☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
☒ | No fee required. | |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
LETTER FROM CEO |
| To Our Shareholders |
To our Shareholders:
I am pleased to invite you to Aptiv PLC’s Annual General Meeting of Shareholders to be held on Wednesday, April 27, 2022,26, 2023, at 9:00 a.m. local time, at Powerscourt Hotel, Powerscourt Estate, Enniskerry, Co. Wicklow, A98 DR12,the Company’s Headquarters in Dublin, Ireland.
The following Notice of Annual General Meeting of Shareholders and Proxy Statement describes the business that will be conducted at the Annual Meeting. You can find financial and other information about Aptiv in the accompanying Form 10-K for the fiscal year ended December 31, 2021.2022. These materials are also available on our website, aptiv.com.
Aptiv is a global technology company that develops safer, greener and more connected solutions enabling the future of mobility. We envision a future with zero vehicle-related injuries or fatalitiesOur unique brain and have developed active safety technologies that have the potentialnervous system capabilities allow us to meaningfully save lives. We also see an acceleration indeliver optimized solutions supporting the adoption of highly electrified, software-defined vehicles. We are also transforming how these solutions are developed, deployed and operated with a cloud-native approach and integrated edge-to-cloud DevOps platform. This enables intelligent edge devices, such as the vehicle, electrificationto evolve and improve over their complete lifecycle while interacting with the environments in which they operate to enable new, more intelligent solutions.
To ensure we have industry-leading high-voltage solutions that reduce CO2 emissionsthe people and enableprocesses needed to execute this vision and strategy, we are focused on continuously enhancing our customers’ electrified vehicle designs.business foundation. Our dedication to a sustainable futureapproach also extends to our commitment of our planet goes beyond just our products with our proud commitment to being carbon neutral by 2040. Lastly, our software enables seamless connectivity between vehicles, their passengers and the environments in which they operate. In short, Aptiv’s success emanates from a strong, sustainable business that makes the world a better place.
Despite the continued industry disruptions in 2021,2022, our commitment to our mission and values has allowed us to effectively execute on our strategy, continue to proactively position Aptiv for the future and enhance the resiliency of our business model. These efforts have translated into greater value for all of our stakeholders.
Your vote is very important to us. I encourage you to sign and return your proxy card or use telephone or Internet voting so that your shares will be represented and voted at the meeting.
Thank you for your continued support. We look forward to seeing you on April 27, 2022.26, 2023.
Sincerely,
Kevin P. Clark Chairman and Chief Executive Officer |
Kevin P. Clark
President and Chief Executive Officer
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS | 1 |
| Notice of Annual General Meeting of Shareholders |
Notice of Annual General Meeting of Shareholders
Wednesday, April 9:00 a.m. Local Time |
Grand Canal Dock Dublin 2, Ireland D02 VY79 | Record Date The close of business March 2, |
Meeting AgendaMEETING AGENDA
Presenting the Company’s accounts and auditors’ reports for the fiscal year ended December 31, 20212022 to the shareholders, passing the following resolutions, and transacting such other business as may properly come before the Annual Meeting:
Ordinary Resolutions
Election of Directors
• | ORDINARY RESOLUTIONS |
ELECTION OF DIRECTORS
THAT the following directors be elected as directors of the Company:
1) | Kevin P. Clark |
2) | Richard L. Clemmer |
3) | Nancy E. Cooper |
4) | Joseph L. Hooley |
5) | Merit E. Janow |
6) | Sean O. Mahoney |
7) | Paul M. Meister |
8) | Robert K. Ortberg |
9) | Colin J. Parris |
10) | Ana G. Pinczuk |
AuditorsAUDITORS
11) | THAT Ernst & Young LLP be re-appointed as the auditors of the Company until the Annual Meeting of the Company to be held in |
• | ADVISORY, NON-BINDING RESOLUTION |
Advisory, Non-Binding Resolution
Executive CompensationEXECUTIVE COMPENSATION
12) | THAT the Company’s shareholders approve, on an advisory, non-binding basis, the Company’s executive compensation. |
Resolutions 1 to 11 will be proposed as ordinary resolutions, and Resolution 12 will be proposed as an advisory, non-binding resolution.
Record Date
• | RECORD DATE |
You are entitled to vote only if you were a shareholder of Aptiv PLC at the close of business on March 2, 2022.2023. Holders of ordinary shares of Aptiv are entitled to one vote for each share held of record on the record date.
Attendance at the Annual Meeting
2 | NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS |
• | ATTENDANCE AT THE ANNUAL MEETING |
We hope you will be able to attend the Annual Meeting in person. If you expect to attend, please check the appropriate box on the proxy card when you return your proxy or follow the instructions on your proxy card to vote and confirm your attendance by telephone or Internet.
APTIV PLC 1
• | |
|
Notice of Annual General Meeting of Shareholders (continued)
Where to Find More Information about the Resolutions and Proxies
Additional information regarding the business to be conducted and the resolutions is set out in the proxy statement (the “Proxy Statement”) and other proxy materials, which can be accessed by following the instructions on the Notice of Internet Availability of Proxy Materials that accompanies this Notice of Annual Meeting of Shareholders.
You are entitled to appoint one or more proxies to attend the Annual Meeting and vote on your behalf. Your proxy does not need to be a shareholder of the Company. Instructions on how to appoint a proxy are set out in the Proxy Statement and on the proxy card.
BY ORDER OF THE BOARD OF DIRECTORS
Katherine H. Ramundo,
Senior Vice President,
Chief Legal Officer, Chief
Chief Compliance Officer and
and Secretary
PLEASE NOTE THAT YOU WILL NEED PROOF THAT YOU OWN APTIV SHARES AS OF THE RECORD DATE TO BE ADMITTED TO THE ANNUAL MEETING.
This Notice of Annual Meeting of Shareholders and the Proxy Statement are being distributed or made available on or about March 14, 2022.13, 2023.
| Table of Contents |
| 6 | ||||||
ELECTION OF DIRECTORS | 10 | ||||||
| |||||||
16 | |||||||
17 | |||||||
18 | |||||||
19 | |||||||
| |||||||
| |||||||
| 26 | ||||||
COMPENSATION DISCUSSION AND ANALYSIS
| |||||||
29 | |||||||
32 | |||||||
36 | |||||||
41 |
|
Table of Contents (continued)
50 | |||||||
50 | |||||||
50 | |||||||
50 | |||||||
50 | |||||||
51 | |||||||
52 | |||||||
52 | |||||||
52 | |||||||
53 | |||||||
54 | |||||||
Potential Payments upon Termination or Change in Control Table | 55 | ||||||
57 | |||||||
2022 PAY VERSUS PERFORMANCE TABLE | Analysis of the Information Presented in the Pay Versus Performance Table | 59 | |||||
Most Important Measures in Linking Compensation with Performance in Fiscal Year 2022 | 61 | ||||||
| |||||||
|
Table of Contents (continued)
| ||||||
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (Resolution 12) | 64 | |||||
| ||||||
| ||||||
67 | ||||||
OTHER INFORMATION | 68 | |||||
68 | ||||||
68 | ||||||
69 | ||||||
A-1 |
| 2023 Proxy Statement—Summary |
2022 Proxy Statement — Summary
This summary highlights information contained elsewhere in the Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
ANNUAL MEETING OF SHAREHOLDERS
Date: April 27, 202226, 2023
Time: 9:00 a.m. local time
Location: Powerscourt Hotel Powerscourt Estate, Enniskerry, Co. Wicklow, A98 DR12, The Company’s Headquarters, 5 Hanover Quay, Grand Canal Dock, Dublin 2, Ireland D02 VY79
Record Date: March 2, 20222023
GENERAL INFORMATION
Stock Symbol: APTV
Exchange: NYSE
Ordinary Shares Outstanding (as of the record date): 270,915,354
271,046,939 shares
Registrar & Transfer Agent: Computershare Investor Services
Corporate Website: aptiv.com
Investor Relations Website:ir.aptiv.com
SHAREHOLDER VOTING MATTERS
Proposal | Board’s Voting Recommendation | |
Election of Directors | FOR EACH | |
Ratification of Appointment of Independent Registered Public Accounting Firm | FOR | |
Advisory Vote to Approve Named Executive Officer Compensation | FOR |
BOARD MEETING INFORMATION
Board Meetings in 2021: 92022: 12
Standing Board Committee Meetings in 2021:2022:
Audit (5), Compensation and Human Resources (6),
Finance (8)(12), Innovation and Technology (5),
Nominating and Governance (5)
DIRECTOR NOMINEES
Name | Director Since | Independent | ||||
Kevin P. Clark | 2015 | |||||
Richard L. Clemmer | 2020 |
| ||||
Nancy E. Cooper | 2018 |
| ||||
Joseph L. Hooley | 2020 |
| ||||
Merit E. Janow | 2021 |
| ||||
Sean O. Mahoney | 2009 |
| ||||
Paul M. Meister | 2019 |
| ||||
Robert K. Ortberg | 2018 |
| ||||
Colin J. Parris | 2017 |
| ||||
Ana G. Pinczuk | 2016 |
|
Two long-standing directors, our Executive Chairman, Rajiv L. Gupta and Nicholas M. Donofrio, are retiring from the Aptiv Board of Directors, and not standing for re-election. Aptiv thanks them for their years of valuable service.
NAMED EXECUTIVE OFFICERS
• | Kevin P. Clark |
• | Joseph R. Massaro |
• | Benjamin Lyon, Senior Vice President and Chief Technology Officer |
• | William T. Presley |
• |
CORPORATE GOVERNANCE BEST PRACTICES
| 9 of 10 Independent Directors | |
| Annual Election of Directors | |
| Board Diversity and Experience | |
| Annual Board and Committee Evaluations |
COMPENSATION BEST PRACTICES
| Robust Stock Ownership Guidelines | |
| Clawback Policy | |
| Restrictive Covenants for Executives | |
| No Excise Tax Gross-Ups | |
| No Hedging/No Pledging |
APTIV AT A GLANCE
ELECTION OF DIRECTORS | 10 |
| ||
| ||
| ||
| ||
|
COMPENSATION BEST PRACTICES
| ||
| ||
| ||
| ||
|
|
(ResolutionsRESOLUTIONS 1 toTO 10)
All of our current directors other than Nicholas M. Donofrio and Rajiv L. Gupta, who are retiring as of the Annual Meeting, consistent with Aptiv’s director retirement policy, are nominated for one-year terms to serve until the 20232024 annual meeting, or until such director’s earlier resignation, retirement or other termination of service. The Board extends its appreciation to Mr. Donofrio and Mr. Gupta for their years of service and thanks them for giving generously of their time. Mr. Donofrio’s significant technology focus and expertise has provided Aptiv and its Board and management with valuable insight regarding our technology and innovation strategies. Mr. Gupta, in his role as Chairman of the Board and Chair of the Nominating and Governance Committee, as well as stints as Chair of the Compensation and Human Resources Committee, has consistently provided Aptiv with independent insight and advice. His expertise in corporate governance and executive compensation has been invaluable to the Board and to Aptiv. The Board will miss their camaraderie, commitment, insight and perspective.
The Board believes that the combination of the various qualifications, skills, and breadth and depth of experiences of the director nominees contributes to an effective and well-functioning Board. The Board and the Nominating and Governance Committee believe that, individually and as a whole, the directors possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management. Included in each director nominee’s biography below is an assessment of each of their specific qualifications, attributes, skills and experience. Committee memberships listed below are as of the date of this Proxy Statement.
The Board has been informed that each nominee is willing to continue to serve as a director. If a director does not receive a majority of the vote for his or her election, then that director will not be elected to the Board, and the Board may fill the vacancy with a different person, or the Board may reduce the number of directors to eliminate the vacancy. Mr. Mahoney was a member of the Board prior to the Company’s initial public offering in 2011, and information included in this Proxy Statement as to his tenure on our Board reflects that service.
CHAIRMAN & CEO DIRECTOR SINCE: MARCH 2015 NON-INDEPENDENT APTIV COMMITTEE None | ||||
KEVIN P. CLARK | AGE: 60 Kevin P. Clark
|
|
| CURRENT PUBLIC COMPANY DIRECTORSHIPS: • None |
PREVIOUS PUBLIC COMPANY
DIRECTORSHIPS IN LAST FIVE YEARS:
• None
|
Election of Directors (continued)
11 | ELECTION OF DIRECTORS | |
|
DIRECTOR SINCE: JULY 2020 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Finance Committee and Innovation and Technology Committee | RICHARD L. CLEMMER | AGE: 71 Richard L. (Rick) Clemmer has been a director since July 2020. Mr. Clemmer |
QUALIFICATIONS:
| ||||
DIRECTORSHIPS: • HP Inc. • Seagate Technology Holdings plc |
DIRECTORSHIPS IN LAST FIVE YEARS: • NCR Corporation • NXP Semiconductors N.V. | |||||
Age: 70
DIRECTOR SINCE: FEBRUARY 2018 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Audit Committee (Chair) and Nominating and Governance Committee | ||||
NANCY E. COOPER | AGE: 69 Nancy E. Cooper has been a director since February 2018. Ms. Cooper is the former Executive Vice President and Chief Financial Officer of CA Technologies (“CA”), an IT management software provider, a position she held from August 2006 until she retired in May 2011. Prior to joining CA,
|
| |||
CURRENT PUBLIC COMPANY
• Brunswick Corporation(Non-Executive | PREVIOUS PUBLIC COMPANY DIRECTORSHIPS IN LAST FIVE YEARS:
•Teradata Corporation
| |||
|
Election of Directors (continued)
ELECTION OF DIRECTORS | 12 | |
|
DIRECTOR SINCE: JANUARY 2020 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Compensation and Human Resources Committee (Chair) and Audit Committee | JOSEPH L. HOOLEY | AGE: 65 Joseph L. (Jay) Hooley has been a director since January 2020. Mr. Hooley is the former Chairman of the Board and Chief Executive Officer of State Street Corporation, one of the world’s leading providers of financial services to institutional
|
| ||||
DIRECTORSHIPS: • Exxon Mobil Corporation |
• State Street Corporation | |||||
Age: 64
DIRECTOR SINCE: APRIL 2021 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Compensation and Human Resources Committee and Nominating and Governance Committee | ||||
MERIT E. JANOW | AGE: 65 Merit E. Janow has been a director since April 2021. Professor Janow is the Former Dean of the Faculty (from 2013-2021) and ongoingly Professor of Practice, School of International and Public Affairs (SIPA) at Columbia University, a position she has held since 1993. Previously, she directed the graduate program in international finance and economic policy.
|
|
| CURRENT PUBLIC COMPANY DIRECTORSHIPS: • Mastercard Inc. (Non-Executive |
PREVIOUS PUBLIC COMPANY
DIRECTORSHIPS IN LAST FIVE YEARS:
• Trimble Inc. (2008 – 2021)
|
Election of Directors (continued)
13 | ELECTION OF DIRECTORS | |
|
DIRECTOR SINCE: NOVEMBER 2009
INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Finance Committee (Chair) and Nominating and Governance Committee | SEAN O. MAHONEY | AGE: 60 Sean O. Mahoney has been a director since November 2009. Mr. Mahoney is a private investor with over three decades of experience in investment banking and finance. |
QUALIFICATIONS:
| ||||
DIRECTORSHIPS: • None |
DIRECTORSHIPS IN LAST FIVE YEARS: • Alcoa Inc. (2016) • Cooper-Standard Holdings, Inc. • Formula One Holdings (2014 – 2017) • Howmet Aerospace Inc. (formerly Arconic Inc.) • iHeartMedia, Inc. |
Age: 59
LEAD INDEPENDENT DIRECTOR DIRECTOR SINCE: JULY 2019 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Compensation and Human Resources Committee, Finance Committee and Nominating and Governance Committee (Chair) | ||||
PAUL M. MEISTER | AGE: 70 Paul M. Meister has been a director since July 2019 and our Lead Independent Director since April 2022. Mr. Meister is a partner in Novalis LifeSciences, a life science venture firm and is also co-founder and Chief Executive Officer of Liberty Lane Partners, LLC, a private investment company with investment holdings in healthcare, technology and distribution-related industries. From 2014 to 2018, he was President of MacAndrews & Forbes Incorporated, |
QUALIFICATIONS:
| |||
DIRECTORSHIPS: •Amneal Pharmaceuticals, Inc. • Quanterix Corporation | PREVIOUS PUBLIC COMPANY DIRECTORSHIPS IN LAST FIVE YEARS: • LKQ Corporation (1999 – 2018) • Oaktree Acquisition
• Scientific Games Corporation • vTv Therapeutics Inc.
|
|
Election of Directors (continued)
ELECTION OF DIRECTORS | 14 | |
|
DIRECTOR SINCE: SEPTEMBER 2018 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Audit Committee and Innovation and Technology Committee | ROBERT K. ORTBERG | AGE: 62 Robert K. (Kelly) Ortberg has been a director since September 2018. Mr. Ortberg is the former Chief Executive Officer of Collins Aerospace, a United Technologies company, a position he held from December 2018 to February 2020. Following his retirement from Collins Aerospace, he served as a Special Advisor to the office of the Chief Executive Officer for Raytheon Technologies Corporation, an aerospace and defense company that provides advanced systems and services for commercial, military and government customers worldwide until March 2021. He previously served at Rockwell Collins, Inc. as |
QUALIFICATIONS:
| ||||
DIRECTORSHIPS: • Raytheon Technologies Corporation |
DIRECTORSHIPS IN LAST FIVE YEARS: • Rockwell Collins, Inc.
| |||||
|
DIRECTOR SINCE: DECEMBER 2017 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Audit Committee and Innovation and Technology Committee (Chair) | COLIN J. PARRIS | AGE: 61 Colin J. Parris has been a director since December 2017. Dr. Parris currently serves as the Senior Vice President and Chief Technology Officer at GE Digital, a position he has held since May 2020. He joined the General Electric Company in 2014 as the Vice President, GE Software Research. Prior to joining GE, he spent two decades at IBM in a variety of executive roles, serving most recently as Vice President, Systems Research in the IBM T.J. Watson Research Division from 2013 to 2014 and General Manager for IBM’s Power Systems business from 2010 to 2013. Dr. Parris |
QUALIFICATIONS:
|
| CURRENT PUBLIC COMPANY DIRECTORSHIPS: • None |
PREVIOUS PUBLIC COMPANY
DIRECTORSHIPS IN LAST FIVE YEARS:
• None
|
Election of Directors (continued)
15 | ELECTION OF DIRECTORS |
DIRECTOR SINCE: NOVEMBER 2016 INDEPENDENT DIRECTOR APTIV COMMITTEE MEMBERSHIPS: Finance Committee and Innovation and Technology Committee | ANA G. PINCZUK | AGE: 59 Ana G. Pinczuk has been a director since November 2016. Ms. Pinczuk |
QUALIFICATIONS:
| ||||
DIRECTORSHIPS: • SentinelOne, Inc. | PREVIOUS PUBLIC COMPANY DIRECTORSHIPS IN LAST FIVE YEARS: • Five9, Inc. (2021 – February 2023) • KLA-Tencor Corporation (2018 – 2019) | |||||
|
The Board of Directors recommends a vote “FOR” each of the 10 director nominees named above. If you complete the enclosed proxy card, unless you direct otherwise on that card, the shares represented by that proxy will be voted FOR the election of all 10 nominees.
|
Board and Governance Information
The Company is committed to good corporate governance, which we believe is important to the success of our business and to advancing shareholder interests. Highlights include:
Board Independence and Accountability
Board Practices |
BOARD AND GOVERNANCE INFORMATION The Company is committed to good corporate governance, which we believe is important to the success of our business and to advancing shareholder interests. Highlights include: |
Board Independence and Accountability
Board Independence |
| 9 of 10 director nominees are independent. Our Chairman and Chief Executive Officer is the only non-independent director. | ||
Board Leadership |
| Current Board leadership structure is comprised of our Chairman and a | ||
Board Engagement |
| Attendance: • All directors attended more than 75% of Board and their respective Committee meetings in • All director nominees are expected to attend the Annual Meeting.
| ||
Board Composition and Diversity |
| Directors have a diversity of experience that spans a broad range of industries.
| ||
Board Committees |
| Fully independent Audit, Compensation and Human Resources, Finance, Innovation and Technology and Nominating and Governance Committees.
| ||
Board Accountability |
| Annual elections of all directors.
| ||
Responsiveness to Shareholders |
| Following each Annual Meeting, the appropriate | ||
Stock Ownership |
| Non-employee directors are subject to robust stock ownership guidelines of |
|
Board Practices (continued)
17 | BOARD PRACTICES |
Board Effectiveness
Board, Committee and Director Evaluations |
| Annual Board and Committee self-evaluation process.
| ||
Overboarding Limits |
| Directors are subject to the following overboarding • Directors who are not actively employed • Directors who are actively employed as • Members of the Audit Committee | ||
Shareholder Engagement |
| Directors are committed to meaningful engagement with shareholders and welcome their input and suggestions.
| ||
Board Oversight of Risk and ESG Programs |
| Our full Board is responsible for risk oversight and
| ||
Succession Planning |
| The Board oversees and engages in Board and executive succession planning. |
The Nominating and Governance Committee regularly reviews the following Board practices and adopts governance practices that serve the interests of our shareholders.
Size of the BoardSIZE OF THE BOARD
As of the date of this mailing, the Board consists of 1210 directors. Following the Annual Meeting and assuming all nominated directors are elected, the Board will consist of 10 directors. Our Memorandum and Articles of Association provide that our Board must consist of a minimum of two directors. The exact number of directors will be determined from time to time by our full Board.
|
Board Practices (continued)
This year, in connection with the retirement of Messrs. Donofrio and Gupta from the Board, theThe Board assessed its leadership structure in 2022 and determined that it iswas in the best interestsinterest of the Company and its shareholders for Mr. Clark to serve as Chairman of the Board and CEO, effective April 27, 2022, followinggiven his skills, experience and character. This year has confirmed the election of directors at the Annual Meeting. The Board believesBoard’s belief that this structure will provideprovides the Company with strongthe right leadership continuity and strategic vision. In making this decision,It is the Board consideredBoard’s view that the Company’s performance, operatingcorporate governance principles, the quality, stature and governance environment,substantive business knowledge of the members of the Board, as well as the Board’s composition, functioningculture of open communication with the CEO and effectiveness.senior management are conducive to Board effectiveness with a combined Chairman and CEO position.
The Board believes that Mr. Clark has the skills, experience and character to provide the Company with strong and effective leadership as well as provides necessary strategic and cultural continuity toIn addition, the Board as it goes through its leadership transition. In making this decision, the Board considered, among other things, the following factors:
The leadership structure of the Board and Company is further strengthened by:
The Board’s independent oversight function is further enhanced by the following: the Board’s direct unfettered access to management, the Board’s and the Committees’ ability to retain their own advisors, and the Board’s annual evaluation of our CEO’s performance against predetermined goals.
The Board believes this leadership structure is the most appropriate for the Company at this time, providing effective independent oversight of management and a highly independent, engaged, and functioning Board.
To further strengthen the leadership of the Company and effectiveness of the Board, and in accordance with our Corporate Governance Guidelines, the Board has appointed Mr. Meister, who was selected in 2022 to serve as the Company’s LID, effective April 27, 2022,in this role and will continue to serve following the election of directors at the Annual Meeting. As Lead Independent Director, Mr. Meister is an experienced director having served as chairman ofprovides independent leadership and coordination among the board of several public companies, and as an independent director on numerous public company boards over the course of his career. In addition, he has developed deep industry knowledge over the course of his career. Moreover, Mr. Meister has been an independent director of Aptiv since July 2019, where he has served on the Compensation and Human Resources and Finance Committees and as Chair of the Finance Committee. As a result, he has a keen understanding of the Company and its industry,directors as well as a strong appreciation ofconnection to the governance and oversight required by the Board and its Committees. Following the Annual Meeting, Mr. Meister will step down as the Finance Committee Chair and will become Chair of the Nominating and Governance Committee.
The duties and responsibilities of the LID as set forth in our Corporate Governance Guidelines include:Company’s management team.
18 |
• | |
|
Board Practices (continued)
• | Serving as a liaison between the Executive Chair and the independent directors; |
• | Working with the Executive Chair to (i) develop schedules and agendas for Board meetings to ensure that appropriate topics are covered at the right time and that the Board is given sufficient opportunity to discuss those topics, and (ii) ensure that outside of regularly scheduled meetings, the Board receives and has the opportunity to discuss appropriate information in a timely manner; |
• | Leading the Board’s annual evaluation of the Executive Chair and CEO; |
• | Having the authority to call meetings of the independent directors; and |
• | If requested by major shareholders, ensuring that he or she is available to communicate with them. |
DIRECTOR INDEPENDENCE
The Board believes that a substantial majority of its members should be independent, non-employee directors. Mr. Clark, our PresidentChairman and Chief Executive Officer,CEO is the only non-independent director. The current non-employee directors of the Company are Richard L. Clemmer, Nancy E. Cooper, Nicholas M. Donofrio, Rajiv L. Gupta, Joseph L. Hooley, Merit. E. Janow, Sean O. Mahoney, Paul M. Meister, Robert K. Ortberg, Colin J. Parris, and Ana G. Pinczuk. The Board has determined that all of its non-employee directors meet the requirements for independence under the New York Stock Exchange (“NYSE”) listing standards. Furthermore, the Board limits membership on the Audit, Compensation and Human Resources, and Nominating and Governance Committees to independent directors.
Audit Committee Financial ExpertsAUDIT COMMITTEE FINANCIAL EXPERTS
The Board has determined that all of the members of the Audit Committee are financially literate and meet the independence rules required for Audit Committee members by the Securities and Exchange Commission (“SEC”). Ms. Cooper, Mr. Hooley and Mr. Ortberg meet the qualifications of audit committee financial experts, as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Evaluation of Board PerformanceEVALUATION OF BOARD PERFORMANCE
The Board believes that a robust and constructive Board, committee and director performance evaluation process is an essential component of board effectiveness. The Board conducts a comprehensive evaluation process annually, overseen by the Nominating and Governance Committee, of its own performance, as well as the performance of each Committee and each director, as outlined below.
Each year, the Nominating and Governance Committee reviews the evaluation format and process. Each director is then asked to complete an anonymous evaluation of the Board and each committeeCommittee on which they serve. Evaluation topics include number and length of meetings, topics covered and materials provided, committeeCommittee structure and activities, Board composition and expertise, succession planning, director participation and interaction with management, and promotion of the Company’s values and ethical behavior.
Board and committeeCommittee evaluation results are compiled and summarized by the Corporate Secretary’s Office. Directors receivesreceive the summary results of these evaluations. Committee evaluation results are discussed by the applicable committee,Committee, and Board evaluation results are discussed by the full Board. Our Board considers the results when making decisions on the structure of our
19 | BOARD PRACTICES |
Board and its committees,Committees, agendas and meeting schedules for our Board and its committees,Committees, and changes in the performance or functioning of our Board and identifies opportunities for improvement.
The Board also conducts individual director and peer assessments. All directors complete an anonymous evaluation of each director. The Chairman receives summary results of these director evaluations. The Chairman thenLead Independent Director conducts individual interviews with each director to obtain his or her assessment of director performance, Board dynamics and the effectiveness of the Board and its committees,Committees, and to provide feedback about that director’s performance. These discussions are designed to help assess the competencies and skills each director is expected to bring to the Board. These evaluations have consistently revealed that the Board and its committeesCommittees are operating effectively, while identifying opportunities to improve the way the Board and its committeesCommittees operate. As a result of the evaluations, the Board takes concrete steps to optimize Board and committeeCommittees effectiveness.
Director Qualifications, Nominations and DiversityDIRECTOR SELECTION AND NOMINATIONS
DIRECTOR SELECTION AND THE IMPORTANCE OF DIVERSITY
The Nominating and Governance Committee recommends individuals for membership on the Board. The Nominating and Governance Committee considers a candidate’s character and expertise, performance, personal characteristics, diversity (inclusive of gender, race, ethnicity and age) and professional responsibilities, and also reviews the composition of the Board relative to the long-term business strategy and the challenges and needs of the Board at that time. The Board is committed to searching for the best available candidates to fill vacancies and fully appreciates the value of diversity, viewed in its broadest sense, including gender, race, ethnicity, experience, leadership qualities, and education when evaluating prospective candidates. The Nominating and Governance Committee uses the same selection process and criteria for evaluating all nominees.
Ensuring the Board is composed of Directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the long-term interests of shareholders, is a top priority of the Board and the Nominating and Governance Committee. The Board is strong in its collective knowledge and diversity of experiences in terms of accounting and finance, acquisitions, capital markets, management and leadership, vision and strategy, human capital management, operations and manufacturing, sales and marketing, business operations, business
|
Board Practices (continued)
judgment, information systems and cybersecurity, software and technology, crisis management, risk assessment, industry knowledge, corporate governance, global policy and trade and global markets.markets, among others.
The Board is designed to operate swiftly and effectively in making key decisions and when facing major challenges. Board meetings should beare conducted in an environment of trust, and confidentiality, open dialogue, mutual respect and constructive commentary.
The Nominating and Governance Committee retains the services of independent executive search firms to help identify director prospects, perform candidate outreach, assist in reference and background checks, and provide other related services. In addition to using search firms, the Nominating and Governance Committee also receives candidate recommendations from members of the Board. The recruiting process typically involves contacting a prospect to gauge his or her interest and availability after which a candidate meets with several members of the Nominating and Governance Committee. References for the candidate are contacted and a back-
groundbackground check is completed before a final recommendation is made to the Board to appoint a candidate to the Board.
SHAREHOLDER RECOMMENDATIONS
In accordance with the procedures in our Memorandum and Articles of Association, shareholders holding at least ten percent10% of the ordinary shares outstanding and who have the right to vote at general meetings of the Company may propose, and the Nominating and Governance Committee will consider, nominees for election to the Board at the next annual meeting by giving timely written notice to the Corporate Secretary, which must be received at our principal executive offices no later than the close of business on March 7, 2023,8, 2024, and no earlier than November 27, 2022.28, 2023. The notice periods may change in accordance with the procedures set out in our Memorandum and Articles of Association. Any such notice must include the name of the nominee, a biographical sketch and resume, contact information and such other background materials as the Nominating and Governance Committee may request.
20 |
|
Board Practices (continued)
Diversity, Skills and Experience of Our Director NomineesDIVERSITY, SKILLS AND EXPERIENCE OF OUR DIRECTOR NOMINEES
The table below summarizes some of the experience, qualifications, attributes and skills of our director nominees. This high-level summary is not intended to be an exhaustive list of each of our director nominee’s skills or contributions to the Board; we look to directors to be knowledgeable in these areas as it relates to Aptiv. We have identified below the areas in which each director has specific expertise or prominence that he or she brings to the Board. Further information on each director nominee, including some of each of their specific experience, qualifications, attributes or skills is set forth in the biographies in “Election of Directors” above.
SKILLS MATRIX
SENIOR EXECUTIVE LEADERSHIP
FINANCE
HUMAN CAPITAL MANAGEMENT
INFORMATION SYSTEMS/CYBERSECURITY
OPERATIONS AND MANUFACTURING
SALES AND MARKETING
SOFTWARE AND TECHNOLOGY
GLOBAL POLICY AND TRADE
|
Board Practices (continued)
Director RetirementDIRECTOR RETIREMENT
Our Corporate Governance Guidelines provide that the retirement age for directors is 75, unless waived by the Board. No director who is or would be over 75 at the expiration of his or her current term may be nominated to a new term, unless the Board waives the retirement age for the director. Once granted, such waiver must be reviewed and, if appropriate, renewed annually.
Our Corporate Governance Guidelines also provide that non-employee directors who significantly change their primary employment during their tenure as Board members must offer to tender their resignation to the Nominating and Governance Committee. The Nominating and Governance Committee will evaluate the continued appropriateness of Board membership under the new circumstances and make a recommendation to the Board as to any action to be taken with respect to such offer.
Board RefreshmentBOARD REFRESHMENT
We believe that Board refreshment is critical as the mobility industry changes and the Company’s business strategy evolves. In the last four years, we have added six new independent directors, providing leadership in a variety of areas of importance to Aptiv. At the same time, we believe that we benefit from having seasoned directors on our Board who are well-versed in the Company’s business and help facilitate the transfer of institutional knowledge. We believe the average tenure for our independent directors of approximately four and one-halffive years reflects the balance the Board seeks between different perspectives brought by long-serving and new directors.
Executive SessionsEXECUTIVE SESSIONS
Independent directors meet in executive session each Board meeting, without the CEO or any other employees in attendance. The ChairmanLead Independent Director presides over each executive session of the Board. Each Committee meeting also includes an executive session at which Committee members meet without the CEO or any other employees in attendance.
|
Board Practices (continued)
Board’s Role in Risk OversightBOARD’S ROLE IN RISK OVERSIGHT
At Aptiv, we always strive to do the right thing, the right way. Our long-term success depends on ensuring that we demonstrate the highest ethical standards in everything we do, everywhere we operate. We believe an effective risk oversight and compliance program is critical to a company’s long-term success and future growth. The Board takes an active role in risk oversight related to the Company, both as a full Board and through its Committees, each of which has primary risk oversight responsibility with respect to all matters within the scope of its duties as described in its charter and as set forth below. While the Company’s management is responsible for day-to-day management of the various risks facing the Company, including those set forth below, the Board is responsible for monitoring management’s actions and decisions.
As part of the Board’s risk oversight, it reviews with the Company its risk management program, including initiatives targeted to address certain identified risks relevant to the business, such as: supply chain resiliency, geopolitical issues, inflation and macroeconomics, talent, and cybersecurity. To aid in its oversight, the Board receives regular updates and reviews from both internal Aptiv and external experts on issues of importance to the Company, and relies on the Committees to provide oversight of risks within their respective charters and to report to the Board on the management of those risks.
Role of the Audit Committee:Committee: The Audit Committee reviews our guidelines and policies with respect to risk assessment and management and our major financial and information technology risk exposures, including internal controls, disclosure, litigation, compliance and enterprise cybersecurity, along with the monitoring and mitigation of these exposures. On a regular
basis, the Audit Committee reviews the Company’s enterprise risk management program.
Role of the Compensation and Human Resources Committee:Committee: The Compensation and Human Resources Committee reviews and discusses with management, management’s assessment of certain risks, including whether there are any risks arising from the Company’s compensation programs.
|
Board Practices (continued)
Role of the Finance Committee:Committee: The Finance Committee reviews and discusses with management financial-related risks facing the Company, including foreign exchange, capital allocation, treasury and liquidity-related risks, major acquisitions, and the Company’s tax planning.
BOARD PRACTICES | 22 |
Role of the Innovation and Technology Committee:Committee: The Innovation and Technology Committee reviews and validates our technology and product roadmap risks and discusses these risks with management, along with product cyber risks, facing the Company.and risks related to engineering talent retention and development.
Role of the Nominating and Governance Committee:Committee: The Nominating and Governance Committee evaluates the overall effectiveness of the Board and its committees,Committees, including the Board’s focus on the most critical issues and risks,risks. As part of its delegated authority to oversee Aptiv’s ESG program, the Nominating and monitorsGovernance Committee ensures that Aptiv is implementing the right strategy to assess and address evolving ESG risks, as part of their oversight of Aptiv’s sustainability initiatives.
including climate risks.
Board’s Role in SustainabilityBOARD’S ROLE IN SUSTAINABILITY
As a global company, we understand how interconnected the world is, and how our commitment to environmental and social responsibility — and our commitment to always do the right thing, the right way — is directly connected to our success.
Sustainability at Aptiv is driven from the top by our Board and CEO and is embedded at every level of Aptiv. The Board has delegated to the Nominating and Governance Committee oversight of management’s handling of Aptiv’s ESG matters of importance to the Company,programs, including risks, policies, strategies and programs.those addressing climate risk. In addition, the Nominating and Governance Committee reviews the goals the Company establishes with respect to ESG matters and its progress against those goals, as well as the Company’s Sustainability Report.Report available on our website at aptiv.com by clicking on the tab “About”, then the heading “Sustainability”. The Nominating and Governance Committee ensures that the other Committees of the Board, as appropriate, receive updates relevant to their continuing oversight on specific ESG topics that otherwise fall within the charter of those Committees, as shown below.
Stock Ownership GuidelinesSTOCK OWNERSHIP GUIDELINES
The Board believes that each director should hold a meaningful equity position in the Company, and it has established equity holding requirements for our non-employee directors. The holding requirement for each non-employee director is $500,000$600,000 in Aptiv shares. Effective as of April 27, 2022, the holding requirement will be raised to $600,000. Each new director has up to five years from his or her date of appointment to fulfill this holding requirement. As of the 20212022 measurement of ownership, all non-employee directors, except for Professor Janow who joined the Aptiv Board in 2021, were at or above the ownership requirement.
Governance PrinciplesGOVERNANCE PRINCIPLES
The Board has adopted Corporate Governance Guidelines, which set forth the corporate governance practices for Aptiv.
The Corporate Governance Guidelines are available on our website at aptiv.com by clicking on the tab “Investors”, then the heading “Governance” and then the caption “Governance Documents”.
Code of Ethical Business ConductCODE OF ETHICAL BUSINESS CONDUCT
The Company has adopted a Code of Ethical Business Conduct, which applies to all employees and directors, including the principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. The Code of Ethical Business Conduct is available on our website at aptiv.com by clicking on the tab “Investors”, then the heading “Governance” and then the caption “Code of Conduct”.
23 | BOARD PRACTICES |
Copies of our Code of Ethical Business Conduct are also available to any shareholder who submits a request to the
|
Board Practices (continued)
Corporate Secretary at Aptiv PLC, 5 Hanover Quay, Grand Canal Dock, Dublin 2, Ireland D02 VY79 or by email at corporatesecretary@aptiv.com. We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K by posting on our website any amendments to, or waivers from, a provision of our Code of Ethical Business Conduct that applies to our directors or officers.
Communications with the Board of DirectorsCOMMUNICATIONS WITH THE BOARD OF DIRECTORS
Anyone who wishes to communicate with the Board or any individual member of the Board (or independent directors as a group) may do so by sending an email to corporatesecretary@aptiv.com or a letter addressed to the director or directors in care of the Corporate Secretary at Aptiv PLC, 5 Hanover Quay, Grand Canal Dock, Dublin 2, Ireland D02 VY79. All correspondence, other than items such as junk mail that are unrelated to a director’s duties and responsibilities, will be forwarded to the appropriate director or directors.
| Board and Committee Meetings |
During 2021,2022, the Board held 912 meetings. All of our directors attended at least 75% of the Board and Committee meetings on which they serve and director attendance in 20212022 averaged 99%98%. In addition, all directors are expected to attend the Annual Meeting, and in 2021,2022, all directors virtually attended the Annual Meeting.
Board Committees |
Our Board has the following five committees: Audit; Compensation and Human Resources (CHRC); Finance; Innovation and Technology (ITC); and Nominating and Governance (Nom Gov). Committee charters are available on our website at aptiv.com by clicking on the tab “Investors”, then the heading “Governance” and then the caption “Governance Documents”. Committee membership for 20212022 is set forth below:
Board Committees | ||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||
| Audit | CHRC | Finance | ITC | Nom Gov | |||||||||||||||||||||||
Kevin P. Clark |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Richard L. Clemmer |
|
|
|
|
|
| X | X |
|
|
| |||||||||||||||||
Nancy E. Cooper | C |
|
|
|
|
|
|
|
|
| ||||||||||||||||||
| X | |||||||||||||||||||||||||||
| X | C |
|
| ||||||||||||||||||||||||
Merit E. Janow |
| X |
|
|
|
|
| X | ||||||||||||||||||||
Sean O. Mahoney | C | X | ||||||||||||||||||||||||||
Paul M. Meister | X | X |
| C | ||||||||||||||||||||||||
| X | X |
|
|
| |||||||||||||||||||||||
| Colin J. Parris | X |
|
|
|
|
|
| ||||||||||||||||||||
| ||||||||||||||||||||||||||||
| C |
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
| ||||||||||||||||||||||||||||
|
| X | X |
|
|
|
“C” = Chair of Committee
“C” | = Chair of Committee |
“X” |
|
During 2021,2022, the following changes to Board Committees were made:
• | In connection with his appointment to Lead Independent Director, Mr. Meister stepped down as Chair of the Finance Committee and joined the Nominating and Governance Committee as its Chair. |
• | Ms. Cooper joined the Nominating and Governance Committee and stepped down from the Innovation and Technology Committee. |
• | Ms. Pinczuk joined the Finance Committee and stepped down from the Audit Committee. |
Professor Janow was appointed to the Compensation and Human Resources Committee and the Nominating and Governance Committee upon her election as director.
In anticipation of Mr. Gupta’s retirement, Mr. Hooley was appointed Chair of the Compensation and Human Resources Committee.
In anticipation of Mr. Donofrio’s retirement, Dr. Parris was appointed Chair of the Innovation and Technology Committee.
|
Board Committees (continued)
Committee | ||||
| Primary Responsibilities | Number of Meetings in 2022 | ||
Audit | Responsible for the engagement of the registered independent public accounting firm and the review of the scope of the audit to be undertaken by the registered independent public accounting firm. Responsible for oversight of the adequacy of our internal accounting and financial controls and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. Responsible for oversight of risk-related matters broadly, including the Company’s enterprise risk management program, compliance program and cybersecurity.
| 5 | ||
Compensation and Human Resources | ||||
Responsible for the oversight of the Company’s compensation philosophy and reviews and approves compensation for executive officers (including cash compensation, equity incentives and benefits). Responsible for oversight of human capital management, including succession planning.
| 6 | |||
Finance | ||||
Responsible for oversight of corporate finance matters, including capital structure, financing transactions, acquisitions and divestitures, minority investments, share repurchase and dividend programs, employee retirement plans, interest rate policies, commodity and currency hedging, tax strategy and the annual business plan, including review of capital expenditures and restructurings.
|
| |||
Innovation and Technology | ||||
Responsible for oversight of the Company’s technology roadmaps and the technology landscape, product cybersecurity and assessing the overall skill set of the engineering organization.
| 5 | |||
Nominating and Governance | ||||
Responsible for reviewing, recommending and overseeing policies and procedures relating to director and board committee nominations and corporate governance policies, conducting director searches, overseeing board and committee self-evaluations and overseeing management’s handling of ESG matters of importance to the Company, including risks, policies, strategies and programs.
| 5 | |||
DIRECTOR COMPENSATION | 26 |
|
Our directors (other than Mr. Clark, who does not receive additional compensation for his Board service) received the following annual compensation for service in 2021,2022, which is paid in cash and time-based restricted stock units (“RSUs”). For 2022, each non-employee director was entitled to receive annual compensation in the amount of $300,000. In addition, the Lead Independent Director was entitled to receive additional annual compensation of $50,000. Also, Chairs of our Board Committees received the following additional annual compensation:
Committee | Additional Annual Compensation | |||
Audit | $30,000 | |||
Compensation and Human Resources | 25,000 | |||
Finance | 20,000 | |||
Innovation and Technology | 20,000 | |||
Nominating and Governance | 20,000 |
Each director may elect, on an annual basis, to receive 60%, 80% or 100% of his or her compensation in RSUs, with the remainder paid in cash. The Chairman of the Board receives $500,000 annually, and all other directors receive $265,000 annually. In 2021, Chairs of our Board committees received the following additional annual compensation:
Committee | Additional Annual Compensation | |||
Audit | $ | 25,000 |
| |
Compensation and Human Resources |
| 20,000 |
| |
Finance |
| 15,000 |
| |
Innovation and Technology |
| 15,000 |
| |
Nominating and Governance(1) |
| 15,000 |
|
|
An annual grant of RSUs is made on the day of the Annual Meeting, which vests on the day before the next annual meeting. Cash compensation is paid quarterly at the end of each fiscal quarter. Any director who joins the Board, other than in connection with the Annual Meeting, will receive prorated cash compensation and a prorated grant of RSUs, based on the date the director joins the Board. These RSUs vest on the day before the next annual meeting.
Changes to Board Compensation for 2022
In 2021, the Nominating and Governance Committee conducted a review of the compensation paid to our non-employee directors for their service on the Board and its committees. The Nominating and Governance Committee considered the results of an analysis prepared by the independent compensation consultant, Semler Brossy Consulting Group (“Semler Brossy”). After the review, the Nominating and Governance Committee approved changes to the compensation program for directors for 2022, as follows:
Effective April 27, 2022, the annual compensation paid to directors will increase to $300,000, an increase of $35,000, and the additional annual compensation paid to Chairs of the
Committees will increase by $5,000. In addition, the LID will receive a premium of $50,000 and will be eligible for the additional annual compensation paid to Chairs of the Committees.
The table below shows cash and equity compensation paid to each member of the Board in 2021:2022:
2021 Director Compensation2022 DIRECTOR COMPENSATION
Name | Fees Earned or Paid in Cash($) | Stock Awards($)(1) | Total($) |
| Fees Earned or Paid in Cash($) | Stock Awards($)(1) | Total($) | |||||||||||||||||||||
Richard L. Clemmer | $ | — |
| $ | 265,045 |
| $ | 265,045 |
|
| $ — | $300,033 | $ | 300,033 | ||||||||||||||
Nancy E. Cooper |
| 87,000 |
|
| 174,107 |
|
| 261,107 |
|
| 128,000 | 198,086 | 326,086 | |||||||||||||||
Nicholas M. Donofrio |
| — |
|
| 280,010 |
|
| 280,010 |
|
| ||||||||||||||||||
Rajiv L. Gupta |
| 154,333 |
|
| 312,097 |
|
| 466,430 |
|
| 50,000 | — | 50,000 | |||||||||||||||
Joseph L. Hooley |
| — |
|
| 265,045 |
|
| 265,045 |
|
| 6,667 | 325,027 | 331,694 | |||||||||||||||
Merit E. Janow |
| 39,750 |
|
| 212,094 |
|
| 251,844 |
|
| 58,250 | 240,089 | 298,339 | |||||||||||||||
Sean O. Mahoney |
| 79,500 |
|
| 159,142 |
|
| 238,642 |
|
| 122,500 | 192,071 | 314,571 | |||||||||||||||
Paul M. Meister |
| — |
|
| 280,010 |
|
| 280,010 |
|
| — | 370,037 | 370,037 | |||||||||||||||
Robert K. Ortberg |
| 79,500 |
|
| 159,142 |
|
| 238,642 |
|
| 116,500 | 180,041 | 296,541 | |||||||||||||||
Colin J. Parris |
| 90,750 |
|
| 159,142 |
|
| 249,892 |
|
| 30,250 | 320,049 | 350,299 | |||||||||||||||
Ana G. Pinczuk |
| — |
|
| 265,045 |
|
| 265,045 |
|
| — | 300,033 | 300,033 |
(1) | Reflects the grant date fair value of the equity awards granted to directors on April |
27 | DIRECTOR COMPENSATION |
Name | Unvested RSUs 12/31/ | |||
Richard L. Clemmer |
| |||
Nancy E. Cooper |
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
| |||
|
1,106
Ana G. Pinczuk
1,842
28 |
| Compensation Discussion and Analysis |
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation and Human Resources Committee (the “Compensation Committee”), composed entirely of independent directors, works with management and itsthe Compensation Committee’s independent compensation consultant to oversee the Company’s executive compensation philosophy and to review and approve compensation for executive officers.
In this section, we describe and analyze:
(1) | the material components of our executive compensation programs for the “named executive officers”, or “NEOs”; |
(2) | the material compensation decisions the Compensation Committee made for |
(3) | the key factors considered in making those decisions, including |
Our Named Executive OfficersOUR NAMED EXECUTIVE OFFICERS
For fiscal year 2022, the NEOs were:
| ||
Kevin P. Clark |
| |
Joseph R. Massaro | Chief Financial Officer (“CFO”) and Senior Vice President, Business Operations | |
| Senior Vice President and Chief Technology Officer | |
William T. Presley | Senior Vice President and Chief Operating Officer, and President, Signal & Power Solutions | |
|
| |
| Senior Vice President and Chief |
Benjamin Lyon joined Aptiv on December 28, 2022 and, given the compensation paid to him in 2022, is considered an NEO for fiscal year 2022. Within this Compensation Discussion and Analysis and related tables in this Proxy Statement, specific references are made to Mr. Lyon with respect to his fiscal year 2022 compensation; otherwise, references to the NEOs exclude Mr. Lyon, principally because he did not participate in the same programs and evaluations for 2022 compensation decisions as applied to the other NEOs.
William T. Presley was promoted to the position of Chief Operating Officer, effective December 15, 2022. He remained as Senior Vice President and President, Signal & Power Solutions.
29 | COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Governance and Alignment with Shareholders
COMPENSATION GOVERNANCE AND ALIGNMENT WITH SHAREHOLDERS
Aptiv’s executive compensation program is designed to attract, retain and motivate the leaders who drive the successful execution of our business strategies, which seekstrategies. Our program seeks to balance achievement of targeted near-term results with building long-term shareholder value through sustained performance. Our focus on pay-for-performance and corporate governance aims to help ensure alignment with the interests of our shareholders, as highlighted below:
Pay for Performance | More Information on Page | |||
| ||||
|
| |||
|
| |||
We use a structured goal-setting process for performance incentives, with multiple levels of review. |
| |||
NEOs’ annual incentives are typically based on achievement of multi-faceted corporate and individual performance goals. |
| |||
| ||||
60% of the NEOs’ long-term incentive compensation consists of performance-based RSUs, which deliver value based on achievement of multi-year financial and relative |
| |||
We review and analyze our pay-for-performance alignment on an annual basis. | — |
|
Compensation Discussion and Analysis (continued)
Compensation Governance | More Information on Page | |||
| ||||
We actively engage with our shareholders | 33 | |||
We maintain reasonable severance practices in line with market practices. | ||||
| ||||
We maintain | ||||
| 41 | |||
We maintain insider trading, clawback, anti-hedging and anti-pledging policies. | 41 | |||
We offer no excise tax gross-ups to our NEOs. | 42 | |||
| ||||
Our Compensation Committee utilizes an independent compensation consultant. | 42 | |||
Our compensation programs are designed to discourage imprudent risk. | 42 | |||
We | — | |||
|
| |||
|
|
2021 Year in Review2022 YEAR IN REVIEW
Company Financial and Business Performance Highlights. TheOur 2022 performance reflects increasing global vehicle production and our solid execution despite continued global supply chain disruptions currently impactingand the industry created unprecedented operating challenges in 2021. Our 2021 performance reflects our commitment to executing flawlessly for our customers despite these and other headwinds, while positioning the Company for continued outperformance as industry conditions improve.global inflationary environment. Our recent financial and business achievements include the following:
Generating strong results despite the continuing impacts of the COVID-19 pandemic and global supply chain disruptions limiting global vehicle production capacity
• | Generating record new business awards of approximately $32 billion, based on expected volumes and prices, validating our industry leading portfolio of advanced technologies tied to the accelerating megatrends in our industry. |
Delivering sustained outperformance, with above-market sales growth of 15%, as strong demand across our portfolio continued despite the challenging operating environment;
• | Delivering strong revenue growth over the prior year, represented by above-market sales growth of 11% despite adverse impacts from the global supply chain disruptions and COVID-19 pandemic. |
Generating record new business awards of $24 billion, based on expected volumes and prices, validating our industry leading portfolio of advanced technologies;
• | Producing $1.26 billion of operating income or $1.58 billion of adjusted operating income and cash flow from operations of $1.3 billion, demonstrating strong operating execution in the face of ongoing disruptions and significant material cost inflation. |
Generating $1,189 million of operating income or $1,230 million of adjusted operating income and cash flow from operations of $1.2 billion, despite supply chain disruptions and material inflation; and
Achieving 154.1% total shareholder return over the period 2019 through 2021, illustrating execution of our long-term strategy and sustainable value creation.
Enhancing our software capabilities and enabling the industry’s transition to software-defined vehicles
Announcing the proposed acquisition of Wind River, a global leader in delivering software for the intelligent edge and announcing our planned investment in TTTech Auto AG, a leading provider of automotive safety-critical middleware solutions. These actions accelerate our software strategy, broaden our portfolio of technology solutions and enable us to capitalize on opportunities requiring comprehensive software solutions.
Leveraging our investment grade credit metrics to further enhance our capital structure and increase our financial flexibility
Successfully issuing $1.5 billion of 30-year, 3.10% senior unsecured notes, utilizing the proceeds to redeem our $700 million, 4.15% senior notes and our $650 million, 4.25% senior notes; and
Extending the maturity of our existing Credit Agreement to August 2026 and being one of the first companies to integrate sustainability metrics into our financing structure.
30 |
• | |
|
Compensation Discussion and Analysis (continued)
• | Maximizing our operational flexibility and profitability at all points in the normal automotive business cycle, by having approximately 97% of our hourly workforce based in best cost countries, and approximately 24% of our hourly workforce composed of contingent employees. |
• | Enhancing our optimized full system, edge-to-cloud capabilities: |
Continuing our relentless focus on cost structure and operational optimization
• | Advancing our software capabilities with the acquisition of Wind River Systems, Inc. (“Wind River”), a global leader in delivering software for the intelligent edge; |
Maximizing our operational flexibility and profitability at all points in the normal automotive business cycle, by having approximately 97% of our hourly workforce based in best cost countries, and approximately 22% of our hourly workforce composed of temporary employees.
• | Broadening our portfolio of high-voltage system and interconnect solutions with the acquisition of Intercable Automotive Solutions S.r.l., an industry leader in high-voltage busbars and interconnect solutions; and |
Recruiting and retaining top talent from various industries, including technology
• | Strengthening our portfolio of power electronics and battery management systems with new product offerings. |
Advancing a culture of diversity and inclusion, improving access to opportunities and ensuring equal pay for equal work within markets; and
• | Leveraging our investment grade credit metrics to successfully issue $700 million of 3-year, 2.396% senior unsecured notes, $800 million of 10-year, 3.25% senior unsecured notes and $1.0 billion of 30-year, 4.15% senior unsecured notes, which we utilized to partially fund the acquisition of Wind River. |
Promoting employee health and safety through our strong safety culture and consistently achieving best-in-class lost workday case rates compared with industry peers.
Continuing to execute on our long-term Safe, Green and Connected strategy to enable a more sustainable future
Expanding our market relevant portfolio to address the industry’s top challenges, including high voltage electrification and active safety technologies;
Capturing value across the entire technology stack with the commercialization of Smart Vehicle ArchitectureTM; and
Announcing new carbon emissions targets to help ensure a more sustainable future which includes a commitment to become a carbon-neutral company by 2040.
• | Meeting the sustainability-linked targets for greenhouse gas emissions and workplace safety within our Credit Agreement. |
Our strategic, operational and financial performance over time is reflected in our results and returns to shareholders. This performance is shown in the following financial metrics and total shareholder returnTSR charts. We have aligned our 20212022 performance-based annual and long-term incentive plans for executives with these metrics:
|
| |
|
| |
|
Compensation Discussion and Analysis (continued)
|
| |
* |
|
Metric definitions:Definitions:
Adjusted EBITDA represents net income before depreciation and amortization (including asset impairments), interest expense, income tax (expense) benefit, other income (expense), net, equity income (loss), net of tax, restructuring and other special items.
Adjusted Net Income represents net income attributable to Aptiv before amortization, restructuring and other special items, including the tax impact thereon.
Cash Flow Before Financing represents cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, the cost of significant technology investments and net proceeds from the divestiture of discontinued operations and other significant businesses.
Growth over Market represents the year-over-year change in net sales, excluding the impact on net sales from currency exchange, commodity movements and divestitures and other transactions,acquisitions, as compared to the year-over-year change in global vehicle production weighted to the geographic regions in which the Company generates its revenue.
Return on Net Assets is defined as tax-affected operating income [net income before interest expense, other income (expense), net income tax expense, equity income (loss), net of tax, income (loss) from discontinued operations, net of tax], divided by average continuing operations net working capital plus average continuing operations net property, plant and equipment, measured each calendar year; not adjusted for restructuring expenses that are expected to provide future benefit to the Company.
Total Shareholder Return is measured by comparing the average closing price per share of the Company’s ordinary shares for the specified trading days in the fourth quarter of the final year of the performance period to the average closing
price per share of the Company’s ordinary shares for the specified trading days in the fourth quarter of the year prior to the beginning of the performance period, including the reinvestment of dividends, relative to the companies in the Russell 3000 Auto Parts Index.
Appendix A contains a reconciliation of these numbers to U.S. GAAP financial measures.
Executive Compensation Philosophy and StrategyEffective on January 1, 2022, the Company now excludes amortization expense of intangible assets from the calculation of Adjusted Net Income, as reflected in the definition above. The historical presentation of Adjusted Net Income in Appendix A has been revised to be consistent with this updated calculation.
COMPENSATION DISCUSSION AND ANALYSIS | 32 |
EXECUTIVE COMPENSATION PHILOSOPHY AND STRATEGY
General Philosophy in Establishing and Making Pay Decisions. Our executive compensation programs reflect our pay-for-performance philosophy and encourage executives to make sound decisions that drive short- and long-term shareholder value creation. The Compensation Committee utilizes a combination of fixed and variable pay elements in order to achieve the following objectives:
• | Emphasize a pay-for-performance culture by linking incentive compensation to defined short- and long-term performance goals; |
• | Attract, retain and motivate key executives by providing competitive total compensation opportunities; and |
• | Align executive and investor interests by establishing market- and investor-relevant metrics that drive shareholder value creation. |
Given the transformation of our Company, we seek talent across a broad range of industries, including technology. Our goal for target total direct compensation (base salary, annual and long-term incentives) for our officers, including the NEOs, is to provide market competitive compensation that allows us to attract and retain the best global talent. Compensation for individual roles is based on a review of market data and multiple factors, including each executive’s role and responsibilities, the individual’s performance over time, the experience and critical skills the individual may bring to his or her role with Aptiv, and talent market dynamics.
2022 |
Compensation Discussion and Analysis (continued)
2021 Peer Group Analysis. We use a group of peer companies to compare NEO compensation to market. The Compensation Committee reviews and determines the composition of our peer group on an annual basis, considering input from its independent compensation consultant and management.
Aptiv’s 20212022 peer group consisted of the following companies, whose aggregate profile was comparable to Aptiv in terms of size, industry, operating characteristics and competition for executive talent.talent:
Amphenol Corporation | Illinois Tool Works, Inc. | |
Corning Incorporated | Johnson Controls International plc | |
Cummins Inc. | Lear Corporation | |
Eaton Corporation plc | Rockwell Automation, Inc. | |
Emerson Electric Co. | TE Connectivity Ltd. | |
Fortive Corporation | Textron Inc. | |
Honeywell International Inc. | Trane Technologies PLC |
No changes were made from the 20202021 peer group referenced for purposes of 2022 compensation decisions. In 2021,2022, target total direct compensation among our NEOs, on average, was positioned within what we view as a competitive range of the peer group.
2021 2022 Say-on-Pay. At our 20212022 Annual Meeting, we received support from approximately 57%92% of votes cast as to our named executive officers’ compensation, reflecting a sharp decline from our prior 5-year average of 97% support.compensation. Management and the Compensation Committee closely reviewed our shareholders’ 2021 2022 Say-on-Pay vote and take this feedback seriously. In addition, Aptiv understands from discussions with investors that while they generallybelieve it to be a strong indication of support for the Company’s executive compensation program and pay-for-performance philosophy, some investors did not agree philosophy. Based on this support, which is consistent with the compensation actions taken in 2020 in response to the COVID-19 pandemic, including the adjustments made to
restorefeedback we have heard through our 2019 and 2020 compensation programs’ intended effectiveness, as those investors in principle disagreed with changes to in-flight long-term compensation plans.
Before the 2020 actions were taken, in anticipation of potential investor concerns, we endeavored to meet with our top 25 shareholders. We were seeking their perspective on the wide range of potential compensation actions that companies in general were taking, as well as potential actions Aptiv could take in light of the dramatic impact COVID-19 was having on our established goals for all three in-flight LTI plans. 5 of our top 25 investors, including 4 of our top 10 investors, met with us during the 4th quarter of 2020 and provided us with their perspective. In addition, we discussed with them our objective of aligning with their interests, including a continued focus on TSR performance. Based on the views that they shared, particularly the guidance thatshareholder engagement efforts described below, the Compensation Committee should exercise its judgmenthas maintained the overall pay-for-performance philosophy, compensation objectives and governing principles it has used in the best interest of the Company and shareholders, the Compensation Committee decided to make certain adjustments. In order to ensure that our long-term incentive plans continued to deliver strong alignment with shareholders, these adjustments were narrowly tailored to the goal of restoring the intended effectiveness of our long-term incentive plans by imposing certain limitations. Those limitations included:
|
|
|
Whenrecent years when making decisions or adopting policies regarding executive compensation, including regarding the adjustments made in 2020, the Compensation Committee adheres to its long-standing overall pay-for-performance philosophy, compensation objectives and governing principles.compensation.
33 |
|
Compensation Discussion2022 Shareholder Engagement. Aptiv is committed to regular, proactive engagement, communication, and Analysis (continued)transparency with shareholders, which enables the Company to better understand shareholders’ perspectives about Aptiv and the market generally. As part of that commitment, we extended the opportunity to our top 25 shareholders, representing approximately 55% of our outstanding shares, to meet with us in December 2022. Eight of these shareholders, representing approximately 17% of Aptiv’s outstanding shares, accepted our invitation to meet at that time. The principal focus of these engagements covered topics related to ESG matters. Members of management, including our Senior Vice President, Chief Legal Officer, and Vice President, Investor Relations and ESG, participated in each of these sessions.
In our 2022 outreach, we received meaningful feedback on various topics of interest to shareholders. Notably, while investors were receptive to discussing our executive compensation, they were primarily focused on other topics, such as Aptiv’s path to carbon neutrality, supply chain management, talent development, and diversity and inclusion.
The Board and management have appreciated the valuable input received from shareholders on all topics, which has continued to give us valuable insight into our shareholders’ priorities. We have and will continue to incorporate shareholder feedback into our practices.
In addition to the formal outreach discussed above, members of management continue to have regular and extensive interaction with our investors throughout the year to discuss our businesses, technologies, end markets, financial results, operational execution and our sustainability efforts at numerous conferences and roadshows, in addition to Company-hosted events and quarterly conference calls; in particular, in 2022, the Company hosted over 369 investor calls, 16 investor conferences and 14 marketing/non-deal roadshow events. We have also shared financial and ESG information relevant to our shareholders through our Sustainability Report, our Investor Relations website, our Annual Report and this Proxy Statement.
|
|
34 |
|
Compensation Discussion and Analysis (continued)
2021 Compensation Program Overview2022 COMPENSATION PROGRAM OVERVIEW
We regularly undertake a comprehensive review of our business plan to identify strategic initiatives that should be linked to executive compensation. We also assess and review the level of risk in our Company-wide compensation programs to ensure that they do not encourage imprudent risk-taking.
The following table outlines the primary elements of executive compensation for the NEOs for 20212022 and indicates how these elements relate to our key strategic objectives:
Element | Key Features | Relationship to Strategic Objectives | ||
| ||||
Annual Base Salary | • Commensurate with job responsibilities, experience, and qualitative and quantitative company or individual performance factors • Reviewed on | • Attract and retain key executives by providing market-competitive fixed compensation | ||
Annual Incentive Plan Awards | • Compensation Committee approves • Each executive is granted a target award opportunity based • Payouts can range from 0% to 200% of target and are determined by achievement of financial goals based on pre-established objectives, • Strategic Results Modifier (“SRM”) provides for an adjustment to individual payout levels based on an assessment of performance against strategic qualitative factors reviewed and approved by the Compensation Committee at the beginning of each year | • Pay-for-performance
• Align executive and shareholder interests • Motivate the pursuit of specific business goals that drive long-term value creation • SRM reflects Aptiv’s sustainability commitments related to people, product, planet and platform • Attract, retain and motivate key executives with market-competitive incentive compensation opportunities | ||
Long-Term Incentive Plan Awards | • Target award granted commensurate with job responsibilities, market competitiveness, experience, and qualitative and quantitative Company and individual performance factors • Grant RSU awards, 60% of which are earned based vest over time | • Pay-for-performance
• • Attract, retain and motivate key executives with market-competitive incentive compensation opportunities • Utilizes multi-year vesting period and multiple metrics aligned to long-term shareholder value creation, including stock price performance |
|
Compensation Discussion and Analysis (continued)
| ||||
Retirement Programs | • Qualified defined contribution plan available to all U.S. salaried employees, including NEOs • Non-qualified defined contribution plan available to eligible U.S. employees, including NEOs, who exceed statutory limits under our qualified defined contribution plan | • Attract and retain key executives with market-competitive compensation opportunities that foster long-term savings opportunities |
Additional, non-primary elements of executive compensation, such as payments related to life insurance, tax preparation, expatriate assignments or relocation, may be provided to NEOs from time to time. Any of these elements that were provided to NEOs in 20212022 are reflected in the “All Other Compensation” column of the “2021“2022 Summary Compensation Table”.
2021 Target Annual Total Direct Compensation Mix. Base salary and annual and long-term incentive award opportunities (all as more fully described below) are the elements of our NEOs’ total direct compensation. A majority of each NEO’s total direct compensation opportunity is comprised of performance-based pay, in line with the Company’s compen-
sation philosophy. Our annual incentive awards and the performance-based component of our long-term incentive awards are considered performance-based pay, as the payout of these awards is dependent on the achievement of specified performance goals. The time-based portion of our RSU awards is retentive while also aligning with Company performance, as the final value realized is based on the Company’s share price.
The significant proportion of performance-based pay aligns the compensation interests of our NEO’s with those of Aptiv’s shareholders.
35 | COMPENSATION DISCUSSION AND ANALYSIS |
2022 TARGET ANNUAL TOTAL DIRECT COMPENSATION MIX Base salary and annual and long-term incentive award opportunities (all as more fully described below) are the elements of our NEOs’ total direct compensation. A majority of each NEO’s total direct compensation opportunity is comprised of performance-based pay, in line with the Company’s compensation philosophy. The payouts of our annual incentive awards and the performance-based components of our long-term incentive awards are dependent on the achievement of specified performance goals. The time-based portion of our RSU awards is also aligned with Company performance, as the final value realized is based on the Company’s share price. |
The mix of compensation for our CEO and other NEOs on average in 20212022 is shown below:above.
2022 TARGET COMPENSATION STRUCTURE
The following table depicts 2022 target annual total direct compensation opportunities for the NEOs. This table reflects base
| ||||||||||||||||||||
Name | Base Salary ($)(1) | Annual Incentive Target Award ($) | Long-Term Incentive Annual Award ($) | Total Direct Compensation ($)(2) | ||||||||||||||||
Kevin P. Clark Chairman and Chief Executive Officer | $ | 1,462,272 |
| $ | 2,193,408 |
| $ | 12,500,000 |
| $ | 16,155,680 |
| ||||||||
Joseph R. Massaro Chief Financial Officer and Senior Vice President, Business Operations |
| 1,200,000 |
|
| 1,500,000 |
|
| 5,000,000 |
|
| 7,700,000 |
| ||||||||
William T. Presley(3) Senior Vice President and Chief Operating Officer, and President, Signal & Power Solutions |
| 750,000 |
|
| 750,000 |
|
| 2,100,000 |
|
| 3,600,000 |
| ||||||||
Sophia M. Velastegui Senior Vice President and Chief Product Officer |
| 750,000 |
|
| 750,000 |
|
| 2,000,000 |
|
| 3,500,000 |
| ||||||||
(1) Reflects base salary rates as of April 1, 2022. (2) This table does not reflect the value of Ms. Velastegui’s new hire awards. (3) Mr. Presley was promoted to the position of Chief Operating Officer, effective December 15, 2022. He remained as Senior Vice President and President, Signal & Power Solutions. In connection with his new role, Mr. Presley’s base salary increased to $900,000, his annual incentive target award increased to $900,000 and, effective for 2023, his long-term incentive plan target award increased to $3,500,000.
|
|
Mr. Lyon joined Aptiv in late December 2022. See “New Hire Information” for details about his compensation.
36 |
|
Compensation Discussion and Analysis (continued)
2021 Target Compensation Structure. The following table depicts 2021 target annual total direct compensation opportunities for the NEOs. This table does not include information regarding changes in non-qualified deferred compensation earnings, information regarding all other compensation or certain additional footnote disclosure, each as required to be presented in the “2021 Summary Compensation Table” under the rules of the SEC. As such, this table should not be viewed as a substitute for the “2021 Summary Compensation Table.”
Name | Base Salary ($)(1) | Annual Incentive Target Award ($) | Long-Term Incentive Plan Target Annual Award ($) | Total ($) | ||||||||||||
Kevin P. Clark |
$ |
1,462,272 |
|
|
$2,193,408 |
|
$ |
11,500,000 |
|
$ |
15,155,680 |
| ||||
President and Chief Executive Officer | ||||||||||||||||
Joseph R. Massaro |
|
1,000,000 |
|
|
1,000,000 |
|
|
4,250,000 |
|
|
6,250,000 |
| ||||
Chief Financial Officer and Senior Vice President, Business Operations | ||||||||||||||||
William T. Presley |
|
650,000 |
|
|
552,500 |
|
|
1,700,000 |
|
|
2,902,500 |
| ||||
Senior Vice President and President, Signal & Power Solutions | ||||||||||||||||
Katherine H. Ramundo |
|
650,000 |
|
|
552,500 |
|
|
1,600,000 |
|
|
2,802,500 |
| ||||
Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Secretary | ||||||||||||||||
Mariya K. Trickett |
|
564,000 |
|
|
479,400 |
|
|
1,575,000 |
|
|
2,618,400 |
| ||||
Senior Vice President and Chief Human Resources Officer |
|
2021 Annual Compensation Determination2022 ANNUAL COMPENSATION DETERMINATION
Individual base salaries and annual incentive targets for the NEOs are established based on the scope of each NEO’s responsibilities, individual performance, experience, and market pay data.data and talent market dynamics. At the beginning of each year, we also define key strategic objectives each NEO is expected to achieve during that year, which are then considered by the Compensation Committee when making final compensation determinations.
20212022 Base Salaries. Base salary is intended to be commensurate with each NEO’s responsibilities, individual performance and experience. Our practice is to make periodic adjustments to base salary, although we review compensation competitiveness annually. During 2021,2022, the Compensation Committee approved base salary increases for threetwo of our NEOs, ranging from 2.5% to 7%.NEOs. Generally, these adjustments were intended to increase the competitiveness of salary. ForSpecifically, for Mr. Massaro, the increase reflected the expansion ofalso recognized continued growth in his roleorganizational responsibilities and exceptional performance in September 2020 to includeleading Aptiv’s finance, global manufacturing, and supply chain operations. Formanagement, information systems, and global business services functions, and for Mr. Presley, the increase reflectedrecognized his promotion to Senior Vice President and President, Signal & Power Solutions.expanded role within the organization, as well as his exceptional performance in leading the Company’s largest segment.
The following table summarizes the adjustments:
Name(1) | Base Salary Adjustment Effective Date | Adjusted Base Salary ($) | Increase (%) | Base Salary Adjustment Effective Date | Adjusted Base Salary ($) | Increase (%) | ||||||||||||||||||
Joseph R. Massaro | April 1, 2021 | $ | 1,000,000 | 7.0 | % | April 1, 2022 | $ | 1,200,000 | 20.0 | % | ||||||||||||||
William T. Presley | April 1, 2021 | 650,000 | 4.0 | April 1, 2022 | 750,000 | 15.4 | ||||||||||||||||||
Mariya K. Trickett | April 1, 2021 | 564,000 | 2.5 |
(1) | Mr. Clark did not receive a base salary adjustment in |
20212022 Annual Incentive Plan Awards. Our Annual Incentive Plan is designed to motivate our NEOs to drive earnings, cash flow and profitable growth by measuring the NEOs’ performance against our goals at the Corporate and relevant Segment levels.goals.
The Compensation Committee establishes the individual annual incentive target for each NEO at a market competitive level, but such target can be adjusted based on the NEO’s position, individual performance, and the size and scope of his or her responsibilities. As designed, final payouts based on the financial metrics described below can range from 0% to 200% of each NEO’s annual incentive target.
|
Compensation Discussion and Analysis (continued)
The Compensation Committee, working with management and its independent compensation consultant, sets the performance metrics and objectives for the preliminary annual incentive plan payout levels based on Aptiv’s annual business objectives. For 2021,2022, each NEO’s award payout was designed to be determined as follows:
• | Corporate performance metrics were weighted 100% for Messrs. Clark, Massaro and Presley; |
• | Individual performance was considered for adjustments, based on personal achievements and contributions to overall success; and |
• | Individual performance was also considered with respect to the Strategic Results Modifier, as further discussed below. |
For 2021, both Corporate and Segment2022, corporate performance objectives were based on the following metrics, which alignedmeasure our overall financial performance in alignment with our business strategy:
• | Adjusted Net Income (“NI”), which we believe is an appropriate measurement of our underlying earnings; |
• | Cash Flow Before Financing (“CFBF”), which is a metric for measuring cash generation; and |
• | Growth over Market (“GOM”), which measures the Company’s sales growth relative to the markets in which it operates. |
37 | COMPENSATION DISCUSSION AND ANALYSIS |
The Compensation Committee selected the following weightings in 20212022 for both Corporate and Segmentthese performance metrics:
Clark, Massaro, Ramundo and Trickett | Presley | |||||
Weighting (%) Performance Metrics | 100% Corporate | 50% Segment | 50% Corporate | |||
NI (Corporate) or OI (Segment)(1) | 50% | 50% | 50% | |||
CFBF (Corporate) and SOCF (Segment)(2) | 40 | 40 | 40 | |||
GOM | 10 | 10 | 10 |
Clark, Massaro and Presley | ||||
Weighting (%) Performance Metrics | 100% Corporate | |||
Net Income (NI)(1) | 50 | % | ||
Cash Flow Before Financing (CFBF)(2) | 30 | |||
Growth Over Market (GOM) | 20 |
(1) | Adjusted Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon. |
(2) | CFBF is cash flow before financing, which is defined as cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, net of cash acquired. |
The NI / OI and CFBF / SOCF goals and the award payout levels related to the achievement of those goals are measured on a performance scale set by the Compensation Committee. Performance below the minimum threshold for a metric would result in no payout for that metric, and performance above the maximum level for a metric would be capped at a maximum total payout of 200% of the target with respect to that metric. For the NI / OI and CFBF / SOCF metrics the threshold, target and maximum payout levels were established at 40%, 100% and 200%, respectively. GOM was designed to be treated differently than the NI / OI and CFBF / SOCF metrics. If the GOM targets are achieved, the target payout for that metric is paid. If the GOM targets are not achieved, no amount is paid for the GOM portion of the award.
The 20212022 performance goals by metric were:
Category | NI / OI ($ in millions) | CFBF / SOCF | GOM | |||||||||
Corporate Metrics: | $ | 1,014 | $ | 1,150 | 6 | % | ||||||
Segment Metrics: | ||||||||||||
Signal & Power Solutions (Presley) | 1,390 | 1,457 | 3 |
Category | NI ($ in millions) | CFBF ($ in millions) | GOM | |||||||||
Performance Metrics: | $ | 886 | $ | 977 | 6 | % |
Our Annual Incentive Plan target goals, approved by the Compensation Committee, are established to reflect our focus on growth over prior year actual outcomes and above market growth in the performance period. WithThreshold, target, and maximum levels of performance continued to reflect rigorous hurdles taking into account the challenging macroeconomic outlook and consistent with our goal of delivering exceptional operational performance.
When determining final compensation decisions, the Compensation Committee took into account continued headwinds related to supply chain disruptions, COVID-19-related constraints, material cost inflation and the emergence of the conflict in Russia/Ukraine. The Compensation Committee made select adjustments allowed under the Annual Incentive Plan to more accurately recognize management’s strong performance amidst macroeconomic headwinds outside of its control. Based on 2022 performance and the adjustments made with respect to these metrics, the performance levels required for target payment, 2021 overall performance at the Corporate level produced a payout of 34%. Performance at the Signal & Power Solutions Segment resulted in a payout at 40%score was 100%.
Strategic Results Modifier. Following the determination of the preliminary payout levels for the Corporate and Segment metrics,above, the Compensation Committee, in conjunction with the CEO, assessed the other NEOs’ performance with respect to the Strategic Results Modifiers (“SRM”)SRM and individual qualitative performance. The CEO is not eligible for an SRM payout.
As part of our focus on strategic priorities, the SRM is approved by the Compensation Committee at the beginning of each year as part of the Annual Incentive Plan design. The SRM can range, in the aggregate, from plus or minus 10% of the total Annual Incentive Plan target opportunity. The SRM allows the Compensation Committee to consider progress on or achievement of strategic priorities in addition to the financial metricsperformance under the Annual Incentive Plan. The SRM is determined based on a qualitative performance assessment and recommendation by the CEO as to each other NEO’s achievement of SRM objectives, with final approval by the Compensation Committee. For 2021,2022, the focus areas of the SRM were Aptiv’s sustainability commitments related to people, product, planet and platform.
|
Compensation Discussion and Analysis (continued)
For 2021, the SRM goals were related to Aptiv’s longer-term sustainability commitments. We set meaningful and challenging annual goals aligning with our sustainability commitments. While significant progress was made relative to these commitments and achievement was on target, the CEO recommended to the Compensation Committee
COMPENSATION DISCUSSION AND ANALYSIS | 38 |
that no positive or negative adjustments be made for SRM. SRM for 2022. For 2023, the Compensation Committee has determined that the SRM wilI no longer be a modifier, but that the underlying strategic priorities will be included as a weighted metric in the 2023 Annual Incentive Plan.
2022 Annual Incentive Plan Payouts. In determining the final individual payouts, the Compensation Committee, in consultation with the CEO (except related to his own performance and payout), evaluated each eligible NEO’s qualitative performance in relation to the specific Segment and overall Corporate performance, as applicable.corporate performance. Each NEO was also evaluated based on his or her individual achievements.
The material qualitative performance achievements considered by the Compensation Committee included: for Mr. Clark, his leadership and performance positioningas he continues to position the Company for significant growth aligned to the industry’s accelerating shift to electrification and software defined transformation and commitment to ensuring a thriving culture with unrelenting focus on the safety and development of our global workforce;transformation; for Mr. Massaro, the continued growth in his leadershiporganizational responsibilities and exceptional performance in 2021, including leveraging our investment grade credit metrics to further enhance our capital structureleading Aptiv’s finance, global manufacturing, information systems, global business services functions, and increase our financial flexibility andhis focus on mitigating the impact of supply chain disruptions; for Mr. Presley, his leadership and performance ensuring that our Signal & Power Solutions business unit was positioned to meet the needs of all of our customers; for Ms. Ramundo, her leadership and performance in legal and compliance initiatives;customers while taking on a broader scope of responsibilities within Aptiv; and for Ms. Trickett,Velastegui, her drive and leadership and performance on critical human capital initiatives, including stewardship of our culture and focus on retaining, attracting and developing talent to meetin establishing the transformational opportunities we have.global product organization throughout the year. The Compensation Committee did not exercise discretion or make any adjustmentsadjust the annual incentive payouts based on achievement of the qualitative performance described above, and the financial performance under the Annual Incentive Plan determined final payouts. Final award payout percentages ranged from 34% to 40% of target for our NEOs.above.
As a result of the analysis described above, the Compensation Committee approved the following 20212022 annual incentive award payments for the NEOs:
Name | Annual Target | Annual Plan Actual | Percent of Incentive (%) | |||||||||
Kevin P. Clark | $ | 2,193,408 | $ | 745,759 | 34 | % | ||||||
Joseph R. Massaro | 1,000,000 | 340,000 | 34 | |||||||||
William T. Presley | 552,500 | 221,000 | 40 | |||||||||
Katherine H. Ramundo | 552,500 | 187,850 | 34 | |||||||||
Mariya K. Trickett | 479,400 | 162,996 | 34 |
Name(1) | Annual Target | Annual Plan Actual | Percent of Incentive (%) | |||||||||
Kevin P. Clark | $ | 2,193,408 | $ | 2,193,408 | 100 | % | ||||||
Joseph R. Massaro | 1,500,000 | 1,500,000 | 100 | |||||||||
William T. Presley | 900,000 | 900,000 | 100 | |||||||||
Sophia M. Velastegui | 750,000 | 686,301 | 100 |
(1) | Mr. Lyon was entitled to an annual incentive payment of $800,000 as part of his new hire package. See “New Hire Information” for more information.For Ms. Velastegui, who joined Aptiv on February 1, 2022 and after the 2022 Annual Incentive Plan performance goals were established, it was determined that her award would be pro-rated for the year, resulting in a 92% payout of her annual target. |
(2) | These incentive payments are reported in the “Non-Equity Incentive Plan Compensation” column of the |
2021 Long-Term CompensationIn addition, Ms. Velastegui received a one-time cash payment of $1,175,000 upon hire to, in part, make up for compensation forfeited upon leaving her prior employer.
2022 LONG-TERM COMPENSATION
Performance Metrics. Aptiv’s Long-Term Incentive Plan is designed to reward performance on long-term strategic metrics and to attract, retain and motivate participants. Aptiv’s incentive plans are market-driven andLong-Term Incentive Plan is primarily performance-based, with 60% of the NEOs’ award consisting of performance-based RSUs, which deliver value if financial and relative TSR goals are met. The targets are aligned withreflect Aptiv’s pay-for-performance culture, which helps align executive and investor interests. The remaining 40% are time-based RSUs, and fluctuatethe value of which fluctuates with Aptiv’s share price.price performance.
The performance-based RSUs are settled after the results of a three-year performance period are determined. The time-based RSUs generally vest ratably over three years, beginning on the first anniversary of the grant date. The 20212022 performance-based RSU grant vests at the end of 20232024 and will be settled in early 20242025 after the outcomes of the performance period are determined and approved. Under the design of the performance-based RSU awards, each NEO could receive from 0% to 200% of his or her
39 | COMPENSATION DISCUSSION AND ANALYSIS |
target performance-based RSU award, as determined by Aptiv’s performance against certain Company-wide performance metrics. The metrics and weights used in the 20212022 awards are:
Metric | Weighting (%) | |||
Average Return on Net Assets (RONA)(1) | 33.3 | % | ||
Cumulative Net Income (NI)(2) | 33.3 | |||
Relative Total Shareholder Return (TSR)(3) | 33.3 |
(1) | Average RONA is tax-affected operating income divided by average net working capital plus average net property, plant and equipment for each calendar year, as adjusted for incentive plan calculation purposes. |
(2) | Cumulative Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon. |
(3) | Relative TSR is measured by comparing the average closing price per share of the Company’s ordinary shares for all available trading days in December |
The Long-Term Incentive Plan allows for dividend equivalents to accrue on unvested RSUs; however, the dividend equivalents vest and pay out only if and to the extent that the underlying RSUs vest and pay out. As part of the Company’s response to COVID-19, dividends were suspended in March 2020; therefore, no dividend equivalents accrued after that date.
2022 |
Compensation Discussion and Analysis (continued)
2021 Grants. The Compensation Committee established the following 20212022 target long-term incentive award values for our NEOs (consisting of time-based RSUs and performance-based RSUs, as described above). These awards take into accountIn so doing, the Compensation Committee considered each NEO’s scope of responsibilities, individual performance, retention considerations and market compensation data:
Name | Long-Term Incentive Plan Target Annual Award ($) | |||
Kevin P. Clark | $ | 12,500,000 | ||
Joseph R. Massaro | 5,000,000 | |||
William T. Presley | 2,100,000 | (1) | ||
Sophia M. Velastegui | 2,000,000 | (2) |
(1) | ||||
In connection with his assumption of the role of Chief Operating Officer on December 15, 2022, the Compensation Committee approved an increase of Mr. Presley’s target Long-Term | ||||
award to $3,500,000, effective for fiscal year 2023. |
|
2019-2021Mr. Lyon did not receive a long-term incentive award for 2022. See “New Hire Information” below for details regarding Mr. Lyon’s one-time new hire award granted in fiscal year 2023.
2020-2022 Performance-Based RSUs. The Compensation Committee carefully assessed the performance awards granted in February 20192020 for which vesting was based on achievement of 3-yearthree-year cumulative financial resultsperformance through December 31, 2021.2022. As was previously disclosed, last year, due to the emergence of the COVID-19 pandemic and resultant impacts on the Company’s industry and operations, the Compensation Committee made adjustments in 2020 to the 20192020 performance-based RSU financial performance awardsgoals to better reflect the unprecedented chal-
lengeschallenges of COVID-19. The relative TSR metric goals were unchanged from the original grant. No adjustments were made in 2021.2021 or 2022.
InAs part of the 2020 adjustments, the Compensation Committee also made the following changes to the 20192020 performance-based RSU awards:awards, all as further described in our 2021 Proxy Statement:
• | Reducing maximum payout opportunity — Lowering the maximum upside for these awards to 150% from 200%; |
• | Requiring Relative TSR to be “at or above market for above target payout” — Capping the |
• | Adjusting goals on the financial metrics only — The financial targets were adjusted in consideration of the global impact of COVID-19 on the overall market, our industry, and Aptiv. The relative TSR metric goals were unchanged from the original grant. |
COMPENSATION DISCUSSION AND ANALYSIS | 40 |
In February 2022,2023, we paid out the performance-based RSUs for the performance period. The following tables set forth: (1) the threshold, target and maximum levels, as well as the performance level achieved during the performance period; and (2) for each NEO, the target total number of performance-based RSUs and actual number of performance-based RSUs earned. Based on the achievement of the performance goals during the period, the earned award was 94% of the target opportunity.
Metric
| Weighting (%)
| Threshold
| Target
| Maximum
| Achievement
| Weighting (%) | Threshold | Target | Maximum | Achievement | ||||||||||||||||||||||
Average Return on Net Assets (RONA)(1)(2) |
| 50 | % |
| 20.6 | % |
| 23.0 | % |
| 25.4 | % |
| 21.1 | % | 33.3 | % | 20.2% | 22.8% | 26.6% | 22.8% | |||||||||||
Cumulative NI(2) |
| 25 |
| $ | 2,570 |
| $ | 2,873 |
| $ | 3,175 |
| $ | 2,598 |
| 33.3 | $2,439 | $2,744 | $3,201 | $2,731 | ||||||||||||
Relative Total Shareholder Return (TSR) | 25 | 30th%ile | 50th%ile | 90th%ile | 100th%ile | 33.3 | 30th%ile | 50th%ile | 90th%ile | 50th%ile |
(1) | Average RONA is tax-affected adjusted operating income divided by average net working capital plus average net property, plant and equipment for each calendar year, as adjusted for incentive plan calculation purposes. |
(2) | Actual achievement reflects adjustments permitted for incentive plan calculation purposes. |
Based on the achievement of the performance goals during the period, the earned award was 100% of the target opportunity. As a result, the Compensation Committee approved the following 2019-20212020-2022 performance-based RSU award payouts.
Performance-based RSUs | Performance-based RSUs | |||||||||||||||
Name(1) | Target Units Granted (#)(2) | Actual Units Earned (#)(2)(3) | Target Units Granted (#) | Actual Units Earned (#)(2) | ||||||||||||
Kevin P. Clark | 97,579 | 91,724 | 95,608 | 95,608 | ||||||||||||
Joseph R. Massaro | 27,880 | 26,207 | 32,159 | 32,159 | ||||||||||||
William T. Presley | 5,576 | 5,241 | 6,374 | 6,374 | ||||||||||||
Mariya K. Trickett | 11,431 | 10,745 |
(1) | Mr. Lyon and Ms. |
(2) |
|
Absent adjustments made in 2020 to restore our compensation programs’ intended effectiveness, the number of awards that would have been paid would have been |
RECENT NEW HIRE INFORMATION
Mr. Lyon joined Aptiv in December 2022. He received the compensation package set forth below.
|
Compensation Discussion and Analysis (continued)
• | Payments of $800,000 under the Annual Incentive Plan for each of 2022 and 2023, payable in 2023 and 2024, respectively; |
• | 2023 Long-Term Incentive award valued at $2,900,000, granted in February 2023; and |
• | To make up for compensation that he forfeited upon leaving his prior employer, Mr. Lyon also received a one-time cash payment of $4,000,000 in December 2022 and a one-time restricted stock award granted in February 2023 valued at $8,000,000 that vests ratably over two years. |
Other CompensationOTHER COMPENSATION
Additional compensation and benefit programs available to our NEOs are described below. Only those benefits and policies offered to the other salaried employee populations are available to our NEOs.
Aptiv Salaried 401(k) Plan, formerly the Salaried Retirement Savings Program (“SRSP”).Plan. Along with other eligible U.S. Aptiv salaried employees and executives, our eligible NEOs participate in our broad-based and tax-qualified defined contribution plan, the Aptiv Salaried 401(k) Plan, which is a qualified plan under Section 401(k) of the Internal Revenue Code (the “Code”). All contributions are subject to any contribution limits imposed by the Code.
Aptiv Deferred Compensation Plan (“DCP”), formerly the Salaried Retirement Equalization Savings Program (“SRESP”). Under the DCP, eligible U.S. employees receive Aptiv contributions in excess of the limits imposed upon the Aptiv Salaried 401(k) Plan by the Code. No guaranteed or above-market rates are earned; the investment options available are a subset of those available to all employees under the DCP.Aptiv Salaried 401(k) Plan. Additional details regarding benefits and payouts under this plan are provided in the “Non-Qualified Deferred Compensation” section.
Severance Plans. In 2017, we adopted the Aptiv PLC Executive Severance Plan (the “Severance Plan”) and the Aptiv PLC Executive Change in Control Severance Plan (the “Change in Control Plan”). The plans were adopted to provide severance
41 | COMPENSATION DISCUSSION AND ANALYSIS |
protections to certain executives who are designated by the Compensation Committee as eligible to participate in each plan, including certain of the NEOs.
For the eligible NEOs, the Severance Plan generally provides for severance benefits in the event of a “qualifying separation” (as defined in the Severance Plan to include a termination without “cause” or a resignation for “good reason”) of the NEO’s employment. Pursuant to the Severance Plan, an NEO who incurs a qualifying separation would be entitled to receive generally severance payments equal in the aggregate to a multiple of annual base salary (1.5X(1.5 times for officers with at least two years of service, and 1X1 time for all other officers), unless and until the NEO is employed by another employer. The Severance Plan also provides a COBRA subsidy for a period of up to 18 months following a qualifying separation.
The Change in Control Plan generally provides for severance benefits in connection with a “qualifying separation” (as defined in the Change in Control Plan to include a termination without “cause” or a resignation for “good reason”) that occurs in connection with or within two years after a Change
in Control (as defined in the Change in Control Plan). Pursuant to the Change in Control Plan, an NEO who incurs a qualifying separation would generally be entitled to receive a lump sum cash payment in an amount equal to the sum of (1) three times base salary in the case of the CEO and two times base salary in the case of an NEO other than the CEO, and (2) in the case of the CEO, three times the higher of the CEO’s target annual cash incentive award opportunity for the year in which the separation occurs or in effect immediately prior to the Change in Control (or in the case of an NEO other than the CEO, two times the higher of the NEO’s target annual cash incentive award opportunity for the year in which the separation occurs or in effect immediately prior to the Change in Control). In addition, an NEO who incurs a qualifying separation is also entitled to receive a lump sum payment representing the sum of 36 monthly COBRA premiums for the CEO and 24 monthly COBRA premiums for NEOs other than the CEO.
Benefits under the Severance Plan and the Change in Control Plan are generally subject to execution by the NEO of a general waiver and release of claims in favor of Aptiv.
Other Benefits. We provide additional benefits, such as relocation and expatriate benefits to our NEOs, when applicable, and in general, these benefits are the same as those provided to similarly situated non-officer employees. The primary expatriate benefits include housing allowance, transportation allowance and tax equalization in home and host country. Additional details are covered in the “2021“2022 Summary Compensation Table”.
Compensation Governance PracticesCOMPENSATION GOVERNANCE PRACTICES
Stock Ownership Guidelines. To support better alignment of our executives’ interests with those of our shareholders, Aptiv’s Board believes that our officers should maintain an appropriate level of equity interest in Aptiv. To that end, our Board has adopted the following stock ownership guidelines:
Role | Guideline | |||
CEO | 6x base salary | |||
| 3x base salary | |||
Elected Corporate staff officers | 1x base salary |
Our officers, including the NEOs, are expected to fulfill the ownership requirement within five years from the time they are appointed to their position. Until such time as the required holding is met, officers may not sell stock, subject to limited exceptions. Once the ownership requirement has been met, an officer may sell stock, provided, however, that the minimum
|
Compensation Discussion and Analysis (continued)
ownership requirement must continue to be met. The Compensation Committee reviews the ownership level for covered executives each year. As of the 20212022 measurement of ownership, all of our NEOs were at or above the applicable ownership requirement or on track to meet the applicable ownership requirement within five years of their start date.
Clawback. As a matter of policy, if our financial statements are materially misstated or in material noncompliance with any financial reporting requirement under securities laws, then the Compensation Committee will review the circumstances and determine if any participants should forfeit certain future awards or repay prior payouts. If the misstatement is due to fraud, then
COMPENSATION DISCUSSION AND ANALYSIS | 42 |
the participants responsible for the fraud will forfeit their rights to future awards and must repay any amounts they received from prior awards due to the fraudulent behavior. The Compensation Committee expects to updaterevise our clawback policy as appropriate,on a timely basis to comply with theapplicable requirements for clawbacks under the final provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as implemented by the Securities and Exchange CommissionSEC and the New York Stock Exchange.NYSE.
Restrictive Covenants. All executives, including the NEOs, are required to sign confidentiality and non-interference agreements in order to participate in the Long-Term Incentive Plan. The non-interference agreements include non-compete and non-solicitation covenants, which generally prohibit executives from:
• | Working for a competitor or otherwise directly or indirectly engaging in competition with us for 12 months after leaving Aptiv; |
• | Soliciting or hiring employees for 24 months after leaving Aptiv; and |
• | Soliciting customers for 24 months after leaving Aptiv. |
If the terms of the confidentiality and non-interference agreements are violated, Aptiv has the right to cancel or rescind any finalunvested Long-Term Incentive Plan award, consistent with applicable law.
No Excise Tax Gross-Ups. We do not provide any excise tax gross-ups specific to our officer population. Certain expatriate policy and relocation provisions, applicable to all salaried employees, allow for tax gross-ups as reimbursement for additional taxes or expenses incurred due to expatriate status or relocation expenses.
No Hedging/No Pledging. The Company’s Insider Trading Policy prohibits its directors and employees from entering into transactions that “hedge” the value of Aptiv stock and from pledging Aptiv securities as collateral for a loan. The Company interprets this prohibition on hedging to extend to engaging in
short-term or speculative transactions and from engaging in short sales or the use of prepaid variable forward contracts, equity swaps, collars and exchange funds. In addition, the Company’s Insider Trading Policy prohibits its directors and employees from trading in options (such as put and call options) on Aptiv stock and purchasing Aptiv securities on margin or holding Aptiv securities in a margin account. Further, directors and employees are encouraged to avoid frequent trading or speculating in Aptiv stock. The Company’s Insider Trading Policy is available on aptiv.com by clicking on the tab “Investors” and then the caption “Governance Documents” under the heading “Governance.”
Independent Compensation Consultant. The Compensation Committee has retained Semler Brossy as its independent compensation consultant. The scope of the work done by Semler Brossy during 20212022 for the Compensation Committee included the following:
• | Providing analyses and recommendations that inform the Compensation Committee’s decisions; |
• | Preparing and evaluating market pay data and competitive position analysis; |
• | Assisting in the design and development of Aptiv’s executive compensation programs; |
• | Providing updates on market compensation trends and the regulatory environment as they relate to executive compensation; |
• | Reviewing various management proposals presented to the Compensation Committee related to executive compensation; and |
• | Working with the Compensation Committee to validate and strengthen the pay-for-performance relationship and alignment with shareholders. |
The Compensation Committee has assessed the independence of Semler Brossy pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Semler Brossy from independently representing the Compensation Committee. Semler Brossy does not perform other services for the Company, and Semler Brossy will not do so without the prior consent of the Chair of the Compensation Committee. Semler Brossy meets with the Compensation Committee Chair and the Compensation Committee outside the presence of management. In addition, Semler Brossy participates in all of the Compensation Committee’s meetings and, when requested by the Compensation Committee Chair, in the preparatory meetings and the executive sessions.
Compensation Risk Assessment. The Aptiv Human Resources team conductedcompleted a risk assessment of our compensation programs in January 20212023 and concluded that our
|
Compensation Discussion and Analysis (continued)
compensation policies, practices and programs do not create risks that are
43 | COMPENSATION DISCUSSION AND ANALYSIS |
reasonably likely to have a material adverse effect on Aptiv. The compensation risk assessment included a review of our pay and incentive plan structures, pay practices and policies, and governance process,processes, including the Compensation Committee’s oversight of such programs (supported by an independent consultant).
The Compensation Committee and Semler Brossy reviewed the 20212023 assessment and discussed the report with management. The Compensation Committee agreed that our compensation policies, practices and programs do not create risks that are reasonably likely to have a material adverse effect on Aptiv. In doing so, the Compensation Committee also
reaffirmed the following key risk mitigating factors with respect to our NEOs:
• | Mix of fixed versus variable, cash versus equity-based and short- versus long-term compensation with an emphasis on equity-based pay; |
• | Incentive award opportunities, with performance-based awards capped at approximately two times the target amount, that span both annual and overlapping, multi-year time periods and incorporate a broad range of financial metrics and TSR; |
• | Existence of a clawback policy; and |
• | Stock ownership guidelines, with retention requirements, and the prohibition on hedging and pledging of Company stock. |
COMPENSATION COMMITTEE REPORT | 44 |
Compensation Committee Report |
We, the undersigned members of the Compensation Committee, have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Respectfully submitted,
Joseph L. Hooley, Chairman
Rajiv L. Gupta
Merit E. Janow
Paul M. Meister
| 2022 |
2021 SUMMARY COMPENSATION TABLE
The table below sets forth specified information regarding the compensation of the individuals who served for 2021in 2022 as PresidentChairman and Chief Executive Officer (Kevin P. Clark) and Chief Financial Officer and Senior Vice President, Business Operations (Joseph R. Massaro), and the next three most highly compensated executive officers who were serving as of December 31, 2021 (William2022 (Benjamin Lyon, William T. Presley, Katherine H. Ramundo and Mariya K. Trickett)Sophia M. Velastegui, and together with our CEO and CFO, Aptiv’s NEOs).
Name and Principal Position
| Year
| Salary ($)(1)(2)
| Bonus ($)(3)
| Stock Awards ($)(4)
| Non-Equity Incentive Plan Compensation ($)(2)(5)
| All Other Compensation
| Total ($)
| |||||||||||||||||||||
Kevin P. Clark | 2021 | $ | 1,462,272 | $ | — | $ | 12,295,011 | $ | 745,759 | $ | 241,738 | $ | 14,744,780 | |||||||||||||||
President and Chief | 2020 | 1,141,924 | — | 28,502,508 | 1,425,715 | 197,182 | 31,267,329 | |||||||||||||||||||||
Executive Officer | 2019 | 1,421,000 | — | 11,504,627 | 1,970,640 | 268,266 | 15,164,533 | |||||||||||||||||||||
Joseph R. Massaro | 2021 | 983,750 | — | 4,543,905 | 340,000 | 114,631 | 5,982,286 | |||||||||||||||||||||
Chief Financial Officer and | 2020 | 857,917 | — | 9,107,543 | 607,750 | 100,080 | 10,673,290 | |||||||||||||||||||||
Senior Vice President, | 2019 | 865,625 | — | 3,287,098 | 917,780 | 116,654 | 5,187,157 | |||||||||||||||||||||
Business Operations | ||||||||||||||||||||||||||||
William T. Presley | 2021 | 643,750 | — | 2,779,753 | 221,000 | 79,556 | 3,724,059 | |||||||||||||||||||||
Senior Vice President and | ||||||||||||||||||||||||||||
President, Signal and Power | ||||||||||||||||||||||||||||
Solutions | ||||||||||||||||||||||||||||
Katherine H. Ramundo | 2021 | 517,045 | 600,000 | 6,077,331 | 187,850 | 38,389 | 7,420,615 | |||||||||||||||||||||
Senior Vice President, | ||||||||||||||||||||||||||||
Chief Legal Officer, Chief | ||||||||||||||||||||||||||||
Compliance Officer and | ||||||||||||||||||||||||||||
Secretary | ||||||||||||||||||||||||||||
Mariya K. Trickett | 2021 | 560,500 | — | 1,683,989 | 162,996 | 63,792 | 2,471,277 | |||||||||||||||||||||
Senior Vice President and | 2020 | 508,333 | — | 3,704,902 | 303,875 | 189,151 | 4,706,261 | |||||||||||||||||||||
Chief Human Resources | 2019 | 515,000 | — | 1,780,353 | 408,300 | 274,933 | 2,978,586 | |||||||||||||||||||||
Officer |
Name and Principal Position | Year | Salary ($)(2)(3) | Bonus ($)(4) | Stock ($)(5) | Non-Equity Incentive Plan Compensation ($)(3)(6) | All Other Compensation | Total ($) | |||||||||||||||||||||
Kevin P. Clark Chairman and Chief Executive Officer | 2022 | $ | 1,462,272 | $ | — | $ | 12,358,679 | $ | 2,193,408 | $ | 192,262 | $ | 16,206,621 | |||||||||||||||
2021 | 1,462,272 | — | 12,295,011 | 745,759 | 241,738 | 14,744,780 | ||||||||||||||||||||||
2020 | 1,141,924 | — | 28,502,508 | 1,425,715 | 197,182 | 31,267,329 | ||||||||||||||||||||||
Joseph R. Massaro Chief Financial Officer and Senior Vice President, Business Operations | 2022 | 1,150,000 | — | 4,943,446 | 1,500,000 | 103,463 | 7,696,909 | |||||||||||||||||||||
2021 | 983,750 | — | 4,543,905 | 340,000 | 114,631 | 5,982,286 | ||||||||||||||||||||||
2020 | 857,917 | — | 9,107,543 | 607,750 | 100,080 | 10,673,290 | ||||||||||||||||||||||
Benjamin Lyon(1) Senior Vice President and Chief Technology Officer | 2022 | 9,091 | 4,000,000 | — | 800,000 | — | 4,809,091 | |||||||||||||||||||||
William T. Presley Senior Vice President and Chief Operating Officer, and President, Signal & Power Solutions | 2022 | 731,250 | — | 2,076,265 | 900,000 | 72,403 | 3,779,918 | |||||||||||||||||||||
2021 | 643,750 | — | 2,779,753 | 221,000 | 79,556 | 3,724,059 | ||||||||||||||||||||||
Sophia M. Velastegui Senior Vice President and Chief Product Officer | 2022 | 687,500 | 1,175,000 | 4,312,838 | 686,301 | 373,052 | 7,234,691 | |||||||||||||||||||||
(1) | Mr. Lyon’s start date was December 28, 2022; he received a sign-on payment of $4,000,000 on his start date. His Annual Incentive Plan payment for 2022 equals his target Annual Incentive Plan amount ($800,000). Due to the timing of his start date, Mr. Lyon was not eligible for a 2022 equity grant. |
(2) | Messrs. Massaro |
Base salary and annual incentive awards are eligible for deferral under the Aptiv |
|
The award values reflected in the “Stock Awards” column are the grant date fair values of the NEOs’ respective long-term incentive awards determined in accordance with FASB ASC Topic 718. The |
2022 SUMMARY COMPENSATION TABLE | 46 |
(6) | The “Non-Equity Incentive Plan Compensation” column reflects payments |
Amounts reported in the “All Other Compensation” column for |
Name
| Aptiv Contributions(a)
| Life Insurance(b)
| Other(c)
| Total
| Aptiv Contributions(a) | Life Insurance(b) | Other(c) | Total | ||||||||||||||||||||||||
Kevin P. Clark | $ | 222,267 | $ | 5,264 | $ | 14,207 | $ | 241,738 | $ | 169,720 | $ | 185 | $ | 22,357 | $ | 192,262 | ||||||||||||||||
Joseph R. Massaro | 104,362 | 1,912 | 8,357 | 114,631 | 89,050 | 2,236 | 12,177 | 103,463 | ||||||||||||||||||||||||
Benjamin Lyon | — | — | — | — | ||||||||||||||||||||||||||||
William T. Presley | 78,305 | 1,251 | — | 79,556 | 70,994 | 1,409 | — | 72,403 | ||||||||||||||||||||||||
Katherine H. Ramundo | 36,796 | 1,053 | 540 | 38,389 | ||||||||||||||||||||||||||||
Mariya K. Trickett | 63,378 | 414 | — | 63,792 | ||||||||||||||||||||||||||||
Sophia M. Velastegui | 50,469 | 866 | 321,717 | 373,052 |
|
2021 Summary Compensation Table (continued)
(a) | For NEOs, this column reflects Aptiv’s contributions to both the qualified Aptiv Salaried 401(k) Plan, |
(b) | This column reflects the dollar value of the insurance premiums paid for each NEO for premium payments made regarding his or her life insurance policy. |
(c) | For Messrs. Clark and Massaro, these amounts represent tax preparation expenses in connection with working in Ireland. For Ms. |
47 | 2022 GRANTS OF PLAN-BASED AWARDS |
|
2021 GRANTS OF PLAN-BASED AWARDS
The table below sets forth the threshold, target and maximum award payout opportunities (or full award opportunity, as applicable) for plan-based awards that were granted to our NEOs in 2021.2022.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3)
| Grant Date Fair Value of Stock and Option Awards ($)(4)
| Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock and Option Awards ($)(4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name
| Grant Date
| Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
| Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin P. Clark | $ | 877,363 | 2,193,408 | 4,386,816 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2022 | 36,083 | $ | 4,670,584 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ |
877,363 |
|
|
2,193,408 |
|
$ |
4,386,816 |
| 2/28/2022 | 21,650 | 54,125 | 108,250 | 7,688,095 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2021 | 29,941 | $ | 4,486,359 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2021 |
|
|
| 17,964 | 44,910 | 89,820 |
| 7,808,651 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joseph R. Massaro | 600,000 | 1,500,000 | 3,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2022 | 14,433 | 1,868,208 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
400,000 |
|
|
1,000,000 |
|
|
2,000,000 |
| 2/28/2022 | 8,660 | 21,650 | 43,300 | 3,075,238 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2021 | 11,066 | 1,658,129 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benjamin Lyon(5) | 800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2021 |
|
|
| 6,639 | 16,597 | 33,194 |
| 2,885,776 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William T. Presley | 221,000 | 552,500 | 1,105,000 | 360,000 | 900,000 | 1,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William T. Presley | 2/28/2022 | 6,062 | 784,665 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2022 | 3,637 | 9,093 | 18,186 | 1,291,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2021 | 4,426 | 663,192 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2021 | (5) | 2,344 | 351,225 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2021 | 2,656 | 6,639 | 13,278 | 1,154,345 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2021 | (5) |
|
|
| 1,406 | 3,514 | 7,028 |
| 610,991 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Katherine H. Ramundo |
|
221,000 |
|
|
552,500 |
|
|
1,105,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/15/2021 | (6) | 4,275 | 653,348 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/15/2021 | (6) | 28,051 | 4,287,034 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/15/2021 | (6) |
|
|
| 2,564 | 6,411 | 12,822 |
| 1,136,948 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mariya K. Trickett |
|
191,760 |
|
|
479,400 |
|
|
958,800 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2021 | 4,101 | 614,494 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| 2/28/2021
|
|
|
|
|
| 2,460
|
|
| 6,151
|
|
| 12,302
|
|
|
| 1,069,495
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
Sophia M. Velastegui | 300,000 | 750,000 | 1,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2022 | 5,774 | 747,387 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2022 | (6) | 18,042 | 2,335,356 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2022 | 3,464 | 8,660 | 17,320 | 1,230,095 |
(1) | These columns show the threshold, target and maximum awards payable to our NEOs under the |
(2) | These columns show the threshold, target and maximum number of RSUs possible under the performance-based RSUs granted in |
(3) | This column shows the number of time-based RSUs granted to our NEOs in |
(4) | This column reflects the grant date fair value of each |
(5) |
|
(6) | Ms. |
Our NEOs are parties to offer letters with Aptiv that generally describe the compensation and benefits initially provided to them upon employment.employment, including benefits upon termination. For more information about these arrangements, refer to “Potential Payments Upon Termination or Change in Control”. For more information about the NEOs’ relative mix of salary and other compensation elements in proportion to total compensation, refer to “2021“2022 Compensation Program Overview — 20212022 Target Annual Total Direct Compensation Mix”.
| 2022 |
2021 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The values displayed in the table below reflect each Aptiv NEO’s outstanding long-term incentive awards as of December 31, 2021.2022. The market values are calculated using a share price of $164.95,$93.13, the December 31, 202130, 2022 (the last trading day of fiscal 2022) closing price of our stock. The performance-based RSUs granted in 20202021 and 2021,2022, labeled with performance periods 1/1/2020-12/31/2022 and 1/1/2021-12/31/2023 and 1/1/2022-12/31/2024, are presented at the maximum level of performance.
Stock Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
Name
| Restricted Stock Unit
| Number of
| Market Value of
| Equity Incentive
| Equity Incentive
| Restricted Stock Unit Grant Date or Performance Period(2) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5),(6) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | ||||||||||||||||||||||||||||
Kevin P. Clark |
2/28/2019 |
|
10,843 |
|
$ |
1,788,553 |
| 2/28/2020 | 10,624 | $ | 989,413 | |||||||||||||||||||||||||||
2/28/2020 | 21,247 | 3,504,693 | ||||||||||||||||||||||||||||||||||||
2/28/2021 | 29,941 | 4,938,768 | ||||||||||||||||||||||||||||||||||||
1/1/2020-12/31/2022 | 143,412 | 23,655,809 | ||||||||||||||||||||||||||||||||||||
Kevin P. Clark | 2/28/2021 | 19,961 | 1,858,968 | |||||||||||||||||||||||||||||||||||
2/28/2022 | 36,083 | 3,360,410 | ||||||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023 | 89,820 | $ | 8,364,937 | |||||||||||||||||||||||||||||||||||
1/1/2022-12/31/2024 | 108,250 | 10,081,323 | ||||||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023
|
| 89,820
|
|
| 14,815,809
|
| ||||||||||||||||||||||||||||||||
Joseph R. Massaro |
2/28/2019 |
|
3,099 |
|
|
511,180 |
| 2/28/2020 | 3,574 | 332,847 | ||||||||||||||||||||||||||||
2/28/2020 | 7,147 | 1,178,898 | ||||||||||||||||||||||||||||||||||||
2/28/2021 | 11,066 | 1,825,337 | 2/28/2021 | 7,378 | 687,113 | |||||||||||||||||||||||||||||||||
1/1/2020-12/31/2022 | 48,239 | 7,956,941 | ||||||||||||||||||||||||||||||||||||
2/28/2022 | 14,433 | 1,344,145 | ||||||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023 | 33,194 | 3,091,357 | ||||||||||||||||||||||||||||||||||||
1/1/2022-12/31/2024 | 43,300 | 4,032,529 | ||||||||||||||||||||||||||||||||||||
Benjamin Lyon(1) | — | — | — | — | — | |||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023
|
| 33,194
|
|
| 5,475,350
|
| ||||||||||||||||||||||||||||||||
William T. Presley |
2/28/2019 |
|
1,860 |
|
|
306,807 |
| 2/28/2020 | 2,125 | 197,901 | ||||||||||||||||||||||||||||
2/28/2019 | 3,285 | 541,861 | ||||||||||||||||||||||||||||||||||||
2/28/2020 | 4,250 | 701,038 | 2/28/2021 | 2,951 | 274,827 | |||||||||||||||||||||||||||||||||
2/28/2021 | 4,426 | 730,069 | ||||||||||||||||||||||||||||||||||||
2/28/2021 | 2,344 | 386,643 | 2/28/2021 | 1,563 | 145,562 | |||||||||||||||||||||||||||||||||
1/1/2020-12/31/2022 | 9,561 | 1,577,087 | ||||||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023 | 13,278 | 2,190,206 | 2/28/2022 | 6,062 | 564,554 | |||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023 | 7,028 | 1,159,269 | ||||||||||||||||||||||||||||||||||||
Katherine H. Ramundo | 3/15/2021 | 4,275 | 705,161 | |||||||||||||||||||||||||||||||||||
3/15/2021 | 28,051 | 4,627,012 | ||||||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023
|
| 12,822
|
|
| 2,114,989
|
| ||||||||||||||||||||||||||||||||
Mariya K. Trickett | 2/28/2019 | 1,272 | 209,816 | |||||||||||||||||||||||||||||||||||
2/28/2020 | 2,898 | 478,025 | 1/1/2021-12/31/2023 | 13,278 | 1,236,580 | |||||||||||||||||||||||||||||||||
2/28/2021 | 4,101 | 676,460 | ||||||||||||||||||||||||||||||||||||
1/1/2020-12/31/2022 | 19,557 | 3,225,927 | 1/1/2021-12/31/2023 | 7,028 | 654,518 | |||||||||||||||||||||||||||||||||
1/1/2021-12/31/2023 | 12,302 | 2,029,215 | ||||||||||||||||||||||||||||||||||||
1/1/2022-12/31/2024 | 18,186 | 1,693,662 | ||||||||||||||||||||||||||||||||||||
Sophia M. Velastegui(7) | 2/28/2022 | 5,774 | 537,733 | |||||||||||||||||||||||||||||||||||
2/28/2022 | 18,042 | 1,680,251 | ||||||||||||||||||||||||||||||||||||
1/1/2022-12/31/2024 | 17,320 | 1,613,012 |
(1) | Mr. Lyon joined Aptiv on December 28, 2022 and did not receive any equity awards in 2022. |
(2) | To better understand the information in this table, we included the time-based RSU award grant dates and the performance periods of our performance-based RSU awards. |
This column shows the unvested time-based RSU awards as of December 31, |
The amount shown represents the market value of awards using a per share price of |
Performance-based RSUs presented at maximum performance levels. |
Of the awards reflected in this column, |
(7) | Ms. Velastegui received an additional RSU award which vests ratably over two years as part of her new hire package; her start date was February 1, 2022. |
49 | 2022 OPTION EXERCISES AND STOCK VESTED TABLE |
|
2021 OPTION EXERCISES AND STOCK VESTED TABLE
The following table sets forth information regarding vested stock awards during 20212022 for our NEOs. The value realized on vesting is based on the market price of the underlying shares on the date of vest.
Stock Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(2) | ||||||||||||
Kevin P. Clark
|
|
122,367
|
|
$
|
19,721,421
|
| 127,054 | $12,974,343 | ||||||||
Joseph R. Massaro
|
|
35,173
|
|
|
5,666,310
|
| 42,519 | 4,335,966 | ||||||||
Benjamin Lyon(1) | — | — | ||||||||||||||
William T. Presley
|
|
12,508
|
|
|
1,953,390
|
| 15,900 | 1,826,656 | ||||||||
Mariya K. Trickett
|
|
21,893
|
|
|
3,442,804
|
| ||||||||||
Sophia M. Velastegui(1) | — | — |
(1) | Mr. Lyon and Ms. |
(2) | The shares and values listed in these columns include time-based RSUs that vested on February 28, |
2022 NON-QUALIFIED DEFERRED COMPENSATION | 50 |
2022
|
2021 NON-QUALIFIED DEFERRED COMPENSATION
The Aptiv Deferred Compensation Plan (“DCP”), formerly the Salaried Retirement Equalization Savings Program (“SRESP”) is a non-qualified deferred compensation program available to a limited number of employees, including the NEOs. Under the DCP, participants receive Aptiv contributions in excess of the limits imposed upon the Aptiv Salaried 401(k) Plan by the Internal Revenue Code.
Employees who were eligible for DCP deferrals in 20212022 were permitted to defer additional income above $290,000, which is the$305,000 (the maximum income deferral level imposed uponeligible compensation limit under the Aptiv Salaried 401(k) Plan by the Internal Revenue Code in 2021,for 2022), into a DCP deferral account. They also received the following benefits:
• | All DCP-eligible employees receive an Aptiv contribution of 4% of their base salary and annual incentive award. This contribution occurs even if the individual does not elect to make deferrals into the DCP; and |
• | Eligible employees who made deferral contributions under the DCP received an additional Aptiv matching contribution of 50% on the individual’s voluntary deferrals up to 7% of the base salary and annual incentive award over the qualified plan limit, which constitutes a maximum contribution by Aptiv of 3.5% of each eligible employee’s base salary. |
INVESTMENT OPTIONS
Participants in the DCP may select investment options for their deferred amounts. The investment options consist of a
small selection of index mutual funds and do not offer any guaranteed or above-market returns.
Deferral Election ProcessDEFERRAL ELECTION PROCESS
The DCP deferral election process is conducted prior to the year in which eligible income is earned. For the 20212022 plan, deferral elections were required to be made no later than December 2020.2021. During this process, eligible employees were allowed to make deferral elections related to their 20212022 base salary and any annual incentive award based on 20212022 performance that would be scheduled to be paid in 20222023 (but no later than March 15, 2022)2023).
Eligible employees must also elect a distribution date for their deferred amounts. A base salary deferral must remain deferred for a minimum of one year, and any annual incentive deferraldeferrals must remain deferred for a minimum of two years.
All employee deferrals and Aptiv contributions are immediately vested.
The values displayed in the table below include contributions to the NEOs’ DCP accounts by the NEOs and by Aptiv in 2021,2022, as well as the aggregate balances of these accounts at the end of 2021.2022.
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals / | Aggregate Balance at Last FYE ($) | |||||||||||||||
Kevin P. Clark | $187,149 | $200,517 | $ | 252,934 | $1,331,488 | $ | 1,922,878 | |||||||||||||
Joseph R. Massaro | 61,105 | 82,612 | 101,613 | 148,691 | 606,296 | |||||||||||||||
William T. Presley | 52,784 | 56,555 | 4,170 | — | 177,037 | |||||||||||||||
Katherine H. Ramundo | 15,893 | 17,028 | 596 | — | 33,518 | |||||||||||||||
Mariya K. Trickett | 40,206 | 43,078 | 7,600 | 105,853 | 130,555 |
51 | 2022 NON-QUALIFIED DEFERRED COMPENSATION |
2022 NON-QUALIFIED DEFERRED COMPENSATION TABLE
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals / | Aggregate Balance at Last FYE ($) | |||||||||||||||
Kevin P. Clark | $137,452 | $147,270 | $(192,203 | ) | $924,243 | $1,091,154 | ||||||||||||||
Joseph R. Massaro | 38,400 | 66,600 | (75,218 | ) | 233,731 | 402,347 | ||||||||||||||
Benjamin Lyon | — | — | — | — | — | |||||||||||||||
William T. Presley | 45,308 | 48,544 | (20,336 | ) | — | 250,553 | ||||||||||||||
Sophia M. Velastegui | 26,775 | 28,688 | (718 | ) | — | 54,745 |
(1) | All of our NEOs, except for Mr. Lyon, elected to defer a portion of their salary and annual incentive awards as permitted under the DCP. Each NEO’s total salary and annual incentive award, including these deferred amounts, is reported in the |
(2) | Company contributions to the NEOs’ DCP accounts, along with contributions to the qualified Aptiv Salaried 401(k) Plan, |
(3) | Aggregate earnings represent change (including losses) in market value less any fee paid by the NEO, but none of these amounts are disclosed in the |
(4) | The withdrawals of our NEOs were made in accordance with the deferral election process described in this section. |
| Potential Payments Upon Termination or Change in Control
|
TERMINATION OR CHANGE IN CONTROL
Employment ArrangementsEMPLOYMENT ARRANGEMENTS
We have offer letters in place with all Aptiv NEOs. These offer letters describe our standard terms and conditions of employment and compensation and benefits provided to the individual. Mr. Clark’s offer letter also includes severance provisions, which provide for 18 months of base pay plus an amount equal to 1.5 times his annual incentive at target in the event he is terminated by the Company without cause.
Each executive who participates inreceives an equity grant under the annual Long-Term Incentive Plan equity grant must sign a grant agreement, as well as a non-interference and confidentiality agreement, described above in the “Compensation Discussion and Analysis” section. The non-interference agreement includes both non-compete and non-solicitation covenants.
Annual Incentive PlanANNUAL INCENTIVE PLAN
In the event of a change in control, each executive’s annual incentive target award will be prorated for the time period between the plan start date and the effective change in control date. A payment will also be calculated for that time period based on actual performance and compared to the prorated target, with the executive receiving the larger of the two values. Payment of the award will be made by March 15 of the calendar year following the year in which a change in control occurs.
A change in control under the annual incentive plan occurs if any of the following events occur:
• | A change in ownership or control of Aptiv resulting in any person or group other than Aptiv or a Aptiv employee benefit plan acquiring securities of Aptiv possessing more than 50% of the total combined voting power of Aptiv’s equity securities outstanding after such acquisition; |
If involuntarily terminated without “Cause” as defined below, each executive, including the NEOs, will also be eligible for a prorated portion of his or her annual incentive award, based on actual performance for the full performance period. The period used to determine the prorated award will be the beginning of the performance period to the individual’s termination date.
• | The majority of the board as of the date of the initial public offering is replaced by persons whose election was not approved by a majority of the incumbent board; or |
• | The sale of all or substantially all of the assets of Aptiv, in one or a series of related transactions, to any person or group other than Aptiv. |
LONG-TERM INCENTIVE PLAN
An equity award must be outstanding for one year in order to receive any benefit at termination. Awards outstanding for less than one year will be forfeited upon termination. Upon a voluntary resignation from Aptiv (other than for good reason), including retirement, any time-based RSUs that have not vested will be canceled. Upon a termination without cause, for good reason or due to death or disability, the time-based RSUs will be prorated over the period between the grant date and termination date. Any unvested pro-rata awards will be delivered at the next scheduled vesting date.
Upon a termination without cause, for good reason or due to retirement, death or disability, any outstanding performance-based RSUs will be prorated over the period between the grant date and termination date. The final performance payout will be determined based on actual performance at the end of the performance period and shares will be distributed at the time of the general distribution.
If an executive voluntarily departs (with the exception of the retirement and good reason provisions discussed above) or is terminated for cause, or in the event of any termination prior to the first anniversary of the grant date, all outstanding unvested equity awards will be canceled.
53 | POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL |
“Cause” is defined in the Long-Term Incentive Plan as:
• | Indictment for a felony or for any other crime that has or could be reasonably expected to have an adverse impact on performance of duties to Aptiv or on the business or reputation of Aptiv; |
• | The NEO being the subject of any order regarding a fraudulent violation of securities laws; |
• | Conduct in connection with employment or service that is not taken in good faith and has resulted or could reasonably be expected to result in material injury to the business or reputation of Aptiv; |
• | Willful violation of Aptiv’s Code of Ethical Business Conduct or other material policies; |
• | Willful neglect in the performance of duties for Aptiv, or willful or repeated failure or refusal to perform these duties; or |
• | Material breach of any applicable employment agreement. |
“Good Reason” is defined in the Long-Term Incentive Plan as: