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☒ | 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. |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Fellow Shareholders, On behalf of our Board of Directors, I want to thank you for your continued confidence and investment in TransDigm. TransDigm’s long-standing goal is to create long-term, sustainable shareholder value through our consistent operating strategy, “private-equity like” capital structure, and culture. Our disciplined, well-proven, value-based operating strategy provides stability through all phases of the aerospace cycle. This strategy along with prudent risk management, a focused acquisition strategy, sound corporate governance, and performance-based executive compensation programs drives long-term intrinsic value creation for our shareholders. Through this approach, we had an excellent fiscal 2023 and have much to celebrate, ranging from our operational and financial performance to continued refinements in our governance, compensation, and board structures. | |||||||||||
Business Highlights We delivered record results in fiscal 2023, including net sales of $6.6 billion, representing 21% growth over the comparable prior year period, and EBITDA As Defined of $3.4 billion, representing 28% growth from fiscal 2022. TransDigm’s growth in revenue and improvements in EBITDA As Defined were driven by our competitive strengths, execution of our value-driven operating strategy, and continued recovery of the commercial aerospace markets. We remained focused in fiscal 2023 on our value drivers, cost structure, and operational excellence. We also continued with strategic acquisitions in fiscal 2023 with the May 2023 acquisition of Calspan for approximately $725 million. Additionally, during fiscal 2023, we proactively refinanced approximately $10 billion of our debt representing about 50% of TransDigm’s gross debt balance as part of our continuous focus to optimize our capital structure mix of debt and equity. We had strong cash flow generation throughout fiscal 2023, ending the fiscal year with approximately $3.5 billion of cash on hand. Strengthening Our Board We believe it is important that we maintain a diverse, highly engaged, and skilled Board to provide valuable strategic guidance and perspectives to our management team. In the past year, as part of our ongoing Board refreshment and evaluation process, we announced that our Chief Operating Officer (“COO”), Jorge Valladares, would retire and join our Board. We are excited to have someone of his talents, perspective, and deep industry experience join our Board! Additionally, I am pleased to announce we have selected Robert Small, a current Board member, to serve as TransDigm’s first Lead Independent Director. We expect that the creation of this role, based partly on shareholder feedback, will further strengthen our Board leadership structure in several significant ways and should facilitate a heightened line of communication between shareholders and the Board. We believe the addition of the Lead Independent Director role will enhance the accountability, effectiveness, and independence of the Board. As we continue to look to the future of our Board, I'd be remiss if I did not also acknowledge the retirement of two of our directors in the past year, Mervin Dunn and John Staer. Mervin and John’s insight and leadership has been instrumental to TransDigm’s tremendous growth and ability to weather an industry-wide downturn event, coming out even stronger on the other side. We appreciate and thank them for their many years of service in supporting TransDigm. | |||||||||||
Commitment to Shareholder Engagement and Responsiveness Direct feedback received from our shareholders through ongoing engagement has always been an essential input to our corporate governance and executive compensation practices. In the past year, we have internally advanced these shareholder engagement efforts, creating a stronger, year-round engagement program to further enhance our investor communications and ensure that we are continually aware of investor sentiment. Feedback and suggestions gathered from our shareholder engagements helped our Board further assess and significantly refine our governance practices, compensation policies, and proxy disclosures in the past year. In the proxy statement, we enhanced the disclosures in our Compensation Discussion and Analysis (“CD&A”), providing clear descriptions and details of our compensation program. This past year, we reviewed and refreshed our compensation peer group to be used for 2024 executive compensation, with the assistance of a new independent compensation consultant, and we also refreshed our Compensation Committee, including the appointment of a new Compensation Committee Chair. Additionally of note, we have increased the stock ownership guidelines for our continuing Named Executive Officers (“NEOs”) and incorporated double-trigger change in control provisions in NEO option agreements. Both of these changes align us with market best practices. In summary, I am very proud of our hard work, discipline, and execution over the past year. I believe these efforts are reflected in our operating results and the value created for our shareholders. I am optimistic that the prevailing, favorable conditions for the commercial aerospace market will continue to evolve throughout 2024, and we anticipate that our consistent strategy will continue to provide the value you have come to expect from TransDigm. On behalf of the entire leadership team and Board, thank you for your continued support of TransDigm. Sincerely, Kevin M. Stein President and Chief Executive Officer | ||||||||
Dear Fellow Shareholders, In late 2023, I was honored to be selected by my fellow Board members to serve as TransDigm’s first Lead Independent Director (“LID”). We expect that the creation of this role, based in part on shareholder feedback, will further strengthen our Board leadership structure in several significant ways and should provide a further line of communication between shareholders and the Board. Our Board remains committed to building long-term value in TransDigm, and values input from our shareholders as TransDigm executes on our strategy. We believe that the addition of the LID role will enhance the accountability, effectiveness, and independence of the Board. There are numerous duties that we have established for this role, which are outlined on page 8. I look forward to fulfilling these commitments and further strengthening the relationship between TransDigm and its shareholders. On behalf of the Board, thank you for choosing to invest in TransDigm. Sincerely, Robert J. Small Lead Independent Director | |||||||||||
1 | To elect |
To ratify the |
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To transact such other business as may properly come before the annual meeting. |
Halle Martin
Secretary
June 1, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON JULY 12, 2022.
The Proxy Statement
http://www.transdigm.com/investor-relations/annual-proxy
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 12, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY The Proxy Statement and Proxy Card are available at http://www.transdigm.com/investor-relations/annual-proxy |
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2022 proxy statement.
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The record date for the annual meeting is May 18, 2022. Only stockholders of record as of the close of business on this date are entitled to vote at the annual meeting.
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You may vote online prior to the meeting by visiting www.proxyvote.com or calling 1-800-690-6903 and, in each case, entering the control number found in your notice of internet availability of proxy materials or, if you requested printed copies of the proxy materials, by phone or by mail. You may also vote in person at the annual meeting. For more detailed information, see the section entitled “Voting Procedures” on page 57.
2021 Business Highlights
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| Record Date January 12, 2024 |
Proposals | Recommendation of the Board | Page # | ||||||||||||
1 | Election of ten director nominees to our Board of Directors | FOR each of the nominees | ||||||||||||
2 | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2024 | FOR | ||||||||||||
3 | Approval, on an advisory basis, of the compensation of our NEOs | FOR |
Online You may vote online prior to the annual meeting by visiting www.proxyvote.com | By Phone You may vote by calling 1-800-690-6903 and, entering your control number found in your notice of internet availability of proxy materials | By Mail If you requested printed copies of the proxy materials, you may vote by mail | In Person You may also vote in person at the annual meeting |
TransDigm Group Incorporated | 2024 Proxy Statement 1 |
Proxy Summary |
Name | Age | Independent | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Executive Committee | |||||||||||||||||
David A. Barr | 60 | * | |||||||||||||||||||||
Jane M. Cronin | 56 | l | l* | ||||||||||||||||||||
Michael Graff | 72 | l* | l* | ||||||||||||||||||||
Sean P. Hennessy | 66 | ||||||||||||||||||||||
W. Nicholas Howley, Chairman | 71 | ||||||||||||||||||||||
Gary E. McCullough | 65 | l* | |||||||||||||||||||||
Michele L. Santana | 53 | l | l | ||||||||||||||||||||
Robert J. Small, LID | 57 | l | l | ||||||||||||||||||||
Kevin M. Stein, President and CEO | 57 | ||||||||||||||||||||||
Jorge L. Valladares III | 49 | ||||||||||||||||||||||
22024 Proxy Statement | TransDigm Group Incorporated |
Proxy Summary |
Net Sales in FY 2023 Up 21% $6,585 Million, Up 21% from FY 2022 ($5,429M) | Net Income from Continuing Operations Up 50% $1,299 Million, Up 50% from FY 2022 ($866M) | GAAP Earnings Per Share Up 65% $22.03 Per Share, Up 65% from FY 2022 ($13.40 per share) | ||||||||||||||||||
EBITDA As Defined (1) Up 28% $3,395 Million, Up 28% from FY 2022 ($2,646M) | Adjusted Net Income (1) Up 48% $1,477 Million, Up 48% from FY 2022 ($998M) | Adjusted Earnings Per Share (1)(2) Up 51% $25.84 Per Share, Up 51% from FY 2022 ($17.14 per share) | ||||||||||||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 3 |
Proxy Summary |
30-year Compound Annual Growth Rate (“CAGR”) | |||||
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EBITDA As Defined |
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Amidst another year of challenging commercial
Management’s expert execution allowed us to have the financial flexibility to focus on effective capital allocation through the purchase of Cobham Aero Connectivity (“CAC”) for $965 million in January 2021. CAC expands the Company’s platform of unique proprietary content with significant aftermarket exposure for the aerospace and defense industry. Since its acquisition, the CAC integration has progressed well. The Company also had strategic divestitures in fiscal 2021 to continue optimizing our portfolio. The businesses divested did not fit well with the Company’s long-term strategy and included Avista Inc., Racal Acoustics, Technical Airborne Components, ScioTeq and TREALITY Simulation Visual Systems. The acquisition of CAC and the strategic divestures in fiscal 2021 will help us to continue delivering the private equity-like returns our investors have come to expect from investment in our stock.
Executive Compensation Program
Our executive compensation program is designed with policies and practices and clear guiding principles that align the compensation of our named executive officers with our stockholders’ interests. While the overall design of the program has been fairly consistent, we have made a number of changes (highlighted below) in the last year aimed to respond to investor feedback.
42024 Proxy Statement | TransDigm Group Incorporated |
Proxy Summary |
CEO Pay Mix Target | Average Other NEO Pay Mix Target |
Base Salary | Target Annual Cash Incentive | Long-Term Equity Award |
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Fixed element of annual compensation
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Accounts for 10% or less of NEO total compensation | |||||||||||||||||
Modest increases for existing NEOs. Salary increases for new NEOs were more significant due to
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Target Annual Cash Incentive | |||||||||||||||||
Short-term cash incentive with variable payout
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Robust and equally weighted targets of 49.0% EBITDA As Defined Margin and $3.095B EBITDA As Defined Dollars | |||||||||||||||||
We exceeded maximum goals for both EBITDA As Defined Margin and EBITDA
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Long-term equity incentives in the form of performance-based stock options with multi-year vesting schedules
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Long-term equity awards remain 100% at-risk and
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The Compensation Committee has
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For a detailed discussion of our executive compensation program, see the section entitled “Executive Compensation” beginning on page 23.
Corporate Governance
Responsible Stewardship
TransDigm’s Board and governance structure is designed to foster principled actions, informed and effective decision-making, and appropriate monitoring of compliance and performance, assuring that the long-term interests of stockholders are being served. Directors are expected to take a proactive approach to their positions to ensure that TransDigm is committed to business success through the maintenance of high standards of responsibility and ethics.
Please see our 2021 Stakeholder Report located at www.transdigm.com/investor-relations/corporate-governance/ for more information about our environmental, social and governance practices.
Selected Areas of Board and Committee Oversight in 2021
TransDigm Group Incorporated | 2024 Proxy Statement 5 |
Proxy Summary |
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| Appointed a Lead Independent Director | We have appointed a LID to strengthen our governance practices and to align with market best practices. | ||||||||||||||
Committee Chair | We have appointed a new Compensation Committee Chair. | |||||||||||||||
Committee | We have refreshed the members of the Compensation Committee; 67% of the members are new to the Committee. | |||||||||||||||
| Enhanced Investor Outreach Program | We have implemented a formal year-round shareholder engagement program, increasing the number of shareholder feedback meetings by almost 250%. | ||||||||||||||
Feedback Disclosure | In connection with our enhanced investor outreach program, we have also enhanced our disclosure of shareholder feedback. | |||||||||||||||
| Enhanced Compensation Program Disclosure | We have enhanced our disclosure of our compensation program, including descriptions of the carry-forward and carry-back feature of the long-term incentive plan and overall program design. | ||||||||||||||
Discretion When Used | Going forward, we will include a more fulsome disclosure if the Compensation Committee exercises discretion. | |||||||||||||||
| Increased Stock Ownership Guidelines for Named Executive Officers | |||||||||||||||
| We have hired a new compensation consultant and significantly refreshed our peer group to help ensure it includes representative peers. | |||||||||||||||
Adopted Double-Trigger Change in Control Provision | We have incorporated double-trigger change in control provisions in option agreements for NEO option awards starting in fiscal 2024. |
Proxy Summary |
TransDigm Group Incorporated | 2024 Proxy Statement 7 |
Leadership Structure
TransDigm’s key governance documents, including our Corporate Governance Guidelines, are available at www.transdigm.com/investor-relations/corporate-governance. The Board met seven times during 2021. In fiscal 2021, independent directors met in executive session after each regularly scheduled Board meeting. Each member ofserving the Board who served during 2021 attended or participated in 75% or more of the aggregate of the total number of meetings of the Board and each committee of the Board on which such member served during 2021, except that Mr. Dunn attended less than 75% of the meetings. Mr. Dunn missed one Board meeting and two committee meetings as a result of a medical emergency that occurred on the date of the committee meetings and after he had already traveled to Cleveland for the meetings; he was still in the hospital for the Board meeting the following day. In addition, Mr. Dunn missed two telephonic meetings relating to TransDigm’s potential acquisition of Meggitt plc that were called on short notice.
The Board does not hold a meeting on the dateinterests of our annual stockholder meeting and we have not established a policy regarding director attendance at the stockholder meeting. Two directors attended the 2021 annual stockholder meeting.
Composition of the Board and its Committees
shareholders. The Board believes that its current leadership structure, in which the roles of Chairman and CEO are separated, best serves the Board’s ability to carry out its roles and responsibilities on behalf of TransDigm’s stockholders,shareholders, including its oversight of management. The Board also believes that the currentthis structure allows our CEO to focus on managingdrive the performance and strategic vision of TransDigm, while leveraging our Chairman’s experience with respect to capital allocation, acquisitions and the strategic vision and culture of TransDigm andability to drive accountability at the Board level. In 2023, TransDigm also added the role of LID to further foster the role of independent directors on the Board and strengthen the Board’s alignment with its shareholders.
The Board also determined that Messrs. Staer and Dunn, who retired from the Board in October 2023, were independent under the applicable rules of the NYSE.
•Review, advise, and set board meeting agendas and schedules, including to help assure that there is sufficient time allocated for discussion of all agenda items •Suggest to the Chairman agenda items for meetings of the Board and approve the agenda, as well as the substance and timeliness of information sent to the Board •Call and preside over executive sessions •Facilitate communications and act as a liaison between non-independent directors and the Chairman and management •Preside at board meetings in the absence of the Chairman | •Consult and communicate with major shareholders as requested •Lead the board and director evaluation process with support of the Chair of the Nominating and Corporate Governance Committee •Provide input on the design of the Board, including Board and committee composition, size, membership, leadership, structure, and oversight responsibilities, as part of the Board’s and the Nominating and Corporate Governance Committee’s periodic review of such matters •Act as a resource for, and counsel to, the Chairman | ||||||||||||||||
82024 Proxy Statement | TransDigm Group Incorporated |
Corporate Governance |
Independent | Audit | Compensation Committee |
Nominating and Corporate Governance Committee | Executive Committee | |||||||||||||
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David A. Barr |
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Jane M. Cronin | l | l* | |||||||||||||||
Michael Graff | l* | l* | |||||||||||||||
Sean P. Hennessy | |||||||||||||||||
W. Nicholas Howley, Chairman | |||||||||||||||||
Gary E. McCullough | l* | ||||||||||||||||
Michele L. Santana | l | l | |||||||||||||||
Robert J. Small, LID | l | l | |||||||||||||||
Kevin M. Stein, President and CEO | |||||||||||||||||
Jorge L. Valladares III | |||||||||||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 9 |
Corporate Governance |
4 members | 2 members | 4 members | |||||||||||||||||||||||||||||||||
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| Responsibilities The Audit Committee oversees issues regarding accounting and financial reporting processes and audits of TransDigm’s financial statements; assists the Board in monitoring the integrity of TransDigm’s financial statements, compliance with legal and regulatory requirements, independent auditor’s qualifications, and independence and the performance of TransDigm’s internal audit function and independent auditors; is responsible for the appointment, compensation, retention, and oversight of the work of TransDigm’s independent auditors; and provides a forum for consideration of matters relating to audit issues, enterprise risk management, and cybersecurity. Each Audit Committee member is independent under NYSE listing standards and as such term is defined in Rule 10A-3(b)(1). The Board has also determined that Mr. Hennessy, Ms. Santana, and Ms. Cronin each qualify as an “audit committee financial expert.” | |||||||||||||||||
Members Sean P. Hennessy (Chair) Jane M. Cronin Michele L. Santana | ||||||||||||||||||
Meetings 8 | ||||||||||||||||||
| Responsibilities The Compensation Committee discharges the Board’s responsibilities relating to compensation of TransDigm executives and directors; oversees TransDigm’s compensation and employee benefit plans and practices; and has sole discretion concerning administration of TransDigm’s stock option plans, including selection of individuals to receive awards, types of awards, the terms and conditions of the awards, and the time at which awards will be granted, other than awards to directors, which are approved by the full Board. To the extent permitted under NYSE listing standards and applicable law, the Compensation Committee may delegate its power and authority as it deems appropriate to subcommittees of no fewer than two members that it may form from time to time. The Compensation Committee may also delegate certain of its authority pursuant to the terms of TransDigm’s stock option plans to one or more officers or other employees of TransDigm, subject to NYSE listing standards, applicable law, and the terms of such plans. For a description of the Compensation Committee’s processes and procedures, including the roles of its independent compensation consultant and the CEO in support of the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” beginning on page 32. Each Compensation Committee member is independent under NYSE listing standards, and a “non-employee director” as defined in Section 16(b) of the Exchange Act. In determining independence, the Board affirmatively determined that none of the Compensation Committee members has a relationship with TransDigm that is material to his ability to be independent from management in connection with his duties on the Compensation Committee. | |||||||||||||||||
Members David A. Barr (Chair)* Gary E. McCullough* Robert J. Small *Appointed to the committee in 2023 | ||||||||||||||||||
Meetings 5 | ||||||||||||||||||
102024 Proxy Statement |
| Corporate Governance |
| Responsibilities The Nominating and Corporate Governance Committee’s duties and responsibilities include overseeing and assisting the Board in identifying and recommending nominees for election as directors; recommending to the Board qualifications for committee membership, structure, and operation; recommending to the Board directors to serve on each committee; developing and recommending to the Board corporate governance policies and procedures; providing oversight with respect to corporate governance; leading the Board in its annual performance review of the Board and management; overseeing TransDigm’s succession planning; and overseeing TransDigm’s ESG initiatives. Each Nominating and Corporate Governance Committee member is independent under NYSE listing standards. In accordance with its charter and TransDigm’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee has evaluated and recommended to the Board each of the nominees named in this proxy statement for election to the Board. | |||||||||||||||||
Members Gary E. McCullough (Chair) Jane M. Cronin* Michael Graff* Michele L. Santana *Appointed to the committee in 2023 | ||||||||||||||||||
Meetings 4 | ||||||||||||||||||
| Responsibilities The Executive Committee possesses the power of the Board during intervals between Board meetings. | |||||||||||||||||
Members W. Nicholas Howley (Chair) Michael Graff* Robert J. Small *Appointed to the committee in 2023 | ||||||||||||||||||
The Executive Committee held no formal meetings during fiscal 2023. | ||||||||||||||||||
| 2024 Proxy Statement 11 |
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Corporate Governance | ||||||||||||||
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Chair
The Audit Committee oversees issues regarding accounting and financial reporting processes and audits of TransDigm’s financial statements; assists the Board in monitoring the integrity of TransDigm’s financial statements, compliance with legal and regulatory requirements, independent auditor’s qualifications and independence and the performance of TransDigm’s internal audit function and independent auditors; is responsible for the appointment, compensation, retention and oversight of the work of TransDigm’s independent auditors; and provides a forum for consideration of matters relating to audit issues, enterprise risk management and cybersecurity. Each Audit Committee member is independent under NYSE listing standards and as such term is defined in Rule 10A-3(b)(1). The Board has also determined that Mr. Hennessy, Ms. Santana and Ms. Cronin each qualify as an “audit committee financial expert”. The Audit Committee met eight times during 2021.
The Compensation Committee discharges the Board’s responsibilities relating to compensation of TransDigm executives; oversees TransDigm’s compensation and employee benefit plans and practices; and has sole discretion concerning administration of TransDigm’s stock option plans, including selection of individuals to receive awards, types of awards, the terms and conditions of the awards and the time at which awards will be granted, other than awards to directors, which are approved by the full Board. For a description of the Compensation Committee’s processes and procedures, including the roles of its independent compensation consultant and the CEO in support of the Compensation Committee’s decision-making process, see the section entitled “Compensation Discussion and Analysis” beginning on page 23. Each Committee member is independent under NYSE listing standards, and a “non-employee director” as defined in Section 16(b) of the Securities Exchange Act of 1934. In determining independence, the Board affirmatively determined that none of the Compensation Committee members has a relationship with TransDigm that is material to his ability to be independent from management in connection with his duties on the Committee. The Compensation Committee met six times during 2021.
Nominating & Corporate Governance Committee
The Nominating & Corporate Governance Committee’s duties and responsibilities include overseeing and assisting the Board in identifying and recommending nominees for election as directors; recommending to the Board qualifications for committee membership, structure and operation; recommending to the Board directors to serve on each committee; developing and recommending to the Board corporate governance policies and procedures; providing oversight with respect to corporate governance; leading the Board in its annual performance review; overseeing TransDigm’s succession planning; and overseeing TransDigm’s environmental, social and governance initiatives. Each Nominating & Corporate Governance Committee member is independent under NYSE listing standards. The Nominating & Corporate Governance Committee met four times during 2021.
In accordance with its charter and TransDigm’s Corporate Governance Guidelines, the Nominating & Corporate Governance Committee has evaluated and recommended to the full Board each of the nominees named in this Proxy Statement for election to the Board.
The Executive Committee possesses the power of the Board of Directors during intervals between Board meetings. The Executive Committee held no formal meetings during fiscal 2021.
Separation of Chairman and CEO roles | We have a separate Chairman and CEO. | ||||||||
| We have appointed a LID to further alignment with shareholders and to align with market best practices. |
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Refreshed Committees | We have refreshed the membership of three of our four committees. 67% of the members of the Compensation Committee are new to the Compensation Committee. 50% of the members of the Nominating and Corporate Governance Committee are new. | ||||||||
Retirement | Directors are required to retire from the Board when they reach age 75 subject to waiver by the Board upon the recommendation of the Nominating | ||||||||
Proxy Access | |||||||||
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Annual Director Elections | All directors are elected annually for a one-year term. | ||||||||
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Prohibitions on | We prohibit short sales, transactions in derivatives, hedging, and pledging of TransDigm securities by all directors and | ||||||||
Stock Ownership Guidelines | |||||||||
We have robust equity ownership guidelines for our directors, officers, and management | |||||||||
Succession Planning | |||||||||
Our Board regularly reviews executive succession |
122024 Proxy Statement | TransDigm Group Incorporated |
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Our risk management program is designed to identify, assess, and prioritize our risk exposures across various timeframes, from the short term to the long term. Further, the enterprise risk management program and our disclosure controls and procedures are designed to appropriately escalate key risks to the Board as well as analyze potential risks for disclosure.
Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Full Board of Directors | |||||||||||
Corporate Strategy | l | |||||||||||||
Enterprise Risk Management | ● | ● | ||||||||||||
Cybersecurity | ● | ● | ||||||||||||
Legal and Regulatory Compliance | ● | ● | ||||||||||||
ESG | ● | ● | ||||||||||||
Diversity and Inclusion | ● | ● | ||||||||||||
Succession Planning | ● | ● | ● | |||||||||||
Human Capital Management | ● | ● | ● | |||||||||||
Corporate Governance | ● | ● |
TransDigm Group Incorporated | 2024 Proxy Statement 13 |
Corporate Governance |
2023.
Only the Audit Committee or the Board may waive a provision of the code with respect to a Senior Financial Officer. Any such waiver, or any amendment to the code, will be promptly disclosed on our website and as otherwise required by rule or regulation. There were no such waivers or amendments in 2021.
2023.
142024 Proxy Statement | TransDigm Group Incorporated |
Corporate Governance |
review, approval and ratification of such transactions are documented in the minutes of the Board meetings.
TransDigm publicly discloses substantial information aboutproxy statement.
We proactivelyhow we plan to continue to engage with stockholders and other stakeholdersshareholders moving forward.
TransDigm Group Incorporated | 2024 Proxy Statement 15 |
Corporate Governance |
•Identify target list of shareholders for proactive engagement and directly outreach to shareholders | •Hold active discussions with shareholders on the issues most important to them •Solicit feedback on program enhancements that TransDigm is considering | |||||||||||||||||||
•Implement selected changes and communicate how changes address shareholder feedback in the proxy statement | •Review feedback received during shareholder engagements •Identify priority areas and potential additional enhancements to consider | |||||||||||||||||||
162024 Proxy Statement | TransDigm Group Incorporated |
Corporate Governance |
What We Heard What We Did Shareholders would like us to enhance our engagement efforts throughout the year to discuss key compensation and governance issues. We have always appreciated shareholder perspectives and value the dialogue we have had with investors over the years. We recognize that in today's environment, our less formal approach to engagement is not enough. Over the past year, we have formalized our shareholder outreach program to systematically engage with a variety of investors and solicit feedback on key compensation and governance issues. We plan to build on these efforts in the coming years and look forward to the ongoing dialogue. Shareholders asked us to provide more disclosure in our proxy statement describing our approach to key governance topics. Over the past year we have reviewed and revised many key sections of our proxy statement to help our shareholders better understand our governance policies, practices, and procedures. We have added more detailed disclosure on investor priority topics including executive compensation and board composition and have included more direct communication from our directors. We will continue to review our disclosure practices to ensure we are meeting our shareholders' expectations. Shareholders expressed their concern over our single trigger change-in-control provision. We have updated our change-in-control provision for NEOs from single trigger to double trigger to align with investor preferences along with market practice. This change will be made on a go forward basis as NEOs receive new stock option grants. Shareholders voiced concern over the Compensation Committee's use of discretion in the Annual Incentive Plan. For any select discretion utilized for fiscal 2023 annual incentive pay outs, rationale was thoroughly provided within the CD&A. Going forward, the Board will continue to only use discretion in select situations and will provide detailed disclosure regarding their rationale for the decision.
TransDigm Group Incorporated | 2024 Proxy Statement 17 |
Corporate Governance |
What We Heard | What We Did | ||||||||||
Shareholders expressed their desire to see enhanced stock ownership guidelines for our CEO and NEOs and would like to see those guidelines expressed as a multiple of salary. | We have revised our stock ownership guidelines for our CEO and continuing NEOs. Our guidelines now align with market practice: 6x salary for the CEO and 3x salary for other continuing NEOs, met through a hybrid approach of 50% stock and 50% in-the-money vested stock options. | ||||||||||
Shareholders expressed their concern that the same Board members of the Compensation Committee have overseen a compensation plan that has received low Say-on-Pay support for multiple years in a row. | We have refreshed the committee membership of several Board committees (refer to ‘Board Composition’ section on page 2 of the proxy statement), including the Compensation Committee. David Barr, who previously served on the Nominating and Corporate Governance Committee, has assumed the role of Chair of the Compensation Committee. Additionally, Gary E. McCullough, who is also the Chair of the Nominating and Corporate Governance Committee, has joined the Compensation Committee. Michael Graff, the long-standing Chair of the Compensation Committee, has rotated off the Compensation Committee to join both the Executive Committee and the Nominating and Corporate Governance Committee. Mervin Dunn, a long-standing member of the Compensation Committee, retired from the Board in 2023. The Committee changes reflect our recognition of investors' concerns around accountability and ensure new perspectives and leadership. | ||||||||||
Several shareholders expressed an interest in better understanding our peer group and the decision process behind the peer group compilation. | With the help of external compensation advisors, we reviewed, and significantly revised our peer group. We evaluated companies for inclusion or deletion on several criteria, resulting in an almost 60% turnover in composition. This new peer group is being used starting with our fiscal 2024 compensation plan. We have provided a detailed explanation of our process in the CD&A of this proxy statement. | ||||||||||
A few shareholders noted that bringing in new advisors to offer fresh perspectives could be an opportunity for us. | Following a several months process, we hired Exequity to serve as our new compensation consultant. They, along with other external governance, and compensation experts, have helped us better understand our shareholders' priorities and identify additional ways to be responsive. | ||||||||||
Shareholders asked us to adopt a clawback policy. | We adopted a clawback policy in 2023 that satisfies the regulatory requirements put in place by the SEC and NYSE. | ||||||||||
Shareholders questioned the use of the carry-forward/carry-back feature in our compensation plan. | We recognize that the carry-forward/carry-back feature in our plan is unique to TransDigm. The Compensation Committee believes it is important to retain this feature of our equity awards, and additional disclosure in the CD&A has been included in this proxy statement to better explain how this feature works and its value in being maintained for the equity awards. | ||||||||||
Some shareholders expressed concern over perceived misalignment between pay and performance, and a few shared that they would like to see us adopt a relative performance metric in our long-term incentive plan to drive better alignment. | Our long-term incentive plan is 100% performance-based stock options, which we believe ultimately drives alignment between the overall amount paid to our CEO and the change in value for our shareholders. Further, more than 90% of NEO total compensation is at-risk and performance-based. We believe our emphasis on performance-based compensation drives results for TransDigm and its shareholders. We have received varying feedback over the years on the exact performance metrics that investors prefer to see in long-term incentive plans. Some investors prefer relative metrics, a common metric referenced being relative TSR, while others believe operational metrics are a more appropriate measure. We have an AOP metric, with a five-year measurement period, that we believe is the best reflection of TransDigm’s performance against our long-term strategy as it is based on actual financial results, not the whims of the market. We will continue to solicit feedback on our approach and evaluate how to best incent our executives to drive our performance for TransDigm. | ||||||||||
Many shareholders stated that they would like to see a greater degree of responsiveness given the results of our Say-on-Pay vote in 2023. | We believe that the collective changes we have made, articulated in this table and throughout this proxy statement, demonstrate that our Board took their duty to be responsive to shareholder feedback very seriously. Understanding and addressing shareholder priorities is an ongoing process for our Board. We will continue to solicit feedback and address concerns throughout the year, including as part of our formal shareholder engagement program. | ||||||||||
In addition to compensation-focused feedback and changes, we also discussed several governance priorities with investors. |
182024 Proxy Statement | TransDigm Group Incorporated |
Corporate Governance |
What We Heard | What We Did | ||||||||||
Some shareholders suggested that, given our current Board leadership structure, we should consider appointing a Lead Independent Director. | The Board has appointed Mr. Small as the LID. He will work closely with our Chairman, Mr. Howley, to support the Board in guiding TransDigm forward. His responsibilities in this role are further described on page 8 of this proxy statement. | ||||||||||
Shareholders expressed a general concern over the tenure of our Board and certain directors. | Our Board, led by the Nominating and Corporate Governance Committee, regularly evaluates its "fit-for-purpose." In this process, they seek to identify if the Board as a whole consists of the right skills and expertise to oversee the company today and into the future. This process led to the appointment of Jane M. Cronin in 2021 and Jorge L. Valladares III in 2023. In 2023, Mervin Dunn and John Staer, two long-serving directors, retired from our Board. With these changes, the average tenure of our Board is approximately ten years. | ||||||||||
Shareholders voiced their focus on Board diversity and requested greater disclosure on the diversity of our Board. | We appreciate shareholders' focus on diversity; it is one of the criteria that the Nominating and Corporate Governance Committee consider when searching for director candidates. Our Board is currently 40% diverse, as described on page 2 of this proxy statement. |
TransDigm Group Incorporated | 2024 Proxy Statement 19 |
TransDigm’s
Each Board member was chosen to beotherwise will not serve as a director at the time of the annual meeting, the proxy holders may vote for any nominee becausedesignated by the Nominating & Corporate Governance Committeepresent Board to fill the vacancy.
Name | Age | Independent | AC | CC | N & CGC | EC | ||||||||||||||||||||||||||
The Board of Directors recommends that the shareholders vote FOR each of the ten director nominees for election set forth below. | ||||||||||||||||||||||||||||||||
David A. Barr | 60 | * | ||||||||||||||||||||||||||||||
Jane M. Cronin | 56 | l | l* | |||||||||||||||||||||||||||||
Michael Graff | 72 | l* | l* | |||||||||||||||||||||||||||||
Sean P. Hennessy | 66 | |||||||||||||||||||||||||||||||
W. Nicholas Howley, Chairman | 71 | Our Nominees David A. Barr Jane M. Cronin Michael Graff Sean P. Hennessy W. Nicholas Howley (Chairman) Gary E. McCullough Michele L. Santana Robert J. Small (LID) Kevin M. Stein (President and CEO) Jorge L. Valladares III | ||||||||||||||||||||||||||||||
Gary E. McCullough | 65 | l* | ||||||||||||||||||||||||||||||
Michele L. Santana | 53 | l | l | |||||||||||||||||||||||||||||
Robert J. Small, LID | 57 | l | l | |||||||||||||||||||||||||||||
Kevin M. Stein, President and CEO | 57 | |||||||||||||||||||||||||||||||
Jorge L. Valladares III | 49 | |||||||||||||||||||||||||||||||
AC: Audit Committee; CC: Compensation Committee; N & CGC: Nominating and Corporate Governance Committee; EC: Executive Committee Chair lMember * Appointed to the committee in 2023 | ||||||||||||||||||||||||||||||||
202024 Proxy Statement | TransDigm Group Incorporated |
Proposal One |
The Nominating & Corporate Governance Committee recommends potential director candidates to the Board. The Nominating &and Corporate Governance Committee identifies nominees by first determining whether current Board members are willing to continue in service. If any Board member does not wish to continue to serve, or if the Nominating &and Corporate Governance Committee or Board decides not to nominate a member for re-election, then the Nominating &and Corporate Governance Committee initially identifies the desired skills and experience in light of the criteria outlinedduties and responsibilities required of a member of our Board and the Board’s oversight role described above. The Nominating &and Corporate Governance Committee then establishes potential director candidates from recommendations from the Board, senior management, stockholdersshareholders, and third parties. The Nominating &and Corporate Governance Committee may retain a search consultant to supplement potential Board candidates if it deems it advisable. In making its recommendations, consistent with the Nominating &and Corporate Governance Committee’s charter, the Committee considers each candidate’s independence, character, ability to exercise sound judgment and demonstrated leadership, as well as diversity, age,
strategic and financial skills, and experience, in the context of the needs of the Board as a whole. The Nominating &and Corporate Governance Committee’s charter requires the selection of prospective Board members with personal and professional integrity who have demonstrated appropriate ability and judgmentjudgment. The Nominating and whom theCorporate Governance Committee believesalso evaluates whether Board member nominees will be effective, in conjunction with the other Board members, in collectively serving the long-term interests of TransDigm and its stockholders. There are no other stated criteria for director nominees.shareholders. However, the Nominating &and Corporate Governance Committee’s charter and our Corporate Governance Guidelines set forth the Board’s commitment to seek out qualified women and minorities to include in the pool from which Board nominees are chosen. In 2021, the Nominating & Corporate Governance Committee,
We are committed to seeking qualified female and minority candidates for the Board. 4 of the last 5 Board members added to the Board were either a female or a minority. | ||||||||
cybersecurity.
TransDigm Group Incorporated | 2024 Proxy Statement 21 |
Proposal One |
Areas of Expertise | ||||||||||||||||||||||||||||||||
Accounting/Audit/Financial Experience | ||||||||||||||||||||||||||||||||
Global Business Experience | ||||||||||||||||||||||||||||||||
Mergers & Acquisitions | ||||||||||||||||||||||||||||||||
Risk Management | ||||||||||||||||||||||||||||||||
Corporate Governance | ||||||||||||||||||||||||||||||||
Senior Leadership Experience | ||||||||||||||||||||||||||||||||
Operations and Business Strategy | ||||||||||||||||||||||||||||||||
Cybersecurity | ||||||||||||||||||||||||||||||||
Human Capital Management |
1 - Expert | 2 - Proficient | 3 - Competent | ||||||
A person who has a comprehensive and authoritative knowledge of or skill in a particular area | Depth of understanding of discipline and area of practice; a thorough competence derived from training and practice | Having requisite or adequate ability |
Among our 11 nominees for election to the Board, two self-identify as women and one self-identifies as an individual from an underrepresented community.
222024 Proxy Statement | TransDigm Group Incorporated |
Proposal One |
| David A. Barr
Mr. Barr leverages his private equity leadership experience
He previously served on the board of Aramark, a food service and facilities services provider, helping guide them through their transition from private to public ownership. Mr. Barr has considerable experience in evaluating and establishing executive compensation at both public and private companies. Former Public Company Directorships In The Last Five Years Builders FirstSource, Inc., a
Selected Directorships And Memberships Good Shepard Services Board of | |||||||
David A. Barr | ||||||||
Age 60 |
| |||||||
Director Since 2017 | ||||||||
Committees Compensation (Chair) | ||||||||
Jane Ms.
also has experience with acquisitions and integration, including The Sherwin-Williams Company acquisition of Valspar. Selected Directorships And Memberships Providence House | ||||||||
Jane M. Cronin | ||||||||
Age 56 | ||||||||
Director Since 2021 | ||||||||
Committees Audit Nominating and Corporate Governance | ||||||||
| 2024 Proxy Statement 23 |
Proposal One |
Michael Graff has been
|
Mr. Graff brings
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Michael Graff | ||||||||||||
Age 72 | ||||||||||||
Director Since 2003 | ||||||||||||
Committees Nominating and Corporate Governance Executive | ||||||||||||
| Sean P. Hennessy As a
His experience of navigating various financial economic cycles has been and continues to be a valuable resource for TransDigm. Other Current Public Company Directorships Perimeter Solutions, SA,
2021. Selected Directorships And Memberships St. Edward High School Sisters of Charity Foundation of Cleveland University Hospitals Miracle Fund | |||||||
Sean P. Hennessy | ||||||||
Age 66 | ||||||||
Director Since 2006 | ||||||||
Committees Audit (Chair) | ||||||||
242024 Proxy Statement | TransDigm Group Incorporated |
Proposal One |
W.
As a TransDigm co-founder, Mr. Howley brings to the Board an extensive understanding of TransDigm’s business. Mr. Howley has played an integral role in TransDigm’s establishment and implementation of its core strategy on an ongoing basis and in its rapid and strategic growth.
Other Current Public Company Directorships Perimeter Solutions, SA, an NYSE-listed manufacturer of highly engineered forest fire retardant and suppressant chemicals and equipment and oil additives and operator of forest fire fighting stations, from November
2021. Former Public Company Directorships In The Last Five Years EverArc Holdings Limited, a cash shell company listed on the London Stock Exchange, through November 2021 when it merged with Perimeter Solutions, SA. Selected Directorships And Memberships Cleveland Clinic Cristo Rey Network Drexel Education Fund Howley Foundation, Chair Rock and Roll Hall of Fame Drexel University St. Joseph Preparatory School | ||||||||
W. Nicholas Howley Chairman | ||||||||
Age 71 | ||||||||
Director Since 1993 | ||||||||
Committees Executive (Chair) | ||||||||
| Gary E.
Mr. McCullough brings to the Board public company leadership and
Other Current Public Company Directorships Commercial Metals Company, an NYSE-listed manufacturer, recycler, fabricator and provider of steel and metal products and related materials and services since October
2021. Selected Directorships And Memberships Rush Oak Park Hospital, Chair Rush University Medical Center Wright State University Foundation | |||||||
Gary E. McCullough | ||||||||
Age 65 |
| |||||||
Director Since 2017 | ||||||||
Committees Compensation Nominating and Corporate Governance (Chair) | ||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 25 |
Proposal One |
Michele L. Santana has been Chief Financial Officer of Bedrock Manufacturing Company since November 2021. Bedrock Manufacturing Company is an investment firm Ms. Santana brings to the Board diverse financial and business expertise
Selected Directorships And Memberships Akron Zoo International Women’s Forum, Member Women Corporate Directors, Member | ||||||||
Michele L. Santana | ||||||||
Age 53 | ||||||||
Director Since 2018 | ||||||||
Committees Audit Nominating and Corporate Governance | ||||||||
| Robert J. Small has been a Managing Director of Berkshire Partners LLC, a private equity investment firm, since 2000 and initially joined the firm in 1992. Since its inception in 2007, Mr. Small has been a Managing Director of Stockbridge, the public equity business unit of Berkshire Partners LLC that manages a concentrated portfolio seeking attractive long-term investments. The firm’s Stockbridge and Private Equity teams frequently collaborate and leverage their collective industry expertise across sectors. Mr. Small brings to the Board
Selected Directorships And Memberships Boston Children’s Hospital Trust Boys and Girls Clubs of Boston Kingsley Montessori School | |||||||
Robert J. Small Lead Independent Director | ||||||||
Age 57 |
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Director Since 2010 | ||||||||
Committees Compensation Executive
| ||||||||
262024 Proxy Statement | TransDigm Group Incorporated |
Proposal One |
Kevin M. Stein has been Chief Executive Officer of TransDigm since April 2018 and President since January 2017. He also served as Chief Operating Officer from January 2017 Mr. Stein was appointed to the Board in connection with his promotion to Chief Executive
Other Current Public Company Directorships Axalta Coating Systems Ltd., a NYSE listed manufacturer specializing in coatings in a wide variety of
industrial applications, material, and sectors, including automotive paints. Former Public Company Directorships In The Last Five Years Perimeter Solutions, SA, Selected Directorships And Memberships Cleveland Institute of Music Gilmour Academy Greater Cleveland Sports Commission | ||||||||
Kevin M. Stein | ||||||||
Age 57 | ||||||||
Director Since 2018 | ||||||||
Committees None | ||||||||
Jorge L. Valladares III served as the Chief Operating Officer of TransDigm from April 2019 until his retirement in September 2023. Prior to that, Mr. Valladares served as Chief Operating Officer of the Power & Control Segment from June 2018 to March 2019, Executive Vice President from October 2013 to May 2018, as President of AvtechTyee, Inc. (formerly Avtech Corporation), a wholly-owned subsidiary of TransDigm Inc., from 2009 to 2013, and as President of AdelWiggins Group, a division of TransDigm Inc., from 2008 to 2009. Prior to that Mr. Valladares served in a variety of senior leadership, operations, sales and marketing, and engineering roles at AdelWiggins Group, since 1997. Mr. Valladares was appointed to the Board because of his all-encompassing and deep knowledge of TransDigm’s business. Specifically, Mr. Valladares has extensive knowledge of the operations of TransDigm’s industry at large. | ||||||||
Jorge L. Valladares III | ||||||||
Age 49 | ||||||||
Director Since 2023 | ||||||||
Committees None | ||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 27 |
Proposal One |
• An annual retainer fee of $75,000, with such fee being paid, at the option of each director, either in cash or shares of TransDigm’s common stock, paid semi-annually in arrears (typically in March and September).arrears. No additional Board or committee meeting fees were paid.
• An additional retainer of $15,000 to the chairmanchair of the Audit Committee, paid semi-annually in arrears.
• An additional retainer of $5,000 to the chairmenchairs of the Compensation and the Nominating &and Corporate Governance Committees, paid semi-annually in arrears.
Historically, every two years, TransDigm made a
Dividend equivalentsThese options are paid on vested options duesubject to the Company’s unique capital allocation strategy of paying infrequentsame rigorous vesting criteria as our NEOs. Performance metrics and large extraordinary dividends. Dividend equivalentsvesting criteria are discusseddescribed below in greatermore detail on page 35. The Board has recently determined that for any future— see “Compensation Discussion and Analysis – 2023 NEO Compensation – 2023 Equity Based Incentives.”
plans in connection with a capital adjustment event. For special dividends declared prior to 2022, directors still receive dividend equivalent payments (“DEPs”) related to such special dividends as the options outstanding at the time of those special dividends vest. Those payments will cease after fiscal 2024.
Director Ownership Requirements
282024 Proxy Statement | TransDigm Group Incorporated |
Proposal One |
Name | Fees Earned or Paid In Cash (1) | Stock Awards(1) | Option Awards | All Other Compensation(2) | Total | |||||||||||||
David Barr | $562 | $74,438 | - | $78,250 | $153,250 | |||||||||||||
Jane Cronin(3) | 361 | 18,389 | - | - | 18,750 | |||||||||||||
Merv Dunn | 5,562 | 74,438 | - | 78,250 | 158,250 | |||||||||||||
Michael Graff | 5,562 | 74,438 | - | 78,250 | 158,250 | |||||||||||||
Sean Hennessy | 15,562 | 74,438 | - | 78,250 | 168,250 | |||||||||||||
Raymond Laubenthal | 562 | 74,438 | - | 78,250 | 153,250 | |||||||||||||
Gary E. McCullough | 562 | 74,438 | - | 78,250 | 153,250 | |||||||||||||
Michele Santana | 562 | 74,438 | - | 55,438 | 130,438 | |||||||||||||
Robert Small | 562 | 74,438 | - | 78,250 | 153,250 | |||||||||||||
John Staer | 75,000 | - | - | 78,250 | 153,250 |
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LOOKING FORWARD…Name
Paid In Cash (2)
Compensation(4) Total
($) David A. Barr 870 74,130 207,624 19,500 302,124 Jane M. Cronin 870 74,130 207,624 — 282,624 75,000 — 207,624 19,500 302,124 Michael Graff 5,870 74,130 207,624 19,500 307,124 Sean P. Hennessy 90,000 — 207,624 19,500 317,124 W. Nicholas Howley — — — — — Gary E. McCullough 80,000 — 207,624 19,500 307,124 Michele L. Santana 870 74,130 207,624 19,500 302,124 Robert J. Small 870 74,130 207,624 19,500 302,124 75,000 — 207,624 19,500 302,124
TransDigm Group Incorporated | 2024 Proxy Statement 29 |
Proposal One |
Amount and Nature of Beneficial Ownership(1) | |||||||||||||||||
Beneficial Owner | Shares (#) | Shares Subject to Options Currently Exercisable or Exercisable within 60 Days (#) | Total Number of Shares (#) | Percentage of Class (%) | |||||||||||||
David A. Barr (2) | 32,002 | 8,334 | 40,336 | * | |||||||||||||
Jane M. Cronin | 556 | 491 | 1,047 | * | |||||||||||||
Michael Graff (3) | 18,175 | 8,898 | 27,073 | * | |||||||||||||
Sean P. Hennessy | 33,935 | 8,378 | 42,313 | * | |||||||||||||
W. Nicholas Howley (4) | 30,000 | 785,970 | 815,970 | 1.45 | % | ||||||||||||
Gary E. McCullough | 915 | 7,591 | 8,506 | * | |||||||||||||
Michele L. Santana | 607 | 5,191 | 5,798 | * | |||||||||||||
Robert J. Small (5) | 1,105,129 | 15,719 | 1,120,848 | 2.02 | % | ||||||||||||
Kevin M. Stein (6) | 8,158 | 213,500 | 221,658 | * | |||||||||||||
Sarah L. Wynne (7) | 710 | 32,810 | 33,520 | * | |||||||||||||
Jorge L. Valladares III (8) | 11,000 | 179,300 | 190,300 | * | |||||||||||||
Michael J. Lisman | 2,309 | 142,620 | 144,929 | * | |||||||||||||
Joel B. Reiss | 3,600 | 172,350 | 175,950 | * | |||||||||||||
Jessica L. Warren | 50 | 9,630 | 9,680 | * | |||||||||||||
All directors and executive officers as a group (14 persons) (9) | 1,247,145 | 1,590,782 | 2,837,927 | 4.96 | % |
302024 Proxy Statement | TransDigm Group Incorporated |
This section describes the experience and qualifications of named executive officers,our NEOs, other than Mr. Howley and Mr. Stein.
Sarah L. Wynne Sarah L. Wynne, 50, was appointed Chief Financial Officer (“CFO”) in |
Michael J. Lisman Michael J. Lisman, 41, was appointed Co-Chief Operating Officer (“Co-COO”) in May 2023. Prior to that, Mr. Lisman served as CFO from July 2018 to May 2023 and Executive Vice President |
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This section describes the executive compensation of our named executive officers and includes the required compensation tables.
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Compensation Discussion and Analysis
Introduction
The 2021 compensation of our named executive officers appropriately reflects and rewards their significant contributions to TransDigm’s strong performance in another year that presented unique and unprecedented challenges for our executive team to manage. This Compensation Discussion and Analysis explains the guiding principles and practices upon which our executive compensation program is based and the compensation paid to our named executive officers:
Kevin Stein, President and Chief Executive Officer
Michael Lisman, Chief Financial Officer
Jorge L. Valladares III, Chief Operating Officer
Sarah Wynne, Chief Accounting Officer
Robert Henderson, former Vice Chairman
W. Nicholas Howley, former Executive Chair
Mr. Howley transitioned from Executive Chair to non-executive Chair in August 2021 as described elsewhere in this Compensation Discussion and Analysis; Mr. Howley was no longer an employee after such date. Mr. Henderson retired as Vice Chairman in December 2021.
2021 Business Highlights
Throughout fiscal 2021, TransDigm continued to see a rebound in our commercial aerospace end markets. While there is still a considerable amount of progress that needs to take place before the commercial aerospace industry returns to normalcy and stability, we were encouraged by the progression of the commercial aerospace market recovery in the fiscal year. The widespread roll-out of the COVID-19 vaccine, the loosening of travel restrictions and reopening of international borders increased demand for commercial travel across the globe. In fiscal 2021, our commercial end markets recovered from pandemic lows and continued to trend upward as the year progressed.
Even with the encouraging signs of the commercial aerospace recovery, fiscal 2021 was a challenging year due to the ongoing impacts of the pandemic. Air travel remained depressed compared to pre-COVID levels of activity and continued to have an adverse impact on our financial results. However, the recovery of the commercial aerospace industry and our commercial aerospace end markets is expected to continue progressing during 2022 barring any significant disruption to the commercial aerospace industry.
Joel B. Reiss Joel B. Reiss, 53, was appointed Co-COO in May 2023. Prior to that, Mr. Reiss served as Executive Vice President from October 2015 to May 2023. Mr. Reiss also served as President of Hartwell Corporation, a wholly-owned subsidiary of TransDigm Inc., from July 2012 to October 2015; President of Skurka Aerospace, a wholly-owned subsidiary of TransDigm Inc., from July 2010 to July 2012; and Director of Operations of Adams Rite Aerospace, a wholly-owned subsidiary of TransDigm Inc., from July 2000 to July 2010. |
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Jessica L. Warren Jessica L. Warren, 41, was appointed General Counsel, Chief Compliance Officer and Secretary in February 2023. Prior to that, Ms. Warren served as Associate General Counsel of TransDigm from December 2018 to February 2023. Prior to joining TransDigm as Associate General Counsel, Ms. Warren maintained a private legal practice focusing on providing services to technology-driven businesses, including providing counsel to TransDigm on disputes, environmental matters, intellectual property, and a variety of other matters. Ms. Warren also served as General Counsel of Thogus Products Company from October 2014 to July 2016. |
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TransDigm Group Incorporated | 2024 Proxy Statement 31 |
Dear Fellow Shareholders, Fiscal 2023 was a strong year for TransDigm, as the commercial aerospace market continued to recover from the impacts of the pandemic and our disciplined and consistent operating strategy drove our exceptional results. Despite this success, as a Compensation Committee, we saw room for improvement after in our 2023 annual advisory vote on executive compensation (also known as “Say-on-Pay”). Each year, the Compensation Committee considers the results of the Say-on-Pay vote, shareholder feedback, our performance, and market practices as it reviews the effectiveness and competitiveness of our executive compensation program. In 2023, our Say-on-Pay vote received support from approximately 51% of votes cast by shareholders – approximately the same level of support as in the prior year. Our Compensation Committee appreciated the need to take action in response to this level of support. To address this, following the 2023 Annual Meeting, we reached out to top TransDigm shareholders to solicit feedback and input. Many of these engagements included the members of our Board and executive team. We reached out to 34 of our top 36 shareholders, representing over 70% of our shares outstanding. Twenty-five of these shareholders, representing approximately 62% of our shares outstanding, elected to engage with TransDigm. Four shareholders elected to deliver feedback via email correspondence and five shareholders did not respond to our requests for engagement. The primary focus of these conversations with shareholders was executive compensation, but we also appreciated the opportunity to cover additional environmental, social, and governance topics. We heard clearly from our shareholders that there were opportunities to improve certain aspects of our executive compensation approach. Further details regarding our shareholder outreach process and the feedback received can be In response to shareholder feedback, we made the following changes: •Appointed a LID •Refreshed the Compensation Committee Chair and Members •Enhanced our Shareholder Outreach Program •Increased Stock Ownership Guidelines for NEOs •Enhanced Compensation Program Disclosure •Refreshed our Peer Group for 2024 NEO Compensation •Incorporated a Double-Trigger Change in Control Provision in NEO option agreements starting in fiscal 2024 •Enhanced Disclosure of Discretion When Used The The Compensation Committee sincerely appreciates our shareholders’ constructive feedback, and we look forward to continued engagement and dialogue over in future years. As you consider your vote, we encourage you to review the information included in this CD&A. Your feedback is important and valuable to TransDigm and its Board. Sincerely, The Compensation Committee David A. Barr (Chair) Gary E. McCullough Robert J. Small | ||||||||
322024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
Compensation Committee Report The Compensation Committee has reviewed and discussed with TransDigm’s management the CD&A set forth below. Based on the review and discussions, the Compensation Committee recommended to the |
| ||
Name | Position | |||||||
Kevin M. Stein | President, Chief Executive Officer, and Director | |||||||
Sarah L. Wynne | Chief Financial Officer | |||||||
Jorge L. Valladares III | Former Chief Operating Officer and Director | |||||||
Michael J. Lisman | Co-Chief Operating Officer | |||||||
Joel B. Reiss | Co-Chief Operating Officer | |||||||
Jessica L. Warren | General Counsel, Chief Compliance Officer, and Secretary |
TransDigm Group Incorporated | 2024 Proxy Statement 33 |
Executive Compensation |
Net Sales in FY 2023 Up 21% $6,585 Million, Up 21% from FY 2022 ($5,429M) | Net Income from Continuing Operations Up 50% $1,299 Million, Up 50% from FY 2022 ($866M) | GAAP Earnings Per Share Up 65% $22.03 Per Share, Up 65% from FY 2022 ($13.40 per share) | ||||||||||||||||||
EBITDA As Defined (1) Up 28% $3,395 Million, Up 28% from FY 2022 ($2,646M) | Adjusted Net Income (1) Up 48% $1,477 Million, Up 48% from FY 2022 ($998M) | Adjusted Earnings Per Share (1)(2) Up 51% $25.84 Per Share, Up 51% from FY 2022 ($17.14 per share) | ||||||||||||||||||
•21% increase in net sales to $6,585 million •50% increase in income from continuing operations to $1,299 million •65% increase in earnings per share from continuing operations of $22.03 •28% increase in EBITDA As Defined of $3,395 million •Increased EBITDA As Defined Margin to •Strong operating cash flow generation of $1.4 billion and •Acquisition and integration of Calspan Corporation, successfully deploying approximately $725 million in capital •Refinanced approximately $10 billion of debt, representing approximately 50% of TransDigm’s 2023 gross debt, extending the maturity dates of our debt to optimize our capital structure mix of debt and equity | ||||||||||||||
61% Increase in share price in fiscal 2023 | ||||||||||||||
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342024 Proxy | TransDigm Group Incorporated |
Amidst another year of challenging commercial aerospace market conditions given
Executive Compensation |
Management’s expert execution allowed us to have the financial flexibility to focus on effective capital allocation through the purchase of Cobham Aero Connectivity (“CAC”) for $965 million in January 2021. CAC expands the Company’s platform of unique proprietary content with significant aftermarket exposure for the aerospace and defense industry. Since its acquisition, the CAC integration has progressed well. The Company also had strategic divestitures in fiscal 2021 to continue optimizing our portfolio. The businesses divested did not fit wellcompensation model. Our compensation program strongly aligns our NEOs with the Company’s long-term strategyinterests of our shareholders. Although we have made some adjustments to our compensation program, our philosophy remains unchanged. As further discussed on page 41, over 94% of our CEO’s compensation is performance-based. The other NEOs are similarly aligned as over 90% of their compensation is performance-based.
18% Net Sales CAGR Since TransDigm’s Formation 137x Growth in Net Sales Since TransDigm’s Formation | |||||
21% EBITDA As Defined CAGR Since TransDigm’s Formation 339x EBITDA As Defined Growth Since TransDigm’s Formation EBITDA As Defined Margin has improved to almost 52% in fiscal 2023 compared to 20% in fiscal 1993. | |||||
TransDigm Group Incorporated | 2024 Proxy Statement 35 |
Executive Compensation |
FY 1993 – 2021 Revenue compound We believe that obtaining this feedback is important, particularly considering our Say-on-Pay performance. In 2023, 51% of our shareholders who voted supported our annual growth rate (CAGR) 18%
FY 1993 – 2021 EBITDA As Defined CAGR 21%
EBITDA as Defined Margin expansion from 20%advisory Say-on-Pay proposal to almost 50% pre-pandemic
To date,approve the pandemic has caused the worst disruption ever experienced in the commercial aerospace industry. At the trough in April 2020, revenue passenger kilometers (“RPKs”), a metric used to measure air traffic demand,compensation of our NEOs. We have made several notable changes, described below, that were down 94% from pre-pandemic numbers as world-wide traffic halted. For comparison, previous disruptions driven by the Gulf War, 9/11 and Great Recession only produced RPK declines of less than 5%. Air traffic has greatly improved from pandemic lows with worldwide RPKs steadily recovering – though traffic is still far lower than pre-pandemic levels. RPKs were down 58% for calendar year 2021 versus pre-pandemic and most recently down 41% in March 2022 (the last reported data point as of the print date of this proxy). Commercial OEM delivery rates from Boeing and Airbus were also significantly impacted by the pandemic and continued to be lower in 2021 than pre-pandemic but are expected to increase over the next several years.
Guiding Principles
Performance Expectations.We establish clear, quantitative, robust financial goals focused on TransDigm’s overall success and impact.
Stockholder Alignment. We establish ownership policies that encourage long-term equity retention and, duedirectly responsive to our shareholders’ feedback. We believe that implementing these enhancements, while maintaining our unique capital allocation philosophy, have dividend equivalent rightsperformance-driven compensation program, will further aligns management’s interests with those of our shareholders.
Refreshed Compensation Committee Chair | We have appointed a new Compensation Committee Chair. | ||||||||||
Refreshed Compensation Committee | 67% of the members of the Compensation Committee are new to the Committee. | ||||||||||
Enhanced Investor Outreach Program | We have implemented a year-round shareholder engagement program, increasing the number of shareholder feedback meetings by almost 250%. | ||||||||||
Enhanced Compensation Program Disclosure | We have enhanced our disclosure of our compensation program including the carry-forward/carry-back feature of the long-term incentive plan and overall program design. | ||||||||||
Enhance Disclosure of Discretion When Used | Going forward, we will include a more fulsome disclosure if the Compensation Committee exercises discretion. | ||||||||||
Increased Stock Ownership Guidelines for Named Executive Officers | We have increased our stock ownership guidelines to six times salary for the CEO and three times salary for the remaining continuing NEOs. | ||||||||||
Refreshed Peer Group | We have hired a new compensation consultant and refreshed our peer group to help ensure it includes representative peers. | ||||||||||
Adopted a Double-Trigger Change in Control Provision | We have incorporated double-trigger change in control provisions in option agreements for NEO option awards starting in fiscal 2024. |
362024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
Focus Initial NEO awards generally vest over a five-year period based on Long-Term Equity Incentives. We have limited fixed cash compensation (i.e., salary and annual incentive) and emphasizeperformance, which incentivizes long-term performance and retention by significantly weightingaids in retention.
Base Salary | |||||||||||
Fixed element of annual compensation | |||||||||||
Accounts for 10% or less of NEO total compensation | |||||||||||
Modest increases for existing NEOs. Salary increases for new NEOs were more significant due to position changes. | |||||||||||
Annual Cash Incentive | |||||||||||
Short-term cash incentive with variable payout opportunities | |||||||||||
Accounts for less than 10% of NEO compensation | |||||||||||
Robust and equally weighted targets of 49.0% EBITDA As Defined Margin and $3.095B EBITDA As Defined | |||||||||||
We exceeded maximum goals for both EBITDA As Defined Margin and EBITDA As Defined Dollars. Payments to NEOs were capped at the maximum bonus percentage | |||||||||||
Upward discretion only utilized for two of the six NEOs to reward exceptional performance | |||||||||||
Long-Term Equity Awards | |||||||||||
Long-term equity incentives in the form of performance-based stock options with multi-year vesting schedules | |||||||||||
Long-term equity awards remain 100% at-risk and performance-based | |||||||||||
The Compensation Committee has a policy that it will not use discretion in vesting performance-based options | |||||||||||
Requires 17.5% compound annual growth which aligns performance with top performing private equity funds | |||||||||||
Base Salary | |||||||||||
The salaries of Messrs. Stein, Lisman, and Valladares were increased by 7.8%, 9.7%, and 7.3% respectively. Ms. Wynne’s salary increased by 22.2% due to her promotion to CFO. | |||||||||||
Annual Cash Incentive | |||||||||||
We exceeded our maximum targets for our annual cash incentive payments, so NEO cash incentive payments were capped at 130% subject to the following discretion. In recognition of exceptional performance in 2023, the Compensation Committee utilized discretion in modifying the annual cash incentives paid to Ms. Wynne and Mr. Reiss. The Committee increased Ms. Wynne’s annual cash incentive payout by 15% due to her excellent performance during 2023, including her efforts to successfully refinance over $10B of debt (50% of TransDigm’s outstanding debt), a smooth transition from CAO to CFO, and effective capital management. The Committee also increased Mr. Reiss’ annual cash incentive payout by 15% due to his outstanding performance, including his successful transition to Co-COO and exceptional performance of the businesses for which he is responsible. | |||||||||||
Long-Term Equity Awards | |||||||||||
As further described below, Messrs. Stein, Valladares, Lisman, and Reiss and Ms. Wynne received a retention award at the start of fiscal 2023. The Compensation Committee determined that retaining our executives, who have successfully led TransDigm through one of the most challenging times for the aerospace market, was in TransDigm’s best interest. In general, option award values were positively impacted due to higher than historic values of inflation. | |||||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 37 |
Executive Compensation |
What | Equity compensation limited to performance-based options | Our stock option plans do not authorize the issuance of any full value awards, such as stock, restricted stock or other stock-based units. Our option program relies on performance-vested options with robust performance criteria; we do not issue time-vested options. | |||||||||||
Prohibition on hedging, pledging and short sales | We prohibit hedging, pledging, transactions in derivatives, and short sales in TransDigm securities by all employees and directors, including our | ||||||||||||
Equity ownership guidelines | We have robust equity ownership guidelines for all of our option holders, including our | ||||||||||||
Annual compensation risk assessment The Compensation Committee conducts an annual risk assessment of our compensation program. | |||||||||||||
Independent compensation consultant The Compensation Committee directly retains an independent compensation consultant. | |||||||||||||
Double-trigger change in control Starting with our fiscal 2024 options grants, we have incorporated double-trigger change in control provisions. | |||||||||||||
What We Don’t Do | No repricing | We do not allow repricing of stock options without | |||||||||||
No tax gross-ups | We do not provide for gross-ups of taxes, including in the event of a change in control or under Section 409A. | ||||||||||||
No evergreen employment contracts | Executive employment agreements do not contain automatic renewal provisions. |
382024 Proxy Statement |
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independent compensation consultant and management; however, the Compensation Committee makes final decisions regarding the compensation paid to our named executive officersNEOs based on its own judgment. The Compensation Committee may consider factors such as individual performance, companyTransDigm performance, market conditions, financial goals, retention, and stockholdershareholder interests in determining compensation.
The Rolenot aware of any conflict of interest that has been raised by the Chief Executive Officer. At the Compensation Committee’s request, for 2021, Mr. Howley provided input regarding the performance and compensation of Mr. Stein and Mr. Stein provided input regarding the performance and compensation of the other named executive officers. The Compensation Committee considered Mr. Howley’s and Mr. Stein’s evaluation and direct knowledge of each named executive officer’s performance and contributions when making compensation decisions. Mr. Stein is not present during Compensation Committee voting and deliberations regarding his own compensation and, when he was formerly an employee, Mr. Howley was not present during Compensation Committee voting and deliberations regarding his own compensation.
The Role of Investors. Stockholders are provided the opportunity to cast an annual advisory vote on the compensation of our named executive officers. Last year investors did not support the compensation of our named executive officers, with only 43% of votes cast on the say-on-pay proposal at the 2021 annual meeting voted in favor of our executive compensation program. Accordingly, in response to input from our investors, we have made a number of changes to our executive compensation program. We have ongoing discussions with many of our investors regarding various corporate governance topics, including environment, social and governance topics and executive compensation. The Compensation Committee considers these discussions while reviewing our executive compensation program.
work performed by Exequity.
Veritas used aagainst TransDigm’s 2023 peer group which is as follows:
Allison Transmission Holdings, Inc. (X) Ametek, Inc. Amphenol Corporation (X) A.O. Smith Corporation (X) Ball Corporation (X) BorgWarner Inc. (X) Colfax Corporation (1) (X) Cummins Inc. (X) Dover Corporation | Emerson Electric Fastenal Company (X) Flowserve Corporation (X) Fortive Corp. General Dynamics Corporation HEICO Corporation Illinois Tool Works L3Harris Technologies, Inc. Masco Corporation (X) | Northrup Grumman Corporation PACCAR Inc. (X) Parker-Hannifin Corporation Raytheon Technologies Corporation (X) Rockwell Automation, Inc. Roper Technologies, Inc. Stanley Black & Decker, Inc. (X) Textron Inc. The Boeing Company (X) | ||||||
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The survey determined that the named executive officers as a whole were positioned at the low end of the peer group in terms of cash compensation, but in the high end of the peer group in terms of total standard compensation and opportunities, but that the chief operating officer received cash compensation above the median compared to peers.
The Compensation Committee considers the peer group data provided by its independent compensation consultant to inform its decision-making process so it can set total compensation levels that it believes are commensurate with the relative size, scope, and success of TransDigm.
Industry fit and business comparability Focus on companies serving the Aerospace and Defense industries and/or manufacturers of engineered components. | Comparably-sized companies Factors considered included net sales, market capitalization, total enterprise value, and EBITDA. | ||||||||||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 39 |
Executive Compensation |
Ametek, Inc. Aptiv PLC * Dover Corporation Eaton Corporation * Emerson Electric Fortive Corp. General Dynamics | HEICO Corporation Howmet Aerospace Inc. * Illinois Tool Works Ingersoll Rand Inc. * L3Harris Technologies, Inc. Motorola Solutions, Inc. * Northrup Grumman | Parker-Hannifin Corp. RBC Bearings Inc. * Rockwell Automation, Inc. Roper Technologies, Inc. Teledyne Technologies Inc. * Textron Inc. | ||||||
2021 Named Executive OfficerNEOs. Last year, we received 51% approval from our shareholders for our annual advisory Say-on-Pay proposal to approve the compensation of our NEOs. As described below in “Shareholder Engagement” starting on page 49, we significantly increased our shareholder engagement in 2023, due in large part to our disappointing Say-on-Pay support. The feedback received through these discussions is strongly considered by the Compensation
Committee when reviewing our executive compensation program.
402024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
CEO Pay Mix Target | Average Other NEO Pay Mix Target |
Base Salary | Target Annual Cash Incentive | Long-Term Equity Award |
2021drive TransDigm’s performance.
Base Salary | |||||||||||||||||
Fixed element of annual compensation | |||||||||||||||||
Accounts for 10% or less of NEO total compensation | |||||||||||||||||
Modest increases for existing NEOs. Salary increases for new NEOs were more significant due to position changes. | |||||||||||||||||
Target Annual Cash Incentive | |||||||||||||||||
Short-term cash incentive with variable payout opportunities | |||||||||||||||||
Accounts for less than 10% of NEO compensation | |||||||||||||||||
Robust and equally weighted targets of 49.0% EBITDA As Defined Margin and $3.095B EBITDA As Defined Dollars | |||||||||||||||||
We exceeded maximum goals for both EBITDA As Defined Margin and EBITDA as Defined Dollars. Payments to NEOs were capped at the maximum bonus percentage | |||||||||||||||||
Upward discretion only utilized for two of the six NEOs to reward exceptional performance | |||||||||||||||||
Long-Term Equity Awards | |||||||||||||||||
Long-term equity incentives in the form of performance-based stock options with multi-year vesting schedules | |||||||||||||||||
Long-term equity awards remain 100% at-risk and performance-based | |||||||||||||||||
The Compensation Committee has a policy that it will not use discretion in vesting performance-based options | |||||||||||||||||
Requires 17.5% compound annual growth for AOP, which aligns performance with top performing private equity funds | |||||||||||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 41 |
Executive Compensation |
20212023 Annual Incentives.Cash Incentives
Annual cash incentive payouts are determined based on an equal weighting for the EBITDA and EBITDA margin performance measures, as approved by the Compensation Committee, and are linearly interpolated for achievement between threshold, target, and maximum goals. If the threshold performance level is reached, the total payout opportunity is 70% of the target payout, and if the maximum performance level is reached, the payout opportunity is 130% of the target payout. Unless the threshold goal is achieved for a performance measure, there is no payout for that performance measure.
Threshold Goal | Target Goal | Maximum Goal | ||||||||||||||||||
Payout Level | 70% | 100% | 130.0% | |||||||||||||||||
$3,424m | ||||||||||||||||||||
q | ||||||||||||||||||||
Pro Forma EBITDA As Defined Dollars | $2,790m | $3,095m | $3,400m | |||||||||||||||||
Pro Forma EBITDA As Defined Margin | 47.0% | 49.0% | 51.0% | |||||||||||||||||
p | ||||||||||||||||||||
51.0% | ||||||||||||||||||||
p Indicates actual fiscal 2023 results |
(1) | References in this proxy |
Fiscal year ended September 30, 2021 | ||||||||||||
Net sales – GAAP basis | $ 4,798 | |||||||||||
Pro forma adjustments (a) | (67) | |||||||||||
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Pro forma net sales | $ 4,731 | |||||||||||
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EBITDA and margin | $ 2,189 | 45.6% | ||||||||||
Pro forma adjustments (b) | (6) | |||||||||||
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Pro forma EBITDA and margin | $ 2,183 | 46.1% | ||||||||||
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levels they considered appropriately rigorous for
422024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
payment.
Name | Target Annual Incentive | Calculated Annual Incentive | Actual Annual Incentive Awarded | |||||||||
Kevin Stein | $ | 1,531,250 |
| $ | 1,626,188 |
| $ | 1,800,000 |
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Michael Lisman |
| 480,000 |
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| 509,760 |
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| 611,712 |
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Jorge L. Valladares III |
| 544,000 |
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| 577,728 |
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| 664,387 |
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Sarah Wynne |
| 292,500 |
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| 310,635 |
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| 325,000 |
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Robert Henderson |
| 340,000 |
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| 361,080 |
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| 365,000 |
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Mr. Howley did not receive an annual incentive, asbelow.
Name | Target Annual Incentive ($) | Calculated Annual Incentive ($) | Actual Annual Incentive Awarded ($) | |||||||||||
Kevin M. Stein | 1,750,000 | 2,275,000 | 2,275,000 | |||||||||||
Sarah L. Wynne | 416,167 | 541,017 | 622,169 | |||||||||||
Jorge L. Valladares III | 612,000 | 795,600 | 795,600 | |||||||||||
Michael J. Lisman | 588,000 | 764,400 | 764,400 | |||||||||||
Joel B. Reiss | 409,667 | 532,567 | 612,452 | |||||||||||
Jessica L. Warren | 255,281 | 331,875 | 331,875 |
TransDigm Group Incorporated | 2024 Proxy Statement 43 |
Executive Compensation |
LOOKING FORWARD… We will continue to use EBITDAthe same design and EBITDA margin, with threshold, target and maximum goals, for 2022. We have eliminated the overlapping metrics in ourperformance-based vesting requirements as TransDigm’s regular annual incentive, programthereby aligning with our overall pay-for-performance philosophy. All of Mr. Stein’s options vest in fiscal 2027 based on performance conditions. Each of Messrs. Valladares, Lisman, and our long-term equity incentive program.
In 2021, Mr. SteinReiss and Ms. Wynne’s awards vest equally in fiscal 2026 and 2027 based on performance conditions. Upon her promotion to General Counsel, Chief Compliance Officer, and Secretary, Ms. Warren received a grant of 68,00036,000 options that vest equally over five years based on performance conditions in fiscal 2025. Mr. Lisman and Ms. Wynne received grants of 57,700 and 18,000 options, respectively, that vest based on performance conditions equally over five years. Mr. Valladares and Mr. Henderson received grants of 58,300 and 22,125 options, respectively, that vest based on performance conditions equally in fiscal 2024 and fiscal 2025. 80% of Mr. Henderson’s options were forfeited upon his retirement in December 2021.
Mr. Howley received a grant of 71,039 options that vest based on performance conditions in 2022 - 2024, a 2021 salary grant of 21,891 options that vest based on performance conditions in 2022 and
2023 and, in August 2021, a grant of 105,000 options in exchange for termination of his employment agreement and transition to non-executive Chairman that vest based on performance conditions in 2022 – 2024. In his role as Chairman of the Board, Mr. Howley will continue to primarily focus his efforts on matters relating to significant mergers and acquisitions, capital allocation and deployment, major strategic initiatives and issues, and leadership of the Board of Directors. The option grant will be the sole compensation for Mr. Howley’s service on the Board through 2024.
LOOKING FORWARD… Although the one-time transition option award to Mr. Howley results in an up-tick in option compensation for 2021, it has the benefit operationally of streamlining our organizational structure and letting our Chief Executive Officer take on further responsibilities and also has the benefit of eliminating on-going “dual CEO” compensation.
Performance-Based Stock Option Program
Overview
Generally, executives other than the CEO do not receive annual grants of options. Rather, executivesparticipate in our option program.
Mr. Stein and Mr. Lisman receive annual grants of options. Mr. Stein’s annual grant vests in the fifth year following the award. Mr. Lisman’s annual grant vests up to 50% in each of the fourth and fifth year following the award.
Specifically,
442024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
growth rate of 17.5%.Targets are thus robust, requiring 17.5% compound annual growthwould be. AOP is calculated by subtracting net debt from the most recently completed year for maximum vesting in an effort to achieve growth at or above the long-term returnsproduct of top performing private equity funds. This is consistent with our objective of providing stockholders with returns at or above those of well-performing private equity funds.
Targets are calculated based on a ratio of (a) the excess of (i)Pro Forma EBITDA multiplied byAs Defined and an acquisition-weighted market multiple, over (ii) net debt to (b) the Company’swhich is then divided by TransDigm’s number of diluted shares based on the treasury stock method of accounting. The targets areAOP metric is adjusted for special dividends and share repurchases.To simplify, option targets and vesting are basically
How do we calculate AOP? | ||||||||||||||
(Pro Forma EBITDA As Defined x Acquisition-Weighted Market Multiple) - Net Debt(1) | ||||||||||||||
Diluted Weighted Average Shares Outstanding | ||||||||||||||
TransDigm’s year-end consolidated total indebtedness minus cash and cash equivalents on TransDigm’s balance sheet.
No vesting without reaching minimum target | ||||||||||||||
• growth in EBITDA;
• management of capital structure;
• cash generation;
• acquisition performance, including the acquisition price paid; and
• the impact of option dilution on common shares outstanding.
We use AOP growth (i.e., growth in intrinsic equity value)
TransDigm Group Incorporated | 2024 Proxy Statement 45 |
Executive Compensation |
It focuses management on the fundamentals of stockholder value creation— i.e., EBITDA, cash generation, capital structure management and return of capital,events pursuant to TransDigm’s stock option plans such as appropriate.
This is the basic private equity formula for value that management has focused on achieving since its inception in 1993.
Over the long term, we believe that market value of our stock will generally follow intrinsic value.
Targets are adjusted forspecial dividends paid to stockholdersshareholders and share repurchases. We believe the adjustments are appropriate and necessary to account for the early return of value to stockholdersshareholders because if a portion of the investment is returned early via special dividend or return of capital, the subsequent years’ targets must be adjusted to reflect the revised capital structure and maintain the same IRR-based performance requirements. Adjustment of the targets does not make the targets any easier to achieve but rather maintains the IRR targets.
As previously disclosed, for 2021 (limited solely to options granted in 2020 and 2021 with vesting in 2021), we determined we were unable to establish AOP targets due to the ongoing impact of the COVID-19 pandemic on the aviation industry. 10-17.5% AOP growth from 2020 was unattainable for 2021 because of the record performance in the first half of fiscal 2020 and the pandemic’s continuing impact. The Compensation Committee considered using the latter half of the year as a baseline but ultimately concluded that it had no visibility into whether those targets would be too easy or unreasonably unattainable. The Compensation Committee strongly believed that in order to provide appropriate incentive the performance goals needed to be based on matters within management’s control. Therefore, the Compensation Committee determined to measure 2021 performance against the primary metric to which management had been managing – EBITDA margin percentage – and also, as incentive to maintain earnings, and EBITDA. These metrics were temporarily used for certain grants under the Company’s option program – those being options granted in 2020 with vesting in 2021 (predominantly those are for promotion and new hire grants) and options granted in 2021 with vesting in 2021 (again, predominantly those are for promotion and new hire grants).
LOOKING FORWARD… The performance criteria for vesting in 2022 and beyond (including in previously granted options) has reverted back to the AOP metric and requires cumulative growth of 10-17.5%.
LOOKING FORWARD…The Compensation Committee has adopted a policy that it will not use discretion in vesting performance-based options in the future. Further, the Compensation Committee has adopted a policy that it will not make discretionary amendments to any then current-year performance targets in the future, except as contemplated for capital events pursuant to the Company’s stock option plans.
Other Option Terms
LOOKING FORWARD… for options granted in 2020, 2021, and 2022, AOP carryforwards and carrybacks are limited to a cap of $100 because the Compensation Committee did not want a potential pandemic market recovery to result in growth targets that were too easy to achieve.
In addition to vesting based on operational targets, in the event of a change in control, unvested options that were granted prior to fiscal 2024 will become fully vested.vested and exercisable. As mentioned above, we adopted double-trigger change in control provisions option agreements for NEO option awards starting in fiscal 2024. Beginning with options granted to NEOs in fiscal 2024, in the event of a change in control, any unvested options will become fully vested and exercisable only if either a replacement award is not provided in connection with such change in control, or in connection with such a replacement award the grantee’s employment is terminated for “good reason” by the grantee or without “cause” by TransDigm or its successors (as defined in the applicable employment agreement or option grant agreement) within two years following such change in control. We do not provide for any gross up to any payments that would be deemed to be “excess parachute payments” under Section 280G of the Internal Revenue Code.
Treatment of Options for Executives Upon Termination
Termination Date |
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During the first fiscal year after date of grant | — | % |
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During the second fiscal year after date of grant | 20 | % |
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During the third fiscal year after date of grant | 40 | % |
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During the fourth fiscal year after date of grant | 60 | % |
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During the fifth fiscal year after date of grant | 80 | % |
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After the fifth fiscal year end after date of grant | 100 | % |
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462024 Proxy Statement | TransDigm Group Incorporated |
2021
Executive Compensation |
2023.
Dividend decisions are made exclusive of compensatory impact. Andexcluded from compensation decisions are made without regard to the possibility of dividend equivalent payments. However, due to the unique structure of our executive compensation program, which targets significantly less cash compensation relative to peers in the short term but provides extraordinary upside in the long term, the Compensation Committee believes our use of DEPs are critical to the understanding of what motivates our executive team and assures alignment between management and investors on capital allocation decisions.
Option Holders Would Lose Value After a Dividend If They Did Not Receive DEPs | ||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 47 |
Executive Compensation |
Employeesdirector, receive DEPsa cash DEP on options (i) that have vested based on rigorous performance criteria and (ii) that the option holder has chosen not to exercise even though vested. Option holders who hold vested stock options at the time a dividend is paid will receive a cash DEP equal to the amount that he or she would otherwise have been entitled to receive had his or her vested stock option been exercised immediately prior to payment of the dividend. Option holders who hold unvested stock options will receive a cash DEP equal to the amount he or she would otherwise have been entitled to receive had his or her unvested stock option been vested and exercised immediately prior to payment of the dividend, but only if and when such stock option vests pursuant to its terms. We believe that we have structured DEPs under the Company’sTransDigm’s dividend equivalent plans such that they are not subject to any excise tax under Section 409A of the Internal Revenue Code. Certain investors and proxy advisory firms have raised the issue as to whether the CompanyTransDigm should pay dividend equivalents only upon an exercise of the options; however, we believe that tying payment of the dividend equivalents to the exercise of an option would result in excise taxes under Section 409A.
LOOKING FORWARD… the Board, including Messrs. Stein and Howley, will receive dividend equivalentsRetention Bonus Plan
Prior to the passage of the 2017 Tax Cuts and Jobs Act, performance-based compensation paid to our “covered employees,” such as annual cash
incentives and performance-based stock options, was generally excluded from this $1 million deduction limit. As a result of changes in the tax law, this previously-available exclusion for performance-based compensation is generally no longer available. The Compensation Committee does not consider tax deductibility in determining executive compensation and will award compensation that it determines to be consistent with the goals of our executive compensation program even if such compensation is not tax deductible by TransDigm.
Results All of Say-On-Pay (“SOP”) Vote
OverviewTransDigm’s other existing option holders are also required to maintain ownership of Say-On-Pay Vote History & Advisory Firm Recommendation Effect
a minimum value of stock or vested options.
482024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
Preceding our annual meetings in 2018 and 2019, we engaged with stockholders representing approximately 75% of our shares. Most of the stockholders were not satisfied with the overall designoutcome of the 2023 Annual Meeting. These results indicated that while we feel that we have strong relationships with our program. Of the stockholders that voted against Say-on-Pay, there was no consistent reason cited.
Outreach priorshareholders, we need to invest more time to better understand and address their perspectives.
We2023 Annual Meeting, we reached out to 34 of our top 31 stockholders representing 73%36 shareholders, which represent over 70% of our shares outstanding to discuss compensation matters. Eight of those stockholders elected to have a discussion while the others declined because they were satisfiedcommon stock. We conducted engagements with the designinvestors representing 62% of our plan and/oroutstanding common stock as result of this outreach. Engagements were led by senior leaders of TransDigm and included participation from the Compensation Committee Chair for select engagements.
not been responsive to every individual piece of feedback received, we did thoughtfully consider each piece of feedback. We continuedare pleased to findsay that most actively managed funds generally liked the design ofwe have made meaningful improvements that address our compensation plan. The few who had objections continued to not cite a consistent reason. However, we heard several issues from more than one firm. The followingshareholders’ key concerns. Below is a summary of those issuesthe feedback that we received, and our response:
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2024 Proxy Statement 49 |
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What We Heard | What We Did | ||||||||||
Shareholders would like us to enhance our engagement efforts throughout the year to discuss key compensation and governance issues. | We have always appreciated shareholder perspectives and value the dialogue we have had with investors over the years. We recognize that in today's environment, our less formal approach to engagement is not enough. Over the past year, we have formalized our shareholder outreach program to systematically engage with a variety of investors and solicit feedback on key compensation and governance issues. We plan to build on these efforts in the coming years and look forward to the ongoing dialogue. | ||||||||||
Shareholders asked us to provide more disclosure in our proxy statement describing our approach to key governance topics. | Over the past year we have reviewed and revised many key sections of our proxy statement to help our shareholders better understand our governance policies, practices, and procedures. We have added more detailed disclosure on investor priority topics including executive compensation and board composition and have included more direct communication from our directors. We will continue to review our disclosure practices to ensure we are meeting our shareholders' expectations. | ||||||||||
Shareholders expressed their concern over our single trigger change-in-control provision. | We have updated our change-in-control provision for NEOs from single trigger to double trigger to align with investor preferences along with market practice. This change will be made on a go forward basis as NEOs receive new stock option grants. | ||||||||||
Shareholders voiced concern over the Compensation Committee's use of discretion in the Annual Incentive Plan. | For any select discretion utilized for fiscal 2023 annual | ||||||||||
Shareholders expressed their desire to see enhanced stock ownership guidelines for our CEO and NEOs, and would like to see those guidelines expressed as a multiple of salary. | We have revised our stock ownership guidelines for our CEO and continuing NEOs. Our guidelines now align with market practice: 6x salary for the CEO and 3x salary for other continuing NEOs, met through a hybrid approach of 50% stock and 50% in-the-money vested stock options. | ||||||||||
Shareholders expressed their concern that the same Board members of the Compensation Committee have overseen a compensation plan that has received low Say-on-Pay support for multiple years in a row. | We have refreshed the committee membership of several Board committees (refer to ‘Board Composition’ section on page 2 of the proxy statement), including the Compensation Committee. David Barr, who previously served on the Nominating and Corporate Governance Committee, has assumed the role of Chair of the Compensation Committee. Additionally, Gary E. McCullough, who is also the Chair of the Nominating and Corporate Governance Committee, has joined the Compensation Committee. Michael Graff, the long-standing Chair of the Compensation Committee, has rotated off the Compensation Committee to join both the Executive Committee and the Nominating and Corporate Governance Committee. Mervin Dunn, a long-standing member of the Compensation Committee, retired from the Board in 2023. The Committee changes reflect our recognition of investors' concerns around accountability and ensure new perspectives and leadership. | ||||||||||
Several shareholders expressed an interest in better understanding our peer group and the decision process behind the peer group compilation. | With the help of external compensation advisors, we reviewed, and significantly revised our peer group. We evaluated companies for inclusion or deletion on several criteria, resulting in an | ||||||||||
A few shareholders noted that bringing in new advisors to offer fresh perspectives could be an opportunity for us. | Following a several months process, we hired Exequity to serve as our new compensation consultant. They, along with other external governance, and compensation experts, have helped us better understand our shareholders' priorities and identify additional ways to be responsive. | ||||||||||
Shareholders asked us to adopt a clawback policy. | We adopted a clawback policy in 2023 that satisfies the | ||||||||||
Shareholders questioned the use of |
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Outreach for the 2021 annual meeting had the following results:
We reached out to 47 of our top 50 stockholders representing 77% of our shares outstanding to discuss compensation matters for our 2021 annual meeting. Twelve of those stockholders elected to have a discussion while many of the others declined because they were satisfied with the design of our plan and/or we have had prior discussions and they had no questions.
While stockholders were encouraged by the responsive compensation plan changes that were implemented since the 2020 annual meeting, two additional concerns, which arose primarily due the COVID-19 pandemic, were mentioned several times:
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| TransDigm Group Incorporated |
Executive Compensation |
What We Heard | What We Did | |||||||||||
Some shareholders expressed concern over perceived misalignment between pay and performance, and a few shared that they would like to see us adopt a relative performance metric in our long-term incentive plan to drive better alignment. | Our long-term incentive plan is 100% performance-based stock options, which we believe ultimately drives alignment between the overall amount paid to our CEO and the change in value for our shareholders. Further, more than 90% of | |||||||||||
Many shareholders stated that they would like to see a greater degree of responsiveness given the | We believe that the |
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Vote Results
TransDigm Group Incorporated | 2024 Proxy Statement 51 |
Executive Compensation |
Name and Principal Position | Fiscal Year | Salary(1) | Bonus(2) | Option Awards(3) | Non-equity Incentive Compensation(2) | All Other Compensation(4) | Total | |||||||||||||||||||||
Kevin Stein, President and Chief Executive Officer | 2021 | $ | 1,200,000 | $ | 173,812 | $ | 12,798,804 | $ | 1,626,188 | $5,685,700 | $ | 21,484,504 | ||||||||||||||||
2020 | 991,563 | -- | 7,460,000 | -- | 13,608,900 | 22,060,463 | ||||||||||||||||||||||
2019 | 1,045,000 | 65,925 | -- | 1,684,075 | 10,340,200 | 13,135,200 | ||||||||||||||||||||||
Michael Lisman, Chief Financial Officer | 2021 | 583,750 | 101,952 | 10,860,161 | 509,760 | 1,650,775 | 13,706,398 | |||||||||||||||||||||
2020 | 496,458 | 2,580 | -- | 327,420 | 2,653,957 | 3,480,415 | ||||||||||||||||||||||
2019 | 467,500 | 22,104 | 12,411,600 | 477,896 | 937,673 | 14,316,773 | ||||||||||||||||||||||
Jorge L. Valladares III, Chief Operating Officer | 2021 | 672,500 | 86,659 | 10,973,092 | 577,728 | 3,147,950 | 15,457,929 | |||||||||||||||||||||
2020 | 614,917 | 2,200 | 5,296,498 | 397,800 | 7,430,025 | 13,741,440 | ||||||||||||||||||||||
2019 | 613,500 | 11,618 | 7,451,630 | 628,382 | 4,626,100 | 13,331,230 | ||||||||||||||||||||||
Sarah Wynne, Chief Accounting Officer | 2021 | 437,500 | 14,365 | 3,387,919 | 310,635 | 269,400 | 4,419,819 | |||||||||||||||||||||
2020 | 365,000 | 1,700 | 1,491,971 | 168,300 | 265,683 | 2,292,654 | ||||||||||||||||||||||
2019 | 260,000 | 54,167 | 605,066 | 95,833 | 133,640 | 1,148,706 | ||||||||||||||||||||||
Robert Henderson, Vice Chairman | 2021 | 10,000 | 3,920 | 4,919,634 | 361,080 | 3,747,933 | 9,042,567 | |||||||||||||||||||||
2020 | 10,000 | -- | 1,695,486 | -- | 11,916,135 | 13,621,621 | ||||||||||||||||||||||
2019 | 10,000 | -- | 15,229,768 | -- | 9,187,020 | 24,426,788 | ||||||||||||||||||||||
W. Nicholas Howley, Former Executive Chairman | 2021 | 6,306 | -- | 38,084,417 | -- | 2,168,388 | 40,259,111 | |||||||||||||||||||||
2020 | 7,000 | -- | 11,880,431 | -- | 56,235,370 | 68,122,801 | ||||||||||||||||||||||
2019 | 7,000 | -- | 13,577,620 | -- | 47,058,288 | 60,642,908 |
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2023.
(1) Amounts reported for fiscal 2023 represent base salaries paid for service during fiscal 2023, and include any base salary deferred into TransDigm’s qualified 401(k) plan by the NEOs for fiscal 2023. For more information about fiscal 2023 base salaries for the NEOs, see “Compensation Discussion and Analysis – 2023 NEO Compensation – 2023 Annual Base Salary” above. (2) TransDigm has a performance-based annual incentive plan, with Compensation Committee discretion to adjust awards by up to 20%. The calculated amount is disclosed |
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LOOKING FORWARD… the Board (including Messrs. Howley and Stein) will receive dividend equivalents for dividends declared in the future by means of a reductionNon-Equity Incentive Plan Compensation column and any additional discretionary amount is disclosed in the exerciseBonus column. For more information about the operation of the fiscal 2023 annual cash incentive program, see “Compensation Discussion and Analysis – 2023 NEO Compensation – 2023 Annual Cash Incentives” above.
LOOKING FORWARD… “Dual CEO” compensation has been eliminated throughdescribed above. Any additional discretionary amount paid for FY 2023 pursuant to the early termination Committee’s discretion under the plan is disclosed in the Bonus column for fiscal 2023. For Ms. Warren,
Executive Compensation |
Name
| Award Type
| Grant
| Estimated Under Non- Equity
| Estimated Future Payouts Under Equity Incentive Plan Awards
| Exercise Price
| Grant Date
| ||||||||||||||||||||||||
Threshold(2)
| Target(3)
| Maximum
| ||||||||||||||||||||||||||||
Kevin Stein | Annual Incentive | 11/11/20 | $ | 1,531,250 | ||||||||||||||||||||||||||
Performance-based |
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11/11/20 |
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17,000 |
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68,000 |
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68,000 |
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$560.81 |
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$ |
12,798,804 |
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Michael Lisman | Annual Incentive | 11/11/20 | 480,000 | |||||||||||||||||||||||||||
Performance-based |
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11/11/20 |
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14,425 |
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57,700 |
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57,700 |
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560.81 |
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10,860,161 |
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Jorge L. Valladares III | Annual Incentive | 11/11/20 | 544,000 | |||||||||||||||||||||||||||
Performance-based |
|
11/11/20 |
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|
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14,575 |
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58,300 |
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58,300 |
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560.81 |
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10,973,092 |
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Sarah Wynne | Annual Incentive | 11/11/20 | 292,500 | |||||||||||||||||||||||||||
Performance-based |
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11/11/20 |
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4,500 |
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18,000 |
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18,000 |
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560.81 |
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3,387,919 |
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Robert Henderson | Annual Incentive | 11/11/20 | 340,000 | |||||||||||||||||||||||||||
Performance-based |
|
11/11/20 |
|
|
5,531 |
|
|
22,125 |
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|
22,125 |
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560.81 |
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4,164,317 |
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Performance-based |
|
11/11/20 |
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|
|
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3,794 |
|
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8,718 |
|
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8,718 |
|
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560.81 |
|
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1,640,862 |
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W. Nicholas Howley | Annual Incentive | 11/11/20 | 1,923,699 | |||||||||||||||||||||||||||
Performance-based |
|
11/11/20 |
|
|
17,760 |
|
|
71,039 |
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|
71,039 |
|
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560.81 |
|
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13,370,797 |
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Performance-based |
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11/11/20 |
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5,473 |
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21,891 |
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21,891 |
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560.81 |
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4,120,274 |
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Performance-based |
|
08/06/21 |
|
|
26,250 |
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105,000 |
|
|
105,000 |
|
|
629.11 |
|
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19,762,859 |
|
Name | Award Type | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise Price of Option Awards (per share) ($) | Grant Date Fair Value of Option Awards ($) | |||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold(1) (#) | Target(2) (#) | Maximum (#) | ||||||||||||||||||||||||||||||
Kevin M. Stein | Annual Incentive | 11/9/2022 | 1,225,000 | 1,750,000 | 2,275,000 | — | — | — | — | — | |||||||||||||||||||||||||
Performance-based Option (3) | 11/9/2022 | — | — | — | 20,775 | 83,100 | 83,100 | 582.80 | 20,179,574 | ||||||||||||||||||||||||||
Sarah L. Wynne | Annual Incentive | 11/9/2022 | 291,317 | 416,167 | 541,017 | — | — | — | — | — | - | ||||||||||||||||||||||||
Performance-based Option (4) | 11/9/2022 | — | — | — | 1,625 | 6,500 | 6,500 | 582.80 | 1,578,426 | ||||||||||||||||||||||||||
Jorge L. Valladares III | Annual Incentive | 11/9/2022 | 428,400 | 612,000 | 795,600 | — | — | — | — | — | |||||||||||||||||||||||||
Performance-based Option (4) | 11/9/2022 | — | — | — | 3,388 | 13,550 | 13,550 | 582.80 | 3,290,412 | ||||||||||||||||||||||||||
Performance-based Option Modification (5) | 7/26/2023 | — | — | — | *(5) | *(5) | *(5) | *(5) | 5,619,377 | ||||||||||||||||||||||||||
Michael J. Lisman | Annual Incentive | 11/9/2022 | 411,600 | 588,000 | 764,400 | — | — | — | — | — | |||||||||||||||||||||||||
Performance-based Option (4) | 11/9/2022 | — | — | — | 9,613 | 38,450 | 38,450 | 582.80 | 9,336,999 | ||||||||||||||||||||||||||
Joel B. Reiss | Annual Incentive | 11/9/2022 | 286,767 | 409,667 | 532,567 | — | — | — | — | — | |||||||||||||||||||||||||
Performance-based Option (4) | 11/9/2022 | — | — | — | 1,625 | 6,500 | 6,500 | 582.80 | 1,578,426 | ||||||||||||||||||||||||||
Jessica L. Warren | Annual Incentive | 1/25/2023 | 178,697 | 255,281 | 331,875 | — | — | — | — | — | |||||||||||||||||||||||||
Performance-based Option (6) | 1/25/2023 | — | — | — | 9,000 | 36,000 | 36,000 | 700.50 | 10,106,640 | ||||||||||||||||||||||||||
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2024 Proxy Statement 53 |
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Name | Number of Securities Underlying Unexercised Options that are Exercisable | Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price (per share) | Option Expiration Date | ||||||||||||||
Kevin Stein | 78,800 | -- | $ | 191.79 | 11/13/2024 | |||||||||||||
71,000 | -- | 269.42 | 11/10/2026 | |||||||||||||||
170,800 | 42,700 | (1) | 324.38 | 04/25/2028 | ||||||||||||||
-- | 50,000 | (2) | 559.78 | 11/15/2029 | ||||||||||||||
-- | 68,000 | (3) | 560.81 | 11/11/2030 | ||||||||||||||
Michael Lisman | 3,200 | -- | 217.70 | 01/20/2026 | ||||||||||||||
550 | 550 | (4) | 284.97 | 11/08/2027 | ||||||||||||||
6,480 | 1,620 | (1) | 303.90 | 01/24/2028 | ||||||||||||||
72,000 | 48,000 | (5) | 347.17 | 11/05/2028 | ||||||||||||||
11,540 | 46,160 | (6) | 560.81 | 11/11/2030 | ||||||||||||||
Jorge L. Valladares III | 52,000 | -- | 148.45 | 11/15/2023 | ||||||||||||||
45,000 | -- | (7) | 226.34 | 11/06/2025 | ||||||||||||||
32,500 | 32,500 | (8) | 284.97 | 11/08/2027 | ||||||||||||||
36,600 | 24,400 | (5) | 347.17 | 11/05/2028 | ||||||||||||||
5,100 | 3,400 | (5) | 476.81 | 04/25/2029 | ||||||||||||||
14,200 | 21,300 | (9) | 559.78 | 11/15/2029 | ||||||||||||||
-- | 58,300 | (10) | 560.81 | 11/11/2030 | ||||||||||||||
Sarah Wynne | | 2,250 5,700 2,700 3,510 |
| | -- -- -- 2,340 |
| (5) | | 148.45 221.81 269.42 347.14 |
| | 11/15/2023 04/22/2025 11/10/2026 11/05/2028 |
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4,000 | 6,000 | (9) | 559.78 | 11/15/2029 | ||||||||||||||
3,600 | 14,400 | (6) | 560.81 | 11/11/2030 | ||||||||||||||
Robert Henderson(11) | 92,000 | -- | 191.79 | 11/13/2024 | ||||||||||||||
44,000 | -- | 269.42 | 11/10/2026 | |||||||||||||||
8,500 | -- | 250.79 | 12/14/2026 | |||||||||||||||
8,500 | 8,500 | (8) | 284.97 | 11/08/2027 | ||||||||||||||
13,854 | -- | 284.97 | 11/08/2027 | |||||||||||||||
710 | -- | 273.81 | 12/27/2027 | |||||||||||||||
-- | 60,000 | (12) | 347.17 | 11/05/2028 | ||||||||||||||
21,162 | -- | 347.17 | 11/05/2028 | |||||||||||||||
50,000 | -- | 476.81 | 04/25/2029 | |||||||||||||||
16,787 | -- | 559.78 | 11/15/2029 | |||||||||||||||
-- | 22,125 | (10) | 560.81 | 11/11/2030 | ||||||||||||||
5,092 | 1,274 | (13) | 560.81 | 11/11/2030 | ||||||||||||||
W. Nicholas Howley(14) | 149,500 | -- | 130.09 | 11/19/2022 | ||||||||||||||
156,190 | -- | 191.79 | 11/13/2024 | |||||||||||||||
133,517 | -- | 226.34 | 11/06/2025 | |||||||||||||||
45,912 | -- | 230.72 | 12/10/2025 | |||||||||||||||
41,888 | -- | 269.42 | 11/10/2026 | |||||||||||||||
116,786 | -- | 269.42 | 11/10/2026 | |||||||||||||||
119,884 | -- | 284.97 | 11/08/2027 | |||||||||||||||
42,571 | -- | 284.97 | 11/08/2027 | |||||||||||||||
93,864 | -- | 347.17 | 11/05/2028 | |||||||||||||||
33,484 | -- | 347.17 | 11/05/2028 | |||||||||||||||
51,794 | 12,949 | (13) | 559.78 | 11/15/2029 | ||||||||||||||
23,573 | -- | 559.78 | 11/15/2029 | |||||||||||||||
28,416 | 42,623 | (15) | 560.81 | 11/11/2030 | ||||||||||||||
16,489 | -- | 560.81 | 11/11/2030 | |||||||||||||||
-- | 105,000 | (16) | 629.11 | 08/06/2031 |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price (per share)(14) ($) | Option Expiration Date | ||||||||||||||||
Kevin M. Stein | 213,500 | — | 305.88 | 4/25/2028 | ||||||||||||||||
— | 50,000 | (1) | 541.28 | 11/15/2029 | ||||||||||||||||
— | 68,000 | (2) | 542.31 | 11/11/2030 | ||||||||||||||||
— | 49,350 | (3) | 624.50 | 11/12/2031 | ||||||||||||||||
— | 83,100 | (4) | 582.80 | 11/9/2032 | ||||||||||||||||
Sarah L. Wynne | 2,700 | — | 269.42 | 11/10/2026 | ||||||||||||||||
5,850 | — | 347.17 | 11/5/2028 | |||||||||||||||||
8,000 | 2,000 | (5) | 559.78 | 11/15/2029 | ||||||||||||||||
10,800 | 7,200 | (6) | 560.81 | 11/11/2030 | ||||||||||||||||
5,460 | 8,190 | (7) | 643.00 | 11/12/2031 | ||||||||||||||||
— | 6,500 | (8) | 582.80 | 11/9/2032 | ||||||||||||||||
Jorge L. Valladares III | 32,400 | — | (9) | 226.34 | 11/6/2025 | |||||||||||||||
65,000 | — | 284.97 | 11/8/2027 | |||||||||||||||||
61,000 | — | 347.17 | 11/5/2028 | |||||||||||||||||
8,500 | — | 476.81 | 4/25/2029 | |||||||||||||||||
28,400 | 7,100 | (5) | 559.78 | 11/15/2029 | ||||||||||||||||
— | 58,300 | (6) | 560.81 | 11/11/2030 | ||||||||||||||||
— | 13,550 | (8) | 582.80 | 11/9/2032 | ||||||||||||||||
Michael J. Lisman | 120,000 | — | 347.17 | 11/5/2028 | ||||||||||||||||
34,620 | 23,080 | (6) | 560.81 | 11/11/2030 | ||||||||||||||||
— | 38,450 | (8) | 582.80 | 11/9/2032 | ||||||||||||||||
Joel B. Reiss | 57,300 | — | 226.34 | 11/6/2025 | ||||||||||||||||
65,000 | — | 284.97 | 11/8/2027 | |||||||||||||||||
43,000 | — | 476.81 | 4/25/2029 | |||||||||||||||||
16,050 | 16,050 | (10) | 559.78 | 11/15/2029 | ||||||||||||||||
— | 28,600 | (11) | 643.00 | 11/12/2031 | ||||||||||||||||
— | 6,500 | (8) | 582.80 | 11/9/2032 | ||||||||||||||||
Jessica L. Warren | 1,450 | — | 347.42 | 1/23/2029 | ||||||||||||||||
— | 550 | (12) | 560.81 | 11/11/2030 | ||||||||||||||||
980 | 1,470 | (7) | 643.00 | 11/12/2031 | ||||||||||||||||
7,200 | 28,800 | (13) | 700.50 | 1/25/2033 |
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542024 Proxy Statement |
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Executive Compensation |
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2023
Name | Option Awards | |||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | |||||||
Kevin Stein |
| 79,600 |
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| 33,663,764 |
| ||
Michael Lisman |
| -- |
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| -- |
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Jorge L. Valladares III |
| 10,000 |
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| 4,665,506 |
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Sarah Wynne |
| -- |
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| -- |
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Robert Henderson(1) |
| 57,500 |
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| 26,356,725 |
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W. Nicholas Howley(2) |
| 209,694 |
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| 100,745,391 |
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Option Awards | |||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | |||||||||
Kevin M. Stein | 74,300 | 43,752,299 | |||||||||
Sarah L. Wynne | 5,700 | 3,722,435 | |||||||||
Jorge L. Valladares III | 52,000 | 29,813,828 | |||||||||
Michael J. Lisman | 12,400 | 5,825,947 | |||||||||
Joel B. Reiss | 22,000 | 13,161,876 | |||||||||
Jessica L. Warren | — | — |
terminated for death or disability or without cause by TransDigm or voluntarily resigns for good reason (each as defined in the agreement and described under “Employment Agreements” below), he will receive (a) two times his annual salary, (b) two times the greater of (i) all bonuses paid or payable for the fiscal year immediately prior to the date of termination or (ii) bonuses for the fiscal year in which the date of termination occurs, determined in accordance with TransDigm’s annual incentive program, if any, and (C) 18 times the monthly cost of the difference between his employee co-premiums for health insurance at the time of termination and the COBRA cost for such coverage, and in each case the paymentscoverage. The amount will be payable in equal monthly installments over the two-year period following his termination.
Mr. Henderson retired on December 31, 2021. However, his prior employment agreement provided that if he were terminated for cause, he would have received only any unpaid but accrued base salary and benefits. As of September 30, 2021, Mr. Henderson had no unpaid but accrued base salary or benefits. If Mr. Henderson had been terminated by reason of death or disability or without cause by the Company or voluntarily resigned for good reason, he would have received, after 90 days’ notice in the case of termination without cause, (a) one times his annual salary, (b) one times the greater of (i) all bonuses paid or payable to the executive for the fiscal year immediately prior to the date of termination or (ii) bonuses for the fiscal year in which the date of termination occurs, determined in accordance with the Company’s bonus program, if any, and (c) 18 times the monthly cost of the difference between his employee co-premiums for health insurance at the time of termination and the COBRA cost for such coverage, and in each case the payments will be payable in equal monthly installments over the two-year period following his termination.
Mr. Howley was not an employee on September 30, 2021.
TransDigm Group Incorporated | 2024 Proxy Statement 55 |
Executive Compensation |
Name | Number of Unvested Options | Option Expiration Date | Number of Options Permitted to Continue to Vest upon | |||||||||
Kevin Stein | 42,700 | 04/25/2028 | 25,620 | |||||||||
50,000 | 11/15/2029 | 10,000 | ||||||||||
68,000 | 11/11/2030 | -- | ||||||||||
Michael Lisman | 550 | 11/08/2027 | -- | |||||||||
1,620 | 01/24/2028 | -- | ||||||||||
48,000 | 11/05/2028 | 19,200 | ||||||||||
46,160 | 11/11/2030 | -- | ||||||||||
Jorge L. Valladares III | 32,500 | 11/08/2027 | 19,500 | |||||||||
24,400 | 11/05/2028 | 9,760 | ||||||||||
3,400 | 04/25/2029 | 1,360 | ||||||||||
21,300 | 11/15/2029 | 4,260 | ||||||||||
58,300 | 11/11/2030 | -- | ||||||||||
Sarah Wynne | 2,340 | 11/05/2028 | 936 | |||||||||
6,000 | 11/15/2029 | 1,200 | ||||||||||
14,400 | 11/11/2030 | -- | ||||||||||
Robert Henderson | 8,500 | 11/08/2027 | 5,100 | |||||||||
60,000 | 11/05/2028 | 24,000 | ||||||||||
22,125 | 11/11/2030 | -- | ||||||||||
1,274 | 11/11/2030 | -- | ||||||||||
W. Nicholas Howley | 12,949 | 11/15/2029 | 10,359 | |||||||||
42,623 | 11/11/2030 | -- | ||||||||||
105,000 | 08/06/2031 | -- |
Name | Number of Unvested Options (#) | Option Expiration Date | Number of Options Permitted to Continue to Vest upon Termination (9/30/23) (#) | |||||||||||
Kevin M. Stein | 50,000 | 11/15/2029 | 30,000 | |||||||||||
68,000 | 11/11/2030 | 27,200 | ||||||||||||
49,350 | 11/12/2031 | 9,870 | ||||||||||||
83,100 | 11/9/2032 | — | ||||||||||||
Sarah L. Wynne | 2,000 | 11/15/2029 | 1,200 | |||||||||||
7,200 | 11/11/2030 | 2,880 | ||||||||||||
8,190 | 11/12/2031 | 1,638 | ||||||||||||
6,500 | 11/9/2032 | — | ||||||||||||
Jorge L. Valladares III | 7,100 | 11/15/2029 | 4,260 | |||||||||||
58,300 | 11/11/2030 | 23,320 | ||||||||||||
13,550 | 11/9/2032 | 13,550 | ||||||||||||
Michael J. Lisman | 23,080 | 11/11/2030 | 9,232 | |||||||||||
38,450 | 11/9/2032 | — | ||||||||||||
Joel B. Reiss | 16,050 | 11/15/2029 | 9,630 | |||||||||||
28,600 | 11/12/2031 | 5,720 | ||||||||||||
6,500 | 11/9/2032 | — | ||||||||||||
Jessica L. Warren | 550 | 11/11/2030 | — | |||||||||||
1,470 | 11/12/2031 | — | ||||||||||||
28,800 | 1/25/2033 | — |
562024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
Name | Change in Control ($)(1) | Termination for Cause ($) | Termination without Cause ($) | Termination for Disability ($) | Voluntary Termination for Good Reason ($) | Voluntary Termination Without Good Reason ($) | ||||||||||||||||||
Kevin Stein |
| 20,383,923 |
|
| -- |
|
| 6,083,501 |
|
| 6,083,501 |
|
| 6,083,501 |
|
| -- |
| ||||||
Michael Lisman |
| 16,964,627 |
|
| -- |
|
| 1,521,775 |
|
| 1,521,775 |
|
| 1,521,775 |
|
| -- |
| ||||||
Jorge L. Valladares III |
| 23,405,179 |
|
| -- |
|
| 1,384,168 |
|
| 1,384,168 |
|
| 1,384,168 |
|
| -- |
| ||||||
Sarah Wynne |
| 1,956,000 |
|
| -- |
|
| 984,987 |
|
| 984,987 |
|
| 984,987 |
|
| -- |
| ||||||
Robert Henderson |
| 21,022,520 |
|
| -- |
|
| 873,384 |
|
| 873,384 |
|
| 873,384 |
|
| -- |
| ||||||
W. Nicholas Howley |
| 3,556,608 |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
| -- |
|
|
On commencementName
ControlTermination
for Cause
($)Termination
without Cause
($)Voluntary
Termination for
Good Reason
($)
Termination
Without Good Kevin M. Stein 67,971,074 — 7,357,454 7,357,454 7,357,454 — Sarah L. Wynne 5,930,614 — 1,385,884 1,385,884 1,385,884 — Jorge L. Valladares III 21,998,513 — 1,831,454 1,831,454 1,831,454 — Michael J. Lisman 16,525,634 — 1,739,949 1,739,949 1,739,949 — Joel B. Reiss 11,963,631 — 1,387,287 1,387,287 1,387,287 — Jessica L. Warren 4,557,211 — 975,568 975,568 975,568 —
Mr. Lisman
Ms. Wynne entered into an employment agreement with TransDigm in November 2018. The agreement was amended in November 2021 to modify the severance provisions to include 18 times the month cost of the difference between her employee co-premiums for health insurance at the time of termination and the COBRA cost for such coverage, instead of 15 times such amount.February 2023. Unless earlier terminated by TransDigm or Ms. Wynne,Warren, the term of her agreement extends until October 1, 2023December 31, 2027 with no automatic right of renewal.
Mr. Henderson and Mr. Howley are no longer employees. Mr. Henderson retired on December 31, 2021. Mr. Howley transitioned from an employee to a non-employee Chairman in August 2021. Mr. Howley’s employment agreement was terminated, other than the non-competition and non-solicitation covenants that were contained therein which will continue until September 20, 2023 and the non-disclosure obligations which will continue indefinitely.
TransDigm Group Incorporated | 2024 Proxy Statement 57 |
Executive Compensation |
•without cause (as defined in his or her employment agreement)
•by the named executive officerNEO for certain enumerated good reasons, which include: a material diminution in his or her title, duties or responsibilities, without his or her prior written consent; a reduction of his or her aggregate cash compensation (including bonus opportunities), benefits or perquisites, without his or her prior written consent; or any material breach of this Agreement by TransDigm; or, solely in the case of Mr. Stein, TransDigm requires him, or her, without his or her prior written consent, to be based at any location that requires a relocation greater than 30 miles from hisCleveland, Ohio; or her current office; or any material breach of this Agreement by TransDigm; or, solely in the case of Mr. Stein, TransDigm’s refusal to amend the agreement to extend the term or any renewal thereof at
|
•due to his or her death or disability (as defined in his or her employment agreement),
As permitted by SEC rules, we used the same
582024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
The Board has nominated Mr. Barr, Ms. Cronin, Mr. Dunn, Mr. Graff, Mr. Hennessy, Mr.TransDigm performance for fiscal years 2023, 2022, and 2021.
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||||||||||||||||
Average Summary Comp. Table Total for Non-PEO Named Executive Officers ($)(1) | Average Comp. Actually Paid to Non-PEO Named Executive Officers ($)(1)(3) | Value of Initial Fixed $100 Investment Based On: | |||||||||||||||||||||||||||
Fiscal Year | Summary Comp. Table Total for PEO ($)(1) | Comp. Actually Paid to PEO ($)(1)(2) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($)(4) | Net Income ($ Millions) | EBITDA As Defined ($ Millions)(5) | |||||||||||||||||||||||
2023 | 23,845,374 | 80,979,736 | 8,539,897 | 20,541,600 | 183.71 | 129.19 | 1,299 | 3,395 | |||||||||||||||||||||
2022 | 18,709,996 | 2,210,189 | 6,683,966 | (442,736) | 114.35 | 105.57 | 867 | 2,646 | |||||||||||||||||||||
2021 | 21,484,504 | 44,523,404 | 16,577,165 | 28,844,554 | 131.46 | 137.33 | 681 | 2,189 |
PEO | 2023 | 2022 | 2021 | |||||||||||
Summary Compensation Table (“SCT”) Total for PEO (Column (b)) | 23,845,374 | 18,709,996 | 21,484,504 | |||||||||||
Less: Stock Award values reported in SCT | — | — | — | |||||||||||
Less: Option Award values reported in SCT | (20,179,574) | (12,486,796) | (12,798,804) | |||||||||||
Plus (Less): Year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the covered year-end from prior year-end | 40,155,771 | (8,499,360) | 10,079,307 | |||||||||||
Plus: Year-end fair value of equity awards granted in the covered year that were outstanding and unvested as of the covered year-end | 37,158,165 | 8,142,750 | 16,249,280 | |||||||||||
Plus: Vesting date fair value of equity awards granted and vested in the covered year | — | — | — | |||||||||||
Plus (Less): Year-over-year change in fair value of equity awards granted in prior years that vested in the covered year (from prior year-end to vesting date) | — | (3,656,401) | 9,509,117 | |||||||||||
Less: Fair value as of prior year-end of equity awards granted in prior years that failed to vest in the covered year | — | — | — | |||||||||||
Plus: Dollar value of dividends paid on equity awards in the covered year | — | — | — | |||||||||||
Less: Aggregate change in actuarial present value of pension benefits | — | — | — | |||||||||||
Plus: Service cost of pension benefits | — | — | — | |||||||||||
Plus: Prior service cost of pension benefits | — | — | — | |||||||||||
Compensation Actually Paid to PEO (Column (c)) | 80,979,736 | 2,210,189 | 44,523,404 | |||||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 59 |
Executive Compensation |
NEO | 2023 | 2022 | 2021 | |||||||||||
Average SCT Total for Non-PEOs (Column (d)) | 8,539,897 | 6,683,966 | 16,577,165 | |||||||||||
Less: Stock Award values reported in SCT | — | — | — | |||||||||||
Less: Option Award values reported in SCT | (6,302,056) | (2,122,249) | (13,645,045) | |||||||||||
Plus (Less): Year-over-year change in fair value of equity awards granted in prior years that are outstanding and unvested as of the covered year-end from prior year-end | 5,229,834 | (3,420,547) | 5,163,170 | |||||||||||
Plus: Year-end fair value of equity awards granted in the covered year that were outstanding and unvested as of the covered year-end | 8,151,452 | 562,573 | 13,541,351 | |||||||||||
Plus: Vesting date fair value of equity awards granted and vested in the covered year | 584,626 | 267,645 | 3,113,027 | |||||||||||
Plus (Less): Year-over-year change in fair value of equity awards granted in prior years that vested in the covered year (from prior year-end to vesting date) | 4,337,847 | (2,414,124) | 4,094,886 | |||||||||||
Less: Fair value as of prior year-end of equity awards granted in prior years that failed to vest in the covered year | — | — | — | |||||||||||
Plus: Dollar value of dividends paid on equity awards in the covered year | — | — | — | |||||||||||
Less: Aggregate change in actuarial present value of pension benefits | — | — | — | |||||||||||
Plus: Service cost of pension benefits | — | — | — | |||||||||||
Plus: Prior service cost of pension benefits | — | — | — | |||||||||||
Compensation Actually Paid to Non-PEOs (Column (e)) | 20,541,600 | (442,736) | 28,844,554 |
At the annual meeting, proxies cannot be voted for a greater numberAnalysis” section of individuals than the 11 nominees named in this Proxy Statement. Holders of proxies solicited by this proxy statement, will voteplus
602024 Proxy Statement | TransDigm Group Incorporated |
Executive Compensation |
Eachpeer group; and (b) comparisons between (i) the compensation actually paid to the PEO and the average compensation actually paid to our non-PEOs and (2) each of the directors nominated byperformance measures set forth in columns (f), (h) and (i) of the Board has consentedPay Versus Performance table.
TransDigm Group Incorporated | 2024 Proxy Statement 61 |
Executive Compensation |
622024 Proxy Statement | TransDigm Group Incorporated |
In accordance with its written charter adopted by the Board, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of TransDigm’s accounting, auditing, and financial reporting practices. Management has the responsibility for the preparation of TransDigm’s financial statements, and the independent registered public accounting firm has the responsibility for the examination of those statements. The Audit Committee meets at least quarterly to review quarterly or annual financial information prior to its release and inclusion in SEC filings. As part of each meeting, the Audit Committee has the opportunity to meet independently with management and TransDigm’s independent registered public accounting firm. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence. The Audit Committee reviewed and discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The Audit Committee reviewed and discussed TransDigm’s audited financial statements for the fiscal year ended September 30, 2023 with management. Based on the above-described review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to the Board that TransDigm’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2023 for filing with the SEC. The Audit Committee Sean P. Hennessy, Chair Jane M. Cronin Michele L. Santana | ||||||||
TransDigm Group Incorporated | 2024 Proxy Statement 63 |
For more information on the director nominees, please see the biographiesAppointment of the director nominees beginning on page 13.
The 11 nominees receiving the greatest number of votes ‘FOR’ election will be electedErnst & Young LLP as directors. If you do not vote for a particular director nominee, or if you indicate ‘WITHHOLD AUTHORITY’ for a particular nominee on your proxy form, your vote will not count either for or against the nominee. If your shares are held in “street name” by a broker or nominee indicating on a proxy that it does not have authority to vote on this or any other proposal, this will result in a “broker non-vote,” which will not count as a vote for or a vote against any of the nominees.
The Board of Directors recommends that the stockholders vote FOR the nominees for election set forth above.
Proposal No. 2 – Ratification of Appointment ofOur Independent Registered Public Accounting Firm
for the Fiscal Year Ending September 30, 2024
Even if this appointment is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of TransDigm and its stockholders.shareholders. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting,annual meeting, will have an opportunity to make a statement if desired, and willis expected to be available to respond to appropriate questions.
the Independent Registered Public Accounting Firm
FY 2021 | FY 2020 | |||||||
Audit Fees(1) | 7,519,000 | 7,013,000 | ||||||
Audit-Related Fees(2) | 238,000 | 65,000 | ||||||
Tax Fees(3) | 1,218,000 | 1,000,000 | ||||||
All Other Fees(4) | 8,000 | 15,000 |
FY 2023 ($) | FY 2022 ($) | ||||||||||
Audit Fees(1) | 8,056,000 | 7,652,000 | |||||||||
Audit-Related Fees(2) | 46,000 | 60,000 | |||||||||
Tax Fees(3) | 581,000 | 1,175,000 | |||||||||
All Other Fees(4) | 10,000 | 5,000 |
| ||||||||
642024 Proxy Statement | TransDigm Group Incorporated |
| ||||||||
Proposal Two |
|
|
| |||||
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR |
TransDigm Group Incorporated | 2024 Proxy Statement 65 |
of Our NEOs
New Compensation Committee Chair | We have appointed a new Compensation Committee Chair. | ||||||||||
Refreshed Compensation Committee | We have refreshed the members of the Compensation Committee; 67% of the members are new to the Committee. | ||||||||||
Enhanced Investor Outreach Program | We have implemented a formal year-round shareholder engagement program, increasing the number of shareholder feedback meetings by almost 250%. | ||||||||||
Enhanced Shareholder Feedback Disclosure | In connection with our enhanced investor outreach program, we have also enhanced our disclosure of shareholder feedback. | ||||||||||
Enhanced Compensation Program Disclosure | We have enhanced our disclosure of our compensation program, including descriptions of the carry-forward and carry-back feature of the long-term incentive plan and overall program design. | ||||||||||
Enhance Disclosure of Discretion When Used | Going forward, we will include a more fulsome disclosure if the Compensation Committee exercises discretion. | ||||||||||
Increased Stock Ownership Guidelines for Named Executive Officers | We have increased our stock ownership guidelines to six times salary for the CEO and three times salary for the remaining continuing NEOs. | ||||||||||
Refreshed Peer Group | We have hired a new compensation consultant and significantly refreshed our peer group to help ensure it includes representative peers. | ||||||||||
Adopted Double-Trigger Change in Control Provision | We have incorporated double-trigger change in control provisions in option agreements for NEO option awards starting in fiscal 2024. |
• Adopting a policy that we will not use discretion in vesting performance-based options in the future
662024 Proxy Statement | TransDigm Group Incorporated |
Proposal Three |
• Re-implementing annual operating performance criteria for option vesting for fiscal year 2022 and beyond (including for options granted in 2020-21)
• Eliminating alternate market vesting in options starting last year, in fiscal 2021
• Eliminating cash dividend equivalents for directors (including our CEO) for future dividends, such that directors will only receive adjustment of the exercise price of the options as contemplated by our stock option plan
• Terminating the executive chair employment agreement early to eliminate dual CEO compensation starting in fiscal 2022
The
NEOs.
| |||||
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR |
TransDigm Group Incorporated | 2024 Proxy Statement 67 |
682024 Proxy Statement | TransDigm Group Incorporated |
In accordance with its written charter adopted by the Board of Directors, the Audit Committee assists the Board of Directors in fulfilling its responsibility for oversight of the quality and integrity of TransDigm’s accounting, auditing and financial reporting practices. The Audit Committee meets at least quarterly to review quarterly or annual financial information prior to its release and inclusion in SEC filings. As part of each meeting, the Audit Committee has the opportunity to meet independently with management and TransDigm’s independent registered public accounting firm.
In discharging its oversight responsibility as to the audit process, the Audit Committee obtained a formal written statement from the independent registered public accounting firm describing all relationships between the independent registered public accounting firm and TransDigm that might bear on the independent registered public accounting firm’s independence consistent with Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” discussed with the independent registered public accounting firm any relationships that may impact its objectivity and independence, and satisfied itself as to the independent registered public accounting firm’s independence.
The Audit Committee reviewed and discussed with the independent registered accounting firm all matters required to be discussed pursuant to auditing standards adopted by the Public Company Accounting Oversight Board.
The Audit Committee reviewed and discussed TransDigm’s audited financial statements for the year ended September 30, 2021 with management and the independent registered public accounting firm. Management has the responsibility for the preparation of TransDigm’s financial statements, and the independent registered public accounting firm has the responsibility for the examination of those statements.
Based on the above-described review and discussions with management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that TransDigm’s audited financial statements be included in its Annual Report on Form 10-K for the year ended September 30, 2021 for filing with the Securities and Exchange Commission.
Audit Committee
Sean P. Hennessy, Chairman
Jane Cronin
Gary E. McCullough
Michele Santana
John Staer
Owners
Name and Address of Beneficial Holder | Amount and Nature of Beneficial Ownership | Percentage of Class (4) | ||||||
Capital International Investors(1) |
| 6,557,837 |
|
| 12.01% |
| ||
333 South Hope Street, 55th Floor | ||||||||
Los Angeles, CA 90071 | ||||||||
The Vanguard Group, Inc.(2) |
| 5,602,332 |
|
| 10.26 |
| ||
100 Vanguard Blvd. | ||||||||
Malvern, PA 19355 | ||||||||
Principal Global Investors, LLC (3) |
| 3,084,248 |
|
| 5.65 |
| ||
801 Grand Avenue | ||||||||
Des Moines, IA 50392 |
|
|
|
|
The following table sets forth information regarding the beneficial ownership of TransDigm common stock as of May 18, 2022 with respect to each director and named executive officer and all directors and executive officers as a group. Except as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in the table haveSeptember 30, 2023. Capital International Investors has sole voting power over 6,566,089 shares.
Amount and Nature of Beneficial Ownership(1) | ||||||||||||||
Beneficial Owner | Shares | Shares Subject to Options Currently Exercisable or Exercisable within 60 Days | Total Number of Shares | Percentage of Class | ||||||||||
David Barr |
| 31,843 |
|
| 4,960 |
|
| 36,803 |
| * | ||||
Jane Cronin |
| 388 |
|
| 0 |
|
| 388 |
| * | ||||
Mervin Dunn |
| 1,762 |
|
| 13,088 |
|
| 14,850 |
| * | ||||
Michael Graff(2) |
| 23,016 |
|
| 5,480 |
|
| 28,496 |
| * | ||||
Sean Hennessy |
| 33,935 |
|
| 11,888 |
|
| 45,823 |
| * | ||||
W. Nicholas Howley(3) |
| 29,809.513 |
|
| 961,868 |
|
| 991,677.513 |
| 1.82 | ||||
Raymond Laubenthal(4) |
| 205,492 |
|
| 4,960 |
|
| 210,452 |
| * | ||||
Gary E. McCullough |
| 852 |
|
| 4,960 |
|
| 5,812 |
| * | ||||
Michele Santana |
| 461 |
|
| 2,925 |
|
| 3,386 |
| * | ||||
Robert Small(5) |
| 2,677,471 |
|
| 13,088 |
|
| 2,690,559 |
| 4.93 | ||||
John Staer(6) |
| 117 |
|
| 8,610 |
|
| 8,727 |
| * | ||||
Kevin Stein(7) |
| 8,158 |
|
| 280,600 |
|
| 288,758 |
| * | ||||
Michael Lisman |
| 2,309 |
|
| 93,770 |
|
| 96,079 |
| * | ||||
Jorge L. Valladares III(8) |
| 11,000 |
|
| 185,400 |
|
| 196,400 |
| * | ||||
Sarah Wynne(9) |
| 610 |
|
| 24,760 |
|
| 25,370 |
| * | ||||
Robert Henderson(10) |
| 10,000 |
|
| 208,605 |
|
| 218,605 |
| * | ||||
All directors and officers as a group (16 persons)(11) |
| 3,028,116.513 |
|
| 1,854,192 |
|
| 4,892,298.513 |
| 8.96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and owners of more than 10% of a registered class of the Company’s equity securities, to file with the SEC and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of common shares and other equity securities of the Company. Executive officers, directors and owners of more than 10% of the common shares are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and representations from executive officers and directors that no other reports were required, in addition to late filings previously disclosed, during the fiscal year ended September 30, 2021, the Company is aware that (i) Mr. Henderson exercised 10,000 options and sold the shares received on such exercise on February 24, 2021; because of inadvertence on the part of a Company employee, the exercise and sale was not reported until December 9, 2021 when the transactions were uncovered during year-end reviews and (ii) Mr. Laubenthal made gifts between March 2020 and March 2021 and sold 10,000 in three transactions during May and June 2021, all of which were not reported until January 12, 2022; the transactions were not reported to the Company for filing by Mr. Laubenthal’s financial advisors as Mr. Laubenthal and the Company had reason to expect and were discovered by the Company in preparation of the beneficial ownership table.
General Information Regarding the 2022 Annual Meeting of Stockholders
Location, Date and Time and Record Date
2024 Proxy Statement 69 |
Other Information |
Date & Time Thursday, March 7, 2024 9:00 a.m., Eastern time | Location 1301 | |||||||||||||||||||
Record Date January 12, | ||||||||||||||||||||
Attending the Annual Meeting
The meeting will be held at the TransDigm’s principal executive offices, 1301 EEast Ninth Street, Suite 3000, Cleveland, Ohio 44114 on Tuesday, July 12, 2022,Thursday, March 7, 2024, at 9:00 a.m. Eastern time. For directions to the annual meeting, callcontact our Investor Relations department at 216-706-2945.
appear in the Company’s records, so you will need to bring a copy of your brokerage statement reflecting your ownership of shares of common stock as of the record date.
In the unlikely event that we determine that holding an in-person meeting is inadvisable or in conflict with federal, state or local executive orders, the Company may decide to instead hold a virtual annual meeting. If we decide to use this format, we will make a public announcement as soon as practicable prior to the meeting. In such event, to attend and participate in the virtual annual meeting, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders of record will need to visit www.virtualshareholdermeeting.com/TDG2022 and use their 16-digit control number provided with this proxy statement to login and beneficial owners will need to follow the instructions provided by the broker, bank or oter nominee that holds their shares. Further instructions on how to attend, participate in and vote at the virtual annua meeting will be available at www.virtualshareholdermeeting.com/TDG2022. Please note you will only be able to participate in the meeting using this website if we decide to use a virtual annual meeting instead of holding an in-person meeting in Cleveland, Ohio.
Delivered?
• The Notice of 20222024 Annual Meeting of Stockholders
• This Proxy Statementproxy statement for the Annual Meeting
• TransDigm’s Annual Report on Form 10-K for the year ended September 30, 2021
Stockholders
702024 Proxy Statement | TransDigm Group Incorporated |
Other Information |
separate proxy cards. Upon request, TransDigm will deliver promptly a separate copy of the noticeNotice of internet availabilityInternet Availability and, if you requested printed versions by mail, this proxy statement and the annual report to any stockholdershareholder that elects not to participate in householding. To receive, free of charge, a separate copy of the notice of internet availability and, if you requested printed versions by mail, this proxy statement or the annual report, or separate copies of any future notice, proxy statement, or annual report, you may write or call:
Quorum for
Meeting?
Solicitation?
Voting
Stockholders
TransDigm Group Incorporated | 2024 Proxy Statement 71 |
Other Information |
|
Phone. • Online Prior to the Annual Meeting.If you are a stockholdershareholder of record, you may vote by proxy by visiting www.proxyvote.com and entering the control number found in your notice of internet availability or proxy card. If you are a beneficial owner of shares held in street name, the availability of online voting may depend on the voting procedures of the organization that holds your shares. Your internet vote must be received by 11:59 p.m. Eastern time on Wednesday, March 6, 2024.
• Mail. If you request printed copies of the proxy materials by mail, you will receive a proxy card or voting instruction form and you may vote by proxy by filling out the card or form and returning it in the envelope provided. If you are a beneficial owner of shares held in street name, you should complete the voting instruction card provided to you by your broker or nominee.
Revoking of Proxy
Uninstructed Shares
Stockholders
non-votes are expected in connection with Proposal No. 2. Proposal No. 1 (the election of directors)ten director nominees to our Board of Directors) and Proposal No. 3 (advisory vote to approve executive compensation)(approval, on an advisory basis, of the compensation of our NEOs) are non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the inspector of election that it does not have the authority to vote on the matter with respect to your shares. This is generally referred to as a “broker non-vote.” Therefore, broker non-votes may exist in connection with Proposals No. 1 and No. 3.
STOCKHOLDER PROPOSALS FOR 2023 ANNUAL MEETING
Stockholder
722024 Proxy Statement | TransDigm Group Incorporated |
Stockholder Proposal Not Included in Proxy Statement.January 6, 2025. If a stockholdershareholder submits such a proposal after January 6, 2025, the specified period set forth above,presiding officer at the 2025 Annual Meeting may refuse to acknowledge the proposal. However, if the presiding officer allows the consideration of a proposal submitted after January 6, 2025, the proxies designated by the Board may exercise their discretionary voting authority with respect to any such proposal, without our discussing the proposal in our proxy materials.
September 28, 2024.
In addition to satisfying the requirements under TransDigm’s Bylaws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than TransDigm’s nominees must provide notice that sets forth any additional information required by SEC Rule 14a-19 under the Exchange Act (including a statement that such shareholder intends to solicit the holders of common stock representing at least 67% of the voting power of the Company’s shares entitled to vote on the election of directors in support of director nominees other than the Company’s nominees) no later than January 6, 2025.
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TransDigm Group Incorporated | 2024 Proxy Statement 73 |
TransDigm Group Incorporated |
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2024 Proxy Statement A-1 |
01) | David Barr | 02) | Jane M. Cronin | 03) | Mervin Dunn | 04) | Michael Graff | 05) | Sean Hennessy | |||||||||||||
06) | W. Nicholas Howley | 07) | Gary E. McCullough | 08) | Michele Santana | 09) | Robert Small | 10) | John Staer | |||||||||||||
11) | Kevin Stein |
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA AND EBITDA AS DEFINED | |||||||||||||||||||||||||||||||||||||||||||||||
1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | ||||||||||||||||||||||||||||||||||
($) (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 52 | $ | 57 | $ | 63 | $ | 78 | $ | 111 | $ | 131 | $ | 151 | $ | 201 | $ | 249 | $ | 293 | $ | 301 | $ | 374 | $ | 435 | $ | 593 | |||||||||||||||||||
Income (loss) from continuing operations | $ | (5) | $ | — | $ | 1 | $ | 3 | $ | 14 | $ | (17) | $ | 11 | $ | 14 | $ | 31 | $ | (76) | $ | 14 | $ | 35 | $ | 25 | $ | 89 | |||||||||||||||||||
Depreciation and amortization expense | 7 | 7 | 7 | 6 | 7 | 6 | 7 | 9 | 13 | 10 | 18 | 17 | 16 | 24 | |||||||||||||||||||||||||||||||||
Interest expense, net | 5 | 5 | 5 | 3 | 3 | 23 | 28 | 32 | 37 | 43 | 75 | 80 | 77 | 92 | |||||||||||||||||||||||||||||||||
Income tax provision (benefit) | (2) | — | 2 | 5 | 13 | (2) | 8 | 9 | 17 | (45) | 6 | 23 | 16 | 53 | |||||||||||||||||||||||||||||||||
Warrant put value adjustment | 1 | 1 | 2 | 5 | 7 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Extraordinary item | — | — | — | 2 | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
EBITDA | 6 | 13 | 17 | 24 | 44 | 10 | 54 | 64 | 98 | (68) | 113 | 155 | 134 | 258 | |||||||||||||||||||||||||||||||||
Merger expense | — | — | — | — | — | 40 | — | — | — | 176 | — | — | — | — | |||||||||||||||||||||||||||||||||
Refinancing costs | — | — | — | — | — | — | — | — | — | — | — | — | 49 | — | |||||||||||||||||||||||||||||||||
Acquisition and divestiture transaction-related costs | 4 | — | — | 1 | — | 1 | — | 8 | — | 15 | 20 | 2 | 1 | 9 | |||||||||||||||||||||||||||||||||
Non-cash compensation and deferred compensation costs | — | — | — | — | — | — | — | — | — | 1 | 6 | 7 | 1 | 6 | |||||||||||||||||||||||||||||||||
One-time special bonus | — | — | — | — | — | — | — | — | — | — | — | — | 6 | — | |||||||||||||||||||||||||||||||||
COVID-19 pandemic restructuring costs | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Gain on sale of businesses | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Public offering costs | — | — | — | — | — | — | — | — | — | — | — | — | 3 | 2 | |||||||||||||||||||||||||||||||||
EBITDA As Defined | $ | 10 | $ | 13 | $ | 17 | $ | 25 | $ | 44 | $ | 51 | $ | 54 | $ | 72 | $ | 98 | $ | 124 | $ | 139 | $ | 164 | $ | 194 | $ | 275 | |||||||||||||||||||
EBITDA As Defined Margin | 19.2 | % | 22.8 | % | 27.0 | % | 32.1 | % | 39.6 | % | 38.9 | % | 35.8 | % | 35.8 | % | 39.4 | % | 42.3 | % | 46.2 | % | 43.9 | % | 44.6 | % | 46.4 | % | |||||||||||||||||||
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| A-2 2024 Proxy Statement | |||||||||||||||
| TransDigm Group Incorporated |
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO EBITDA AND EBITDA AS DEFINED | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||||||||||||||||||||||||
($) (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 714 | $ | 762 | $ | 828 | $ | 1,206 | $ | 1,700 | $ | 1,924 | $ | 2,373 | $ | 2,707 | $ | 3,171 | $ | 3,504 | $ | 3,811 | $ | 5,223 | $ | 5,103 | $ | 4,798 | $ | 5,429 | $ | 6,585 | |||||||||||||||||||||
Income (loss) from continuing operations | $ | 133 | $ | 163 | $ | 163 | $ | 152 | $ | 325 | $ | 303 | $ | 307 | $ | 447 | $ | 586 | $ | 629 | $ | 962 | $ | 841 | $ | 653 | $ | 681 | $ | 866 | $ | 1,299 | |||||||||||||||||||||
Depreciation and amortization expense | 25 | 28 | 30 | 61 | 68 | 73 | 96 | 94 | 122 | 141 | 129 | 226 | 283 | 253 | 253 | 268 | |||||||||||||||||||||||||||||||||||||
Interest expense, net | 93 | 84 | 112 | 185 | 212 | 271 | 348 | 419 | 484 | 602 | 663 | 859 | 1,029 | 1,059 | 1,076 | 1,164 | |||||||||||||||||||||||||||||||||||||
Income tax provision (benefit) | 74 | 88 | 88 | 77 | 163 | 146 | 142 | 189 | 182 | 209 | 24 | 222 | 87 | 34 | 261 | 417 | |||||||||||||||||||||||||||||||||||||
Warrant put value adjustment | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Extraordinary item | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
EBITDA | 325 | 363 | 393 | 475 | 768 | 793 | 893 | 1,149 | 1,374 | 1,581 | 1,778 | 2,148 | 2,052 | 2,027 | 2,456 | 3,148 | |||||||||||||||||||||||||||||||||||||
Merger expense | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Refinancing costs | — | — | — | 72 | — | 30 | 132 | 18 | 16 | 40 | 6 | 3 | 28 | 37 | 1 | 56 | |||||||||||||||||||||||||||||||||||||
Acquisition and divestiture transaction-related costs | 2 | 6 | 12 | 30 | 19 | 26 | 21 | 37 | 57 | 31 | 29 | 169 | 31 | 35 | 18 | 18 | |||||||||||||||||||||||||||||||||||||
Non-cash compensation and deferred compensation costs | 6 | 6 | 7 | 13 | 22 | 49 | 26 | 32 | 48 | 46 | 59 | 93 | 93 | 130 | 184 | 157 | |||||||||||||||||||||||||||||||||||||
One-time special bonus | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
COVID-19 pandemic restructuring costs | — | — | — | — | — | — | — | — | — | — | — | — | 54 | 40 | — | — | |||||||||||||||||||||||||||||||||||||
Gain on sale of businesses | — | — | — | — | — | — | — | — | — | — | — | — | — | (69) | (7) | — | |||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | 2 | 1 | (2) | — | 13 | 5 | 6 | 20 | (11) | (6) | 16 | |||||||||||||||||||||||||||||||||||||
Public offering costs | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
EBITDA As Defined | $ | 333 | $ | 375 | $ | 412 | $ | 590 | $ | 809 | $ | 900 | $ | 1,073 | $ | 1,234 | $ | 1,495 | $ | 1,711 | $ | 1,877 | $ | 2,419 | $ | 2,278 | $ | 2,189 | $ | 2,646 | $ | 3,395 | |||||||||||||||||||||
EBITDA As Defined Margin | 46.6 | % | 49.2 | % | 49.8 | % | 48.9 | % | 47.6 | % | 46.8 | % | 45.2 | % | 45.6 | % | 47.1 | % | 48.8 | % | 49.3 | % | 46.3 | % | 44.6 | % | 45.6 | % | 48.7 | % | 51.6 | % | |||||||||||||||||||||
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
($) (in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from continuing operations | $ | 841 | $ | 653 | $ | 681 | $ | 866 | $ | 1,299 | |||||||||||||||||||||||||||||||||||||||||||
Gross adjustments from EBITDA to EBITDA As Defined | 271 | 226 | 162 | 190 | 247 | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchase accounting backlog amortization | 38 | 53 | 11 | 7 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||
Tax adjustment | (122) | (103) | (146) | (65) | (73) | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Net Income | $ | 1,028 | $ | 829 | $ | 708 | $ | 998 | $ | 1,477 | |||||||||||||||||||||||||||||||||||||||||||
Weighted-average shares outstanding under the two-class method | 56.3 | 57.3 | 58.4 | 58.2 | 57.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Earnings Per Share | $ | 18.27 | $ | 14.47 | $ | 12.13 | $ | 17.14 | $ | 25.84 |
TransDigm Group Incorporated | ||||||||||||||||||
2024 Proxy Statement A-3 |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice, Proxy Statement, and Annual Report are available at www.proxyvote.com
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You invested in TRANSDIGM GROUP INCORPORATED and it’s time to vote!
You have the right to vote on proposals being presented at the Annual Meeting. This is an important notice regarding the availability of proxy material for the stockholder meeting to be held on July 12, 2022.
Get informed before you vote
View the Notice, Proxy Statement, and Annual Report online OR you can receive a free paper or email copy of the material(s) by requesting prior to June 28, 2022. If you would like to request a copy of the material(s) for this and/or future stockholder meetings, you may (1) visit www.ProxyVote.com, (2) call 1-800-579-1639 or (3) send an email to sendmaterial@proxyvote.com. If sending an email, please include your control number (indicated below) in the subject line. Unless requested, you will not otherwise receive a paper or email copy.
* Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares.
Vote at www.ProxyVote.com
THIS IS NOT A VOTABLE BALLOT
This is an overview of the proposals being presented at the
upcoming stockholder meeting. Please follow the instructions on
the reverse side to vote these important matters.
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