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1, 2014
Time and Place | 3:00 p.m., local time, on Thursday, May | |
| AAM World Headquarters Auditorium, One Dauch Drive, Detroit, Michigan | ||
Items of Business | (1) Elect three members of the Board of Directors to serve until the Annual Meeting of Stockholders in 2017; (2) Advisory vote to approve named executive officer compensation; (3) Ratify the appointment of Deloitte & Touche LLP as AAM’s independent registered public accounting firm for the year ending December 31, (4) Attend to other business properly presented at the meeting. | |
Record Date | You may vote if you were an AAM stockholder at the close of business on March | |
Meeting Admission | Admission may be limited to AAM stockholders as of the record date and holders of valid proxies. Please be prepared to present identification for admittance. Stockholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras and recording devices will not be permitted. | |
Proxy Materials | We have elected to furnish materials for the | |
Important Notice Regarding Internet Availability of Proxy Materials for the May | ||
2014
revoking it by written notice to AAM’s Secretary at the address on the cover of this proxy statement; voting in person at the annual meeting; or delivering a later-dated proxy vote by mail, telephone or over the Internet. 2017. 61 63 The Board annually reviews and determines, on the recommendation of the Nominating/Corporate Governance Committee, whether any director has a material relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our Board leadership structure is further enhanced by an Independent Lead process and systems technology. The Strategy Committee oversees committee. policy and the Audit Committee's charter. which AAM is or is expected to be a participant, the amount involved exceeds a related person has or will have a A related person includes directors and executive officers and their immediate family members, stockholders owning more than five percent of the During fiscal year Meetings The Board held four regularly scheduled meetings and two special meetings during 2013. Richard E. Dauch Salvatore J. Bonanno, Sr. Elizabeth A. Chappell David C. Dauch Forest J. Farmer Steven B. Hantler Richard C. Lappin James A. McCaslin William P. Miller II John F. Smith(1) Larry K. Switzer Thomas K. Walker(2) Dr. Henry T. Yang No. of Meetings in 2012 the quality and integrity of our financial statements; our compliance with legal and regulatory requirements; our independent auditors’ qualifications and independence; and the performance of our internal audit function and independent auditors. Code and are "non-employee" directors within the meaning of SEC Rule 16b-3. The The President & CEO, the Executive Vice President & CFO and the Vice President, Human Resources develop and recommend performance objectives and targets for AAM’s incentive compensation programs. The The Board has primary responsibility for CEO succession planning and develops both long-term and contingency plans for CEO succession. Our executive compensation program reflects an externally competitive compensation structure based on a comprehensive market study of executive compensation programs in Unit; and Peer Group and Compensation Benchmarking Comparative Peer Based on this analysis, Meridian recommended and the NEO may be above or below the 50 David C. Dauch (effective September 1, 2012) Michael K. Simonte John J. Bellanti Norman Willemse Chairman, President & CEO, was increased to $1,100,000. This increase reflects the additional leadership responsibilities he assumed in August 2013 upon the passing of Mr. R.E. Dauch. In that may be selected our NEOs. David C. Dauch Michael K. Simonte John J. Bellanti Alberto L. Satine Net operating cash flow is a critical financial metric for AAM Increasing net operating cash flow is key to achieving credit rating upgrades, which will have a favorable impact on the Company’s cost of future financing; Net income is a key indicator of financial and operational performance; and Net income and net income growth are highly correlated to cash flow, cash flow growth and stockholder value creation. Threshold Target Maximum The 2013 annual budget also included $30 million in proceeds from anticipated sale-leaseback transactions. Committee established a maximum payout for such awards beginning in 2014. Plan. The usage. The competitor peer group consists of companies listed in the table shown above in Performance Level Threshold Target Maximum th percentile of our competitor peer group and resulted in a payout of 200% of target. Senior executives are eligible for the use of a Company-provided vehicle with AAM content. The payout. Chief Executive Officer Executive Vice President Senior Vice President, Group Vice President and Vice President person is an executive officer of AAM. his position. Company. Name and Principal Position David C. Dauch(1) President & Chief Executive Officer Michael K. Simonte Executive Vice President & Chief Financial Officer Richard E. Dauch(1) Co-Founder & Executive Chairman John J. Bellanti Executive Vice President, Worldwide Operations Norman Willemse Vice President, Metal Formed Product Business Unit — — — David C. Dauch Michael K. Simonte John J. Bellanti Norman Willemse Employer $ Retirement $ Executive $ Tax $ Other(e) $ Total $ David C. Dauch Michael K. Simonte Richard E. Dauch John J. Bellanti Norman Willemse2013 2 2 4 5122020333539404144 46 55 56 59 60 61 626263 63 642013,2014, we mailed to our stockholders (other than those who previously requested e-mail or paper delivery) a Notice of Availability of Proxy Materials containing instructions on how to access our proxy materials, including our proxy statement and 2012 Annual Report2013 annual report on Form 10-K. The Notice of Availability of Proxy Materials provides instructions on how you may submit your proxy over the Internet or by telephone.5, 20134, 2014 (record date). AAM’s Board of Directors (Board) is soliciting your proxy to vote your shares at the annual meeting. By use of a proxy, you can vote whether or not you attend the meeting. This proxy statement includes information that we are required to provide to you and is designed to assist you in voting your shares.•In person — attending the annual meeting and casting a ballot.•By mail — using the proxy and/or voting instruction card provided.•By telephone or over the Internet — following the instructions on your notice card, proxy and/or voting instruction card.5, 2013,4, 2014, we had 74,839,56775,646,724 shares of common stock outstanding and entitled to vote. Under AAM’s by-laws, a majority of these shares must be present in person or by proxy to hold the annual meeting and take any action during the meeting.20162017 annual meeting;2013.2014.Information not incorporated into this proxy statement.The information on our website (www.aam.com) is not, and shall not be deemed to be, a partdirectors, Elizabeth A. Chappell, Steven B. Hantler and John F. Smith,Samuel Valenti III, be elected to the Board for terms expiring at the annual meeting in 2016.IIIII directors based on their achievements, special competencies and integrity. Each nominee brings a strong and unique background and set of skills to the Board. Collectively, the Board has high levels of competence and experience in a variety of areas, including manufacturing, engineering, finance, international business, management, restructuring, law, risk management, strategic business development and the global automotive industry. A summary of the principal occupation, professional background and specific qualifications and/or skills that qualify each nominee and returning director to serve on our Board is provided in the following pages of this proxy statement.
Director since 2013 
55Elizabeth A. (Beth)56Ms. ChappellMs.Chappell was President and Chief Executive Officer of a consulting firm she founded, The Chappell Group, Inc. For 16 years, Ms. Chappell held executive positions at AT&T. From 1999 to 2009, Ms. Chappell served on the Board of Directors of the Handleman Company. She also serves on a number of civic boards, including Brother Rice High School,the Michigan State University Capital Campaign, Citizens Research Council, Detroit Regional Chamber, Airport Authority-Citizen’s Review Council,the United Way Board and Tocqueville Committee, and Michigan Economic Development Corporation and has served on the Charter One Regional Advisory Board (Midwest) since 2001.. Ms. Chappell is a former board member of the Karmanos Cancer Institute, Michigan Economic Growth Authority and Hospice of Michigan. Ms. Chappell’s demonstrated leadership skills, entrepreneurial business experience and service on various Boards of Directorsboards enhance her contributions to the Board on mattersin the areas of significance to AAM’sinvestor relations, marketing and communications, and strategic business development. 
60 
62served inheld positions of increasing responsibility with General Motors Corporation in sales and marketing, product planning and corporate strategy, most recently as Group Vice President, Corporate Planning and Alliances. During his 42-year career in the automotive industry, Mr. Smith also served as General Manager of Cadillac Motor Car, President of Allison Transmission, and Vice President, Planning at General Motors International Operations in Zurich, Switzerland. In June 2012, Mr. Smith joinedcurrently serves on the Boardboards of Directors ofCEVA Holdings LLC, Plasan Carbon Composites and Enginetics, LLC. Mr. Smith Electric Vehicles (no relation), a manufacturer of all-electric commercial vehicles and the Advisory Board ofalso serves as an advisor to VNG.CO, a developer of compressed natural gas refueling stations. In January 2013, Mr. Smith joined the Advisory Board ofstations, and Palogix International, a provider of in-bound logistics and container management solutions. Mr. Smith also serves on the boardsis a member of several nonprofit organizations, including the National Advisory Board of Boy Scouts of America and the Board of Trustees of St. John’sJohn's Providence Health System in Michigan. He served on the Board of Directors of Smith Electric Vehicles Corp. from June 2012 to December 2013. Mr. Smith’sSmith's extensive experience in manufacturing, finance, business development, international operations, sales and marketing, product development and mergers and acquisitions is aligned with AAM’sAAM's key business objectives, including continued global business growth and diversification.Director since2011Class III — Directors to hold office until the 2014 Annual Meeting of Stockholders
RICHARD E. DAUCHAge 70Richard E. Dauch is Co-Founder & Executive Chairman of the Board of AAM and is also Chairman of the Executive Committee of the Board. He served as Chief Executive Officer from 1994 through August 2012 and has been a member of the Board since AAM began operations in March 1994. In October 1997, he was named Chairman of the Board of Directors. He was also President of AAM from March 1994 through December 2000. Prior to March 1994, he spent 12 years at Chrysler Corporation, where he established the just-in-time materials management system and the three-shift manufacturing vehicle assembly process. He is a retired officer from the Chrysler Corporation. Mr. Dauch’s last position at Chrysler, in 1991, was Executive Vice President of Worldwide Manufacturing. Mr. Dauch also served as Group Vice President of Volkswagen of America, where he established the manufacturing facilities and organization for the successful launch of the first major automotive transplant in the United States. Mr. Dauch has more than 48 years of experience in the automotive industry. Mr. Dauch currently serves on the Board of Directors of the National Association of Manufacturers (N.A.M.), where he previously served as Chairman. In 2012, Mr. Dauch was inducted into IndustryWeek’s Manufacturing Hall of Fame. He has lectured extensively on the subject of manufacturing and authored two books, Passion for Manufacturing, which was released in 1993, and American Drive, which was released in September 2012. The Board considers Mr. Dauch’s continuing leadership of the Board and the services he provides to AAM in his new role as Executive Chairman to be significant contributors to the achievement of the Company’s strategic goals. Mr. Dauch’s extensive expertise in the global automotive industry and manufacturing operations supports AAM’s business strategy to build value for its key stakeholders.Director since1994
JAMES A. McCASLINAge 64Mr. McCaslin retired from Harley Davidson, Inc. in April 2010. Mr. McCaslin joined Harley Davidson in 1992 and held various senior executive leadership positions, including President and Chief Operating Officer of Harley-Davidson Motor Company, from 2001 to 2009. From 1989 to 1992, he held manufacturing and engineering positions with JI Case, a manufacturer of agricultural equipment. Previously, he held executive positions in manufacturing and quality with Chrysler Corporation, Volkswagen of America and General Motors Corporation, where he began his 40-year career in manufacturing. From 2003 to 2006, he served on the Board of Directors of Maytag Corporation. Mr. McCaslin has served on a number of civic boards, including Boys and Girls Clubs of Greater Milwaukee, Manufacturing Skill Standards Council and Kettering University. Mr. McCaslin’s extensive operational expertise and experience in multiple manufacturing industries in the original equipment and aftermarket product markets provide the Board with a valued resource in geographic and product diversification, one of AAM’s key strategic objectives.Director since2011
WILLIAM P. MILLER II, CFAAge 57Mr. Miller, Chartered Financial Analyst, is the Senior Managing Director & Chief Financial Officer of Financial Markets International, Inc., an international law and economics consulting firm. Since 2003, Mr. Miller has been a member of the Board of Directors of the Chicago Mercantile Exchange, serving on the Audit Committee, Finance Committee and Market Regulation Oversight Committee. Since June 2011, Mr. Miller has served on the Board of Directors of the Dubai Mercantile Exchange, serving on the Compensation Committee and the Compliance Committee. Since December 2012, Mr. Miller has served on the Institutional Investor Advisory Board for Golub Capital, a U.S. asset manager with over $7 billion of assets under management. From 2005 to 2011, he was employed by the Ohio Public Employees Retirement System, where he served as Deputy Chief Investment Officer. Previously, he served as Senior Risk Manager for the Abu Dhabi Investment Authority and as an Independent Risk Oversight Officer and Chief Compliance Officer for Commonfund Group, an investment management firm for educational institutions. Mr. Miller also served as Director, Trading Operations and Asset Mix Management, with General Motors Investment Management Corp. and as a financial analyst with the U.S. Department of Transportation. Mr. Miller also was a member of the Public Company Accounting Oversight Board’s Standing Advisory Group and a member of the Board of Directors of the Dubai International Financial Exchange. Mr. Miller’s expertise in finance, investments, risk management, compliance, international business, audit and accounting provides the Board with valuable guidance in assessing and managing risks and in fulfilling the Board’s financial oversight role.Director since2005
LARRY K. SWITZERAge 69Larry K. Switzer retired as Chief Executive Officer of DANKA PLC, London, England, a global independent distributor of office equipment, in 2000. From 1994 to 1998, Mr. Switzer was Senior Executive Vice President and Chief Financial Officer of Fruit of the Loom, Inc. Previously, he served as Executive Vice President and Chief Financial Officer for Alco Standard Corporation and, from 1989 to 1992, Senior Vice President and Chief Financial Officer for S.C. Johnson & Son, Inc. Mr. Switzer has also held senior executive positions at Bendix Corp., White Motor Corp. and Gencorp. As a former chief financial officer, Mr. Switzer serves as a valued resource to the Board in finance, accounting and tax matters and provides significant expertise and perspective in the Board’s oversight of the Company’s capital structure, liquidity management and strategic business development.Director since2005Class I — Directors to hold office until the 2015 Annual Meeting of Stockholders
DAVID C. DAUCHAge 48David C. Dauch is President & Chief Executive Officer of AAM, a position he has held since September 2012. Since June 2008, he served as President & Chief Operating Officer and previously served as Executive Vice President & Chief Operating Officer. Mr. D.C. Dauch joined AAM in July 1995 and has served in positions of increasing responsibility. Prior to joining AAM, Mr. D.C. Dauch served in several positions at Collins & Aikman Products Company, where he received the President’s Award for leadership and innovation. Mr. D.C. Dauch also served on the Collins & Aikman Board of Directors from 2002 to 2007. Presently, he serves on the Boards of Directors of Business Leaders for Michigan, the Detroit Regional Chamber, the Great Lakes Council Boy Scouts of America and the Boys & Girls Club of Southeast Michigan. Mr. D.C. Dauch also serves on the Miami University Business Advisory Council. Mr. D.C. Dauch’s day to day leadership as President & Chief Executive Officer provides him with intimate knowledge of and responsibility for developing and implementing the Company’s operating and strategic objectives. Mr. D.C. Dauch’s leadership of AAM’s global business and operations provides the Board with strategic vision and insight regarding AAM’s strategic plans for the future. Director since 2009
FOREST J. FARMERAge 72Forest J. Farmer has served as Chairman of the Board, Chief Executive Officer & President of The Farmer Group, a holding company for three technology and manufacturing corporations, since 1998. Mr. Farmer serves on the Board of Directors of Saturn Electronics & Engineering, Inc., a global supplier of electronic components, engineering and other services to the automotive, appliance and communications industries. From 1997 to September 2011 Mr. Farmer was a member of the Board of Directors of The Lubrizol Corporation, serving on the Compensation Committee. In 1994, he retired from Chrysler Corporation after 26 years of service, which included six years as President of its Acustar automotive parts subsidiary. Through his senior management-level experience and his prior service on the Board and Compensation Committee of another public company, Mr. Farmer brings strong leadership skills, extensive U.S. automotive and manufacturing experience, and public company experience to our Board.Director since1999
RICHARD C. LAPPINAge 68Richard C. Lappin is Executive Chairman of VOKAL Interactive, a maker of mobile applications for business. From 2007 to 2010, he served as Chairman of the Board & Chief Executive Officer of Clear Sky Power, an alternative energy company. Mr. Lappin retired in 2004 as Chairman of the Board of Haynes International, Inc. Previously, Mr. Lappin served as Senior Managing Director of The Blackstone Group L.P., where he was a member of the Private Equity Group from 1998 to 2002. He also helped monitor the operations of Blackstone Capital Partners portfolio companies and evaluated business strategy options. From 1989 to 1998, Mr. Lappin served as President of Farley Industries, which included West Point-Pepperell, Inc., Acme Boot Company, Inc., Tool and Engineering, Inc., Magnus Metals, Inc. and Fruit of the Loom, Inc. He also served as President & Chief Executive Officer of Doehler-Jarvis and Southern Fastening Systems, and he has held senior executive positions with Champion Spark Plug Company and RTE Corporation. Mr. Lappin’s experience as a CEO and his financial expertise provide the Board with an important perspective in the areas of business strategy and organizational development, as well as sound investment criteria, capital structure and liquidity management.Director since1999
THOMAS K. WALKERAge 72Thomas K. Walker is Chairman of the Board & Chief Executive Officer of Lackawanna Acquisition Corporation and is the former President of Amcast Automotive, where from 1995 to 1999 he directed all activities for the $300 million automotive group. Previously, he held senior executive positions with ITT Automotive and Allied-Signal Automotive Catalyst Co. He also served in various manufacturing and engineering leadership positions with Volkswagen of America and with General Motors Corporation, where he began his 50-year career in the automotive industry. Mr. Walker serves on the National Advisory Board for Michigan Technological University. Mr. Walker’s business acumen and extensive leadership experience in the automotive industry enable him to provide our Board with expertise related to engineering, manufacturing operations and strategic business development.Director since1999and each member of the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee meet the independence criteria of the NYSE listing standards. In addition,Currently, nine of our ten directors are independent from the Company. Only David C. Dauch, who serves as AAM's President & Chief Executive Officer, is not independent due to his employment with AAM.When assessing materiality, the Board considers relevant facts and circumstances of which it is aware. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company.The has affirmatively determined that the following nominees and returning directors have no material relationships with AAM and are independent: Elizabeth A. (Beth) Chappell, Forest J. Farmer, Steven B. Hantler, Richard C. Lappin, James A. McCaslin, William P. Miller II, John F. Smith, Larry K. SwitzerSamuel Valenti III and Thomas K. Walker. Richard E. Dauch, Co-Founder & Executive Chairman and David C. Dauch, President & CEO, are not independent due to their employment with AAM. Mr. D.C. Dauch is the son of Mr. R.E. Dauch.Board has the responsibility to determine the appropriateBoard's current leadership structure for the Company, including whether it is best for the Company atincludes a given point in time for the roles of Boardcombined Chairman and CEO to be separate or combined.Historically,role with a lead independent director. On August 16, 2013, the positions ofBoard appointed President & CEO and Chairman were held by Mr. R.E. Dauch. Mr. R.E.David C. Dauch has been our CEO since he co-founded AAM in 1994 and has served as Chairman since 1997. As a result of the Company’s multi-year CEO succession planningBoard, following the passing of our Co-Founder and leadership development process, as well asformer Executive Chairman, Richard E. Dauch, on August 2, 2013.Board’s ongoing reviewbest interest of its structure,the Company to combine the roles of Chairman and CEO were separated in September 2012.Effective September 1, 2012,at this time because it provides the Company with unified leadership and direction. The Board appointed David C. Dauch President & CEO. Concurrentbelieves the Company's CEO is best situated to serve as Chairman because he is the director most familiar with this appointment, AAM’s co-founder, Richard E. Dauch, was named Executive Chairman of the Board. Both the President & CEOCompany's business and the Executive Chairman report solely to the Board. As Executive Chairman of the Board, Mr. R.E. Dauch will continue to provide leadership to the Board based on his extensive knowledge of the global automotive industry, and his prior experience serving as the Board’s Chairman & CEO. The separation of these roles permits Mr. D.C. Dauchis in a position to focus on leading AAM’s global business and day-to-day operations while providing the Board witheffectively identify strategic vision and insight regarding AAM’s strategic plans for the future.In addition to the customary procedural duties of the Chairman of the Board, the Executive Chairman has the following responsibilities:Together with the President & CEO, represent the Company to external groups, including shareholders, customers, creditors, suppliers, local communities and governmental organizations and other key stakeholders;Promote the Company as a technology and quality leader within the auto industry through public speaking, media appearances and global community affairs;Develop relationships and maintain liaisons with universities that excel in the Company’s fields of both current and future business lines;Develop relationships and maintain liaisons with other business leaders to share best practices in long-term planning;Oversee and evaluate (but not direct) day-to-day operations;Oversee the long-term strategy and vision of the Company and ensure the Board’s participation in strategic planning;Discuss and review with the President & CEO issues facing the Company;Evaluate the performance of the Company in achieving its goals and objectives;Overseepriorities and lead the developmentdiscussion and implementationexecution of a brand management program that promotesstrategy. While the Company's independent directors bring experience, oversight and expertise from various perspectives outside the Company, as a technologythe CEO's in-depth knowledge of our business enables him to identify areas of focus for the Board and quality leader withineffectively recommend appropriate agendas. The Board believes that the auto industry;combined role of Chairman andOversee and review succession planning.Director, aDirector. Effective April 30, 2014, Mr. McCaslin will hold this position, currently held byreplacing Mr. Walker. The Independent Lead Director has the following responsibilities:Presidepreside at executive sessions of the independent directors, which are held at the end of each scheduled Board meeting;Callcall special executive sessions of independent directors, as appropriate;Serveserve on all standing committees required by NYSE listing standards and on the Executive Committee;Serveserve as Chairchair of the Nominating/Corporate Governance Committee;Serveserve as the liasonliaison between the independent directors and AAM’s Executivethe Chairman, and President & CEO;Informinform the Executive Chairman, and President & CEO of issues arising from executive sessions of the independent directors; andWithwith Board approval, retain outside advisors and/or consultants who report directly to the full Board on matters of interest to the full Board.In September 2012, the Board approved the temporary assignmentcompany-wideoverall risk management process, the Board regularly reviews information provided by senior management about the Company’s strategic, operational, financial and compliance risks. In addition, the chairs of the Audit, Compensation, Nominating/Corporate Governance, Strategy and Technology Committees regularly report to the Board on the activities of their respective Committees, including matters related to risk.an annual reportregular reports from management on the Company’s overall risk management structure and processes. The Nominating/Corporate Governance Committee manages risks associated with corporate governance and management succession planning. The Compensation Committee oversees risks related to AAM’s compensation programs. The Technology Committee oversees risks related to AAM’s product,riskrisks related to the development and implementation of the Company’s strategic plan. Additional review or reporting of specific risks is conducted as necessaryappropriate or as requested by the Board or a Committee.Executive Chairman, CFO and other Senior Financial Officers (Code of Ethics). The Board annually reviews the Code of Business Conduct and makes updates as appropriate. AAM’s Code of Business Conduct and Code of Ethics are available on our website athttp://investor.aam.com. A written copy also may be obtained by any stockholder without charge upon request to the AAM Investor Relations Department by mail at One Dauch Drive, Detroit, Michigan 48211-1198 or by email at investorrelations@aam.com.persons”person” as defined in the policy. This policy supplements AAM’s other conflict of interest policies as set forth in AAM’sour Code of Business Conduct. The Board has delegated to the Audit Committee the responsibilityis responsible for reviewing, approving and ratifying all related person transactions in accordance with the policy. financial transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which:participant;$120,000;$120,000, anddirect or indirect material interest.However, a transaction between AAM and a related person is not subject to this policy if the transaction:is available to all employees generally;involves less than $5,000 when aggregated with all similar transactions; orinvolves compensation of an executive officer that is approved by the Compensation Committee.Company’sCompany's outstanding common stock as of the last completed fiscal year, and any entity owned or controlled by any one of these persons.Ameeting the above criteriaAudit Committee will be permitted only iftake into account, among other factors it deems appropriate, (1) whether the transaction is approvedon terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and (2) the significance of the related person's interest in the transaction.is on terms comparable to those available to unrelated third parties. Any related person transaction involving a member of the Audit Committee must be presented to disinterested members of the full Board for review.In considering a transaction, the Audit Committee and/do not require separate approval or the Board may consider the following factors, as applicable:the Company’s business reasons for entering into the transaction;the alternatives to entering into a related person transaction;the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflict;the extent of the related person’s interest in the transaction; andwhether the transaction is in the best interests of AAM.AAM’s directors and executive officers complete annual questionnaires designed to elicit information about potential related person transactions. In addition, our directors and executive officers are required to report any existing or contemplated related person transaction to the Company Secretary, who also serves as AAM’s General Counsel.2012, the Company did not engage in any reportable related person transactions. As2013 and as of the date of this proxy statement, nothe Company has not engaged in any reportable related person transaction has been brought to the attentiontransactions.or the Board.Board Committee CompositionDuring 2012, all directors attended more than 75 percent of the meetings of the Board and the committees on which they served. The 2012 annual meeting of stockholders was attended by all but one of our directors.2012. 2013. All nominees and continuing directors attended 100% of the Board and applicable committee meetings during 2013, except one continuing director missed one committee meeting. The 2013 annual meeting of stockholders was attended by eight of the eleven directors on the Board at that time.membershipdate of the Board’s committees during 2012this proxy statement, and the number of committee meetings held during 2012.IN 2012Name of Director Audit
Committee Compensation
Committee Nominating/
Corporate
Governance
Committee Executive
Committee Technology
Committee Strategy
Committee Chairman X X X X X Chairman X X X X X Chairman X X Chairman X X X X X X X X Chairman X Chairman 4 5 6 2 3 2 Name of Director David C. Dauch Chair X Elizabeth A. Chappell X Forest J. Farmer Chair X X Steven B. Hantler X Richard C. Lappin X X Chair James A. McCaslin X X William P. Miller II Chair X John F. Smith X Chair X Larry K. Switzer X X X Samuel Valenti III X X Thomas K. Walker X X Chair X No. of Meetings in 2013 4 5 5 2 3 4 (1)Mr.Name of Director David C. Dauch Chair X Elizabeth A. Chappell Chair X Forest J. Farmer X X Steven B. Hantler X Richard C. Lappin X X Chair James A. McCaslin X X X X William P. Miller II Chair X X John F. Smith was appointed to the Technology Committee effective February 6, 2013.X Chair X Larry K. Switzer Samuel Valenti III X X Thomas K. Walker X X (2)Mr.Walker’s service on the Technology Committee ended effective April 26, 2012.Committee operates under aCommittee's responsibilities are more fully described in its written charter, thatwhich is available on AAM’s website athttp://investor.aam.com.determined that each Audit Committee member is independent, is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 and is financially literate under applicable NYSE listing standards. The Audit Committee hasalso determined that Mr. Miller and Mr. Smith and Mr. Switzer each qualify as an auditare "audit committee financial expertexperts" as defined by SEC rules.Committee is responsible forCommittee's responsibilities include the following:Establishingestablishing and reviewing AAM’s compensation philosophy and programs with respect to ourfor executive officers;Approvingapproving executive officer compensation with a view to support AAM’s business strategies and objectives;Approvingapproving corporate goals and objectives for executive officer compensation and evaluating executive officer performance in light of these criteria;Recommendingrecommending incentive compensation and equity-based plans to the Board;Overseeingoverseeing management’s risk assessment of the Company’s policies and practices regarding its compensation programs for executive officers and other associates;Overseeingrecommending non-employee director compensation and benefits to the Board;Producingproducing the Compensation Committee Report for inclusion in our annual proxy statement.Committee operates under aCommittee's responsibilities are more fully described in its written charter, thatwhich is available on our website athttp://investor.aam.com. In February 2013,Charter was amended to comply with recently-adoptedmembers are independent under NYSE listing standards, regardingincluding the independence of thestandards applicable specifically to compensation committee members, and our Director Independence Guidelines. All Compensation Committee and its advisors. In accordance with our Corporate Governance Guidelines, the Compensation Committee is also responsible for recommending non-employee director compensation and benefits for approval by the Board.Each member of the Compensation Committee is independent, is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, and is anmembers are “outside director”directors” within the meaning of Section 162(m) of the Internal Revenue Code.2012,2013, AAM management conducted a risk assessment of the Company’s compensation policies and practices relating to AAM’s compensation programs for executive officers and other associates. The process used by management to conduct the risk assessment was approved by the Compensation Committee. The risk assessment considered, among other things, AAM’s annual and long-term incentive programs and pay mix, performance measures used to calculate payouts, and pay philosophy and governance. Based on this risk assessment and other factors, management concluded that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee agreed with management’s conclusion. Executive Chairman and President & CEO provideprovides the Compensation Committee with their evaluationshis evaluation of the performance of the Company’s executive officers, including the other named executive officers (NEOs). The President & CEO and Vice President, Human Resources make compensation recommendations for executive officers, including base salary levels and the amount and mix of incentive awards.ChairmanChair of the Compensation Committee in developing meeting agendas and manages the preparation and distribution of pre-meeting informational materials on the matters to be considered. Executive Chairman, President & CEO, Executive Vice President & CFO and the Vice President, Human Resources regularly attend Compensation Committee meetings. Management generally does not attend the executive session of the Compensation Committee. On occasion, the Compensation Committee may request certain members of management to attend all or a portion of an executive session.ChairmanChair of the Compensation Committee. Meridian also meets with management to gather information, prepare materials, and review proposals to be made to the Compensation Committee. Meridian provides no other services to the Company other than advice with respect to director and executive officer compensation and has no other direct or indirect business relationships with the Company of any of its subsidiaries or affiliates.adopted by the SEC and incorporated into theset forth in NYSE Corporate Governance Listing Standards.listing standards. In this correspondence and in communications with the Compensation Committee, Meridian affirmed its independence and that of its partners, consultants and employees who service AAM’sthe Compensation Committee on executive compensation matters.Identifyidentify qualified individuals to serve on the Board and committees;Reviewreview our Corporate Governance Guidelines and Code of Business Conduct and recommend changes as appropriate; andOverseeoversee and approve the process for succession planning for the CEO and other executive officers.Committee operates under aCommittee's responsibilities are more fully described in its written charter, thatwhich is available on our website athttp://investor.aam.com. Each member All members of the Nominating/Corporate Governance Committee isare independent under NYSE listing standards and is a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934.our Director Independence Guidelines.Executive Chairman, and the President & CEO, the Nominating/Corporate Governance Committee identifies, evaluates and recommends potential candidates for membership on the Board. The Nominating/Corporate Governance Committee conducts necessary and appropriate inquiries into the backgrounds and qualifications of the candidates and considers questions of independence and possible conflicts of interest. Based on the Nominating/Corporate Governance Committee’s evaluation, candidates who meet the Board’s criteria may receive further consideration, which may include interviews with the Nominating/Corporate Governance Committee and other directors. The Nominating/Corporate Governance Committee then submits its recommendations for nominees to the Board for approval. Pursuant to AAM’s bylaws, the Board may establish the size of the Board by resolution, provided there is a minimum of three members. AAM Board are reviewed in consideration of the current composition of the Board, the operating requirements of the Company and the interests of stockholders. Although specific qualifications may vary from time to time, desired qualities and characteristics include:Highhigh ethical character and shared values with AAM;Loyaltyloyalty to AAM and concern for its success and welfare;High-levelhigh-level leadership experience and achievement at a policy-making level in business, or in educational or professional activities;Knowledgebreadth of knowledge of issues affecting AAM;Thethe ability to contribute special competencies to Board activities, such as financial, technical, international business or other expertise, or industry knowledge;Willingnesswillingness to apply sound, independent business judgment;Awarenessawareness of a director’sdirector's vital role in AAM’sAAM's good corporate citizenship and corporate image; andSufficientsufficient time and availability to effectively carry out a director’sdirector's duties.20142015 Annual Meeting. The Nominating/Corporate Governance Committee will evaluate candidates recommended by stockholders using substantially the same criteria as it considersthat are considered in evaluating director candidates recommended by our Board members Executiveor Chairman, or President & CEO. In September 2012, the Board implemented its multi-year CEO succession plan with the appointment of Mr. D.C. Dauch as President & CEO. The Company’s co-founder and former CEO, Mr. R.E. Dauch, assumed the role of Executive Chairman of the Board. The Company’s long-term and ongoing succession planning program is designed to support effective senior leadership development and succession in a manner that positions AAM to achieve its strategic, operating and financial performance goals, and enhance stockholder value. Its members are identified in theCommittee Membership in 2012 table.Technology CommitteeThe Technology Committee oversees and provides advice to AAM regarding AAM’s product, process and systems technology. Its members are identified in theCommittee Membership in 2012 table.Strategy CommitteeThe Strategy Committee oversees the development and implementationEffective September 1, 2012, AAM’s Board appointed David C. Dauch as President & Chief Executive Officer, concurrent with the appointment of Richard E. Dauch as Co-Founder & Executive Chairman. Mr. D.C. Dauch most recently served as AAM’s President & Chief Operating Officer since June 2008 and has been a member of the Board since 2009. He has held positions of increasing responsibility since he joined AAM in 1995. Mr. R.E. Dauch has served as CEO since he co-founded the Company in 1994 and as Chairman of the Board since 1997. These actions reflect the Board’s ongoing commitment to succession planning and development of AAM’s leadership team.On April 26, 2012, the Company’s stockholders approved the 2012 Omnibus Incentive Plan and authorized up to 5 million shares for issuance as equity-based compensation under the plan. This action by our stockholders enabled theto include equity-based incentives as a component of(Committee) oversees the Company’s long-term incentive compensation program forCompany's executive officers, which we believe strengthens the alignment of interests between our executive officers and our stockholders. Since the expiration of AAM’s previous stock incentive plan in January 2009, the Company has been unable to grant equity-based awards as part of its compensation program. Upon approval of AAM’s 2012 Omnibus Incentive Plan, the Compensation Committee increased the stock ownership requirements for executive officers.AAM’sAAM's comparative peer group. In addition to attracting and retaining key executives, the program is designed to drive Company and individual performance while aligning the interests of our executives with those of our stockholders.• program includessize of the comparative peer group was reduced from 38 to 20 companies.• mixperformance share award vehicle as a component of base salaries and target annual and long-term incentive compensation. Stockholders commented that our long-term incentive (LTI) program should include performance-based equity awards. Historically, our LTI program was comprised of 50% cash-based performance awards and 50% restricted stock units (RSUs) with time-based vesting. The Committee redesigned the LTI program to strengthen pay-for-performance alignment of executive compensation. For 2014, the Committeetheour executive compensation incentive programs are established to reward achievement of the Company’sCompany's goals and objectives. In 2012, the Company did not perform as expected against its established goals due to increased costs associated with plant closures, global launch activity, lower capacity utilization and labor inefficiencies. As a result, the 2012The 2013 payouts forof annual and cash-based long-term incentives as compared to incentive payouts for 2012 reflect this pay-for-performance alignment. As discussed in more detail below, improvements in the lower levels of CompanyCompany's performance pursuant to the metrics established by the Compensation Committee.When setting compensation for 2013 resulted in higher incentive payouts for certain awards as compared to 2012 payments. For example, our achievements related to net operating cash flow and relative TSR resulted in determininghigher incentive payouts for 2013 as compared to 2012. This result supports AAM's compensation policies,objectives of rewarding performance and aligning the Compensation Committee took into account the favorable results of the stockholder advisory vote on executive compensation in April 2012. Our stockholders approved the compensationinterests of our named executive officers with approximately 95% of votes cast in favorthose of our say-on-pay proposal. Accordingly,stockholders.Compensation Committee has continued to applyCompany's Co-Founder and Executive Chairman, passed away. Effective August 16, 2013, the executive compensation philosophy and objectives described below. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for our named executive officers.Named Executive OfficersFor purposes of this Compensation Discussion and Analysis and the tables and narrative disclosures that follow, Named Executive Officers (NEOs) refer to the following individuals:David C. Dauch,Board appointed President & Chief Executive Officer David C. Dauch as Chairman of the Board. Mr. D.C. Dauch has served as AAM’s President & CEO since September 2012.Richard E. Dauch, Co-Founder & Executive Chairman; andUnit. Compensation Committee is responsible for establishing and reviewing the overall compensation philosophy of the Company. The Compensation Committee believes that the compensation paid to executives should be structured to provide AAM executives with meaningful rewards, while maintaining alignment with stockholder interests, corporate values and management initiatives. Compensation Committee believes that AAM’s executive compensation program should consist of a mix of base salary, annual incentive compensation and long-term incentive compensation, with limited perquisites and other personal benefits. One of the key objectives of establishing a mix of base salaries, annual incentive and long-term incentive compensation is to have a significant portion of total compensation be performance basedperformance-based and contingent upon the achievement of stated Company performance goals.In an effort to more closely align the objectives of the philosophy to market competitive practices, the Compensation Committee has established stated target percentile goals (compared to our comparative peer group) for each component of pay as set forth below underMarket Analysis and Benchmarking. pay percentile goals are generally used as a guide to help set compensation levels for the NEOs, excluding the Executive Chairman. The Executive Chairman’s compensation is determined under his employment agreement.The Compensation Committee also considers other factors in setting compensation levels for the NEOs including, among other things,such as Company and individual performance, succession planning and the requirements of the position as determined by the Company from time to time.levels.Compensation and benefit programs should appropriately reflect the size and financial resources oflevels for our Company in order to maintain long-term viability. These programs should be market-based to be competitive relative to the compensation paid to similarly situated executives in our peer group.NEOs.growth.growth. AAM makes an effort to remain competitive by targeting competitive pay levels based on the Company’s compensation philosophy with consideration ofcomparative peer group while considering the specificCompany's business environment, including industry conditions and other market influences. The Committee believes our compensation programs should encourage high-achieving, marketable executives to remain motivated and committed to AAM for long and productive careers.performance.performance. Our programs should strive to deliver competitive compensation for exceptional individual and Company performance as compared to companies in our comparative peer group. As associates progress to higher levels in the Company and assume key leadership positions, a greater portion of their compensation should be linked to Company performance and stockholder returns. Company performance is measured against financial and operational objectives and to stockholder return.returns.for success in the global automotive industry.to deliver value to our stockholders. We believe that long-term incentive compensation will motivate executive officers to deliver long-term value to our stockholders. Executives who are in positions to influence longer-term results should have a greater proportion of their compensation tied to longer-term performance.ExecutiveTotal compensation opportunities should reflect each executive’s level of responsibility and contribution to AAM. While the overall structure of compensation and benefit programs should bebe AAMalign their interests with those of our stockholders. Stock ownership aligns our executive officers’ interests with those of stockholders and reinforces the importance of making sound long-term decisions. AAM’s executive officers are required to maintain a certain level of stock ownership based on their position.The objectivesDetermination of rewarding performance and retention should be balanced. Our compensation programs should continue to ensure that high-achieving, marketable executives remain motivated and committed to AAM. This principle is essential to our effort to encourage our strongest leaders to remain with AAM for long and productive careers.Compensation and benefit programs should be fair in consideration of each executive’s level of responsibility and contribution to AAM. While the overall structure of compensation and benefit programs should be broadly similar across the Company, individual pay levels and benefit packages will reflect differences in job responsibilities, geography and marketplace considerations.Market Analysis and BenchmarkingGroup. AGroup38 industrial manufacturing companies drawn from a broad array of industries, including automotive suppliers, was identified by Meridian, the Compensation Committee’s independent compensation consultant, for consideration by the Compensation Committee to help assessdetermining competitive pay levels and compensation structure, setting incentive pay opportunities and assessing Company performance relative to provide data for pay decisions.its peers in support of AAM's executive compensation philosophy and objectives. The peer group was selected to be representativeCommittee periodically reviews the composition of a broad industrial sector in which AAM competes for executive talent. The criteria used to assess the market and to select the comparative peer group included:Operating/Industry Competitors — Companies with guidance from the Committee's independent compensation consultant, Meridian, and makes adjustments to reflect changes in the Company's business as well as industry and market conditions.weto select the companies to be included in the comparative peer group. In developing the pool, Meridian considered companies in the automotive and related industries with annual revenues between one-third and three times our revenues and those in our competitor peer group as described below. The initial pool was then narrowed by Meridian through the use of a weighted scorecard based on additional criteria, which included:for the sale of products and services;Labor Market Competitors — Companies with which we competeAAM for executive talent;Competitorsmarket capitalization; andCapital — Companies with which we compete for investment dollars and against which investment performance is evaluated; and2013.Revenue Size — Companies with revenues within a broad range.foregoing criteria, the Compensation Committee established the followingapproved a new comparative peer group of 20 companies, which resulted in the following changes:be used for pay decisions:A. O. Smith CorporationKennametal Inc.Ball CorporationLear CorporationBorgWarner Inc.Meritor Inc.Brady CorporationNavistar InternationalCameron International CorporationOwens-Illinois, Inc.Cummins Inc.PACCAR Inc.Dana CorporationPolaris Industries Inc.Donaldson Company, Inc.Rockwell AutomationDover CorporationSauer-Danfoss Inc.Eaton CorporationSonoco Products CompanyFederal Signal CorporationTerex CorporationFederal-Mogul CorporationThomas & Betts CorporationFleetwood Enterprises, Inc.The Timken CompanyFlowserve CorporationTrinity Industries, Inc.FMC TechnologiesTRW Automotive Holdings Corp.Genuine Parts CompanyUSG CorporationHarley-Davidson Motor CompanyValmont Industries, Inc.Ingersoll-Rand CompanyVisteon CorporationJoy Global Inc.Woodward Governor CompanyThe Compensation Committee reliedimprove alignment with AAM based on the factors described above; anddata analysis performed by Meridiancapitalization, global complexity and competition. We expect that AAM's new and incremental backlog will drive AAM's sales to exceed the rate of growth expected in October 2010 for setting 2011 and 2012 executive officer compensation. Meridian’s market analysis in 2010was considered adequate for setting 2012 pay based on Meridian’s guidancethe industry. AAM's projected 2014 revenues are well positioned relative to the median of the comparative peer group's 2014 projected revenues.Company 2014 Peer Group 2013 Peer Group Competitor Peer Group A. O. Smith Corporation X X BorgWarner Inc. X X X Briggs & Stratton X Cooper-Standard Holdings, Inc. X Dana Holding Corporation X X X Donaldson Company, Inc. X X Federal-Mogul Corporation X X Flowserve Corporation X X Kennametal Inc. X X Lear Corporation X X X Meritor Inc. X X X Regal-Beloit Corporation X Tenneco Automotive Inc. X X Terex Corporation X X Tower International Inc. X Trinity Industries, Inc. X X USG Corporation X X Valmont Industries, Inc. X X Visteon Corporation X X X Woodward Inc. X Ball Corporation X Brady Corporation X Cameron International Corporation X Cummins Inc. X Dover Corporation X Eaton Corporation X Federal Signal Corporation X Fleetwood Enterprises, Inc. X FMC Technologies X Genuine Parts Company X Harley-Davidson Motor Company X Ingersoll-Rand Company X Joy Global Inc. X Navistar International X Owens-Illinois, Inc. X PACCAR Inc. X Polaris Industries Inc. X Rockwell Automation X Sauer-Danfoss Inc. X Sonoco Products Company X Thomas & Betts Corporation X The Timken Company X TRW Automotive Holdings Corp. X Woodward Governor Company X Autoliv Inc. X Magna International Inc. X Total Number of Companies 20 38 8 that levelstargets approximately the 50th percentile of compensation among our comparative peer group had not changed significantly from 2010 to 2012. The market data was revenue size adjusted using regressed market values.Our general practice is to setfor total direct compensation at market competitive levels based on the responsibilities, expertise and experience of each NEO as well as individual and Company performance. The total compensation for each NEO (other than the Executive Chairman) and each pay component described below are compared to pay levels of executives holding similar positions at companies in our comparative peer group. TheTotal direct compensation consists of base salary plus target percentile goalsannual and long-term incentive compensation. Total direct compensation for each pay component are as follows:Pay ComponentTarget Percentile GoalBase Salary50th PercentileAnnual IncentivesBetween 50th and 75th PercentilesLong-Term IncentivesBetween 50th and 75th Percentilespercentile goalsCommittee generally sets performance objectives for annual incentivesand long-termincentives were setincentive pay opportunities between the 50th50th and 75th percentile and the 75th percentile to enable the Company to reward executive performance at a rate above average in order to drive above average performance and to compete for executive talent.Competitor Peer Group. The Compensation Committee also considers, from time to time, publicly available information regarding companies inof our competitorcomparative peer group in establishing certain executiveto targeting total direct compensation benchmarks, targetsat approximately the 50th percentile. This target reflects a generally accepted benchmark of external competitiveness and performance levels. As disclosed insupports our most recent Annual Report on Form 10-K, our competitor peer group consists of Autoliv Inc., BorgWarner Inc., Dana Corporation, Lear Corporation, Magna International Inc., Meritor, Inc., Tenneco Automotive Inc.ability to attract and Visteon Corporation.retain key executives. Compensation Committee reviews compensation tally sheets for each executive officer, including the NEOs. The tally sheets, which are prepared by management, provide a summary of the current amounts of each component of pay includingand a historical reviewhistory of prior long-term incentive grants. The tally sheets also provide a summaryshow estimates of the potential payoutspayments and benefits uponthat could be realized under various hypothetical termination events.scenarios. The elements and calculations reviewed aretally sheets consist of information that is substantially similar to the information providedshown for each NEO inPotential Payments Upon Termination or Change in Control below. The Compensation Committee did not change the NEOs’ compensation based on its review of this information.information in 2013. The Compensation In the fourth quarter of each year, the Committee based its 2012 salary determinationsreviews base salaries for executive officers for the NEOs (other thanfollowing calendar year. In determining 2013 base salaries for executive officers, the Executive Chairman) by reference to the 50th percentileCommittee reviewed benchmarking data comparing pay levels of our executive officers with that of executives holding similar positions at companies in our comparative peer group. The recommendations of Mr. R. E. Dauch and Mr. D.C. Dauch wereCommittee also considered in determining 2012 base salaries for the other NEOs. These recommendations were based on each individual’s experience, time in position, professional development, contribution to the Company, performance and other factors. The Compensation Committee approved 2012 increases for each of ourFor NEOs (otherother than the Executive Chairman) as follows: Base Salary 2012 2011 $ 1,000,000 $ 650,000 $ 527,900 $ 515,000 $ 485,700 $ 473,800 $ 310,600 $ 303,000 Base Salary.the Committee considered the recommendations of Mr. D.C. Dauch in determining NEO base salaries. The Committee approved 2013 base salary increases for the NEOs listed below as follows: Base Salary 2013 2012 David C. Dauch (effective September 1, 2013) $ 1,100,000 $ 1,000,000 Michael K. Simonte $ 543,800 $ 527,900 John J. Bellanti $ 500,300 $ 485,700 Alberto L. Satine $ 360,000 $ 320,000 Norman Willemse $ 320,000 $ 310,600 2012, the Board appointed Mr. D.C. Dauch President & CEO. The Company entered into an employment agreement with Mr. D.C. Dauch on August 27, 2012 in connection with this appointment.2013, Mr. D.C. Dauch’s base salary as President & CEO is $1 million.determining Mr. D.C. Dauch’s base salary,making this determination, the Compensation Committee considered CEO base salary benchmarking data provided by Meridian from the comparative peer group established by the Compensation Committee for purposes of setting executiveregarding CEO compensation as shown inMarket Analysis and Benchmarking above. In addition, management provided the Compensation Committee with publicly available CEO pay information for members of the Company’s competitor peer group. Based on Meridian’s analysis, Mr. D.C. Dauch’s base salary is at the 50th percentile of CEO pay among our comparative peer group.Effective January 1, 2012 through August 31, 2012, The Committee approved Mr. D.C. Dauch’sDauch's base salary (as President & COO) was $810,000. This amount reflected an increase from $650,000 due to the additional responsibilities he assumed on Decembereffective September 1, 2011 in the areas of finance, information technology and investor relations. In determining his 2012 base salary while serving as President & COO, the Compensation Committee also considered his leadership role in connection2013 with the Company’s ongoing succession planning process.Other NEO Base Salaries. expectation that this level would remain in effect for fiscal 2014.20122013 base salary shown above for Mr. Simonte, Mr. Bellanti (in lump sum) and Mr. Willemse represent annual merit increases of 2.5%3%, which is consistent with the budgeted amount for the merit program for U.S. salaried associates.Meridian’s market data analysis,the recommendation of the Chairman, President & CEO, the Committee considered Mr. Simonte’s 2012 baseSatine's significant role in strategic matters, the depth of his manufacturing and engineering experience in light of AAM's expanding global operations and his demonstrated leadership capabilities. This salary is betweenadjustment was made in the 50th and 75th percentilecontext of CFO pay among our comparative peer group.AAM's succession planning for a key leadership position previously held by Mr. Simonte’s pay level reflects, among other things, his additionalBellanti, who retired as head of worldwide operations on January 1, 2014. Mr. Satine assumed leadership responsibilities in functional areas outside the finance organization.responsibility for a significant portion of AAM's global operations upon Mr. Bellanti’s and Mr. Willemse’s 2012 base salaries are at the 50th percentileBellanti's retirement.Encourageencourage executives to achieve short-term goalsobjectives to foster achievement of the Company's long-term goals of the Company;Rewardreward performance to support strategic initiatives; andProvideprovide incentive for executive retention.(other than the Executive Chairman) participated in this plan during 2012. 2013. Compensation Committee determines one or more performance factors, and the relative weighting of each factor, in consideration of the Company’s key performance objectives. Under the plan, the performance factorsareare: (1) net income as a percentage of sales (NIPS),; (2) after tax return on invested capital (ROIC); and (3) net operating cash flow. ROIC is defined as after-tax return divided by average invested capital. Net operating cash flow is defined as cash provided by or used in operating activities less capital expenditures.expenditures net of proceeds from the sale of property, plant and equipment. ROIC is defined as after-tax return divided by average invested capital. Target performance levels, established annually, are intended to be aggressive but achievable based on industry conditions.both (1) meets or exceeds threshold levels of performance set by the Compensation Committee and (2) reports positive net income for the performance year. Compensation Committee to make discretionary adjustments if it determines that the achievement of performance targets for a plan year do not reflect the true performance of the Company due to unanticipated circumstances specified in the plan. Annual incentive awards may be increased or decreased byAlthough the Compensationplan permits the Committee based onto exercise discretion in adjusting individual award payouts, the recommendationsCommittee made no discretionary increases to 2013 payouts for any of Mr. R.E. Dauch and Mr. D.C. Dauch.following table summarizesbelow shows the 20122013 target annual incentive opportunities for the following NEOs, (other than the Executive Chairman), stated as a percentage of base salary: (effective September 1, 2012)125% 125%80% 80%80% 80%60% Norman Willemse 60% 60%President & CEO Annual Incentive Target. Pursuant to his employment agreement, Mr. D.C. Dauch’s target annual incentive opportunity is 125% of base salary. His target annual incentive opportunity for the period January 1, 2012 through August 31, 2012 was 90% of base salary. In determining Mr. D.C. Dauch’s target annual incentive opportunity effective September 1, 2012, the Compensation Committee considered, among other things, the pay levels for CEOs among AAM’s competitor peer group as described inPresident & CEO Base Salaryabove. Based on a market analysis conducted by Meridian, Mr. D.C. Dauch’s target annual incentive opportunity is 6% above the 75th percentile of CEO pay among our comparative peer group. Compensation Committee considered this level to be appropriate in consideration of his target long-term incentive opportunity, which is at the 50th percentile of our comparative peer group.Other NEO Annual Incentive Targets. The Compensation Committee considers Meridian’s market analysis in determining the2013 annual incentive target opportunities for the other NEOs. The 2012 annual incentive target opportunities for Mr. Simonte, Mr. Bellanti and Mr. Willemse are each between the 50th and 75th percentile for comparable positions among our comparative peer group. Mr. R.E. Dauch’s annual bonus is discussed below inCompensation of Executive Chairman.2012NEO remains unchanged from 2012.20122013 goals and objectives, the Compensation Committee approved the use of net operating cash flow and NIPS, each with equal weighting, as the performance metrics for determining 20122013 annual cash incentives. Net operating cash flow and NIPSThese performance metrics were selected as performance metrics for the following reasons:at this time due to its impact on liquidity, debt reduction and debt reduction;2011,2012, in conjunction with a review of the Board-approved annual budget, the Compensation Committee determined the 2012set 2013 performance targets for both the net operating cash flow and NIPsNIPS performance metrics. The 2012 targets for each performance metric aremetrics as follows: Net Operating
Cash Flow Net Income as a
Percentage of Sales Performance Payout Performance Payout $0 50% 1% 30% $26 million 100% 3% 100% $51 million 125% >3% >100% The budgeted Performance Payout Performance Payout Threshold $25 million 50% 1% 30% Target $75 million 100% 3% 100% Maximum $100 million 125% >3% >100% $1$50 million. The target performance level for net operating cash flow was based on the Company outperforming the budget by $25 million; the maximum performance level was based on outperforming the budget by $50 million. No payout would be made with respect to the net operating cash flow metric unless the threshold was attained.theour performance ofrelative to our competitor peer group. The target performance level for NIPS, or 3%, was set at a level to meet the performance of the top one-thirdone-half of our competitor peer group for the three most recent fiscal years. There isAlthough there was no establishedstated maximum for NIPS. The Compensation Committee approved this approachaward opportunity based on NIPS for 2013, the correlation of net income growth to cash flow growth and stockholder value.20122013 adjusted net operating cash flow performance was a use of $383.1 million, which is lower than the breakeven threshold level. Accordingly, no payout was made for 2012 based on this$32.4 million. For 2013, net operating cash flow included the proceeds from sale-leaseback transactions and excluded the impact of debt refinancing costs and other special charges totaling $28.1 million. Accordingly, a payout of 57% was made for 2013 based on the net operating cash flow metric.20122013 NIPS was 3.1 %,3.79%, excluding the impact of the reversal of the deferred tax valuation allowance and the costs associated with plant closures and debt refinancing activities.costs and other special charges. Accordingly, the NIPS performance metric resulted in an achievement of 102%117% of target.20122013 annual incentive awards resulted in a payout of 51%87% of target. For Mr. D.C. Dauch and Mr. Simonte, the Compensation Committee approvedNo discretionary increases were made to 2013 annual incentive payouts of 53% and 52% of target, respectively. The Compensation Committee made these discretionary adjustments to the payouts for Mr. D.C. Dauch and Mr. Simonte in consideration of their leadership and contributions to the Company during 2012. For Mr. D.C. Dauch, the Committee considered AAM’s strong sales growth of 13.4% on a year-over-year basis and new business awards resulting in a new business backlog of $1.25 billion for 2013-2015. For Mr. Simonte, the Committee considered the completion of key financing initiatives that provided additional liquidity to fund AAM’s sales growth, extended the debt maturity profile of AAM’s debt capital structure and allowed AAM to improve the funded status of our global pension plans.any NEO. The annual incentive awards paid to the NEOs are shown in theSummary Compensation Table.Alignalign executive officer and stockholder interests;Rewardreward achievement of long-term performance goals; andProvideprovide incentives for executive retention.following table summarizes 2012below shows the 2013 target long-term incentive award targetsopportunities for the following NEOs, (other than the Executive Chairman), stated as a percentage of base salary:Long-Term IncentiveTargetDavid C. Dauch (effective September 1, 2012)240% Michael K. Simonte120% John J. Bellanti120% Norman Willemse80% Target Long-Term Incentive Opportunity 2013 2012 David C. Dauch 350% 240% Michael K. Simonte 200% 120% John J. Bellanti 200% 120% Alberto L. Satine 120% 80% Norman Willemse 100% 80% President & CEO Long-Term Incentive. Prior to September 1, 2012, Mr. D.C. Dauch’s 2012In determining 2013 long-term incentive target opportunity was 180%. Under his employment agreement, Mr. D.C. Dauch’s target long-term incentive opportunity was increased to 240%. In determining Mr. D.C. Dauch’s target long-term incentive opportunity,opportunities, the Compensation Committee considered among other things, target awards for CEOs in AAM’s competitor peer group.Upon his appointment as President & CEO on September 1, 2012, Mr. D.C. Dauch received a long-term incentive award consisting of restricted stock units and cash-based performance units. The restricted stock unit award had a grant date value of $250,000 and the performance unit award had a target value of $250,000. The Board approved this one-time award upon execution of Mr. D.C. Dauch’s employment agreement to provide him with a long-term incentive award opportunity that the Compensation Committee considered appropriate for his new position.The restricted stock unit award is payable in common stock on the third anniversary of the grant date contingent upon continued employment with the Company. The performance unit award is payable in cash, based on the Company’s earnings before interest, taxes, depreciation and amortization (EBITDA) performance during the July 1, 2012 through June 30, 2015 performance period. The threshold, target and maximum EBITDA performance levels for determining the performance award payout are shown in theEBITDA Performance Measure table below.Other NEO Long-Term Incentive Targets. The Compensation Committee considers Meridian’s market analysis, in determining thewhich indicated that long-term incentive target opportunities for the other NEOs. The long-term incentive target opportunities forour NEOs at 2012 for Mr. Simonte, Mr. Bellanti and Mr. Willemse are currentlylevels were below the 50thpercentile for comparable positions amongat companies in our comparative peer group of companies. Mr. R.E. Dauch’s one-timegroup. As a result, the Committee approved 2013 long-term incentive award is discussed below inCompensationtargets shown above with the objective of Executive Chairman.targeting total compensation at approximately the 502012th percentile.April 2012, the Company received stockholder approval of the 2012 Omnibus Incentive Plan, which authorized the Company to issue equity-based long-term incentives and other types of awards. In May 2012,March 2013, the Company granted the NEOs equity-based and cash-based long-term incentives under the 2012 Omnibus Incentive Plan as described below. Compensation Committee determined the form and mix of awards in consideration of AAM’s compensation objectives, current market practice and share usage under the Company’s 2012 Omnibus Incentive Plan.20122013 long-term incentive award value for NEOs (other than the Executive Chairman) was in the form of restricted stock units (RSUs) and one-half was in the form of cash-based performance units (PUs) with a notional value of one dollar.dollar and one-half was in the form of restricted stock units (RSUs). The RSUs are payable in common stock, contingent upon continued employment through the three-year vesting period. The RSUs were designed to provide opportunities for share ownership and to motivate executive officers to build long-term value for our stockholders. PU target award payment for PUs will be determined based on the Company’s EBITDAcumulative earnings before interest, taxes, depreciation and amortization (EBITDA) margin performance from AprilJanuary 1, 20122013 through December 31, 2014. The PU2015. These awards were designed to align executive officer performance goals with those of the Company. The Committee selected EBITDA was selected as the performance measure based on the Compensation Committee’sits belief that EBITDA is a key indicator of the Company’s financial and operational performance and is useful in analyzing entity valuation.RSURSUs and PU awardsPUs are described in more detail in theNarrative to Summary Compensation Table and Grants of Plan-Based Awards Tablebelow.illustratesshows the threshold, target and maximum EBITDA margin performance levels used in determining 2013 award payouts for determining 2012 PU award payouts. ThePUs. These EBITDA performance levels shown below were designed to drive a level of performance in the top one-half of our competitor peer group.Performance Level Threshold 10% 25% Target 12% 100% Maximum 15% 200% Performance Measuremargin and relative total shareholder return (TSR) performance over a three-year performance period and paid only to the extent that pre-established performance targets are achieved. The Committee determined that the remaining 34% of long-term incentive equity awards should be in the form of RSUs settled in common stock with three-year cliff vesting. The Committee believes these RSUs promote retention of key executives. 33-Month Cumulative
EBITDA Percent of
Target Award
Opportunity Earned 10 % 25 % 12 % 100 % 15 % 200 % Compensation Committee. Historically, grants have beenGrants are typically made in the first quarter of each year to coincide with the communication to executive officers and other executives of their annual cash incentive awards for the previous year’s performance. This timing increases the impact of the awards by strengthening the link between pay and performance. In 2012, the annual grant of equity awards was delayed until May, which followed stockholder approval of the 2012 Omnibus Incentive Plan. On September 1, 2012, equity awards were granted to Mr. D.C. Dauch and Mr. R.E. Dauch in conjunction with the execution of their employment agreements. AAM does not and has never permitted backdating, spring loading or other timing of option grants with the release of material non-public information.Prior Long-Term Incentive Awards under the AAM 2009 Long-Term Incentive PlanBenefits.Prior to adoption of the 2012 Omnibus Incentive Plan, the Company’s long-term incentive program consisted of cash-based performance awards made under the AAM 2009 Long-Term Incentive Plan (2009 AAM LTIP).Payouts of the 2010 cash-based performance awards were determined based on EBITDA and TSR for the performance period beginning January 1, 2010 through December 31, 2012. The Company’s cumulative EBITDA percentage for the performance period was 13.8%, after adjustments approved by the Compensation Committee for certain special charges, including asset impairments, costs associated with plant closures and debt refinancing costs in accordance with the discretion provided to the Compensation Committee in the plan. The adjusted EBITDA percentage resulted in a payment at 159% of target. The Company’s TSR for the performance period ranked above the 35th percentile of our competitor peer group and resulted in a payout of 82% of target. Based on the 50% weighting of EBITDA and TSR performance, total award payments were approximately 120% of target for each NEO (other than the Executive Chairman). SeeSummary Compensation Table for the amounts paid in March 2013.Other Compensation ComponentsBenefits. Our NEOs participate in the benefitssame benefit and retirement plans provided toin which our U.S. salaried associates.associates participate. A group of approximately 50 senior executives, including the NEOs, also receive supplemental life, supplemental disability and umbrella liability insurance benefits. Our NEOs are eligible to participate in AAM’s qualified and nonqualified defined benefit pension plans and defined contribution plans. They are also eligible to participate in a nonqualified deferred compensation plan that permits deferrals of a portion of base salary and/or annual cash incentive compensation on a pretax basis. These plans are described in thePension Benefits andNonqualified Deferred Compensation sections below.forto senior executives, including our NEOs. AAM has never owned a corporate aircraft and generally does not provide leased aircraft for personal use. AAM does not pay for country club memberships.Company also provides a vehicle for use by the spouses of the Executive Chairman and the President & CEO.CEO is entitled to the use of two Company-provided vehicles. From time to time, the Company invites spouses of AAM senior executives to attend Company business events. For attendance that requires a spouse to travel, the Company pays for the spouse’s travel and other related non-business expenses and reimburses the executive for taxes attributable to the income associated with this benefit. Perquisites are further described in the footnotes to theSummary Compensation Table.Effective September 1, 2012, the Board appointed the co-founder, Mr. R. E. Dauch,The compensation of AAM's Co-Founder and former Executive Chairman of the Board. The Company entered into an employment agreement with Mr. R.E. Dauch on August 27, 2012 in connection with this appointment, which was concurrent with the appointment of Mr. D. C. Dauch as President & CEO. The key responsibilities assigned to Mr. R.E. Dauch are described above inCorporate Governance, Board Leadership Structure.Mr. R.E. Dauch’s total compensation package is set forth in his employment agreement. agreement dated August 27, 2012. The terms of his employment agreement, which terminated upon his death on August 2, 2013, are described in the Narrative to Summary Compensation and Grants of Plan-Based Awards Table below.Dauch’sDauch's total compensation was structured in order to induce him to defer retirement from AAM and assume the leadership responsibilities as Executive Chairman. The Board approved the Executive Chairman’s compensation package in consideration of Mr. R.E. Dauch’sreflected his extensive knowledge and expertise in the global automotive industry and the Board’s expectation that he will carry out these responsibilities in supportexpectations regarding his contribution to the achievement of AAM’s goals and business strategy to build value for AAM stockholders and other key stakeholders.Mr. R.E Dauch’s employment agreement continues through August 31, 2015, and renews automatically for two additional one-year periods unless either party gives notice of its election not to renew. The terms and conditions of his employment agreement are further described in theNarrative to Summary Compensation and Grants of Plan-Based Awards Table below.objectives. The components of Mr. R.E. Dauch’shis compensation are described below.as CEO was $2 million beginning October 1, 2011 through August 31, 2012. Effective September 1, 2012, Mr. R.E. Dauch’s base salary as Executive Chairmanfor 2013 was set at $2 million, continuingmillion. The amounts paid through August 31, 2015. His base salary will be reduced to $1 million for any renewal period from September 1, 2015 through August 31, 2017. Base salary for2, 2013 and in 2012 and 2011 and 2010 isare shown in theSummary Compensation Table.Cash Bonus.Incentive. For calendar year 2012,2013, Mr. R.E. Dauch was eligible for ana target annual cash bonus asincentive opportunity of two times his annual base salary. His 2013 annual incentive was determined under AAM's Incentiveprior employment agreement. Accordingly, the2013 annual cash bonus for 2012 isincentive was based on the Compensation Committee’s assessmentachievement of Companythe pre-established performance as compared to thatmetrics described above in 2013 Annual Incentive Performance. Based on the weighting of our competitor peer group. Heeach performance metric, he was eligible to receive ana 2013 annual bonus paymentincentive of up87% of his target opportunity. The annual incentive paid to three times his annual salary, or $6 million, if AAM outperformed its competitor peer group. In determining Mr. R.E. Dauch’s annual bonus, the CompensationDauch's beneficiary was pro-rated based on time served through August 2, 2013. The Committee may useexercised no discretion in considering other factors, which may differ from year to year.The Compensation Committee approved Mr. R.E. Dauch’sdetermining his 2013 annual bonus for 2012 in the amount of $4 million. In determining thisincentive award the Compensation Committee considered AAM’s 2012 performance, including strong sales growth of 13.4% on year-over-year basis, new business awards resulting in a new business backlog of $1.25 billion for the years 2013-2015, achievement of market competitive labor cost structures and attainment of key quality performance objectives. The Committee also considered the successful completion of financing initiatives that provided additional liquidity to fund AAM’s sales growth, extended the debt maturity profile of AAM’s debt capital structure and allowed AAM to improve the funded status of our global pension plans. The Company’s 2012 performance was adversely impacted by special charges related to the closure of two U.S. plants, increased costs associated with global launch activity, lower capacity utilization and labor inefficiencies. Based on these and other factors, the Compensation Committee decided that theamount of his award would be less than the maximum amount permitted under his employment agreement. This 2012 award reflects a $2 million decrease from his 2011 bonus. SeeSee Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table below. Upon his appointment as Executive Chairman on September 1, 2012, Mr. R.E. Dauch received a one-time equity award of RSUs with a grant date value of $6,247,000. The Compensation Committee considered the amount of this award to be appropriate as a long-term incentive based on his service as AAM’s CEO during 2012 and the Company’s desire to provide an inducement sufficient for Mr. R.E. Dauch to enter into the employment agreement as Executive Chairman. Mr. R.E. Dauch is not eligible to receive any additional equity or other long-term incentive awards during the term of his employment agreement.Under his prior employment agreement, Mr. R.E. Dauch was not entitled to receive, each year, ana long-term incentive award in 2013. Vesting of 150,000 stock options and an equity award of equal value. Accordingly, on May 30, 2012, Mr. R.E. Dauch received 150,000 stock options and 68,227 RSUs under the 2012 Omnibus Incentive Plan. Mr. R.E. Dauch did not receive anyhis outstanding long-term incentive awards for 2010 and 2011 as a resultwas accelerated upon his death pursuant to the applicable award agreements. The grant date fair value of among other things, AAM not having an equity plan available for issuance of equity-based awards. Thesethese awards are shownwas reported in theGrants of Plan-Based Awards summary compensation table and are further described in thefor 2012. See Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table and Options Exercised and Stock Vested table below.participatesparticipated in the same benefit programs provided forin which other executive officers. In addition, underofficers participate. Under his employment agreement, AAM provides Mr. R.E. Dauchprovided him with the use of two Company vehicles and reimbursesreimbursed him for premiums paid for a $5 million life insurance policy. The Company will also provide postretirement health care benefits upon expiration of his employment agreement. Perquisites provided to the Executive Chairman in 2013, 2012 2011 and 20102011 are reported in theSummary Compensation Table. & Anti-Hedging PolicyStock Ownership Requirements.Since January 2009, the Company has been unable to issue equity-based compensation in support of the achievement of stock ownership requirements. Consequently, the Compensation Committee adopted provisional stock ownership requirements based on a fixed number of shares at levels that recognized that executive officers would not receive equity-based compensation until our stockholders approved a new incentive plan under which equity awards could be made.Upon stockholder approval of AAM’sIn April 2012, Omnibus Incentive Plan, the Compensation Committee decided to increase the stock ownership requirements for executive officers in 2012 and change the measurement from a fixed number of shares to a multiple of base salary. These new stock ownership requirements were based on an analysis of prevalent external market practices provided by Meridian and in 2012 atorder to align the direction of the Compensation Committee. Based on this analysis, the Compensation Committee increased theCompany's stock ownership requirement levelsrequirements with prevalent market practices, the Committee revised the Company's stock ownership requirements, as follows:Stock Ownership Requirements for Executive Officers 5 3 2 becoming an executive officer. Once the requirement is met, the executive officer must maintain the required ownership level.appointment. Shares owned directly and any unvested RSUs (payable(settled in stock) are considered in determiningcount toward the requirements;requirement, while unexercised stock options are not considered. One hundred percent of the net shares of equity awards granted by the Companyincluded. These ownership levels must be held untilmaintained as long as the requirement has been met. Compensation Committee annually reviews each executive officer’s stock ownership amounts as comparedlevel according to this policy. Each of our current NEOs has met the established stock ownership requirements. All executive officers are on target to meet these stock ownership requirements established for their respective positions.Policy.and Anti-pledging PolicyOther than the Executive ChairmanOn September 27, 2013, Mr. D.C. Dauch's employment agreement was amended and President & CEO, our NEOs are not entitledrestated to provide for certain severance benefits upon termination ofif his employment for any reason. AAM does not provide any NEO with severance benefits solelyis terminated as a result of a change in control. Ourcontrol of the Company (CIC). His employment agreements withagreement also provides for an automatic two-year extension following a CIC. Benefits payable to Mr. D.C. Dauch and Mr. R.E. Dauch provide for certain benefits upon termination of employment without cause or upon resignation for good reason.reason remain unchanged from his prior employment agreement. Severance benefits payableprovided under these agreementshis employment agreement are described underPotential Payments uponUpon Termination or Change in Control below.uponUpon Termination or Change in Control below. the NEOs will be taxable to the executive and will give rise to a corresponding corporate deduction at the time the compensation is paid. Section 162(m) of the Internal Revenue Code precludes a public corporation from taking a tax deduction for annual compensation in excess of $1 million paid to the CEO or to any of the other NEOs other than the CFO. One exception applies to performance-based compensation paid pursuant to stockholder-approved employee benefit plans. Performance basedPerformance-based compensation is compensation that is paid only if the individual’s performance meets pre-established objective performance goals based on performance criteria approved by our stockholders.the Company’sour compensation programs. The Compensation Committee may decide to pay compensation or grant awards that are consistent withserve the objectives of our executive compensation program thateven though such compensation or awards may not be deductible by the Company for tax purposes.20122013 to theour NEOs (other than the Executive Chairman) are intended to comply with the performance-based compensation exemption under Section 162(m). RSUs granted to NEOs in 2012,2013, although not deductible, were considered to be the appropriate vehicle for a portion of the long-term incentive component of our executive compensation program. The 2012 annual bonus for the Executive Chairman was determined in accordance with his employment agreement and is not deductible. Stock options granted to Mr. R.E. Dauch in 2012 are intended to satisfy the requirements for deductibility under Section 162(m).The Compensation Committee has with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, and basedwith management. Based on such review and discussions,discussion, we recommended to the Board of Directors that suchthe Compensation Discussion and Analysis be included in this proxy statement.2012,2013, December 31, 20112012 and December 31, 2010. Year Salary
($) Bonus(2)
($) Stock
Awards(3)
($) Options
Awards(3)
($) Non-Equity
Incentive
Plan
Compen-
sation(4)
($) Change in
Pension Value
And
Nonqualified
Deferred
Compensation
Earnings(5)
($) All Other
Compen-
sation(6)
($) Total
($) 2012 873,333 21,500 979,013 — 1,728,100 565,534 67,695 4,235,175 2011 650,004 111,150 — — 7,169,180 397,228 28,778 8,356,340 2010 575,004 — — — 731,250 97,540 27,006 1,430,800 2012 527,900 4,617 316,743 — 935,383 294,245 48,942 2,127,830 2011 515,004 37,080 — — 4,255,095 251,101 49,604 5,107,884 2010 500,004 — — — 500,000 97,430 51,294 1,148,728 2012 2,000,000 4,000,000 6,874,007 627,000 — 4,201,202 141,916 17,844,125 2011 2,526,728 6,000,000 — — — 2,802,700 149,441 11,478,869 2010 2,702,304 — — — — 2,692,143 158,981 5,553,428 2012 485,700 — 291,424 — 802,400 188,187 42,429 1,810,140 2011 473,796 — — — 2,166,972 446,401 33,823 3,120,992 2010 459,996 — — — 460,000 357,673 30,312 1,307,981
2012
2011
310,600
303,000
— 124,249 —
376,808
603,180
100,562
113,444
48,162
41,412
960,381
1,061,036
Year 2013 1,033,333 — 1,750,002 — 3,185,250 245,423 116,389 6,330,397 2012 873,333 21,500 979,013 — 1,728,100 565,534 67,695 4,235,175 2011 650,004 111,150 — — 7,169,180 397,228 28,778 8,356,340 2013 543,800 — 543,810 1,429,085 27,943 50,817 2,595,455 2012 527,900 4,617 316,743 — 935,383 294,245 48,942 2,127,830 2011 515,004 37,080 — — 4,255,095 251,101 49,604 5,107,884 2013 500,300 — 485,713 — 1,678,896 — 45,240 2,710,149 2012 485,700 — 291,424 — 802,400 188,187 42,429 1,810,140 2011 473,796 — — — 2,166,972 446,401 33,823 3,120,992 2013 360,000 — 216,006 — 565,800 — 41,399 1,183,205 2013 320,000 — 160,006 — 579,120 12,546 50,348 1,122,020 2012 310,600 — 124,249 — 376,808 100,562 48,162 960,381 2011 303,000 — — — 603,180 113,444 41,412 1,061,036 2013 1,181,818 — — — 2,030,000 — 155,822 3,367,640 2012 2,000,000 4,000,000 6,874,007 627,000 — 4,201,202 141,916 17,844,125 2011 2,526,728 6,000,000 — — — 2,802,700 149,441 11,478,869 (1)Mr. D.C. Dauch and Mr. R.E. Dauch receive compensation based solely on their roles as executive officers. They receive no compensation for serving as directors.(2)Reflects discretionary adjustments to the 2012 annual incentive payments for Mr. D.C. Dauch and Mr. Simonte as described above in theCompensation Discussion and Analysis. For Mr. R.E. Dauch, reflects a 2012 bonus award under his employment agreement as described in theNarrative to Summary Compensation Table and Grants of Plan-Based Award Table.(3)(1)Reflects the full grant date fair value of equity awards made during fiscal year 20122013 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based on applying the assumptions used in our financial statements. The grant date fair value of stock awards is calculated using the closing market price of AAM common stock on the date of grant. The grant date fair value of option awards was calculated using the Black-Scholes option pricing model. See Note 97 to the audited consolidated financial statements in our Annual Reportannual report on Form 10-K for the year ended December 31, 20122013 regarding assumptions underlying the valuation of equity awards.(4)(2) Reflects amounts earned under the AAM Incentive Compensation Plan for Executive Officers and the 2009 AAM LTIP with respect to the three-year performance period ending December 31, 2012.2013. The 20122013 amounts are as follows: AAM Incentive
Compensation Plan AAM LTIP Total $ 518,500 $ 1,209,600 $ 1,728,100 $ 215,383 $ 720,000 $ 935,383 $ 140,000 $ 662,400 $ 802,400 $ 95,000 $ 281,808 $ 376,808 AAM LTIP Total David C. Dauch $ 1,196,250 $ 1,989,000 $ 3,185,250 Michael K. Simonte $ 378,485 $ 1,050,600 $ 1,429,085 $ 285,000 $ 1,393,896 $ 1,678,896 Alberto L. Satine $ 185,000 $ 380,800 $ 565,800 Norman Willemse $ 167,040 $ 412,080 $ 579,120 Richard E. Dauch $ 2,030,000 $ — $ 2,030,000 (5)(3) Effective August 1, 2012, the SERP was amended to include an actuarial increase provision for participants who continue to work after age 65. For Mr. R.E. Dauch, the amount shown for 2012 includes the impact of the SERP amendment of approximately $2.8 million. The SERP amendment is further described in the narrative to thePension Benefits Table.Name David C. Dauch 12,569 12,750 7,640 31,632 22,704 29,094 116,389 Michael K. Simonte 12,575 12,750 3,681 20,301 — 1,510 50,817 John J. Bellanti 8,750 12,750 7,155 14,188 424 1,973 45,240 Albert L. Satine — 12,750 3,171 23,618 — 1,860 41,399 Norman Willemse 12,469 12,750 3,219 — 424 21,486 50,348 Richard E. Dauch 6,906 6,906 110,046 31,364 — 600 155,822 (6)The components of All Other Compensation for 2012 are as follows:Name
401(k) Match
Contributions(a)
Contributions(b)
Life
Insurance
Premiums(c)
Gross
Ups for
Spousal
Travel(d) 11,938 12,500 4,432 14,303 24,522 67,695 12,250 12,500 3,367 — 20,825 48,942 9,375 9,375 100,808 — 22,358 141,916 8,500 12,500 6,436 — 14,993 42,429 12,146 13,647 2,784 193 19,392 48,162 (a)Includes employer matching contributions under AAM’s 401(k) plan.(b)Includes employer retirement contributions under AAM’s 401(k) plan.(c)Includes executive life insurance premiums.(d) Includes amounts reimbursed for taxes attributable to the income associated with the cost of spousal travel for participation in Company business meetings and events.(e)Includes personal use of Company-provided vehicles for Mr. D.C. Dauch, Mr. Simonte, Mr. R.E. Dauch and Mr. Bellanti.vehicles. The aggregate incremental cost of Company-provided vehicles is based on total vehicle cost if business use of the vehicle is less than 30%. For Mr. D.C. Dauch and Mr. R.E. Dauch, includes the cost of the personal use of a second Company-provided vehicle for each of them.(e) Includes amounts reimbursed for taxes attributable to the income associated with the cost of spousal travel for participation in Company business meetings and events. (f) For Mr. D.C. Dauch, includes the cost of travel for spousal participation in Company business meetings and events. For Mr. D.C. Dauch and Mr. R.E. Dauch, also includesevents of $26,091, meals provided during business hours.hours, the cost of an executive physical and personal umbrella liability insurance premiums. For Mr. R.E. Dauch,Simonte and Mr. Satine, includes airline club access fees.the cost of an executive physical and personal umbrella liability insurance premiums. For Mr. Bellanti, includes the cost of travel for spousal participation in Company business meetings and events, the cost of an executive physical and personal umbrella liability insurance premiums. For Mr. Willemse, also includes employer matching contributions under the Executive Deferred Compensation Plan,cost of travel for spousal participation in Company business meetings and events, the cost of airfare for personal travel under an international relocation arrangement, employer matching contributions under the Executive Deferred Compensation Plan and the cost of travel for spousal participation in Company business meetings and events.personal umbrella liability insurance premiums. For each NEO, reflectsMr. R.E. Dauch, includes the cost of executive physicals and personal umbrella liability insurance premiums.
David C. Dauch Annual Incentive Long-Term Incentive Long-Term Incentive Michael K. Simonte Annual Incentive Long-Term Incentive Richard E. Dauch(6) Long-Term Incentive Long-Term Incentive John J. Bellanti Annual Incentive Long-Term Incentive Norman Willemse Annual Incentive Long-Term Incentive Reflects the full grant date fair value of 20122013 to the NEOs are shown in the following table. The annual and long-term incentive compensation programs are described inCompensation Discussion and Analysis and following the table below. Estimated Future Payouts under
Non Equity Incentive Plan Awards(1) All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(2)
# All Other
Option
Awards:
Number of
Securities
Underlying
Options(3)
# Exercise
or Base
Price of
Option
Awards
$/Sh(4) Grant Date
Fair
Value of
Stock and
Option
Awards(5)
$ Name Grant Date Approval
Date Number
of
Units # Threshold
$ Target
$ Maximum
$(1) — — — 406,667 1,016,667 — — — — — 5/30/2012 4/26/2012 729,000 182,250 729,000 1,458,000 79,326 — — 729,006 9/1/2012 8/27/2012 250,000 62,500 250,000 500,000 22,382 — — 250,007 — — — 168,928 422,320 — — — — — 5/30/2012 4/26/2012 316,740 79,185 316,740 633,480 34,466 — — 316,743 5/30/2012 4/26/2012 — — — — 68,227 150,000 9.19 1,254,006 9/1/2012 8/27/2012 — — — — 559,266 — — 6,247,001 — — — 155,424 388,560 — — — — — 5/30/2012 4/26/2012 291,420 72,855 291,420 582,840 31,711 — — 291,424 — — — 74,544 186,360 — — — — — 5/30/2012 4/26/2012 124,240 31,060 124,240 248,480 13,520 — — 124,249 Name Grant Date David C. Dauch Annual Incentive 1/1/2013 10/24/2012 550,000 1,375,000 — — — — — Long-Term Incentive 3/6/2013 2/6/2013 — — — 137,687 — — 1,750,002 Long-Term Incentive 3/6/2013 2/6/2013 437,500 1,750,000 3,500,000 — — — — Michael K. Simonte Annual Incentive 1/1/2013 10/24/2012 174,016 435,040 — — — — — Long-Term Incentive 3/6/2013 2/6/2013 — — — 42,786 — — 543,810 Long-Term Incentive 3/6/2013 2/6/2013 135,950 543,800 1,087,600 — — — — John J. Bellanti Annual Incentive 1/1/2013 10/24/2012 155,424 388,560 — — — — — Long-Term Incentive 3/6/2013 2/6/2013 — — — 38,215 — — 485,713 Long-Term Incentive 3/6/2013 2/6/2013 121,425 485,700 971,400 — — — — Alberto L. Satine Annual Incentive 1/1/2013 10/24/2012 86,400 216,000 — — — — — Long-Term Incentive 3/6/2013 2/6/2013 — — — 16,995 — — 216,006 Long-Term Incentive 3/6/2013 2/6/2013 54,000 216,000 432,000 — — — — Norman Willemse Annual Incentive 1/1/2013 10/24/2012 76,800 192,000 — — — — — Long-Term Incentive 3/6/2013 2/6/2013 — — — 12,589 — — 160,006 Long-Term Incentive 3/6/2013 2/6/2013 40,000 160,000 320,000 — — — — Richard E. Dauch Annual Incentive 1/1/2013 10/24/2012 1,600,000 4,000,000 — — — — — (1) Net operating cash flow and net income as a percentage of sales (NIPS) were selected as performance metrics for 2012 annual incentive awards. The maximum payout for net operating cash flow is 125%. There is no established maximum for NIPS. Also includesreflects the long-term incentive performance unit awards (PUs) granted under the 2012 Omnibus Incentive Plan. The performance unitsPUs are payable in cash based on the Company’s EBITDA performance. See further discussion of these incentive awards under theNarrative to Summary Compensation Table and Grants of Plan-Based Award Table.(2) (3) Reflects stock option award granted to Mr. R.E. Dauch under his prior employment agreement. See further discussion in theNarrative to Summary Compensation Table and Grants of Plan-Based Award Tableand in the Compensation of Executive Chairman section of theCompensation Discussion and Analysis.(4)Equal to the closing market price of AAM common stock on the grant date, May 30, 2012.(5)equity awardsRSUs made during fiscal year 20122013 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based
| on applying the assumptions used in our financial statements. The grant date fair value of stock awards is calculated using the closing market price of AAM common stock on the date of grant. |
Term Base Salary Annual Incentive Long-Term Incentive Other Benefits Term Base Salary Other Benefits Dauch in Performance Level Threshold Target Maximum Performance Level Threshold Target Maximum David C. Dauch Michael K. Simonte Richard E. Dauch John J. Bellanti Norman WillemseEffective September 1, 2012, one yearone-year extensions unless either party provides 60 days’ written notice of intent not to renewrenew. Automatic two-year extension upon a change in control.$1 million effective September 1, 2012, subject to annual review and increase by the Compensation Committee in its sole discretiondiscretion. Base salary increased to $1.1 million effective September 1, 2013.Initial target as of September 1, 2012 is 125% of base salaryInitial targetas of September 1, 2012 is 240%350% of base salaryOne-time award on September 1, 2012 of RSUs with a grant date value of $250,000 and performance units with a target value of $250,000Effective September 1, 2012, provideswhich terminated upon his death on August 2, 2013, provided for the following compensation and benefits:Initial Term: September 1, 2012In effect through August 31, 2015Two additional one-year extensions, unless either party provides 60 days’ written notice of intent not to renew$2 million per year 2013 Annual Incentive 31, 2015; $1 million thereafter if agreement is extended2, 2013. 2012 AnnualLong-Term IncentiveAnnual cash bonus in an amount determined by the Compensation Committee based on our financial performance relativeNo grants subsequent to AAM’s competitor peer group:• equal to 3 times annual base salary if the Company outperforms our competitor peer group;• up to the amount of Mr. R.E. Dauch’s base salary if the Company does not outperform the Company’s competitor peer groupSubject to adjustment based on other factors as determined by the Compensation Committee in its sole discretionLong-Term IncentiveOne-time grant of RSUs with a grant date value of $6,247,000 on September 1, 2012Dauch;UnderIn 2013, annual incentive awards were granted under the employment agreements with Mr. D.C. DauchAAM Incentive Compensation Plan for Executive Officers. Net operating cash flow and Mr. R.E. Dauch, certain payments and benefits will be providedNIPS were selected as performance metrics for these awards. The maximum payout for net operating cash flow is 125%. Although there was no established maximum payout for NIPS in 2013, a stated maximum was established in 2014. See Annual Incentive Compensation in the event of termination of employment under different scenarios as described below inPotential Payments Upon Termination or Change in Control.CD&A.2012,2013, the Company granted long-term incentive awards to NEOs in the form of RSUs and cash-based performance units and, for Mr. R.E. Dauch, stock options, under the 2012 Omnibus Incentive Plan.units. The terms of these awards, as well as the outstanding cash-based performance awards granted to NEOs under the 2009 AAM LTIP are described below.theall RSUs are payable in common stock. Vesting is accelerated upon termination of employment due to death or disability or upon a change in control. The award is forfeited if employment is terminated for any other reason prior to vesting.(other than the Executive Chairman) on May 30, 2012March 6, 2013 are based upon the attainment of certain EBITDA margin performance targets over a 33-monththree-year performance period beginning AprilJanuary 1, 20122013 through December 31, 2014.2015. PUs have an initial notional value equal to one dollar and will be settled in cash. A pro ratapro-rata portion of the award is payable upon death, disability, retirement, termination without cause or upon a change in control.EBITDA Performance Measure 33-Month Cumulative
EBITDA Percent of
Target Award
Opportunity Earned 10 % 25 % 12 % 100 % 15 % 200 % Stock Options. The nonqualified stock options granted to Mr. R.E. Dauch on May 30, 2012 vest in three approximately equal installments on the first, second and third anniversaries of the grant date. Vesting is accelerated upon termination of employment due to death or disability or upon a change in control. The award is forfeited if employment is terminated for any other reason prior to vesting. Vested options expire ten years after the grant date and may be exercised any time before the earliest of: (1) the expiration of the grant, (2) five years following termination of employment due to death, disability or retirement, (3) 90 days following termination of employment without cause, or the participant’s resignation and (4) termination of employment for cause.President & CEO Long-Term Incentive Award — September 1, 2012. Upon his appointment as President & CEO on September 1, 2012, Mr. D.C. Dauch received a one-time long-term incentive award in the form of RSUs and performance units. Pursuant to his employment agreement, the RSU award had a grant date value of $250,000 and the performance unit award had a target value of $250,000. The RSU award is payable in common stock on the third anniversary of the grant date contingent upon continued employment with the Company. The performance unit award is payable in cash based on the Company’s EBITDA performance during the July 1, 2012 through June 30, 2015 performance period. The threshold, target and maximum EBITDA performance levels for determining the performance award payout are shown in theEBITDA Performance Measure table above.Executive Chairman Long-Term Incentive Award — September 1, 2012. Upon his appointment to Executive Chairman on September 1, 2012, Mr. R.E. Dauch received a one-time long-term incentive award in the form of RSUs payable in common stock. Pursuant to his employment agreement, the award had a grant date value of $6,247,000 and vests ratably in three approximately equal annual installments contingent upon continued employment with the Company.Performance Level Threshold 10% 25% Target 12% 100% Maximum 15% 200% 2010 award payouts to the NEOs (other than the Executive Chairman)2011 awards were paid in March 20132014 as shown in theSummary Compensation Table above. The 2011No other awards under the 2009 AAM LTIP remain outstanding.outstanding at December 31, 2013. In calculating these awards, the Compensation Committee has discretion to exclude certain special items from EBITDA, such as special charges or gains, non-recurring operating costs, extraordinary gains or losses, the impact of changes in accounting principles, or other unusual items.2010 and 2011 award payouts for each performance measure. EBITDA Performance Measure TSR Performance Measure 3-Year Cumulative
EBITDA Percent of
Target Award
Opportunity
Earned Company’s TSR
Percentile
Rank Percent of
Target Award
Opportunity
Earned 8 % 25 % 35 th 50 % 12 % 100 % 50 th 100 % 15 % 200 % 75 th 200 % EBITDA Performance Measure TSR Performance Measure Performance Level Threshold 8% 25% 50% Target 12% 100% 100% Maximum 15% 200% 200% 2012Name Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#) Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1)
(#) Option
Exercise
Price
($) Option
Expiration
Date Number of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested(2)
($) 28,000 23.73 1/22/2013 79,326 (3) 888,451 28,000 38.70 2/2/2014 22,382 (4) 250,678 12,000 26.65 3/15/2015 15,000 15.58 3/15/2016 13,000 26.02 3/14/2017 10,000 23.73 1/22/2013 34,466 (3) 386,019 8,500 38.70 2/2/2014 9,000 26.65 3/15/2015 10,000 15.58 3/15/2016 10,000 26.02 3/14/2017 12,500 10.08 6/25/2018 300,000 23.73 1/22/2013 68,227 (3) 764,142 300,000 38.70 2/2/2014 559,266 (4) 6,263,779 150,000 26.65 3/15/2015 150,000 15.58 3/15/2016 150,000 26.02 3/14/2017 — 150,000 9.19 5/30/2022 13,000 23.73 1/22/2013 31,711 (3) 355,163 16,000 38.70 2/2/2014 9,000 26.65 3/15/2015 6,700 15.58 3/15/2016 10,000 26.02 3/14/2017 11,000 10.08 6/25/2018 8,000 23.73 1/22/2013 13,520 (3) 151,424 7,500 38.70 2/2/2014 9,700 10.08 6/25/2018 Name David C. Dauch 28,000 38.70 2/2/2014 1,622,217 12,000 26.65 3/15/2015 457,712 15,000 15.58 3/15/2016 2,815,699 13,000 26.02 3/14/2017 Michael K. Simonte 8,500 38.70 2/2/2014 704,830 9,000 26.65 3/15/2015 874,974 10,000 15.58 3/15/2016 10,000 26.02 3/14/2017 John J. Bellanti 16,000 38.70 2/2/2014 434,501 9,000 26.65 3/15/2015 781,497 6,700 15.58 3/15/2016 10,000 26.02 3/14/2017 11,000 10.08 6/25/2018 Alberto L. Satine 9,000 38.70 2/2/2014 284,848 8,000 26.65 3/15/2015 347,548 8,000 26.02 3/14/2017 Norman Willemse 7,500 38.70 2/2/2014 276,484 9,700 10.08 6/25/2018 257,445 300,000 38.70 2/2/2014 150,000 26.65 3/15/2015 150,000 15.58 3/15/2016 150,000 26.02 3/14/2017 100,500 9.19 8/2/2017 (1) Reflects stockAll outstanding options granted on May 30, 2012 under the 2012 Omnibus Incentive Plan. The options vest ratably in three equal annual installments beginning in Mayare vested as of December 31, 2013.(2) Reflects value of outstanding RSUs using a share price of $11.20,$20.45, the closing price of AAM common stock on December 31, 2012.2013.(3) Reflects RSUs granted on May 30, 2012 under the 2012 Omnibus Incentive Plan. RSUs for Mr. D.C. Dauch, Mr. Simonte, Mr. Satine and Mr. Willemse vest three years from the date of grant. RSUs for Mr. R.E. Dauch and Mr. Bellanti vest ratably in three approximately equal annual installments beginning in May 2013.were forfeited upon retirement on January 1, 2014.(4) Reflects RSUs granted on September 1, 2012 under the 2012 Omnibus Incentive Plan under the terms ofpursuant to Mr. D.C. Dauch’s and Mr. R.E. Dauch’s employment agreements.agreement. The RSUs for Mr. D.C. Dauch vest three years from the date of grant andgrant.(5) Reflects RSUs granted on March 6, 2013 under the 2012 Omnibus Incentive Plan. RSUs for Mr. R.E.D.C. Dauch, Mr. Simonte, Mr. Satine and Mr. Willemse vest ratably in three approximately equal annual installments beginning in September 2013.years from the date of grant. RSUs for Mr. Bellanti were forfeited upon his retirement on January 1, 2014.
David C. Dauch Michael K. Simonte Richard E. Dauch John J. Bellanti Norman Willemse(6) Upon his death, vesting of Mr. R.E.Dauch's outstanding long-term incentive awards was accelerated under the terms of the applicable award agreements. Unexercised stock options remain exercisable by his beneficiary until the earlier of the option expiration date or five years from the date of death. Option Awards Stock Awards Name Number of
Shares
Acquired on
Exercise(1)
(#) Value
Realized on
Exercise(1)
($) Number of
Shares
Acquired on
Vesting(2)(3)
(#) Value
Realized on
Vesting(4)
($) — — 4,500 52,245 — — 3,600 41,796 49,500 484,605 19,681 224,363 — — 3,600 41,796 — — 6,000 69,660 Option Awards Stock Awards Name David C. Dauch — — — — Michael K. Simonte 12,500 119,115 — — John J. Bellanti — — 10,464 190,445 Alberto L. Satine 16,700 120,046 — — Norman Willemse — — — — Richard E. Dauch 49,500 445,995 627,493 13,078,015 (1) Reflects the number of shares acquired upon exercise of stock options. Value realized upon exercise is based on the difference between the actual salesmarket price of the AAM common stock acquired upon exercise and the exercise price for such stock options.options on the exercise date.(2) Reflects the lapse of the transfer and forfeiture restrictions under awards of performance accelerated restricted stockRSUs granted in March 2007May 2012 to Mr. D.C. Dauch, Mr. Simonte, Mr. Bellanti and Mr. Willemse. These awardsR.E. Dauch. The first of three approximately equal annual installments vested in March 2012.(3)ReflectsMay 2013. For Mr. R.E. Dauch, also reflects the lapse of the transfer and forfeiture restrictions under the awardRSUs that were unvested as of restricted stock granted to Mr. R.E. Dauch in January 2009. The award vested in three approximately equal annual installments through January 2012.his death.(4)(3) Reflects the number of shares underlying vested performance accelerated restricted stock and restricted stock,RSUs multiplied by the closing market price of AAM common stock on the vesting date. For Mr. R.E. Dauch, the value realized on vesting upon death was $12,228,260.
David C. Dauch Michael K. Simonte Richard E. Dauch(1) John J. Bellanti(2) Norman Willemse(3) 2013. Two percent of the executive’s average monthly salary calculated as of December 31, 2011 (as determined for the The benefit payable to the executive under the 1.5% of the executive’s average monthly salary calculated as of December 31, 2011 (as determined for the The benefit payable to the executive under the David C. Dauch Michael K. Simonte Richard E. Dauch John J. Bellanti Norman Willemse Fidelity Retirement Money Market Portfolio Vanguard External Market Index PIMCO Total Return Fund Fidelity Freedom Income K Fund PIMCO High Yield Fund Fidelity Freedom K 2000 Fund Domini Social Equity Fund Fidelity Freedom K 2005 Fund Spartan U.S. Equity Index Fund Fidelity Freedom K 2010 Fund Touchstone Value Y Fund Fidelity Freedom K 2015 Fund American Funds Growth Fund of America Fidelity Freedom K 2020 Fund Fidelity Growth Company Fund Fidelity Freedom K 2025 Fund Fidelity Low-Priced Stock Fund Fidelity Freedom K 2030 Fund Nuveen Mid Cap Growth Opportunities Fidelity Freedom K 2035 Fund American Beacon Small Cap Value Fund Fidelity Freedom K 2040 Fund Royce PA Mutual Fund Fidelity Freedom K 2045 Fund Fidelity Diversified International Fund Fidelity Freedom K 2050 Fund Spartan International Index Fund 2013. Agreement a material breach of his obligations under the agreement; the willful and continued failure or refusal to satisfactorily perform his duties; a conviction of or pleading guilty (or no contest) to a felony or to another crime involving dishonesty or moral turpitude or which reflects negatively upon the Company or impairs its operations; engaging in any misconduct, negligence, act of dishonesty (including any violation of federal securities laws) or violence that is materially injurious to the Company; a material breach of a restrictive covenant (i.e., non-competition, non-solicitation) or Company policy; refusal to follow the directions of the Board; or any other willful misconduct that is materially injurious to a material decrease in compensation or a failure by the Company to pay material compensation; a material diminution of responsibilities, positions or titles (other than solely as a result of the Company ceasing to be a publicly-traded company); relocation outside the Detroit-metropolitan area; or a material breach by the Company. years, as well as any accrued and unpaid compensation and benefits and outplacement services. The annual incentive payment will be determined based on the higher of (1) his average annual bonus for the three fiscal years preceding termination of employment (1) non-disclosure and directly or indirectly engaging in any business that competes with AAM; soliciting or inducing our employees to leave AAM, or offering employment to our employees or otherwise interfering with our relationship with our employees, agents or consultants; and using, exploiting or disclosing our confidential information to any third party without our prior written consent. Compensation: Severance(2) Annual Incentive(3) Long Term Incentives: RSUs(4) 2010 Performance Awards(5) 2011 Performance Awards(6) 2012 Performance Unit Awards(7) Special Incentive Program(8) Other Benefits: Deferred Compensation(9) Health care(10) Disability(11) Life Insurance(12) Outplacement Services(13) Total Compensation: Annual Incentive(2) Long Term Incentives: RSUs(3) 2010 Performance Awards(4) 2011 Performance Awards(5) 2012 Performance Unit Award(6) Special Incentive Program(7) Other Benefits: Health care(8) Disability(9) Life Insurance(10) Total Compensation: Severance(2) Bonus(3) Retirement Plans: Defined Benefit Retirement Program(4) SERP(5) Welfare Benefit(6) Equity: Stock Options(7) RSUs(8) Other Benefits: Deferred Compensation(9) Life Insurance(10) Total Compensation: Annual Incentive(2) Retirement Plans: Defined Benefit Retirement Program(3) SERP(4) Welfare Benefit(5) Equity: RSUs(6) 2010 Performance Awards(7) 2011 Performance Awards(8) 2012 Performance Unit Award(9) Special Incentive Program(10) Other Benefits: Deferred Compensation(11) Total Compensation: Annual Incentive(2) Retirement Plans: Defined Benefit Retirement Program(3) SERP(4) Welfare Benefit(5) Long Term Incentives: RSUs(6) 2010 Performance Awards(7) 2011 Performance Awards(8) 2012 Performance Unit Award(9) Other Benefits: Deferred Compensation(10) Total Compensation and benefit programs should attract, motivate and retain experienced executives who are vital to our short-term and long-term success, profitability and Compensation and benefit programs should reward Company and individual performance; and Company's say on pay proposal. This result was considerably less favorable than the level of support we received in prior years. As a result of this outcome, the Board directed senior management to conduct stockholder outreach to gain an understanding of stockholder concerns about our executive compensation program. The For the reasons stated above, and more fully discussed in the CD&A, the Board unanimously recommends a vote for the approval of the compensation of our named executive officers. Name Salvatore J. Bonanno, Sr. Elizabeth A. Chappell Forest J. Farmer Steven B. Hantler Richard C. Lappin James A. McCaslin William P. Miller II John F. Smith Larry K. Switzer Thomas K. Walker Dr. Henry T. Yang2012,2013, AAM’s fiscal year-end measurement date used for financial statement reporting purposes. The values shown are based on unreduced benefits deferred to the earliest age at which unreduced benefits are payable. The assumptions used to calculate the actuarial present value of accumulated benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2012, except that the values in the table do not reflect assumptions for future compensation increases or future service credits2013 and assume continued serviceemployment until unreduced retirement age is attained. SeeFor material assumptions, see Note 6 to the audited consolidated financial statements in our Annual Reportannual report on Form 10-K for material assumptions.Name Plan Name Number of
Years of
Credited
Service
(#) Present
Value of
Accumulated
Benefit
($) AAM Retirement Program for Salaried Employees 11.5000 296,563 AAM Supplemental Executive Retirement Program 17.5000 1,326,013 AAM Retirement Program for Salaried Employees 8.0833 197,858 AAM Supplemental Executive Retirement Program 14.0833 765,129 AAM Retirement Program for Salaried Employees 17.8333 991,169 AAM Supplemental Executive Retirement Program 23.0000 29,718,734 AAM Retirement Program for Salaried Employees 17.8333 979,008 AAM Supplemental Executive Retirement Program 18.8333 917,081 Albion Pension Plan 6.3333 260,915 AAM Supplemental Executive Retirement Program 10.9167 282,554 Name Plan Name David C. Dauch AAM Retirement Program for Salaried Employees 250,031 — AAM Supplemental Executive Retirement Program 18.5000 1,617,968 — Michael K. Simonte AAM Retirement Program for Salaried Employees 167,221 — AAM Supplemental Executive Retirement Program 15.0833 823,708 — AAM Retirement Program for Salaried Employees 804,187 — AAM Supplemental Executive Retirement Program 19.8333 835,056 — AAM Retirement Program for Salaried Employees 399,540 — AAM Supplemental Executive Retirement Program 12.5833 281,112 — Albion Pension Plan 6.3333 276,017 — AAM Supplemental Executive Retirement Program 11.9167 279,998 — AAM Retirement Program for Salaried Employees 544,571 16,163 AAM Supplemental Executive Retirement Program 23.5833 17,434,222 503,028 (1) Benefits under the SRP were frozen effective December 31, 2006 for Mr. D.C. Dauch and Mr. Simonte. Benefits under the SRP were frozen effective December 31, 2011 for Mr. Bellanti, Mr. Satine and Mr. R.E. DauchDauch.(2) Mr. Bellanti retired on January 1, 2014 under the SRP and the SERP. The present value of accumulated benefits as of December 31, 2013 was reduced to reflect Mr. Bellanti's actual pension elections. (3) Mr. Satine was eligible to retire on December 31, 2012 with full benefits2013 under both the Salaried Retirement Program and the SERP.(2)Mr. Bellanti was eligible to retire on December 31, 2012 under the Salaried Retirement ProgramSRP and the SERP. He qualifies for a reduced benefit of approximately 80%54% of the unreduced benefit under the Salaried Retirement ProgramSRP and for the basic form of benefit under the SERP.(3)(4) Mr. Willemse is not a participant underin the Salaried Retirement Program.SRP. Mr. Willemse was eligible to retire on December 31, 20122013 under both the Albion Pension Plan and the SERP. He qualifies for the current benefit formula under the SERP.(5) Mr. R.E. Dauch's present value of accumulated benefits as of December 31, 2013 was reduced to the survivorship portion of the benefits payable under the SERP and the SRP. His surviving spouse began receiving benefit payments in September 2013. our Salaried Retirement Program,the SRP, a broad-based defined benefit pension plan covering substantially all U.S. salaried associates hired prior to January 1, 2007, and our SERP. The purpose of the SERP is to provide total retirement benefits at a competitive level with executives of other major industrial companies. Our Albion Automotive LimitedProgram.Program (SRP). The annual retirement benefit payable to each executive, commencing on retirement at or after age 65, equals the sum of the executive’s contributions plus an additional benefit based on the executive’s average monthly salary (determined as the average of the executive’s base salary in the highest 60 months during his final 10 years of service) and years of credited service. The planSRP also includes a cash benefit structure for participants hired between January 1, 2002 and December 31, 2006. None of the NEOs are covered by the cash benefit structure. The amount of compensation that may be taken into account for determining benefits is limited under the Internal Revenue Code.Salaried Retirement ProgramSRP may be paid as a single life annuity or, upon election, in the form of a joint and survivor annuity with a reduction in the amount of the annual benefit.Salaried Retirement ProgramSRP was amended to freeze benefits at current levels for associates who were not eligible to retire by December 1, 2011. Those associatesAssociates who were eligible for early or normal retirement on or before December 31, 2011 continued to accrue benefits through December 31, 2011. Mr. R.E. Dauch and Mr. Bellanti were grandfathered and thus continued to accrue benefits through December 31, 2011. The NEOs did not accrue benefits under the plan in 2012.Program.Program (SERP). Mr. R.E. DauchBellanti and Mr. Bellanti,Satine, who were grandfathered under the Salaried Retirement Program,SRP, are eligible to receive the basic form of pension benefit under ourthe SERP upon retirement. In addition, they are eligible to receive the alternative form of benefit, if greater than the basic benefit, upon retirement at or after age 62. The executive must have at least 10 years of credited service to receive either form of benefit under the SERP.Salaried Retirement ProgramSRP excluding the limitations as specified under the Internal Revenue Code), multiplied by the executive’s years of credited service; lessSalaried Retirement ProgramSRP (without reduction for survivor benefits), plus 2% of the maximum monthly social security benefit payable at age 65 multiplied by the executive’s years of credited service.Salaried Retirement ProgramSRP excluding the limitations as specified under the Internal Revenue Code) and average monthly incentive compensation as of December 31, 2011 (determined as the average of the highest five of the executive’s last 10 annual cash incentive awards, divided by 12) multiplied by the executive’s years of credited service; lessSalaried Retirement ProgramSRP (without reduction for survivor benefits), plus the maximum monthly social security benefit payable at age 65.Salaried Retirement Program,SRP; however, the executive’s monthly SERP benefit will be reduced and paid in the form of a joint and survivor annuity.Salaried Retirement Program,SRP, are eligible to receive a benefit under the current SERP formula, payable six months after retirement in a lump sum. The amount of the benefit will be equal to 12.5% of the executive’s final average compensation (determined as the executive’s average annual base salary and cash incentive for the highest five consecutive years), multiplied by the executive’s years of credited service, less the sum of the actuariallyactuarial equivalent value of the executive’s benefits payable under the Salaried Retirement Program,SRP, Albion Pension Plan and the balance of the executive’s employer retirement contribution account under AAM’s 401(k) plan.Effective August 1, 2012, the SERP was amended and restated to implement actuarial increases for participants who remain employed after reaching age 65. As a result, participants who work past age 65 will receive an increased annual SERP benefit when they retire to reflect a shorter expected payment period due to delayed retirement. This amendment had an impact on Mr. R.E. Dauch’s SERP benefit for 2012, which is shown in theSummary Compensation Table. The amended and restated SERP also provides that a participant’s entire SERP benefit will be forfeited if the participant’s employment with AAM is terminated for cause (as defined in the plan).20122013 fiscal year.Name Executive
Contributions
in Last FY(1)
($) Registrant
contributions in
Last FY(2)
($) Aggregate
Earnings
In Last FY(3)
($) Aggregate
Withdrawals
Distributions
($) Aggregate
Balance at
Last FYE(4)
($) — — 38,630 — 301,238 — — — — — — — 532,099 — 5,502,317 — — 65,112 — 567,875 25,264 513 1,595 — 27,372 Name David C. Dauch — — 50,956 — 352,194 Michael K. Simonte — — — — — John J. Bellanti — — 93,646 — 661,521 Alberto L. Satine — — — — — Norman Willemse 35,100 768 11,069 — 75,904 Richard E. Dauch — — 55,056 (5,557,373 ) — (1) $17,083$25,600 of his 20122013 base salary and $8,181$9,500 of his 20112012 annual incentive award paid March 2012.2013. Base salary amounts deferred are included in the salary column for 20122013 in theSummary Compensation Table and the 20112012 annual incentive award deferred is included in the non-equity incentive compensation column for 20112012 in theSummary Compensation Table.(2) CompanyCompany's 3% match on 2012Mr. Willemse's 2013 base salary deferred by Mr. Willemse. Amountdeferral. This amount is included in the all other compensation column for 20122013 in theSummary Compensation Table.(3) 20122013 on notional investments designed to track the performance of funds similar to those available to participants in the Company’s 401(k) plan. None of the earnings shown in this column are reported as compensation in theSummary Compensation Table.(4) Upon his death, Mr. R.E. Dauch's beneficiary received a distribution of the plan account balance. (5) $17,596$26,368 reported as compensation in theSummary Compensation Table for 2012.2013.2012.Name of Fund Rate of
Return Name of Fund Rate of
Return .01% 18.48% 10.36% 6.36% 14.55% 6.44% 11.75% 8.77% 15.96% 10.53% 15.38% 10.81% 20.92% 11.86% 18.52% 13.26% 18.50% 13.65% 15.12% 14.60% 16.52% 14.61% 14.58% 14.97% 19.41% 15.23% 18.78% Fidelity Freedom K 2055 Fund 15.39% Name of Fund Name of Fund Fidelity Retirement Money Market Portfolio 0.01 % Vanguard External Market Index 38.37 % PIMCO Total Return Fund (1.92 )% Fidelity Freedom Income K Fund 4.60 % PIMCO High Yield Fund 5.77 % Fidelity Freedom K 2000 Fund 4.56 % Domini Social Equity Fund 33.30 % Fidelity Freedom K 2005 Fund 8.15 % Spartan 500 Index Fund 32.35 % Fidelity Freedom K 2010 Fund 11.20 % Touchstone Value Y Fund 31.29 % Fidelity Freedom K 2015 Fund 11.96 % T. Rowe Price Growth Stock Fund 39.20 % Fidelity Freedom K 2020 Fund 13.35 % Fidelity Growth Company Fund 37.61 % Fidelity Freedom K 2025 Fund 16.65 % Fidelity Low-Priced Stock Fund 34.45 % Fidelity Freedom K 2030 Fund 18.21 % Nuveen Mid Cap Growth Opportunities 36.86 % Fidelity Freedom K 2035 Fund 20.86 % American Beacon Small Cap Value Fund 40.06 % Fidelity Freedom K 2040 Fund 21.25 % Royce PA Mutual Fund 35.25 % Fidelity Freedom K 2045 Fund 21.84 % Fidelity Diversified International Fund 25.19 % Fidelity Freedom K 2050 Fund 22.08 % Spartan International Index Fund 21.80 % Fidelity Freedom K 2055 Fund 22.78 % 2012.2013. Although the calculations are intended to provide reasonable estimates of the potential payments, they are based on numerous assumptions as described in the footnotes, and may not represent the actual amountamounts the NEOs would receive upon each termination event.and Executive Chairman Employment Agreementsagreementsagreement with Mr. D.C. Dauch and Mr. R.E. Dauch, the Company may terminate each executive’shis employment with or without cause, or upon disability. With respect to each executive, causeCause means:theAAM's financial condition or business reputation.each executivehe may resign for good reason, which means:each executive wouldMr. D.C. Dauch is entitled to receive only accrued and unpaid compensation. Participation in the Company’s benefit plans would cease upon termination.each executive wouldMr. D.C. Dauch is entitled to receive accrued and unpaid compensation and continued payment of base salary for two years following termination. Mr. D.C. Dauch wouldHe is also entitled to receive $50,000 of outplacement services and health care benefits for two years.R.E. Dauch’sD.C. Dauch's employment is terminated for any reason other than forwithout cause or uponfor good reason within two years of a change in control, he will be entitled to payment of his death, the Company will continue to reimburse premiums paid on a $5 million executive life insurance policybase salary, annual incentive and medical benefits for two years.agreementsor the change in control, or (2) his target bonus for the year of the termination of employment or of the change in control.Dauch and Mr. R.E. Dauch containDauch's employment agreement contains the following restrictive covenants that extend for two years following termination of employment or the expiration of thehis employment agreement:confidentiality, which prohibit unauthorized use or disclosureconfidentiality; (2) non-competition; and (3) non-solicitation of AAM’s confidential information;non-competition, which prohibits each of them from directly or indirectly engaging in any business that competes with AAM; andnon-solicitation, which prohibits solicitation of ourAAM employees and customers. with AAM terminates due to disability or death, Mr. D.C. Dauch and Mr. R.E. Dauch will be entitled to accrued benefits under applicable benefit plans and programs (such as our Deferred Compensation Plan, Salaried Retirement Plan and SERP). Should Mr. D.C. Dauch or Mr. R.E. Dauch die during the term of his employment agreement, his estate and/or spouse would be entitled to accrued benefits under applicable benefit plans and programs.WillemseSatine each have each entered into a non-competition agreement that prohibits each of them, while employed by AAM and for one year following termination of employment, each executive from:David C. Dauchfollowing table shows estimatedtables below reflect potential payments to Mr. D.C. Daucheach NEO upon resignation for good reason, termination without cause, disability, retirement and a change in control as of December 31, 2012.2013. Upon termination for cause or upon resignation without good reason, Mr. D.C. Daucheach NEO would receive only accrued and unpaid compensation. These amountsThe assumptions used to determine retirement benefits for eligible NEOs are not shownthe same as those used in our audited consolidated financial statements for the table below.fiscal year ended December 31, 2013. See Note 6 to the audited consolidated financial statements in our 2013 annual report on Form 10-K. Mr. D.C. Dauch wasand Mr. Simonte were not eligible to retire as of December 31, 2012. For Good
Reason
Resignation
($) Without
Cause
Termination
($) Disability
Retirement(1)
($) Change in
Control
($) 2,000,000 2,000,000 — — 540,000 540,000 540,000 — — — 1,139,129 1,139,129 — 1,209,600 1,209,600 — — 780,000 780,000 — — 240,485 240,485 240,485 1,750,000 1,750,000 1,750,000 — 301,238 301,238 301,238 301,238 26,676 26,676 322,562 — — — 7,756,067 — — — 139,920 — 50,000 50,000 — — 4,667,914 6,897,999 14,179,001 1,680,852 David C. Dauch For Good
Reason
Resignation
($)Without
Cause
Termination
($)
Retirement(1)Change in
Control
($)Compensation: 2,200,000 2,200,000 — — 2,200,000 1,196,250 1,196,250 1,196,250 — 2,750,000 Long Term Incentives: — — 4,895,628 — 4,895,628 — 1,989,000 1,989,000 — — — 588,909 588,909 — 588,909 — 583,333 583,333 — 583,333 875,000 875,000 875,000 — — Other Benefits: Retirement Plans — — — — — SERP — — — — — Welfare Benefit — — — — — 352,194 352,194 352,194 — 352,194 29,819 29,819 316,971 — 29,819 — — 7,787,266 — — — — 143,981 — — 50,000 50,000 — — 50,000 Total 4,703,263 7,864,505 18,728,532 — 11,449,883 Michael K. Simonte For Good
Reason
Resignation
($)Without
Cause
Termination
($)
Retirement(1)Change in
Control
($)Compensation: Severance — — — — — — — 378,485 — — Long Term Incentives: — — 1,579,804 — 1,579,804 — 1,050,600 1,050,600 — — — 201,562 201,562 — 201,562 — 181,267 181,267 — 181,267 500,000 500,000 500,000 — — Other Benefits: Retirement Plans — — — — — SERP — — — — — Welfare Benefit — — — — — Deferred Compensation — — — — — — — 312,521 — — — — 4,158,162 — — — — 71,264 — — Outplacement Services — — — — — Total 500,000 1,933,429 8,433,665 — 1,962,633 John J. Bellanti For Good
Reason
Resignation
($)Without
Cause
Termination
($)
RetirementCompensation: Severance — — — — — Annual Incentive — — — 285,000 — Long Term Incentives: RSUs — — — — — 2011 Performance Awards — — — 966,552 — 2012 Performance Unit Awards — — — 212,232 — 2013 Performance Unit Awards — — — 215,112 — 2010 Special Incentive Program — — — — — Other Benefits: Retirement Plans — — — 804,187 — SERP — — — 835,056 — Welfare Benefit — — — 195,617 — — — — 661,521 — Health care — — — — — Disability — — — — — Life Insurance — — — — — Outplacement Services — — — — — Total — — — 4,175,277 — Alberto L. Satine For Good
Reason
Resignation
($)Without
Cause
Termination
($)
RetirementCompensation: Severance — — — — — — — 185,000 185,000 — Long Term Incentives: — — 632,396 — 632,396 — 380,800 380,800 380,800 — — 81,455 81,455 81,455 81,455 72,000 72,000 72,000 72,000 2010 Special Incentive Program — — — — — Other Benefits: — — 690,218 357,635 — — — — 281,112 — 13,678 — Deferred Compensation — — — — — Health care — — — — — Disability — — — — — Life Insurance — — — — — Outplacement Services — — — — — Total — 534,255 2,055,547 1,358,002 785,851 Norman Willemse For Good
Reason
Resignation
($)Without
Cause
Termination
($)
RetirementCompensation: Severance — — — — — — — 167,040 167,040 — Long Term Incentives: — — 533,929 — 533,929 — 412,080 412,080 412,080 — — 79,062 79,062 79,062 79,062 — 53,333 53,333 53,333 53,333 2010 Special Incentive Program — — — — — Other Benefits: — — 261,558 261,558 — — — 279,998 279,998 — — — 13,236 — — 75,904 75,904 75,904 75,904 75,904 Health care — — — — — Disability — — — — — Life Insurance — — — — — Outplacement Services — — — — — Total 75,904 620,379 1,876,140 1,328,975 742,228 Assumes total and permanent disability on December 31, 2012.2013. Because Mr. D.C. Dauch hasand Mr. Simonte have more than 10 years of service, he isboth are eligible to retire due to total and permanent disability and receive pension and postretireepost-retiree health care benefits. Amount assumesAs a result, their amounts assume continued employment (on leave) until retirement.Upon resignation for good reason, termination without cause or resignation for good reason,upon a change in control, Mr. D.C. Dauch is entitled to receive two years’ base salary, payable semimonthly. (3)Under AAM’s Incentive Compensation Plan for Executive Officers, the award payout is pro-rated through the date of disability. Under Mr. D.C. Dauch’sDauch's employment agreement, he is entitled to accrued and unpaid compensation upon termination without cause or resignation for good reason. TheIn the event of disability, AAM’s Incentive Compensation Plan for Executive Officers provides a pro-rated award payout through the date of disability. Accordingly, the amount reflects the 2012his 2013 award paid in March 2013.2014 under these termination events. He is also entitled to payment of an annual bonus for two years if he is terminated without cause or resigns for good reason within two years of a change in control. The annual bonus will be determined based on the higher of (a) his average annual bonus for the three fiscal years preceding termination of employment or the change in control, or (b) his target bonus for the year of the termination of his employment or of the change in control. In the event of a change in control, the amount reflects his target bonus for two years.Outstanding RSUs vest upon termination of employment due to death, disability or upon a change in control. The value reflects the number of RSUs multiplied by the closing price of AAM common stock on December 31, 2012.2013.The 20102011 performance award payable in the event of disability or termination without cause would be based on actual performance through December 31, 2012.2013. Reflects award earned through December 31, 20122013 and paid in March 2013.2014.The 2011 performance award payable in the event of a disability or termination without cause would be based on actual performance2012 and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, two-thirds of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. (7)The 20122013 performance unit awards payable in the event of a disability, termination without cause or upon a change in control would be based on actual performance and the pro-rata portion ofemployment as compared to the performance periods for each award. As of December 31, 2012, approximately 25% of the performance periods would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. (8)Under the special incentive program, in the event of disability, resignation for good reason or termination without cause, Mr. D.C. Dauch is entitled to program amounts earned and not previously paid. Reflects the remaining two annual installments of $875,000. (9)Assumes amount is payable in a lump sum upon occurrence of termination event.(10)Under Mr. D.C. Dauch’s employment agreement, he is entitled to two years of health care benefits (including his spouse) if his employment is terminated without cause or if he resigns for good reason. Under the disability scenario, reflects health care benefits until retirement.(11)Reflects benefits equal to 100% of base salary for year one and 60% of base salary until retirement.(12)Under the disability scenario, reflects basic and supplemental life insurance benefits until retirement at age 65.(13)Under Mr. D.C. Dauch’s employment agreement, he is entitled to receive $50,000 of outplacement services if his employment is terminated without cause or if he resigns for good reason.Michael K. SimonteThe following table shows estimated potential payments to Mr. Simonte upon resignation for good reason, termination without cause, disability and a change in control as of December 31, 2012. Upon termination for cause or upon resignation without good reason, Mr. Simonte would receive only accrued and unpaid compensation. These amounts are not shown in the table below. Mr. Simonte was not eligible to retire as of December 31, 2012. For Good
Reason
Resignation
($) Without
Cause
Termination
($) Disability
Retirement(1)
($) Change in
Control
($) — — 220,000 — — — 386,019 386,019 — 720,000 720,000 — — 412,000 412,000 — — 86,384 86,384 86,384 1,000,000 1,000,000 1,000,000 — — — 318,431 — — — 4,428,641 — — — 73,864 — 1,000,000 2,218,384 7,645,339 472,403 (1)Assumes total and permanent disability on December 31, 2012. Because Mr. Simonte has more than 10 years of service, he is eligible to retire due to total and permanent disability and receive pension and postretiree health care benefits. Amount assumes continued employment (on leave) until retirement. (2)Under AAM’s Incentive Compensation Plan for Executive Officers, the award payout is pro-rated through the date of disability. The amount reflects the 2012 award paid in March 2013. (3)Outstanding RSUs vest upon termination of employment due to death, disability or upon a change in control. The value reflects the number of RSUs multiplied by the closing price of AAM stock on December 31, 2012. (4)The 2010 performance award payable in the event of disability or termination without cause would be based on actual performance through December 31, 2012. Reflects award earned through December 31, 2012 and paid in March 2013. (5)The 2011 performance award payable in the event of a disability or termination without cause would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, two-thirds of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. (6)The 2012 performance unit award payable in the event of a disability, termination without cause or upon a change in control would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012,2013, approximately 27%two-thirds and one-third of the performance period for the 2012 and 2013 awards, respectively, would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%.Under thea special incentive program adopted in March 2010, upon resignation for good reason, termination without cause or in the event of disability, resignationMr. D.C. Dauch and Mr. Simonte would be entitled to program amounts earned and unpaid. Amounts reflect the final annual installments payable in October 2014.Reflects account balance in the Executive Deferred Compensation Plan as of December 31, 2013. Assumes amount is payable in a lump sum upon occurrence of the termination event. (9) Under Mr. D.C. Dauch’s employment agreement, he is entitled to two years of health care benefits (including his spouse) if his employment is terminated without cause or if he resigns for good reason. He is also entitled to this benefit if his employment is terminated without cause or if he resigns for good reason or termination without cause, Mr. Simonte is entitled to award amounts earned and not previously paid. Reflectswithin two years of a change in control. In the remaining two annual installmentsevent of $500,000. (8)Underdisability, the disability scenario,amount reflects health care benefits until retirement. (9)(10) Reflects benefits equal to 100% of base salary for year one and 66 2/60% and 66-2/3% of base salary until retirement.retirement for Mr. D.C. Dauch and Mr. Simonte, respectively, based on participant elections.(10)(11) Under the disability scenario, reflects basic and supplemental life insurance benefits until retirement at age 65.retirement.Richard E. DauchThe following table shows estimated potential payments to Mr. R.E. Dauch upon resignation for good reason, termination without cause, disability, retirement and a change in control as of December 31, 2012. Upon termination for cause or upon resignation without good reason, Mr. R.E. Dauch would receive only accrued and unpaid compensation. These amounts are not shown in the table below. Mr. R.E. Dauch was eligible to retire on December 31, 2012. The assumptions used to determine retirement benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2012. See Note 6 to the audited consolidated financial statements in our Annual Report on Form 10-K. For Good
Reason
Resignation
($) Without
Cause
Termination
($) Disability
Retirement(1)
($) Retirement
($) Change in
Control
($) 4,000,000 4,000,000 — — — 4,000,000 4,000,000 4,000,000 4,000,000 — — — 991,169 991,169 — — — 29,718,734 29,718,734 — — — 1,391,904 1,391,904 — — — 301,500 — 301,500 — — 7,027,921 — 7,027,921 5,502,317 5,502,317 5,502,317 5,502,317 5,502,317 47,780 47,780 47,780 47,780 — 13,550,097 13,550,097 48,981,325 41,651,904 12,831,738 (1)Assumes retirement due(12) Under Mr. D.C. Dauch’s employment agreement, he is entitled to total and permanent disability on December 31, 2012. (2)Uponreceive $50,000 of outplacement services upon termination of employment without cause or resignation for good reason, Mr. R.E. Dauchreason. He is also entitled to receivethis benefit if his employment is terminated without cause or if he resigns for good reason within two years’ base salary payable semimonthly. (3)Reflects Mr. R.E. Dauch’s cash bonus earned in 2012 and paid in March 2013. (4)Reflects a present valueyears of a joint and survivor annuity benefit payable monthly. (5)The present value calculated assuming a joint and survivor annuity benefit payable monthly. (6)Reflects benefits for Mr. R.E. Dauch and his spouse assuming retirement or disability on December 31, 2012. (7)Outstanding stock option awards vest upon termination of employment due to death, disability or upon a change in control. The value reflects the difference between the exercise price of the unvested options and the closing price of AAM stock on December 31, 2012. (8)Outstanding RSUs vest upon termination of employment due to death, disability or upon a change in control. The value reflects the number of RSUs multiplied by the closing price of AAM stock on December 31, 2012. (9)Assumes amount is payable in a lump sum upon occurrence of termination event.(10)Represents reimbursement of two years’ premiums paid by Mr. R.E. Dauch for a $5 million executive life insurance policy.John J. BellantiThe following table shows estimated potential payments to Mr. Bellanti upon resignation for good reason, termination without cause, disability, retirement and a change in control as of December 31, 2012. Upon termination for cause or upon resignation without good reason, Mr. Bellanti would receive only accrued and unpaid compensation. These amounts are not shown in the table below. Mr. Bellanti was eligible to retire on December 31, 2012. The assumptions used to determine retirement benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2012. See Note 6 to the audited consolidated financial statements in our Annual Report on Form 10-K. For Good
Reason
Resignation
($) Without
Cause
Termination
($) Disability
Retirement(1)
($) Retirement
($) Change in
Control
($) — — 140,000 140,000 — — — 1,211,666 966,672 — — — 644,007 917,081 — — — 219,800 219,800 — — — 355,163 — 355,163 — 662,400 662,400 662,400 — — 379,040 379,040 379,040 — — 79,478 79,478 79,478 79,478 300,000 300,000 300,000 — — 567,875 567,875 567,875 567,875 567,875 867,875 1,988,793 4,559,429 3,932,346 1,002,516 (1)Assumes retirement due to total and permanent disability on December 31, 2012. (2)(13)Under AAM’sAAM's Incentive Compensation Plan for Executive Officers, the award payout is pro-rated through the date of disability or retirement. The amount reflects the 20122013 award paid in March 2013.2014. (3)(14) Under the disability scenario, reflects health care benefits until retirement. (15) Upon his retirement on January 1, 2014, Mr. Bellanti was entitled to receive his 2013 annual incentive and certain long-term incentive awards. The annual and long-term incentive amounts reflect payments made to Mr. Bellanti under these awards in March 2014. Upon his retirement, he forfeited unvested RSUs and the remaining annual installment payment under the 2010 special incentive program. The pension and SERP amounts reflect Mr. Bellanti's actual pension elections. (16) Reflects a joint and survivor annuity benefit payable monthly. (4)The(17) Reflects the present value of the SERP calculated assuming a lump sum benefit for Mr. Satine and a joint and survivor annuity benefit payable monthly for Mr. Willemse under the disability and retirement scenarios. (5)(18) Reflects welfare benefits for Mr. Bellanti and his spouse assuming retirement on December 31, 2012 under theour retiree welfare benefit plan. (6)Outstanding RSUs vest upon termination of employment due to death, disability or upon a change in control. The value reflects the number of RSUs multiplied by the closing price of AAM stock on December 31, 2012. (7)The 2010 performance award in the event of disability, retirement or termination without cause would be based on actual performance through December 31, 3012. Reflects award earned through December 31, 2012 and paid in March 2013. (8)The 2011 performance award payable in the event of disability, retirement or termination without cause would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, two-thirds of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. (9)The 2012 performance unit award payable in the event of disability, retirement, termination without cause or upon a change in control would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, approximately 27% of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%.(10)Under the special incentive program, in the event of disability, resignation for good reason or termination without cause, Mr. Bellanti is entitled to program amounts earned and not previously paid. Reflects the remaining two annual installments of $150,000.(11)Assumes amount is payable in a lump sum upon occurrence of termination event.Norman WillemseThe following table shows estimated potential payments to Mr. Willemse upon termination without cause, disability, retirement and a change in control as of December 31, 2012. Upon termination for cause or upon resignation without good reason, Mr. Willemse would receive only accrued and unpaid compensation. These amounts are not shown in the table below. Mr. Willemse was eligible to retire on December 31, 2012. The assumptions used to determine retirement benefits are the same assumptions used in our audited consolidated financial statements for the fiscal year ended December 31, 2012. See Note 6 to the audited consolidated financial statements in our Annual Report on Form 10-K. Without
Cause
Termination
($) Disability
Retirement(1)
($) Retirement
($) Change in
Control
($) — 95,000 95,000 — — 250,789 250,789 — — 282,554 282,554 — — 12,740 — — — 151,424 — 151,424 281,808 281,808 281,808 — 161,600 161,600 161,600 — 33,884 33,884 33,884 33,884 27,372 27,372 27,372 27,372 504,664 1,297,171 1,133,007 212,680 (1)Assumes total and permanent disability on December 31, 2012. (2)Under AAM’s Incentive Compensation Plan for Executive Officers, the award payout is pro-rated through the date of disability or retirement. The amount reflects the 2012 award paid in March 2013. (3)(19)Reflects Mr. Willemse’sWillemse's benefits in the Albion Pension Plan as of December 31, 2012. (4)The present value calculated assuming a lump sum benefit under the disability and retirement scenarios. (5)Reflects benefits for Mr. Willemse and his spouse assuming retirement on December 31, 2012 under our retiree welfare benefit plan. (6)Outstanding RSUs vest upon termination of employment due to death, disability or upon a change in control. The value reflects the number of RSUs multiplied by the closing price of AAM stock on December 31, 2012. (7)The 2010 performance award in the event of disability, retirement or termination without cause would be based on actual performance through December 31, 3012. Reflects award earned through December 31, 2012 and paid in March 2013. (8)The 2011 performance award payable in the event of a disability, retirement or termination without cause would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, two-thirds of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%. (9)The 2012 performance unit award payable in the event of disability, retirement, termination without cause or upon a change in control would be based on actual performance and the pro-rata portion of employment as compared to the performance period. As of December 31, 2012, approximately 27% of the performance period would have lapsed. Reflects pro-rata award assuming target is achieved. The actual payout may range from 0% to 200%.(10)Assumes amount is payable in a lump sum upon occurrence of termination event.have providedprovide a detailed description of our compensation programs, including our compensation philosophy and objectives, the individual elements of executive pay, and how the programs are administered. We encourage you to review the CD&A, together with the other narrative and tabular disclosures, in considering your advisory vote on our named executive officers’ compensation.the Company’sour business objectives and creates long-term stockholder value. The Compensation Committee considers the following fundamental objectives, among others, in determining our compensation programs:growth.for successto deliver value to our stockholders.global automotive industry.Executive officers should be AAM stockholders.objectives of rewarding performanceBoard and retention should be balanced.Features ofthe Compensation Committee believe that the feedback we received from our stockholders was valuable in evaluating and implementing changes to our executive compensation program. We believe that the changes we made to AAM's executive compensation program and practices includeaddress the following:PayoutsKey changes to our executive compensation programannual andexecutive officers;awards are based on AAM’scompensation;as measured againstmetric, which resulted in all performance metrics having stated maximum payouts;mixclawback policy; andpre-established financial metricsAAM's executive compensation program and total shareholder return.Executive officers are required to complypractices with stock ownership requirements, which were increased bythe objectives of our stockholders. The Board and the Compensation Committee in 2012.AAM prohibits hedging or pledging of Company stock.There are no golden parachute agreements and no excise tax gross-ups upon a change of control.201220122013 compensation of our non-employee directors is shown below. Fees Earned or
Paid in Cash(1)
($) Stock Awards
($)(2) Non-Equity
Incentive Plan
Compensation
($)(3) All Other
Compensation
($)(4) Total 75,000 80,003 76,000 — 231,003 75,500 80,003 76,000 400 231,903 102,000 80,003 76,000 600 258,603 75,500 80,003 — 400 155,903 91,500 80,003 76,000 1,900 249,403 79,000 80,003 76,000 — 235,003 87,000 80,003 76,000 — 243,003 79,500 80,003 — — 159,503 91,000 80,003 76,000 1,400 248,403 146,333 80,003 76,000 400 302,736 78,000 80,003 76,000 8,200 242,203 Name 43,667 — — 43,667 Elizabeth A. Chappell 93,667 100,013 — 193,680 Forest J. Farmer 114,667 100,013 — 214,680 Steven B. Hantler 95,667 100,013 — 195,680 Richard C. Lappin 113,667 100,013 — 213,680 James A. McCaslin 99,667 100,013 — 199,680 William P. Miller II 103,667 100,013 — 203,680 John F. Smith 108,667 100,013 — 208,680 Larry K. Switzer 111,667 100,013 1,500 213,180 — — — — Thomas K. Walker 147,667 100,013 — 247,680 42,667 — — 42,667 (1) For Mr. Walker, reflects $33,333an additional $10,000 paid for histemporary services he provided in January 2013 as Non-Executive Chairman. Mr. Walker served in this temporary role from September 21, 2012 through January 31, 2013 during the absence of the Executive Chairman for a medical procedure. Upon the recommendation of the Compensation Committee, the Board approved additional compensation for Mr. Walker at the rate of $10,000 per month. This amount was determined based on a market analysis provided by Meridian of non-executive chairman pay at companies in our comparative peer group and a broader general industry group.chairman.(2) Reflects the full grant date fair value of equity awards granted on May 15, 20122, 2013 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based on applying the assumptions used in our financial statements. The grant date fair value of equity awards is calculated using the closing market price of AAM common stock on the grant date of $9.16.$13.74. See Note 97 to the audited consolidated financial statements in our Annual Reportannual report on Form 10-K for the year ended December 31, 20122013 regarding assumptions underlying the valuation of equity awards.(3)Reflects amounts earned under the 2011 deferred compensation unit (DCUs) award. In April 2011, annual DCU awards of $80,000 were made to each non-employee director concurrent with the 2011 annual meeting of stockholders. These awards vested April 2012 and resulted in a payout of 95% of target, or $76,000, based on AAM’s total shareholder return.(4)(3)The Company reimburses non-employee directors for their travel and related out-of-pocket expenses in connection with attending Board, Committeecommittee and stockholder meetings. From time to time, the Company invites spouses of non-employee directors to attend Company events associated with these meetings. The Company pays for spousal travel and certain other expenses and reimburses non-employee directors for taxes attributable to the income associated with this benefit. Amounts reflect reimbursement of taxes on this income.
| (4) | Mr. Bonanno and Dr. Yang served on the Board through May 2, 2013. |
| (5) | Mr. Valenti joined the Board effective October 31, 2013 and received no compensation during 2013. |
Name | Option Awards Outstanding (#) | Restricted Stock Units Outstanding (#) | ||||||
Salvatore J. Bonanno, Sr. | — | 8,734 | ||||||
Elizabeth A. Chappell | 5,000 | 19,834 | ||||||
Forest J. Farmer | 7,500 | 13,334 | ||||||
Steven B. Hantler | — | 8,734 | ||||||
Richard C. Lappin | 7,500 | 14,384 | ||||||
James A. McCaslin | — | 8,734 | ||||||
William P. Miller II | 7,500 | 23,084 | ||||||
John F. Smith | — | 8,734 | ||||||
Larry K. Switzer | 7,500 | 23,084 | ||||||
Thomas K. Walker | 7,500 | 16,584 | ||||||
Dr. Henry T. Yang | 7,500 | 19,834 | ||||||
| Name | Option Awards Outstanding (#) | Restricted Stock Units Outstanding (#) |
| Elizabeth A. Chappell | 5,000 | 27,113 |
| Forest J. Farmer | — | 20,613 |
| Steven B. Hantler | — | 16,013 |
| Richard C. Lappin | — | 21,663 |
| James A. McCaslin | — | 16,013 |
| William P. Miller II | 7,500 | 30,363 |
| John F. Smith | — | 16,013 |
| Larry K. Switzer | 7,500 | 30,363 |
| Samuel Valenti III | — | — |
| Thomas K. Walker | — | 23,863 |
2012
Annual retainer | $ | 60,000 | ||
Board meeting attendance fee | 1,500 | |||
Committee meeting attendance fee: | ||||
Committee chairman | 3,000 | |||
Other committee members | 2,000 |
| Annual retainer | $ | 80,000 | |
| Board meeting attendance fee | 1,500 | ||
| Committee meeting attendance fee: | |||
| Committee chairman | 3,000 | ||
| Other committee members | 2,000 | ||
| Lead director annual retainer | 20,000 | ||
2013 Non-Employee Director Compensation.The Board
•each person known to us who beneficially owns more than 5 percent5% of AAM common stock;
•each of our non-employee directors and nominees;
•our named executive officers (unless otherwise noted); and • |
all directors, nominees and executive officers as a group.
4, 2014.
Name and Address | Shares of Common Stock Beneficially Owned | Percent of Shares Outstanding | ||||||
Barrow, Hanley, Mewhinney & Strauss, LLC(1) | 5,283,416 | 7.06 | ||||||
2200 Ross Avenue, 31st Floor Dallas, TX 75201 | ||||||||
The Vanguard Group(2) | 3,786,844 | 5.05 | ||||||
100 Vanguard Blvd. Malvern, PA 19355 | ||||||||
| Name and Address | Shares of Common Stock Beneficially Owned | Percent of Shares Outstanding |
Sandra J. Dauch(1) | 7,285,232 | 9.64 |
| 1430 Caxambas Court, Marco Island, FL 34145 | ||
JANA Partners LLC(2) | 6,663,698 | 8.80 |
| 767 Fifth Avenue, 8th Floor New York, NY 10153 | ||
Barrow, Hanley, Mewhinney & Strauss, LLC(3) | 4,982,055 | 6.59 |
| 2200 Ross Avenue, 31st Floor Dallas, TX 75201 | ||
Ameriprise Financial, Inc. and Columbia Management Investment Advisers LLC(4) | 4,883,368 | 6.46 |
| 145 Ameriprise Financial Center Minneapolis, MN 55474 | ||
| (1) | Based on the Schedule 13G filed on February 14, 2014 by Sandra J. Dauch, reporting sole voting power over 7,243,522 shares, shared voting power over 41,710 shares, sole investment power over 7,243,522 shares and shared investment power over 41,710 shares. |
| (2) | Based on the Schedule 13G filed on February 14, 2014 by JANA Partners, LLC, reporting sole voting power over 6,663,698 shares and sole investment power over 6,663,698 shares. |
| (3) | Based on the Schedule 13G filed on February 12, 2014 by Barrow, Hanley, Mewhinney & Strauss, LLC, reporting shared voting power over |
| (4) | Based on the Schedule 13G filed jointly on February 13, 2014 by |
