to his election to AAM’s Board, Mr. McCaslin was an officer of Harley-Davidson, Inc., an AAM customer. He retired from Harley-Davidson in April 2010.
Board Leadership Structure
The Board believes that as AAM’s co-founder, Richard E. Dauch,has the responsibility to determine the appropriate leadership structure for the Company, including whether it is uniquely qualifiedbest for the Company at a given point in time for the roles of Board Chairman and CEO to serve asbe separate or combined.
Historically, the positions of CEO and Chairman of the Board while holding the position of CEO.were held by Mr. R.E. Dauch. Mr. R.E. Dauch has been our CEO since he co-founded AAM in 1994 and has served as Chairman since 1997. TheAs a result of the Company’s multi-year CEO succession planning and leadership development process, as well as the Board’s ongoing review of its structure, the roles of Chairman and CEO were separated in September 2012.
Effective September 1, 2012, the Board benefits fromappointed David C. Dauch President & CEO. Concurrent with this structure throughappointment, AAM’s co-founder, Richard E. Dauch, was named Executive Chairman of the Board. Both the President & CEO and the Executive Chairman report solely to the Board. As Executive Chairman of the Board, Mr. R.E. Dauch’s contributions as a strong leader withDauch will continue to provide leadership to the Board based on his extensive knowledge of the global automotive industry and a unique commitmenthis prior experience serving as the Board’s Chairman & CEO. The separation of these roles permits Mr. D.C. Dauch to focus on leading AAM’s global business and day-to-day operations while providing the Board with strategic vision and insight regarding AAM’s strategic plans for the future.
In addition to the successcustomary procedural duties of the Chairman of the Board, the Executive Chairman has the following responsibilities:
Together with the President & CEO, represent the Company to external groups, including shareholders, customers, creditors, suppliers, local communities and governmental organizations and other key stakeholders;
Promote the Company as a technology and quality leader within the auto industry through public speaking, media appearances and global community affairs;
Develop relationships and maintain liaisons with universities that excel in the Company’s fields of both current and future business lines;
Develop relationships and maintain liaisons with other business leaders to share best practices in long-term planning;
Oversee and evaluate (but not direct) day-to-day operations;
Oversee the long-term strategy and vision of the Company he co-founded.and ensure the Board’s participation in strategic planning;
Discuss and review with the President & CEO issues facing the Company;
Evaluate the performance of the Company in achieving its goals and objectives;
Oversee and lead the development and implementation of a brand management program that promotes the Company as a technology and quality leader within the auto industry; and
Oversee and review succession planning.
Our Board leadership structure is further enhanced by independent director oversight. The Board is comprised of nine independent directors, including a lead director.an Independent directors and management have different perspectives and roles in strategy development. One of the key responsibilities
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Preside at executive sessions of the Board’s non-managementindependent directors, and acting as a liaison between the Chairman and the independent directors.
Call special executive sessions of independent directors, as appropriate;
Serve on all standing committees required by NYSE listing standards and on the Executive Committee;
Serve as Chair of the Nominating/Corporate Governance Committee;
Serve as the liason between the independent directors and AAM’s Executive Chairman and President & CEO;
Inform the Executive Chairman and President & CEO of issues arising from executive sessions of the independent directors; and
With Board approval, retain outside advisors and/or consultants who report directly to the full Board on matters of interest to the full Board.
In September 2012, the Board approved the temporary assignment of Mr. Walker to serve as Non-Executive Chairman during the absence of the Executive Chairman for a medical procedure. Mr. Walker’s temporary assignment as Non-Executive Chairman and the compensation paid for such services are described inNarrative Description of Non-Employee Director Compensation.
Board Oversight of Risk Management
The Board, as a wholedirectly and also atthrough its committees, is responsible for overseeing the committee level oversees management of potential risks affecting the Company’s risks. TheCompany. In connection with our company-wide risk management process, the Board regularly reviews information provided by senior management regardingabout the Company’s strategic, operational, financial and compliance risks. In addition, the chairs of the Audit, Compensation, Nominating/Corporate Governance, Strategy and Technology Committees regularly report to the Board on the activities of their respective Committees, including matters related to risk.
The Audit Committee oversees management of financial risks and receives an annual report from management on the Company’s overall risk management structure and process.processes. The Nominating/Corporate Governance Committee manages risks associated with corporate governance and management succession planning. The Compensation Committee oversees risks related to AAM’s compensation programs. The Technology Committee oversees risks related to AAM’s product,
process and systems technology. The Strategy Committee oversees risk related to the development and implementation of the Company’s strategic plan. Additional review or reporting of specific risks is conducted as necessary or as requested by the Board or a Committee.
Stockholder Communication with the Board
Stockholders or other interested parties may communicate with the Board through the Secretary of AAM by mail at One Dauch Drive, Detroit, Michigan48211-1198 or bye-mail at AAMBoardofDirectors@aam.com.
The Board has instructed the Secretary to review all such communications and to exercise his discretion not to forward correspondence to the Board that is inappropriate, such as advertising and business solicitations, routine business matters and personal grievances. However, any director may at any time request the Secretary to forward any communication received by the Secretary on behalf of the Board.
Code of Business Conduct
AAM has adopted a Code of Business Conduct that is designed to assist all AAM associates, executive officers and members of the Board in conducting AAM’s business with the highest standards of ethics and integrity. AAM has also adopted a Code of Ethics forapplicable to our CEO, COO, CAO,Executive Chairman, CFO and other Senior Financial Officers (Code of Ethics). The Board annually reviews the Code of Business Conduct and makes updates the Code as appropriate. AAM’s Code of Business Conduct and Code of Ethics are available on our website athttp://www.aam.com/investors/corporategovernance.investor.aam.com.A written copy also may be obtained by any stockholder without charge upon request to the AAM
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Related Person Transactions Policy
The Board has adopted a policy and procedure for the review, approval and ratification of transactions involving AAM and “related persons” as defined in the policy. This policy supplements AAM’s other conflict of interest policies as set forth in AAM’s Code of Business Conduct. The Board has delegated to the Audit Committee the responsibility for reviewing, approving and ratifying all related person transactions in accordance with the policy.
For purposes of this policy, a related person transaction includes any financial transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which:
AAM is or is expected to be a participant;
the amount involved exceeds $120,000; and
a related person has or will have a direct or indirect material interest.
However, a transaction between AAM and a related person is not subject to this policy if the transaction:
is available to all employees generally;
involves less than $5,000 when aggregated with all similar transactions; or
involves compensation of an executive officer that is approved by the Compensation Committee.
A related person includes directors and executive officers and their immediate family members, stockholders owning more than five percent of the Company’s outstanding common stock as of the last completed fiscal year, and any entity owned or controlled by any one of these persons.
A related person transaction meeting the above criteria will be permitted only if the transaction is approved by the Audit Committee and is on terms comparable to those available to unrelated third parties. Any related person transaction involving a member of the Audit Committee must be presented to disinterested members of the full Board for review.
In considering a transaction, the Audit Committeeand/or the Board may consider the following factors, as applicable:
the Company’s business reasons for entering into the transaction;
the alternatives to entering into a | ||
the potential for the transaction to AAM’s Executive Director, Administration & Legal, who also serves as lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflict;
the Company’s Secretary. In addition, extent of the related person’s interest in the transaction; and
whether the transaction is in the best interests of AAM.
AAM’s directors and executive officers complete annual questionnaires designed to elicit information about potential related person transactions. TheIn addition, our directors and executive officers are required to report any existing or contemplated related person transaction to the Company Secretary, who also serves as AAM’s General Counsel.
During fiscal year 2012, the Company did not engage in any reportable related person transactions during fiscal year 2010.transactions. As of the date of this proxy statement, no reportable related person transaction has been brought to the attention of the Secretary, the Audit Committee or the Board.
Board Committee Composition
Directors are expected to attend all Board meetings, meetings of the committees on which they serve and stockholder meetings. During 2010,2012, all directors attended 100more than 75 percent of the meetings of the Board and the committees on which they served and theserved. The 2012 annual meeting of stockholders.
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COMMITTEE MEMBERSHIP IN 20102012
| Nominating/ | |||||||||||||||
| Corporate | |||||||||||||||
| Audit | Compensation | Governance | Executive | Technology | |||||||||||
| Name of Director | Committee | Committee | Committee | Committee | Committee | ||||||||||
| Richard E. Dauch | Chairman | ||||||||||||||
| Salvatore J. Bonanno, Sr. | X | ||||||||||||||
| Elizabeth A. Chappell | X | ||||||||||||||
David C. Dauch(1) | |||||||||||||||
| Forest J. Farmer | Chairman | X | X | ||||||||||||
| Richard C. Lappin | X | X | |||||||||||||
James A. McCaslin(2) | |||||||||||||||
| William P. Miller II | Chairman | X | |||||||||||||
| Larry K. Switzer | X | X | |||||||||||||
| Thomas K. Walker | X | X | Chairman | X | X | ||||||||||
| Dr. Henry T. Yang | Chairman | ||||||||||||||
No. of Meetings in 2010 | 4 | 6 | 4 | 1 | 3 | ||||||||||
| Name of Director | Audit Committee | Compensation Committee | Nominating/ Corporate Governance Committee | Executive Committee | Technology Committee | Strategy Committee | ||||||
Richard E. Dauch | Chairman | X | ||||||||||
Salvatore J. Bonanno, Sr. | X | |||||||||||
Elizabeth A. Chappell | X | |||||||||||
David C. Dauch | X | X | ||||||||||
Forest J. Farmer | Chairman | X | X | |||||||||
Steven B. Hantler | X | |||||||||||
Richard C. Lappin | X | X | Chairman | |||||||||
James A. McCaslin | X | X | ||||||||||
William P. Miller II | Chairman | X | ||||||||||
John F. Smith(1) | X | X | ||||||||||
Larry K. Switzer | X | X | X | |||||||||
Thomas K. Walker(2) | X | X | Chairman | X | ||||||||
Dr. Henry T. Yang | Chairman | |||||||||||
No. of Meetings in 2012 | 4 | 5 | 6 | 2 | 3 | 2 |
| (1) | Mr. | |
| (2) | Mr.Walker’s service on the Technology Committee ended effective April 26, 2012. |
Audit Committee
The Audit Committee provides assistance toassists the Board in fulfilling its oversight responsibility with respect to:
the quality and integrity of our financial statements;
our compliance with legal and regulatory requirements;
our independent auditors’ qualifications and independence; and
the performance of our internal audit function and independent auditors.
The Audit Committee operates under a written charter that is available on AAM’s website athttp://www.aam.com/investors/corporategovernance.investor.aam.com.
The Board has determined that alleach Audit Committee members serving during 2010 aremember is independent, is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 and is financially literate under applicable NYSE listing standards. The Audit Committee has determined that Mr. Miller, Mr. Smith and Mr. Switzer alsoeach qualify as an audit committee financial expertsexpert as defined by SEC rules.
Compensation Committee
The Compensation Committee is responsible for the following:
Establishing and reviewing AAM’s compensation philosophy and programs with respect to our executive officers;
Approving executive officer compensation with a view to support AAM’s business strategies and objectives; |
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Approving corporate goals and objectives for executive officer compensation and evaluating executive officer performance in light of these criteria;
Recommending incentive compensation and equity-based plans to the Board;
Overseeing management’s risk assessment of the Company’s policies and practices regarding its compensation programs for executive officers and other associates;
Overseeing the preparation of the Compensation Discussion and Analysis for inclusion in our annual proxy statement; and
Producing the Compensation Committee Report for inclusion in our annual proxy statement.
The Compensation Committee operates under a written charter that is available on our website athttp://www.aam.com/investors /corporategovernance.investor.aam.com. In February 2013, Compensation Committee Charter was amended to comply with recently-adopted NYSE listing standards regarding the independence of the Compensation Committee and its advisors. In accordance with our Corporate Governance Guidelines, the Compensation Committee is also responsible for recommending non-employee director compensation and benefits for approval by the Board.
Each member of the Compensation Committee is independent, is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, and is an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code.
Risk Assessment of Compensation Policies and Practices
In 2011,2012, AAM management conducted a risk assessment of the Company’s compensation policies and practices relating to AAM’s compensation programs for executive officers and other associates on a global basis.associates. The process used by management to conduct the risk assessment was approved by the Compensation Committee. The risk assessment considered, among other things, AAM’s annual and long-term incentive programs and pay mix, performance measures used to calculate payouts, and pay philosophy and governance. Based on this risk assessment and other factors, management concluded that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee agreed with management’s conclusion.
Role of Management in Compensation Decisions
The Compensation Committee is responsible for making compensation decisions relative to executive officers. However, in making its decisions, the Compensation Committee seeks and considers input from senior management. Since management has direct involvement with and an in-depth knowledge of the business strategy, goals and performance of the Company, certain executive officers play an important role in the executive compensation decision-making process. Senior management participates in the Compensation Committee’s activities in the following specific respects:
The Executive Chairman and President & CEO provide the Compensation Committee with their evaluations of the performance of the Company’s executive officers, including the other named executive officers (NEOs). The President & CEO and Vice President, Human Resources make compensation recommendations for executive officers, including base salary levels and the amount and mix of incentive awards.
The President & CEO, the Executive Vice President & CFO and the Vice President, Human Resources develop and recommend performance objectives and targets for AAM’s incentive compensation programs. | ||
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The Vice President, Human Resources assists the Chairman of the Compensation Committee in developing meeting agendas and manages the preparation and distribution of pre-meeting informational materials on the matters to be considered.
The Executive Chairman, President & CEO, Executive Vice President & CFO and the Vice President, Human Resources regularly attend Compensation Committee meetings. Management generally does not attend the executive session of the Compensation Committee. On occasion, the Compensation Committee may request certain members of management to attend all or a portion of an executive session.
Role of Compensation Consultant
The Compensation Committee has retained Meridian Compensation Partners, LLC (Meridian) as its independent compensation consultant. Meridian provides independent advice and ongoing recommendations on compensation matters related to the CEO, otherour executive officers and non-employee directors, including:
In the course of fulfilling its responsibilities, Meridian may communicate directly with the Chairman of the Compensation Committee. Meridian also meets with management to gather information, prepare materials, and review proposals to be made to the Compensation Committee.
The Compensation Committee determined that Meridian is independent of management and that the services provided by Meridian to the Compensation Committee engaged Meridiando not give rise to conduct a market studyany conflicts of non-employee director compensationinterest. In written correspondence to determine the competitiveness of AAM’s total compensation program for non-employee directors. Meridian was instructed to compare AAM’s non-employee director pay levels and design practices against that of the peer group established by the Compensation Committee, for evaluating the competitiveness of AAM’s executive compensation programs. This peer group is shown in theMarket Analysis and BenchmarkingsectionMeridian provided detailed information addressing each of the CD&A. Based onsix independence factors adopted by the results of Meridian’s analysis,SEC and incorporated into the NYSE Corporate Governance Listing Standards. In this correspondence and in communications with the Compensation Committee, Meridian affirmed its independence and the Board approved changes to non-employee directorthat of its partners, consultants and employees who service AAM’s Compensation Committee on executive compensation for 2011 as described in2011 Non-employee Director Compensationbelow.
Nominating/Corporate Governance Committee
The Nominating/Corporate Governance Committee’s primary responsibilities are to:
Identify qualified individuals to serve on the Board and committees;
Review our Corporate Governance Guidelines and Code of Business Conduct and recommend changes as appropriate; and
Oversee and approve the process for succession planning for the CEO and other executive officers.
The Nominating/Corporate Governance Committee operates under a written charter that is available on our website athttp://www.aam.com/investors/corporategovernance.investor.aam.com. Each member of the Nominating/Corporate Governance Committee is independent and is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934.
Selection Process for Director Nominees. In consultation with the Executive Chairman ofand the Board,President & CEO, the Nominating/Corporate Governance Committee identifies, evaluates and recommends potential candidates for membership on the Board. The Nominating/Corporate Governance Committee conducts necessary and appropriate inquiries into the backgrounds and qualifications of the candidates and considers questions of independence and possible conflicts of interest. Based on the Nominating/Corporate Governance Committee’s evaluation, candidates who meet the Board’s criteria may receive further consideration, which may include interviews with the Nominating/Corporate Governance Committee and other directors. The Nominating/Corporate Governance Committee then submits its recommendations for nominees to the Board for approval. Pursuant to AAM’s bylaws, the Board may establish the size of the Board by resolution, provided there is a minimum of three members.
Before the Board nominates an incumbent director for re-election by our stockholders, the incumbent director is evaluated by the Nominating/Corporate Governance Committeeand/or the Board. This evaluation is based on, among other things, theeach incumbent director’s meeting attendance record and contributions to the activities of the Board.
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High ethical character and shared values with AAM;
Loyalty to AAM and concern for its success and welfare;
High-level leadership experience and achievement at a policy-making level in business or in educational or professional activities;
Knowledge of issues affecting AAM;
The ability to contribute special competencies to Board activities, such as financial, technical, international business or other expertise, or industry knowledge;
Willingness to apply sound, independent business judgment;
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.
The Board as a whole should reflect the appropriate balance of knowledge, experience, skills, expertise and diversity that, when taken together, will enhance the quality of the Board’s deliberations and decisions. Although the Board has no formal policy regarding diversity, the Board believes that diversity is an essential element of Board effectiveness. In this context, diversity is defined broadly to include differences in background, skills, education, experience, gender, race, national origin and culture.
For director candidates recommended by stockholders, the Nominating/Corporate Governance Committee follows the procedures described below inOther Matters, Stockholder Proposals for 20122014 Annual Meeting. The Nominating/Corporate Governance Committee will evaluate candidates recommended by stockholders using substantially the same criteria as it considers in evaluating director candidates recommended by our Board members, Executive Chairman or President & CEO.
Succession Planning. The Nominating/Corporate Governance Committee is responsible for overseeing the Company’s succession planning process for executive officers and other key executive positions at AAM. In performing this role, the Nominating/Corporate Governance Committee monitors and approves management’s succession planning process and actions and, with respect to the CEO, makes recommendations to the full Board for approval.
The Board has primary responsibility for CEO succession planning and develops both long-term and contingency plans for CEO succession. In September 2012, the Board implemented its multi-year CEO succession plan with the appointment of Mr. D.C. Dauch as President & CEO. The Company’s co-founder and former CEO, Mr. R.E. Dauch, assumed the role of Executive Chairman of the Board. The Company’s long-term and ongoing succession planning program is designed to support effective senior leadership development and succession in a manner that positions AAM to achieve its strategic, operating and financial performance goals, and enhance stockholder value.
Executive Committee
The Executive Committee exercises the authority of the Board during the intervals between Board meetings and does not meet on a regular basis. Its members are identified in theCommittee Membership in 20102012table.
Technology Committee
The Technology Committee oversees and provides advice to AAM regarding AAM’s product, process and systems technology. Its members are identified in theCommittee Membership in 20102012table.
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Strategy Committee
The Strategy Committee oversees the development and implementation of AAM’s strategic plan and provides advice to management regarding specific strategic opportunities. Its members are identified in theCommittee Membership in 2012 table.
Executive Summary Effective September 1, 2012, AAM’s Board appointed David C. Dauch as President & Chief Executive Officer, concurrent with the appointment of Richard E. Dauch as Co-Founder & Executive Chairman. Mr. D.C. Dauch most recently served as AAM’s President & Chief Operating Officer since June 2008 and On April 26, 2012, the Company’s stockholders approved the 2012 Omnibus Incentive Plan and authorized up to 5 million shares for issuance as equity-based compensation under the plan. This action by our stockholders enabled the Compensation Committee to include equity-based incentives as a component of the Company’s long-term incentive compensation program for executive officers, which we believe strengthens the alignment of interests between our executive officers and our stockholders. Since the expiration of AAM’s previous stock incentive plan in Our executive compensation program reflects an externally competitive compensation structure based on a comprehensive market study of executive compensation programs in AAM’s comparative peer group. The program includes a mix of base salaries and target annual When setting compensation for 2013 and in determining compensation policies, the Compensation Committee took into account the favorable results of the stockholder advisory vote on executive compensation in April 2012. Our stockholders approved the compensation of our named executive officers, with approximately 95% of votes cast in favor of our say-on-pay proposal. Accordingly, the Compensation Committee has continued to apply the executive compensation philosophy and objectives described below. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for our named executive officers. Named Executive Officers For purposes of David C. Dauch, President & Chief Executive Officer; Michael K. Simonte, Executive Vice President & Chief Financial Officer; Richard E. Dauch, Co-Founder & Executive Chairman; John J. Bellanti, Executive Vice President, Worldwide Operations; and Norman Willemse, Vice President, Metal Formed Products Business Unit. Executive Compensation Philosophy and Objectives The Compensation Committee is responsible for establishing and reviewing the overall compensation philosophy of the Company. The Compensation Committee believes that the compensation paid to executives should be structured to provide AAM executives with meaningful rewards, while maintaining alignment with stockholder interests, corporate values and management initiatives. The Compensation Committee believes that AAM’s executive compensation program should consist of a mix of base salary, annual incentive compensation, long-term incentive compensation, perquisites and other personal benefits. One of the key objectives of establishing a mix of base salaries, annual incentive and long-term incentive compensation is to have a significant portion of total compensation be performance based and contingent upon the achievement of stated Company performance goals. In an effort to more closely align the objectives of the philosophy to market competitive practices, the Compensation Committee The Compensation Committee also considers other factors in setting compensation levels for the NEOs, including, among other things, individual performance, succession planning and the In 2010, general economic conditions began to stabilize, credit markets improvedU.S. domestic automotive production levels increased. The U.S. Seasonally Adjusted Annual Rate (SAAR)has been a member of sales increasedthe Board since 2009. He has held positions of increasing responsibility since he joined AAM in 2010 for1995. Mr. R.E. Dauch has served as CEO since he co-founded the first timeCompany in three years to 11.6 million units1994 and as Chairman of the U.S. domestic automotive industry began to recover from the severe downturn it had suffered. Over the past several years, AAM’s senior management team implemented a restructuring plan that resulted in a cost structure aligned with current and projected levels of customer demand and market requirements. This plan has proven successful, yielding significant, permanent structural cost reductions, which has driven down our operating breakeven level.Board since 1997. These actions positioned AAMreflect the Board’s ongoing commitment to significantly improve profitabilitysuccession planning and free cash flowdevelopment of AAM’s leadership team.2010.incentive opportunities and long-term incentive opportunities. The performance goals under the compensation incentive programs are established to reward achievement of the Company’s goals and objectives. In 2012, the Company did not perform as expected against its established goals due to increased costs associated with plant closures, global launch activity, lower capacity utilization and labor inefficiencies. As a result, the 2012 payouts for annual and cash-based long-term incentives reflect the lower levels of Company performance pursuant to the metrics established by the Compensation Committee. In 2010, our annual incentives were based exclusively on achievementnet operating cash flow goals. Our current long-term incentive program for executive officers is a cash-based program as a result of AAM not having an equity plan available for new equity-based awards. We use total shareholder return (TSR)this Compensation Discussion and earnings before interest, taxes, depreciationAnalysis and amortization (EBITDA) as the performance measures for long-term incentive awards. In addition, the annual compensation limit of $3 million for any executive officer and other restrictions contained in the 2009 Settlement and Commercial Agreement we entered into with GM (2009 Settlement and Commercial Agreement) will be considered by the Committee in order to ensure compliance with the agreement as long as it remains in effect.approvedhas established stated target percentile goals (compared to our comparative peer group) for each component of pay.pay as set forth below underMarket Analysis and Benchmarking. The following pay percentile goals are generally used as a guide to help set compensation levels for the NEOs, excluding the CEO (whoseExecutive Chairman. The Executive Chairman’s compensation is determined under his employment agreement, as described below). In addition to these goals, theagreement.specific needsrequirements of the position for the Company.Pay ComponentTarget Percentile GoalBase Salary50th PercentileTarget Annual IncentiveBetween 50th and 75th PercentilesLong-Term IncentivesBetween 50th and 75th PercentilesThese percentile goals were established based on the Committee’s objective that base salaries should be consistent with market salaries at the 50th percentile. The percentile goals for annual20
Compensation Objectives. The following fundamental objectives are considered in determining compensation programs and pay levels.
Compensation and benefit programs should appropriately reflect the size and financial resources of our Company in order to maintain long-term viability. These programs should be market-based to be competitive relative to the compensation paid to similarly situated executives in our peer group.
Compensation and benefit programs should attract, motivate and retain experienced executives who are vital to our short-term and long-term success, profitability and growth. AAM makes an effort to remain competitive by targeting competitive pay levels based on the Company’s compensation philosophy with consideration of the specific business environment and other market influences.
Compensation and benefit programs should reward Company and individual performance. Our programs should strive to deliver competitive compensation for exceptional individual and Company performance as compared to companies in our peer group. As associates progress to higher levels in the Company and assume key leadership positions, a greater portion of their compensation should be linked to Company performance and stockholder returns. Company performance is measured against financial and operational objectives and stockholder return.
Compensation and benefit programs should foster the long-term focus required for success in the global automotive industry. We believe that long-term incentive compensation will motivate executive officers to deliver long-term value to our stockholders. Executives who are in positions to influence longer-term results should have a greater proportion of their compensation tied to longer-term performance.
Executive officers should be AAM stockholders. Stock ownership aligns our executive officers’ interests with those of stockholders and reinforces the importance of making sound long-term decisions. AAM’s executive officers are required to maintain a certain level of stock ownership based on their position.
The objectives of rewarding performance and retention should be balanced. Our compensation programs should continue to ensure that high-achieving, marketable executives remain motivated and committed to AAM. This principle is essential to our effort to encourage our strongest leaders to remain with AAM for long and productive careers.
Compensation and benefit programs should be fair in consideration of each executive’s level of responsibility and contribution to AAM. While the overall structure of compensation and benefit programs should be broadly similar across the Company, individual pay levels and benefit packages will reflect differences in job responsibilities, geography and marketplace considerations.
Market Analysis and Benchmarking
Comparative Peer Group.
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Operating/Industry Competitors — Companies with which we compete for the sale of products and services;
Labor Market Competitors — Companies with which we compete for executive talent;
Competitors for Capital — Companies with which we compete for investment dollars and against which investment performance is evaluated; and
Revenue Size — Companies with revenues within a broad range.
Based on the foregoing criteria, the Compensation Committee approvedestablished the following comparative peer group to be used for 2010 and 2011 pay decisions:
A. O. Smith Corporation | Kennametal Inc. | |
Ball Corporation | Lear Corporation | |
BorgWarner Inc. | Meritor Inc. | |
Brady Corporation | Navistar International | |
Cameron International Corporation | Owens-Illinois, Inc. | |
Cummins Inc. | PACCAR Inc. | |
Dana Corporation | Polaris Industries Inc. | |
Donaldson Company, Inc. | Rockwell Automation | |
Dover Corporation | Sauer-Danfoss Inc. | |
Eaton Corporation | Sonoco Products Company | |
Federal Signal Corporation | Terex Corporation | |
Federal-Mogul Corporation | Thomas & Betts Corporation | |
Fleetwood Enterprises, Inc. | The Timken Company | |
Flowserve Corporation | Trinity Industries, Inc. | |
FMC Technologies | TRW Automotive Holdings Corp. | |
Genuine Parts Company | USG Corporation | |
Harley-Davidson Motor Company | Valmont Industries, Inc. | |
Ingersoll-Rand Company | Visteon Corporation | |
Joy Global Inc. | Woodward Governor Company |
The Compensation Committee relied on the market data analysis usedperformed by Meridian in determiningOctober 2010 for setting 2011 and 2012 executive officer compensation. Meridian’s market analysis in 2010
was considered adequate for setting 2012 pay based on Meridian’s guidance to the Compensation Committee that levels of compensation levelsamong our comparative peer group had not changed significantly from 2010 to 2012. The market data was revenue size adjusted using regressed market valuesvalues.
Our general practice is to set compensation at market competitive levels based on the responsibilities, expertise and experience of each NEO as well as individual and Company performance. The total compensation for each relevant position.
| Pay Component | Target Percentile Goal | |
Base Salary | 50th Percentile | |
Annual Incentives | Between 50th and 75th Percentiles | |
Long-Term Incentives | Between 50th and 75th Percentiles |
The percentile goals for annual incentives and long-term incentives were set between the 50th percentile and the 75th percentile to enable the Company to reward executive performance at a rate above average in order to drive above average performance and to compete for executive talent.
Competitor Peer Group. The Compensation Committee also considers, from time to time, publicly available information regarding companies in our competitor peer group in establishing certain executive compensation benchmarks, targets and performance levels. As disclosed in our most recent Annual Report on Form 10-K, our competitor peer group consists of Autoliv Inc., BorgWarner Inc., Dana Corporation, Lear Corporation, Magna International Inc., Meritor, Inc., Tenneco Automotive Inc. and Visteon Corporation.
Tally Sheets
Annually, the Compensation Committee reviews compensation tally sheets for each executive officer, including the NEOs. The tally sheets, which are prepared by management, provide a summary of the current amounts of each component of pay, including a historical review of prior long-term incentive grants. The tally sheets also provide a summary of the potential payouts and benefits upon various termination events. The elements and calculations reviewed are substantially similar to the information provided for each NEO inPotential Payments Upon Termination or Change in Controlbelow. The Compensation Committee did not change the NEOs’ compensation based on its review of this information. The Committee expects to review updated tally sheets on an annual basis.
Components of the AAM Compensation Program
The primary components of AAM’s executive compensation program are base salary, annual incentives, long-term incentives, and benefits and perquisites. The discussion below of the elements of compensation applies to the NEOs, other than Mr. R. E. Dauch, our CEO. Mr. R. E. Dauch’s compensation is discussed separately inCompensation of Chief Executive Officerbelow.
Base Salary. Base salaries provide fixed compensation to the executive for services rendered during the year. To more closely align its compensation programs with market competitive practices,
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| Base Salary | ||||
| Richard. E. Dauch | $ | 2,702,300 | ||
| Michael K. Simonte | $ | 515,000 | ||
| David C. Dauch (effective November 1, 2010) | $ | 650,000 | ||
| John J. Bellanti | $ | 473,800 | ||
| John E. Jerge | $ | 303,000 | ||
| Base Salary | ||||||||
| 2012 | 2011 | |||||||
David C. Dauch (effective September 1, 2012) | $ | 1,000,000 | $ | 650,000 | ||||
Michael K. Simonte | $ | 527,900 | $ | 515,000 | ||||
John J. Bellanti | $ | 485,700 | $ | 473,800 | ||||
Norman Willemse | $ | 310,600 | $ | 303,000 | ||||
President & CEO Base Salary. Effective September 1, 2012, the Board appointed Mr. D.C. Dauch President & CEO. The Company entered into an employment agreement with Mr. D.C. Dauch on August 27, 2012 in connection with this appointment. Mr. D.C. Dauch’s base salary as President & CEO is $1 million.
In determining Mr. D.C. Dauch’s base salary, the Compensation Committee considered CEO base salary benchmarking data provided by Meridian from the comparative peer group established by the Compensation Committee for purposes of setting executive compensation as shown inMarket Analysis and Benchmarking above. In addition, management provided the Compensation Committee with publicly available CEO pay information for members of the Company’s competitor peer group. Based on Meridian’s analysis, Mr. D.C. Dauch’s base salary is at the 50th percentile of CEO pay among our comparative peer group.
Effective January 1, 2012 through August 31, 2012, Mr. D.C. Dauch’s base salary (as President & COO) was increased effective November 1, 2010 in connection with$810,000. This amount reflected an increase from $650,000 due to the additional responsibilities he assumed on December 1, 2011 in the areas of labor relations, legalfinance, information technology and administration.investor relations. In determining his 2012 base salary while serving as President & COO, the Compensation Committee also considered his leadership role in connection with the Company’s ongoing succession planning process.
Other NEO Base Salaries. The increases in 2012 base salary shown above for Mr. Simonte, Mr. Bellanti and Mr. Willemse represent annual merit increases of 2.5%. Based on Meridian’s market data analysis, Mr. Simonte’s 2012 base salary is between the 50th and 75th percentile of CFO pay among our comparative peer group. Mr. Simonte’s pay level reflects, among other things, his additional leadership responsibilities in functional areas outside the finance organization. Mr. Bellanti’s and Mr. Willemse’s 2012 base salaries are at the 50th percentile of pay for 2010, 2009 and 2008 are showntheir positions among our comparative peer group. Mr. R.E. Dauch’s compensation is discussed below in theSummary Compensation Tableof Executive Chairman.
Annual Incentive Compensation. Annual incentive compensation at AAM is designed to:
Encourage executives to achieve short-term goals to foster achievement of the long-term goals of the Company;
Reward performance to support strategic initiatives; and
Provide incentive for executive retention.
Annual incentive compensation is measured by our achievement of financial targets established under AAM’s Incentive Compensation Plan for Executive Officers. All executive officers (other than the Executive Chairman) participated in this plan during 2012. On an annual basis, the Compensation Committee determines one or more performance factors, and the relative weighting of each factor, in consideration of the Company’s key performance objectives. Under the plan, the performance factors
that may be selected are (1) net income as a percentage of sales (NIPS), (2) after tax return on invested capital (ROIC) and (3) net operating cash flow. ROIC is defined as after-tax return divided by average invested capital. Net operating cash flow is defined as cash provided by or used in operating activities less capital expenditures. Target performance levels, established annually, are intended to be aggressive but achievable metrics based on industry conditions.
Payment of annual cash incentive awards are permitted to the extent the Company both (1) meets or exceeds threshold levels of performance set by the Compensation Committee and (2) reports positive net income for the performance year. However, theThe plan permits the Compensation Committee to make discretionary adjustments if the Committeeit determines that the achievement of performance targets for a plan year do not reflect the true performance of the Company due to unanticipated circumstances specified in the plan. No such adjustments were made for the 2008, 2009 or 2010 plan years.
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| Annual Incentive | ||||
| Opportunity | ||||
David C. Dauch (effective September 1, 2012) | % | |||
Michael K. Simonte | 80 | % | ||
John J. Bellanti | 80 | % | ||
Norman Willemse | 60 | % | ||
President & CEO Annual Incentive Target. Pursuant to his employment agreement, Mr. D.C. Dauch’s target annual incentive opportunity is 125% of base salary. His target annual incentive opportunity for the period January 1, 2012 through August 31, 2012 was 90% of base salary. In determining Mr. D.C. Dauch’s target annual incentive opportunity effective September 1, 2012, the fourth quarter of 2009,Compensation Committee considered, among other things, the Committee determined the 2010 awardpay levels for CEOs among AAM’s competitor peer group as described inPresident & CEO Base Salaryabove. Based on a market analysis conducted by Meridian, Mr. D.C. Dauch’s target annual incentive opportunity is 6% above the net operating cash flow performance metric75th percentile of CEO pay among our comparative peer group. The Compensation Committee considered this level to be appropriate in conjunction with a reviewconsideration of his target long-term incentive opportunity, which is at the 50th percentile of our comparative peer group.
Other NEO Annual Incentive Targets. The Compensation Committee considers Meridian’s market analysis in determining the annual incentive target opportunities for the other NEOs. The 2012 annual incentive target opportunities for Mr. Simonte, Mr. Bellanti and Mr. Willemse are each between the 50th and 75th percentile for comparable positions among our comparative peer group. Mr. R.E. Dauch’s annual bonus is discussed below inCompensation of Executive Chairman.
2012 Annual Incentive Performance
In support of the Board-approved annual budgetCompany’s 2012 goals and projections provided to AAM’s lenders. The award levels are as follows:
Net operating cash flow is a critical financial metric for AAM at this time due to its impact on liquidity and debt reduction;
Increasing net operating cash flow were determined inis key to achieving credit rating upgrades, which will have a favorable impact on the Company’s cost of future financing;
Net income is a key indicator of financial and operational performance; and
Net income and net income growth are highly correlated to cash flow, cash flow growth and stockholder value creation.
In the fourth quarter of 2010. Target2011, in conjunction with a review of the Board-approved annual budget, the Compensation Committee determined the 2012 targets for both the net operating cash flow and NIPs performance metrics. The 2012 targets for each performance metric are as follows:
| Net Operating Cash Flow | Net Income as a Percentage of Sales | |||||||
| Performance | Payout | Performance | Payout | |||||
Threshold | $0 | 50% | 1% | 30% | ||||
Target | $26 million | 100% | 3% | 100% | ||||
Maximum | $51 million | 125% | >3% | >100% | ||||
The budgeted net operating cash flow was $1 million. The target performance level for net operating cash flow was based on the Company outperforming the budget by $25 million; the maximum performance level was based on outperforming the budget by $50 million. No payout would be made with respect to the net operating cash flow metric unless the threshold was attained.
The target and threshold performance levels for NIPS were establisheddetermined based on a reviewthe performance of our competitor peer group benchmarks for the three most recently completed years. AAM’s competitor
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The Company’s 2012 net operating cash flow performance was a use of $383.1 million, which is lower than the breakeven threshold level. Accordingly, no payout was made for 2012 based on the Board approved budget. The target performance level forthis net operating cash flow is based on our outperformingmetric. The Company’s 2012 NIPS was 3.1 %, excluding the budget by $25 millionimpact of the reversal of the deferred tax valuation allowance and the maximumcosts associated with plant closures and debt refinancing activities. Accordingly, the NIPS performance level is basedmetric resulted in an achievement of 102% of target. Based on outperforming the budget by $50 million. These 2011weighting of each performance targets will be disclosedmetric, the 2012 annual incentive awards resulted in a payout of 51% of target. For Mr. D.C. Dauch and Mr. Simonte, the Compensation Committee approved annual incentive payouts of 53% and 52% of target, respectively. The Compensation Committee made these discretionary adjustments to the payouts for Mr. D.C. Dauch and Mr. Simonte in consideration of their leadership and contributions to the Company during 2012. For Mr. D.C. Dauch, the Committee considered AAM’s strong sales growth of 13.4% on a year-over-year basis and new business awards resulting in a new business backlog of $1.25 billion for 2013-2015. For Mr. Simonte, the Committee considered the completion of key financing initiatives that provided additional liquidity to fund AAM’s sales growth, extended the debt maturity profile of AAM’s debt capital structure and allowed AAM to improve the funded status of our 2012 proxy statement.
Long-Term Incentives.Incentive Compensation. Long-term incentive compensation at AAM is designed to:
Align executive officer and stockholder interests;
Reward achievement of long-term performance goals; and
Provide incentives for executive retention.
The following table summarizes 2012 long-term incentive award targets for the NEOs (other than the Executive Chairman), stated as a percentage of base salary:
Target | ||||
David C. Dauch (effective September 1, 2012) | 240 | % | ||
Michael K. Simonte | 120 | % | ||
John J. Bellanti | 120 | % | ||
Norman Willemse | 80 | % | ||
President & CEO Long-Term Incentive. Prior to executive officers under the 1999 Stock Incentive Plan. That plan expired in 2009 and was not replaced by the Company. Since AAM does not have an equity plan in place, the Committee approved changes to theSeptember 1, 2012, Mr. D.C. Dauch’s 2012 long-term incentive program for executive officers that impact both (1) each executive officer’s awardtarget opportunity and (2) the type of long-term incentive awards.
Upon his appointment as President & CEO on September 1, 2012, Mr. D.C. Dauch received a long-term incentive award consisting of restricted stock units and cash-based performance units. The restricted stock unit award had a grant date value of $250,000 and the AAM 2009 Long-Term Incentive Plan (AAM LTIP), each participant receivesperformance unit award had a target value of $250,000. The Board approved this one-time award value, stated asupon execution of Mr. D.C. Dauch’s employment agreement to provide him with a dollar amount basedlong-term incentive award opportunity that the Compensation Committee considered appropriate for his new position.
The restricted stock unit award is payable in common stock on a percentage of base salary.
| 2011 | 2010 | |||||||
| Target Award | Target Award | |||||||
| Amount | Amount | |||||||
| Richard. E. Dauch | $ | — | $ | — | ||||
| Michael K. Simonte | $ | 618,000 | $ | 600,000 | ||||
| David C. Dauch | $ | 1,170,000 | $ | 1,008,000 | ||||
| John J. Bellanti | $ | 568,560 | $ | 552,000 | ||||
| John E. Jerge | $ | 242,400 | $ | 228,000 | ||||
| Patrick S. Lancaster (Retired 1/1/11) | $ | — | $ | 528,000 | ||||
Other NEO Long-Term Incentive Targets. The Compensation Committee considers Meridian’s market analysis in determining the long-term incentive target opportunities for the other NEOs. The long-term incentive target opportunities for 2012 for Mr. Simonte, Mr. Bellanti and Mr. Willemse are currently below the 50th percentile for comparable positions among our comparative peer group of companies. Mr. R.E. Dauch’s one-time long-term incentive award is discussed below inCompensation of Executive Chairman.
2012 Long-Term Incentives
In calculating thisApril 2012, the Company received stockholder approval of the 2012 Omnibus Incentive Plan, which authorized the Company to issue equity-based long-term incentives and other types of awards. In May 2012, the Company granted the NEOs equity-based and cash-based long-term incentives under the 2012 Omnibus Incentive Plan as described below.
The Compensation Committee determined the form and mix of awards in consideration of AAM’s compensation objectives, current market practice and share usage under the Company’s 2012 Omnibus Incentive Plan.
One-half of the total 2012 long-term incentive award value for NEOs (other than the plan givesExecutive Chairman) was in the Committee discretionform of restricted stock units (RSUs) and one-half was in the form of cash-based performance units (PUs) with a notional value of one dollar. The RSUs are payable in common stock, contingent upon continued employment through the three-year vesting period. The RSUs were designed to exclude certain special itemsprovide opportunities for share ownership and motivate executive officers to build long-term value for our stockholders.
The PU target award payment will be determined based on the Company’s EBITDA performance from EBITDA, such as special charges or gains, non-recurring operating costs, extraordinary gains or losses,April 1, 2012 through December 31, 2014. The PU awards were designed to align executive officer performance goals with those of the impact of changes in accounting principles, or any other unusual items.Company. EBITDA was chosenselected as one of the measures of Company performance as itmeasure based on the Compensation Committee’s belief that EBITDA is a key indicator of the Company’s financial and operational
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The remaining one-halfterms of the target award amount will be earned based on a total shareholder return (TSR) measure that comparesRSU and PU awards are described in more detail in the Company’s TSR over the three-year performance period relativeNarrative to the TSRSummary Compensation Table and Grants of AAM’s competitor peer group. Relative TSR was chosen as one of the measures of Company performance in order to motivate executive officers to build long-term value for our stockholders above that of our competitor peer group. Share price appreciation and dividends paid will be measured over the performance period to determine TSR.
The following tables illustratetable illustrates the threshold, target and maximum EBITDA performance levels for determining 2012 PU award payouts for each performance measure.payouts. The EBITDA performance levels shown below were designed to drive a level of performance in the top one-thirdone-half of our competitor peer group.
EBITDA Performance Measure
| Percent of | ||||||||
| 3-Year Cumulative | Target Award | |||||||
Performance Level | EBITDA | Opportunity Earned | ||||||
| Threshold | 8 | % | 25 | % | ||||
| Target | 12 | % | 100 | % | ||||
| Maximum | 15 | % | 200 | % | ||||
Performance Level | 33-Month Cumulative EBITDA | Percent of Target Award Opportunity Earned | ||||||
Threshold | 10 | % | 25 | % | ||||
Target | 12 | % | 100 | % | ||||
Maximum | 15 | % | 200 | % | ||||
TSR Performance MeasureEquity Grant Practices
AAM generally makes equity grants to its executive officers and other executives on an annual basis, subject to the approval of | ||||||||
Prior Long-Term Incentive Awards under the AAM 2009 Long-Term Incentive Plan
Prior to adoption of the financial accommodations provided by GM in connection with2012 Omnibus Incentive Plan, the Company’s long-term incentive program consisted of cash-based performance awards made under the AAM 2009 Settlement and Commercial Agreement and the Access and Security Agreement (Access Agreement)Long-Term Incentive Plan (2009 AAM LTIP). The Committee and the full Board believe that termination
Payouts of the financial accommodations provided by GM and the Access Agreement is in the best interests of AAM, its stockholders and other key stakeholders. The benefits to AAM of terminating the financial accommodations provided by GM and the Access Agreement include, among other things, a cost savings associated with eliminating the one percent sales discount related to the expedited payment terms. The Company also anticipates improved flexibility in accessing new sources of debt capital by eliminating certain covenants and other restrictions that accompany the financial accommodations provided by GM and the Access Agreement.
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| Total | ||||
| Award Value | ||||
| David C. Dauch | $ | 5,000,000 | ||
| Michael K. Simonte | $ | 3,000,000 | ||
| John J. Bellanti | $ | 1,000,000 | ||
| Patrick S. Lancaster | $ | 1,000,000 | ||
| Total | $ | 10,000,000 | ||
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Benefits. Our executive officersNEOs participate in the benefits and retirement plans provided to U.S. salaried associates. A group of approximately 4050 senior executives, including executive officers,the NEOs, also receive supplemental life, supplemental disability and umbrella liability and travel accident insurance benefits.
Perquisites. AAM provides a limited number of perquisites for senior executives, including executive officers, which are described in the footnotes to theSummary Compensation Table. The most significant perquisite provided is the use of a Company-provided vehicle with AAM content. This perquisite is common among automotive suppliers.our NEOs. AAM has never owned a corporate aircraft and does not provide leased aircraft for personal use. AAM does not pay for country club memberships.
Senior executives are eligible for the use of a Company-provided vehicle with AAM content. The Company also provides a vehicle for use by the spouses of the Executive Chairman and the President & CEO. From time to time, the Company invites spouses of AAM senior executives to attend Company business events. For attendance that requires a spouse to travel, the Company pays for the spouse’s travel and other related non-business expenses and reimburses the executive for taxes attributable to the income associated with this benefit. Perquisites are further described in the footnotes to theSummary Compensation Table.
Compensation of Chief Executive OfficerChairman
Effective September 1, 2012, the Board appointed the co-founder, Mr. R. E. Dauch’s compensation is governed byDauch, Executive Chairman of the Board. The Company entered into an employment agreement with Mr. R.E. Dauch on August 27, 2012 in connection with this appointment, which was amendedconcurrent with the appointment of Mr. D. C. Dauch as President & CEO. The key responsibilities assigned to Mr. R.E. Dauch are described above in December 2009.Corporate Governance, Board Leadership Structure.
Mr. R.E. Dauch’s total compensation package is set forth in his employment agreement. Mr. R.E. Dauch’s compensation was structured in order to induce him to defer retirement from AAM and assume the leadership responsibilities as Executive Chairman. The Board approved the Executive Chairman’s compensation package in consideration of Mr. R.E. Dauch’s extensive knowledge and expertise in the global automotive industry and the Board’s expectation that he will carry out these responsibilities in support of AAM’s goals and business strategy to build value for AAM stockholders and other key stakeholders.
Mr. R.E Dauch’s employment agreement iscontinues through August 31, 2015, and renews automatically for two additional one-year periods unless either party gives notice of its election not to renew. The terms and conditions of his employment agreement are further described in theNarrative to Summary Compensation and Grants of Plan-Based Awards Tablebelow. The CEO’s compensation arrangements are structured in considerationcomponents of the breadth of his responsibilities for the entire Company, his unique experience in the automotive industry, his leadership skills and service to AAM since he co-founded the Company in 1994.
Base Salary. Mr. R.E. Dauch’s base salary for 2010 or 2011.
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Annual Cash Bonus. For calendar year 2012, Mr. R. E.R.E. Dauch iswas eligible for an annual cash bonus as described indetermined under his prior employment agreement. SeeNarrative to Summary Compensation Table and Grants of Plan-Based Awards Tablebelow. TheAccordingly, the annual cash bonus for 2012 is based on the Compensation Committee’s assessment of Company performance as compared to that of theour competitor peer group. Pursuant to his employment agreement, Mr. R.E. Dauch is entitledHe was eligible to receive an annual bonus payment of up to three times his annual salary, or $6 million, if AAM outperformsoutperformed its competitor peer group by greater than the historical amount. However, his annual bonus will be reduced, if necessary, to comply with the $3 million limit on annual compensation set forth in the 2009 Settlement and Commercial Agreement.group. In determining Mr. R. E.R.E. Dauch’s annual cash award,bonus, the Compensation Committee may use discretion in considering other factors, which may differ from year to year.
The Compensation Committee approved Mr. R.E. Dauch’s annual bonus for 2012 in the amount of $4 million. In determining this award, the Compensation Committee considered AAM’s 2012 performance, including strong sales growth of 13.4% on year-over-year basis, new business awards resulting in a new business backlog of $1.25 billion for the years 2013-2015, achievement of market competitive labor cost structures and attainment of key quality performance objectives. The Committee also considered the successful completion of financing initiatives that provided additional liquidity to fund AAM’s sales growth, extended the debt maturity profile of AAM’s debt capital structure and allowed AAM to improve the funded status of our global pension plans. The Company’s 2012 performance was adversely impacted by special charges related to the December 22, 2009 employment agreement amendment, Mr. R. E. Dauch agreed to forego receiptclosure of two U.S. plants, increased costs associated with global launch activity, lower capacity utilization and labor inefficiencies. Based on these and other factors, the annual equity awardsCompensation Committee decided that the Company had agreed to provide
amount of his award would be less than the maximum amount permitted under his employment agreement since it was first executed in November 1997. Asagreement. This 2012 award reflects a result, effective January 1, 2010, Mr. R.E. Dauch will no longer receive annual equity awards$2 million decrease from the Company. The terms of the outstanding awards granted prior to 2010 are described in thehis 2011 bonus. SeeNarrative to Summary Compensation Table and Grants of Plan-Based Awards Table.Table
Long-Term Incentives. Upon his appointment as Executive Chairman on September 1, 2012, Mr. R.E. Dauch received a one-time equity award of RSUs with a grant date value of $6,247,000. The Compensation Committee considered the amount of this award to be appropriate as a long-term incentive based on his service as AAM’s CEO during 2012 and the Company’s desire to provide an inducement sufficient for Mr. R.E. Dauch to enter into the employment agreement as Executive Chairman. Mr. R.E. Dauch is not eligible to receive any additional equity or other long-term incentive awards during the term of his employment agreement.
Under his prior employment agreement, Mr. R.E. Dauch was entitled to receive, each year, an award of 150,000 stock options and an equity award of equal value. Accordingly, on May 30, 2012, Mr. R.E. Dauch received 150,000 stock options and 68,227 RSUs under the 2012 Omnibus Incentive Plan. Mr. R.E. Dauch did not receive any long-term incentive awards for 2010 and 2011 as a result of, among other things, AAM not having an equity plan available for issuance of equity-based awards. These awards are shown in theGrants of Plan-Based Awardstable and are further described in theNarrative to the Summary Compensation Table and Grants of Plan-Based Awards Tablebelow.
Benefits and Perquisites. Mr. R. E.R.E. Dauch participates in the same benefit programs provided for other executive officers. In addition, under his employment agreement, AAM provides Mr. R. E.R.E. Dauch with the use of an additionaltwo Company vehiclevehicles and reimburses him for premiums underpaid for a $5 million life insurance policy. The Company will also provide postretirement health care benefits upon expiration of his employment agreement. Perquisites provided to the CEOExecutive Chairman in 2010, 20092012, 2011 and 20082010 are reported in theSummary Compensation Table.
Management’sExecutive Officer Stock Ownership Requirements & Anti-Hedging Policy
Stock Ownership Requirements.
Upon stockholder approval of AAM’s 2012 Omnibus Incentive Plan, the Compensation Committee decided to increase the stock ownership requirements for executive officers in 2012 and change the measurement from a fixed number of shares to a multiple of base salary. These new stock ownership requirements were based on an analysis of prevalent external market practices provided by Meridian in 2012 at the direction of the Compensation Committee. Based on this analysis, the Compensation Committee increased the stock ownership requirement levels as follows:
Fixed Share RequirementStock Ownership Requirements for Executive Officers
Base Salary | ||||
Chief Executive Officer | ||||
Executive Vice President | ||||
Group Vice President and Vice President | ||||
Executive officers have five years from April 2012 to meet these requirements must be attained withinor, for new executive officers, five years from the effective date or, for newly appointedof becoming an executive officers, within five yearsofficer. Once the requirement is met, the executive officer must maintain the required ownership level. Shares owned directly and any unvested RSUs (payable in stock) are considered in determining the requirements; unexercised stock options are not considered. One hundred percent of such appointment. Currently, allthe net shares of equity awards granted by the Company must be held until the requirement has been met.
The Compensation Committee annually reviews each executive officer’s stock ownership amounts as compared to the established stock ownership requirements. All executive officers are in compliance with theon target to meet these stock ownership requirements.
Anti-hedging Policy. All employees and non-employee directors are prohibited from entering into transactions that may result in a financial benefit if our stock price declines, or any hedging and pledgingtransaction involving our stock, including but not limited to the use of financial derivatives, short sales or any similar transactions. Pledging of Company stock.
Federal Income Severance Benefits and Restrictive Covenants
Other than the Executive Chairman and President & CEO, our NEOs are not entitled to severance benefits upon termination of employment for any reason. AAM does not provide any NEO with severance benefits solely as a result of a change in control. Our employment agreements with Mr. D.C. Dauch and Mr. R.E. Dauch provide for certain benefits upon termination of employment without cause or upon resignation for good reason. Severance benefits payable under these agreements are described underPotential Payments upon Termination or Change in Control below.
Each of the NEOs has agreed to non-competition and non-solicitation covenants for a period following termination of employment. For additional information, seePotential Payments upon Termination or Change in Control below.
Tax ConsiderationsGross Ups
The Company does not provide tax gross ups to an executive officer upon a change in control.
Tax Deductibility of Executive Compensation.Compensation
In general, the compensation awarded to the NEOs will be taxable to the executive and will give rise to a corresponding corporate deduction at the time the compensation is paid. Section 162(m) of the Internal Revenue Code (Code) deniesprecludes a federal incomepublic corporation from taking a tax deduction for certainannual compensation in excess of $1 million per year paid to the CEO or to any of the other NEOs other than the CFO. The portion ofOne exception applies to performance-based compensation paid pursuant to stockholder-approved employee benefit plans. Performance based compensation is compensation that is paid only if the compensation in excess of $1 million paid to certain NEOs in 2010 was not deductible for federal income tax purposes.
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The annual incentives and long-term incentive performance unit awards granted in 2012 to the NEOs (other than the benefit of tax deductibility. The Company reservesExecutive Chairman) are intended to comply with the rightperformance-based compensation exemption under Section 162(m). RSUs granted to maintain flexibilityNEOs in how executive officers are compensated, which may result in limiting2012, although not deductible, were considered to be the deductibility of amounts of compensation from time to time.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) ofRegulation S-K, and based on such review and discussions, recommended to the Board of Directors that such Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee of the Board of Directors
Forest J. Farmer, Chairman
Elizabeth A. Chappell
Steven B. Hantler
Larry K. Switzer
Thomas K. Walker
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The following table summarizes the compensation of our named executive officers (Richard E. Dauch, Co-Founder, Chairman of the Board & Chief Executive Officer, Michael K. Simonte, Executive Vice President — Finance & Chief Financial Officer, David C. Dauch, President & Chief Operating Officer, John J. Bellanti, Executive Vice President, Worldwide Operations, John E. Jerge, President — AAM Americas and Patrick S. Lancaster, retired effective January 1, 2011, former Executive Vice President, Chief Administrative Officer & Secretary, for the fiscal years ended December 31, 2010,2012, December 31, 20092011 and December 31, 2008.
| Change in | |||||||||||||||||||||||||||||||||||||||||||||
| Pension Value | |||||||||||||||||||||||||||||||||||||||||||||
| Non-Equity | and | ||||||||||||||||||||||||||||||||||||||||||||
| Incentive | Nonqualified | ||||||||||||||||||||||||||||||||||||||||||||
| Plan | Deferred | All Other | |||||||||||||||||||||||||||||||||||||||||||
| Stock | Options | Compen- | Compensation | Compen- | |||||||||||||||||||||||||||||||||||||||||
| Name and | Salary | Bonus(2) | Awards(3) | Awards(3) | sation(4) | Earnings(5) | sation(6) | Total | |||||||||||||||||||||||||||||||||||||
| Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||||||||
| Richard E. Dauch(1) | |||||||||||||||||||||||||||||||||||||||||||||
| Co-Founder, Chairman & | 2010 | 2,702,304 | — | — | — | — | 2,692,143 | (7) | 158,981 | 5,553,428 | (7) | ||||||||||||||||||||||||||||||||||
| Chief Executive Officer | 2009 | 2,156,269 | — | 167,583 | 210,000 | — | 7,074,845 | 112,485 | 9,721,182 | ||||||||||||||||||||||||||||||||||||
| 2008 | 1,620,667 | — | 596,655 | 400,500 | — | 3,081,360 | 105,673 | 5,804,855 | |||||||||||||||||||||||||||||||||||||
| Michael K. Simonte | |||||||||||||||||||||||||||||||||||||||||||||
| Executive Vice President — | 2010 | 500,004 | — | — | — | 500,000 | 97,430 | 51,294 | 1,148,728 | ||||||||||||||||||||||||||||||||||||
| Finance & Chief Financial Officer | 2009 | 372,375 | — | — | — | — | 69,597 | 46,477 | 488,449 | ||||||||||||||||||||||||||||||||||||
| 2008 | 271,125 | — | 100,800 | 33,375 | — | 59,884 | 44,235 | 509,419 | |||||||||||||||||||||||||||||||||||||
| David C. Dauch(1) | |||||||||||||||||||||||||||||||||||||||||||||
| President & Chief | 2010 | 575,004 | — | — | — | 731,250 | 97,540 | 27,006 | 1,430,800 | ||||||||||||||||||||||||||||||||||||
| Operating Officer | 2009 | 411,125 | — | — | — | — | 101,071 | 27,748 | 539,944 | ||||||||||||||||||||||||||||||||||||
| 2008 | 358,875 | — | 120,960 | 41,385 | — | 96,222 | 21,460 | 638,902 | |||||||||||||||||||||||||||||||||||||
| John J. Bellanti | |||||||||||||||||||||||||||||||||||||||||||||
| Executive Vice President, | 2010 | 459,996 | — | — | — | 460,000 | 357,673 | 30,312 | 1,307,981 | ||||||||||||||||||||||||||||||||||||
| Worldwide Operations | 2009 | 355,417 | — | — | — | — | 224,999 | 31,518 | 611,934 | ||||||||||||||||||||||||||||||||||||
| John E. Jerge | |||||||||||||||||||||||||||||||||||||||||||||
| President — AAM Americas | 2010 | 288,000 | — | — | — | 227,250 | 74,685 | 43,226 | 633,161 | ||||||||||||||||||||||||||||||||||||
| Patrick S. Lancaster(8) | |||||||||||||||||||||||||||||||||||||||||||||
| Former Executive Vice President, | 2010 | 440,004 | 704,000 | — | — | 173,184 | 283,152 | (8) | 1,081,878 | (9) | 2,682,218 | (10) | |||||||||||||||||||||||||||||||||
| Chief Administrative Officer & | 2009 | 356,158 | — | — | — | — | 348,353 | 31,999 | 736,510 | ||||||||||||||||||||||||||||||||||||
| Secretary | 2008 | 268,896 | — | 146,160 | 32,040 | — | 145,474 | 33,979 | 626,549 | ||||||||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus(2) ($) | Stock Awards(3) ($) | Options Awards(3) ($) | Non-Equity Incentive Plan Compen- sation(4) ($) | Change in Pension Value And Nonqualified Deferred Compensation Earnings(5) ($) | All Other Compen- sation(6) ($) | Total ($) | |||||||||||||||||||||||||||
David C. Dauch(1) | ||||||||||||||||||||||||||||||||||||
President & Chief Executive Officer | 2012 | 873,333 | 21,500 | 979,013 | — | 1,728,100 | 565,534 | 67,695 | 4,235,175 | |||||||||||||||||||||||||||
| 2011 | 650,004 | 111,150 | — | — | 7,169,180 | 397,228 | 28,778 | 8,356,340 | ||||||||||||||||||||||||||||
| 2010 | 575,004 | — | — | — | 731,250 | 97,540 | 27,006 | 1,430,800 | ||||||||||||||||||||||||||||
Michael K. Simonte | ||||||||||||||||||||||||||||||||||||
Executive Vice President & Chief Financial Officer | 2012 | 527,900 | 4,617 | 316,743 | — | 935,383 | 294,245 | 48,942 | 2,127,830 | |||||||||||||||||||||||||||
| 2011 | 515,004 | 37,080 | — | — | 4,255,095 | 251,101 | 49,604 | 5,107,884 | ||||||||||||||||||||||||||||
| 2010 | 500,004 | — | — | — | 500,000 | 97,430 | 51,294 | 1,148,728 | ||||||||||||||||||||||||||||
Richard E. Dauch(1) Co-Founder & Executive Chairman | 2012 | 2,000,000 | 4,000,000 | 6,874,007 | 627,000 | — | 4,201,202 | 141,916 | 17,844,125 | |||||||||||||||||||||||||||
| 2011 | 2,526,728 | 6,000,000 | — | — | — | 2,802,700 | 149,441 | 11,478,869 | ||||||||||||||||||||||||||||
| 2010 | 2,702,304 | — | — | — | — | 2,692,143 | 158,981 | 5,553,428 | ||||||||||||||||||||||||||||
John J. Bellanti | ||||||||||||||||||||||||||||||||||||
Executive Vice President, Worldwide Operations | 2012 | 485,700 | — | 291,424 | — | 802,400 | 188,187 | 42,429 | 1,810,140 | |||||||||||||||||||||||||||
| 2011 | 473,796 | — | — | — | 2,166,972 | 446,401 | 33,823 | 3,120,992 | ||||||||||||||||||||||||||||
| 2010 | 459,996 | — | — | — | 460,000 | 357,673 | 30,312 | 1,307,981 | ||||||||||||||||||||||||||||
Norman Willemse Vice President, Metal Formed Product Business Unit | | 2012 2011 | | | 310,600 303,000 | |
| — — |
|
| 124,249 — |
|
| — — |
| | 376,808 603,180 | | | 100,562 113,444 | | | 48,162 41,412 | | | 960,381 1,061,036 | | |||||||||
| (1) | Mr. | |
| (2) | Reflects discretionary adjustments to the 2012 annual incentive payments for Mr. D.C. Dauch and Mr. Simonte as described above in theCompensation Discussion and Analysis. For Mr. R.E. Dauch, | |
| (3) | Reflects the full grant date fair value of equity awards made during fiscal | |
| (4) | Reflects amounts earned under the AAM Incentive Compensation Plan for Executive Officers |
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| AAM Incentive Compensation Plan | AAM LTIP | Total | ||||||||||
David C. Dauch | $ | 518,500 | $ | 1,209,600 | $ | 1,728,100 | ||||||
Michael K. Simonte | $ | 215,383 | $ | 720,000 | $ | 935,383 | ||||||
John J. Bellanti | $ | 140,000 | $ | 662,400 | $ | 802,400 | ||||||
Norman Willemse | $ | 95,000 | $ | 281,808 | $ | 376,808 | ||||||
| (5) | ||
| (6) | The components of All Other Compensation for 2012 are as follows: |
| Name | Employer $ | Retirement $ | Executive $ | Tax $ | Other(e) $ | Total $ | ||||||||||||||||||
David C. Dauch | 11,938 | 12,500 | 4,432 | 14,303 | 24,522 | 67,695 | ||||||||||||||||||
Michael K. Simonte | 12,250 | 12,500 | 3,367 | — | 20,825 | 48,942 | ||||||||||||||||||
Richard E. Dauch | 9,375 | 9,375 | 100,808 | — | 22,358 | 141,916 | ||||||||||||||||||
John J. Bellanti | 8,500 | 12,500 | 6,436 | — | 14,993 | 42,429 | ||||||||||||||||||
Norman Willemse | 12,146 | 13,647 | 2,784 | 193 | 19,392 | 48,162 | ||||||||||||||||||
| (a) | Includes |
| (b) | Includes employer retirement contributions under AAM’s 401(k) plan. |
| (c) | Includes executive life insurance |
| (d) | Includes amounts reimbursed for taxes attributable to the income associated with the cost of spousal travel for participation in Company business meetings and |
| (e) | Includes personal use of Company-provided vehicles for Mr. | |
| Total 2010 compensation as presented on Summary Compensation Table | $ | 5,553,428 | ||
| Less: Value of pension / SERP benefits granted prior to 2010 | 2,692,143 | |||
| Total 2010 compensation as measured under the 2009 Settlement and Commercial Agreement | $ | 2,861,285 | ||
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Annual and long-term incentive awards granted in 20102012 to the NEOs are shown in the following table. The annual and long-term incentive compensation programs are described inCompensation Discussion and Analysis and following the table below.
| Estimated Future Payouts Under | ||||||||||||||||||||
| Non-Equity Incentive Plan Awards(2)(3) | ||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||
Richard E. Dauch(1) | — | — | — | — | ||||||||||||||||
| Michael K. Simonte | ||||||||||||||||||||
Annual Incentive(2) | — | 200,000 | 400,000 | 500,000 | ||||||||||||||||
Long-Term Incentive(3) | 01/07/2010 | 225,000 | 600,000 | 1,200,000 | ||||||||||||||||
Senior Executive Special Incentive Program(4) | 03/15/2010 | 3,000,000 | 3,000,000 | 3,000,000 | ||||||||||||||||
| David C. Dauch | ||||||||||||||||||||
Annual Incentive(2) | — | 292,500 | 585,000 | 731,250 | ||||||||||||||||
Long-Term Incentive(3) | 01/07/2010 | 378,000 | 1,008,000 | 2,016,000 | ||||||||||||||||
Senior Executive Special Incentive Program(4) | 03/15/2010 | 5,000,000 | 5,000,000 | 5,000,000 | ||||||||||||||||
| John J. Bellanti | ||||||||||||||||||||
Annual Incentive(2) | — | 184,000 | 368,000 | 460,000 | ||||||||||||||||
Long-Term Incentive(3) | 01/07/2010 | 207,000 | 552,000 | 1,104,000 | ||||||||||||||||
Senior Executive Special Incentive Program(4) | 03/15/2010 | 1,000,000 | 1,000,000 | 1,000,000 | ||||||||||||||||
| John E. Jerge | ||||||||||||||||||||
Annual Incentive(2) | — | 90,900 | 181,800 | 227,250 | ||||||||||||||||
Long-Term Incentive(3) | 01/07/2010 | 85,500 | 228,000 | 456,000 | ||||||||||||||||
| Patrick S. Lancaster | ||||||||||||||||||||
Annual Incentive(5) | — | 176,000 | 352,000 | 440,000 | ||||||||||||||||
Long-Term Incentive(3)(6) | 01/07/2010 | 198,000 | 528,000 | 1,056,000 | ||||||||||||||||
| Estimated Future Payouts under Non Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock or Units(2) # | All Other Option Awards: Number of Securities Underlying Options(3) # | Exercise or Base Price of Option Awards $/Sh(4) | Grant Date Fair Value of Stock and Option Awards(5) $ | ||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Approval Date | Number of Units # | Threshold $ | Target $ | Maximum $(1) | ||||||||||||||||||||||||||||||||||
David C. Dauch | ||||||||||||||||||||||||||||||||||||||||
Annual Incentive | — | — | — | 406,667 | 1,016,667 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Long-Term Incentive | 5/30/2012 | 4/26/2012 | 729,000 | 182,250 | 729,000 | 1,458,000 | 79,326 | — | — | 729,006 | ||||||||||||||||||||||||||||||
Long-Term Incentive | 9/1/2012 | 8/27/2012 | 250,000 | 62,500 | 250,000 | 500,000 | 22,382 | — | — | 250,007 | ||||||||||||||||||||||||||||||
Michael K. Simonte | ||||||||||||||||||||||||||||||||||||||||
Annual Incentive | — | — | — | 168,928 | 422,320 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Long-Term Incentive | 5/30/2012 | 4/26/2012 | 316,740 | 79,185 | 316,740 | 633,480 | 34,466 | — | — | 316,743 | ||||||||||||||||||||||||||||||
Richard E. Dauch(6) | ||||||||||||||||||||||||||||||||||||||||
Long-Term Incentive | 5/30/2012 | 4/26/2012 | — | — | — | — | 68,227 | 150,000 | 9.19 | 1,254,006 | ||||||||||||||||||||||||||||||
Long-Term Incentive | 9/1/2012 | 8/27/2012 | — | — | — | — | 559,266 | — | — | 6,247,001 | ||||||||||||||||||||||||||||||
John J. Bellanti | ||||||||||||||||||||||||||||||||||||||||
Annual Incentive | — | — | — | 155,424 | 388,560 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Long-Term Incentive | 5/30/2012 | 4/26/2012 | 291,420 | 72,855 | 291,420 | 582,840 | 31,711 | — | — | 291,424 | ||||||||||||||||||||||||||||||
Norman Willemse | ||||||||||||||||||||||||||||||||||||||||
Annual Incentive | — | — | — | 74,544 | 186,360 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Long-Term Incentive | 5/30/2012 | 4/26/2012 | 124,240 | 31,060 | 124,240 | 248,480 | 13,520 | — | — | 124,249 | ||||||||||||||||||||||||||||||
| (1) | ||
| (2) | Reflects RSU awards | |
| (3) | Reflects stock option award granted to Mr. R.E. Dauch under his prior employment agreement. See further discussion in the |
| (4) | Equal to the closing market price of AAM common stock on the grant date, May 30, 2012. |
| (5) | Reflects the full grant date fair value of equity awards made during fiscal year 2012 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. The grant date fair value of stock awards is calculated using the closing market price of AAM common stock on the date of grant. The grant date fair value of option awards was calculated using the Black-Scholes option pricing model. See Note 9 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012 regarding assumptions underlying the valuation of equity awards. |
| (6) | Mr. | |
33
President & CEO Employment Agreement
Effective September 1, 2012, Mr. D.C. Dauch’s employment agreement amendment betweenas President & CEO provides for the Companyfollowing compensation and Mr. R. E. Dauch, the CEO agreed to forego compensation payable to him under his then currentbenefits:
Term | Initial Term: September 1, 2012 through August 31, 2015 Additional one year extensions unless either party provides 60 days’ written notice of intent not to renew | |
Base Salary | $1 million effective September 1, 2012, subject to annual review and increase by the Compensation Committee in its sole discretion | |
Annual Incentive | Participation in the AAM Annual Incentive Plan for Executive Officers Initial target opportunity as of September 1, 2012 is 125% of base salary | |
Long-Term Incentive | Participation in the plans applicable to executive officers Initial target opportunity as of September 1, 2012 is 240% of base salary One-time award on September 1, 2012 of RSUs with a grant date value of $250,000 and performance units with a target value of $250,000 | |
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 active salaried associates as of September 1, 2012 |
Executive Chairman Employment Agreement to the extent his annual compensation would exceed the $3 million limit set forth in the 2009 Settlement and Commercial Agreement.
Effective September 1, 2012, Mr. R.E. Dauch’s employment agreement as amended,Executive Chairman provides for the following compensation and benefits (subject to the $3 million compensation limit under the 2009 Settlement and Commercial Agreement with GM):
Term | Initial Term: September 1, 2012 through August 31, 2015 Two additional one-year extensions, unless either party provides 60 days’ written notice of | |
Base Salary |
2012 Annual Incentive | Annual cash bonus in an amount determined by the Compensation Committee based on our financial performance relative to |
• | equal to 3 times annual base salary if | |
• | ||
| up to the amount of Mr. R.E. Dauch’s base salary if |
| group Subject to adjustment based on other factors as determined by the Compensation Committee in its sole discretion | ||
Long-Term Incentive | One-time grant of RSUs with a grant date value of $6,247,000 on September 1, 2012 | |
Other Benefits | Participation in plans applicable to executive officers Reimbursement of premiums under a $5 million life insurance policy purchased by Mr. R.E. Dauch; | |
Use and maintenance of two Company-provided automobiles |
Under the employment agreements with Mr. D.C. Dauch and is automatically extended for successive one-year terms, unless either party gives notice of termination at least 60 days prior to the end of the applicable term. The potentialMr. R.E. Dauch, certain payments and benefits uponwill be provided in the event of termination of Mr. R.E. Dauch’s employment areunder different scenarios as described below inPotential Payments Upon Termination or Change in Control.
Settlement Agreement withLong-Term Incentive Awards
In 2012, the Company granted long-term incentive awards to NEOs in the form of RSUs, cash-based performance units and, for Mr. Lancaster
Awards Granted Under the 2012 Omnibus Incentive Plan
Restricted Stock Units (RSUs). The RSUs granted to NEOs under age 57 at the date of grant vest in three years, while RSUs granted to NEOs age 57 and Mr. Lancaster effective July 12, 2010,over vest ratably in three approximately equal annual installments. Upon vesting, the Committee approvedRSUs are payable in common stock. Vesting is accelerated upon termination of employment due to death or disability or upon a change in control. The award is forfeited if employment is terminated for any other reason prior to vesting.
Performance Unit Awards (PUs). The PUs granted to the NEOs (other than the Executive Chairman) on May 30, 2012 are based upon the attainment of certain EBITDA performance over a 33-month performance period beginning April 1, 2012 through December 31, 2014. PUs have an initial notional value equal to one dollar and will be settled in cash. A pro rata portion of the award is payable upon death, disability, retirement, termination without cause or upon a change in control.
The following cash paymentstable illustrates the threshold, target and other benefitsmaximum EBITDA performance levels for determining awards under PUs.
EBITDA Performance Measure
Performance Level | 33-Month Cumulative EBITDA | Percent of Target Award Opportunity Earned | ||||||
Threshold | 10 | % | 25 | % | ||||
Target | 12 | % | 100 | % | ||||
Maximum | 15 | % | 200 | % | ||||
Stock Options. The nonqualified stock options granted to Mr. Lancaster in connection with his retirement effective January 1, 2011 (Retirement Date):
34
Restricted Stock.President & CEO Long-Term Incentive Award — September 1, 2012. Restricted stock awardedUpon his appointment as President & CEO on September 1, 2012, Mr. D.C. Dauch received a one-time long-term incentive award in the form of RSUs and performance units. Pursuant to executives under age 60 vests onhis employment agreement, the third anniversary of the grant date. Restricted stock awarded to executives age 60 and over vests in three approximately equal annual installments through March 14, 2011. Vesting accelerates upon death, disability, termination of employment by the Company pursuant toRSU award had a reduction in force or similar program approved by the CEO, or upon a change in control.
Executive Chairman Long-Term Incentive Award — September 1, 2012. Upon his appointment to Executive Chairman on the fourth anniversary of the grant date if shareholder return exceeds the 66th percentile of our competitor peer group for the preceding four years. Total shareholder return is defined as the cumulative appreciation (assuming reinvestment of dividends) of an investment in common stock. Vesting will not accelerate unless AAM has positive TSR.
Awards granted under the AAM 2009 Long-Term Incentive Plan
Cash-Based Performance Awards. Prior to adoption of the 2012 Omnibus Incentive Plan, the Company’s long-term incentive program consisted of cash-based performance awards.awards made under the 2009 AAM LTIP. The award represented the right to a payment in cash payouts are determined based on AAM’sEBITDA and relative TSRtotal shareholder return (TSR) performance levels as shown below over a three yearthree-year performance period beginningperiod. The 2010 award payouts to the NEOs (other than the Executive Chairman) were paid in January 2008. Based on AAM’s relative TSR for the period January 2008 through December 2010, the awards did not result in a payment to Mr. Simonte, Mr. D.C. Dauch, Mr. Bellanti or Mr. Jerge.
The following tables illustrate the threshold, target and Analysis.
35
| EBITDA Performance Measure | TSR Performance Measure | |||||||||||||||
Performance Level | 3-Year Cumulative EBITDA | Percent of Target Award Opportunity Earned | Company’s TSR Percentile Rank | Percent of Target Award Opportunity Earned | ||||||||||||
Threshold | 8 | % | 25 | % | 35 | th | 50 | % | ||||||||
Target | 12 | % | 100 | % | 50 | th | 100 | % | ||||||||
Maximum | 15 | % | 200 | % | 75 | th | 200 | % | ||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||
| Market | ||||||||||||||||||||||||||||||
| Number of | Value of | |||||||||||||||||||||||||||||
| Shares | Shares | |||||||||||||||||||||||||||||
| Number of | Number of | or Units | or Units | |||||||||||||||||||||||||||
| Securities | Securities | of Stock | of Stock | |||||||||||||||||||||||||||
| Underlying | Underlying | That | That | |||||||||||||||||||||||||||
| Unexercised | Unexercised | Option | Have | Have | ||||||||||||||||||||||||||
| Options | Options | Exercise | Option | Not | Not | |||||||||||||||||||||||||
| Exercisable | Unexercisable | Price | Expiration | Vested | Vested(8) | |||||||||||||||||||||||||
| Name | (#) | (#) | ($) | Date | (#) | ($) | ||||||||||||||||||||||||
| Richard E. Dauch | 240,000 | 8.85 | 4/2/2011 | 19,534 | (1) | 251,207 | ||||||||||||||||||||||||
| 300,000 | 24.15 | 1/23/2012 | 39,958 | (2) | 513,860 | |||||||||||||||||||||||||
| 300,000 | 23.73 | 1/22/2013 | ||||||||||||||||||||||||||||
| 300,000 | 38.70 | 2/2/2014 | ||||||||||||||||||||||||||||
| 150,000 | 26.65 | 3/15/2015 | ||||||||||||||||||||||||||||
| 150,000 | 15.58 | 3/15/2016 | ||||||||||||||||||||||||||||
| 150,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||||||||
| 100,500 | 49,500(1 | ) | 10.08 | 6/25/2018 | ||||||||||||||||||||||||||
| — | 100,500(2 | ) | 2.81 | 1/6/2019 | ||||||||||||||||||||||||||
| Michael K. Simonte | 39,664 | 15.56 | 2/2/2011 | 3,600 | (3)(6) | 46,296 | ||||||||||||||||||||||||
| 9,500 | 24.15 | 1/23/2012 | 2,400 | (4)(6) | 30,864 | |||||||||||||||||||||||||
| 10,000 | 23.73 | 1/22/2013 | 3,600 | (3)(7) | 46,296 | |||||||||||||||||||||||||
| 8,500 | 38.70 | 2/2/2014 | 2,400 | (4)(7) | 30,864 | |||||||||||||||||||||||||
| 9,000 | 26.65 | 3/15/2015 | 10,000 | (5) | 128,600 | |||||||||||||||||||||||||
| 10,000 | 15.58 | 3/15/2016 | ||||||||||||||||||||||||||||
| 10,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||||||||
| 8,375 | 4,125(1 | ) | 10.08 | 6/25/2018 | ||||||||||||||||||||||||||
| David C. Dauch | 7,260 | 8.85 | 4/2/2011 | 4,800 | (3)(6) | 61,728 | ||||||||||||||||||||||||
| 16,750 | 24.15 | 1/23/2012 | 3,200 | (4)(6) | 41,152 | |||||||||||||||||||||||||
| 28,000 | 23.73 | 1/22/2013 | 4,500 | (3)(7) | 57,870 | |||||||||||||||||||||||||
| 28,000 | 38.70 | 2/2/2014 | 3,000 | (4)(7) | 38,580 | |||||||||||||||||||||||||
| 12,000 | 26.65 | 3/15/2015 | 12,000 | (5) | 154,320 | |||||||||||||||||||||||||
| 15,000 | 15.58 | 3/15/2016 | ||||||||||||||||||||||||||||
| 13,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||||||||
| 10,385 | 5,115(1 | ) | 10.08 | 6/25/2018 | ||||||||||||||||||||||||||
| John J. Bellanti | 12,000 | 24.15 | 1/23/2012 | 3,600 | (3)(6) | 46,296 | ||||||||||||||||||||||||
| 13,000 | 23.73 | 1/22/2013 | 2,400 | (4)(6) | 30,864 | |||||||||||||||||||||||||
| 16,000 | 38.70 | 2/2/2014 | 3,600 | (3)(7) | 46,296 | |||||||||||||||||||||||||
| 9,000 | 26.65 | 3/15/2015 | 2,400 | (4)(7) | 30,864 | |||||||||||||||||||||||||
| 6,700 | 15.58 | 3/15/2016 | 9,000 | (5) | 115,740 | |||||||||||||||||||||||||
| 10,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||||||||
| 7,370 | 3,630(1 | ) | 10.08 | 6/25/2018 | ||||||||||||||||||||||||||
| John E. Jerge | 11,500 | 24.15 | 1/23/2012 | 3,600 | (3)(6) | 46,296 | ||||||||||||||||||||||||
| 12,000 | 23.73 | 1/22/2013 | 2,400 | (4)(6) | 30,864 | |||||||||||||||||||||||||
| 10,000 | 38.70 | 2/2/2014 | 3,300 | (3)(7) | 42,438 | |||||||||||||||||||||||||
| 8,000 | 26.65 | 3/15/2015 | 2,200 | (4)(7) | 28,292 | |||||||||||||||||||||||||
| 10,000 | 15.58 | 3/15/2016 | 7,000 | (5) | 90,020 | |||||||||||||||||||||||||
| 9,500 | 26.02 | 3/14/2017 | ||||||||||||||||||||||||||||
| 6,030 | 2,970(1 | ) | 10.08 | 6/25/2018 | ||||||||||||||||||||||||||
36
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(1) (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | ||||||||||||||||||
David C. Dauch | 28,000 | 23.73 | 1/22/2013 | 79,326 | (3) | 888,451 | ||||||||||||||||||
| 28,000 | 38.70 | 2/2/2014 | 22,382 | (4) | 250,678 | |||||||||||||||||||
| 12,000 | 26.65 | 3/15/2015 | ||||||||||||||||||||||
| 15,000 | 15.58 | 3/15/2016 | ||||||||||||||||||||||
| 13,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||
Michael K. Simonte | 10,000 | 23.73 | 1/22/2013 | 34,466 | (3) | 386,019 | ||||||||||||||||||
| 8,500 | 38.70 | 2/2/2014 | ||||||||||||||||||||||
| 9,000 | 26.65 | 3/15/2015 | ||||||||||||||||||||||
| 10,000 | 15.58 | 3/15/2016 | ||||||||||||||||||||||
| 10,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||
| 12,500 | 10.08 | 6/25/2018 | ||||||||||||||||||||||
Richard E. Dauch | 300,000 | 23.73 | 1/22/2013 | 68,227 | (3) | 764,142 | ||||||||||||||||||
| 300,000 | 38.70 | 2/2/2014 | 559,266 | (4) | 6,263,779 | |||||||||||||||||||
| 150,000 | 26.65 | 3/15/2015 | ||||||||||||||||||||||
| 150,000 | 15.58 | 3/15/2016 | ||||||||||||||||||||||
| 150,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||
| — | 150,000 | 9.19 | 5/30/2022 | |||||||||||||||||||||
John J. Bellanti | 13,000 | 23.73 | 1/22/2013 | 31,711 | (3) | 355,163 | ||||||||||||||||||
| 16,000 | 38.70 | 2/2/2014 | ||||||||||||||||||||||
| 9,000 | 26.65 | 3/15/2015 | ||||||||||||||||||||||
| 6,700 | 15.58 | 3/15/2016 | ||||||||||||||||||||||
| 10,000 | 26.02 | 3/14/2017 | ||||||||||||||||||||||
| 11,000 | 10.08 | 6/25/2018 | ||||||||||||||||||||||
Norman Willemse | 8,000 | 23.73 | 1/22/2013 | 13,520 | (3) | 151,424 | ||||||||||||||||||
| 7,500 | 38.70 | 2/2/2014 | ||||||||||||||||||||||
| 9,700 | 10.08 | 6/25/2018 | ||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||
| Market | ||||||||||||||||||||||||||||||
| Number of | Value of | |||||||||||||||||||||||||||||
| Shares | Shares | |||||||||||||||||||||||||||||
| Number of | Number of | or Units | or Units | |||||||||||||||||||||||||||
| Securities | Securities | of Stock | of Stock | |||||||||||||||||||||||||||
| Underlying | Underlying | That | That | |||||||||||||||||||||||||||
| Unexercised | Unexercised | Option | Have | Have | ||||||||||||||||||||||||||
| Options | Options | Exercise | Option | Not | Not | |||||||||||||||||||||||||
| Exercisable | Unexercisable | Price | Expiration | Vested | Vested(8) | |||||||||||||||||||||||||
| Name | (#) | (#) | ($) | Date | (#) | ($) | ||||||||||||||||||||||||
| Patrick S. Lancaster | 35,000 | 8.85 | 4/2/2011 | 3,900 | (10) | 50,154 | ||||||||||||||||||||||||
| 40,000 | 24.15 | 1/23/2012 | 2,600 | (10) | 33,436 | |||||||||||||||||||||||||
| 30,000 | 23.73 | 1/22/2013 | 3,300 | (10) | 42,438 | |||||||||||||||||||||||||
| 25,000 | 38.70 | 2/2/2014 | 2,200 | (10) | 28,292 | |||||||||||||||||||||||||
| 9,000 | 26.65 | 3/15/2015 | 4,785 | (10) | 61,535 | |||||||||||||||||||||||||
| 11,000 | (9) | 15.58 | 1/1/2016 | |||||||||||||||||||||||||||
| 9,500 | (9) | 26.02 | 1/1/2016 | |||||||||||||||||||||||||||
| 8,040 | (9) | 3,960(9 | ) | 10.08 | 1/1/2016 | |||||||||||||||||||||||||
| (1) | ||
| (2) | ||
| (3) | ||
| Reflects RSUs granted on May 30, 2012 under the | ||
| for Mr. | ||
37
| Option Awards | Stock Awards | |||||||||||||||||||
| Number of | Number of | |||||||||||||||||||
| Shares | Value | Shares | Value | |||||||||||||||||
| Acquired on | Realized on | Acquired on | Realized on | |||||||||||||||||
| Exercise | Exercise(1) | Vesting(2)(3)(4) | Vesting(5) | |||||||||||||||||
| Name | (#) | ($) | (#) | ($) | ||||||||||||||||
| Richard E. Dauch | 49,500 | 430,758 | 39,805 | 361,413 | ||||||||||||||||
| Michael K. Simonte | 10,000 | 36,601 | 5,500 | 55,275 | ||||||||||||||||
| David C. Dauch | — | — | 7,000 | 70,350 | ||||||||||||||||
| John J. Bellanti | — | — | 5,000 | 50,250 | ||||||||||||||||
| John E. Jerge | 11,000 | 24,938 | 5,000 | 50,250 | ||||||||||||||||
| Patrick S. Lancaster | — | — | 10,930 | 102,698 | ||||||||||||||||
| (4) | Reflects RSUs granted on September 1, 2012 under the 2012 Omnibus Incentive Plan under the terms of Mr. D.C. Dauch’s and Mr. R.E. Dauch’s employment agreements. The RSUs for Mr. D.C. Dauch vest three years from the date of grant and for Mr. R.E. Dauch vest ratably in three approximately equal annual installments beginning in September 2013. |
OPTIONS EXERCISED AND STOCK VESTED
| Option Awards | Stock Awards | |||||||||||||||
| Name | Number of Shares Acquired on Exercise(1) (#) | Value Realized on Exercise(1) ($) | Number of Shares Acquired on Vesting(2)(3) (#) | Value Realized on Vesting(4) ($) | ||||||||||||
David C. Dauch | — | — | 4,500 | 52,245 | ||||||||||||
Michael K. Simonte | — | — | 3,600 | 41,796 | ||||||||||||
Richard E. Dauch | 49,500 | 484,605 | 19,681 | 224,363 | ||||||||||||
John J. Bellanti | — | — | 3,600 | 41,796 | ||||||||||||
Norman Willemse | — | — | 6,000 | 69,660 | ||||||||||||
| (1) | Reflects the number of shares |
| (2) | Reflects the lapse of the transfer and forfeiture restrictions under awards of performance accelerated restricted stock granted in March 2007 to Mr. | |
| (3) | Reflects the lapse of the transfer and forfeiture restrictions under | |
| (4) | ||
| Reflects the number of shares underlying vested performance accelerated restricted |
38
The following table shows the value of the benefits accumulated by the NEOs and their years of credited service under AAM’s Salaried Retirement Program, the Albion Pension Plan and the SERP.AAM’s Supplemental Executive Retirement Program (SERP). The years of credited service are through December 31, 2010,2012, AAM’s fiscal year-end measurement date used for financial statement reporting purposes. The values shown are based on unreduced benefits deferred to the earliest age at which unreduced benefits are payable. The assumptions used to calculate the actuarial present value of accumulated benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2010,2012, except that the values in the table do not reflect assumptions for future compensation increases or future service credits and assume continued service until unreduced retirement age is attained.
| Number of | Present | ||||||||||||
| Years of | Value of | ||||||||||||
| Credited | Accumulated | ||||||||||||
| Service | Benefit | ||||||||||||
| Name | Plan Name | (#) | ($) | ||||||||||
Richard E. Dauch(1) | AAM Retirement Program for Salaried Employees | 16.8333 | 843,319 | ||||||||||
| AAM Supplemental Executive Retirement Program | 21.0000 | (2) | 22,862,681 | ||||||||||
| Michael K. Simonte | AAM Retirement Program for Salaried Employees | 8.0833 | (3) | 117,400 | |||||||||
| AAM Supplemental Executive Retirement Program | 12.0833 | 300,241 | |||||||||||
| David C. Dauch | AAM Retirement Program for Salaried Employees | 11.5000 | (3) | 176,622 | |||||||||
| AAM Supplemental Executive Retirement Program | 15.5000 | 483,193 | |||||||||||
John J. Bellanti(4) | AAM Retirement Program for Salaried Employees | 16.8333 | 647,252 | ||||||||||
| AAM Supplemental Executive Retirement Program | 16.8333 | 614,249 | |||||||||||
| John E. Jerge | AAM Retirement Program for Salaried Employees | 12.8333 | (3) | 206,053 | |||||||||
| AAM Supplemental Executive Retirement Program | 16.8333 | 335,632 | |||||||||||
Patrick S. Lancaster(5) | AAM Retirement Program for Salaried Employees | 16.5833 | 861,446 | ||||||||||
| AAM Supplemental Executive Retirement Program | 16.5833 | 727,786 | |||||||||||
| Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | |||||||
David C. Dauch | AAM Retirement Program for Salaried Employees | 11.5000 | 296,563 | |||||||
| AAM Supplemental Executive Retirement Program | 17.5000 | 1,326,013 | ||||||||
Michael K. Simonte | AAM Retirement Program for Salaried Employees | 8.0833 | 197,858 | |||||||
| AAM Supplemental Executive Retirement Program | 14.0833 | 765,129 | ||||||||
Richard E. Dauch(1) | AAM Retirement Program for Salaried Employees | 17.8333 | 991,169 | |||||||
| AAM Supplemental Executive Retirement Program | 23.0000 | 29,718,734 | ||||||||
John J. Bellanti(2) | AAM Retirement Program for Salaried Employees | 17.8333 | 979,008 | |||||||
| AAM Supplemental Executive Retirement Program | 18.8333 | 917,081 | ||||||||
Norman Willemse(3) | Albion Pension Plan | 6.3333 | 260,915 | |||||||
| AAM Supplemental Executive Retirement Program | 10.9167 | 282,554 | ||||||||
| (1) | Mr. R.E. Dauch was eligible to retire on December 31, | |
| (2) | ||
| Mr. Bellanti was eligible to retire on December 31, |
| (3) | Mr. |
We provide pension benefits for NEOs under our Salaried Retirement Program, a broad-based defined benefit pension plan open tocovering substantially all of our U.S. salaried associates hired prior to January 1, 2002,2007, and our SERP. The purpose of the SERP is to provide total retirement benefits at a competitive level with executives of other major industrial companies.
Salaried Retirement Program. The annual retirement benefit payable to each executive, commencing on retirement at or after age 65, equals the sum of the executive’s contributions plus an additional benefit based on the executive’s average monthly salary (determined as the average of the executive’s base salary in the highest 60 months during his final 10 years of service) and years of credited service. The plan also includes a cash benefit structure for participants hired between January 1, 2002 and December 31, 2006. None of the NEOs are covered by the cash benefit structure. The amount of compensation that may be taken into account for determining benefits is limited under the Internal Revenue Code. The maximum annual compensation under this limit was $245,000 for the year ended December 31, 2010.
39
Effective December 31, 2006, the Salaried Retirement Program was amended to freeze benefits at current levels for associates who willwere not be eligible to retire by December 1, 2011. Those associates who were eligible for early or normal retirement on or before December 31, 2011 continued to accrue benefits through December 31, 2011. Mr. R.E. Dauch Mr. Lancaster and Mr. Bellanti arewere grandfathered and will continuethus continued to accrue benefits through December 31, 2011. The NEOs did not accrue benefits under the program throughplan in 2012.
Albion Pension Plan. The annual retirement benefit payable, commencing on retirement at or after age 65, is based on the earlierexecutive’s average salary (determined as the average of (1) December 31, 2011 or (2) the dateexecutive’s base salary in the highest 36 months during the final 10 years of retirement or other terminationservice with Albion Automotive Limited), years of employment.
Supplemental Executive Retirement Program. Mr. R.E. Dauch Mr. Lancaster and Mr. Bellanti, who were grandfathered under the Salaried Retirement Program, are eligible to receive the basic form of pension benefit under our SERP upon retirement. In addition, they are eligible to receive the alternative form of benefit, if greater than the basic benefit, upon retirement at or after age 62. The executive must have at least 10 years of credited service to receive either form of benefit under the SERP.
The total monthly benefit payable under the basic form of SERP is equal to the following amount:
Two percent of the executive’s average monthly salary calculated as of December 31, 2011 (as determined for the Salaried Retirement Program excluding the limitations as specified under the Internal Revenue Code), multiplied by the executive’s years of credited service; less
The benefit payable to the executive under the Salaried Retirement Program (without reduction for survivor benefits), plus 2% of the maximum monthly social security benefit payable at age 65 multiplied by the executive’s years of credited service.
The Compensation Committee has discretion to reduce or eliminate the amount payable under the alternative form of benefit. Subject to the Compensation Committee’s discretion, the total monthly benefit payable under the alternative form of SERP is equal to the following amount:
1.5% of the executive’s average monthly salary calculated as of December 31, 2011 (as determined for the Salaried Retirement Program excluding the limitations as specified under the Internal Revenue Code) and average monthly incentive compensation (determined as the average of the highest five of the executive’s last 10 annual cash incentive awards, divided by 12) multiplied by the executive’s years of credited service; less
The benefit payable to the executive under the Salaried Retirement Program (without reduction for survivor benefits), plus the maximum monthly social security benefit payable at age 65.
SERP benefits payable under the basic and alternative forms are generally paid as a single life annuity. If the executive’s spouse is eligible for survivor benefits under the Salaried Retirement Program, however, the executive’s monthly SERP benefit will be reduced and paid in the form of a joint and survivor annuity.
Mr. D.C. Dauch, Mr. Simonte and Mr. Jerge,Willemse, who arewere not grandfathered under the Salaried Retirement Program, are eligible to receive a defined contribution benefit under the current SERP formula, payable six months after retirement in a lump sum. The amount of the benefit will be equal to 12.5 percent12.5% of the executive’s final average compensation (determined as the executive’s average annual base salary and cash incentive for the highest five consecutive years), multiplied by the executive’s years of credited service, less the sum of the actuarially equivalent value of the executive’s benefits payable under the Salaried Retirement Program, Albion Pension Plan and the balance of the executive’s retirement contribution account under ourAAM’s 401(k) plan.
40
Effective August 1, 2012, the SERP was amended and restated to implement actuarial increases for participants who remain employed after reaching age 65. As a result, participants who work past age 65 will receive an increased annual SERP benefit when they retire to reflect a shorter expected payment period due to delayed retirement. This amendment had an impact on Mr. R.E. Dauch’s SERP benefit for 2012, which is shown in theSummary Compensation Table. The amended and restated SERP also provides that a participant’s entire SERP benefit will be forfeited if the participant’s employment with AAM is terminated for cause (as defined in the plan).
The following table summarizes the NEOs compensation under the Executive Deferred Compensation Plan for the 20102012 fiscal year. All of the NEOs are fully vested in any applicable Company matching contributions.
| Executive | Registrant | Aggregate | Aggregate | Aggregate | |||||||||||||||||||||
| Contributions | contributions in | Earnings | Withdrawals | Balance at | |||||||||||||||||||||
| in Last FY | Last FY | In Last FY(1) | Distributions | Last FYE | |||||||||||||||||||||
| Name | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||
| Richard E. Dauch | — | — | 360,214 | — | 4,865,696 | ||||||||||||||||||||
| Michael K. Simonte | — | — | — | — | — | ||||||||||||||||||||
| David C. Dauch | — | — | 30,545 | — | 263,066 | ||||||||||||||||||||
| John J. Bellanti | — | — | 58,046 | — | 498,071 | ||||||||||||||||||||
| John E. Jerge | — | — | — | — | — | ||||||||||||||||||||
| Patrick S. Lancaster | — | — | — | — | — | ||||||||||||||||||||
| Name | Executive Contributions in Last FY(1) ($) | Registrant contributions in Last FY(2) ($) | Aggregate Earnings In Last FY(3) ($) | Aggregate Withdrawals Distributions ($) | Aggregate Balance at Last FYE(4) ($) | |||||||||||||||
David C. Dauch | — | — | 38,630 | — | 301,238 | |||||||||||||||
Michael K. Simonte | — | — | — | — | — | |||||||||||||||
Richard E. Dauch | — | — | 532,099 | — | 5,502,317 | |||||||||||||||
John J. Bellanti | — | — | 65,112 | — | 567,875 | |||||||||||||||
Norman Willemse | 25,264 | 513 | 1,595 | — | 27,372 | |||||||||||||||
| (1) | For Mr. Willemse, reflects $17,083 of his 2012 base salary and $8,181 of his 2011 annual incentive award paid March 2012. Base salary amounts deferred are included in the salary column for 2012 in theSummary Compensation Table and the 2011 annual incentive award deferred is included in the non-equity incentive compensation column for 2011 in theSummary Compensation Table. |
| (2) | Reflects the Company 3% match on 2012 base salary deferred by Mr. Willemse. Amount is included in the all other compensation column for 2012 in theSummary Compensation Table. |
| (3) | Reflects hypothetical accrued earnings during |
| (4) | Of the aggregate balance, the amounts reflect compensation previously reported in the Summary Compensation Table for each of the NEOs. For Mr. Willemse, the amount includes $17,596 reported as compensation in theSummary Compensation Table for 2012. |
Under AAM’s Executive Deferred Compensation Plan, a nonqualified, tax-deferred savings plan, certain executives, including our NEOs, may elect to defer the payment of six6% to 75 percent75% of their base salaryand/or their annual incentive compensation award during any plan year. Base salary deferred into the Executive Deferred Compensation Planplan receives a three percent3% Company match. Matching contributions are vested after five years of credited service. The amounts deferred are unfunded and unsecured obligations of AAM.
Amounts deferred or credited into this plan are represented in the executive’s notional account and are “invested” among funds similar to those available under the Company’sAAM’s 401(k) plan. Forty percent of deferral elections are automatically and irrevocably allocated to the restricted investment benchmark, the PIMCO Total Return Fund. The remaining 60 percent of deferral elections60% may be allocated by the executive to any of the investments available under the plan and may be reallocated on a daily basis among any of the investments available under the plan.available. Although the executive has no actual or constructive ownership of shares in the investment funds, the return on the executive’s account is determined as if the amounts were notionally invested in these funds.
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| Rate of | Rate of | ||||||||
| Name of Fund | Return | Name of Fund | Return | ||||||
| Fidelity Retirement Money Market Portfolio | .02% | Fidelity Freedom Income Fund | 7.63% | ||||||
| PIMCO Total Return Fund | 8.83% | Fidelity Freedom 2000 Fund | 7.86% | ||||||
| PIMCO High Yield Fund | 14.24% | Fidelity Freedom 2005 Fund | 10.57% | ||||||
| Fifth Third Disciplined Large Cap Value Fund | 13.44% | Fidelity Freedom 2010 Fund | 11.65% | ||||||
| Domini Social Equity Fund | 14.36% | Fidelity Freedom 2015 Fund | 11.75% | ||||||
| Spartan U.S. Equity Index Fund | 14.98% | Fidelity Freedom 2020 Fund | 12.93% | ||||||
| American Funds Growth Fund of America | 12.63% | Fidelity Freedom 2025 Fund | 13.82% | ||||||
| Fidelity Growth Company Fund | 20.55% | Fidelity Freedom 2030 Fund | 14.04% | ||||||
| Fidelity Low-Priced Stock Fund | 20.70% | Fidelity Freedom 2035 Fund | 14.46% | ||||||
Nuveen Mid Cap Growth Opportunities(1) | 27.91% | Fidelity Freedom 2040 Fund | 14.62% | ||||||
| American Beacon Small Cap Value Fund | 26.19% | Fidelity Freedom 2045 Fund | 14.72% | ||||||
| Munder Small Cap Value Fund | 27.16% | Fidelity Freedom 2050 Fund | 14.90% | ||||||
| Fidelity Diversified International Fund | 9.65% | ||||||||
| Spartan International Index Fund | 7.70% | ||||||||
| Vanguard External Market Index | 27.37% | ||||||||
| Name of Fund | Rate of Return | Name of Fund | Rate of Return | |||||||
Fidelity Retirement Money Market Portfolio | .01% | Vanguard External Market Index | 18.48% | |||||||
PIMCO Total Return Fund | 10.36% | Fidelity Freedom Income K Fund | 6.36% | |||||||
PIMCO High Yield Fund | 14.55% | Fidelity Freedom K 2000 Fund | 6.44% | |||||||
Domini Social Equity Fund | 11.75% | Fidelity Freedom K 2005 Fund | 8.77% | |||||||
Spartan U.S. Equity Index Fund | 15.96% | Fidelity Freedom K 2010 Fund | 10.53% | |||||||
Touchstone Value Y Fund | 15.38% | Fidelity Freedom K 2015 Fund | 10.81% | |||||||
American Funds Growth Fund of America | 20.92% | Fidelity Freedom K 2020 Fund | 11.86% | |||||||
Fidelity Growth Company Fund | 18.52% | Fidelity Freedom K 2025 Fund | 13.26% | |||||||
Fidelity Low-Priced Stock Fund | 18.50% | Fidelity Freedom K 2030 Fund | 13.65% | |||||||
Nuveen Mid Cap Growth Opportunities | 15.12% | Fidelity Freedom K 2035 Fund | 14.60% | |||||||
American Beacon Small Cap Value Fund | 16.52% | Fidelity Freedom K 2040 Fund | 14.61% | |||||||
Royce PA Mutual Fund | 14.58% | Fidelity Freedom K 2045 Fund | 14.97% | |||||||
Fidelity Diversified International Fund | 19.41% | Fidelity Freedom K 2050 Fund | 15.23% | |||||||
Spartan International Index Fund | 18.78% | Fidelity Freedom K 2055 Fund | 15.39% | |||||||
Distributions can be received (1) upon retirement in a lump sum or in annual payments over a period of five or ten years, (2) in a lump sum upon death, disability, termination of employment, change in control or (3) if elected by the executive, during employment at a specified date after a minimum deferral period. The minimum deferral period is at least three years following the end of the plan year to which the deferral election relates, and distributions during employment consist of employee deferrals and related earnings or losses (not the Company contributions and related earnings or losses).
42
The following tables show the estimated potential payments and benefits that each of the NEOs would receive upon termination of employment under different scenarios,various circumstances that would trigger payments under applicable employment agreements and the Company’s plans and programs, assuming that the termination was effectiveevent occurred on December 31, 2010.
President & CEO and Executive Chairman Employment Agreements
Under our employment agreementagreements with Mr. D.C. Dauch and Mr. R.E. Dauch, the Company may terminate hiseach executive’s employment with or without cause, or upon disability. With respect to each executive, cause means:
a material breach of his disability. Cause exists if he: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 the financial condition or business reputation.
In addition, heeach executive may resign for good reason, meaningwhich means:
a material decrease in compensation or a failure by the Company: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 outside the Detroit-metropolitan area; or
a material breach by the Company.
Upon termination for cause Mr. R.E. Dauch will be entitled toor upon resignation without good reason, each executive would receive only accrued butand unpaid amounts as ofcompensation. Participation in the termination date.
If his employment is terminated without cause, or if he resignsupon resignation for good reason, he will be entitled to:
If Mr. R.E. Dauch’s employment is terminated for any reason other than for cause or upon his death, the Company will continue to reimburse premiums paid on a $5 million executive life insurance policy purchased byfor two years.
The employment agreements for Mr. R.E. Dauch.
non-disclosure and confidentiality, which prohibit unauthorized use or disclosure of AAM’s confidential information;
non-competition, which prohibits each of them from directly or indirectly engaging in any business that competes with AAM; and | ||
43
non-solicitation, which prohibits solicitation of our employees and customers.
Non-Competition Agreements
Mr. Simonte, Mr. D.C. Dauch, Mr. Bellanti and Mr. JergeWillemse have each entered into a non-competition agreement that prohibits, while employed by AAM and for one year following termination of employment, theeach executive from:
directly or indirectly engaging in any business that competes with AAM;
soliciting or inducing our employees to leave AAM, or offering employment to our employees or otherwise interfering with our relationship with our employees, agents or consultants; and
using, exploiting or disclosing |
44
Richard E.David C. Dauch
The following table shows estimated potential payments to Mr. D.C. Dauch upon termination, retirement and a change in controlresignation for Mr. R.E. Dauch. Mr. R.E. Dauch was eligible to retire on December 31, 2010. The assumptions used to determine retirement benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2010.
| Not for | |||||||||||||||||||||||||
| For Cause | Cause | Disability | Change in | ||||||||||||||||||||||
| Termination | Termination | Retirement(1) | Retirement | Control | |||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Compensation: | — | — | — | — | — | ||||||||||||||||||||
Bonus(2) | — | — | — | — | — | ||||||||||||||||||||
Severance(3) | — | — | — | — | — | ||||||||||||||||||||
Retirement Plans: | |||||||||||||||||||||||||
Defined Benefit | |||||||||||||||||||||||||
Retirement Program(4) | — | — | 843,319 | 843,319 | — | ||||||||||||||||||||
SERP(5) | — | — | 22,862,681 | 22,862,681 | — | ||||||||||||||||||||
Welfare Benefit(6) | — | — | 1,440,270 | 1,440,270 | — | ||||||||||||||||||||
Equity: | — | — | — | — | — | ||||||||||||||||||||
Stock Options(7) | — | — | 1,147,635 | — | 1,147,635 | ||||||||||||||||||||
Restricted Stock(8) | — | — | 765,067 | — | 765,067 | ||||||||||||||||||||
Other Benefits: | — | — | — | — | — | ||||||||||||||||||||
Deferred Compensation(9) | 4,865,696 | 4,865,696 | 4,865,696 | 4,865,696 | 4,865,696 | ||||||||||||||||||||
Health care(10) | — | 17,858 | — | — | — | ||||||||||||||||||||
Life Insurance(11) | — | 47,780 | 47,780 | 47,780 | — | ||||||||||||||||||||
Use of Vehicles(3) | — | — | — | — | — | ||||||||||||||||||||
280G TaxGross-Up(3) | — | — | — | — | — | ||||||||||||||||||||
Total | 4,865,696 | 4,931,334 | 31,972,448 | 30,059,746 | 6,778,398 | ||||||||||||||||||||
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| Disability | Change in | |||||||||||||||||||
| Resignation | Termination | Retirement(1) | Control | |||||||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||||
Compensation: | — | — | — | — | ||||||||||||||||
Bonus(2) | — | — | — | — | ||||||||||||||||
Severance(2) | — | — | — | — | ||||||||||||||||
Long Term Incentives: | — | — | — | — | ||||||||||||||||
Stock Options(3) | — | — | 11,468 | 11,468 | ||||||||||||||||
PARS and RSUs(4) | — | — | 154,320 | 154,320 | ||||||||||||||||
Restricted Stock(5) | — | — | 128,600 | 128,600 | ||||||||||||||||
2009 Performance Award(6) | — | — | 337,500 | 506,250 | ||||||||||||||||
2010 Performance Award(7) | — | — | 200,000 | — | ||||||||||||||||
Other Benefits: | — | — | — | — | ||||||||||||||||
Health care(8) | — | — | 237,857 | — | ||||||||||||||||
Disability(9) | — | — | 4,078,916 | — | ||||||||||||||||
Life Insurance(10) | — | — | 59,822 | — | ||||||||||||||||
Use of Vehicles(2) | — | — | — | — | ||||||||||||||||
280G TaxGross-Up(2) | — | — | — | — | ||||||||||||||||
Total | — | — | 5,208,483 | 800,638 | ||||||||||||||||
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| Disability | Change in | |||||||||||||||||||
| Resignation | Termination | Retirement(1) | Control | |||||||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||||
Compensation: | — | — | — | — | ||||||||||||||||
Bonus(2) | — | — | — | — | ||||||||||||||||
Severance(2) | — | — | — | — | ||||||||||||||||
Long Term Incentives: | — | — | — | — | ||||||||||||||||
Stock Options(3) | — | — | 14,220 | 14,220 | ||||||||||||||||
PARS and RSUs(4) | — | — | 199,330 | 199,330 | ||||||||||||||||
Restricted Stock(5) | — | — | 154,320 | 154,320 | ||||||||||||||||
2009 Performance Award(6) | — | — | 621,000 | 931,500 | ||||||||||||||||
2010 Performance Award(7) | — | — | 336,000 | — | ||||||||||||||||
Other Benefits: | — | — | — | — | ||||||||||||||||
Deferred Compensation(8) | 263,066 | 263,066 | 263,066 | 263,066 | ||||||||||||||||
Health care(9) | — | — | 241,068 | — | ||||||||||||||||
Disability(10) | — | — | 4,885,679 | — | ||||||||||||||||
Life Insurance(11) | — | — | 80,062 | — | ||||||||||||||||
Use of Vehicles(2) | — | — | — | — | ||||||||||||||||
280G TaxGross-Up(2) | — | — | — | — | ||||||||||||||||
Total | 263,066 | 263,066 | 6,794,745 | 1,562,436 | ||||||||||||||||
| For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Change in Control ($) | |||||||||||||
Compensation: | ||||||||||||||||
Severance(2) | 2,000,000 | 2,000,000 | — | — | ||||||||||||
Annual Incentive(3) | 540,000 | 540,000 | 540,000 | — | ||||||||||||
Long Term Incentives: | ||||||||||||||||
RSUs(4) | — | — | 1,139,129 | 1,139,129 | ||||||||||||
2010 Performance Awards(5) | — | 1,209,600 | 1,209,600 | — | ||||||||||||
2011 Performance Awards(6) | — | 780,000 | 780,000 | — | ||||||||||||
2012 Performance Unit Awards(7) | — | 240,485 | 240,485 | 240,485 | ||||||||||||
Special Incentive Program(8) | 1,750,000 | 1,750,000 | 1,750,000 | — | ||||||||||||
Other Benefits: | ||||||||||||||||
Deferred Compensation(9) | 301,238 | 301,238 | 301,238 | 301,238 | ||||||||||||
Health care(10) | 26,676 | 26,676 | 322,562 | — | ||||||||||||
Disability(11) | — | — | 7,756,067 | — | ||||||||||||
Life Insurance(12) | — | — | 139,920 | — | ||||||||||||
Outplacement Services(13) | 50,000 | 50,000 | — | — | ||||||||||||
Total | 4,667,914 | 6,897,999 | 14,179,001 | 1,680,852 | ||||||||||||
| (1) | Assumes total and permanent disability on December 31, |
| (2) |
| (3) |
47
| (4) | Outstanding | |
| (5) | The |
| (6) | The 2011 performance award payable in the event of a disability or termination without cause would be based on actual performance and |
| (7) | The |
| employment as compared to the performance |
| (8) | Under the special incentive program, in the event of disability, resignation for good reason or termination without cause, Mr. D.C. Dauch is entitled to program amounts earned and not |
| (9) | Assumes amount is payable in a lump sum upon occurrence of termination event. |
| Under Mr. D.C. Dauch’s employment agreement, he is entitled to two years of health care benefits (including his spouse) if his employment is terminated without cause or if he resigns for good reason. Under the disability scenario, reflects health care benefits |
| (11) | Reflects benefits equal to 100% of base salary for year one and 60% of base salary |
| (12) | Under the disability scenario, reflects basic and supplemental life insurance benefits |
48
| Disability | Change in | |||||||||||||||||||
| Termination | Retirement(1) | Retirement | Control | |||||||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||||
Compensation: | — | — | — | — | ||||||||||||||||
Bonus(2) | — | — | — | — | ||||||||||||||||
Severance(2) | — | — | — | — | ||||||||||||||||
Retirement Plans: | — | — | — | — | ||||||||||||||||
Defined Benefit | — | — | — | — | ||||||||||||||||
Retirement Program(3) | — | 972,382 | 661,351 | — | ||||||||||||||||
SERP(4) | — | 265,752 | 614,249 | — | ||||||||||||||||
Welfare Benefit(5) | — | 120,377 | 120,377 | — | ||||||||||||||||
Equity: | — | — | — | — | ||||||||||||||||
Stock Options(6) | — | 10,091 | — | 10,091 | ||||||||||||||||
PARS and RSUs(7) | — | 154,320 | — | 154,320 | ||||||||||||||||
Restricted Stock(8) | — | 115,740 | — | 115,740 | ||||||||||||||||
2009 Performance Award(9) | — | 315,000 | 315,000 | 472,500 | ||||||||||||||||
2010 Performance Award(10) | — | 184,000 | 184,000 | — | ||||||||||||||||
Other Benefits: | — | — | — | — | ||||||||||||||||
Deferred Compensation(11) | 498,071 | 498,071 | 498,071 | 498,071 | ||||||||||||||||
Use of Vehicles(2) | — | — | — | — | ||||||||||||||||
280G TaxGross-Up(2) | — | — | — | — | ||||||||||||||||
Total | 498,071 | 2,635,733 | 2,393,048 | 1,250,722 | ||||||||||||||||
| (13) | ||
49
| Disability | Change in | |||||||||||||||||||
| Resignation | Termination | Retirement(1) | Control | |||||||||||||||||
| ($) | ($) | ($) | ($) | |||||||||||||||||
Compensation: | — | — | — | — | ||||||||||||||||
Bonus(2) | — | — | — | — | ||||||||||||||||
Severance(2) | — | — | — | — | ||||||||||||||||
Long Term Incentives: | — | — | — | — | ||||||||||||||||
Stock Options(3) | — | — | 8,257 | 8,257 | ||||||||||||||||
PARS and RSUs(4) | — | — | 147,890 | 147,890 | ||||||||||||||||
Restricted Stock(5) | — | — | 90,020 | 90,020 | ||||||||||||||||
2009 Performance Award(6) | — | — | 162,000 | 243,000 | ||||||||||||||||
2010 Performance Award(7) | — | — | 76,000 | — | ||||||||||||||||
Other Benefits: | — | — | — | — | ||||||||||||||||
Health care(8) | — | — | 216,631 | — | ||||||||||||||||
Disability(9) | — | — | 2,000,624 | — | ||||||||||||||||
Life Insurance(10) | — | — | 36,246 | — | ||||||||||||||||
Use of Vehicles(2) | — | — | — | — | ||||||||||||||||
280G TaxGross-Up(2) | — | — | — | — | ||||||||||||||||
Total | — | — | 2,737,668 | 489,167 | ||||||||||||||||
| For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Change in Control ($) | |||||||||||||
Compensation: | ||||||||||||||||
Annual Incentive(2) | — | — | 220,000 | — | ||||||||||||
Long Term Incentives: | ||||||||||||||||
RSUs(3) | — | — | 386,019 | 386,019 | ||||||||||||
2010 Performance Awards(4) | — | 720,000 | 720,000 | — | ||||||||||||
2011 Performance Awards(5) | — | 412,000 | 412,000 | — | ||||||||||||
2012 Performance Unit Award(6) | — | 86,384 | 86,384 | 86,384 | ||||||||||||
Special Incentive Program(7) | 1,000,000 | 1,000,000 | 1,000,000 | — | ||||||||||||
Other Benefits: | ||||||||||||||||
Health care(8) | — | — | 318,431 | — | ||||||||||||
Disability(9) | — | — | 4,428,641 | — | ||||||||||||
Life Insurance(10) | — | — | 73,864 | — | ||||||||||||
Total | 1,000,000 | 2,218,384 | 7,645,339 | 472,403 | ||||||||||||
| (1) | Assumes total and permanent disability on December 31, |
| (2) |
50
| (3) | Outstanding RSUs vest upon termination of employment due to death, disability or upon a change in control. The value reflects the number of RSUs multiplied by the closing price of AAM stock on December 31, 2012. |
| (4) |
| (5) | The 2011 performance award payable in the event of a disability or termination without cause would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, two-thirds of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. |
| (6) | The 2012 performance unit award payable in the event of a disability, termination without cause or upon a change in control would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, approximately 27% of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. |
| (7) | Under the special incentive program, in the event of disability, resignation for good reason or termination without cause, Mr. Simonte is entitled to award amounts earned and not previously paid. Reflects the remaining two annual installments of $500,000. |
| (8) | Under the disability scenario, reflects health care benefits until retirement. |
| (9) | Reflects benefits equal to 100% of base salary for year one and 66 2/3% of base salary until retirement. |
| (10) | Under the disability scenario, reflects basic and supplemental life insurance benefits until retirement at age 65. |
Richard E. Dauch
The following table shows estimated potential payments to Mr. R.E. Dauch upon resignation for good reason, termination without cause, disability, retirement and a change in control as of December 31, 2012. Upon termination for cause or upon resignation without good reason, Mr. R.E. Dauch would receive only accrued and unpaid compensation. These amounts are not shown in the table below. Mr. R.E. Dauch was eligible to retire on December 31, 2012. The assumptions used to determine retirement benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2012. See Note 6 to the audited consolidated financial statements in our Annual Report on Form 10-K.
| For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Retirement ($) | Change in Control ($) | ||||||||||||||||
Compensation: | ||||||||||||||||||||
Severance(2) | 4,000,000 | 4,000,000 | — | — | — | |||||||||||||||
Bonus(3) | 4,000,000 | 4,000,000 | 4,000,000 | 4,000,000 | — | |||||||||||||||
Retirement Plans: | ||||||||||||||||||||
Defined Benefit | ||||||||||||||||||||
Retirement Program(4) | — | — | 991,169 | 991,169 | — | |||||||||||||||
SERP(5) | — | — | 29,718,734 | 29,718,734 | — | |||||||||||||||
Welfare Benefit(6) | — | — | 1,391,904 | 1,391,904 | — | |||||||||||||||
Equity: | ||||||||||||||||||||
Stock Options(7) | — | — | 301,500 | — | 301,500 | |||||||||||||||
RSUs(8) | — | — | 7,027,921 | — | 7,027,921 | |||||||||||||||
Other Benefits: | ||||||||||||||||||||
Deferred Compensation(9) | 5,502,317 | 5,502,317 | 5,502,317 | 5,502,317 | 5,502,317 | |||||||||||||||
Life Insurance(10) | 47,780 | 47,780 | 47,780 | 47,780 | — | |||||||||||||||
Total | 13,550,097 | 13,550,097 | 48,981,325 | 41,651,904 | 12,831,738 | |||||||||||||||
| (1) | Assumes retirement due to total and permanent disability on December 31, 2012. |
| (2) | Upon termination without cause or resignation for good reason, Mr. R.E. Dauch is entitled to receive two years’ base salary payable semimonthly. |
| (3) | Reflects Mr. R.E. Dauch’s cash bonus earned in 2012 and paid in March 2013. |
| (4) | Reflects a present value of a joint and survivor annuity benefit payable monthly. |
| (5) | The present value calculated assuming a joint and survivor annuity benefit payable monthly. |
| (6) | Reflects benefits for Mr. R.E. Dauch and his spouse assuming retirement or disability on December 31, 2012. |
| (7) | Outstanding stock option awards vest upon termination of employment due to death, disability or upon a change in control. |
| (8) | Outstanding |
| (9) | Assumes amount is payable in a lump sum upon occurrence of termination event. |
| (10) | Represents reimbursement of two years’ premiums paid by Mr. R.E. Dauch for a $5 million executive life insurance policy. |
John J. Bellanti
The following table shows estimated potential payments to Mr. Bellanti upon resignation for good reason, termination without cause, disability, retirement and a change in control as of December 31, 2012. Upon termination for cause or upon resignation without good reason, Mr. Bellanti would receive only accrued and unpaid compensation. These amounts are not shown in the table below. Mr. Bellanti was eligible to retire on December 31, 2012. The assumptions used to determine retirement benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2012. See Note 6 to the audited consolidated financial statements in our Annual Report on Form 10-K.
| For Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement(1) ($) | Retirement ($) | Change in Control ($) | ||||||||||||||||
Compensation: | ||||||||||||||||||||
Annual Incentive(2) | — | — | 140,000 | 140,000 | — | |||||||||||||||
Retirement Plans: | ||||||||||||||||||||
Defined Benefit | ||||||||||||||||||||
Retirement Program(3) | — | — | 1,211,666 | 966,672 | — | |||||||||||||||
SERP(4) | — | — | 644,007 | 917,081 | — | |||||||||||||||
Welfare Benefit(5) | — | — | 219,800 | 219,800 | — | |||||||||||||||
Equity: | ||||||||||||||||||||
RSUs(6) | — | — | 355,163 | — | 355,163 | |||||||||||||||
2010 Performance Awards(7) | — | 662,400 | 662,400 | 662,400 | — | |||||||||||||||
2011 Performance Awards(8) | — | 379,040 | 379,040 | 379,040 | — | |||||||||||||||
2012 Performance Unit Award(9) | — | 79,478 | 79,478 | 79,478 | 79,478 | |||||||||||||||
Special Incentive Program(10) | 300,000 | 300,000 | 300,000 | — | — | |||||||||||||||
Other Benefits: | ||||||||||||||||||||
Deferred Compensation(11) | 567,875 | 567,875 | 567,875 | 567,875 | 567,875 | |||||||||||||||
Total | 867,875 | 1,988,793 | 4,559,429 | 3,932,346 | 1,002,516 | |||||||||||||||
| (1) | Assumes retirement due to total and permanent disability on December 31, 2012. |
| (2) | Under AAM’s Incentive Compensation Plan for Executive Officers, the award payout is pro-rated through the date of disability or retirement. The amount reflects the 2012 award paid in March 2013. |
| (3) | Reflects a joint and survivor annuity benefit payable monthly. |
| (4) | The present value |
| (5) | Reflects benefits for Mr. Bellanti and his spouse assuming retirement on December 31, 2012 under the retiree welfare benefit plan. |
| (6) |
| (7) | The |
| (8) | The 2011 performance award payable in the event of disability, retirement or termination without cause would be based on actual performance and |
| (9) | The 2012 performance unit award payable in the event of disability, retirement, termination without cause or upon a change in control | |
| (10) | Under the special incentive program, in the event of disability, | |
| program amounts earned and not previously paid. Reflects | ||
| (11) | Assumes amount is payable in a lump sum upon occurrence of termination event. |
Patrick S. LancasterNorman Willemse
The following table shows estimated potential payments to Mr. Willemse upon termination without cause, disability, retirement and other benefits for Mr. Lancastera change in control as of December 31, 20102012. Upon termination for cause or upon resignation without good reason, Mr. Willemse would receive only accrued and unpaid compensation. These amounts are not shown in accordance with the Settlement Agreement between AAM andtable below. Mr. Lancaster effective July 12, 2010. Mr. Lancaster retired effective January 1, 2011.
| Without Cause Termination ($) | Disability Retirement(1) ($) | Retirement ($) | Change in Control ($) | |||||||||||||
Compensation: | ||||||||||||||||
Annual Incentive(2) | — | 95,000 | 95,000 | — | ||||||||||||
Retirement Plans: | ||||||||||||||||
Defined Benefit | ||||||||||||||||
Retirement Program(3) | — | 250,789 | 250,789 | — | ||||||||||||
SERP(4) | — | 282,554 | 282,554 | — | ||||||||||||
Welfare Benefit(5) | — | 12,740 | — | — | ||||||||||||
Long Term Incentives: | ||||||||||||||||
RSUs(6) | — | 151,424 | — | 151,424 | ||||||||||||
2010 Performance Awards(7) | 281,808 | 281,808 | 281,808 | — | ||||||||||||
2011 Performance Awards(8) | 161,600 | 161,600 | 161,600 | — | ||||||||||||
2012 Performance Unit Award(9) | 33,884 | 33,884 | 33,884 | 33,884 | ||||||||||||
Other Benefits: | ||||||||||||||||
Deferred Compensation(10) | 27,372 | 27,372 | 27,372 | 27,372 | ||||||||||||
Total | 504,664 | 1,297,171 | 1,133,007 | 212,680 | ||||||||||||
| (1) | Assumes total and permanent disability on December 31, 2012. |
| (2) | |||||
51
| (3) | ||
| Reflects Mr. |
| (4) | The present value calculated assuming a lump sum benefit |
| (5) | Reflects benefits for Mr. Willemse and his |
| (6) | Outstanding RSUs vest upon termination of employment due to death, disability or upon a |
| (7) | The |
| (8) | The 2011 |
| (9) | The |
52
AAM to seekis seeking a non-binding advisory vote from our stockholders to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis (CD&A) and narrative and tabular disclosures in this Proxy Statement.proxy statement. In the CD&A, we have provided a detailed description of our compensation programs, including our compensation philosophy and objectives, the individual elements of executive pay, and how the programs are administered. We encourage you to review the CD&A, together with the other narrative and tabular disclosures, in considering your advisory vote on our named executive officers’ compensation.
Our executive officer compensation program is designed to reward performance that supports the achievement of the Company’s business objectives and creates long-term stockholder value. The Compensation Committee considers the following fundamental objectives, among others, in determining our compensation programs:
Compensation and benefit programs should attract, motivate and retain experienced executives who are vital to our short-term and long-term success, profitability and growth.
Compensation and benefit programs should foster the long-term focus required for our executive officers:success in the global automotive industry.
Executive officers should be AAM stockholders.
The objectives of rewarding performance and retention should be balanced.
Features of our compensation program and practices include the following:
Payouts of annual and long-term incentive awards are based on AAM’s performance as measured against a mix of pre-established financial metrics and total shareholder return.
Executive officers are required to comply with stock ownership requirements, which were increased by | ||
AAM prohibits hedging or pledging of Company stock.
There are no golden parachute agreements and no excise tax gross-ups upon a change of control.
For the reasons stated above, and more fully discussed in the CD&A, the Board unanimously recommends a vote for the approval of the compensation programs have been effective in motivating our senior management team to successfully deliver on our strategic goals and achieve superior results for AAM and its stockholders and other key stakeholders. We believe the effectiveness of our compensation programs and policies is demonstrated by the recent accomplishments of AAM’s senior management team. Our senior management team led a comprehensive, multi-year restructuring of our business, yielding significant, permanent structural cost reductions and positioning us to significantly improve our profitability and free cash flow performance in 2010. We believe that ournamed executive compensation programs are designed to continue to drive positive performance in the achievement of AAM’s long-term strategic goals and provide value for our stockholders.
Although the vote on this proposal is advisory vote is not binding,and non-binding, the Board and the Compensation Committee will consider the outcome of the advisory vote on executive compensationvoting results when making future compensation decisions.
The Board of Directors unanimously recommends a vote FOR the following non-binding resolution:
53officers.
54
Total 20102012 compensation of our non-employee directors is shown below.
| Non-Equity | ||||||||||||
| Fees Earned or | Incentive Plan | |||||||||||
| Paid in Cash | Compensation(2) | Total | ||||||||||
Name(1) | ($) | ($) | ($) | |||||||||
| Salvatore J. Bonanno, Sr. | 63,450 | 84,000 | 147,450 | |||||||||
| Elizabeth A. Chappell | 71,250 | 79,632 | 150,882 | |||||||||
| Forest J. Farmer | 86,150 | 84,000 | 170,150 | |||||||||
| Richard C. Lappin | 71,450 | 84,000 | 155,450 | |||||||||
| William P. Miller II | 75,450 | 75,264 | 150,714 | |||||||||
| Larry K. Switzer | 79,250 | 75,264 | 154,514 | |||||||||
| Thomas K. Walker | 97,250 | 84,000 | 181,250 | |||||||||
| Dr. Henry T. Yang | 66,450 | 79,632 | 146,082 | |||||||||
Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total | |||||||||||||||
Salvatore J. Bonanno, Sr. | 75,000 | 80,003 | 76,000 | — | 231,003 | |||||||||||||||
Elizabeth A. Chappell | 75,500 | 80,003 | 76,000 | 400 | 231,903 | |||||||||||||||
Forest J. Farmer | 102,000 | 80,003 | 76,000 | 600 | 258,603 | |||||||||||||||
Steven B. Hantler | 75,500 | 80,003 | — | 400 | 155,903 | |||||||||||||||
Richard C. Lappin | 91,500 | 80,003 | 76,000 | 1,900 | 249,403 | |||||||||||||||
James A. McCaslin | 79,000 | 80,003 | 76,000 | — | 235,003 | |||||||||||||||
William P. Miller II | 87,000 | 80,003 | 76,000 | — | 243,003 | |||||||||||||||
John F. Smith | 79,500 | 80,003 | — | — | 159,503 | |||||||||||||||
Larry K. Switzer | 91,000 | 80,003 | 76,000 | 1,400 | 248,403 | |||||||||||||||
Thomas K. Walker | 146,333 | 80,003 | 76,000 | 400 | 302,736 | |||||||||||||||
Dr. Henry T. Yang | 78,000 | 80,003 | 76,000 | 8,200 | 242,203 | |||||||||||||||
| (1) | ||
| (2) | Reflects the full grant date fair value of equity awards granted on May 15, 2012 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. The grant date fair value of equity awards is calculated using the closing market price of AAM common stock on the grant date of $9.16. See Note 9 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012 regarding assumptions underlying the valuation of equity awards. |
| (3) | Reflects amounts earned under the |
| (4) | The Company reimburses non-employee directors for their travel and related out-of-pocket expenses in connection with attending Board, Committee and stockholder meetings. From time to time, the Company invites spouses of non-employee directors to attend Company events associated with these meetings. The Company pays for spousal travel and certain other expenses and reimburses non-employee directors for taxes attributable to the income associated with this benefit. Amounts reflect reimbursement of taxes on this income. |
As of December 31, 2010,2012, each non-employee director had the following number of outstanding options and restricted stock units (RSUs):
| Option Awards | Restricted Stock | |||||||
| Outstanding | Units Outstanding | |||||||
Name | ($) | ($) | ||||||
| Salvatore J. Bonanno, Sr. | — | — | ||||||
| Elizabeth A. Chappell | 5,000 | 11,100 | ||||||
| Forest J. Farmer | 7,500 | 4,600 | ||||||
| Richard C. Lappin | 7,500 | 5,650 | ||||||
| William P. Miller II | 7,500 | 14,350 | ||||||
| Larry K. Switzer | 7,500 | 14,350 | ||||||
| Thomas K. Walker | 7,500 | 7,850 | ||||||
| Dr. Henry T. Yang | 7,500 | 11,100 | ||||||
Name | Option Awards Outstanding (#) | Restricted Stock Units Outstanding (#) | ||||||
Salvatore J. Bonanno, Sr. | — | 8,734 | ||||||
Elizabeth A. Chappell | 5,000 | 19,834 | ||||||
Forest J. Farmer | 7,500 | 13,334 | ||||||
Steven B. Hantler | — | 8,734 | ||||||
Richard C. Lappin | 7,500 | 14,384 | ||||||
James A. McCaslin | — | 8,734 | ||||||
William P. Miller II | 7,500 | 23,084 | ||||||
John F. Smith | — | 8,734 | ||||||
Larry K. Switzer | 7,500 | 23,084 | ||||||
Thomas K. Walker | 7,500 | 16,584 | ||||||
Dr. Henry T. Yang | 7,500 | 19,834 | ||||||
ElementsNarrative Description of Non-Employee Director Compensation
20102012 Annual Retainer and Meeting Attendance Fees
| Annual retainer | $ | 50,000 | ||
| Board meeting attendance fee | 1,500 | |||
| Committee meeting attendance fee: | ||||
| Committee chairman | 3,000 | |||
| Other committee members | 2,000 | |||
| Committee chairman attendance at meetings at the Company for Committee-related business | 1,000 |
55
Annual retainer | $ | 60,000 | ||
Board meeting attendance fee | 1,500 | |||
Committee meeting attendance fee: | ||||
Committee chairman | 3,000 | |||
Other committee members | 2,000 |
DeferralDeferral.
Stock Ownership GuidelinesGuidelines.
56
2013 Non-Employee Director Compensation.The Board of Directors, upon the recommendation of the Compensation Committee, approved an increase in the annual retainer and the value of annual
equity awards. Effective January 1, 2013, the annual retainer was increased to $80,000. The Board also approved an additional annual retainer of $20,000 for the lead director as compensation for the responsibilities and duties associated with that position. The value of the annual equity award for non-employee directors was increased to $100,000 effective on the date of the 2013 annual meeting of stockholders. These adjustments were made based on of a 2012 market study of non-employee director compensation performed by Meridian of companies in our comparative peer group.
The following tables show the number of shares of AAM common stock beneficially owned as of March each person known to us who beneficially owns more than 5 percent of AAM common stock; each of our non-employee directors and nominees; our named executive officers;and all directors, nominees and executive officers as a group. A beneficial owner of stock is a person who has voting power (the power to control voting decisions) or investment power (the power to cause the sale of the stock). All individuals listed in the tables have sole voting and investment power over the shares The beneficial ownership calculation includes MORE THAN 5% BENEFICIAL OWNERS The following persons have filed reports with the SEC for the period ending December 31, Name and Address Barrow, Hanley, Mewhinney & Strauss, LLC(1) 2200 Ross Avenue, 31st Floor Dallas, TX 75201 The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 193553, 20115, 2013 (unless otherwise noted) by: • each person known to us who beneficially owns more than 5 percent of AAM common stock; • each of our non-employee directors and nominees;• • all directors, nominees and executive officers (as of March 3, 2011) as a group.unless(unless otherwise noted.75,301,26374,839,567 shares of AAM common stock outstanding on March 3, 2011.2010,2012, stating that they beneficially own more than five percent of AAM’s common stock. Shares of Common Stock Percent of Beneficially Shares Owned Outstanding Barrow, Hanley, Mewhinney & Strauss, Inc.(1) 4,529,426 6.35 2200 Ross Avenue, 31st Floor
Dallas, TX 75201 Eagle Asset Management, Inc.(2) 4,817,674 6.75 880 Carillon Parkway
St. Petersburg, FL 33716 TIAA-CREF Investment Management, LLC(3) 6,417,325 8.99 730 Third Avenue
New York, NY 10017 Shares of
Common Stock
Beneficially
Owned Percent of
Shares
Outstanding 5,283,416 7.06 3,786,844 5.05 (1) Based on the Schedule 13G filed by Barrow, Hanley, Mewhinney & Strauss, Inc.,LLC, reporting shared voting power over 2,628,4002,508,300 shares, sole voting power over 1,901,0262,775,116 shares, and sole investment power over 4,529,4265,283,416 shares.(2) Based on the Schedule 13G filed by Eagle Asset Management, Inc.,The Vanguard Group, reporting sole voting andpower over 109,452 shares, sole investment power over 4,817,674 shares.(3)Based on the Schedule 13G filed jointly by TIAA-CREF Investment Management, LLC3,679,992 shares and Teachers Advisors, Inc., reporting sole voting andshared investment power over 6,417,325106,852 shares.57
| Percent | ||||||||||||
| Shares | of | |||||||||||
| Beneficially | Shares | |||||||||||
| Owned(1)(2) | Outstanding | |||||||||||
Directors | ||||||||||||
| Salvatore J. Bonanno, Sr. | 25,000 | * | ||||||||||
| Elizabeth A. Chappell | 17,100 | * | ||||||||||
| Forest J. Farmer | 30,350 | * | ||||||||||
| Richard C. Lappin | 21,950 | * | ||||||||||
| James A. McCaslin | — | * | ||||||||||
| William P. Miller II | 27,850 | * | ||||||||||
| Larry K. Switzer | 22,850 | * | ||||||||||
| Thomas K. Walker | 21,350 | * | ||||||||||
| Dr. Henry T. Yang | 19,600 | * | ||||||||||
Named Executive Officers(3) | ||||||||||||
Richard E. Dauch(4) | 7,249,187 | 9.5 | ||||||||||
| Michael K. Simonte | 96,951 | * | ||||||||||
David C. Dauch(5) | 168,025 | * | ||||||||||
| John J. Bellanti | 107,400 | * | ||||||||||
| John E. Jerge | 116,900 | * | ||||||||||
Directors and Executive Officers as a Group (24 persons)(6) | 8,605,202 | 11.1 | ||||||||||
| Shares Beneficially Owned(1)(2) | Percent of Shares Outstanding | |||||||
Directors | ||||||||
Salvatore J. Bonanno, Sr. | 25,000 | * | ||||||
Elizabeth A. Chappell | 17,100 | * | ||||||
Forest J. Farmer | 33,568 | * | ||||||
Steven B. Hantler | 5,000 | * | ||||||
Richard C. Lappin | 21,950 | * | ||||||
James A. McCaslin | 4,000 | * | ||||||
William P. Miller II | 27,850 | * | ||||||
John F. Smith | 5,000 | * | ||||||
Larry K. Switzer | 22,850 | * | ||||||
Thomas K. Walker | 26,350 | * | ||||||
Dr. Henry T. Yang | 19,600 | * | ||||||
Named Executive Officers | ||||||||
David C. Dauch(3) | 119,131 | * | ||||||
Michael K. Simonte | 101,951 | * | ||||||
Richard E. Dauch(4) | 6,691,957 | 8.9 | ||||||
John J. Bellanti(5) | 79,279 | * | ||||||
Norman Willemse | 32,791 | * | ||||||
Directors and Executive Officers as a Group (28 persons) | 7,615,039 | 10.0 | ||||||
| (*) | Less than 1 percent of the outstanding shares of AAM common stock. | |
| (1) | Includes vested RSUs awarded to non-employee directors that have | |
| (2) | Includes the following number of shares of common stock which may be acquired upon exercise of options that were exercisable or would become exercisable within 60 days: 5,000 for Ms. Chappell; 7,500 for | |
| (3) | Includes | |
| (4) | Includes 5,830,247 shares held |
| (5) | Includes 10,000 shares held by Mr. Bellanti’s spouse. |
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10 percent10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Based solely on our review of these reports, and written representations from such reporting persons, we believe that allthe Section 16(a) filing requirements applicable to our executive officers, directors and owners of more than 10 percent of AAM’s common stockfor such reporting persons were met during 2010.582012.
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2012
Representatives of Deloitte & Touche LLP will attend the 20112013 annual meeting and be available to make a statement or respond to appropriate questions.
The Board unanimously recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2011.
592013.
The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the Company’s financial reporting process, by monitoring, among other matters, the quality and integrity of the Company’s financial statements, the independence and performance of Deloitte & Touche LLP (D&T), the Company’s independent registered public accounting firm, and the performance of the Company’s internal auditors. Management has primary responsibility for preparing the consolidated financial statements and for the reporting processes, including the design and maintenance of the Company’s system of internal controls. The independent registered public accounting firm is responsible for auditing the Company’s consolidated financial statements and opining upon the effectiveness of the internal control over financial reporting under the standards of the Public Company Accounting Oversight Board (PCAOB). The Audit Committee is solely responsible for the compensation, appointment and oversight of the Company’s independent registered public accounting firm. In this context, the Audit Committee has met and held discussions with management, D&T and the internal auditors, separately and together, with and without management present, regarding the Company’s audited consolidated financial statements for the year ended December 31, The Audit Committee reviewed and discussed with Based upon the considerations described above and subject to the limitations upon the role and responsibilities of the Audit Committee, the Audit Committee recommended to the Board that the audited consolidated financial statements for the year ended December 31, Audit Committee of the Board of Directors William P. Miller II, Chairman John F. Smith Larry K. Switzer Thomas K. Walker2010,2012, and the Company’s internal controls. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles in the U.S. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standards No. 61,Communications with Audit Committees, as amended, (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted byapplicable rules of the Public Company Accounting Oversight Board in Rule 3200T.SEC, and other relevant professional and regulatory standards, which include, among other items, matters related to the conduct of the audit of the Company’s consolidated financial statements. Further, the Audit Committee discussed with the internal auditors the Company’s plans for and scope of internal audits, identification of audit risks and results of audit activities.the independent registered public accounting firmD&T the auditor’s independence from the Company and itsmembers of the Company’s management. As part of that review, D&T submitted to the Audit Committee the written disclosures and the letter required by the applicable requirements of the PCAOB regarding D&T’s communication with the Audit Committee concerning independence from the Company. Further, the Audit Committee discussed with D&T the firm’s independence and considered whether D&T’s provisionperformance of non-audit services to the Company was compatible with maintaining D&T’s independence. The Audit Committee concluded that D&T is independent from the Company and its management.20102012 be included in the Company’s 20102012 Annual Report onForm 10-K.60
The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services (including scope, fee structure and the potential effect of the service on the auditor’s independence) to be performed for the Company by its independent registered public accounting firm. Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee may also pre-approve particular services on acase-by-case basis. The Chairman of the Audit Committee may pre-approve permissible non-audit services that arise between Audit Committee meetings, provided the fees do not exceed a limit established by the Audit Committee and the Audit Committee is informed of the decision to pre-approve the service at its next scheduled meeting. The Audit Committee received regular updates on the amount of fees and scope of audit, non-audit and tax services provided by D&T during 2010.2012. During fiscal 2010,2012, all services provided by D&T as noted in the table below were authorized and approved by the Audit Committee in compliance with pre-approval policies and procedures described herein.
The aggregate amount of fees billed by D&T, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates during the previous two fiscal years is as follows: December 31, 2010 2009 $ 1,181,000 $ 1,353,000 — — 238,000 32,000 All Other Fees — — Total $ 1,419,000 $ 1,385,000
| December 31, | ||||||||
| 2012 | 2011 | |||||||
Audit Fees(1) | $ | 1,357,550 | $ | 1,181,000 | ||||
Audit Related Fees(2) | — | — | ||||||
Tax Fees(3) | 80,539 | 238,000 | ||||||
All Other Fees | — | — | ||||||
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Total | $ | 1,438,089 | $ | 1,419,000 | ||||
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| (1) | Includes fees for the audit of annual consolidated financial statements, 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. Audit fees also include fees incurred in connection with an audit of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. | |
| (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. This category includes fees related to internal control, financial accounting and reporting standards. | |
| (3) | Fees for tax services in |
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Expenses of Solicitation
The Board is soliciting your proxy, and the expense of soliciting proxies will be borne by AAM. Proxy materials were distributed by mail by Computershare Trust Company, N.A. In addition, AAM will reimburse brokers, banks and other holders of record for their expenses in forwarding proxy materials to stockholders.
We have retained Georgeson Inc. to assist in the solicitation of proxies for an estimated fee of $10,000$11,000 plus reimbursement of certain out-of-pocket expenses. Georgeson may be contacted at(866) 432-2791.391-6921. In addition, our officers and certain other employees may solicit proxies personally or by telephone, fax ore-mail. They will receive no special compensation for these services.
Stockholder Proposals for 20122014 Annual Meeting
Under SEC rules, stockholder proposals for the 20122014 annual meeting of stockholders must be received by the Secretary of AAM at One Dauch Drive, Detroit, MI48211-1198, on or before November 20, 201121, 2013 in order to be eligible for inclusion in the Company’s 20122013 proxy materials. In addition, AAM’s bylaws require stockholders intending to present any matter for consideration at the 20122014 annual meeting of stockholders, other than through inclusion in our proxy materials, to notify AAM’s Secretary in writing at the above address on or before February 19, 2012,21, 2014, but no earlier than January 30, 2012.
Obtaining a copy of 20102012 Form 10-K
AAM will furnish to stockholders without charge a copy of our Annual Report onForm 10-K for the year ended December 31, 2010.2012. Requests should be directed to American Axle & Manufacturing Holdings, Inc., Investor Relations Department, One Dauch Drive, Detroit, MI48211-1198, or bye-mail to investorrelations@aam.com. The 20102012 Annual Report onForm 10-K is available on our website athttp://investor.aam.com/sec.cfm.investor.aam.com.
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| Using a | x |
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on May 2, 2013.
 | Vote by Internet • • Or scan the QR code with your smartphone • Follow the steps outlined on the | |
Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada • Follow the instructions provided by the recorded | ||
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
| Proposals — | The Board of Directors recommends a voteFOR all the nominees listed in Proposal 1,FOR Proposal 2, andFOR | |||
| 1. | Election of Directors: | For | Withhold | For | Withhold | For | Withhold | + | ||||||||||||||||
01 - Elizabeth A. Chappell |
¨ |
¨ |
02 - Steven B. Hantler |
¨ |
¨ |
03 - John F. Smith |
¨ |
¨ | ||||||||||||||||
| For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||
| 2. | Approval, on an advisory basis, of the compensation of the Company’s named executive officers. | ¨ | ¨ | ¨ | 3. | Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2013. | ¨ | ¨ | ¨ | |||||||||||||||
| In their discretion, the proxies are authorized to the extent permitted by law to vote on any and all other matters as may properly come before the meeting, including the authority to vote to adjourn the meeting. | ||||||||||||||||||||||||
| Non-Voting Items |
| Change of Address— Please print new address | Meeting Attendance | |||||||
| Mark box to the right if you plan to attend the Annual Meeting. | ¨ | |||||||
| C | Authorized Signatures — This section must be completed for your vote to be counted. |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.This section must be completed for your instructions to be executed.
| Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||||
| / / | ||||||||
01L57C
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Proxy — American Axle & Manufacturing Holdings, Inc.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON May 2, 2013
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Richard E. Dauch and David E. Barnes, or either of them, with full power of substitution, are authorized to vote all of your shares as if you were present at the Annual Meeting of Stockholders of American Axle & Manufacturing Holdings, Inc. to be held in the Auditorium at AAM’s World Headquarters Complex, One Dauch Drive, Detroit, Michigan, at 3:00 p.m. on May 2, 2013 or at any adjournments of the meeting.
This proxy will be voted as you specify on the reverse side. If you do not make a choice, this proxy will be voted for the director nominees in Proposal 1, for the approval, on an advisory basis, of the compensation of the Company’s named executive officers in Proposal 2 and for ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm in Proposal 3.
Voting over the Internet or by telephone reduces costs to AAM. If you vote over the Internet or by telephone, please do not mail this card.
(Items to be voted appear on reverse side.)