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Preliminary Proxy Statement
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SPIRIT AEROSYSTEMS HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter) 
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MESSAGE FROM OUR CHAIR
March 12, 2024
Dear Fellow Stockholders:
On behalf of the entire Board of Directors, I would like to express our appreciation for the trust you have placed in us to act as stewards of our Company.
This Year Brought Important Changes
■
Pat Shanahan stepped in as CEO. The Board has confidence in Pat’s leadership. He is uniquely qualified to guide Spirit at this time and has earned his respect in the industry for driving innovative solutions to real problems.
■
Jane P. Chappell joined the Board. We are excited to have Jane on our Board and are confident we will benefit from her experience, including over 36 years at Raytheon.
Robert D. Johnson
Chair of the Board
■
We executed a Memorandum of Agreement (MOA) with Boeing. The MOA was an important step in strengthening Spirit. It addressed key topics including shipset pricing on certain programs, tooling and capital funding, and a release of claims, among other items.
■
We accessed the capital markets to strengthen our balance sheet. In addition to refinancing certain shorter maturity debt, we raised over $400 million of additional capital through common stock and exchangeable notes offerings.
■
We reached an agreement with our largest union. The demands on our workforce have been heavy these last several years and we are happy to have in place a new agreement with the International Association of Machinists and Aerospace Workers.
Safety and Quality Remain Our Central Focus
I have been on the shop floor and met face-to-face with our manufacturing teams. They take the quality of their work personally and are proud of what they produce. This is true at every level of the organization, from the front-line mechanics to the Board. However, the past year provided us with opportunities for self-reflection, and we are taking advantage of these opportunities. No one at Spirit takes for granted the importance of safety and quality in our products. We strive for constant improvement. At its most fundamental level, the means to achieve this are continuous support for our people building products, ensuring they have the resources they need to do the best they can in a demanding environment.
I have been in the aerospace industry for over 40 years and am confident in our team at Spirit. I am confident in their dedication, integrity, and ability to deliver what we need.
I and the rest of the Board invite you to the 2024 Annual Meeting of Stockholders, which will be held virtually. If you are not able to join the meeting, we encourage you to vote by proxy. These proxy materials contain detailed information about the matters on which we are asking you to vote.
On behalf of the Board, of Directors, I am delightedwould like to invite you to attend the 2018 Annual Meeting of Stockholders (the “Annual Meeting”) of Spirit AeroSystems Holdings, Inc. (the “Company” or “Spirit”). Details of the business to be conducted at the Annual Meeting are included in the attached Notice of Annual Meeting of Stockholders and accompanying Proxy Statement.FinancialandOperationalPerformance
2017 was another strong year for Spirit. Our strategic focus remains to be a leader in designing, developing, and manufacturing complex structuresexpress our appreciation for the aerospace industry. We are a leaderconfidence you place in this field for commercial aircraft and are rapidly expanding into military markets. As part of this focus, we identified three major growth priorities: growth with our largest customers – Airbus and Boeing, the fabrication of detailed parts, and growth of our defense business.
From a financial perspective, we exceeded target performance with respect to all Company performance metrics used in our short-term incentive program and with respect to long-term incentive awards vesting in 2017: revenue, adjusted annual earnings before interest and taxes, adjusted annual free cash flow, and total share holder return over a three-year period.
From an operational perspective, we delivered solid results. Perhaps our most significant achievement was the completion of negotiations and execution of definitive agreements with our largest customer, Boeing, resolving numerous open commercial issuesus through 2022. The agreements solidified our relationship with Boeing, reduced uncertainty, and gave us new opportunities to expand our work with Boeing on current and future platforms.
From a business development perspective, we were pleased to announce a major win with Airbus to supply the spoiler for the Airbus A320 family programs, which leverages our state of the art capability in resin transfer molding technology. To support future growth of Airbus programs at Spirit, we made capital investments in our Prestwick location and infrastructure for our Malaysia and North Carolina sites.
Additionally, we celebrated significant milestones on both commercial and defense development programs, executed rate increases on Airbus and Boeing programs, announced our strategic growth areas of fabrication and defense, and expanded our research and development efforts. We continued to focus on perfecting the quality of our products, improving our supply chain costs, preparing for upcoming rate increases, and expanding our research and development capabilities, all while holding firm on our delivery and other customer commitments.
IncreasingStockholderValueandEngagement
In 2017, we continued to focus on giving value back to our stockholders. We paid our first quarterly cash dividend on January 9, 2017, and, over the course of the full year, deployed $47 million of capital to stockholders in the form of quarterly cash dividends. In addition, we deployed $502 million of capital to stockholders in the form of stock repurchases. As of February 26, 2018, the Company has authorization to conduct an additional $1 billion in stock repurchases.
In 2017, we conducted a robust stockholder engagement program, culminating with our Investor Day on September 27, 2017. In addition, in order to further engage with and be responsive to our stockholders, we held over 620 in-person and telephonic meetings with investors in 2017. We traveled throughout the U.S., and to France, England, and Canada for the meetings.
CompensationandGovernanceChanges
In 2017, we made significant changes to our executive compensation program in an attempt to better align our executives’ interests with stockholders’ interests and update our programs to reflect stockholder and market expectations. Major changes included increasing the Company performance element of our short-term incentive program, increasing the performance-based portion of our long-term incentives, and adding a new performance metric to our long-term incentives — free cash flow as a percentage of revenue over a three-year period.
In addition, in February 2018, we welcomed Laura Wright to our Board, who brings us added diversity of perspective and a wealth of knowledge and experience from her previous role as Chief Financial Officer of Southwest Airlines.
We are proud of our 2017 performance and look forward to another successful year in 2018. We thank you for your continued support of Spirit and look forward to seeing you at the Annual Meeting.
investment.
Sincerely,
ThomasC.Gentile,III
PresidentandChiefExecutiveOfficer
Spirit AeroSystems Holdings, Inc.
March 12 , 2018
3801 S. Oliver St.
Wichita, KS 67210-2112
March 12 , 2018
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON APRIL 25, 2018
The Proxy Statement and Annual Report are available at http://www.proxyvote.comThe 20182024 Annual Meeting of Stockholders (the “Annual Meeting”) of Spirit AeroSystems Holdings, Inc. (“Spirit” or the “Company”) will be held:
WEDNESDAY, APRIL 25, 2018
11: 00conducted virtually via live audio webcast on Wednesday, April 24, 2024, at 10 a.m. Eastern Time
Fairmont Hotel, Dumbarton Room
2401 M Street NW
Washington, DC 20037
Items of business include:
1.
Election of nine nominees as directors;
2.
Advisory vote to approveCentral Daylight Time. The record date for the compensation of the Company’s named executive officers;
3.
Ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2018;
4.
Consideration of the Board of Directors’ proposal to lower the threshold of stockholders required to call a special meeting to 25%;
5.
The stockholder proposal regarding shareowner meeting improvement described in thisAnnual Meeting is February 26, 2024 (the “Record Date”). This Proxy Statement if properly presented at the meeting; and
is being first released to stockholders on March 12, 2024.MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
| | Proposal | | | Description | | | Board Recommendation | |
| | Proposal 1 | | | Election of directors | | | FOR each nominee | |
| | Proposal 2 | | | Advisory vote to approve the compensation of named executive officers | | | FOR | |
| | Proposal 3 | | | Approval of Amended and Restated Employee Stock Purchase Plan | | | FOR | |
| | Proposal 4 | | | Ratification of appointment of Ernst & Young LLP as independent auditors for 2024 | | | FOR | |
| | Proposal 5 | | | Stockholder proposal titled “Transparency in Political Spending” | | | AGAINST | |
6.CASTING YOUR VOTE
The transaction of any other business that properly comes before the meeting.
Stockholders of record of our Class A Common Stock (the “Common Stock”) as of February 26, 2018,the close of business on the Record Date are entitled to receivevote using any of the below methods and the 16-digit control number on your notice of, andor proxy card.
ATTENDING THE ANNUAL MEETING
The Annual Meeting will be conducted virtually again this year. Stockholders may vote at,attend the Annual Meeting. ForMeeting at www.virtualshareholdermeeting.com/SPR2024 by entering the first time, we are furnishing proxy materials to our stockholders primarily over the Internet rather than mailing paper copies. On March 12, 2018, we commenced distributing to our stockholders a Notice Regarding the Availability of Proxy Materials (the “Notice”) or a paper copy of the proxy materials and our Annual Report along with a proxy card or16-digit voting information form. The Notice contains instructions on how to access and review the proxy materials, including this Proxy Statement and our Annual Report,control number found on the Internet, and instructions on how to vote.notice or proxy card. Stockholders may vote in person atand submit questions during the Annual Meeting or by Internet pursuant toon the instructions set forth in the Proxy Statement. In addition, if you received a paper copywebsite.
Your vote is important. Regardless of the proxy materials, you may vote by completing and returning a proxy card or voting information form, as applicable, pursuant to the instructions set forth in the Proxy Statement.Whether or notwhether you plan to virtually attend the Annual Meeting, we hope you will vote as soon as possible.
By order Thank you for your ongoing support of the Board of Directors.
Spirit.
StacyCozad
Mindy McPheeters
Senior Vice President,
General Counsel Chief Compliance Officer , and Corporate Secretary
Table of Contents
March 12, 2024 | | Important Notice Regarding the Availability of Proxy Materials for the 2024 Annual Meeting: | |
| | The Proxy Statement and Annual Report are available at www.proxyvote.com | |
| 1 | | | Spirit AeroSystems2024 Proxy Statement | |
Back to Contents
This summary highlights certain information contained elsewhere in the accompanyingthis Proxy Statement. This summary does not contain all the information you should consider before voting your shares. For more complete information regarding the proposals to be voted upon at the Annual Meeting and our 2017 performance, please review thePlease carefully read this entire Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2023, before voting. We use the terms “Spirit,” the “Company,” “we,” “us,” and “our” in this Proxy Statement to refer to Spirit AeroSystems Holdings, Inc. and its consolidated subsidiaries.
Matters
| | PROPOSAL 1 —
Election of Directors | | | The Nominating and Corporate Governance Committee and Board of Directors recommend that stockholders vote “FOR” all director nominees. Each nominee is nominated for a one-year term. See “Proposal 1 — Election of Directors” beginning on page 7 of this Proxy Statement. | |
Director Nominees
Spirit’s Board of Directors (the “Board”) best serves the Company and its stockholders when there is a balance between fresh perspectives and experienced directors who bring continuity through business and market cycles. Board composition, refreshment, and succession are focus items for our Board. Four directors have joined the Board since 2021. Most recently, Ms. Chappell was appointed as a director in February of this year and we are excited to Be Votedhave her join our Board. Half of our new directors since 2021 have been either ethnically or gender diverse. Following the Annual Meeting, Mr. Fitzgerald will succeed Mr. Fulchino as Chair of the Compensation Committee. Mr. Fulchino continues to be an invaluable member of our Board and will remain on the Compensation Committee to ensure a smooth transition. We appreciate Mr. Fulchino’s years of leadership. We expect this progress on the Board’s succession plan to continue into next year with a focus on the importance of diversity.
The following table sets forth the 2024 director nominees. The average tenure of our nominees is approximately 8 years and the average age of our nominees is approximately 68 years old.
| | Name | | | Age | | | Director
Since | | | Skills and Experience | | | Independent | | | Committee
Memberships | | | Other
Public
Boards | |
| | Stephen A. Cambone | | | 71 | | | 2019 | | | Dr. Cambone has extensive advisory experience in strategic planning, operations, resource allocation, technology, and governmental affairs acquired through years in public and private service, including as the Pentagon’s first Under Secretary of Defense for Intelligence. | | | Yes | | | | | | 0 | |
| | Jane P. Chappell | | | 62 | | | 2024 | | | Ms. Chappell has over 40 years of experience providing operational and strategic leadership in the defense industry. Ms. Chappell is the CEO of Altamira Technologies, on the Board of Advisors for Lone Star Analysis, and served in various roles at Raytheon Corporation for over 36 years, most recently as the VP, Global Intelligence Solutions leading the overall intelligence and commercial ground business with operational, strategy, and customer relationship responsibilities. | | | Yes | | | | | | 0 | |
| | Irene M. Esteves | | | 65 | | | 2015 | | | Ms. Esteves has an invaluable depth and breadth of experience in finance, risk management, and business strategy across multiple industries. Ms. Esteves has overseen a variety of business functions in senior executive roles, including as EVP and CFO for Time Warner Cable Inc. | | | Yes | | | ![[MISSING IMAGE: tm2213929d10-icon_audit4c.gif]](/files/DEF 14A/0001104659-24-033265/tm2213929d10-icon_audit4c.gif) * ![[MISSING IMAGE: ic_person-4c.gif]](/files/DEF 14A/0001104659-24-033265/ic_person-4c.gif) | | | 2 | |
| | William A. Fitzgerald | | | 63 | | | 2021 | | | Mr. Fitzgerald has years of technical and operational leadership experience, including in global supply chain and aerospace manufacturing and services. Mr. Fitzgerald served most recently as Vice President and General Manager of Commercial Engines Operation for GE Aviation. | | | Yes | | | | | | 0 | |
| | 3 | | | Spirit AeroSystems2024 Proxy Statement | |
| | Name | | | Age | | | Director
Since | | | Skills and Experience | | | Independent | | | Committee
Memberships | | | Other
Public
Boards | |
| | Paul E. Fulchino | | | 77 | | | 2006 | | | Mr. Fulchino has executive and strategic advisory experience spanning 40 years. He has particular expertise in growth attained through various roles, including as Chairman and CEO of the world’s largest technology-based service provider of component parts and services to the aviation industry (Aviall, Inc.) through its acquisition by The Boeing Company (“Boeing”). | | | Yes | | | * ![[MISSING IMAGE: tm2213929d10-icon_corp4c.gif]](/files/DEF 14A/0001104659-24-033265/tm2213929d10-icon_corp4c.gif) | | | 1 | |
| | Robert D. Johnson,
Board Chair | | | 76 | | | 2006 | | | Mr. Johnson has deep domestic and international executive experience in the aerospace industry, including risk management, financial oversight, operations, and strategy. Mr. Johnson’s global experience was acquired through a variety of roles, including as CEO of Dubai Aerospace Enterprise and as Chairman of Honeywell Aerospace. | | | Yes | | | | | | 2 | |
| | Ronald T. Kadish | | | 75 | | | 2006 | | | Mr. Kadish has extensive military and executive experience with unique defense, government, risk oversight, and operations expertise. Mr. Kadish served as EVP of the Defense Group for Booz Allen Hamilton, in a variety of roles for the Department of Defense, and as a Lieutenant General in the U.S. Air Force. | | | Yes | | | ![[MISSING IMAGE: tm2213929d10-icon_risk4c.gif]](/files/DEF 14A/0001104659-24-033265/tm2213929d10-icon_risk4c.gif) * | | | 0 | |
| | John L. Plueger | | | 69 | | | 2014 | | | Mr. Plueger has unique operational and aviation industry experience from over 35 years in the aviation industry, along with financial and accounting expertise as a certified public accountant. Mr. Plueger currently serves as CEO and President of Air Lease Corporation. | | | Yes | | | | | | 1 | |
| | James R. Ray, Jr. | | | 60 | | | 2022 | | | Mr. Ray has expertise in supply chain, business transformation, strategy development and execution, innovation, technology, acquisitions, and global business integration acquired through years in leadership at Stanley Black & Decker. Mr. Ray currently serves as CEO and President of Commercial Vehicle Group. | | | Yes | | | | | | 1 | |
| | Patrick M. Shanahan | | | 61 | | | 2021 | | | Prior to being named as Spirit’s President and CEO in September 2023, Mr. Shanahan served as an independent director of the Company since 2021. Mr. Shanahan has policy, defense, cybersecurity, and operations experience, as well as a valuable customer perspective. Mr. Shanahan served as Acting Secretary of Defense and previously as the 33rd Deputy Secretary of Defense, he spearheaded modernization in cybersecurity and other critical areas. Mr. Shanahan spent over three decades in a variety of leadership roles with Boeing. | | | No | | | | | | 2 | |
| | Laura H. Wright | | | 64 | | | 2018 | | | Ms. Wright has extensive experience in commercial aviation executive management, including corporate finance, accounting, operations, treasury, and risk management. Ms. Wright also provides unique commercial aircraft end-user insights from her 25-year career at Southwest Airlines, most recently as SVP and CFO. | | | Yes | | | * | | | 3 | |
| | | | | Audit Committee | | | | | | Risk Committee | | | | | | Compensation
Committee | | | | | | Corporate Governance and
Nominating Committee | | | *Chair | |
| | Spirit AeroSystems2024 Proxy Statement | | | 4 | |
| | PROPOSAL 2—
Advisory Vote on Executive Compensation | | | The Board recommends that stockholders vote “FOR” advisory approval of the compensation of our NEOs for 2023. See “Proposal 2 — Advisory Vote on Executive Compensation” beginning on page 33 of this Proxy Statement. | |
Executive Compensation At-A-Glance
Due to quality performance during 2023, the Compensation Committee exercised negative discretion on the Quality component of the short-term incentive program notwithstanding actual metric achievement. This resulted in no NEO payouts for 2023 under either the short-term or long-term performance programs, except for Mr. Hawkins who was dedicated to the Defense & Space segment (the “Defense Segment”) and received a partial short-term incentive payout based on that segment’s performance.
In addition, for the 2024 short-term incentive program, the Compensation Committee has increased the weighting of the Quality component to 60% of the Company score.
The following are the key metric results for our 2023 executive performance incentive programs, including long-term performance incentives with a vesting period concluding at the Annual MeetingElectionend of directors Advisory vote to approve compensation of named executive officers Ratify selection of Ernst & Young LLP Consider Board’s proposal to lower special meeting ownership threshold to 25% Stockholder proposal: special shareowner meeting improvement Board Recommends FOR Each Nominee Board Recommends FOR Board Recommends FOR Board Recommends FOR Board Recommends AGAINST
Casting Your Vote
Stockholders of record of our Common Stock as of February 26, 2018, may vote their shares using any of the following methods:
2023.
 |  FREE CASH FLOW(1) |  |  | | EBIT(1) | | | | REVENUE | |
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SPIRIT AEROSYSTEMS - 2018 Proxy Statement 6
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About Spirit
Quick Spirit Facts
HEADQUARTERS
| Wichita, Kansas
| ($274) million
TARGET: $203 million | | | | $6.048 billion
TARGET: $6.549 billion | |
PRODUCTS
| Fuselages, wing structures, and propulsion systems for commercial and defense aircraft
QUALITY INDEX SCORE | | | | TOTAL STOCKHOLDER RETURN
(2021-2023 performance) | | | | | |
WORLWIDEEMPLOYEES
| 15,550
|
LOCATIONS
0.00(2)
TARGET: 1.00 | Kansas, Oklahoma, North Carolina, Scotland, France, Malaysia
|
MAJORCUSTOMERS
| Airbus, Boeing, Bombardier, Lockheed Martin (Sikorsky), Northrop Grumman, Rolls-Royce
| | Below 25th percentile
TARGET: 50th Percentile | | | | | |
2017 Performance
$6.98$574$537$3.01$5.35billionREVENUEmillion CASH FROMOPERATIONSmillionADJUSTED FREECASH FLOW*EPSADJUSTED EPS*
* Represents a non-GAAP measure. Please see (1) See Appendix A for an explanation and reconciliation.
Business Overview
reconciliation of non-GAAP measures.(2) The Compensation Committee exercised negative discretion, zeroing out the Quality Index score notwithstanding actual metric achievement of 0.80.
Spirit is
The Company’s incentive compensation payouts demonstrate the rigor of the performance targets set by the Compensation Committee and alignment with stockholder interests.
| | ANNUAL CASH
INCENTIVE
1-year
performance period | | | 2023 Payout
For NEOs
0%(1) of target | | | 2022 Average Payout
For NEOs
18% of target | | | 2021 Average Payout
For NEOs
80% of target | |
| | LONG-TERM
PERFORMANCE
INCENTIVE
3-year
performance period | | | 2021-2023
performance 0% vesting | | | 2020-2022
performance 0% vesting | | | 2019-2021
performance 0% vesting | |
(1)
No NEOs received any payouts other than Mr. Hawkins, who was dedicated to the Defense Segment and received a leading tier-one global aerostructures provider. We manufacture large aerostructures, including fuselages, wing structures, engine nacelles, pylons, fan cowls, thrust reversers, and systems integrationpartial short-term incentive payout of approximately 19% of target based on that segment’s performance.
| | PROPOSAL 3—
Approval of Amended and Restated Employee Stock Purchase Plan | | | The Board recommends that stockholders vote “FOR” approval of the Amended and Restated Employee Stock Purchase Plan. See “Proposal 3 — Approval of Amended and Restated Employee Stock Purchase Plan” beginning on page 73 of this Proxy Statement. | |
| | 5 | | | Spirit AeroSystems2024 Proxy Statement | |
| | PROPOSAL 4—Ratification of Appointment of Independent Auditors | | | The Board recommends that stockholders vote “FOR” ratification of the appointment of Ernst & Young LLP as the Company’s independent auditors for 2024. See “Proposal 4 — Ratification of Appointment of Independent Auditors” beginning on page 78 of this Proxy Statement. | |
| | PROPOSAL 5—Stockholder Proposal | | | The Board recommends that stockholders vote “AGAINST” the stockholder proposal titled “Transparency in Political Spending.” See “Proposal 5 — Stockholder Proposal” beginning on page 81 of this Proxy Statement. | |
| | Spirit AeroSystems2024 Proxy Statement | | | 6 | |
| | PROPOSAL 1 | | | ELECTION OF DIRECTORS | |
The Board has nominated each individual listed below for the world’s premier aircraft. Spirit’s capabilities include metal manufacturing and assembly, precision assembly, and composites manufacturing.Our engineering capabilities, combined with our capacity for high-volume production, have positioned Spiritelection as a leading aerostructures supplier to both Airbus and Boeing. For Boeing, we manufacturedirector. The Board has determined it is in the 737 fuselage, the front sectionbest interests of the 787 fuselage,Company and otherwise manufacture partsits stockholders for every Boeing commercial aircraft currently in production. Further, for Airbus, we supply fuselage and wing aerostructures contenteach nominee to continue serving on the A350 XWB and wing aerostructures content on the A320, A330, and A380. Spirit also supplies aerostructures for various regional and business jet programs, including pylons on the Bombardier C-Series and in-development Mitsubishi Regional Jet, as well as nacelles for Rolls-Royce engines used on Gulfstream aircraft.
In additionBoard, subject to producing aerostructures for commercial aircraft, Spirit designs, engineers, and manufactures structural components for military programs. We have been awarded a significant amount of work for Boeing’s P-8, C-40, and KC-46 tanker, all of which are commercial aircraft modified for military use. We are also involved in the development and production of various parts for the Sikorsky CH-53K heavy-lift helicopter and Bell V-280 tilt rotor aircraft. In addition, Spirit is proud to be a member of the B-21 Raider industry team. Spirit has invested heavily in research and development labs that enable us to deliver innovation and value on defense programs.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 7
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2017 Business Highlights
The following table summarizes somestockholder approval. All of our business highlights from 2017:
Boeing
| Executed definitive agreements with Boeing on September 22, 2017, resolving numerous commercial issues into 2022
Removed multi-year overhang with our largest customer allowing us to focus on executing production rate increases and growing our business
Delivered first Boeing 737 MAX
Delivered test hardware programs for Boeing 777X
|
Airbus
| •
Awarded single-aisle spoiler work on Airbus A320 family programs
•
Surpassed 200 A350 Section 15 fuselage and fixed leading edge wing deliveries
•
Invested in Kinston and Malaysia locations to increase capacity to support additional work statement
|
Fabrication
| •
Announced 5-axis machining center of excellence in Wichita, KS
•
Established 3- and 4-axis machining center of excellence in McAlester, OK
•
Expanded chemical processing center in Wichita, KS
•
Implemented plans for 3D/additive center of excellence
•
Collaborated with Norsk Titanium regarding metal additive technology
|
Defense
| •
Built on strong foundation of current programs
•
Pursued opportunities for growth
•
Formally celebrated role as team member on the Northrop Grumman B-21 Raider
•
Celebrated the first flight of Bell V-280 Valor
•
Started production on Systems Demonstration Test Articles 5 and 6 for the CH-53K heavy-lift helicopter
|
Supply Chain
| •
Followed a disciplined program to ensure that wedirectors are getting world-class prices for tens of thousands of parts we purchase
•
Reset contracts on more than 20,000 parts, for which we will realize the benefits over the next decade
|
Research and Development
| •
Continued enhancing production techniques to support announced rate increases for the Boeing 737 and 787, and Airbus A320 and A350 XWB
•
Continued development and implementation of new manufacturing technologies (joule forming, cryo-machining, semi-automatic drilling, and automated sealing) to improve efficiencies
•
Continued implementing digital technologies (autoclave load optimization, factory simulation, and augmented reality exercises) and robotics to maximize productivity
|
Capital Deployment
| •
Paid $47 million in quarterly cash dividends
•
Repurchased $502 million of shares of Common Stock
|
Community
| •
More than $2 million donated by Spirit and $2.65 million by Spirit employees to non-profit organizations supporting education, arts and culture, civic engagement , and health and human services
•
15,600+ hours volunteered by Spirit employees across the globe to local community and charitable organizations
|
Operating Priorities
Our operating priorities are as follows:
| | |
 | Safety
| Our employees are our greatest asset. We are committed to conducting our operations in a manner that prioritizes the safety and continued health of our employees and other workers. We are committed to continual assessment, training, and investments to execute on our safety goals and reduce injuries and incidents.
|
 | Quality
| Without quality, performance is absent. We spent 2017 focusing on assessing and identifying opportunities for improving our quality and executing such improvements. We are committed to continual improvement of our quality and delivering and exceeding our customers’ quality expectations.
|
 | Delivery
| Aside from safety and quality, successful, on-time delivery is our goal. The success of our customers depends on our ability to meet their delivery expectations consistently.
|
 | Customer Focus | Being a trusted partner to our customers is essential to our ability to win profitable new business. We focus on our customers by meeting our operational commitments and working alongside our customers to develop innovative solutions to their challenges. We are committed to continually inventing new technologies to improve quality, lower costs, and increase production capabilities, in a mutually-beneficial way. |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 8
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Values
At Spirit, we believe that culture and values play a determining role in the success of corporate strategy. Values are demonstrated in the way we think, act, and ultimately achieve results. We rolled out the following values in 2017:
| |
 | Transparency
I am open, honest, and respectful with my communication. I speak up to share my ideas and build trust by making my intentions clear.
|
 | Collaboration
I align my actions with others, so we work together to achieve the best outcome in everything we do.
|
 | Inspiration
I encourage the best from others, and I lead by example to ensure innovation is a component of our success.
|
Commitments
Our values are demonstrated through the way we conduct our business and our commitments, which include the following:
| |
 | CharitableGiving
We believe the opportunity to do business in a community comes with a responsibility to give back.
|
 | CommunityInvolvement
Whether it’s serving on the board of a non-profit or serving meals to the hungry, Spirit leaders and employees give generously of their time and talents.
|
 | GlobalDiversity
We are committed to promoting diversity - not only because it is the right thing to do, but because it drives innovation and growth.
|
 | Environment,Health,andSafety
We conduct our business in a manner that protects the environment and promotes the health, safety, and well-being of our employees and our surrounding communities.
|
 | EthicsandCompliance
We uphold the highest ethical standards, and we are committed to complying with all laws and regulations applicable to our business.
|
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 9
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About Spirit’s Director Nominees and Governance Practices
Director Nominees
Name | Age | Director Since | Principal Occupation | Independent | Committee Memberships |
Charles Chadwell | 77 | 2008 | Retired VP/GM of Commercial Engine Operations, GE Aircraft Engines | Yes | Governance (Chair) Compensation |
Irene M. Esteves | 59 | 2015 | Retired CFO, Time Warner Cable Inc. | Yes | Audit (Chair) Risk |
Paul Fulchino | 71 | 2006 | Retired President and CEO, Aviall, Inc. | Yes | Compensation (Chair) Governance |
Thomas C. Gentile, III | 53 | 2016 | President and CEO, Spirit AeroSystems Holdings, Inc. | No | |
Richard Gephardt | 77 | 2006 | President and CEO, Gephardt Group | No | |
Robert Johnson, Chairman | 70 | 2006 | Retired CEO, Dubai Aerospace Enterprise Ltd. | Yes | Compensation Governance |
Ronald T. Kadish | 69 | 2006 | Senior Executive Advisor, Booz Allen Hamilton | Yes | Risk (Chair) Governance* |
John Plueger | 63 | 2014 | President and CEO, Air Lease Corporation | Yes | Audit Risk |
Laura Wright | 58 | 2018 | Retired SVP and CFO, Southwest Airlines | Yes | Risk |
* Francis Raborn currently serves as the third member of the Audit Committee. Mr. Raborn has notified the Company that he will not be standing for re-election at the Annual Meeting. Mr. Raborn will remain on our Board and on the Audit Committee until the Annual Meeting. Effective immediately after the Annual Meeting, Mr. Kadish is expected to serve on the Audit Committee and come off of the Governance Committee.
Nominee Qualifications
7 Directors with Commercial Aviation Experience 2 Directors with Military and Defense Experience 9 Directors with Public Company Board Experience 4 Directors with Executive Compensation and Benefits Experience 5 Directors with Operations Management Experience 4 Directors with Risk Management Experience 5 Directors with Public Company CEO/Senior Executive Experience 3 Directors with Audit/Tax/Accounting Experience 2 Directors with Senior U.S. Government Experience 4 Directors with Corporate Finance and M&A Experience
Corporate Governance Highlights
✔
Independent Chairman of the Board
| |
✔
7 out of 9 director nominees are independent
| ✔
Stockholders have the right to call special meetings
|
✔
Annual election of all directors
| ✔
Active stockholder engagement
|
✔
Majority voting standard in uncontested director elections
| ✔
Ongoing director education program
|
✔
Regular executive sessions of independent directors
| ✔
Robust stock ownership requirements for directors and executives
|
✔
Robust risk oversight process with Board and committee roles
| ✔
Annual Board and committee evaluations
|
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 10
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About Spirit’s Executive Compensation Program and Practices
Overview of Spirit’s Executive Compensation Program
The objectives of the Company’s executive compensation program are to attract, retain, and motivate highly qualified executive officers, pay for performance, align the interests of executives with the interests of stockholders, and ensure incentives do not encourage inappropriate risk taking. The table below captures the main elements of our executive compensation program and describes how each element works to satisfy our objectives:
| Compensation
Element
| Description
| Purpose
|
FIXED COMPENSATION
| Base Salary
| Cash compensation based on day-to-day responsibilities
| •
Attracts and retains executive officers
•
Recognizes responsibilities, experience, and performance
|
VARIABLE, AT-RISK COMPENSATION
| Short-Term Annual Cash Incentive
| Annual cash incentive paid upon the achievement of Company performance goals relating to revenue, adjusted earnings before interest and taxes, adjusted free cash flow, and individual objectives, each over a one-year period; no guaranteed payout
| •
Motivates and rewards executives with respect to short-term performance
•
Aligns executive interests with stockholder interests
|
Long-Term Incentives
|
•
Time-Based Restricted Stock Award (60%)
| Time-based award vesting over three years
| •
Aligns executive interests with long-term stockholder value creation
|
•
Performance-Based Restricted Stock Awards (40%)
| Awards vest on achievement of two equally represented goals: total shareholder return and free cash flow as a percentage of revenue, each over a three-year period; no guaranteed payout
| •
Motivates and rewards executives with respect to long-term performance
•
Aligns executive interests with long-term stockholder value creation
|
|
A substantial portion of our executive officers’ compensation is at-risk and varies based on individual and Company performance. Due to the named executive officers’ strong individual performance along with the Company’s strong financial performance in 2017, our short-term annual cash incentive and performance-based restricted stock awards paid out above predetermined targets.
Compensation Practices Checklist
Best Practices
| What the Company Doesn’t Do
|
✓
Align pay and performance - substantial portion of pay is delivered through variable, at-risk compensation
| ×
No ongoing new defined benefit Supplemental Executive Retirement Plan accruals
|
✓
Implemented clawback policy in January 2017
| ×
No share recycling (other than in the context of forfeited shares)
|
✓
Maintain robust stock ownership requirements
| ×
No tax gross-ups related to a change-in-control
|
✓
Performance goals are relevant and tied to creation of stockholder value
| ×
No enhanced health and welfare benefit plans for executives
|
✓
Implemented double-trigger change-in-control provisions in January 2017
| ×
No guaranteed payouts on performance-based compensation (except for upon death, disability, or retirement after the age of 62, beginning for equity awards granted in 2018)
|
✓
Offer market-competitive benefits
| ×
No dividend payments on time-based restricted stock awards until they vest
|
✓
Pay long-term incentives entirely in stock
| ×
No accumulation of dividends on unvested performance-based restricted stock awards beginning with the 2017 awards
|
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 11
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Overview
The Board of Directors is elected each year at the Company’s annual meeting of stockholders. Spirit currently has ten directors. However, Francis Raborn, who currently serves on our Board, the Audit Committee, and Risk Committee, has notified the Company that he will not be standing for re-election at the Annual Meeting. We thank him for his 11 - year commitment to our Company and for his distinguished service. Effective upon Mr. Raborn’s retirement at the Annual Meeting, the Company’s Board will consist of nine directors. Each directorThe directors elected at the Annual Meeting will serve until the 2019 A nnual M eeting2025 annual meeting of S tockholdersstockholders (the “2025 Annual Meeting of Stockholders”) and until the election and qualification of his or her respective successor, subject to such director’s earlier resignation, removal, death, or disability.
Based on
Spirit currently has 11 directors, which number may be modified from time to time by the recommendationsBoard. Each of the Company’s Corporate Governance and Nominating Committee (the “Governance Committee”), the Board has nominated each of the persons listed below for election as directors. Except for Ms. Wright, who was elected to the Board on February 20, 2018, all nominees have served as directors of the Company since the 2017 A nnual M eeting of S tockholders.Each of thedirector nominees has agreed to serve if elected and, as of the date of this Proxy Statement, the Company has no reason to believe that any nominee will be unavailableunable to serve. If any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxy holders’ intention is to vote the proxies for such other person as may be designated by the present Board to fill such vacancy.
![[MISSING IMAGE: tm2213929d10-icon_blmark4c.jpg]](/files/DEF 14A/0001104659-24-033265/tm2213929d10-icon_blmark4c.jpg)
The
following information with respect to the nine nominees is based on information furnished to the Company byBoard unanimously recommends a vote FOR each
nominee and highlights the specific experience, qualifications, attributes, and skills of the
individualdirector nominees
that have led the Board to conclude that each should continue to serve on the Board.Director Nominees
listed below.
 | Charles Chadwell
| Voting Standard | | |
Age 77
Director Since 2008
| | The Company’s bylaws provide for simple majority voting in an uncontested election of directors. In order for a director nominee to be elected, the votes cast “FOR” the director nominee’s election must exceed the votes cast “AGAINST” the director nominee’s election. In the event that an incumbent nominee does not receive the requisite majority of votes cast in this election, the Company will follow the procedure described under “General Information — What happens if an incumbent director nominee is not elected at the Annual Meeting?” Any shares not voted (whether by abstention, broker non-vote, or otherwise) will have no impact on the election of directors. Your broker may not vote your shares on this proposal unless you give voting instructions. | | |
| | Stephen A. Cambone Independent Director Age: 71
Director Since: 2019 | | | PROFESSIONAL EXPERIENCE: ■
Consultant, Techsource (2022-present) ■
Consultant, Intelligence and Security Alliance (2021-present) ■
Trustee, Rumsfeld Foundation (2012-present) ■
Associate Vice Chancellor for Cyber Initiatives, Texas A&M University System (2017-2022) ■
Founder, Adirondack Advisors, LLC (2012-2018) ■
Senior positions at QinetiQ, Inc. (2007-2012), including Executive Vice President, Strategic Development North America, and President, Missions Solution Group North America ■
Under Secretary of Defense for Intelligence, U.S. Department of Defense (“DOD”) (2003-2006) and served in other roles with the DOD from 2001-2003 CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2019-present) COMMITTEE ASSIGNMENTS: ■
Audit ■
Risk | |
| Professional Experience:
| Former Public Company Directorships Held in the Past 7 Years:
|
| | •
Vice President and General Manager of Commercial Engine Operations, General Electric Aircraft Engines (“GE Aviation”)(1994-2002)
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS:•
Vice President, Operations, GE Aviation (1990-1994)
| •
B/E Aerospace (2007-2012)
|
| Committee Assignments:
|
|
|
| Qualifications, Experience, Key Attributes, and Skills: Mr. Chadwell has significant experience in supply chain and manufacturing operations within the commercial and defense aviation industry and has executive leadership experience. Mr. Chadwell alsoDr. Cambone brings to the Board extensive expertise in governmental affairs, defense, and intelligence, along with executive leadership experience as a public company director.
in the defense technology industry. Dr. Cambone has world-class knowledge of cybersecurity matters and invaluable insight into strategic development, given his years of experience in the private sector and government. | |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 12
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 | 7 | | | Spirit AeroSystems2024 Proxy Statement | |
| | Jane P. Chappell Independent Director Age: 62
Director Since: 2024 | | | PROFESSIONAL EXPERIENCE: ■
CEO, Altamira Technologies (2021-present) ■
Consultant, Altamira Technologies (2020-2021) ■
Consultant, Raytheon Corporation (2020-2021) ■
VP, Global Intelligence Solutions, Raytheon Corporation (2015-2019) ■
VP, Business Development Intelligence, Information and Services, Raytheon Corporation (2009-2015) ■
Various roles, Raytheon Corporation (“Raytheon”) (1983-2009) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2024-present) COMMITTEE ASSIGNMENTS: ■
Governance ■
Risk | |
| | QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: Ms. Chappell has over 40 years of experience, 17 years at the executive level, providing operational and strategic leadership in the defense industry. She currently serves as CEO of Altamira Technologies, a national security company in both the defense and intelligence sectors, and is on the Board of Advisors for Lone Star Analysis. Prior to Altamira, Ms. Chappell was with Raytheon for 36 years, where in her last position she was Vice President leading the overall intelligence and commercial ground business with operational, strategy, and customer relationship responsibilities. | |
| | Spirit AeroSystems2024 Proxy Statement | | | 8 | |
| | Irene M. Esteves |
Age 59
Director Since 2015
Independent Director |
Age: 65
Director Since: 2015 | Professional Experience:
| Current Public Company Directorships:
|
| | PROFESSIONAL EXPERIENCE: •■
Executive Vice President and Chief Financial Officer, Time Warner Cable Inc. (2011-2013) •■
Executive Vice President and Chief Financial Officer, XL Group plc (2010-2011) •
Senior Vice President and Chief Financial Officer,
Regions Financial Corporation (2008-2010)
■
•
Senior Vice President and Chief Financial Officer, WachoviaRegions Financial Corporation (2008-2010) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Roper Technologies (2021-present) ■
Spirit AeroSystems Holdings, Inc. (2015-present) ■
KKR Real Estate Finance Trust Inc. (2018-present) FORMER PUBLIC COMPANY DIRECTORSHIPS — PAST FIVE YEARS: ■
Aramark Holdings Corp., Capital Management Group (2006-2008) (2015-2022) | •■
RR Donnelley (2017-present), Aramark (2014-present)& Sons Co. (2017-2022) COMMITTEE ASSIGNMENTS: ■
Audit (Chair) ■
Compensation | |
Former Public Company Directorships Held in Past 5 Years:
|
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: •
Level 3 Communications (2014-2017), TW Telecom Inc. (2014)
|
Committee Assignments:
|
|
| Qualifications,Experience,KeyAttributes,andSkills:Ms. Esteves has significant experience in global finance, corporate strategy, human resources, treasury, accounting, tax, risk management, mergers and acquisitions, and investor relations across multiple industries. Ms. Esteves also brings to the Board experience as a public company director. In addition, Ms. Esteves qualifies as an audit committee financial expert under the rules of the Securities and Exchange Commission (the “SEC”(“SEC”).
rules. | |
| | William A. Fitzgerald Independent Director Age: 63
Director Since: 2021 | | | PROFESSIONAL EXPERIENCE: ■
Vice President, Commercial Engines, GE Aviation (2011-2021) ■
Vice President GEnx Engine Program, GE Aviation (2010-2011) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2021-present) COMMITTEE ASSIGNMENTS: ■
Audit ■
Governance | |
| | QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: Mr. Fitzgerald offers the Board a depth of technical and operational experience from his years of leadership in aviation manufacturing and services. Mr. Fitzgerald has manufacturing, operations, supply chain, and engineering expertise, along with experience in executive management, international operations, and risk management. | |
 | 9 | | | Spirit AeroSystems2024 Proxy Statement | |
| | Paul E. Fulchino |
Age 71
Director Since 2006
Independent Director |
Age: 77
Director Since: 2006 | Professional Experience:
| Current Public Company Directorships:
|
| | PROFESSIONAL EXPERIENCE: •■
Operating Partner, AE Industrial Partners (“AEI”) (2015-2023) ■
Chairman, AEI HorizonX Ventures (2021-2023) ■
Senior Advisor, The Boeing Company (“Boeing”) (2010-2014) •■
Chairman, President, and Chief Executive Officer, Aviall, Inc. (2000-2010)
(Aviall (Aviall became a wholly ownedwholly-owned subsidiary of Boeing in September 2006) •■
President and Chief Operating Officer, B/E Aerospace, Inc. (1996-1999) •■
President and Vice Chairman, Mercer Management Consulting (1990-1996) | •CURRENT PUBLIC COMPANY DIRECTORSHIPS:
■
Spirit AeroSystems Holdings, Inc. (2006-present) ■
BigBear.ai (2021-present) FORMER PUBLIC COMPANY DIRECTORSHIPS — PAST FIVE YEARS: ■
Wesco Aircraft Holdings, Inc. (2008-present)Committee Assignments:
(2008-2020) •COMMITTEE ASSIGNMENTS:
■
Compensation (Chair)
•■
Governance | |
|
|
|
|
| | Qualifications,Experience,KeyAttributes,andSkills:
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: Mr. Fulchino provides the Board with executive leadership experience, and extensive knowledge and expertise regarding the commercial aviation component parts and services industry, the Company’s customers and supply base, and compensation and human resource matters.matters, and mergers and acquisitions. Mr. Fulchino also brings to the Board experience as a public company director. | |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 13
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 | Thomas C. Gentile, III
|
Age 53
Director Since 2016
|
| Professional Experience:
| Former Public Company Directorships Held in Past 5 Years:
|
| | •
President and Chief Executive Officer, Spirit AeroSystems Holdings, Inc. (2016-present)
![[MISSING IMAGE: ph_robertjohnson-4c.jpg]](/files/DEF 14A/0001104659-24-033265/ph_robertjohnson-4c.jpg) •
Executive Vice President and Chief Operating Officer, Spirit AeroSystems Holdings, Inc. (April 2016-August 2016)
Robert D. Johnson,
Chair
Independent Director•
President and Chief Operating Officer, General Electric Capital Corporation (2014-2016)
•
President and Chief Executive Officer, General Electric Healthcare Systems (2011-2014)
•
President and Chief Executive Officer, General Electric Aviation Services (2008-2011)
Age: 76
Director Since: 2006 | •
Synchrony Financial Bank (2015)
|
| | |
|
|
| |
| Qualifications,Experience,KeyAttributes,andSkills: Mr. Gentile has demonstrated success in managing large, complex global technology businesses across multiple industries. He brings to the Board a deep understanding of aviation program management, product development, strategy, and business development.
|
 | Richard Gephardt
|
Age 77
Director Since 2006
|
| Professional Experience:
| Current Public Company Directorships:
|
| | •
President and Chief Executive Officer, Gephardt Consulting Group (2007-present)
PROFESSIONAL EXPERIENCE:•
President and Chief Executive Officer, Gephardt Governmental Affairs (2005-present)
■
•
Member, U.S. House of Representatives (1977-2005). During this time, he served as the House Minority Leader (1995-2003) and House Majority Leader (1989-1995)
| •
Centene Corporation (2006-present)
|
Former Public Company Directorships Held in Past 5 Years:
|
•
Century Link, Inc. (2007-2016), Ford Motor Company (2009-2015), U.S. Steel Corporation (2005-2015)
|
|
|
| Qualifications,Experience,KeyAttributes,andSkills:Mr. Gephardt brings significant governmental affairs and public relations experience to the Board along with labor management and union expertise. He provides the Board with a diverse perspective on public policy, political affairs, and the regulatory environment. Mr. Gephardt also brings to the Board experience as a public company director.
|
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 14
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 | Robert Johnson, Chairman
|
Age 70
Director Since 2006
Independent Director
|
| Professional Experience:
| Current Public Company Directorships:
|
| •
Chief Executive Officer, Dubai Aerospace Enterprise Ltd. (2006-2008) •■
Chairman, Honeywell Aerospace (2005-2006)
•■
President and Chief Executive Officer, Honeywell Aerospace (2000-2005)(known as Allied Signal Aerospace until 2000) (1999-2005) | •■
President and Chief Executive Officer, Electronic and Avionics Systems, Honeywell Aerospace (known as Allied Signal Aerospace at the time) (1997-1999) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2006-present) ■
Roper Technologies, Inc. (2005-present), ■
Spirit Airlines, Inc. (2010-present) COMMITTEE ASSIGNMENTS: ■
Compensation ■
Governance | |
Former Public Company Directorships Held in Past 7 Years:
|
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: •
Ariba, Inc. (2003-2012)
|
Committee Assignments:
|
|
| Qualifications,Experience,KeyAttributes,andSkills:Mr. Johnson, ChairmanChair of the Board, has industry-specificinternational aviation industry executive leadership experience experience inand executive compensation and human resource matters, as well asresources experience, and provides the Board with valuable insight and perspective resulting from his expertise in marketing, sales, supply chain, and production operations. Mr. Johnson also brings to the Board experience as a public company director.
| |
 | Spirit AeroSystems2024 Proxy Statement | | | 10 | |
| | Ronald T. Kadish |
Age 69
Director Since 2006
Independent Director
|
Age: 75
Director Since: 2006 | Professional Experience:
| Current Public Company Directorships:
|
| | PROFESSIONAL EXPERIENCE: •■
Consultant, Raytheon (2018-2019) ■
Senior Executive Advisor, Booz Allen Hamilton (“Booz”BAH”) (2015-present)(2015-2019)
•■
Executive Vice President, BoozBAH (2005-2015)
•■
Director, U.S. Missile Defense Agency, U.S. Department of Defense (2002-2004)
•■
Director, Ballistic Missile Defense Organization, U.S. Department of Defense (1999-2001)
•■
Commander, Electronic Systems Center, Hanscom
Air Force Base (1996-1999) | •CURRENT PUBLIC COMPANY DIRECTORSHIPS:
■
Spirit AeroSystems Holdings, Inc. (2006-present) FORMER PUBLIC COMPANY DIRECTORSHIPS — PAST FIVE YEARS: ■
Northrop Grumman Innovation Systems, Inc. (formerly known as Orbital ATK, (2015-present)Inc.) (2015-2019) COMMITTEE ASSIGNMENTS: ■
Risk (Chair) ■
Governance | |
Former Public Company Directorships Held in Past 5 Years:
|
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: •
Orbital Sciences Corp. (2005-2015)
|
Committee Assignments:
|
|
| Qualifications,Experience,KeyAttributes,andSkills:Mr. Kadish provides the Board with unique expertise in military, program management, security, international, and governmental matters, including having served three decades in the U.S. Air Force, rising to the rank of Lieutenant General. He delivers critical insight to the Board with respect to enterprise risk management, cybersecurity, global security, and our defense customers’ needs and expectations. Mr. Kadish also brings to the Board experience as a public company director.
| |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 15
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 | John L. Plueger |
Age 63
Director Since 2014
Independent Director |
Age: 69
Director Since: 2014 | Professional Experience:
| Current Public Company Directorships:
|
| | PROFESSIONAL EXPERIENCE: •■
Chief Executive Officer and President, Air Lease Corporation (“ALC”) (2016-present) •■
President and Chief Operating Officer, ALC (2010-2016) •■
President and Chief Executive Officer, International Lease Finance Corporation (“ILFC”) (2010) •■
President and Chief Operating Officer, ILFC (2002-2010) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2014-present) ■
ALC (2010-present) COMMITTEE ASSIGNMENTS: ■
Audit ■
Compensation | |
Committee Assignments:
|
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: •
Audit
|
|
|
| Qualifications, Experience, Key Attributes, and Skills:Mr. Plueger provides the Board with significantvaluable insight into aviation industry experience,operations management stemming from his executive leadership expertise,roles at ILFC and operational expertise.ALC. In addition, Mr. Plueger has significant experience in finance and accounting matters as a certified public accountant, having received his training as an auditor from PricewaterhouseCoopers. Mr. Plueger qualifies as an audit committee financial expert under SEC rules. Mr. Plueger also brings to the Board experience as a public company director.
| |
 | Laura Wright
11 | | | Spirit AeroSystems2024 Proxy Statement | |
| | James R. Ray, Jr. Independent Director Age: 60
Director Since: 2022 | | | PROFESSIONAL EXPERIENCE: ■
President and CEO, Commercial Vehicle Group, Inc. (2023-present) ■
President, Engineered Fastening, Stanley Black & Decker (2018-2020) ■
Various roles, Stanley Black & Decker (2013-2018) ■
SVP and General Manager, TE Connectivity, Inc. (2009-2013) ■
Various roles, General Motors and Delphi Corporation (1993-2009) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2022-present) ■
Commercial Vehicle Group, Inc. (2020-present) FORMER PUBLIC COMPANY DIRECTORSHIPS — PAST FIVE YEARS: ■
Leslie’s, Inc. (2021-2023) ■
RR Donnelley & Sons Co. (2021-2022) COMMITTEE ASSIGNMENTS: ■
Compensation ■
Risk | |
Age 58
| QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: Mr. Ray is an experienced senior executive and general manager with diverse global P&L leadership. Mr. Ray brings to the Board expertise in supply chain, business transformation, strategy development and execution, customer relationship management, innovation and technology development, mergers and acquisitions, and global business integration, along with experience as a public company director. | |
| | Patrick M. Shanahan Director Age: 61
Director Since 2018Independent Director
Since: 2021 | | | PROFESSIONAL EXPERIENCE: ■
President and CEO, Spirit AeroSystems, Inc. (2023-Present) ■
Acting Secretary of Defense, Department of Defense (2019) ■
Deputy Secretary of Defense, Department of Defense (2017-2018) ■
Senior Vice President, Supply Chain & Operations, Boeing (2016-2017) ■
Senior Vice President and General Manager, Commercial Airplane Programs, Boeing (2008-2016) ■
Various roles, Boeing (1986-2007) CURRENT PUBLIC COMPANY DIRECTORSHIPS: ■
Spirit AeroSystems Holdings, Inc. (2021-present) ■
Leidos Holdings, Inc. (2022-present) ■
CAE, Inc. (2022-present) FORMER PUBLIC COMPANY DIRECTORSHIPS — PAST FIVE YEARS: ■
Zanite Acquisition Corporation (2021-2022) | |
| Professional Experience:
| Current Public Company Directorships:
|
| | QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: •
Sole MemberMr. Shanahan brings to the Board valuable defense knowledge and Founder, GSB Advisory, LLC (2013-present)
experience having served as the Acting Secretary of Defense and the 33rd Deputy Secretary of Defense. Mr. Shanahan also offers a unique customer perspective from his extensive leadership career at Boeing. Mr. Shanahan’s experience includes commercial and defense operations, cybersecurity, risk management, compensation oversight, public policy, and international expertise. | |
| | •Spirit AeroSystems2024 Proxy Statement
| | | 12 | |
| | Laura H. Wright
Independent Director Age: 64
Director Since: 2018 | | | PROFESSIONAL EXPERIENCE: ■
Senior Vice President and Chief Financial Officer, Southwest Airlines Co. (“SWA”) (2004-2012) •■
Vice President, Finance, and Treasurer, SWA (2001-2004) •■
Treasurer, SWA (1998-2001) | •CURRENT PUBLIC COMPANY DIRECTORSHIPS:
■
Spirit AeroSystems Holdings, Inc. (2018-present) ■
TE Connectivity Ltd. (2014-present), ■
CMS Energy Corp. (and its wholly-owned subsidiary, Consumers Energy Company) (2013-present), ■
JOBY Aviation, Inc. (2021-present) FORMER PUBLIC COMPANY DIRECTORSHIPS — PAST FIVE YEARS: ■
Pebblebrook Hotel Trust (2009-present)(2009-2019) COMMITTEE ASSIGNMENTS: ■
Governance (Chair) ■
Risk | |
Committee Assignments:
|
QUALIFICATIONS, EXPERIENCE, KEY ATTRIBUTES, AND SKILLS: •
Risk
|
|
| Qualifications,Experience,KeyAttributes,andSkills:Ms. Wright has significantexperience in corporate finance and accounting, experiencecommercial aviation end-user operations, risk management, and mergers and acquisitions as a result of her position as Senior Vice President and Chief Financial Officer of SWA, and various other financial rolespositions held during her 25 year25-year career at SWA, including treasurer and director of corporate finance.SWA. Ms. Wright worked for Arthur Young & Co. from 1982-1988 prior to joining SWA. Ms. Wright is a certified public accountant and also brings to the Board experience as a public company director. Ms. Wright is a certified public accountant.
| |
| | 13 | | | Spirit AeroSystems2024 Proxy Statement | |
GOVERNANCE HIGHLIGHTS
| | INDEPENDENT
OVERSIGHT: | | | 10 out of 11 directors are independent All committees are composed solely of independent directors Lead independent director is required if Chair and CEO roles not separate (currently the roles are separate) | | | Regular executive sessions of non-employee directors Regular review of independent director committee roles | |
| | BOARD
REFRESHMENT: | | | Four new directors have joined the Board since 2021 Two of our four most recently appointed directors are diverse Average tenure of our nominees is approximately 8 years, and average age is approximately 68 years old | | | Annual Board and committee evaluations are conducted Regularly analyze Board and committee composition and succession The Board promotes ongoing director education, including through membership in the National Association of Corporate Directors | |
| | HIGH
GOVERNANCE
STANDARDS: | | | Risk oversight process with separate committee roles Overboarding policy in place Two Audit Committee members qualify as audit committee financial experts Board regularly reviews executive succession plans Robust stock ownership requirements for directors and executive officers Stockholders have the right to call special meetings Active stockholder engagement program | | | Annual say-on-pay vote Annual director elections Majority voting standard in uncontested director elections Stockholders have the right to act by written consent Market-standard proxy access right Insiders are not permitted to short-sell, hedge, or pledge Company securities Single class of shares with equal voting rights | |
The Board is committed to maintaining corporate governance practices that maximize stockholder value. The Company’s bylaws provide for simple majority voting in an uncontested election of directors. In order for a director nomineeCorporate Governance Guidelines (the “Governance Guidelines”) are intended to be elected, the votes that stockholders cast “FOR” the director nominee must exceed the votes that stockholders cast “AGAINST” the director nominee. In the event that an incumbent nominee does not receive the requisite majority of votes cast in this election, the Company will follow the procedure described under “General Information Regarding the Meeting - What Happens if an Incumbent Director Nominee is Not Elected at the Annual Meeting?” on page 69 . Any shares not voted (whether by abstention, broker non-vote, or otherwise) will have no impact on the election of directors. Your broker may not vote your shares on this proposal unless you give voting instructions.✓
The Board recommends that you vote FOR eachpromote strong independent oversight, transparency, and efficient functioning of the director nominees.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 16
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BOARD AND GOVERNANCE MATTERS
The Board’s Role
The Company is governed byBoard and its Board of Directors. Other than with respect to matters reserved to stockholders, the Board is the ultimate decision-making body of the Company.committees. The Board is responsible for overseeing, counseling, and directing management; ensuring that the long-term interests of our stockholders are being served; reviewing the major risks facing the Company and helping develop strategies to address such risks; assessing adherence to the Company’s standards and policies; and performing the duties and responsibilities assigned to the Board under the Governance Guidelines and our certificate of incorporation, bylaws, and applicable law. The Governance Guidelines speak to a number of different matters, including Board responsibilities, management succession, director conflicts of interest, director compensation, outside board memberships, director age and term limits, and director attendance at meetings, among other things. The Governance Guidelines are available at
http://investor.spiritaero.com/corporate-governance/govdocs/default.aspx. | | Spirit AeroSystems2024 Proxy Statement | | | 14 | |
CORPORATE GOVERNANCE (continued)
Board Leadership
In 2023, the Company modified its Governance Guidelines to require the appointment of a lead independent director at any time that the Chief Executive Officer (“CEO”) and Board Chair roles are not separate. Currently, the Company has separate CEO and Board Chair roles so the Board has not deemed it necessary to appoint a lead independent director. The Board believes that separation of these roles is appropriate for the Company as it maximizes the ability of the CEO to focus on managing Company operations, strategy, and performance, and protecting stockholder interests and value. Further,while benefiting from the Board Chair’s independent perspective and insight.
The Board Chair performs the following duties:
■
Approves the agenda for Board meetings;
■
Presides over and manages Board meetings (including meetings of non-employee directors);
■
Presides over and manages stockholder meetings;
■
Serves as a liaison between the CEO and the non-employee directors;
■
Provides feedback to the CEO on behalf of the independent directors regarding business issues and Board management; and
■
Engages with the CEO regularly to discuss Company performance and matters of significance.
Board Composition and Refreshment
Our Board strives to maintain an appropriate balance of tenure and diverse attributes. In order to promote thoughtful Board refreshment, we undertake annual Board and Committee assessments to maintain director accountability and identify areas of improvement. The Board has periodically evaluated age and term limits, along with retirement policies, and has determined that such limits and policies may arbitrarily restrict valuable Board members from service. Instead, the Board has determined that it will continue evaluating its members on their merits based on the contributions they make in the boardroom and their ability to enhance overall Board effectiveness.
Four of our 11 director nominees have joined the Board since 2021, including, most recently, Ms. Chappell, who we are excited to have join our Board. For the appointment of Ms. Chappell to the Board, the Governance Committee retained a third-party international executive search firm, Russell Reynolds, to identify candidates and the firm was paid a customary fee for the search. The Governance Committee reviewed her qualifications in the same manner as it reviews other potential candidates. In addition, following the 2024 Annual Meeting of Stockholders, Mr. Fitzgerald will succeed Mr. Fulchino as Chair of the Compensation Committee. These are intentional steps in implementation of the Board’s succession plans, which are focused on three important priorities: (i) ensuring critical director skills are identified and cultivated, (ii) overlapping longer-tenured directors with newer directors to assist in the transfer of knowledge and overall business continuity, and (iii) the importance of diverse voices, backgrounds, and experiences across Board members. The average age of our directors is 68 years old and the average tenure of our directors is 8 years. Among our four newest directors since 2021, two are diverse. The following are highlights for our directors.
| | 15 | | | Spirit AeroSystems2024 Proxy Statement | |
CORPORATE GOVERNANCE (continued)
| | | | | Cambone | | | Chappell | | | Esteves | | | Fitzgerald | | | Fulchino | | | Johnson | | | Kadish | | | Plueger | | | Ray | | | Shanahan | | | Wright | |
| | Gender
Diverse | | | | | | ■ | | | ■ | | | | | | | | | | | | | | | | | | | | | | | | ■ | |
| | Ethnically
Diverse | | | | | | | | | ■ | | | | | | | | | | | | | | | | | | ■ | | | | | | | |
Selecting qualified individuals to serve as directors is key to the Board’s performance. The Governance Committee is responsible for selectingevaluating qualified potential candidates to serve on the Board and overseeingrecommending to the Board nominees to stand for election at the Company’s annual meeting of stockholders. This responsibility is further described in the Governance Committee’s charter (available at: http://investor.spiritaero.com/corporate-governance/govdocs/ default.aspx).
In evaluating candidates, the Governance Committee and Board consider the qualifications and expertise of director candidates individually and in the broader context of the Board’s overall composition, taking into account any particular needs that the
| | Spirit AeroSystems2024 Proxy Statement | | | 16 | |
CORPORATE GOVERNANCE (continued)
Company may have based on its strategic initiatives, risks, and opportunities. The following table highlights key areas of experience among our director nominees, broken down by individual director as noted across the top of the table.
| | | | | Cambone | | | Chappell | | | Esteves | | | Fitzgerald | | | Fulchino | | | Johnson | | | Kadish | | | Plueger | | | Ray | | | Shanahan | | | Wright | |
| | Public
Company CEO | | | | | | | | | | | | | | | ■ | | | | | | | | | ■ | | | ■ | | | ■ | | | | |
| | Public
Company CFO | | | | | | | | | ■ | | | | | | | | | | | | | | | | | | | | | | | | ■ | |
| | Aerospace
Operations
Management | | | | | | ■ | | | | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | |
| | Public
Company
Board | | | ■ | | | | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | | | ■ | |
| | Executive
Compensation | | | | | | | | | ■ | | | | | | ■ | | | ■ | | | ■ | | | | | | ■ | | | ■ | | | ■ | |
| | Risk
Management | | | ■ | | | ■ | | | ■ | | | ■ | | | | | | ■ | | | ■ | | | | | | ■ | | | ■ | | | ■ | |
| | M&A | | | | | | ■ | | | ■ | | | | | | ■ | | | ■ | | | ■ | | | | | | ■ | | | | | | ■ | |
| | Senior
Government | | | ■ | | | | | | | | | | | | | | | | | | ■ | | | | | | | | | ■ | | | | |
| | Cyber | | | ■ | | | ■ | | | | | | | | | | | | | | | ■ | | | | | | ■ | | | ■ | | | | |
| | International | | | ■ | | | ■ | | | ■ | | | ■ | | | | | | ■ | | | | | | ■ | | | ■ | | | ■ | | | | |
| | Defense | | | ■ | | | ■ | | | | | | | | | | | | ■ | | | ■ | | | | | | | | | ■ | | | | |
The Company utilizes a variety of methods to assist the Governance Committee in identifying and evaluating potential director candidates, including:
■
A third-party international executive officers, who setsearch firm,
■
The New York Stock Exchange’s Board Advisory Council, and execute
■
Sitting director recommendations and contacts.
When evaluating individual candidates, the Governance Committee considers the personal ethics and values, experience and judgment of each candidate, among other things. It is the Board’s policy that the Board should reflect a diversity of skills, education, backgrounds, personal characteristics, qualifications, experiences, viewpoints, and such other factors as the Governance Committee and Board believe would enhance Board effectiveness. As stated in our Governance Guidelines, “Spirit is committed to considering diverse candidates for the Board across gender, race, ethnicity, and national origin. Any search firm retained to assist the corporate governance and nominating committee in seeking candidates for the Board will affirmatively be instructed to seek to present diverse candidates.” Nominees must have high standards of integrity and ethics and convey a commitment to act in the best interests of the Company and its stockholders.
In addition, the Governance Committee considers the candidates’ employment and other commitments, and evaluates whether the candidates have sufficient time available to efficiently and effectively carry out director duties. For additional information, see the “Overboarding Policy” section below.
| | 17 | | | Spirit AeroSystems2024 Proxy Statement | |
CORPORATE GOVERNANCE (continued)
Director Selection Process
Stockholder Candidates
It is the Governance Committee’s policy to consider candidates nominated by stockholders in compliance with applicable laws, regulations, and the procedures described in the Company’s businessbylaws and this Proxy Statement. If a stockholder desires to recommend a director candidate for nomination, the stockholder should follow the procedures described under the “Stockholder Proposals and Director Nominations for the 2025 Annual Meeting of Stockholders” heading below. Director candidates recommended by stockholders will be considered and evaluated in the same manner as candidates identified through other sources.
Proxy Access
The Company’s bylaws provide stockholders with a market-standard proxy access right. Specifically, our bylaws permit a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s Common Stock continuously for at least three years, to nominate and include in the Company’s proxy materials directors constituting up to the greater of two individuals or 20% of the Board, provided that the stockholder(s) and the nominee(s) satisfy the applicable requirements in the bylaws.
Annual Evaluations
Each year, the Governance Committee oversees an evaluation of the Board and each committee. The 2023 annual evaluation covered the following topics and incorporated feedback from the senior management team:
■
Board and committee composition in light of the Company’s strategic priorities;
■
Board and committee members’ individual skills and contributions;
■
Effectiveness of Board and committee leadership;
■
Strengths of the Board and committees;
■
Opportunities for improvement;
■
Key decisions made by the Board and the impact of those decisions;
■
Effectiveness of structures and practices; and
■
Quality of the Board’s relationship with management.
| | Spirit AeroSystems2024 Proxy Statement | | | 18 | |
CORPORATE GOVERNANCE (continued)
A summary of the evaluation process is below:
Director Education
Our director education program includes occasional site visits and tours, education seminars on topics of interest conducted by senior management or external advisors, provision of background material on the Company’s operations and strategy, and handleprovision of resources from various educational institutions (including the day-to-day operationsNational Association of Corporate Directors).
Each new Board member receives onboarding training that involves meetings with senior management, business overviews, and presentations on the Code of Conduct, insider trading, and various other policies and procedures. We encourage our directors to attend reputable director education programs sponsored by external advisors and educational institutions.
Director Independence
Consistent with New York Stock Exchange (“NYSE”) rules, SEC rules, and the Company’s Governance Guidelines, our Board consists of a majority of independent directors, and our Audit, Governance, and Compensation Committees each consists solely of independent directors. Directors qualify as independent based on the Board’s determination that the director has no material relationship with the Company (either directly, or as an officer, partner or stockholder of an organization that has a relationship with the Company). The Board performs an independence assessment of each director annually, with the assistance of the Company.Governance Committee, and as circumstances may otherwise require.
In assessing the existence of a material relationship with the Company, the Board considers all relevant transactions, relationships, and arrangements required by NYSE’s independence standards, the SEC, and the Company’s Governance Guidelines, each as
| | 19 | | | Spirit AeroSystems2024 Proxy Statement | |
CORPORATE GOVERNANCE (continued)
applicable to non-employee directors generally and to each committee. The Board examines each director’s involvement through directorships, employment, consulting relationships, or otherwise, with entities with which the Company does business.
When considering the independence of Mr. Fulchino, the Governance Committee and Board considered his role during 2023 as an operating partner of AEI, a private equity firm that has ownership interests in several of the Company’s suppliers. In his role at AEI, Mr. Fulchino assisted with the acquisition, development, and value creation of portfolio companies.
Mr. Fulchino received a retainer from AEI and does not own any equity in AEI. However, Mr. Fulchino received a modest carrying interest upon the sale of certain portfolio companies. Mr. Fulchino was not covered under AEI’s benefit plans or programs, received a Form 1099 from AEI, and was free to be employed by other companies. The Governance Committee and Board affirmatively determined, based on available facts and circumstances, that Mr. Fulchino was not an employee of AEI (for purposes of the independence determination). Further, with respect to the Company’s transactions with the AEI-owned suppliers, each transaction either arose as a result of the entity submitting the most competitive bid out of all bidding suppliers (and thus was not reportable under Item 404 of Regulation S-K) or the Board determined that Mr. Fulchino’s relationship with AEI did not give rise to a material interest. For these and other reasons, the Governance Committee and Board determined that Mr. Fulchino’s relationship with AEI does not give rise to a material relationship that impacts his independence (nor does it create a related person transaction).
Based on an analysis of each director’s affiliations and circumstances, the Board has affirmatively determined that each of the director nominees is independent under the NYSE’s criteria, excluding Mr. Shanahan. All committees of the Board consist solely of independent directors. Mr. Shanahan is not a member of any committee.
Board Committees and Meetings
In carrying out its responsibilities, the Board has created and delegated certain responsibilities to four standing committees: the Audit Committee, the Compensation Committee, the Governance Committee, and the Risk Committee. Additional information about these committees and their responsibilities is described under “Committees” on page 20.The Board is committed to maintaining corporate governance practices that maximize stockholder value. To further its commitment, the Board has adopted the Company’s Corporate Governance Guidelines (the “Governance Guidelines”) to ensure that the Board has the necessary authority and practices in place to effectively review and evaluate the Company’s strategy and operations, to make decisions that are independent of the Company’s management, and to monitor adherence to the Company’s standards and policies. The Governance Guidelines are available at http://investor.spiritaero.com/govdocs.
Board Leadership
The Company separates the roles of Chief Executive Officer (“CEO”) and Chairman of the Board in recognition of the differences between the two roles and the value of independent leadership oversight. The Board believes that separation of the roles maximizes the ability of the CEO to focus on Company strategy and operations without distraction while benefiting from the Chairman’s perspective and insight. Because Mr. Johnson, the Chairman of the Board, is not an employee of the Company and qualifies as an independent director, the Board has not deemed it necessary to appoint a lead independent director.
While the CEO is responsible for setting the strategic direction of the Company and managing the day-to-day operations and performance of the Company, the Chairman of the Board performs the following duties:
•
sets the agenda for Board meetings;
•
presides over meetings of the full Board and executive sessions of independent directors;
•
presides over stockholder meetings;
•
serves as a liaison between the CEO and the independent directors;
•
provides feedback to the CEO on behalf of the independent directors regarding business issues and Board management; and
•
regularly speaks with the CEO between Board meetings to discuss Company performance and matters of significance.
Board Logistics
Size
Pursuant to our bylaws, the Board of Directors is required to consist of three or more directors and may be increased or decreased at any time by the Board of Directors. Currently, the Board of Directors consists of ten directors, including Mr. Raborn who is retiring at the Annual Meeting. Once Mr. Raborn retires, the Board will consist of nine directors. Pursuant to its charter, the Governance Committee is responsible for reviewing the size of the Board and recommending to the Board any changes it deems appropriate with respect to Board size.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 17
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Composition and Director Nominations
The Governance Committee is responsible for identifying and evaluating qualified potential candidates to serve on the Board, and recommending to the Board for its selection nominees to stand for election as directors at the Company’s annual meeting of stockholders. In carrying out this responsibility, the Governance Committee considers the qualifications and expertise of director candidates individually and in the broader context of the Board’s overall composition. The Governance Committee continually evaluates the Board’s composition to ensure it is appropriate for the Company’s strategic needs. When a need for a new Board member arises, the Governance Committee conducts targeted recruiting through a retained search firm and receives suggestions from current directors and stockholders.
In evaluating individual candidates, the Governance Committee considers the personal ethics and values, experience, judgment, and diversity of the candidate, among other things. It is the policy of the Board that the Board reflect diversity of viewpoint, professional experience, education, skill, expertise, industry knowledge, and such other factors as the Governance Committee and Board believe would enhance the effectiveness of the Board. Nominees must have high standards of integrity and ethics and convey a commitment to act in the best interest of Spirit and its stockholders.
In addition, the Governance Committee considers the candidates’ employment and other involvements and evaluates whether the candidate has sufficient time available to efficiently and effectively carry out the duties of a director. For example, the Governance Guidelines limit the number of boards that any director may serve on to five (including the Company’s Board) or three (including the Company’s Board) boards in the case of a director that is an active chief executive officer at another public company.
It is the Governance Committee’s policy to consider candidates nominated by stockholders in compliance with applicable laws, regulations, and the procedures described in the Company’s bylaws and Proxy Statement. If a stockholder desires to recommend a director candidate for nomination by the Governance Committee, the stockholder should follow the procedures described under “Stockholder Proposals and Director Nominations for the 2019 Annual Meeting” on page 70. Director candidates recommended by stockholders will be considered and evaluated in the same manner as candidates discovered through other sources.
Director Tenure
While the Company has added four new directors to its Board in the past four years, five of the nominees have served on the Board for more than eight years. The Board is committed to routine Board and director refreshment as needed to enhance Board effectiveness. Through its annual evaluation process, the Board has determined that each of these five nominees provide diversity of experience and perspective and plays an integral and necessary role in the boardroom. The Board has evaluated age and term limits along with retirement policies and has determined that such limits and policies may arbitrarily restrict valuable Board members from service and, thus, reduce stockholder value. Instead, the Board has determined to continue evaluating its members on the merits based on the contributions they make in the boardroom and their ability to enhance overall Board effectiveness.
2017 Board Meetings
During 2017, there were four in-person meetings of the Board and five formal telephonic meetings. An executive session of the Company’s non-employee directors was held at each of the in-person meetings. Except for Ms. Wright, who was elected in February 2018, all of the Company’s directors attended 75% or more of the aggregate of all meetings of the Board and of committees on which they served in 2017. Our Governance Guidelines provide that attendance is expected at annual meetings of stockholders and all of our directors who were then-serving attended the 2017 A nnual M eeting of S tockholders.
In addition to scheduled Board meetings, the Board receives monthly reports from Mr. Gentile detailing financial results, operational highlights and challenges, and updates on strategic initiatives.
Board and Committee Evaluations
Each year, the Governance Committee oversees an evaluation of the Board and each committee. In 2017, the Chair of the Governance Committee conducted telephonic interviews with each Board member and asked a set of questions that had been pre-approved by the Governance Committee. The questions covered a range of topics including Board structure, leadership effectiveness, governance practices, and relationships with management and stockholders. After the interviews were completed, a written report summarizing the responses and matters discussed in the interviews was prepared and shared with the Governance Committee at its January 2018 meeting. The Governance Committee shared highlights of the written report with the Board during an executive session at the January 2018 meeting, and the Board discussed and determined next steps and opportunities for improvement.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 18
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Director Independence
The Company’s Common Stock is listed on the New York Stock Exchange (the “NYSE”) and the Company uses the NYSE’s listing standards to determine director independence. Under the NYSE’s listing standards and the Governance Guidelines, the Board must consist of a majority of independent directors. For a director to qualify as independent, the Board must determine that the director has no material relationship with the Company (either directly, or as a partner, stockholder, or officer of an organization that has a relationship with the Company). The Board performs an independence assessment of each director annually and as circumstances may otherwise require.
In assessing the existence of a material relationship with the Company, the Board considers all relevant transactions, relationships, and arrangements required by the NYSE’s independence standards. The Board examined each director’s involvement, through directorships, employment, consulting relationships, or otherwise, with entities the Company does business with. In particular, the Board evaluated the following:
Topic
| Transaction Evaluated
| Outcome
|
Paul Fulchino
| When considering the independence of Mr. Fulchino, the Board considered his role as an operating partner of AE Industrial Partners (“AEI”) , a private equity firm that has ownership interests in four of the Company’s suppliers. For three of such suppliers, all work with Spirit was won as a result of the suppliers submitting the most competitive proposal in competitive bidding situations. With respect to the fourth supplier, AEI is a minority owner and the percentage of the supplier’s revenue that is attributable to the Company is insignificant.
In his role at AEI, Mr. Fulchino assists with the acquisition, development, and value creation of portfolio companies. Mr. Fulchino receives a retainer from AEI and does not own any equity in AEI. Mr. Fulchino has no agreements with AEI, is not covered under AEI’s benefit plans or programs, receives a Form 1099 from AEI, and is free to be employed by other companies.
| The Board affirmatively determined, based on available facts and circumstances, that Mr. Fulchino was not an employee of AEI (for purposes of the independence determination). Further, with respect to the Company’s transactions with three of the suppliers, each transaction arose as a result of the respective entity submitting the most competitive bid out of all bidding suppliers and, thus, the transactions were not reportable under Item 404 of Regulation S-K. Finally, with respect to fourth supplier, the Board determined that Mr. Fulchino’s relationship was AEI did not give rise to a material interest. For these and other reasons, the Board determined that Mr. Fulchino’s relationship with AEI does not give rise to a material relationship that impacts his independence or creates a related party transaction.
|
Richard Gephardt
| When considering Mr. Gephardt’s independence, the Board considered his role as President and Chief Executive Officer of the Gephardt Consulting Group, a consulting firm that provides services to the Company in connection with labor matters (the “Gephardt Group”). Mr. Gephardt holds a 40% equity interest in the Gephardt Group, and Mr. Gephardt’s son, who is Chief Operating Officer of the Gephardt Group, holds a 10% equity interest. While the Company’s transactions with the Gephardt Group in 2017 were less than $ 75,000 , the Company entered into a contract with the Gephardt Group in January 2018 (after following the process set forth in its Related Person Transaction Policy) that provided for monthly payments of $20,000 to the Gephardt Group.
| The Board affirmatively determined that, in light of Mr. Gephardt’s significant ownership and involvement in the Gephardt Group and the new contract entered into with the Company in January 2018 , Mr. Gephardt has a material relationship with the Company and is, therefore, not independent.
|
Based on this analysis, the Board has determined that all of the director nominees are independent under the NYSE’s criteria, with the exclusion of Messrs. Gentile and Gephardt. All of the committees of the Board are comprised solely of independent directors.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 19
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Committees
The Board has four committees: the Audit Committee, Governance Committee, Compensation Committee, and Risk Committee. The Board has adopted a written chartercharters for each committee, which isare available at http:at:
https://investor.spiritaero.com/govdocscorporate-governance/govdocs/default.aspx. | | Spirit AeroSystems2024 Proxy Statement | | | 20 | |
CORPORATE GOVERNANCE (continued)
Information on each committee of the Board is set forth in the table below. Francis Raborn is a current directorTwo of our four Board committees are chaired by the Company who has chosen not to stand for election at the Company’s Annual Meeting. His name is referenced below as he served as a member of the Audit Committee and Risk Committee for the full 2017 year and will continue to serve until the Annual Meeting.women serving on our Board.
Committee
| Members
Committee | | | Current Members(1) | | | Primary Responsibilities | | | No. o fof
Meetings
in 2017
2023 | |
| Audit Committee*Committee(2) | | | Irene M. Esteves (Chair)**
Stephen A. Cambone
William A. Fitzgerald
John L. Plueger
Francis Raborn**
| | | (1)
(1)
Assist the Board in its oversight of:Oversee the quality and integrity of the Company’s financial reporting;reporting and financial statements.
(2)
Oversee the Company’s compliance with legal and regulatory requirements;requirements. (3)
Engage, compensate, and oversee performance and independence of the qualifications, independence, andindependent auditor. (4)
Oversee performance of the independent auditor;Company’s internal audit function including staffing, compensation, and effectiveness. (5)
Review and discuss with management and the performance of Spirit’s internalindependent auditors the Company’s earnings releases and quarterly and annual reports on Forms 10-Q and 10-K, and the audit function.generally. (2)
Pre-approve the terms and fees relating to the engagement of the independent auditor.
(6)
(3)
Consider the effectiveness of the Company’s internal controls over financial reporting. reporting and participate in the resolution of internal control issues, where identified. (4)(7)
Collaborate
Oversee and participate in the review and resolution of significant deficiencies or material weaknesses, where identified. (8)
Communicate with the Risk Committeeindependent auditor on audit control matters and overseecritical audit matters to be described in the independent auditor’s report. (9)
Oversee financial-related risk exposures and related policies and processes attempting to mitigate such risks. (5)(10)
Oversee the Company’s Code of Ethics and Business Conduct, Insider Trading Policy and the Company’s ethics and compliance program. | 8
| | 6 | |
Compensation Committee
| Compensation
Committee | | | Paul E. Fulchino (Chair)
Irene M. Esteves
Robert D. Johnson
Charles Chadwell
John L. Plueger
James R. Ray, Jr. | | | (1)
(1)
Review and approve the compensation of the Company’s executive officers. officers, with a focus on linking pay and performance. (2)
Oversee the administration of the Company’s compensation plans, policies, and programs. (3)
Prepare the Compensation Committee Report in this Proxy Statement. (4)
Collaborate with the Risk Committee and oversee
Oversee compensation-related risk exposures and related policies and processes attempting to mitigate such risks. (5)
Review and make recommendations to the Board with respect to non-employee director compensation. | 5
| | 9 | |
| Governance Committee | Charles Chadwell
| | Laura H. Wright (Chair)
Jane P. Chappell
Robert D. Johnson
Paul E. Fulchino
Ronald T. Kadish
William A. Fitzgerald | | | (1)
(1)
Assist the Board in identifying qualified individuals to become Board members. members, with a focus on substantive skills and the Board’s overall diversity profile. (2)
Determine the composition of the Board and its committees. (3)
Lead the Board in its annual review of the Board’s and management’sthe committees’ performance. (4)
Develop and implement the Governance Guidelines and recommend to the Board any changes thereto. (5)
Review and approve, deny, or ratify transactions under the Company’s Related Person Transaction Policy. (6)
Collaborate with the Risk Committee and oversee
Oversee risks related to the Company’s governance structure. (7)
Review the Company’s practices and reporting with respect to corporate responsibility, environmental, and social matters. (8)
Oversee Board refreshment and succession. | 5
| | 6 | |
| Risk Committee*Committee | | | Ronald T. Kadish (Chair) John Plueger
Irene Esteves
Francis Raborn
Stephen A. Cambone
Jane P. Chappell
James R. Ray, Jr.
Laura H. Wright
| | | (1)
(1)
Provide oversight of management’s guidelines, policies, and processes for assessing, monitoring, and mitigating the Company’s critical enterprise risks, including the major strategic, operational,operating, safety/quality, financial, and compliance risks inherent in the Company’s business and core strategies,strategies. (2)
Oversee the effectiveness of the Company’s cybersecurity programs and collaborate with other committees regarding the same.its practices for identifying, assessing, and mitigating cybersecurity risks. (2)(3)
Oversee management’s review and assessment of key risks that have the potential to significantly affect the Company’s ability to execute its strategy, and determine which risks should be included on the Board’s agenda for discussion. | 5
|
*
Francis Raborn will serve on the Audit Committee and Risk Committee until the Annual Meeting. Effective immediately after the Annual Meeting, the Board expects to appoint Mr. Kadish to fill the vacancy on the Audit Committee and come off of the Governance Committee.
**
The Board has determined that Ms. Esteves and Mr. Raborn are “audit committee financial experts,” as such term is defined in Item 407(d)(5) of Regulation S-K.
| 4 | |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 20
| | 21 | | | Spirit AeroSystems2024 Proxy Statement | |
CORPORATE GOVERNANCE (continued)
(1)
Following the Annual Meeting we expect membership of the Committees to Contentsbe as follows: Audit Committee: Irene M. Esteves (Chair and Audit Committee financial expert), Stephen A. Cambone, William A. Fitzgerald, and Laura H. Wright (Audit Committee financial expert); Compensation Committee: William A. Fitzgerald (Chair), Irene M. Esteves, Paul E. Fulchino, Ronald T. Kadish, and John L. Plueger; Governance Committee: Laura H. Wright (Chair), Robert D. Johnson, Jane P. Chappell, Paul E. Fulchino, and James R. Ray; Risk Committee: Ronald T. Kadish (Chair), Robert D. Johnson, Stephen A. Cambone, and Jane P. Chappell.
(2)
The Board has determined that Ms. Esteves and Ms. Wright are, and during his service on the Audit Committee up to the Annual Meeting, that Mr. Plueger was, “audit committee financial experts,” as such term is defined in Item 407(d)(5) of Directors’Regulation S-K.
2023 Board and Committee Meetings and Attendance
During 2023, there were 15 meetings of the Board. These meetings were held both in person and virtually. Each of the Company’s directors attended 75% or more of the aggregate of all meetings of the Board and of the committees on which they served in 2023. Our Governance Guidelines provide that director attendance is expected at each annual meeting of stockholders. Each of our directors attended the 2023 annual meeting of stockholders (the “2023 Annual Meeting of Stockholders”).
In addition to scheduled Board meetings, the Board receives regular reports from management detailing financial results, operating highlights and challenges, and updates on strategic initiatives. Following quality or safety-related events, the Board receives weekly or other more frequent updates as appropriate.
Executive Sessions
As part of each quarterly Board meeting in 2023, the Company’s non-employee directors met without management present in an executive session, with Mr. Johnson as Chair presiding over each session. During executive sessions, the non-employee directors reviewed management’s performance, compensation, talent development and succession planning, strategic considerations, corporate governance matters, and other matters of importance. The Company’s independent directors met in executive session at least one time during the year as required by the Governance Guidelines and NYSE rules.
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CORPORATE GOVERNANCE (continued)
Risk Oversight
The Board’s Role in Risk Oversight
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The Board is responsible for overseeing the Company’s risk exposure. The Board administers this responsibility through its review of corporate strategy and operations and by delegating certain oversight responsibilities to the appropriate committees for further consideration and evaluation. The Board receives briefings from members of management on key strategic and operational risks during the July Board meeting and as the other committees deem necessary in their Board reports. Risk Committee Has primary responsibility for overseeing the Company’s enterprise risk management framework and material risks facing the Company Reviews management’s guidelines, policies, and processes for assessing, monitoring, and mitigating the Company’s critical enterprise risks, including the major strategic, operational, financial, and compliance risks inherent in the Company’s business and core strategies Receives regular reports from senior management detailing areas of risk and management and mitigation strategies with respect to such risks Determines which risks need to be included on the Board’s agenda for discussion Audit Committee Collaborates with Risk Committee Oversees financial reporting and other risks relating to internal controls, disclosure issues, Ethics Hotline reports, and legal and regulatory issues, including compliance with SEC rules and regulations Annually reviews a comprehensive annual risk assessment report from the Company’s internal auditors Conducts annual assessment in October of most significant risks within Committee’s purview and reports findings to the Board Compensation Committee Collaborates with Risk Committee Oversees executive compensation risks Strives to create incentives that do not encourage inappropriate risk taking and align executives’ interests with stockholders’ interests Conducts annual assessment in October of most significant risks within Committee’s purview and reports findings to the Board Governance Committee Collaborates with Risk Committee Oversees governance risks relating to Board and Committee composition, regulatory compliance, and public company governance matters Conducts annual assessment in October of most significant risks within Committee’s purview and reports findings to the Board
Management’s Role in Risk ManagementOversight
The Company’s management is responsible for the identification, assessment, mitigation, and management of risks relating to the Company’s strategy and operations. Apart from reporting to the Board, management engages in a robust enterprise risk management process that involves: (i) annual risk assessmentcreating risk-assessment surveys and conducting interviews; (ii) reviewing, repositioning, and prioritizing identified risks by a risk council composed of executive leadership; (iii) assigning risks to risk owners based on responsibilities with respect to the Company’s strategic objectives; (iv) developing and reporting mitigation plans by the risk owners and risk management team to the risk council; and (v) oversight byreceiving insights from the Company’s internal audit function. On a quarterly basis, the status of the top risks identified in management’s enterprise risk management process, along with their associated mitigation plans, areis presented to the Risk Committee.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 21
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Cybersecurity
One of the specific risks Risks that the BoardCompany focused on in 2023 were heavily centered on quality and Risk Committee reviewed in 2017 was cybersecurity. safety, but also included matters relating to financial performance recovery, production-rate readiness, supply chain, inflationary pressures, and cybersecurity, among other items.
Cybersecurity
The Risk Committee received several presentations from management onof the status ofBoard is charged with reviewing the Company’s cybersecurity protections,policies and processes. Management reports to the Company hired a chief information security officer in early 2018 to assist with management of cybersecurity protectionsRisk Committee quarterly regarding cyber practices and procedures. The Company requires cybersecurity education and training at all levels of the organization. Spirit works to maintain the confidentiality, integrity, and availability of its information and digital resources through comprehensive and proactive compliance, privacy, incident response, cyber threat
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CORPORATE GOVERNANCE (continued)
management, and enterprise risk programs developed from industry-accepted best practices. The framework for our programs is based on the U.S. Department of Defense Cybersecurity Maturity Model Certification (CMMC) and National Institute of Security and Technology (NIST) Frameworks, U.K. Cyber Defence and Risk (CyDr), Generally Accepted Privacy Program (GAPP) guiding principles, and ISO 27001/2 standards. These standards reflect well-defined processes and best-in-class technology.
Succession Planning
The Board appreciatesis responsible for overseeing management succession planning. Following the threats presented by cybersecurity incidentstransition from Mr. Gentile to Mr. Shanahan as interim CEO, the Board is actively leading the search for a permanent CEO and is committedintegrally involved in succession planning for other key executive positions. Under ordinary circumstances, the Board reviews candidates for succession with respect to the prevention, timely detection,CEO role and mitigationother senior management roles at least twice annually. Succession plans are developed for both ordinary course succession and contingency planning for an unforeseen event. The Board receives updates regularly on the development of succession candidates. Directors engage with potential succession candidates at Board and committee meetings and informal events.
Stockholder Engagement
Our Board recognizes the importance of alignment with our stockholders and places a high priority on stockholder engagement. Our stockholder outreach team includes representatives from various functions including Sustainability, Compensation, Human Resources, Investor Relations, and the Corporate Secretary’s office. Members of our Board and our CEO also participate, as appropriate. We engage proactively with our stockholders throughout the year and the feedback we receive is reviewed with the full Board. Stockholder feedback is instrumental in developing our governance, compensation, and sustainability policies and practices and in informing our business strategy.
In 2023, we continued our expansive stockholder engagement program by reaching out to investors representing roughly 65% of our outstanding shares. We solicited feedback on a variety of topics and received important insights from our stockholders.
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CORPORATE GOVERNANCE (continued)
| | How We Engage | | | We engage with our stockholders year-round in a variety of ways: ■
In the fall, we reach out to our largest stockholders (representing roughly 65% of outstanding shares in 2023) to solicit feedback on a variety of topics. ■
We hold calls with stockholders and discuss company performance, compensation, governance priorities, diversity, and sustainability, among other topics. ■
Our investor relations team regularly meets with our stockholders, prospective stockholders, and investment analysts. ■
From time-to-time, we receive unsolicited outreach from stockholders and respond to engage with such stockholders on areas of importance to them. | |
| | What We Heard | | | Below is a summary of the feedback we received in 2023: ■
Positive feedback on the Company’s transition to our interim CEO, Pat Shanahan. ■
Interest in the timeline and key criteria the Governance Committee and Board will apply in the search for a permanent CEO. ■
Requests for additional information on the Company’s efforts to support quality performance. ■
Interest in Board succession and on the overall mix of tenure, diversity, age, and experience on our Board. | |
| | How We
Responded | | | The following is a summary of actions taken in response to stockholder feedback (for more details, see also “Say on Pay Vote and Stockholder Engagement” below): ■
The Board is actively searching for a permanent CEO to follow Mr. Shanahan and has identified critical skills and areas of experience that are key to enabling the next CEO to effect the Company’s strategic direction. ■
Improving quality and operational performance are critical priorities for both the Board and executive management teams. The Company continues to evaluate and refine its practices with a fundamental aim of ensuring our people have the resources they need to do the best they can. ■
We are pleased to have Ms. Chappell join our Board, furthering our succession plan and improving our gender profile. Mr. Fitzgerald stepping in as our new Compensation Committee Chair following the Annual Meeting also reflects progress on implementation of our succession plan. We are extremely grateful to Mr. Fulchino and for the years of service he has provided as the Chair of our Compensation Committee. He will continue as a valued member of both the Board and Compensation Committee. | |
Overboarding Policy
Per our Governance Guidelines, directors are expected to ensure that other commitments, including outside board memberships, do not interfere with their duties and responsibilities as Board members. A director may not serve on the boards of more than four other public companies or, if the director is an active CEO or equivalent of another public company, on the boards of more than two other public companies. In addition, directors must notify the Governance Committee before accepting an invitation to serve on the board of any other for-profit entity. The director must not accept such service until being advised by the Governance Committee Chair that the committee has determined that service on such other board would not create regulatory issues or potential conflicts of interest and would not conflict with the Company’s policies. All directors are in compliance with the Company’s overboarding policy as of the effectsdate of any such incidents on the Company.Communications with the Board
Stockholders and other interested persons may communicate with the Board, the Chairman of the Board, individual members of the Board, members of any committee of the Board, or one or more non-employee directors through the following:
this Proxy Statement. | | |
BYEMAIL
to CorporateSecretary@spiritaero.com
| BYMAIL
to Corporate Secretary
| Spirit AeroSystems Holdings, Inc.3801 S . Oliver St .
Wichita, KS 67210-2112
2024 Proxy Statement | INPERSON
at the Annual Meeting
(we expect all of our directors to attend)
|
The Corporate Secretary will forward communications received to the appropriate party. Receipt
CORPORATE GOVERNANCE (continued)
Code of communications clearly not appropriate for consideration by members of the Board, such as unsolicited advertisements, inquiries concerning the Company’s products and services, and harassing communications, are not forwarded to members of the Board.Stockholder Engagement
The Company’s management frequently meets with investors to discuss Company performance, strategy, operations, and other matters of importance to our stockholders. Occasionally, the Chairman of the Board has participated in meetings with investors. In 2017, members of the Company’s management held more than 620 in-person and telephonic meetings with investors and traveled through the continental U.S. and to Canada, France, and the U.K. to attend the meetings. On September 27, 2017, we held an investor day in New York, which was made available by webcast to all stockholders, and discussed our business strategy, innovation and technology efforts, and Company values. Conduct
The Company is committed to maintaining a robust stockholder engagement program and welcomes stockholder feedback and constructive dialogue.Code of Ethics and Business Conduct
Spirit is committed to the highesthigh ethical standards and to complyingcompliance with all laws and regulations applicable to ourthe Company’s business. To support and articulate ourits commitment and personal responsibility in this regard, Spiritthe Company has adopted the Code of Ethics and Business Conduct (the “Code”). The Code addresses a number of topics, including the Foreign Corrupt Practices Act, conflicts of interest, safeguarding assets, insider trading, and general adherence to laws and regulations. All directors and employees, including executive officers, must comply with the Code. The Code is available on the Company’s website at:
https://investor.spiritaero.com/corporate-governance/govdocs/default.aspx. Social Responsibility and Sustainability
In 2023, Spirit published its third annual Sustainability Report (the “Report”), highlighting the Company’s continued progress on meeting its sustainability goals and objectives established in 2021. The Report highlights Sprit’s key accomplishments and utilizes the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force for Climate-Related Financial Disclosures (TCFD) frameworks. The fourth annual Sustainability Report is expected to be published in 2024, with a continued focus on transparency in our disclosures. Information contained in the Sustainability Report is not incorporated by reference into, and does not constitute a part of, this Proxy Statement.
Pursuant to its charter, the Governance Committee oversees Spirit’s practices and reporting with respect to corporate responsibility, environmental, and social factors that are of significance to the Company and its stakeholders.
Climate Action Plan
Spirit is committed to conducting and managing its business in a manner that protects the environment and supports the transition to a low-carbon economy. We are transitioning to renewable energy at many of our sites across the globe. Additionally, Spirit has set a goal to reduce its absolute Scope 1 and 2 greenhouse gas emissions by 30% below 2019 levels by 2030 and has already achieved significant milestones towards that goal. Our sustainability strategies and programs consider climate, water, waste, and biodiversity.
Diversity, Equity, and Inclusion
At Spirit, we believe our success and the success of our employees depend on a commitment to fostering a diverse and inclusive culture that supports growth and development, along with the diverse skills needed to innovate. We have set a goal to increase representation of women in leadership (senior manager and above globally) to 30%, and minorities in leadership (senior manager and above in the United States) to 20%, by 2025. In 2022, Spirit was named on the Diversity Inc. Top Regional Company list and launched its first “Taking Flight” DE&I Leadership Symposium as well as a new employee business resource group focusing on the engagement and development of our Hispanic/Latino workforce. In 2023, Spirit continued to make progress on these initiatives.
Community Contributions
We believe in the power of innovative solutions, partnerships, and programs that bring communities together. In 2023, Spirit and its employees continued to support local communities, and contributed nearly 12,000 volunteer hours and donated approximately $4.6 million through corporate grants, in-kind contributions, and employee donations.
For more information, visit www.spiritaero.com/company/sustainability/overview/.
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CORPORATE GOVERNANCE (continued)
Related Person Transactions
The Board has adopted a written Related Person Transaction Policy (the “RPT Policy”) that can be found on the Company’s website at http:https://investor.spiritaero.com/govdocscorporate-governance/govdocs/default.aspx.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 22
Back The purpose of the
Under the RPT Policy, a related person transaction is any transaction in which the Company was, is, or will be a participant, where the amount involved exceeds or may be expected to exceed $120,000, and in which a Related Person (as defined below) has, had, or will have a direct or indirect material interest. The RPT Policy defines a Related Person as a director, director nominee, officer, or 5% stockholder, or any of their immediate family members. The existence of a direct or indirect material interest depends upon individual facts and circumstances and is determined by our General Counsel or the Governance Committee.
The Governance Committee is responsible for reviewing these transactions and determining whether they are fair to, and in the best interests of, the Company. After review of the relevant facts and circumstances, if the Governance Committee concludes a related person transaction is fair to, and in the best interests of, the Company, it may approve or ratify the transaction.
Except as described below, no other transactions occurred since January 1, 2023, that fall within the definition of “related person transaction” in the RPT Policy or under Item 404 of Regulation S-K, other than compensation arrangements which are described under “Executive Compensation” and “Director Compensation.”
Alan Young
Kimba Sjogren, who is the spouse of Mr. Young, an executive officer of the Company, is employed by the Company in a non-executive officer position. Ms. Sjogren’s compensation was established by the Company in accordance with its compensation practices applicable to employees with comparable qualifications and responsibilities and holding similar positions, and without the involvement of Mr. Young. Her total compensation for 2023 was less than $350,000. Ms. Sjogren was hired independently of Mr. Young.
See also “Director Independence” for more information.
| | | For More Information, Governance Documents Are Available on Our Website We maintain governance documents on our website at: https://investor.spiritaero.com/corporate-governance/govdocs/default.aspx. These documents include, without limitation, our: | | |
| | | ■
Bylaws; ■
Governance Guidelines; ■
Committee Charters; ■
Code of Conduct; ■
Severance Policy; | | | ■
Finance Code of Professional Conduct; ■
Supplier Code of Conduct; ■
Related Party Transaction Policy; ■
Discrimination and Harassment Policy; and ■
Anti-Hedging and Pledging Policy. | | |
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Overview
Non-employee directors receive annual cash and equity compensation as further described below. Equity compensation is granted under the Director Stock Program adopted under the Amended and Restated 2014 Omnibus Incentive Plan, as amended (the “OIP”).
The Compensation Committee reviews and approves non-employee director compensation amounts and practices annually. As part of theirits review, the Compensation Committee evaluates peer company non-employee director compensation data from the companies in Spirit’s proxy peer group, including data regarding the size of equity awards. In addition, the Compensation Committee confers with its independent compensation consultant on the magnitude and type of non-employee director compensation, and reviews market data and benchmarking surveys provided by the consultant. Based upon that information, the Compensation Committee makes a recommendation to the Board. The Board determinesapproves the form and amount of compensation after considering the Compensation Committee’s recommendation. In developing its recommendations, the Compensation Committee is guided by the following goals:goals with respect to non-employee director compensation:
■
•
Compensationcompensation should be market-competitive;
market-competitive in relation to similarly situated companies, including the Company’s proxy peer group;
•■
Compensation
compensation should align directors’ interests with the long-term interests of the Company’s stockholders; and
•■
The
the compensation structure should be simple, transparent and easy for stockholders to understand.
Compensation Elements
The following table describes the elements of the 2017our non-employee director compensation program:
program for the 2023-2024 term:
Element
| Amount
Element | | | 2023-2024
Amounts
($) | |
| Annual Board Cash Retainer | $105,000
| | | | 110,000 | | |
| Annual Board Equity Retainer | $105,000
| | | | 150,000 | | |
| Additional Retainer for ChairmanChair of the Board | $100,000
| | | | 125,000 | | |
| Additional Retainer for ChairmanChair of the Audit Committee | $25,000
| | | | 26,000 | | |
| Additional Retainer for ChairmanChair of the Compensation Committee | $18,000
| | | | 21,000 | | |
| Additional Retainer for ChairmanChair of Other Committees | $12,000
|
Board and Committee Meeting Fees
| $1,000 per meeting
|
| | | 15,000 | | |
Each Board member receives an annual cash retainer, which is paid quarterly. Further, the Chairmanretainer. The Chair of the Board and each Committee Chairmancommittee chair receives an additional cash retainer. Each directorDirectors may elect to havereceive their retainer receivedretainers in shares of restricted stock or restricted stock units (“RSUs”), in lieu of cash, but if any director ceases to serve as a director for any reason during the term, any such elective equity award will be forfeited and the director will receive a pro-rated portion of the annual retainer in cash. Except with respect to elective equity awards in lieu of cash, cash compensation is paid quarterly in arrears.
Each Board member receives an annual equity retainer, which directors may be paidelect to receive in the form of restricted stock or RSUs. Both types of awards vest if the non-employee director remains continuously in service for the entire term to which the grant relates. If the non-employee director incurs a termination for any reason before the end of the term (before the annual meeting of stockholders following the grant), the awards are forfeited without any payment therefor.forfeited. The Board may, in its discretion, waive this one-year servicevesting condition (in whole or in part) if it deems it to be appropriate and in the best interests of the Company to do so. Upon vesting, shares ofrelating to restricted stock awards are delivered to the directors;director free of restriction; however, vested shares underlying RSUs are not paid delivered
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DIRECTOR COMPENSATION (continued)
to the director until the date that the director leaves the Board. Restricted stock confers voting and dividend rights; dividends accrue during the restricted period and are paid out upon vesting. RSUs do not confer dividend equivalent rights;voting rights, but do confer dividend-equivalents; dividend equivalents accrue during the restricted period and thereafter, , and are paid outdelivered upon settlement. If the awards are forfeited, dividends or dividend equivalents,dividend-equivalents, as applicable, are also forfeited.Board and Committee Meeting Fees
Board and Committee meeting fees are paid for attendance at formal meetings where notice is duly given, a quorum is present, a matter is presented for consideration, the Board or Committee takes action on the matter, and minutes are taken. Meeting fees are paid in cash in arrears at the end of the quarter for which the fees were earned. Directors can choose to receive fees in the form of cash, restricted stock, or RSUs. A director must attend a majority of his or her required Board and committee meetings to receive any meeting fees. The Compensation Committee and Board plan to perform a market analysis of meeting fees (along with other non-employee director compensation features) in April 2018 to ensure we are aligned with market and best practices.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 23
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Directors are reimbursed for out-of-pocket expenses incurred in connection with their Board services.service. The Company does not provide perquisite allowances to non-employee directors.Non-Employee
Director Stock Ownership Requirements
Non-employeePursuant to the Company’s Stock Ownership Guidelines, non-employee directors are required to own stock equal to five times the greater of (i) $400,000 in shares of Common Stock, or (ii) 12,500 shares of Common Stock. To attain the minimum stockholding requirements, non-employeeannual Board cash retainer, which currently amounts to $550,000. Non-employee directors have until the later of: (i) four years after the adoption of the most recent increased minimum stockholding requirement; or (ii) four years of Board service.service before they are required to meet the minimum stockholding requirements. Restricted stock and RSUs held by directors are counted in determining whether the minimum stockholding requirements are satisfied. If a director does not meet the minimum stockholding requirements due solely to a decrease in the value of the Company’s stock, the director is not required to acquire additional shares but is required to retain all shares until the requirements are met. Information regarding the current stock ownership of the Company’s non-employee directors can be found below under “Stock Ownership -— Beneficial Ownership of Directors and Executive Officers and Directors.Officers.”
As of February 26,
2018,2024, all non-employee directors
other than Ms. Wright were
either in compliance with the stock ownership
requirements. Ms. Wright has until February 20, 2022,requirements or were on track to
meetachieve compliance in the
requirements.required time frame.
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DIRECTOR COMPENSATION (continued)
2023 Director Compensation
Table
The following table sets forth non-employee director compensation for the fiscal year ended December 31, 2017. Ms. Wright2023. Because Mr. Shanahan was appointed as President and Chief Executive Officer of the Company on September 30, 2023, his compensation received for services as a non-employee director prior to such appointment are provided below in the “Summary Compensation Table.” Additionally, since Jane P. Chappell joined our Board in 2024 and received no compensation from us for 2023, she is excludedomitted from the table as she was notbelow.
| | Name | | | Fees Earned or Paid
in Cash(1)
($) | | | Stock Awards(2)
($) | | | All Other
Compensation(3)
($) | | | Total
($) | |
| | Stephen A. Cambone | | | | | 110,302 | | | | | | 150,001 | | | | | | | | | | | | 260,303 | | |
| | Irene M. Esteves | | | | | 136,374(4) | | | | | | 150,001 | | | | | | | | | | | | 286,375 | | |
| | William A. Fitzgerald | | | | | 110,302(5) | | | | | | 150,001 | | | | | | | | | | | | 260,303 | | |
| | Paul E. Fulchino | | | | | 131,360(6) | | | | | | 150,001 | | | | | | | | | | | | 281,361 | | |
| | Robert D. Johnson | | | | | 235,646 | | | | | | 150,001 | | | | | | 2,563 | | | | | | 388,210 | | |
| | Ronald T. Kadish | | | | | 125,343 | | | | | | 150,001 | | | | | | | | | | | | 275,344 | | |
| | John L. Plueger | | | | | 110,302(7) | | | | | | 150,001 | | | | | | | | | | | | 260,303 | | |
| | James R. Ray | | | | | 110,302 | | | | | | 150,001 | | | | | | | | | | | | 260,303 | | |
| | Laura H. Wright | | | | | 125,343 | | | | | | 150,001 | | | | | | | | | | | | 275,344 | | |
(1)
Includes annual cash retainer and committee or advisory chair retainers earned for 2023, including any such retainers that were paid in the form of restricted stock or RSUs in 2023 or 2024 by the director’s election in lieu of cash compensation for 2023. Ms. Esteves, Mr. Fitzgerald, Mr. Fulchino and Mr. Plueger elected to defer all or a portion of their annual cash retainers for 2023 as set forth in footnotes (4)-(7).
(2)
Represents the Board until February 20, 2018.Name | Fees Earned or Paid
in Cash
($) | Stock
Awards(1) ($) | All Other
Compensation(2)
($) | Total
($) |
Charles Chadwell | 126,000 | 105,015 | | 231,015 |
Irene M. Esteves |
| 260,025(3) | | 260,025 |
Paul Fulchino |
| 246,015(4) | | 246,015 |
Richard Gephardt | 113,000 | 105,015 | 70,673(6) | 288,688 |
Robert Johnson | 192,500 | 105,015 | | 297,515 |
Ronald T. Kadish | 126,000 | 105,015 | | 231,015 |
John Plueger | | 233,022(5) | | 233,022 |
Francis Raborn | 128,500 | 105,015 | | 233,515 |
| |
(1) Represents the aggregate grant date fair value of the stock awards computed in accordance with authoritative guidance on stock-based compensation accounting issued by the Financial Accounting Standards Board (the “FASB”). On May 8, 2017, each non-employee director received an annual grant of restricted stock or RSUs with an aggregate value of $105,000 based on $53.47 per share, the average of the opening and closing prices of Common Stock on the grant date. As a result of rounding up fractional share amounts, the grants were valued at $105,015. As of February 26, 2018, the balance of each non-employee director’s unvested restricted stock or unvested RSUs was as follows: Mr. Chadwell - 1,964 shares of restricted stock; Ms. Esteves - 4,863 RSUs (includes 2,899 RSUs for deferred retainer, Committee chair, and meeting fees); Mr. Fulchino - 4,601 shares of restricted stock (includes 2,637 shares of restricted stock for deferred retainer, Committee chair, and meeting fees); Mr. Gephardt - 1,964 shares of restricted stock; Mr. Johnson - 1,964 shares of restricted stock; Mr. Kadish - 1,964 shares of restricted stock; Mr. Plueger - 4,358 shares of restricted stock (includes 2,394 shares of restricted stock for deferred retainer and meeting fees); Mr. Raborn - 1,964 shares of restricted stock. (2) The amount of perquisites and other personal benefits has been excluded for all non-employee directors as the total value of each director’s perquisites and other personal benefits was less than $10,000. (3) Includes $155,010 in deferred cash retainer, Committee chair, and meeting fees per Ms. Esteves’ election to receive her cash retainers and meeting fees in RSUs. (4) Includes $141,000 in deferred cash retainer, Committee chair, and meeting fees per Mr. Fulchino’s election to receive his cash retainers and meeting fees in restricted stock. (5) Includes $128,007 in deferred cash retainer and meeting fees per Mr. Plueger’s election to receive his cash retainer and meeting fees in restricted stock. (6) Reflects consulting fees paid to the Gephardt Group for labor consulting services rendered in 2017, as further described under “Director Independence” on page 19. |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 24
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Related Person Transactions
Related Person Transaction Policy and Process
The Board has adopted a written Related Person Transaction Policy (the “RPT Policy”) that can be found on the Company’s website at http://www.investor.spiritaero.com/govdocs. The purposeaggregate grant date fair value of the RPT Policy is to ensure the proper evaluation, approval (or ratification), and reporting of related person transactions. Such transactions are only appropriate if they are fair to, and in the best interests of, the Company.
Under the RPT Policy, a related person transaction is any transaction in which the Company was, is, or will be a participant, where the amount involved exceeds $120,000 and in which a Related Person has, had, or will have a direct or indirect material interest. A Related Person is a director, director nominee, officer, or 5% stockholder, or any of their immediate family members. The existence of a direct or indirect material interest depends upon individual facts and circumstances and is determined by our General Counsel or Governance Committee.
The Governance Committee is responsible for reviewing these transactions and determining whether they are fair to, and in the best interests of, the Company. After review of the relevant facts and circumstances, if the Governance Committee concludes the related person transaction is fair to, and in the best interests of, the Company, it may approve or ratify the transaction.
If the Governance Committee declines to approve or ratify any related person transaction, the Company’s General Counsel will review the transaction, determine whether it should be terminated or amended in a manner that is acceptable to the Governance Committee, and advise the Governance Committee of her recommendation. The Governance Committee will then consider the recommendation at its next meeting. If the General Counsel does not ultimately recommend the transaction to the Governance Committee or if the Governance Committee does not approve the transaction, the proposed transaction will not be pursued; or, if the transaction has already been entered into, the Governance Committee will determine an appropriate course of action with respect to the transaction.
Certain Related Person Transactions
Below are the transactions that occurred between January 1, 2017, and February 26, 2018, and fall within the definition of related person transaction in the RPT Policy or under Item 404 of Regulation S-K. With respect to each transaction, the Governance Committee reviewed the transactionstock awards computed in accordance with authoritative guidance on stock-based compensation accounting issued by the RPT Policy and approved itFinancial Accounting Standards Board (the “FASB”). On May 8, 2023, each non-employee director received an annual grant of 6,120 shares of restricted stock or RSUs with an aggregate value of $150,001 based on $24.51 per share, the closing price of Common Stock on the basisgrant date. As of December 31, 2023, each non-employee director’s aggregate number of unvested restricted stock or RSUs was as follows: Dr. Cambone: 6,120 shares of restricted stock; Ms. Esteves: 11,669 RSUs (includes 5,549 RSUs received in lieu of 2023-2024 term annual cash and committee chair retainers); Mr. Fitzgerald: 10,608 RSUs (includes 4,488 RSUs received in lieu of 2023-2024 term annual cash retainer); Mr. Fulchino: 11,465 shares of restricted stock (includes 5,345 shares of restricted stock received in lieu of 2023-2024 term annual cash and committee chair retainers); Mr. Johnson: 6,120 shares of restricted stock; Mr. Kadish: 6,120 shares of restricted stock; Mr. Plueger: 10,608 RSUs (includes 4,488 RSUs received in lieu of 2023-2024 term annual cash retainer); Mr. Ray: 6,120 RSUs; and Ms. Wright: 6,120 shares of restricted stock. Note that it was fairany RSUs or shares of restricted stock received in lieu of annual cash and committee chair retainers described in this footnote were granted in 2023 and relate to retainers earned over the director’s 2023-2024 annual term, which covers portions of two calendar years, and that upon any termination of services of the director during the outstanding term, the equity award will be canceled, and a cash payment will be made therein that is equal to the cash amounts earned by the director through the date of such termination of service.
(3)
For Mr. Johnson, amount reflects personal travel costs.
(4)
Includes $136,374 in annual cash and committee chair retainers that were paid in the form of 5,176 RSUs for Ms. Esteves pursuant to her election. The RSUs were granted to Ms. Esteves in part on May 9, 2022, and in part on May 8, 2023, and are included in this disclosure because the best interestsRSUs were granted in lieu of cash payments earned for service in 2023.
(5)
Includes $110,302 in annual cash retainer that was paid in the Company.form of 4,187 RSUs for Mr. Fitzgerald pursuant to his election. The RSUs were granted to Mr. Fitzgerald in part on May 9, 2022, and in part on May 8, 2023, and are included in this disclosure because the RSUs were granted in lieu of cash payments earned for service in 2023.
(6)
Includes $131,360 in annual cash retainer and committee chair retainers that were paid in the form of 4,986 shares of restricted stock for Mr. Fulchino pursuant to his election. The restricted stock was granted to Mr. Fulchino in part on May 9, 2022, and in part on May 8, 2023, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2023.
(7)
Includes $110,302 in annual cash retainer that was paid in the form of 4,187 RSUs for Mr. Plueger pursuant to his election. The RSUs were granted to Mr. Plueger in part on May 9, 2022, and in part on May 8, 2023, and is included in this disclosure because the RSUs were granted in lieu of cash payments earned for service in 2023.
Related Person
| Facts
|
Anthony Kondrotis, husband of Krisstie Kondrotis (SVP, Defense Programs & Business Development)
Spirit AeroSystems2024 Proxy Statement | Mr. Kondrotis was employed by the Company as Vice President, Unclassified Defense Programs, for a portion of 2017. He left the Company on June 30, 2017. In 2017, Mr. Kondrotis received $1,155,444 in compensation from Spirit, which included salary, severance pay, a short-term incentive attributable to 2016 performance, and the value of vesting long-term incentives that were granted in prior years. Mr. Kondrotis was granted equity awards in January 2017, but all such awards were forfeited upon his departure from the Company.
|
Richard Gephardt
| As described under “Board and Governance Matters - Director Independence” on page 19, above, the Company entered into an agreement with the Gephardt Group for labor consulting services in 2018, which provides for the payment of a total of $240,000 in consulting fees to the Gephardt Group in 2018.
| 30 | |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 25
Beneficial Ownership of Directors and Executive Officers
The following table sets forth, as of February 26, 2018,2024, the shares of Common Stock beneficially owned by each director and named executive officer, individually and by all the Company’sas a group. Our directors and executive officers as a group. Individually and together, theybeneficially own less than 1%1.0% of our Common Stock. The table also includes information about RSUs credited toStock both individually and in the accounts of certain non-employee directors.aggregate. For purposes of the table, shares are considered to be beneficially owned if the person, directly or indirectly, has sole or shared voting or investment power with respect to the shares. In addition, a person is deemed to beneficially own shares if that person has the right to acquire such shares within 60 days after February 26, 2018.2024.
| | Name | | | Common
Stock
Beneficially
Owned | | | RSUs Vesting
Within 60
Days of
Record Date | | | Time-Based
Restricted
Stock(1) | | | Total Common
Stock
Beneficially
Owned | | | | Unvested
RSUs(2) | | | Total Common
Stock Beneficially
Owned Plus
Unvested RSUs | |
| | DIRECTORS
Stephen A. Cambone | | | | | 13,249 | | | | | | 1,356 | | | | | | 6,120 | | | | | | 20,725 | | | | | | | — | | | | | | 20,725 | | |
| | Jane P. Chappell | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | |
| | Irene M. Esteves | | | | | — | | | | | | 44,678 | | | | | | — | | | | | | 44,678 | | | | | | | 11,669 | | | | | | 56,347 | | |
| | William A. Fitzgerald | | | | | — | | | | | | 10,539 | | | | | | — | | | | | | 10,539 | | | | | | | 10,608 | | | | | | 21,147 | | |
| | Paul E. Fulchino | | | | | 40,791 | | | | | | — | | | | | | 11,465 | | | | | | 52,256 | | | | | | | — | | | | | | 52,256 | | |
| | Robert D. Johnson | | | | | 22,416 | | | | | | — | | | | | | 6,120 | | | | | | 28,536 | | | | | | | — | | | | | | 28,536 | | |
| | Ronald T. Kadish | | | | | 33,354 | | | | | | — | | | | | | 6,120 | | | | | | 39,474 | | | | | | | — | | | | | | 39,474 | | |
| | John L. Plueger | | | | | 35,711 | | | | | | 13,026 | | | | | | — | | | | | | 48,737 | | | | | | | 10,608 | | | | | | 59,345 | | |
| | James R. Ray, Jr. | | | | | — | | | | | | 5,625 | | | | | | — | | | | | | 5,625 | | | | | | | 6,120 | | | | | | 11,745 | | |
| | Laura H. Wright | | | | | 18,109 | | | | | | — | | | | | | 6,120 | | | | | | 24,229 | | | | | | | — | | | | | | 24,229 | | |
| | EXECUTIVE OFFICERS
Patrick M. Shanahan | | | | | 6,022 | | | | | | — | | | | | | 6,120 | | | | | | 12,142 | | | | | | | 495,662 | | | | | | 507,804 | | |
| | Thomas C. Gentile III(3) | | | | | 299,477 | | | | | | — | | | | | | — | | | | | | 299,477 | | | | | | | — | | | | | | 299,477 | | |
| | Mark J. Suchinski | | | | | 47,525 | | | | | | — | | | | | | — | | | | | | 47,525 | | | | | | | 43,391 | | | | | | 90,916 | | |
| | Samantha J. Marnick(4) | | | | | 76,555 | | | | | | — | | | | | | — | | | | | | 76,555 | | | | | | | — | | | | | | 76,555 | | |
| | Duane F. Hawkins(5) | | | | | 79,369 | | | | | | 17,211 | | | | | | — | | | | | | 96,580 | | | | | | | — | | | | | | 96,580 | | |
| | William E. Brown | | | | | 48,781 | | | | | | — | | | | | | — | | | | | | 48,781 | | | | | | | 25,217 | | | | | | 73,998 | | |
| | Scott M. McLarty | | | | | 25,693 | | | | | | — | | | | | | — | | | | | | 25,693 | | | | | | | 20,850 | | | | | | 46,543 | | |
| | Alan W. Young(6) | | | | | 32,803 | | | | | | 2,500 | | | | | | — | | | | | | 35,303 | | | | | | | 25,234 | | | | | | 60,537 | | |
| | All current executive officers and directors as a group (24 persons) | | | | | 892,354 | | | | | | 116,282 | | | | | | 42,065 | | | | | | 1,050,701 | | | | | | | 730,292 | | | | | | 1,780,993 | | |
Name | Common Stock Beneficially Owned | | Shares Vesting in 60 Days of Record Date | Time-Based and Performance- Based Restricted Stock(1) | Total Common Stock Beneficially Owned | RSUs(2) | Total Common Stock Beneficially Owned Including RSUs |
DIRECTORS Charles Chadwell | 21,864 | | | 1,964 | 23,828 | 4,884 | 28,712 |
Irene M. Esteves | | | | | | 12,228 | 12,228 |
Paul Fulchino | 54,504 | | | 4,601 | 59,105 | | 59,105 |
Richard Gephardt | 7,287 | | | 1,964 | 9,251 | 5,790 | 15,041 |
Robert Johnson | 12,278 | | | 1,964 | 14,242 | | 14,242 |
Ronald T. Kadish | 26,170 | | | 1,964 | 28,134 | | 28,134 |
John Plueger | 2,000 | | | 4,358 | 6,358 | 13,026 | 19,384 |
Francis Raborn | 29,644 | | | 1,964 | 31,608 | | 31,608 |
Laura Wright | | | | 243(3) | 243 | | 243 |
EXECUTIVE OFFICERS Thomas C. Gentile, III | 27,856 | | 32,666 | 141,491 | 202,013 | | 202,013 |
Sanjay Kapoor | 64,411 | | | 74,919 | 139,330 | | 139,330 |
Samantha Marnick | 30,976 | | | 39,052 | 70,028 | | 70,028 |
Duane F. Hawkins | 22,501 | | | 40,023 | 62,524 | | 62,524 |
Michelle J. Lohmeier | 19,998 | | | 29,643 | 49,641 | | 49,641 |
All directors and executive officers as a group (19 persons) | 473,064 | | 32,666 | 455,836 | 961,56 6 | 35,928 | 997,49 4 |
| |
(1) With respect to executive officers, includes unvested time-based and performance-based restricted stock awards that are forfeitable until the vesting date or performance certification date, as applicable. Performance-based restricted stock awards are included in the table at target amounts. With respect to directors, includes unvested restricted stock awards that are forfeitable until the vesting date. Such awards are included herein as they confer voting rights and, therefore, are deemed to be beneficially owned under Rule 13d-3(a)(1) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). (2) RSUs vest after one year of service as a director. However, RSUs are not payable until the director’s termination of service. At such time, the RSUs will be paid at the Board’s option in cash or shares of Common Stock based on the market value of Common Stock upon termination of service. All RSUS reflected are currently vested except for 4,863 RSUs held by Ms. Esteves. (3) Representing a grant of 243 shares of restricted stock to Mr. Wright on February 20, 2018, in connection with her election to the Board. |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 26
Back(1)
For directors: includes unvested time-based restricted stock awards but excludes RSUs. RSUs do not confer voting rights until they are settled upon the director’s departure, as described in footnote (2) below. This column does not include any time-based or performance-based restricted stock units as they do not confer voting rights.
(2)
For directors: RSUs vest after one year of service as a director. However, RSUs are not payable until the director’s termination of service. At such time, the RSUs will be settled, at the Board’s option, in cash or shares of Common Stock based on the market value of Common Stock upon termination of service. Because of this, all vested RSUs are included under the “RSUs Vesting within 60 days of Record Date” column. The RSUs included under the “RSUs” column are currently unvested. For executives: reflects time-based RSUs granted in 2022,2023 and 2024 that were still unvested. Does not include performance-based restricted stock units.
(3)
Mr. Gentile was appointed to Contentsthe position of President and Chief Executive Officer on August 1, 2016, and ceased to serve in the position on September 30, 2023. However, Mr. Gentile vested in 91,978 of his restricted stock units in February 2024, pursuant to the terms of his separation agreement and based on satisfaction of certain post-termination covenants.
(4)
Ms. Marnick was appointed to the position of Executive Vice President and Chief Operating Officer and President of Commercial on July 28, 2020, and ceased to serve in the position on November 27, 2023. For Ms. Marnick, values shown assume no transactions have taken place after Ms. Marnick’s receipt of severance benefits following her departure from the position.
(5)
Mr. Hawkins reached retirement eligibility for time-based restricted stock units in 2020 and, accordingly, all outstanding time-based restricted stock units are included under the “RSUs Vesting within 60 days of Record Date” column.
| | 31 | | | Spirit AeroSystems2024 Proxy Statement | |
STOCK OWNERSHIP (continued)
(6)
The amounts reflected as beneficially owned by Mr. Young also include 3,103 shares held by certain family members, including his spouse, and the shares reflected as subject to Mr. Young’s RSUs include 2,806 RSUs held by his spouse. Mr. Young disclaims beneficial ownership of all such shares and RSUs held by these family members, except to the extent of any pecuniary interest therein.
Beneficial Ownership of Major Stockholders
The following table sets forth information with respect to beneficial owners of more than 5% of our outstanding securitiesthe Common Stock as of February 26, 2018.2024. The information set forth below is based on ownership statements filed with the SEC pursuant to Section 15(d) or 13(g) of the Exchange Act.
| | Name | | | Amount of Shares
Beneficially Owned | | | Percentage of
Common Stock | | | Sole
Voting
Shares | | | Shared
Voting
Shares | | | Sole
Investment
Shares | | | Shared
Investment
Shares | |
| | The Vanguard Group(1)
100 Vanguard Blvd.
Malvern, PA 19355 | | | | | 10,844,853 | | | | | | 9.35% | | | | | | — | | | | | | 38,511 | | | | | | 10,702,407 | | | | | | 142,446 | | |
| | T. Rowe Price Associates, Inc.(2)
100 E. Pratt Street
Baltimore, MD 21202 | | | | | 10,018,729 | | | | | | 8.6% | | | | | | 4,141,144 | | | | | | — | | | | | | 10,018,729 | | | | | | — | | |
| | FMR LLC(3)
245 Summer Street
Boston, MA 02210 | | | | | 8,407,243 | | | | | | 7.23% | | | | | | 8,407,243 | | | | | | — | | | | | | 8,407,243 | | | | | | — | | |
| | Blackrock, Inc.(4)
55 E. 52nd St.
New York, NY 10005 | | | | | 6,948,851 | | | | | | 6.1% | | | | | | 6,603,047 | | | | | | — | | | | | | 6,948,851 | | | | | | — | | |
| | Hill City Capital Master Fund LP(5)
121 High St. 3rd Floor
Boston, MA 02110 | | | | | 5,700,000 | | | | | | 5.4% | | | | | | 5,700,000 | | | | | | — | | | | | | 5,700,000 | | | | | | — | | |
Name | Amount of Shares Beneficially Owned | Percentage of Common Stock | Sole
Voting
Shares | Shared
Voting
Shares | Sole Investment Shares | Shared Investment Shares |
5% Stockholders | | | | | | |
The Vanguard Group(1) 100 Vanguard Blvd. Malvern, PA 19355 | 10,790,865 | 9.53% | 86,917 | 22,934 | 10,690,472 | 100,393 |
Blackrock, Inc.(2) 55 E. 52nd St. New York, NY 10005 | 7,616,743 | 6.73% | 6,840,882 | | 7,616,743 | |
Scopia Capital Management LP(3) Scopia Management, Inc. Matthew Sirovich Jeremy Mindich 152 W. 57th St., 33rd Floor
New York, NY 10019 | 5,885,181 | 5.20% | | 5,885,181 | | 5,885,181 |
(1) Information is based on an amended Schedule 13G filed with the SEC on February 12, 2018. (2) Information is based on a Schedule 13G filed with the SEC on February 1, 2018. (3) Information is based on an amended Schedule 13G filed with the SEC on February 14, 2018. |
(1)
Information is based on an amended Schedule 13G filed with the SEC on February 13, 2024.
(2)
Information is based on an amended Schedule 13G filed with the SEC on February 14, 2024.
(3)
Information is based on a Schedule 13G filed with the SEC on February 9, 2024.
(4)
Information is based on an amended Schedule 13G filed with the SEC on January 29, 2024.
(5)
Information is based on an amended Schedule 13G filed with the SEC on February 13, 2024.
Delinquent Section 16(a)
Beneficial Ownership Reporting ComplianceSection 16(a) of the Exchange Act requires directors, executive officers, and persons who own more than 10% of any registered class of a company’s equity securities to file beneficial ownership reports with the SEC. Such reports are filed on Form 3, Form 4, and Form 5 under the Exchange Act, as appropriate. Reports
To the Company’s knowledge, based solely on a review of
these reports
filed under Section 16(a) of the Exchange Act and
thecertain reporting persons’ written representations, the Company believes that all filings required to be made by reporting persons holding
the Company’s stockCommon Stock were timely filed in accordance with Section 16(a)
of the Exchange Act in
2017,2023, except for
twoMr. Plueger’s Form
4s4 due on May 10, 2023, which was missed due to technical difficulties. A Form 4 was filed for Mr.
Johnson (the “Late Forms”). The Late Forms regarded a sale of 500 sharesPlueger on
June 1, 2017, and a sale of 500 shares on September 1, 2017. The Late Forms were not filed on a timely basis because the appropriate staff of the Company did not receive information about the sales until several months after they occurred. The Late Forms were filed on December 5, 2017.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 27
Back to Contents
May 11, 2023.
| | Spirit AeroSystems2024 Proxy Statement | | | 32 | |
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
Overview
Stockholders
| | PROPOSAL 2 | | | ADVISORY VOTE ON EXECUTIVE COMPENSATION | |
We are being asked to approve, on anseeking advisory basis,approval of the compensation of theour named executive officers or NEOs,(“NEOs”), as set forth underin the headingfollowing “Compensation Discussion and Analysis.”Analysis” section. This vote, which is referred to as the “say-on-pay” vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s NEOs and the objectives, policies, and practices described in this Proxy Statement. We conduct a say-on-pay vote annually. The Board believes that our executive compensation as disclosed in this Proxy Statement, alignspromotes stockholder interests by providing a strong link between pay and performance consistent with practices across the Company’s peer group pay practices and furthers the Company’s compensation objectives.group.
Accordingly, the Board asks the Company’s stockholders to vote “FOR”“FOR” the following resolution at the Annual Meeting: “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed by the Company pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table, and other related tables and disclosures.” The Board and Compensation Committee will review the voting results of Proposal 2 and take them into consideration when making future decisions regarding executive compensation.
Voting Standard
The affirmative vote
Based on the voting results at the Company’s 2023 Annual Meeting of a majority of stockholders present, in person or by proxy, will constitute the stockholders’ non-binding approvalStockholders with respect to Proposal 2.With respectthe frequency of stockholder advisory votes to Proposal 2, a stockholder mayapprove the compensation of the Company’s Named Executive Officers (the “Frequency Vote”), the Company decided to include an advisory vote “FOR,” “AGAINST,” or “ABSTAIN.” Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” Proposal 2. However, because abstentions and broker non-votes will be counted as present atto approve the compensation of its Named Executive Officers in its proxy materials on an annual basis. The next required Frequency Vote is scheduled for the Company’s 2029 Annual Meeting they will have the effect of votes “AGAINST” Proposal 2.
Under the rules of the NYSE, brokers are prohibited from giving proxies to vote on executive compensation matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to Proposal 2 if you want your broker to vote your shares on the matter.
Stockholders. ✓
The Board recommends you vote FOR“FOR” the approval ofresolution approving the compensation of our named executive officers.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 28
| | | Voting Standard | | |
| | | The affirmative vote of a majority of votes cast, in person or by proxy, will constitute the stockholders’ non-binding approval with respect to Proposal 2. A stockholder may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to Proposal 2. Any shares not voted (whether by abstention, broker non-vote, or otherwise) will have no impact on this Proposal 2. Before voting on this proposal, stockholders are encouraged to read and consider the proposal as described herein. Proposal 2 is considered a non-routine matter under NYSE rules. Under the NYSE rules, brokers are prohibited from giving proxies to vote on non-routine matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to Proposal 2 if you want your broker to vote your shares on the matter. | | |
| | 33 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION &AND ANALYSIS
This Compensation Discussion and Analysis makes reference to financial data derived from our financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) and certain other financial data prepared using non-GAAP components. For a description of how such non-GAAP measures are calculated, as well as a reconciliation to the most comparable GAAP measures, see “Non-GAAP Financial Measures” set forth in Appendix A.
2023 Named Executive Officers
This section describes the 20172023 compensation program and plans for our NEOs.
Due to quality performance during 2023, the Compensation Committee exercised negative discretion on the Quality component of the short-term incentive program notwithstanding actual metric achievement. This resulted in no NEO payouts for 2023 under either the short-term or long-term performance programs, except for Mr. Hawkins who was dedicated to the Defense Segment and received a partial short-term incentive payout based on that segment’s performance.
In addition, for the 2024 short-term incentive program, the Compensation Committee has increased the weighting of the Quality component to 60% of the Company score.
Our 20172023 NEOs are:were:
|  |  |  |  |
THOMASC.GENTILE,III
President and Chief Executive Officer | SANJAYKAPOOR
Executive
|
| | Mark J. Suchinski | | | Senior Vice President and Chief Financial Officer | SAMANTHAMARNICK
Executive
|
| | Scott M. McLarty | | | Senior Vice President, Airbus & Regional/Business Jets Programs | |
| | William E. Brown(2) | | | Senior Vice President, Quality | |
| | Alan W. Young | | | Senior Vice President and Chief AdministrationProcurement Officer | DUANE
|
| | Duane F.HAWKINS Hawkins(3) | | | Senior Advisor | |
| | Thomas C. Gentile III(4) | | | Former President and Chief Executive Officer | |
| | Samantha J. Marnick(5) | | | Former Executive Vice President/General Manager, Boeing, Defense, Business/Regional Jet Programs,President, Chief Operating Officer, and Global Customer SupportPresident, Commercial | MICHELLEJ.LOHMEIER
Senior Vice President/General Manager, Airbus Programs
|
(1)
Mr. Shanahan was appointed President and Chief Executive Officer of the Company, effective September 30, 2023.
(2)
Mr. Brown is retiring as an executive officer effective March 17, 2024, but will continue as an employee of the Company to facilitate an orderly transition through March 17, 2025, or such other date mutually agreed.
(3)
Mr. Hawkins retired as an executive officer effective April 1, 2023, but continues as an employee of the Company to facilitate an orderly transition through April 1, 2024, or such other date mutually agreed.
| | Spirit AeroSystems2024 Proxy Statement | | | 34 | |
SPIRIT AEROSYSTEMS - 2018
COMPENSATION DISCUSSION AND ANALYSIS (continued)
(4)
Mr. Gentile separated employment with the Company effective September 30, 2023.
(5)
Ms. Marnick separated employment with the Company effective November 27, 2023.
For a full description of the compensation we pay to our NEOs, please review this section and the related compensation tables carefully.
Say on Pay Vote and Stockholder Engagement
We are pleased that the Company’s say on pay proposal at our 2023 Annual Meeting of Stockholders received more than 91% support, which is a significant improvement over prior years. In 2023 we reached out to stockholders representing nearly 70% of the Company’s outstanding shares as part of our annual engagement program. Through these engagements, some of which included our CEO and the Chair of our Governance Committee, we received valuable feedback on a variety of topics. There were three key themes in this feedback relating to executive compensation, which are set forth below. The Board and Compensation Committee consider this feedback when making decisions. See also “Stockholder Engagement” above.
| | What We Heard | | | How We Are Responding | |
| | Quality is paramount. | | | ■
Due to quality performance during 2023, the Compensation Committee exercised negative discretion on the Quality component of the short-term incentive program notwithstanding actual metric achievement. ■
For our 2024 annual cash incentive, we are developing revised quality measures and have substantially increased the weighting for the Quality metric to 60% of the Company total. ■
We are working to support our team’s quality performance by ensuring they have the resources they need to do the best they can, including through the application of human-assisted technology and automation. | |
| | Finding the right permanent CEO and ensuring a smooth transition is a top priority. | | | ■
The Board is highly focused on the permanent CEO search. We have engaged an external search firm and identified key attributes, including: ■
Results-driven leader ■
Quality and lean operations centric ■
Customer mindset ■
Ability to transform culture | |
| | Board succession continues to be an important priority. | | | ■
Following the Annual Meeting, Mr. Fitzgerald will succeed Mr. Fulchino as Chair of the Compensation Committee. Mr. Fulchino will remain on the Compensation Committee to ensure a smooth transition. ■
We are excited to have added Jane Chappell to our Board. | |
How Performance Determines Pay
Mr. Shanahan has stepped into the CEO role at a critical time for Spirit. A variety of challenges over recent years have continued to put pressure on the normalization of operations. Mr. Shanahan is uniquely situated to lead Spirit at this critical time while the Board continues its search for a permanent CEO. His extensive experience spanning decades at Boeing and top leadership at the Department of Defense give him an exceptionally deep understanding of the industry and our products. As a result, Mr. Shanahan was awarded a compensation package that reflects these contributions, the primary elements of which are set forth below.
| | 35 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | | | | Base Salary
(Annualized)
($) | | | RSU Grant
($) | |
| | Patrick M. Shanahan, President and CEO | | | | $ | 2,000,000 | | | | | $ | 8,000,000(1) | | |
(1)
Mr. Shanahan received a one-time grant of RSUs under the LTIP maintained pursuant to and in accordance with the terms and conditions of the OIP, with a grant date value of approximately $8,000,000 (the “RSU Grant”). The grant date value of the RSU Grant is based on the number of shares subject to the grant multiplied by $16.14, the per share closing price of our Common Stock on Friday, September 29, 2023.
Mr. Shanahan’s compensation package consists primarily of stock compensation to drive focus on market performance. The Compensation Committee carefully considered his unique position as interim CEO during this critical transition period. The RSU Grant was intentionally structured in light of the interim nature of his role, making more traditional compensation practices inappropriate. The Board expects to continue to benefit from Mr. Shanahan’s experience following the installment of a permanent CEO. Mr. Shanahan will bring a further enhanced perspective to the Board at that time, having directly run the company as CEO.
2023 Incentive Programs
In 2023, our Compensation programs were focused on fundamental financial performance, particularly cash performance, consistent with the feedback we received from our stockholders. For 2023 grants under our long-term performance incentive program, we added a Free Cash Flow (“FCF”) metric and a Revenue Growth (“RG”) metric. For our 2023 annual cash incentive, we primarily used financial performance metrics and introduced segment specific metrics as well. Our 2023 incentive programs included the following:
| | 2023 Annual Cash Incentive | | | 2023 Long-Term Incentive | |
| | ■
No individual performance component. ■
For segment-dedicated individuals, the incentive is weighted 50% company metrics and 50% segment metrics. For non-segment-dedicated individuals the weighting is 100% company metrics. ■
Company metrics: ■
Free Cash Flow (40%) ■
EBIT (20%) ■
Revenue (20%) ■
Quality (20%) ■
Segment (Commercial, Defense & Space, and Aftermarket) metrics: ■
Segment Profit (80%) ■
Segment Revenue (20%) ■
Updated our primary compensation benchmarking peer group reflecting market dynamics and the most appropriate peer companies. | | | ■
50% time-based and 50% performance-based (adjusted in 2022 from prior use of 60% time-based and 40% performance-based) ■
Metrics and weightings for the performance-based component: ■
Relative TSR (50%) ■
Free Cash Flow (25%) ■
Revenue Growth (25%) ■
Maintained a secondary peer group specific to relative TSR to maximize effectiveness of the metric as an incentive tool. | |
Looking Forward: 2024 Incentive Programs
For 2024 grants under our long-term performance incentive program, we have simplified the program with the use of relative TSR as the only metric. This is intended to align management focus with stockholder interests. For our 2024 annual cash incentive, we are developing revised quality measures and have substantially increased the weighting for the Quality metric to 60% of the Company score. We also expect to use similar financial metrics as in prior years.
| | Spirit AeroSystems2024 Proxy Statement | | | 36 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | 2024 Annual Cash Incentive | | | 2024 Long-Term Incentive | |
| | ■
Increased weighting of Quality metric to 60% of total Company score ■
Other details not final as of the date of this Proxy Statement, but to include: ■
Revised quality measures ■
Similar financial metrics as used in prior years | | | ■
50% time-based and 50% performance-based. ■
Relative TSR (100%) for the performance-based component | |
Executive Compensation OverviewOurPlan Design
The objectives of our executive compensation program is designed to enable us to programs are to:
■
attract, retain, and incentivize executive officers who are able to deliver short-termmotivate highly qualified executives;
■
promote absolute performance resultsthrough the use of structured incentives;
■
align pay with relative performance by developing and longer-term stockholder value. The following highlightsbenchmarking against an appropriate peer group (see “Peer Benchmarking”);
■
link the key items the Compensation Committee considers in the development, review, and approval of the NEOs’ compensation.Our Compensation Objectives
The Company’s executive compensation program is designed to:
1.
Attract,retain,andmotivatehighlyqualifiedexecutiveofficers. The Company aims to deliver compensation that is market-competitive and designed to retain qualified, experienced, and passionate executives in the competitive aerospace and defense industry.
2.
Reward/pay-for-performance. A substantial portion of total compensation for executive officers should be variable and deliver rewards based on Company and individual performance. Variable compensation motivates executives to perform. Company performance is measured against established metrics. Individual performance is measured against pre-established objectives and contributions to Company successes.
3.
Align interests of executive officersour NEOs with those of our stockholders, including by using TSR as a compensation incentive metric; and
■
manage appropriate risk-taking through the Company’s stockholders. In order to align interestsuse of executive officers with stockholders, metrics for determining Company performance should be aligned to the Company’s financial resultsmeasures, payment caps, clawback policies, and the creation of stockholder value. The Company’s variable compensation should focus on the achievement of financial targets such as revenue, earnings, free cash flow, and total shareholder return.other tools.
4.
Ensurecompensationdoesnotencourageinappropriaterisktaking. We mitigate risk taking by balancing short- and long-term incentives, placing caps on potential payments, incorporating challenging performance goals, diversifying the metrics we use to measure performance, enforcing our stock ownership requirements, and maintaining our clawback policy.
| | 37 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | What We Do | | | | | | What We Don’t Do | |
| | | | | Pay-for-Performance. A significant portion of direct NEO pay on average is tied to performance results | | | | | | | | | Ongoing Accruals. No ongoing accruals under defined-benefit Supplemental Executive Retirement Plan | |
| | | | | Peer Benchmarking. Compensation packages are benchmarked against peers through relative metrics | | | | | | | | | Share Recycling. No share recycling (other than in the context of forfeited shares) | |
| | | | | Limit Awards. Payout of annual cash incentive and performance-based restricted stock unit awards is capped at 200% | | | | | | | | | Hedging, Pledging, and Shorts. No short selling, pledging, or hedging Company stock | |
| | | | | Performance Weighting. Long-term incentive grants are weighted 50% performance and 50% time-based since 2022 | | | | | | | | | Enhanced Benefit Plans. No enhanced health and welfare benefit plans for executives | |
| | | | | Equity Incentives. Long-term incentives are paid entirely in Common Stock | | | | | | | | | Guaranteed Payouts. No guaranteed payouts on performance-based equity compensation (except for upon death or disability) | |
| | | | | Clawback Policy. The Company’s short- and long-term incentive awards are subject to clawback provisions | | | | | | | | | Dividends on Unvested Shares. No dividend payments on time- or performance-based restricted stock unit awards until they vest | |
| | | | | Stock Ownership Requirements. Our executives are required to maintain stock ownership measured as a multiple of base salary (5x for CEO, 3x for EVP/SVP, 1x for VP) | | | | | | | | | Tax Gross-Ups. No tax gross-ups related to a change in control | |
| | | | | Annual Say-on-Pay. Stockholders cast an annual advisory say-on-pay vote | | | | | | | | | Single-Trigger Change in Control. No payment of cash severance or vesting of equity awards solely upon a change in control (such benefits are provided upon a qualifying termination following a change in control) | |
| | | | | Independent Consultant. The Compensation Committee uses an independent compensation consultant and assesses independence annually | | | | | | | | | No “Evergreen” Provisions in Omnibus Incentive Plan. We have no “evergreen” provisions in our stockholder-approved incentive plan that would allow continuous share pool refreshment | |
| | | | | Rigorous Targets. Performance targets are rigorous and tied to key measures of profitability and performance | | | | | | | | | | |
Setting Target Pay
The Compensation Committee reviews and approves the target pay levels for our NEOs with respect to salary, our annual cash incentive, and our long-term incentives. In setting these levels, the Compensation Committee works with management and external advisors, including our independent compensation consultant, and reviews the following:
■
the Company’s compensation objectives;
■
peer group compensation levels and broad survey samplesdata provided by the Compensation Committee’s independent compensation consultant. In addition, the Compensation Committee reviews the individualconsultant, along with other market data;
■
each NEO’s position responsibilities, goals, and challenges with respect to the position in question, along with challenges; and
■
the experience, prior performance, and potential of each NEO.
The Company generally sets total annual direct compensation (consisting of base salary, the annual cash incentive, and long-term incentives) of the NEOs at a target level that is at or around the market median, subject to individual in question.circumstances and exceptions. Additional information about the Company’s peer group and compensation setting process can be found under “The Compensation Decision-Making Process,” and “Benchmarking” sections below.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 30
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the “Peer Benchmarking” section.
Aligning Pay with Performance
The
Company’s success depends largely on2023 compensation structure (excluding perquisite, “other” compensation, and changes in pension value) for our CEO and the
contributions of its executives and their efforts to deliver strong business results and increase stockholder value. The Company uses a balance of short- and long-term incentives as well as cash and non-cash compensation to rewardother NEOs
for their rolesis described in
meeting Company objectives. For either short- or long-term incentives, executive officers have the
opportunity to earn in excess of market median levels when performance exceeds expectations. Conversely, if performance falls below expectations, the incentives pay below target levels, if at all.In 2017, we linked pay with performance through the following variable pay:
•
AnnualCashIncentive: a short-term incentive, which is paid in cash annually based on Company and individual performance. Company performance goals include revenue, earnings before interest and taxes, adjusted for certain items (“Annual EBIT”), and annual free cash flow, adjusted for certain items (“Annual FCF”), each over a one-year period.
•
Time-BasedRestrictedStock: a long-term incentive consisting of an award of restricted Common Stock vesting ratably over three years. While vesting is not tied to performance, the increase or decrease in value that the executive receives between the award’s grant date and vesting date is tied to stock performance.
•
Performance-Based Restricted Stock: a long-term incentive consisting of an award of restricted Common Stock that will be earned at the end of a three-year performance period based on the Company’s total shareholder return relative to its peer group (“TSR”) and free cash flow as a percentage of revenue (“FCF Percentage”) over such period.
Additional information on our incentives can be found under “2017 Compensation Program Elements”chart below.
2017 Target Pay Mix
A substantialsignificant portion of our 2017 pay mix for our NEOs was at-risk, variable compensation. As the charts below demonstrate, 85% of our CEO’s direct compensation was variable, while 76% of the o ther NEOs’ direct compensation is delivered through
| | Spirit AeroSystems2024 Proxy Statement | | | 38 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
performance-based pay. Our interim CEO’s compensation was variable. Generally, the portion of target annual compensation that is variable increasesintentionally structured with the NEOs’ position leveluse of time-based shares in light of the unique nature of the interim role and impact on the Company’s performance, providing significantly more upside potentialof Mr. Shanahan’s substantial value and downside risk for more senior positions as these executives have greater influence on the Company’s performance as a whole.experience. CEO PAY MIX15%Salary39% Time-Based Restricted Stock20% Annual Cash Incentive26% Performance-Based Restricted Stock85% At-Risk/VariableOTHER NEO PAY MIX31% Time-Based Restricted Stock24% Salary24% Annual Cash Incentive21% Performance-Based Restricted Stock24% Annual Cash Incentive76% At-Risk/Variable
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 31
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Our Pay Metrics
The table below explains the metrics we useand inputs used to measure performance and determine 2023 compensation. We strive to design incentive plans that challenge our executives and drive achievement, but are also achievable at target performance, with respectless frequent achievement of maximum performance and below threshold performance.
| | Program | | | Metric/Input | | | Company
Weight(1) | | | Segment
Weight(1) | | | Scale | | | Rationale for Metric | |
| | Annual Cash Incentive —
Company Performance
| | | Company
Free Cash Flow(2) | | | 40% | | | 20% | | | Maximum: $75 million
Target: $0 million
Threshold: ($100 million) | | | Managing cash is a key priority for the Company as the commercial aviation recovery continues. Our stockholders have expressed strong support for incentive metrics focused on cash generation. | |
| | Company
EBIT(2) | | | 20% | | | 10% | | | Maximum: $278 million
Target: $203 million
Threshold: $98 million | | | EBIT improvement supports long- and short-term goals and reflects the Company’s ability to operate profitably. | |
| | Company
Revenue | | | 20% | | | 10% | | | Maximum: $6.699 billion
Target: $6.549 billion
Threshold: $6.274 billion | | | Revenue achievement reflects our ability to deliver on commercial aircraft production rate increases. | |
| | Company
Quality | | | 20% | | | 10% | | | Maximum: 2.0
Target: 1.0
Threshold: 0.5 | | | Quality is critical to our business. The Compensation Committee exercised negative discretion on the Quality Index Score for 2023 and is substantially increasing its weighting for 2024. | |
| | Defense Segment Profit(1) | | | — | | | 40% | | | Maximum: $112 million
Target: $101 million
Threshold: $86 million | | | Incentivizes sound decision-making and operational efficiency. | |
| | Defense Segment Revenue(1) | | | — | | | 10% | | | Maximum: $827 million
Target: $797 million
Threshold: $747 million | | | As with Company revenue, achievement reflects the ability of our Defense Segment to execute program performance through growth. | |
| | Long-Term Incentive Program | | | Stock Price (Time-Based RSUs) | | | 50%(3) | | | | | | Three-year vesting period | | | Promotes stockholder alignment through stock price performance and executive retention by requiring continuous employment. | |
| | TSR (Performance-Based RSUs) | | | 50%(3) | | | | | | Maximum: 75th percentile
Target: 50th percentile
Threshold: 25th percentile | | | Aligns NEOs’ interests with our stockholders’ by measuring the Company’s TSR percentile rank against its peers over a three-year period. | |
(1)
For segment-dedicated individuals, the incentive is weighted 50% company metrics and 50% segment metrics. For non-segment-dedicated individuals the weighting is 100% company metrics. For 2023, our segment-dedicated NEOs included only Mr. Hawkins who was dedicated to the Company’s compensation.Defense Segment.
Program
| Metric
| Percentage of
Component /
Opportunity
| How Performance is Calculated
| Reason for Using Metric
|
AnnualCashIncentive(CompanyPerformanceComponent)
| Revenue
| 20%
| Top-line revenue in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), measured over a one-year period
| Aligns with the Company’s strategy to grow the top line through winning new business with existing and new customers, and the Company provides earnings guidance on this metric
|
Annual EBIT*
| 30%
| Annual EBIT consists of earnings before interest and taxes, adjusted for non-core earnings impact, measured over a one-year period
| Annual EBIT is a common short-term measure of earnings, demonstrating growth in revenue and ability to control costs
|
Annual FCF*
| 50%
| Annual FCF is calculated by subtracting capital expenditures from GAAP cash flow from operations, measured over a one-year period and adjusted for certain items
| Annual FCF aligns with the Company’s goal to produce positive cash flow after investing in capital to maintain and grow our base, and the Company also provides earnings guidance on this metric
|
Long-TermIncentiveProgram(TotalAwardOpportunity)
| Stock Price
| 60%
| This portion of the long-term incentive is calculated using a dollar amount, which results in a number of shares based on the price of Common Stock on the third trading day following the earnings call immediately after the grant is approved. Accordingly, the value received upon vesting is directly related to the change in the stock price between the grant date and the vesting date
| This metric ties performance of executives’ restricted stock awards directly to stock price performance, thus aligning the interests of executives and stockholders
|
TSR
| 20%
| Performance is measured based on the ranking of the Company’s TSR, expressed as a percentile, relative to the TSR of the Company’s peer group over a three-year performance period as compared to threshold, target, and maximum performance goals
| This metric ties executive interests to stockholder interests and aligns with proxy advisory policies and market trends
|
FCF Percentage*
| 20%
| Performance is measured based on the Company’s free cash flow as a percentage of revenue over a three-year performance period as compared to threshold, target, and maximum performance goals
| FCF Percentage is used to measure the Company’s conversion of sales to cash
|
*
(2)
Please see AppendixA for an explanation and reconciliation of non-GAAP measures.
(3)
50% time-based and 50% performance-based long-term incentive split began with grants in 2022, prior to which grants were 60% time-based and 40% performance-based.
Peer Benchmarking
In order to effectively attract, motivate, and retain our executives, the Compensation Committee regularly examines market data for both pay levels and pay practices with the assistance of our independent compensation consultant. Benchmarking data provides
| | 39 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
valuable insights regarding market practices, and the Compensation Committee generally targets the median compensation range for our executives. However, we do not use a formulaic approach to determining competitive pay levels and will deviate from that range to address business needs, individual performance, internal pay equity across the executive team, and succession planning.
Given the unique nature of the Company’s business, and the lack of true direct competitors in the market, it was challenging to develop a single set of peer companies for purposes of compensation benchmarking. While certain companies conduct business in areas that overlap with ours, many are either much smaller or much larger in scope with limited direct overlap. In addition, the Company’s profile is evolving through the commercial aerospace recovery and as our segments grow. To address these non-GAAP metrics.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 32
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The Company’s Performance
The Company’s one-and three-year total shareholder return compared to itschallenges, beginning in 2022, the Compensation Committee developed both a primary compensation peer group the Russell 3000 index, and S&P 500 index is set forth below.
1 AND 3 YEARa secondary peer group for benchmarking relative TSR VERSUS MARKET BENCHMARKS120%104%0% 20% 40% 60% 80% 100%50% 30% 21% 22% 104% 47% 37% 38%2017 2015-17SPRPeersRussell 3000S&500
Notes: TSR was calculated using adjusted close prices. Peer TSR is market-cap weighted at the beginning of each annual period. For additional informationperformance.
Specific factors considered in determining companies for inclusion in these peer groups included:
| | ■
Overall size | | | ■
Similarities in capital intensity | |
| | ■
Scope of operations | | | ■
Stock price movement correlation | |
| | ■
Aerospace and defense industry | | | ■
Industrial operations | |
| | ■
Overlapping market competitors | | | ■
Domestic and international revenue mix | |
| | ■
Executive talent competitors | | | | |
Based on the companies within ourabove factors, the Compensation Committee approved the following peer group, see “2017 Proxy Peer Group” on page 43. Source: S&P’s Capital IQCEO Target Pay Compared to Peers
The target paygroups for our CEO as compared to the target pay of other CEOs in our peer group is set forth below:
TARGET CEO PAY VS. PEERS160 2 4 6 8 10 12 14Peer pay rangeTarget CEO pay ($mms)Spirit 2017 target CEO pay $7.9mm
Notes: Represents 2016 target CEO pay for peer companies and 2017 target CEO pay for the Company; excludes one peer company that does not have a target annual incentive plan.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 33
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Significant Program-Wide Compensation Decisions in 2017
The Company made several significant decisions with respect to its compensation program in 2017 to align with changes in the Company’s strategy, market trends and stockholder expectations, among other things. A brief overview of the changes is set forth below.
What Changed
| Why
Primary Compensation Peer Group | | | | Relative TSR Peer Group | |
ChangedAnnualCashIncentivecomponentsforallNEOsotherthantheCEO(the“OtherNEOs”):
In 2016, the Other NEOs’ Annual Cash Incentive was scored as follows: 20% individual performance; 40% program/functional performance, and 40% Company performance. In January 2017, the Compensation Committee changed the Annual Cash Incentive scoring for Other NEOs to the following: 25% individual performance and 75% Company performance.
| To further incentivize NEOs to improve Company performance by tying more of their pay metrics to the Company’s strategic execution requirements
AAR Corp. | | | | A.O. Smith | | | Northrop Grumman | |
RecalibratedweightingofmetricsforCompanyperformancewithrespecttotheAnnualCashIncentive:
In 2016, the weighting of the metrics was as follows: 10% revenue, 40% Annual EBIT, and 50% Annual FCF. In January 2017, the Compensation Committee changed the weighting to the following: 20% revenue, 30% Annual EBIT, and 50% Annual FCF.
| The Company’s growth strategy shifted, in part, to be more focused on growing top-line revenue; accordingly, we changed Company performance metrics to align with the new strategy
Curtiss-Wright | | | | AAR Corp. | | | Oshkosh Corporation | |
Increasedpercentageoflong-termincentiveconsistingofPerformance-BasedRestrictedStock:
In 2016, the long-term incentives consisted of 75% Time-Based Restricted Stock and 25% Performance-Based Restricted Stock. In 2017, the Compensation Committee changed the long-term incentives to consist of 60% Time-Based Restricted Stock and 40% Performance-Based Restricted Stock.
| To increase the percentage of long-term incentives based on Company performance metrics in light of market trends and stockholder expectations
Hexcel Corporation | | | | Crane Co | | | Owens Corning | |
AddedsecondmetrictoPerformance-BasedRestrictedStock:
In 2016, the Performance-Based Restricted Stock was based on one metric - TSR. In 2017, the Compensation Committee added FCF Percentage as a second metric equally weighted with relative TSR.
| To better align long-term incentives with the Company’s strategic execution requirements, market trends, and stockholder expectations
Howmet Aerospace | | | | Curtiss-Wright | | | Parker Hannifin | |
Implementeddouble-triggerchange-in-controlprovisions:
Prior to 2017, the Annual Cash Incentive and long-term incentives became fully vested upon a change-in-control. In January 2017, the Compensation Committee implemented a double-trigger provision for both the Annual Cash Incentive and long-term incentives such that the incentives will vest only if (i) there is a change of control, and (ii) the employee is terminated without cause or departs for good reason in anticipation of the change-in-control or during the period beginning 30 days before the change-in-control and ending two years after the change-in-control.
| To better align with market trends and stockholder expectations
Huntington Ingalls | | | | Eaton Corporation | | | Parsons Corporation | |
Changeddividendpolicies:
The Company paid its first quarterly cash dividend in January 2017 and, as a result, in January 2017, the Compensation Committee adopted policies providing the following with respect to awards granted in 2017 and thereafter: (i) with respect to Time-Based Restricted Stock awards, dividends accrue during the restricted period and are paid out upon vesting, and (ii) with respect to Performance-Based Restricted Stock awards, dividends do not accrue prior to vesting.
| To ensure that no financial benefits are received until vesting, which is more aligned with market trends and stockholder expectations
L3 Harris Technologies | | | | General Dynamics | | | Pentair plc | |
Adoptedclawbackpolicy:
In January 2017, the Compensation Committee adopted a clawback policy.
| Lennox International Inc. | | | | Hexcel Corporation | | | Rockwell Automation | |
| | Moog Inc. | | | | Howmet Aerospace | | | Stanley Black & Decker | |
| | Oshkosh Corporation | | | | Hubbell Incorporated | | | Teledyne Technologies | |
| | Owens Corning | | | | Huntington Ingalls | | | Textron | |
| | Parker Hannifin | | | | IDEX Corporation | | | The policy is designed to ensure that compensation paid to covered employees is appropriately adjusted in the event of a material financial restatement due to material non-compliance with financial reporting requirements (a “Triggering Event”). Upon a Triggering Event, if the Compensation Committee determines that certain compensation paid to a Covered Executive during the three-year period preceding the Triggering Event would have been lower taking into account the Triggering Event, the Committee will, with some exceptions, seek to recover the difference between the awarded and actual compensation. Covered Executives include all Section 16 officers of the Company.Timken Company | To discourage excessive risk taking
|
| | Parsons Corporation | | | | Illinois Tool Works | | | Trane Technologies | |
| | Textron | | | | ITT Inc. | | | TransDigm Group Incorporated | |
| | TransDigm Group Incorporated | | | | L3 Harris Technologies | | | Triumph Group | |
| | Triumph Group | | | | Lennox International | | | Xylem, Inc. | |
| | | | | | Moog Inc. | | | | |
2023 Performance and Payouts
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 34
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2017 Compensation Program Elements
There are
The three major components toof the Company’s compensation program for NEOs:(base salary, annual cash incentive, and long-term incentive) are each described below.
| | Spirit AeroSystems2024 Proxy Statement | | | 40 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Base Salary
Base salary is a fixed cash amount designed to attract, retain, and motivate executive officers. In determining base salary, the Compensation Committee considers market data for comparable roles,officers, taking into consideration responsibilities, experience, breadth of role, and expertise, prior positions held, performance, and responsibility level. Generally, we set base salary at a competitive level commensurate with the market median.overall performance. The Company reviews each NEO’s base salary annually in FebruaryJanuary and makes appropriate adjustments to account for individual performance, additionalmarket movement, and any change in responsibilities and market movement.
or circumstances. Base salary is paid in cash bi-weekly.
Annual Cash Incentive
The Annual Cash Incentive (“ACI”) is designed to incentivize achievement of annual performance objectives that are tied to our business plan and drive stockholder value. Under the ACI, each NEO, other than Mr. Shanahan, is assigned a target award is an annual cash award granted under the Company’s Short-Term Incentive Plan (the “STIP”) under the OIP. Each individual receives a total target Annual Cash Incentive award that is equal toopportunity, expressed as a percentage of his or her totalthe NEO’s base salary. ThisMr. Shanahan does not participate in the ACI program. The 2023 target amountaward opportunity for our other NEOs is equal to 140% of our Chief Executive Officer’s base salary, and 100% of the Other NEOs’ base salaries. We set target pay at set forth under “Setting Target Pay” on pg 30.in the “2023 ACI Payouts” table below. The Company generally targets Annual Cash Incentive awards at a level that, when combined with base salaries, results in total annual compensation that is at or aroundCompensation Committee set each NEO’s target taking into consideration peer group market data and the market median when target performance is met, above the market median when the Company performs well,NEO’s responsibilities, experience, breadth of role, and below the market median when the Company misses its goals, subject to individual circumstances and exceptions.
overall performance.
Payout of the Annual Cash IncentiveACI depends on the attainment of individualperformance goals and Company performance goals. Depending on the level of performance achieved, payout can be between 0-200%0% and 200% of target. The objectives of the Annual Cash IncentiveACI are to support our pay-for-performance philosophy, align the awards with stockholder interests, and motivate executives to achieve the Company’s near-term focuspriorities that drive long-term performance. The NEOs’ ACIs are based solely on safety, quality, delivery ,Company performance with the exception of Mr. Hawkins, who is dedicated to our Defense Segment and customer focus that drives the Company’s long-term performance.Thefor whom a Defense Segment specific element is included. There is no individual performance weighting for the NEOs’ Annual Cash Incentives is as follows:
•
CEO: 20% individual performance; 80% Company performance
•
Other NEOs: 25% individual performance; 75% Company performance
With respectcomponent to the measurement of the performance components, theACI.
For the 2023 ACI, the Company performance measures and related performance goals were based on Free Cash Flow (40%), EBIT (20%), Revenue (20%), and Quality (20%). For Mr. Hawkins, the Company performance measures accounted for half of his metric performance, and the other half was the Defense Segment Profit (80%) and Revenue (20%).
The Individual Performancetable below shows achieved results against each performance goal, which yielded a score of 0.16 out of a potential score of 2.00. However, due to quality performance during 2023 the Compensation Committee exercised negative discretion on the Quality component of each NEO’s 2017 Annual Cash Incentive is evaluatedthe ACI notwithstanding actual achievement. This resulted in no payouts for 2023 under the ACI to our NEOs except for Mr. Hawkins, who received a partial payout based on the achievement of individual performance goals. To determine the score for the CEO, the Compensation Committee reviews his annual performance and personal contributions to the Company’s financial and operational results. With respect to the Other NEOs, the Compensation Committee first considers the report and recommendationDefense Segment’s performance. This limited payment demonstrates rigor in both setting of the CEO with respect to each person’s performancemetrics and score and, subsequently,in their application by the Compensation Committee conducts a subjective review of each NEO’s contributions to the Company during the fiscal year. The individual performance component is intended to further align executive compensation with performance in the Company’s focus areas in any given year by establishing relevant individual performance metrics that relate to each NEO’s assignments. With respect to 2017 performance, the NEOs received the following individual performance scores: Gentile: 1.640, Kapoor: 1.640, Marnick: 1.636, Hawkins: 1.621, and Lohmeier: 1.621.For additional payout information, please see “2017 Annual Cash Incentive Payouts;” for descriptions of the NEOs’ 2017 individual performance contributions, please see “NEO Performance and Compensation Decisions.”
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 35
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Company Performance
The Company Performance component of each NEO’s 2017 Annual Cash Incentive is scored based on the performance of the Company with respect to three quantitative metrics, each over a one-year period:
•
Revenue - representing 20% of total Company performance
•
Annual EBIT - representing 30% of total Company performance
•
Annual FCF - representing 50% of total Company performance
We make certain adjustments to Annual EBIT and Annual FCF when calculating results to exclude certain non-operating or non-recurring items, all of which are described in AppendixA.
Committee. In 2017, the Company exceeded its target performance goal with respect to all three metrics, as displayed in the table below. As a result, the Compensation Committee determined a 1.60 score had been achieved with respect to Company performance, representing a weighted score of 1.28 for the CEO (representing 80% of his total Annual Cash Incentive score) and 1.20addition, for each of the OtherACI financial performance metrics (Free Cash Flow, EBIT, and Revenue), the 2023 targets were more rigorous than 2022 actual achievement levels: Free Cash Flow targeted over $500 million of improvement over 2022 achievement; EBIT targeted nearly $500 million of improvement over 2022 achievement; and Revenue targeted nearly $1.7 billion of improvement over 2022 achievement.
| | 41 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
2023 ACI Company Metrics Performance
($ in millions)
| | Measure | | | Company
Weight | | | Defense
Weight(2) | | | Threshold | | | Target | | | Maximum | | | Actual Result | | | Prior Year
Achievement | | | Assessment | | | Weighted
Score | |
| | FCF(1) | | | | | 40% | | | | | | 20% | | | | | | ($100) | | | | | | $0 | | | | | | $75 | | | | | | ($374) | | | | | | ($516) | | | | Below Threshold | | | | | 0.00 | | |
| | EBIT(1) | | | | | 20% | | | | | | 10% | | | | | | $98 | | | | | | $203 | | | | | | $278 | | | | | | ($274) | | | | | | ($295) | | | | Below Threshold | | | | | 0.00 | | |
| | Revenue | | | | | 20% | | | | | | 10% | | | | | | $6,274 | | | | | | $6,549 | | | | | | $6,699 | | | | | | $6,048 | | | | | | $5,030 | | | | Below Threshold | | | | | 0.00 | | |
| | Quality | | | | | 20% | | | | | | 10% | | | | | | 0.5 | | | | | | 1 | | | | | | 2 | | | | | | 0.8 | | | | | | 0.9 | | | | Below Target | | | | | 0.16 | | |
| | Defense Profit | | | | | — | | | | | | 40% | | | | | | $86 | | | | | | $101 | | | | | | $112 | | | | | | $54 | | | | | | — | | | | Below Threshold | | | | | 0.00 | | |
| | Defense Revenue | | | | | — | | | | | | 10% | | | | | | $747 | | | | | | $797 | | | | | | $827 | | | | | | $795 | | | | | | — | | | | Above Target | | | | | 0.96 | | |
| | Total Company Score | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.00(3) | | |
| | Total Defense
Score(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.192 | | |
(1)
Free Cash Flow and Earnings Before Interest and Taxes; please see Appendix A for an explanation and reconciliation of non-GAAP measures.
(2)
Only applicable to Mr. Hawkins as a result of his role being dedicated to the Defense Segment.
(3)
Reflects the Compensation Committee’s exercise of negative discretion due to quality performance during 2023.
2023 ACI Payouts
Due to the Compensation Committee’s exercise of negative discretion, none of our NEOs (representing 75%received any ACI payout for the 2023 year except for Mr. Hawkins who received a partial payout of their total Annual Cash Incentive scores).$44,803 based on the fact that he was dedicated to the Defense Segment and half of his ACI opportunity was tied to that segment’s performance. The following table summarizesshows each NEO’s target award and, for Mr. Hawkins, the Company’s actual performance relative toaward payout is calculated as the Company’s threshold,target award multiplied by the weighted Company score.
| | NEO | | | Target Award
(%) | | | Target Award
($) | | | Actual Award
($) | | | Actual as a
% of Target | |
| | Patrick M. Shanahan | | | Not eligible | | | Not eligible | | | N/A | | | N/A | |
| | Mark J. Suchinski | | | 110% | | | 687,500 | | | — | | | 0% | |
| | Scott M. McLarty | | | 110% | | | 502,162 | | | — | | | 0% | |
| | William E. Brown | | | 100% | | | 480,000 | | | — | | | 0% | |
| | Alan W. Young | | | 88.93%(1) | | | 403,533 | | | — | | | 0% | |
| | Duane F. Hawkins | | | 81.16%(2) | | | 466,695 | | | 44,803 | | | 9.6% | |
| | Thomas C. Gentile III(3) | | | 145% | | | 1,885,000 | | | — | | | 0% | |
| | Samantha J. Marnick(3) | | | 110% | | | 770,000 | | | — | | | 0% | |
(1)
Based on a blended rate resulting from Mr. Young’s change in position during the year. For 26 days of the year Mr. Young was eligible for a 75% ACI target, and
maximum performance goals for
2017:Measure
| 2017 Annual Cash Incentive Company Metrics Performance
|
Weighting
| Threshold
| Target
| Maximum
| Actual Result
| Assessment
|
Revenue
| 20%
| $6.80 billion
| $6.90 billion
| $7.00 billion
| $6.98 billion
| Exceeded Target
|
AnnualEBIT
| 30%
| $850 million
| $875 million
| $925 million
| $916 million
| Exceeded Target
|
AnnualFCF
| 50%
| $425 million
| $500 million
| $600 million
| $537 million
| Exceeded Target
|
2017 Annual Cash Incentive Payouts
The formulathe remainder of the year Mr. Young was eligible for determininga 90% ACI target, resulting in a blended ACI target of 88.93% for 2023 for Mr. Young.
(2)
Based on a blended rate resulting from Mr. Hawkins change in position during the 2017 Annual Cash Incentiveyear. For the first quarter of the year Mr. Hawkins was eligible for a 100% ACI target and, as a result of his retirement as head of the Defense Segment, for the last three quarters of the year Mr. Hawkins was eligible for a 75% ACI target, resulting in a blended ACI target of 81.16% for 2023 for Mr. Hawkins.
(3)
Mr. Gentile and Ms. Marnick forfeited their right to receive payout andof their respective ACIs upon their separation from employment with the resulting payout is reflected in the table below:Company.
NEO | Base Salary ($) | × | Target (Percentage of Base Salary) % | = | Target
Award
($) | × | Company Performance (80% weighting for CEO; 75% weighting for Other NEOs)(2) | + | Individual Performance (20% weighting for CEO; 25% weighting for Other NEOs)(3) | | = | 2017 Total Payout
($) |
Mr. Gentile | 1,145,479(1) | | 140 | | 1,603,671 | | 1.28 | | 0.328 | | | 2,578,703 |
Mr. Kapoor | 650,000 | | 100 | | 650,000 | | 1.20 | | 0.410 | | | 1,046,500 |
Ms. Marnick | 490,000 | | 100 | | 490,000 | | 1.20 | | 0.409 | | | 788,410 |
Mr. Hawkins | 518,192(1) | | 100 | | 518,192 | | 1.20 | | 0.405(4) | | | 831,827 |
Ms. Lohmeier | 475,000 | | 100 | | 475,000 | | 1.20 | | 0.405(4) | | | 762,494 |
| |
(1) Messrs. Gentile’s and Hawkins’ Annual Cash Incentive payout was calculated using a weighted average base salary that takes into account, on a weighted basis, their 2017 salary change. (2) Reflects a Company score of 1.60 multiplied by the weighting percentage. (3) Reflects the following individual performance scores multiplied by the weighting percentage: Gentile - 1.640; Kapoor - 1.640; Marnick - 1.636; Hawkins - 1.621; Lohmeier - 1.621. (4) Mr. Hawkins’ and Ms. Lohmeier’s individual performance scores were 0.40525 (and the resulting total payout is based on such number). However, we have elected to round their scores for purposes of uniformity with the other NEO scores. |
Based on Company and individual performance results, the Compensation Committee believes the 2017 NEO Annual Cash Incentives2023 ACI payouts to NEOs were appropriate and achieved the objectives of the executive compensation program.appropriate. While the Annual Cash Incentives wereACIs are earned based on performance in 2017,the prior year 2023, they wereare paid out in February 2018. The Annual Cash Incentivesthe current (i.e. 2024 for Mr. Hawkins). ACI payouts, if any, are reported as 20172023 compensation in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.”SPIRIT AEROSYSTEMS - 2018 Proxy Statement 36
| | Spirit AeroSystems2024 Proxy Statement | | | 42 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Long-Term IncentivesIncentive
Long-term incentives are an important componenttool to promote executive retention and effective alignment of compensation, as they provide long-term, equity-based variable incentive compensation in keepingexecutives’ interests with stockholders’ interests. At the Company’s pay-for-performance philosophy forbeginning of each year, the entire executive group. Long-term incentives are deliveredCompensation Committee approves the type and amount of grants to each NEO under the Company’s Long-Term Incentive Plan (the “LTIP”) under. Grants are made and priced on the OIP. For 2017,third trading day following the Company’s next earnings release. Beginning in 2022, the LTIP grants were weighted 50% performance-based and 50% time-based, in prior years the weightings were 40% performance-based and 60% time-based. This change was made to increase performance orientation and enhance alignment with stockholder interests. The Compensation Committee set each NEO received a n annualNEO’s 2023 target LTIP award equal to the percentage of his or her total base salaryvalue as provided in the table below:
below, taking into consideration peer group market data and the NEO’s responsibilities, experience, breadth of role, and performance.| | NEO | | | Base Salary on Grant Date
($) | | | Target on Grant Date
(Percentage of Base Salary)
(%) | | | 2023 LTIP Grant(1)
($) | |
| | Patrick M. Shanahan | | | | | 2,000,000 | | | | | | 400% | | | | | | 8,000,000 | | |
| | Mark J. Suchinski | | | | | 625,000 | | | | | | 230% | | | | | | 1,437,500 | | |
| | Scott M. McLarty | | | | | 442,695(2) | | | | | | 150% | | | | | | 664,043 | | |
| | William E. Brown | | | | | 480,000 | | | | | | 175% | | | | | | 840,000 | | |
| | Alan W. Young | | | | | 455,000 | | | | | | 150% | | | | | | 682,500 | | |
| | Duane F. Hawkins | | | | | 575,000 | | | | | | 230% | | | | | | 1,322,500 | | |
| | Thomas C. Gentile III | | | | | 1,300,000 | | | | | | 550% | | | | | | 7,150,000 | | |
| | Samantha J. Marnick | | | | | 700,000 | | | | | | 255% | | | | | | 1,785,000 | | |
NEO | Salary | x | Target (% of Base Salary) | = | Target
Award
($) |
Mr. Gentile | 1,150,000 | | 450 | | 5,175,000 |
Mr. Kapoor | 650,000 | | 280 | | 1,820,000 |
Ms. Marnick | 490,000 | | 190 | | 931,000 |
Mr. Hawkins | 520,000 | | 220 | | 1,144,000 |
Ms. Lohmeier | 475,000 | | 170 | | 807,500 |
|
The total annual target
(1)
When the 2023 LTIP
award consistsawards were granted to the NEOs, the number of
three components:•
Time-Based Restricted Stock, representing 60% of the total target award amount;
•
Performance-Based Restricted Stock tiedUnits granted to TSR over a three-year performance period, representing 20%each NEO was calculated using the closing price of the total target award amount; and
•
Performance-Based RestrictedCommon Stock tied to FCF Percentage overon the grant date rather than a three-year performance period, representing 20%price determined using a Monte Carlo simulation model based on the probable ranking of the total target award amount.
Time-Based Restricted Stock
In 2017, 60%Company’s TSR relative to the TSR of a group of the Company’s peers. The grant date fair value of each NEO’s 2023 award as calculated in accordance with FASB ASC Topic 718, and as reported in the “Summary Compensation Table,” therefore exceeds the target value of each NEO’s LTIP award as provided in this table. For additional information on the awards, see “Summary Compensation Table.”
(2)
Mr. McLarty’s base salary reflects the exchange rate on the Grant Date from GBP to USD.
Time-Based RSUs
In 2023, 50% of the target LTIP award amount was delivered in the form of a Time-Based Restricted Stock awardtime-based restricted stock units (“RSUs”) vesting in three equal installments on each of the first, second, and third anniversaries of the grant date (with the exception of Mr. Shanahan, who received 100% of his LTIP award in the form of time-based RSUs). Vesting of the time-based RSUs is subject to the recipient being continually employed by the Company uponthrough the vesting date.date, or alternative vesting arrangements upon death, disability, retirement, or a qualifying termination in connection with a change in control as described under “Potential Payments Upon Termination or Change in Control.” The Compensation Committee grants Time-Based Restricted Stock awardstime-based RSUs to assist in retaining our NEOs and also to increase theirpromote increased stock ownership, which further aligns our NEOs’ interests with those of stockholders. Awards are granted in February of each year. The number of shares granted is determined based on the average of the opening and closing Common Stock prices on the third trading day after the Company’s earnings release immediately following the date the award is approved by the Compensation Committee.Dividends on Time-Based Restricted Stock awardstime-based RSUs accrue from the grant date and are not paid out upon vesting.until the vesting date. If the underlying award is forfeited, the accrued dividends, if any, are forfeited too.
as well.
Performance-Based
Restricted Stock Tied to Total Shareholder ReturnRSUs
In 2017, 20%2023, 50% of the target LTIP award amount was delivered in the form of a Performance-Based Restricted Stock awardperformance-based RSUs tied to TSR. Payout of the award is based on the ranking of thefollowing:
■
Relative TSR (50% weighting): The Company’s TSR ranking, expressed as a percentile, relative to the Company TSR of apeer group ofover the Company’s peers over a three-year tracking period as compared to threshold, target, and maximum performance goals. Participants are initially granted a number of unvested shares equal to the number of vested shares to which the participant would be entitled upon achievement of the target performance goal. The table below sets forth these performance goals and vesting percentages: | | Threshold* | Target | Maximum |
Performance Goal | (Percentile Ranking in Peer Group) | 25th | 50th | 90th |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% |
* If performance is below threshold, payout is zero. |
For grants made in 2017, the performance period runs from January 1, 2017, toending December 31, 2019, and the vesting of the awards is dependent upon the Compensation Committee’s certification of the performance goal being achieved. An individual must be continuously performing services (or deemed to be continuously performing services) throughout the entire performance period, or none of the award will be earned.
For grants made in 2017, the2025 (the “Performance Period”). TSR for the Company and each member of its peer group for the tracking period will be determined by calculating the percentage increase in the dividend-adjusted average closing share price for the 20 trading days ending December 31, 2019,2022, and the 20 trading days ending December 31, 2016. If2025.
■
Revenue Growth (25% weighting): Total growth in revenue, calculated in accordance with GAAP, over the Company’s TSR percentile ranking falls betweenPerformance Period.
| | 43 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
■
Free Cash Flow (25% weighting): Cumulative Free Cash Flow achieved over the thresholdPerformance Period. Please see Appendix A for an explanation and the target performance goals or the target and the maximum performance goals, the percentagereconciliation of the award that a participant will receive is interpolated on a straight-line basis. If theSPIRIT AEROSYSTEMS - 2018 Proxy Statement 37
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Company’s TSR percentile ranking is below the threshold performance goal, the participant will not be entitled to any vested shares, and if the Company’s TSR percentile ranking is equal to or higher than the maximum performance goal, the participant will be entitled to a number of vested shares equal to 200% of the target award. Dividends on Performance-Based Restricted Stock awards tied to TSR do not accrue until the award vests.
Performance-Based Restricted Stock Tied to FCF Percentage
In 2017, 20% of the target award amount was delivered in the form of a Performance-Based Restricted Stock award tied to FCF Percentage. Payout of the award is based on the Company’s free cash flow as a percentage of revenue over a three-year tracking period as compared to threshold, target, and maximum performance goals. FCF Percentage is a measure of long-term cash generation driven by increasing revenue, reducing costs, improving productivity, and efficiently using capital. Participants are initially granted a number of unvested shares equal to the number of vested shares to which the participant would be entitled upon the target performance goal. non-GAAP measures.
The table below sets forth thesethe performance goals and vesting percentages: | | Threshold* | Target | Maximum |
Performance Goal | FCF Percentage | 6.0% | 6.7% | 7.4% |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% |
*percentages for the 2023 grant. If performance is below threshold, the payout is zero.
zero; the payout is interpolated for performance between threshold and target and between target and maximum; and payouts are capped at maximum achievement. For grants made in 2017, the performance period runs from January 1, 2017,TSR component, if the Company’s TSR is negative, the payout for this component is capped at 100% regardless of percentile ranking. The Compensation Committee may apply negative discretion to December 31, 2019,the award payout if deemed appropriate based upon the circumstances.
| | Metric | | | Element | | | Threshold | | | Target | | | Maximum | |
| | Relative TSR | | | Goal | | | 25th | | | 50th | | | 75th | |
| | | | | Vesting (% of Target Award) | | | 12.5% | | | 50% | | | 100% | |
| | Revenue Growth | | | Goal | | | $7.542 billion | | | $8.045 billion | | | $8.548 billion | |
| | | | | Vesting (% of Target Award) | | | 6.25% | | | 25% | | | 50% | |
| | Free Cash Flow(1) | | | Goal | | | $400 million | | | $500 million | | | $600 million | |
| | | | | Vesting (% of Target Award) | | | 6.25% | | | 25% | | | 50% | |
(1)
Please see Appendix A for an explanation and thereconciliation of non-GAAP measures.
The vesting of the awardsperformance-based RSUs is dependent upon the Compensation Committee’s certification of the level of achievement of the performance goal being achieved. An individualgoals. Eligible NEOs must be continuously performing services throughemployed throughout the entire performance period or none of the award will be earned.FCF Percentage will be calculated onearned, subject to alternative vesting arrangements upon death, disability, retirement, or a cumulative basis overqualifying termination in connection with a three-year period (total free cash flow over three years divided by total revenue over three years). If the calculated percentage falls between the threshold and the target performance goalschange in control as described under “Potential Payments Upon Termination or the target and the maximum performance goals, the percentage of the award that a participant will receive is interpolated on a straight-line basis. If the Company’s percentage is below the threshold performance goal, the participant will not be entitled to any vested shares, and if the Company’s percentage is equal to or higher than the maximum performance goal, the participant will be entitled to a number of vested shares equal to 200% of the target award. Dividends on Peformance-BasedChange in Control.”
2021 Performance-Based Restricted Stock
awards tied to FCF Percentage do not accrue until the award vests.For an explanation and reconciliation of FCF Percentage, please see AppendixA.
2017 NEO Performance and Compensation Decisions
Mr. Gentile, President and Chief Executive Officer
Units — FORFEITED
•
2017 Performance: Mr. Gentile’s 2017 individual performance exceeded expectations. He led the Company to strong financial results, continued to raise market confidence by resolving long outstanding contractual and pricing negotiations with Boeing and Airbus, significantly improved supply chain costs, executed on strategic work packages, secured new work packages, and established a new growth strategy for Spirit. In addition, he continued to strengthen leadership through realignment, led quality initiatives, and initiated new stakeholder relationships, while improving existing relationships.
•
2017 Compensation Decisions:
–
Salary: In January 2017,2021, the Compensation Committee approvedgranted performance-based restricted stock unit awards that could be earned at the conclusion of the three-year performance period ending December 31, 2023 (and delivered in 2024) based on achievement against a relative TSR metric. On January 23, 2024, the Compensation Committee certified the Company achieved a percentile rank of 0.0%. As a result, threshold performance was not achieved and the 2021 performance-based restricted stock unit award was forfeited, as shown in the below table.
| | | | | | | | Threshold | | | Target | | | Maximum | | | 2021 PB-TSR
Actual Performance | |
| | Performance Goal | | | (Percentile Ranking in Peer Group) | | | 25th | | | 50th | | | 90th | | | 1st | |
| | Vesting Percentage | | | (% of Target Award) | | | 25% | | | 100% | | | 200% | | | 0% | |
NEO Compensation Changes
Due to the interim nature of Mr. Shanahan’s role, and due to the fact that Mr. Gentile and Ms. Marnick are no longer employed by the Company, compensation changes for each of them are not reflected below. No changes to Mr. Shanahan’s compensation are anticipated at this time. There were no changes to either Mr. Gentile’s or Ms. Marnick’s compensation during 2023.
| | Spirit AeroSystems2024 Proxy Statement | | | 44 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | Mark J. Suchinski,
SVP and CFO | | | | |
| | 2023 Compensation | | | Changes During 2023 | | | Changes For 2024(1) | |
| | Annualized Salary
$625,000 | | | | | | | |
| | Annual Cash Incentive
110% target | | | No changes
to salary, ACI, or LTI | | | No changes
to salary, ACI, or LTI | |
| | Long-Term Incentive
230% target | | | | | | | |
(1)
As of the date of this Proxy Statement.
| | Scott M. McLarty,
SVP, Airbus & Regional/ Business Jets Programs | | | | |
| | 2023 Compensation | | | Changes During 2023 | | | Changes For 2024(2) | |
| | Annualized Salary
£367,000 (GBP)
($456,511)(1) | | | | | | | |
| | Annual Cash Incentive
110% target | | | No changes
to salary,(1) ACI, or LTI | | | No changes
to salary, ACI, or LTI | |
| | Long-Term Incentive
150% target | | | | | | | |
(1)
Mr. McLarty is paid in GBP. Based on the average exchange rate in 2023, his base salary of £367,000 (GBP) converts to $456,511 (USD). Although Mr. McLarty’s base salary did not increase in GBP during 2023, changes in the average exchange rate resulted in an increase in his converted salary from $1,100,000$424,000 to $1,150,000 effective February 3, 2017. The increase was based on$456,511.
(2)
As of the date of this Proxy Statement.
| | Bill Brown
SVP, Quality | | | | |
| | 2023 Compensation | | | Changes During 2023 | | | Changes For 2024(1) | |
| | Annualized Salary
$480,000 | | | | | | | |
| | Annual Cash Incentive
100% target | | | No changes
to salary, ACI, or LTI | | | No changes
to salary, ACI, or LTI | |
| | Long-Term Incentive
175% target | | | | | | | |
(1)
As of the date of this Proxy Statement, provided that Mr. Brown is expected to remain an evaluationemployee of Mr. Gentile’s performance, level of responsibility, and target compensationthe Company until March 17, 2025 or such other date as compared to the Company’s peer group.may be mutually agreed.
| | 45 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | Alan Young
SVP and Chief
Procurement Officer | | | | |
| | 2023 Compensation | | | Changes During 2023(2) | | | Changes For 2024(3) | |
| | Annualized Salary
$455,000 | | | Annualized Salary
Increased from $435,000 to $455,000 | | | | |
| | Annual Cash Incentive
88.93%(1) target | | | Annual Cash Incentive
Increased from 75% to 90% target | | | No changes
to salary, ACI, or LTI | |
| | Long-Term Incentive
150% target | | | Long-Term Incentive
Increased from 115% to 150% target | | | | |
(1)
In connection with his promotion to SVP and Chief Procurement Officer in early 2023, for 26 days of the year Mr. Young was eligible for a 75% ACI target, and for the remainder of the year Mr. Young was eligible for a 90% ACI target, resulting in a blended ACI target of 88.93% for 2023.
(2)
All changes were madeas a result of promotion to SVP and Chief Procurement Officer in early 2023.
(3)
As of the date of this Proxy Statement.
| | Duane F. Hawkins,
Senior Advisor | | | | |
| | 2023 Compensation | | | Changes During 2023(1) | | | Changes For 2024(2) | |
| | Annualized Salary
$575,000 | | | Annualized Salary
No change | | | | |
| | Annual Cash Incentive
81.16%(1) target | | | Annual Cash Incentive
Reduced from 100% to 75% target | | | No changes
to salary, ACI, or LTI | |
| | Long-Term Incentive
230% target | | | Long-Term Incentive
Eligibility concluded | | | | |
(1)
In connection with his retirement from his role as EVP, President of Defense & Space, effective April 1, 2023, Mr. Gentile’s target during 2017. Mr. Gentile’s target was 140% of salary and in January 2018,Hawkins became ineligible for future LTI grants but remained eligible to receive a bonus for 2023 based on a reviewtarget award opportunity of Mr. Gentile’s and the Company’s performance during 2017, the Compensation Committee approved an Annual Cash Incentive of $2,578,703.
–
Long-Term Incentives: The Compensation Committee approved an increase of Mr. Gentile’s target amount from 400% to 450% effective February 3, 2017. The increase was based on an evaluation of Mr. Gentile’s performance, level of responsibility, and target compensation as compared to the Company’s peer group. In February 2017, Mr. Gentile was granted an award with an aggregate grant date fair value of $5,175,087. Aggregate grant date fair value was determined as set forth in footnote (5) to the “ Summary Compensation Table ” on page 47.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 38
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Mr. Kapoor, Executive Vice President and Chief Financial Officer
•
2017 Performance: Mr. Kapoor’s 2017 individual performance exceeded expectations as evidenced by the Company exceeding financial targets, meeting cost targets, continuing the quarterly cash dividend, and aggressively repurchasing shares. In addition, Mr. Kapoor was instrumental in resolving contractual and pricing negotiations with Boeing, leading the Company’s inorganic growth strategy, and improving stakeholder relationships.
•
2017 Compensation Decisions:
–
Salary: Mr. Kapoor’s salary remained at $650,000.
–
Annual Cash Incentive: No changes were made to Mr. Kapoor’s target during 2017. Mr. Kapoor’s target was 100% of salary. In January 2018, based on a review of Mr. Kapoor’s and the Company’s performance during 2017, the Compensation Committee approved an Annual Cash Incentive of $1,046,500.
–
Long-Term Incentives: No changes were made to Mr. Kapoor’s target amount during 2017. Mr. Kapoor’s target amount was 280% of salary and in February 2017, Mr. Kapoor was granted an award with a grant date fair value of $1,820,067. Aggregate grant date fair value was determined as set forth in footnote (5) to the “ Summary Compensation Table ” on page 47.
Ms. Marnick, Executive Vice President and Chief Administration Officer
•
2017 Performance: Ms. Marnick’s 2017 individual performance exceeded expectations. She successfully realigned and developed senior executive talent, significantly improved fringe costs, secured critical government incentives for growth, executed significant union contract extensions, initiated a structured program for interns and new hires, led Company culture change, and improved key stakeholder relationships.
•
2017 Compensation Decisions:
–
Salary: Ms. Marnick’s salary remained at $490,000.
–
Annual Cash Incentive: No changes were made to Ms. Marnick’s target during 2017. Ms. Marnick’s target was 100% of salary and, in January 2018, based on a review of Ms. Marnick’s and the Company’s performance during 2017, the Compensation Committee approved an Annual Cash Incentive of $788,410.
–
Long-Term Incentives: No changes were made to Ms. Marnick’s target amount during 2017. Ms. Marnick’s target amount was 190% of salary. In February 2017, Ms. Marnick was granted an award with a grant date fair value of $931,048. Aggregate grant date fair value was determined as set forth in footnote (5) to the “ Summary Compensation Table ” on page 47.
Mr. Hawkins, Senior Vice President and General Manager - Boeing, Defense, Business/Regional Jet Programs and Global Customer Support
•
2017 Performance: Mr. Hawkins’ 2017 individual performance exceeded expectations with respect to closing contractual and pricing negotiations with Boeing, establishing relationships with new OEMs, securing new defense projects, and developing new centers of excellence to support the Company’s growth strategy.
•
2017 Compensation Decisions:
–
Salary: In January 2017, the Compensation Committee approved an increase from $500,000 to $520,000, effective February 3, 2017. The increase was based on an evaluation of Mr. Hawkins’ performance, level of responsibility, and target compensation as compared to the peer group.
–
Annual Cash Incentive: No changes were made to Mr. Hawkin’s target during 2017. Mr. Hawkins’ target was 100% of salary and in January 2018, based on a review of Mr. Hawkins’ and the Company’s performance during 2017, the Compensation Committee approved an Annual Cash Incentive of $831,827.
–
Long-Term Incentives: No changes were made to Mr. Hawkins’ target during 2017. Mr. Hawkins’ target amount was 220% of salary. In February 2017, Mr. Hawkins was granted an award with a grant date fair value of $1,144,036. Aggregate grant date fair value was determined as set forth in footnote (5) to the “ Summary Compensation Table ” on page 47.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 39
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Ms. Lohmeier, Senior Vice President and General Manager - Airbus Programs
•
2017 Performance: Ms. Lohmeier’s 2017 individual performance exceeded expectations with respect to executing key transfers of work, expanding Malaysian operations, winning new work, and achieving cost reduction targets.
•
2017 Compensation Decisions:
–
Salary: Ms. Lohmeier’s salary remained at $475,000.
–
Annual Cash Incentive: No changes were made to Ms. Lohmeier’s target during 2017. Ms. Lohmeier’s target amount was 100% of salary. In January 2018, based on a review of Ms. Lohmeier’s and the Company’s performance during 2017, the Compensation Committee approved an Annual Cash Incentive of $762,494.
–
Long-Term Incentives: No changes were made to Ms. Lohmeier’s target during 2017. Ms. Lohmeier’s target amount was 170% of salary. In February 2017, Ms. Lohmeier was granted an award with a grant date fair value of $807,636. Aggregate grant date fair value was determined as set forth in footnote (5) to the “ Summary Compensation Table ” on page 47.
Preview of 2018 Compensation Decisions
2018 Program-Wide Compensation Decisions
The Compensation Committee met in January 2018 to discuss and implement changes to the Company’s compensation program for 2018. In large part, from a programmatic standpoint, the 2018 executive compensation program remains the same as the 2017 program except for the following:
What Changed
| Why
|
Updatedv estingt ermsforTime-BasedRestrictedStocka wardsu ponr etirement,d eath,andd isability:
On death, disability, or retirement, the grantee will fully vest in his or her outstanding restricted stock. Retirement means termination on or after the date when the grantee has attained age 62.
| To be competitive with market practices
|
Updatedv estingt ermsforPerformance-BasedRestrictedStocka wardsu ponr etirement,d eath,andd isability:
On death or disability, the grantee will vest in a prorated portion of his or her target award, which will be prorated based on the number of days continuously employed during the performance period. On retirement, the grantee will vest in a prorated portion of his or her award, as calculated and certified by the Compensation Committee at the end of the applicable performance period, which will be prorated based on the number of days continuously employed during the performance period. Retirement means termination on or after the date when the grantee has attained age 62.
| To be competitive with market practices
|
Increasedt hreshold,t arget,andm aximumg oalsonPerformance-BasedRestrictedStocka wardst iedtoFCFp ercentage:
In 2017, the threshold, target, and maximum goals with respect to FCF Percentage were 6.0%, 6.7%, and 7.4%, respectively. The Compensation Committee increased the threshold, target, and maximum goals with respect to the 2018 FCF Percentage to 7.0%, 7.75%, and 9.0%, respectively.
| Incentivize higher levels of performance; better align with market expectations; better align with Company performance targets
|
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 40
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2018 NEO Compensation Decisions
At its January 2018 meeting, the Compensation Committee modified the compensation arrangements of the NEOs, effective for 2018 compensation, as follows:
•
Mr. Gentile will be entitled to receive an annual award under the LTIP with a value equal to 500% of his annual base salary (increased from 450%). In addition, his annual base salary increased from $1,150,000 to $1,250,000, effective as of February 2, 2018.
•
Mr. Kapoor will be entitled to receive an annual award under the LTIP with a value equal to 300%January 1, 2023, through March 31, 2023, and 75% of his annual base salary (increased from 280%).
April 1, 2023, through December 31, 2023.
•(2)
Ms. Marnick will be entitled to receive an annual award under
As of the LTIP with a value equal to 200%date of her annual base salary (increased from 190%). In addition, her annual base salary increased from $490,000 to $520,000, effective as of February 2, 2018.
•
this Proxy Statement, provided that Mr. Hawkins will be entitledis expected to receiveremain an annual award under the LTIP with a value equal to 230% of his annual base salary (increased from 220%). In addition, his annual base salary increased from $520,000 to $535,000, effective as of February 2, 2018.
•
Ms. Lohmeier will be entitled to receive an annual award under the LTIP with a value equal to 180% of her annual base salary (increased from 170%). In addition, Ms. Lohmeier’s annual base salary increased from $475,000 to $500,000, effective as of February 2, 2018.
As previously disclosed in the Current Report on Form 8-K filed with the SEC on January 29, 2018, each NEO was granted the following: (i) a Time-Based Restricted Stock award equal to 60% of his or her total annual target LTIP award; (ii) a Performance-Based Restricted Stock award tied to TSR equal to 20% of his or her total annual target LTIP award and (iii) a Performance-Based Restricted Stock award tied to FCF Percentage equal to 20% of his or her total annual target LTIP award . Except as described under “ 2018 Program-Wide Compensation Decisions,” termsemployee of the awards remain consistent with the 2017 compensation program.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 41
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Company until April 1, 2024 or such other date as may be mutually agreed.
Compensation Governance
The Compensation Decision-Making Process
The
As set forth in its charter (available at: http://investor.spiritaero.com/corporate-governance/govdocs/ default.aspx), the Compensation Committee is responsible for establishing, implementing, and monitoring compliance withoverseeing the administration of the Company’s compensation objectives,plans, policies, and programs. Further, the Compensation Committee is responsible for setting compensation for, and reviewing performance of, the Company’s executive officers. Pursuant to its charter, the Compensation Committee has the authority to delegate its responsibilities to such subcommittees as it deems appropriate, so long as the subcommittee is solely comprisedcomposed of one or more members of the Compensation Committee. In setting executive officer compensation, the Compensation Committee takes into consideration the following:
■
•Overall Company performance and progress toward strategic priorities;
■
The CEO’s self assessmentself-assessment and performance reviewreviews of the Otherother NEOs;
•■
The Compensation Committee’s and Board’s views of the NEOs’ performance;
| | Spirit AeroSystems2024 Proxy Statement | | | 46 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
■
The counsel and recommendations of the Company’s CEO and Chief AdministrationAdministrative Officer;
•
Recommendations of other members of the Compensation Committee;
■
•
Results from benchmarking against the Company’s peer group and survey data; and
•■
The analysis and consulting advice of its independent compensation consultant.consultant with respect to the amount or form of such compensation.
Generally, the
The Compensation Committee strives for internal pay equity among the Company’s NEOs and accordingly,NEOs. Pay equity across the typesNEO group is balanced among a myriad of compensation and benefits offered to the Company’s NEOs are consistent among the group.other factors. The Compensation Committee continues to examine existingremains cognizant of pay equity as it makes compensation decisions and new compensation programs and practices to ensure thatadjustments throughout the Company’s compensation programs remain appropriate and consistent with the Company’s overall objectives.year.
The chart below reflects the annual compensation-setting process, by regularly scheduled quarterly meeting ofthough certain items may shift during the Compensation Committee.year. In addition to the following, the CEO’s performance, along with revenue, Annual EBIT, Annual FCF, TSR, and FCF Percentageall Company performance metrics used in the ACI or long-term incentives, are monitored and discussed at each meeting.quarterly.
![[MISSING IMAGE: tm2213929d10-fc_process4c.jpg]](/files/DEF 14A/0001104659-24-033265/tm2213929d10-fc_process4c.jpg)
October Meeting: Discuss compensation design for upcoming year and anticipated changes; conduct risk analysis of compensation programs; update compensation risk registerJuly Meeting: Conduct a mid-year performance review of executive officers, review talent strategy and proposed changes to executive officers, and review peer group compositionJanuary Meeting: Review best practices, market trends, and benchmarking results; evaluate NEOs’ performance and review and approve NEO annual compensation including salary, short- and long-term incentives and other similar arrangementsApril Meeting: Review ISS and Glass Lewis reports on executive compensation and discuss resulting action steps; review regulatory matters; review stock ownership requirements
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Benchmarking
Each year, the Compensation Committee, with the assistance of management and the independent compensation consultant, reviews external market data in order to determine the competitiveness of our compensation packages, highlight trends and regulatory implications, and develop incentive plan design alternatives. The market data reviewed is from the Company’s peer group and nationally recognized published survey data.
2017 Proxy Peer Group
The Company uses its peer group as a reference point for its compensation design and award decisions. The Company’s peer group consists of companies similar to Spirit in size and operations (emphasizing aerospace, defense, and auto component manufacturers) and/or companies that compete with Spirit for executive talent. For 2017, the Company’s peer group was as follows (the companies are ranked by revenue and all ticker symbols are for the NYSE):
Company Name | 2016 Revenue ($ in billions) | Market Cap as of 12/31/2016 ($ in billions) |
Textron (TXT) | 13.8 | 13.1 |
Ingersoll-Rand (IR) | 13.5 | 19.4 |
L3 Technologies (LLL) | 10.5 | 11.8 |
Borg Warner (BWA) | 9.1 | 8.4 |
Tenneco (TEN) | 8.6 | 3.4 |
Huntington Ingalls (HII) | 7.1 | 8.5 |
Spirit AeroSystems Holdings (SPR) | 6.8 | 7.1 |
Rockwell Collins (COL) | 5.3 | 12.1 |
Orbital ATK (OA) | 4.5 | 5.1 |
Terex (TEX) | 4.4 | 3.3 |
Triumph Group (TGI) | 3.9 | 1.3 |
B/E Aerospace (BEAV) | 2.9 | 6.1 |
Moog (MOG-B) | 2.4 | 2.4 |
Curtiss-Wright (CW) | 2.1 | 4.4 |
Teledyne Technologies (TDY) | 2.1 | 4.3 |
Changes to Proxy Peer Group for 2018
Each year, the Compensation Committee, working with its independent compensation consultant, reviews the composition of the peer group and determines whether any changes should be made. In April 2017, after most 2017 compensation decisions had been made, the Company removed B/E Aerospace as a result of its acquisition by Rockwell Collins, and added Arconic (ARNC) to its peer group.
In January 2018, as a result of the announced acquisitions of Orbital ATK and Rockwell Collins, the Compensation Committee evaluated the Company’s peer group and removed Orbital ATK and Rockwell Collins from the peer group. In addition, the Compensation Committee added Parker-Hannifin Corporation (PH), Harris Corporation (HRS), and Esterline Technologies Corporation (ESL) as of January 2018.
Survey Data
In addition to benchmarking using the peer group, the Company also uses a broad survey sample from the independent compensation consultant’s executive compensation survey. The survey analysis considers companies in relevant industries (aerospace and defense, machinery, auto components, and electrical equipment) as well as companies in other industries, when necessary, to complement data limitations. Survey data was size-adjusted to approximate the Company’s revenue either through regression or by limiting the survey sample to comparably sized companies. This information was used by the Compensation Committee in establishing the base salaries and target goals for the NEOs.
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Independent Compensation Consultant
The Compensation Committee’s Chartercharter allows the committee to engage an independent compensation consultant to advise on executive compensation matters. For 2017,The Company engaged Meridian Compensation Partners (“Meridian”) for 2023. Meridian was engaged directly by the Compensation Committee engaged Willis Towers Watson directly for the purpose of providing analysis and advice with respect to executive officer compensation matters. to the Compensation Committee. Meridian’s engagement and fees related to work conducted for the Compensation Committee were reviewed and pre-approved by the Compensation Committee.
The Compensation Committee has determined, after considering and discussing criteria from the SEC and the NYSE and Meridian’s annual independence letter, that Willis Towers WatsonMeridian does not have any conflicts of interest that would prevent objectivity. | | 47 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Clawback Policies
The Company’s ACI and LTIP awards are subject to the clawback provisions of Advisory Stockholder Votethe OIP, the Company’s Mandatory Recoupment Policy (the “Recoupment Policy”), and applicable law. With respect to executive grants, our grant agreements under the OIP expressly provide that equity awards are subject to the OIP clawback provision, any applicable law, and any Company policies on Executivecompensation recovery.
OIP Clawback. The OIP clawback provision provides that the Compensation Committee may take certain actions, including canceling an award or causing the participant to forfeit any gains realized in connection with the award, if the participant (including the NEOs) engages in a detrimental activity. Detrimental activities include breaches of restrictive covenants, such as confidentiality, non-solicitation, and non-compete covenants, and any activity contributing to a financial restatement or accounting irregularities that are appropriate to include in the Recoupment Policy.
Recoupment Policy. The Company believesadopted the Recoupment Policy effective December 1, 2023. The Recoupment Policy is intended to comply with the requirements of Section 10D of the Exchange Act and Section 303A.14 of the NYSE Listing Company Manual. Under the terms of the Recoupment Policy, in the event of a restatement of our financial statements due to material non-compliance with any financial reporting requirement under applicable securities laws, the Compensation Committee shall take reasonably prompt action to cause the Company to recover the amount of any incentive compensation granted, awarded or paid to a covered person within the preceding 36-month period to the extent the value of such compensation was in excess of the amount of incentive compensation that would have been granted, awarded or paid had the financial statements been in compliance with the financial reporting requirements. Each executive officer, including our Named Executive Officers and former executive officers, are considered covered persons for purposes of the Recoupment Policy.
Policy Prohibiting Short-Selling, Hedging, and Pledging
The Company has adopted a policy prohibiting the Company’s insiders from engaging in short-selling, hedging, and pledging the Company’s securities. As it is appropriaterelates to seek and reflecthedging, insiders of the views of its stockholders onCompany are prohibited from purchasing or selling, or making any offer to purchase or offer to sell, derivative securities related to the design and effectivenessCompany’s securities, such as exchange-traded options to purchase or sell the Company’s securities or financial instruments that are designed to hedge or offset any decrease in the market value of the Company’s executive compensation program. Accordingly, consistent withsecurities (including but not limited to prepaid variable forwards, equity swaps, collars, and exchange funds). Company insiders include all employees and directors of the Company as well as their spouses, domestic partners, minor children, economic dependents, other persons living in their households, or any corporations, partnerships, trusts, or other entities that they beneficially own, and any person over whom, or trust or other entity over which, they have control. Additionally, Company insiders are prohibited from holding the Company’s most recent say-on-pay frequency votesecurities in April 2017, the Company holds an annual say-on-pay vote. Ata margin account or otherwise pledging the Company’s 2017 A nnual M eeting of S tockholders, approximately 91% of stockholders voted in favor of the Company’s executive compensation programs. The Compensation Committee takes the annual say-on-pay proposal voting results into consideration when making future decisions regarding executive compensation.securities as collateral for a loan.
Compensation Risk Assessment
In October each year, and
Annually (and more frequently as otherwise deemed necessary,necessary), the Compensation Committee assesses risks presented by our compensation program, policies, and award structures. This assessment is used to determine whether any of our compensation components incentivize executives to take risks that are not in the Company’s or stockholders’ best interests. In 2017,2023, our Compensation Committee reviewed the followinga variety of risk factors relative to our current compensation programs:programs, including:
■
•
Senior talent acquisition and the ability to recruit and retain talent at market-based compensation.
compensation levels;
•■
Senior talent loss due to misalignment of strategic decisions and incentives, including balancing long-term incentives with the investment requirement for long-term objectives.objectives;
•■
Matching
Alignment of compensation to Company performance in relation to meeting stockholder expectations to balance short- and long-term incentives to achieve growth strategies.Company performance;
•■
Potential for material restatement of earnings to impact incentive plan calculations.calculations;
•
Clawback policy requirements aligned with market in regard to talent recruitment and retention.
■
•
Potential for unforeseen one-time events beyond management’s control that affect incentive plan calculations.
calculations; and•
Potential for management decisions based on short-term objectives unbalanced with long-term Company performance.
■
•
Potential for unrealized talent investment due to underperforming individuals.
After reviewing our current compensation program and award structures, the Compensation Committee determined that our program does not incentivize executives to take suchexcessive risks in light of the following features:
| | Spirit AeroSystems2024 Proxy Statement | | | 48 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
■
We diversify the compensation delivered to executives - the individual components andwith performance goals eachthat incentivize different behaviors (short-term focus, long-term focus, etc.) in an attempt to balance our executives’ interests;
•■
We have maximum payouts, or caps, on our performance-based compensation -— the highest amount that can be paid with respect to our Annual Cash IncentiveACIs or performance-based long-term incentives is 200%;
•■
The Compensation Committee reserves the right to exercise negative discretion over performance-based awards;
•
We deliver compensation using several vehicles, including cash, stock, and perquisites;
■
•
We maintain a clawback policypolicies that allows us to recoverallow recovery of certain compensation awarded based on certain improper conduct by executives;
when the participant has engaged in misconduct;
•■
Our NEOs and other executives must comply with stringent stock ownership requirements;requirements and the prohibition on short-selling, hedging, and pledging Company securities; and
•■
We have engaged an independent compensation consultant to advise us on compensation practices.
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Other Compensation Elements and Information
Benefits and Perquisites
In addition to the four basic compensation elements,described above, we provide our NEOs with the additionalcertain other benefits and perquisites described below.perquisites. Benefits and perquisites received by NEOs are included in the “All Other Compensation” column of the “ Summary“Summary Compensation Table.” These benefits are based on an assessment ofconsistent with the benefits offered by our peers and competitors and are important for retaining the Company’s executive officers.
competitors.
| Benefit/Perquisite | | | Explanation | |
| Retirement &and Savings Plan (the “RSP”) | | | ■
•
The RSP is a tax-qualified defined contribution plan for certain eligible salaried employees. The Company makes both matching and non-matching contributions under the RSP. •■
Matching: The Company matches 75% of the employee’s contributions up to a maximum of 6% of the employee’s base pay (provided the employee contributes 8%). The matching contributions are immediately 100% vested. •■
Non-Matching: The Company makes an additional,a non-matching contribution following the end of each calendar year based on an employee’s age and vesting service, provided that the employee is employed by the Company on December 31 of the applicable year and has earned a year of vesting service. If age plusage-plus vesting service totals less than 60, employees receive a contribution equal to 1.5% of base salary; if age plusage-plus vesting service totals at least 60 but less than 80, employees receive a contribution equal to 3% of base salary; and if age plusage-plus vesting service totals 80 or more, employees receive a contribution equal to 4.5% of base salary. These contributions are 25% vested at two years, 50% vested at three years, 75% vested at four years, and 100% vested at five years of vesting service. •
Transition Contribution: An additional contribution is available to employees who were previously Boeing employees and meet certain other requirements. None of the NEOs are eligible for this additional contribution.
| |
| Deferred Compensation Plan (the “DCP”) | | | This non-qualifiednonqualified plan allows eligible SpiritCompany employees, including each of our NEOs, to defer receipt of a portion of their base salary or Annual Cash Incentive.ACI. In addition, the DCP allows for matching and discretionary contributions by the Company into a separate account in the DCP. Deferred amounts and matching or discretionary Company contributions are credited with a rate of return equal to 120% of the applicable federal long-term rate for October of the prior fiscal year. For 2017,2023, the interest crediting rate was 2.34%is 4.12%. | |
| Perquisite Allowance Plan | Under
| | The Board approved an amended version of the Company’s Perquisite Allowance Plan (the “Perquisite Plan”) in October 2022. Under the Perquisite Plan, the CEO receives an annual allowance of $25,000, while the Otherother NEOs receive an annual allowance of $13,000. Participants may select the perquisite items to be funded from their allowances in accordance with an exclusive list set forth in the Perquisite Plan. Any portion of a participant’s annual allowance that is not used by the end of the applicable calendar year is forfeited except upon a qualifying termination in connection with a change-in-control.change in control. See “Potential Payments Upon Termination or Change-in-Control” on page 55.Change in Control.” | |
Executive Security
| Some of our NEOs receive personal or home security provisions. These provisions are based on business-related security concerns and have been assessed by an independent security consulting firm and deemed necessary and appropriate for the protection of the Company’s NEOs.
|
Personal Corporate Aircraft Use | | | For security reasons, the Company’s CEO CFO, and CAOCOO are authorized to use the corporate aircraft for a limited amount of personal travel. OtherMr. Shanahan is authorized to use the corporate aircraft for travel between Wichita, Kansas and Seattle, Washington pursuant to the Company’s corporate aircraft policy, which authorizes him to use the aircraft for 70 personal hours annually. Mr. Gentile was authorized to use the aircraft for 70 personal hours annually and Ms. Marnick was authorized to use the aircraft for 25 personal hours annually, each prior to their respective separations from employment with the Company. In each case, the personal hour allowances do not include deadhead or ferry flights. The other NEOs domay not use the corporate aircraft for personal travel unless approved by the CEO. No tax gross-ups are provided for this benefit, unless the benefit is incurred pursuant to the terms of a relocation assistance package.benefit. | |
| Relocation Benefits | We provide relocation assistance
| | In connection with Mr. Shanahan’s appointment as interim President and CEO, he is entitled to temporary housing in Wichita, Kansas. | |
| | Post-Retirement Medical Coverage | | | The Company has two programs for post-retirement medical coverage. Under the first program, benefits are available to employees including our NEOs. In 2017,who were previously Boeing employees and who retire from the Company provided Mr. Gentilebetween the ages of 62 and Ms. Lohmeier relocation assistance for65 (and who meet certain qualified relocation expenses. Where appropriate, the Company provides a gross-up to these employees to cover tax liabilities associated with relocation assistance. | |
| | 49 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | Benefit/Perquisite | | | Explanation | |
Post-Retirement
Medical and Dental Coverage
| The Company makes post-retirement medical and dental coverage
| | | other requirements). Under the second program, benefits are available to all(i) employees who retire from the Company at age 55 or later provided they have at leastwith 10 years of service, and participated in(ii) employees who retire from the Company’s medical and dental plans prior to retirement.Company at age 60 or later with five years of service. Under either program, benefits cease at age 65. None of our NEOs are currently eligible for this coverage.coverage under either program. | |
| | Other | | | Other perquisites provided include an annual physical exam for our CEO, ground transportation services for our CEO for security purposes and efficiency, IT home services, and home security services. | |
Severance
Discontinued and Frozen Benefit Plans and Arrangements
The Company pays certain benefits through discontinued and frozen benefit plans and arrangements, which include the Supplemental Executive Retirement Plan and the Pension Value Plan. No new employees are eligible to participate in these plans. None of the NEOs received benefits under these plans in 2017 or are eligible to participate in such plans.
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Post-Termination Payments and Change-in-Control Compensation
The Company believes competitive severance protection is an appropriate incentive in attracting and retaining executive talent. The Company has provided forprovides post-termination severance compensation through certain individual employment agreements and has also agreed to individual severance arrangements at the time of termination of employment, taking into account the specific facts and circumstances of termination. The Company provided post-termination severance compensation to Mr. Gentile and Ms. Marnick in connection with their separations of employment in September 2023 and November 2023, respectively, as discussed in more detail under the heading “Potential Payments Upon Termination or Change in Control.” Certain of our employment agreements provide benefits upon a change-in-control.
change in control.
Further, certain of the Company’s benefit plans provide for compensation upon termination or in connection with a change-in-control. Beginningchange in 2017, the Annual Cash Incentive ,control. The ACI, long-term incentives, , and Perquisite Allowance Plan are subject to a double trigger.You can find additionaldouble-trigger change in control provisions.
Additional information regarding the Company’s practices in providing compensation in connection with termination of employment may be found under the heading “Potential Payments Upon Termination or Change-in-Control” on page 55.Stock Ownership Requirements
The Company maintains stock ownership requirements for its NEOs and other senior executives to further promote alignment of management and stockholder interests. The ownership requirements (measured by the value of the Company’s stock required to be held) are based on a multiple of base salary tied to pay grade. The stock ownership requirements establish the following target levels for Company stock ownership:
Officer Level
| Target Level
(Multiple of Annual Base Salary)
|
ChiefExecutiveOfficer
| 5x
|
ExecutiveVicePresidents/SeniorVicePresidents
| 3x
|
VicePresidents
| 1x
|
The stock ownership requirements mandate that the CEO and other senior officers accumulate their required positions within the later of : (i) five years after the adoption of the guidelines, or (ii) five years after being hired or promoted into the officer position. The Company believes that five years provides a reasonable goal for executives to accumulate shares through earned incentive awards.
During the five-year accumulation period, all NEOs are expected to continuously accumulate qualifying equity until they meet the minimum stock ownership guideline.
The Company reviews ownership positions on an annual basis. Based on the review conductedChange in 2017, the Company determined that the NEOs own appropriate amounts of Company stock in light of the minimum stock ownership requirements and the portions of their respective accumulation periods that have passed. The Company may restrict any officer from liquidating any of his or her then-current holdings in Company stock, except for those shares which are sold to meet Company tax withholding requirements. The Company may modify or waive the requirements of the guidelines at its discretion if it determines that compliance would result in severe hardship for an officer.
Control.”
Accounting and Tax Treatment of Compensation
When evaluating the Company’s compensation programs, the Company takes into account the various accounting, tax, and disclosure rules associated with such matters, including Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”“IRC”) and Section 409A of the Code. The Compensation Committee generally seeks to award compensation that would allow it to preserve tax deductions; however, the Compensation Committee reserves the right to set compensation at the levels and in the manner (tax-deductible or not) that it determines to be in the best interests of the Company and its stockholders.
IRC. Section 162(m) generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to “covered employees” each year. PriorWhile the tax impact of any compensation arrangement is one factor to federal tax reform legislation enactedbe considered, such impact is evaluated in December 2017,light of the Tax CutsCompany’s overall compensation philosophy and Jobs Act (the “TCJA”), Section 162(m) includedobjectives. The Compensation Committee believes that maintaining the discretion to evaluate the performance of executive officers is an exceptionimportant part of the Company’s responsibilities and benefits public stockholders, and therefore, the Compensation Committee may award compensation to the $1 million limit for “qualifying performance-based” compensation. As in prior years, for 2017,NEOs that is not fully deductible if it is determined that such compensation is consistent with the Company intends to deduct,Company’s compensation philosophy and benefits stockholders.
Section 409A of the Code requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to coveredthe timing of deferral elections, timing of payments, and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is the Company’s intention to design and administer its compensation and benefits plans and arrangements for all employees and other service providers, including the executive officers, so that they are either exempt from, or satisfy the requirements of, section 409A of the Code.
Executive Stock Ownership Requirements
The Company’s executive stock ownership requirements promote alignment of management and stockholder interests. The requirements are based on a multiple of base salary and non-performance-based compensation upare measured by the value of Common Stock required to $1 million,be held.
| | Officer Level | | | Target Level
(Multiple of Annual
Base Salary) | |
| | Chief Executive Officer | | | 5x | |
| | Executive Vice Presidents/Senior Vice Presidents | | | 3x | |
| | Vice Presidents | | | 1x | |
| | Spirit AeroSystems2024 Proxy Statement | | | 50 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
The stock ownership requirements must be met within the later of: (i) five years after adoption of the guidelines, or (ii) five years after being hired or promoted into the officer position. During the five-year accumulation period, all NEOs are expected to continuously accumulate qualifying equity until they meet the applicable threshold. The five-year accumulation allows for accumulation of shares through earned incentive awards.
Executive ownership positions are reviewed on an annual basis. For 2023, all NEOs complied with the ownership requirements or were within the five-year accumulation period. The Company may restrict any officer from liquidating any Company stock, except for shares that are sold to meet Company tax-withholding requirements. The Company may modify or waive the requirements of the guidelines at its discretion if it determines that compliance would result in severe hardship for an officer. Note that the Company’s insider trading policy prohibits Company employees from engaging in short sales of the Company’s securities, and performance-based compensation earned or vesting in 2017 pursuant tohedging and pledging the “qualifying performance-based” compensation exception.Effective for the 2018 tax year, the TCJA eliminates the exemption from Section 162(m)’s deduction limit for performance-based compensation. Accordingly, compensation paid to covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to written binding contracts in effect as of November 2017.
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Company’s securities. For additional information on this policy, see “Policy Prohibiting Short-Selling, Hedging, and Pledging.”
Executive Compensation Tables
Summary Compensation Table
The following table summarizes the compensation of the NEOs for the last three fiscal years.Name and
Principal Position | Year | Salary
($) | (3) | Bonus
($) | (4) | Stock
Awards
($) | (5) | Non-Equity
Incentive Plan
Compensation
($) | (6) | All Other
Compensation
($) | (7) | Total
($) |
Thomas C. Gentile, III, | 2017 | 1,144,223 | | | | 5,175,087 | | 2,578,703 | | 1,009,385 | | 9,907,398 |
2016 | 770,773 | | | | 3,000,045 | | 2,234,460 | | 169,476 | | 6,174,754 |
Sanjay Kapoor, | 2017 | 650,000 | | | | 1,820,067 | | 1,046,500 | | 39,148 | | 3,555,715 |
2016 | 624,229 | | | | 2,696,650 | | 973,882 | | 127,208 | | 4,421,969 |
2015 | 561,144 | | | | 1,130,068 | | 592,160 | | 28,701 | | 2,312,073 |
Samantha Marnick, | 2017 | 490,006 | | | | 931,048 | | 788,410 | | 141,475 | | 2,350,939 |
2016 | 460,465 | | | | 1,405,583 | | 719,204 | | 213,332 | | 2,798,584 |
Duane F. Hawkins, SVP/GM - Boeing and Defense Programs | 2017 | 517,691 | | | | 1,144,036 | | 831,827 | | 33,657 | | 2,527,211 |
2016 | 497,684 | | | | 1,000,076 | | 756,097 | | 57,905 | | 2,311,762 |
2015 | 450,384 | | | | 630,079 | | 462,396 | | 22,899 | | 1,565,758 |
Michelle J. Lohmeier, | 2017 | 475,010 | | | | 807,636 | | 762,494 | | 83,955 | | 2,129,095 |
2016 | 472,125 | | | | 807,552 | | 661,653 | | 135,198 | | 2,076,528 |
2015 | 245,774 | | 250,000 | | 1,165,055 | | 450,000 | | 222,820 | | 2,333,649 |
| |
(1) Mr. Gentile was appointed Executive Vice President and Chief Operating Officer of the Company effective April 1, 2016, and President and CEO of the Company effective August 1, 2016. Accordingly, no information is displayed for 2015. (2) Ms. Marnick was not a NEO in the fiscal year ended December 31, 2015. Accordingly, no information is displayed for 2015. (3) For NEOs who received salary increases during the fiscal year, these numbers reflect a prorated amount based on the portions of the years for which their new compensation arrangements applied. (4) Because the Annual Cash Incentive (“ACI”) has mandatory performance measures that must be achieved for any payout, the ACI is shown in the “Non-Equity Incentive Plan Compensation” column of the table. The amount stated for Ms. Lohmeier in 2015 represents the cash signing bonus paid under her employment agreement. (5) Amounts shown represent the aggregate grant date fair value of awards granted to NEOs during the applicable year, as determined in accordance with FASB ASC Topic 718. These grant date fair values represent the accounting expense to be recorded for the award and are not reflective of the actual value that may be recognized by a NEO with respect to the award. In 2017, each NEO received Time-Based Restricted Stock (“RS”), Performance-Based Restricted Stock tied to TSR (“PB-TSR”), and Performance-Based Restricted Stock tied to FCF Percentage (“PB-FCF”). The assumptions made by the Company in calculating these amounts are incorporated herein by reference to Note 15 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for 2017. The grant date fair value of the RS awards is equal to the number of shares granted multiplied by $56.075, the average of the opening and closing prices of Common Stock on February 7, 2017, the grant date. The grant date fair value of the PB-TSR awards is equal to the number of shares granted at target multiplied by $55.55, which was determined using a Monte Carlo simulation model based on the probable ranking of the Company’s TSR relative to the TSR of a group of the Company’s peers. If we assume that the maximum level of performance is achieved with respect to the PB-TSR awards (and thus the maximum number of shares are awarded to the NEOs), using the average of the opening and closing prices of Common Stock on the grant date, the value of the PB-TSR awards would be as follows: Mr. Gentile - $2,089,579; Mr. Kapoor - $734,919; Ms. Marnick - $375,927; Mr. Hawkins - $461,946; and Ms. Lohmeier - $326,132. The grant date fair value of the PB-FCF awards is equal to the number of shares granted at target multiplied by $54.95, the average of the opening and closing of Common Stock on the grant date, adjusted for dividends (as dividends do not accrue on PB-FCF awards until vesting). If we assume that the maximum level of performance is achieved with respect to the PB-FCF awards (and thus the maximum number of shares are awarded to the NEOs), using the average of the opening and closing prices of Common Stock on the grant date, the value of the PB-FCF awards would be as follows: Mr. Gentile - $2,112,457; Mr. Kapoor - $742,994; Ms. Marnick - $380,076; Mr. Hawkins - $466,993; and Ms. Lohmeier - $329,721. For additional information on the awards, see “2017 Compensation Program Elements” on page 35. (6) Represents ACIs earned by each NEO. |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 47
Back Prior to Contents
his appointment as President and CEO, Mr. Shanahan served as a non-employee director of our Board and was entitled to certain cash and equity compensation under our non-employee director compensation program, which are detailed in this table and associated footnotes. Messrs. Shanahan, Brown, Young and McLarty were not NEOs in the fiscal years ended December 31, 2021, and December 31, 2022, and accordingly, information is not displayed for 2021 and 2022 for such NEOs. | | Name and Principal Position | | | Year | | | Salary
($) | | | Stock
Awards(2)
($) | | | Non-Equity
Incentive Plan
Compensation(3)
($) | | | All Other
Compensation(4)
($) | | | Total
($) | |
| | Patrick M. Shanahan
President and CEO | | | | | 2023 | | | | | | 504,110 | | | | | | 8,149,986 | | | | | | — | | | | | | 265,018 | | | | | | 8,919,114 | | |
| | Mark J. Suchinski
SVP and CFO | | | | | 2023 | | | | | | 625,000 | | | | | | 1,617,497 | | | | | | — | | | | | | 59,026 | | | | | | 2,301,523 | | |
| | | | 2022 | | | | | | 619,863 | | | | | | 1,842,410 | | | | | | 122,055 | | | | | | 37,939 | | | | | | 2,622,267 | | |
| | | | 2021 | | | | | | 528,767 | | | | | | 1,050,065 | | | | | | 427,839 | | | | | | 44,696 | | | | | | 2,051,367 | | |
| | William E. Brown
SVP, Quality | | | | | 2023 | | | | | | 480,000 | | | | | | 945,176 | | | | | | — | | | | | | 39,918 | | | | | | 1,465,094 | | |
| | Alan Young
SVP & Chief Procurement Officer | | | | | 2023 | | | | | | 453,575 | | | | | | 768,034 | | | | | | — | | | | | | 36,321 | | | | | | 1,257,930 | | |
| | Scott M. McLarty
SVP, Airbus & Regional/
Business Jets Program | | | | | 2023 | | | | | | 456,511 | | | | | | 747,214 | | | | | | — | | | | | | 86,882 | | | | | | 1,290,607 | | |
| | Duane F. Hawkins(1)
Former EVP; President,
Defense & Space
Current Senior Advisor | | | | | 2023 | | | | | | 575,000 | | | | | | 1,488,099 | | | | | | 44,803 | | | | | | 36,638 | | | | | | 2,144,540 | | |
| | | | 2022 | | | | | | 575,000 | | | | | | 1,695,047 | | | | | | 103,500 | | | | | | 34,904 | | | | | | 2,408,451 | | |
| | | | 2021 | | | | | | 544,203 | | | | | | 1,230,518 | | | | | | 440,328 | | | | | | 35,483 | | | | | | 2,250,532 | | |
| | Thomas C. Gentile III(1)
Former President and CEO | | | | | 2023 | | | | | | 968,767 | | | | | | 9,529,351 | | | | | | — | | | | | | 1,308,949 | | | | | | 11,807,067 | | |
| | | | 2022 | | | | | | 1,300,000 | | | | | | 9,163,814 | | | | | | 339,300 | | | | | | 925,786 | | | | | | 11,728,900 | | |
| | | | 2021 | | | | | | 1,297,863 | | | | | | 7,150,071 | | | | | | 1,497,053 | | | | | | 904,951 | | | | | | 10,849,938 | | |
| | Samantha J. Marnick(1)
Former EVP; COO; and President,
Commercial | | | | | 2023 | | | | | | 634,795 | | | | | | 2,008,440 | | | | | | — | | | | | | 1,614,404 | | | | | | 4,257,639 | | |
| | | | 2022 | | | | | | 700,000 | | | | | | 2,287,789 | | | | | | 138,600 | | | | | | 273,458 | | | | | | 3,399,847 | | |
| | | | 2021 | | | | | | 659,529 | | | | | | 1,495,040 | | | | | | 547,917 | | | | | | 246,436 | | | | | | 2,948,922 | | |
| | 51 | | | (7)Spirit AeroSystems2024 Proxy Statement
The following table shows “All Other Compensation” amounts for our NEOs for 2017:
| |
Name | Life Insurance(a) ($) | Financial and Tax Services(b) ($) | Personal Aircraft Usage(c) ($) | Personal Travel Expenses(d) ($) | Personal Security(e) ($) | Relocation Expenses, Aircraft Usage, and Gross-Ups(f) ($) | Deferred Compensation Plan Contributions(g) ($) | Company Contributions Under Tax Qualified Contribution Plan(h) ($) | Other ($) | Total ($) |
Thomas C. Gentile, III | 816 | | 97,259 | | | 256,430 | 600,000 | 17,476 | 37,403(i) | 1,009,385 |
Sanjay Kapoor | 816 | | 5,876 | 13,000 | 1,091 | | | 17,475 | 889(j) | 39,148 |
Samantha Marnick | 800 | 975 | | | 10,200 | | 100,000 | 17,475 | 12,025(k) | 141,475 |
Duane F. Hawkins | 816 | 12,868 | | | 1,091 | | | 18,784 | 98(l) | 33,657 |
Michelle J. Lohmeier | 775 | 8,740 | | 4,260 | | 2,367 | 47,500 | 20,215 | 98(l) | 83,955 |
| |
(a) Amounts shown reflect Company contributions toward executive group life insurance. (b) Amounts shown reflect financial, tax preparation, and other related services paid for by the Company. (c) Amounts shown reflect the incremental cost to the Company of personal usage of its corporate aircraft. The incremental cost to the Company for personal aircraft usage is determined by dividing direct operating costs per aircraft by the total number of flight hours per aircraft, resulting in a cost per hour, and multiplying the cost per hour by the hours of personal usage. Direct operating costs include variable costs less revenue derived from charter flights. Variable costs include fuel, maintenance expenses, parts and supplies, landing fees, ground services, catering, and crew expenses associated with such use, including those associated with “deadhead” flights related to such use. Because corporate aircraft is used primarily for business travel, the methodology excludes fixed costs that do not change based on usage. Fixed costs include pilot salaries, the purchase or lease costs of the aircraft, and the cost of maintenance not related to personal travel. Executives, their families, and invited guests occasionally fly on the corporate aircraft as additional passengers on business flights. In those cases, the aggregate incremental cost to the Company is a de minimis amount, and as a result, no amount is reflected in the Summary Compensation Table. Executives, directors, their families, and invited guests also occasionally fly on the corporate aircraft as additional passengers on personal flights that are attributed to another executive, in which case the entire incremental cost is allocated to the executive who arranged for the personal flight. The Company generally does not grant bonuses to cover, reimburse, or otherwise “gross-up” any income tax owed for personal travel on corporate aircraft; however, in the event that personal aircraft usage is incorporated in a relocation package, the Company may gross-up income tax on such amount. (d) Amounts shown reflect the NEOs’ personal travel expenses (or travel expenses of their spouses) and personal commercial flights paid for by the Company. (e) Amounts shown reflect the incremental cost of personal or home security services for the NEOs that were deemed to be necessary and appropriate based on risk assessments performed by an independent security firm. (f) Amounts shown reflect relocation expenses reimbursed by the Company. For Mr. Gentile, the amount reflects $80,859, the net incremental cost to the Company of Mr. Gentile’s relocation flights between his home in Connecticut and Wichita, KS (computed as described under footnote (c), above), $88,929 for lodging and related expenses, and $88,642 for gross-ups to cover Mr. Gentile’s tax liability with respect to qualified relocation expenses ($29,938 of this gross-up amount related to personal aircraft usage for relocation flights). (g) Amounts shown reflect Company contributions to the accounts of its eligible NEOs under the DCP . See “Other Compensation Elements and Information - Benefits and Perquisites” on page 45. (h) Amounts shown reflect matching and non-matching contributions made by the Company under the RSP. See “Other Compensation Elements and Information - Benefits and Perquisites” on page 45. (i) Amounts shown reflect a $25,000 charitable contribution to a non-profit organization, personal driving costs, executive physical costs, and costs relating to personal use of a country club membership. (j) Amounts shown reflect costs relating to personal use of a country club membership and spousal travel expenses. (k) Amounts shown reflect vehicle lease fees. (l) Amounts shown reflect spousal travel expenses. |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
(1)
Mr. Hawkins retired from his role as EVP; President, Defense & Space, effective as of April 1, 2023, but continues as an employee of the Company to facilitate an orderly transition through April 1, 2024, or such other date as mutually agreed. Mr. Gentile separated from the Company effective as of September 30, 2023. Ms. Marnick separated from the Company effective as of November 27, 2023.
(2)
Amounts shown represent the aggregate grant date fair value of awards granted to the NEOs during the applicable year, as determined in accordance with FASB ASC Topic 718. These grant date fair values represent the accounting expense to be recorded for the award and are not reflective of the actual value that may be recognized by an NEO with respect to the award. The assumptions made by the Company in calculating these amounts are incorporated herein by reference to Note 19 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In 2023, each NEO received a Time-Based Restricted Stock Unit award (“RSU”) and, except for Mr. Shanahan, a Performance-Based Restricted Stock Unit award tied to TSR (“PB-TSR”), a Performance-Based Restricted Stock Unit award tied to FCF (“PB-FCF”) and a Performance-Based Restricted Stock Unit award tied to RG (“PB-RG”). For each NEO other than Mr. Shanahan, the grant date fair value of the RSU awards equals the number of shares granted, multiplied by $34.58, which was the closing price of the Common Stock on the grant date. Mr. Shanahan received RSUs for service as a member of the Board prior to his appointment and RSUs in connection with his appointment, which had grant date fair values equal to the number of shares granted, multiplied by $24.51 and $16.14, respectively, which were the closing prices of the Common Stock on the grant date or if the grant date was not a trading day, the closing prices of the Common Stock on the date immediately preceding the grant date. Amounts shown for Mr. Gentile also represent the incremental fair value of the modifications to Mr. Gentile’s RSUs calculated in accordance with FASB ASC Topic 718, which were modified in connection with his separation from the Company. The grant date fair value of the PB-TSRs is equal to the number of shares granted at target multiplied by $51.89, which was determined using a Monte Carlo simulation model based on the probable ranking of the Company’s TSR relative to the TSR of a group of the Company’s peers, using the closing price of the Common Stock on the grant date. The grant date fair value of the PB-FCFs and PB-RGs is equal to the number of shares granted at target multiplied by $34.58, the closing price of the Common Stock on the grant date. If the maximum level of performance is achieved with respect to the PB-FCFs and PB-RGs, the value of the PB-FCFs and PB-RGs would be as follows: Mr. Suchinski: $718,849; Mr. Brown: $420,078; Mr. Young: $341,374; Mr. McLarty: $332,106; Mr. Hawkins: $661,308; Mr. Gentile: $3,575,019; and Ms. Marnick: $892,579. For additional information on the awards, see “2023 Compensation Program Elements.”
(3)
Represents an ACI earned by Mr. Hawkins with respect to 2023 performance and paid in February 2024. Mr. Shanahan was not eligible for an ACI for 2023. The Compensation Committee exercised its negative discretion on the Quality component of the ACI program notwithstanding actual metric achievement, resulting in no payout for all other NEOs.
(4)
The following table shows “All Other Compensation” amounts for our NEOs in 2023.
All Other Compensation
| | Name | | | Life
Insurance(1)
($) | | | Financial
and Tax
Services(2)
($) | | | Personal
Aircraft
Usage(3)
($) | | | Personal
Travel
Expenses(4)
($) | | | Deferred
Compensation
Plan
Contributions(5)
($) | | | Company
Contributions
Under Tax-
Qualified
Defined
Contribution
Plan(6)
($) | | | Other(7)
($) | | | Total
($) | |
| | Patrick M. Shanahan | | | | | 233 | | | | | | 6,250 | | | | | | 157,631 | | | | | | 359 | | | | | | | | | | | | 1,731 | | | | | | 98,814 | | | | | | 265,018 | | |
| | Mark J. Suchinski | | | | | 930 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,025 | | | | | | 32,071 | | | | | | 59,026 | | |
| | William E. Brown | | | | | 893 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,025 | | | | | | 13,000 | | | | | | 39,918 | | |
| | Alan Young | | | | | 809 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,511 | | | | | | 13,000 | | | | | | 36,321 | | |
| | Scott M. McLarty | | | | | 6,722 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 54,781 | | | | | | 25,379 | | | | | | 86,882 | | |
| | Duane F. Hawkins | | | | | 930 | | | | | | 13,000 | | | | | | | | | | | | | | | | | | | | | | | | 22,708 | | | | | | | | | | | | 36,638 | | |
| | Thomas C. Gentile III | | | | | 698 | | | | | | 20,300 | | | | | | 275,145 | | | | | | | | | | | | 600,000 | | | | | | 26,025 | | | | | | 386,781 | | | | | | 1,308,949 | | |
| | Samantha J. Marnick | | | | | 853 | | | | | | | | | | | | 17,751 | | | | | | | | | | | | 200,000 | | | | | | 28,950 | | | | | | 1,366,850 | | | | | | 1,614,404 | | |
(1)
Amounts shown reflect Company contributions toward group life insurance.
(2)
Amounts shown reflect financial, tax preparation, and other related services paid for by the Company, which were reimbursed under the Perquisite Plan.
(3)
Amounts shown reflect the aggregate incremental cost to the Company of personal usage of its corporate aircraft. The incremental cost is determined by dividing direct operating costs per aircraft by the total number of flight hours per aircraft, resulting in a cost per hour, and multiplying the cost per hour by the hours of personal usage. Direct operating costs include variable costs such as fuel, maintenance expenses, parts and supplies, landing fees, ground services, catering, and crew expenses associated with such use, including those associated with “deadhead” flights related to such use. Because corporate aircraft is used primarily for business travel, the methodology excludes fixed costs that do not change based on usage. Fixed costs include pilot salaries, the purchase costs of the aircraft, and the cost of maintenance not related to personal travel. Executives, their families, and invited guests occasionally fly on the corporate aircraft as additional passengers on business flights. In those cases, the aggregate incremental cost to the Company is a de minimis amount, and as a result, no amount is reflected in the “Summary Compensation Table.” Executives, directors, their families, and invited guests also occasionally fly on the corporate aircraft
| | Spirit AeroSystems2024 Proxy Statement | | | 52 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
as additional passengers on personal flights that are attributed to another executive, in which case the entire incremental cost is allocated to the executive who arranged for the personal flight. The Company does not grant bonuses to cover, reimburse, or “gross-up” any income tax owed for personal travel on corporate aircraft. The Compensation Committee has authorized annual aircraft personal usage amounts of the following (such amounts do not include “deadhead” or ferry flights), with other amounts approved on an ad hoc basis: Mr. Shanahan — 70 hours; Mr. Gentile — 70 hours and Ms. Marnick — 25 hours. With ferry flights, the total hours reported above for 2023 was 44.4 hours for Mr. Shanahan, 77.5 hours for Mr. Gentile and 5 hours for Ms. Marnick.
(4)
For Mr. Shanahan, amount reflects personal driving expenses.
(5)
Amounts shown reflect Company contributions to the accounts of its eligible NEOs under the DCP. See “Other Compensation Elements and Information — Benefits and Perquisites.”
(6)
Amounts shown reflect contributions made by the Company under the RSP. See “Other Compensation Elements and Information — Benefits and Perquisites.”
(7)
For Mr. Shanahan, amount reflects $93,945 in cash fees paid in connection with his service on the Board prior to his appointment as President and CEO and housing expenses for a corporate apartment the Company provides to Mr. Shanahan when he is at Company headquarters in Wichita, Kansas. For Mr. Gentile, amount reflects $270,000 in severance payments, $50,000 in post-employment consulting fees, $25,000 in legal fees and $29,718 in club expenses. For Mr. Gentile, amount also reflects COBRA continuation payments, executive physicals and charitable contributions. For Mr. Suchinski, amount reflects car expenses and club expenses. For Mr. Brown, amount reflects car expenses. For Mr. Young, amount reflects tuition fees. For Mr. McLarty, amount reflects car expenses and hanger fees, aviation services and flight training. For Ms. Marnick, amount reflects $1,256,850 in severance payments, $75,000 in transition services fees, $20,000 in COBRA continuation coverage payments and $15,000 in legal fees. Certain amounts were reimbursed under the Perquisite Plan, subject to the annual allowances of $25,000 for Messrs. Shanahan (which was prorated for his start date) and Gentile and $13,000 for the other NEOs.
Narrative to the Summary Compensation Table
For a description of the material terms of Messrs. Shanahan’s, Suchinski’s, and Gentile’s employment agreements, Mr. Hawkins’ retirement agreement, and Mr. Gentile’s and Ms. Marnick’s separation agreements, please see the section titled “Employment and Separation Agreements.” While Messrs. Brown, Young and McLarty have employment agreements with the Company, and Ms. Marnick had an employment agreement with the Company prior to her separation, their roles and compensation have significantly changed since the employment agreements were entered into. Accordingly, the Company does not believe a description of the terms of such agreements is necessary to understand the information disclosed in the “Summary Compensation Table.”
In connection with Mr. Gentile’s separation from service on September 30, 2023, and as described under the section titled “Employment and Separation Agreements,” certain of his outstanding equity compensation awards were modified to provide for continued vesting through February 2024, subject to compliance with certain restrictive covenants and other obligations. The incremental fair value of such modifications has been included in the “Summary Compensation Table” and the “Grants of Plan-Based Awards Table.”
| | 53 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Grants of Plan-Based Awards in 2023
The following table presents information regarding grants of plan-based awards to the NEOs during the fiscal year ended December 31, 2023.
| | | | | | | | | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | | All Other
Stock
Awards | | | | | | | |
| | Name | | | Grant Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Number
of Shares
of Stock
(#) | | | Grant Date Fair
Value of Stock
Awards
($) | |
| | Patrick M. Shanahan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(1) | | | | | 5/8/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,120 | | | | | | 150,001 | | |
| | RSU(2) | | | | | 9/30/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 495,662 | | | | | | 7,999,985 | | |
| | Mark J. Suchinski | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 34,375 | | | | | | 687,500 | | | | | | 1,375,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,786 | | | | | | 718,780 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 2,598 | | | | | | 10,393 | | | | | | 20,786 | | | | | | | | | | | | 539,293 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,299 | | | | | | 5,197 | | | | | | 10,394 | | | | | | | | | | | | 179,712 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,299 | | | | | | 5,197 | | | | | | 10,394 | | | | | | | | | | | | 179,712 | | |
| | William E. Brown | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 24,000 | | | | | | 480,000 | | | | | | 960,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,146 | | | | | | 420,009 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,518 | | | | | | 6,073 | | | | | | 12,146 | | | | | | | | | | | | 315,128 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 759 | | | | | | 3,037 | | | | | | 6,074 | | | | | | | | | | | | 105,019 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 759 | | | | | | 3,037 | | | | | | 6,074 | | | | | | | | | | | | 105,019 | | |
| | Alan Young | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 20,177 | | | | | | 403,533 | | | | | | 807,066 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,869 | | | | | | 341,270 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,234 | | | | | | 4,935 | | | | | | 9,870 | | | | | | | | | | | | 256,077 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 617 | | | | | | 2,468 | | | | | | 4,936 | | | | | | | | | | | | 85,343 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 617 | | | | | | 2,468 | | | | | | 4,936 | | | | | | | | | | | | 85,343 | | |
| | Scott M. McLarty | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 25,108 | | | | | | 502,162 | | | | | | 1,004,324 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,602 | | | | | | 332,037 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,200 | | | | | | 4,801 | | | | | | 9,602 | | | | | | | | | | | | 249,124 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 600 | | | | | | 2,401 | | | | | | 4,802 | | | | | | | | | | | | 83,027 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 600 | | | | | | 2,401 | | | | | | 4,802 | | | | | | | | | | | | 83,027 | | |
| | Spirit AeroSystems2024 Proxy Statement | | | 54 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | | | | | | | | | | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards | | | All Other
Stock
Awards | | | | | | | |
| | Name | | | Grant Date | | | Threshold
($) | | | Target
($) | | | Maximum
($) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Number
of Shares
of Stock
(#) | | | Grant Date Fair
Value of Stock
Awards
($) | |
| | Duane F. Hawkins | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 23,335 | | | | | | 466,695 | | | | | | 933,390 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,123 | | | | | | 661,273 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 2,391 | | | | | | 9,562 | | | | | | 19,124 | | | | | | | | | | | | 496,172 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,195 | | | | | | 4,781 | | | | | | 9,562 | | | | | | | | | | | | 165,327 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,195 | | | | | | 4,781 | | | | | | 9,562 | | | | | | | | | | | | 165,327 | | |
| | Thomas C. Gentile III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 94,250 | | | | | | 1,885,000 | | | | | | 3,770,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(8) | | | | | 9/30/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 91,978 | | | | | | 1,484,525 | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 103,384 | | | | | | 3,575,019 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 12,923 | | | | | | 51,692 | | | | | | 103,384 | | | | | | | | | | | | 2,682,298 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 6,462 | | | | | | 25,846 | | | | | | 51,692 | | | | | | | | | | | | 893,755 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 6,462 | | | | | | 25,846 | | | | | | 51,692 | | | | | | | | | | | | 893,755 | | |
| | Samantha J. Marnick | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ACI(3) | | | | | | | | | | | 38,500 | | | | | | 770,000 | | | | | | 1,540,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,810 | | | | | | 892,510 | | |
| | PB-TSR(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 3,226 | | | | | | 12,905 | | | | | | 25,810 | | | | | | | | | | | | 669,640 | | |
| | PB-FCF(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,613 | | | | | | 6,453 | | | | | | 12,906 | | | | | | | | | | | | 223,145 | | |
| | PB-RG(7) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | | | | | | | 1,613 | | | | | | 6,453 | | | | | | 12,906 | | | | | | | | | | | | 223,145 | | |
(1)
Represents RSUs that vest on May 8, 2024, and were granted to Mr. Shanahan in connection with his service as a non-employee director of our Board. The grant date fair value of each award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $24.51, the closing price of the Common Stock on the grant date.
(2)
Represents RSUs that vest annually over three years, beginning on September 30, 2024, if Mr. Shanahan remains employed by the Company on each annual vesting date. The grant date fair value of each award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $16.14, the closing price of the Common Stock on the date immediately preceding the grant date as the grant date was not a trading day.
(3)
Represents ACI opportunities that were granted in 2023. For all participants, the threshold, target, and maximum figures were calculated on a weighted-average basis, giving effect to the changes made to base salaries during 2023. As reported in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table,” with the exception of Mr. Hawkins, no NEOs earned or were paid any ACI amounts for 2023.
(4)
Represents RSUs that vest annually over three years, beginning February 10, 2024, if such NEO remains employed by the Company on each annual vesting date. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will become 100% vested in the RSUs when he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). The grant date fair value of each award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $34.58, the closing price of the Common Stock on the grant date.
(5)
Represents PB-TSRs that vest at the end of the three-year performance period, subject to continued employment through the date the Committee certifies performance, based on the ranking of the Company’s TSR relative to the TSR of each of the companies in the Company’s peer group. The grant date fair value of each award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares granted at target multiplied by $51.89, which was determined using a Monte Carlo simulation based on the probable ranking of the Company’s TSR relative to a group of the Company’s peers, using the closing price of the Common Stock on the grant date. Actual payout may be zero or range from 25% to 200% of the target shares granted. Please see Appendix A for an explanation and reconciliation of non-GAAP measures.
| | 55 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
(6)
Represents PB-FCFs that vest at the end of the three-year performance period, subject to continued employment through the date the Committee certifies performance, based on Cumulative Free Cash Flow achieved over the Performance Period. Please see Appendix A for an explanation and reconciliation of non-GAAP measures. The grant date fair value of each award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares granted at target multiplied by $34.58, the closing price of the Common Stock on the grant date. Actual payout may be zero or range from 25% to 200% of the target shares granted. Please see Appendix A for an explanation and reconciliation of non-GAAP measures.
(7)
Represents PB-RGs that vest at the end of the three-year performance period, subject to continued employment through the date the Committee certifies performance, based on total growth in revenue, calculated in accordance with GAAP, over the three-year performance period. The grant date fair value of each award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares granted at target multiplied by $34.58, the closing price of the Common Stock on the grant date. Actual payout may be zero or range from 25% to 200% of the target shares granted.
(8)
Represents the incremental fair value of the modifications to Mr. Gentile’s RSUs calculated in accordance with FASB ASC Topic 718, which were modified in connection with his separation from the Company.
Outstanding Equity Awards at 2023 Fiscal Year End
The following table presents the outstanding equity awards held by the NEOs as of December 31, 2023. The Company has not granted any options or option-like awards. The market value of the awards is determined by multiplying the number of shares shown in the applicable columns below by $31.78, the closing price of the Common Stock on December 29, 2023, which was the last trading day in calendar year 2023. Ms. Marnick did not have any outstanding equity awards as of December 31, 2023.
| | | | | Stock Awards | |
| | Name | | | Grant
Date | | | Number of
Shares or
Units of
Stock
That Have
Not Vested
(#) | | | Market Value
of
Shares or
Units
of Stock That
Have Not
Vested
($) | | | Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units,
or Other Rights That
Have Not Vested
(#) | | | Equity Incentive Plan
Awards: Market or
Payout
Value of Unearned
Shares,
Units, or Other Rights
That
Have Not Vested
($) | |
| | Patrick M. Shanahan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(1) | | | | | 9/30/2023 | | | | | | 495,662 | | | | | | 15,752,138 | | | | | | | | | | | | | | |
| | RSU(2) | | | | | 5/8/2023 | | | | | | 6,120 | | | | | | 194,494 | | | | | | | | | | | | | | |
| | Mark J. Suchinski | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(3) | | | | | 2/10/2023 | | | | | | 20,786 | | | | | | 660,579 | | | | | | | | | | | | | | |
| | PB-TSR(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 2,599 | | | | | | 82,596 | | |
| | PB-FCF(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 1,299 | | | | | | 41,282 | | |
| | PB-RG(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 10,394 | | | | | | 330,321 | | |
| | RSU(7) | | | | | 2/7/2022 | | | | | | 9,702 | | | | | | 308,330 | | | | | | | | | | | | | | |
| | PB-TSR(8) | | | | | 2/7/2022 | | | | | | | | | | | | | | | | | | 3,638 | | | | | | 115,616 | | |
| | RSU(9) | | | | | 2/26/2021 | | | | | | 4,902 | | | | | | 155,786 | | | | | | | | | | | | | | |
| | William E. Brown | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(3) | | | | | 2/10/2023 | | | | | | 12,146 | | | | | | 386,000 | | | | | | | | | | | | | | |
| | PB-TSR(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 1,518 | | | | | | 48,242 | | |
| | PB-FCF(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 759 | | | | | | 24,121 | | |
| | PB-RG(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 6,074 | | | | | | 193,032 | | |
| | RSU(7) | | | | | 2/7/2022 | | | | | | 5,392 | | | | | | 171,358 | | | | | | | | | | | | | | |
| | PB-TSR(8) | | | | | 2/7/2022 | | | | | | | | | | | | | | | | | | 2,022 | | | | | | 64,259 | | |
| | Spirit AeroSystems2024 Proxy Statement | | | 56 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | | | | Stock Awards | |
| | Name | | | Grant
Date | | | Number of
Shares or
Units of
Stock
That Have
Not Vested
(#) | | | Market Value
of
Shares or
Units
of Stock That
Have Not
Vested
($) | | | Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units,
or Other Rights That
Have Not Vested
(#) | | | Equity Incentive Plan
Awards: Market or
Payout
Value of Unearned
Shares,
Units, or Other Rights
That
Have Not Vested
($) | |
| | RSU(9) | | | | | 2/26/2021 | | | | | | 3,730 | | | | | | 118,539 | | | | | | | | | | | | | | |
| | Alan Young (10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(3) | | | | | 2/10/2023 | | | | | | 9,869 | | | | | | 313,637 | | | | | | | | | | | | | | |
| | PB-TSR(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 1,234 | | | | | | 39,217 | | |
| | PB-FCF(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 617 | | | | | | 19,608 | | |
| | PB-RG(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 4,936 | | | | | | 156,866 | | |
| | RSU(11) | | | | | 3/4/2022 | | | | | | 5,000 | | | | | | 158,900 | | | | | | | | | | | | | | |
| | RSU(7) | | | | | 2/7/2022 | | | | | | 3,260 | | | | | | 103,603 | | | | | | | | | | | | | | |
| | PB-TSR(8) | | | | | 2/7/2022 | | | | | | | | | | | | | | | | | | 1,223 | | | | | | 38,867 | | |
| | RSU(9) | | | | | 2/26/2021 | | | | | | 2,225 | | | | | | 71,664 | | | | | | | | | | | | | | |
| | Scott M. McLarty | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(3) | | | | | 2/10/2023 | | | | | | 9,602 | | | | | | 305,152 | | | | | | | | | | | | | | |
| | PB-TSR(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 1,200 | | | | | | 38,136 | | |
| | PB-FCF(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 600 | | | | | | 19,068 | | |
| | PB-RG(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 4,802 | | | | | | 152,608 | | |
| | RSU(7) | | | | | 2/7/2022 | | | | | | 5,028 | | | | | | 159,790 | | | | | | | | | | | | | | |
| | PB-TSR(8) | | | | | 2/7/2022 | | | | | | | | | | | | | | | | | | 1,886 | | | | | | 59,937 | | |
| | RSU(9) | | | | | 2/26/2021 | | | | | | 3,191 | | | | | | 101,410 | | | | | | | | | | | | | | |
| | Duane F. Hawkins | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(3) | | | | | 2/10/2023 | | | | | | 18,507 | | | | | | 588,152 | | | | | | | | | | | | | | |
| | PB-TSR(4) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 2,391 | | | | | | 75,986 | | |
| | PB-FCF(5) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 1,195 | | | | | | 37,977 | | |
| | PB-RG(6) | | | | | 2/10/2023 | | | | | | | | | | | | | | | | | | 9,562 | | | | | | 303,880 | | |
| | RSU(7) | | | | | 2/7/2022 | | | | | | 8,926 | | | | | | 283,668 | | | | | | | | | | | | | | |
| | PB-TSR(8) | | | | | 2/7/2022 | | | | | | | | | | | | | | | | | | 3,347 | | | | | | 106,368 | | |
| | RSU(9) | | | | | 2/26/2021 | | | | | | 5,561 | | | | | | 176,729 | | | | | | | | | | | | | | |
| | Thomas C. Gentile III(12) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RSU(3) | | | | | 2/10/2023 | | | | | | 34,462 | | | | | | 1,095,202 | | | | | | | | | | | | | | |
| | 57 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | | | | Stock Awards | |
| | Name | | | Grant
Date | | | Number of
Shares or
Units of
Stock
That Have
Not Vested
(#) | | | Market Value
of
Shares or
Units
of Stock That
Have Not
Vested
($) | | | Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units,
or Other Rights That
Have Not Vested
(#) | | | Equity Incentive Plan
Awards: Market or
Payout
Value of Unearned
Shares,
Units, or Other Rights
That
Have Not Vested
($) | |
| | RSU(7) | | | | | 2/7/2022 | | | | | | 24,128 | | | | | | 766,788 | | | | | | | | |
| | RSU(9) | | | | | 2/26/2021 | | | | | | 33,388 | | | | | | 1,061,071 | | | | | | | | |
(1)
Represents RSUs that vest on May 8, 2024 and were granted to Mr. Shanahan in connection with his service as a non-employee director of our Board.
(2)
Represents 2023 RSUs granted to Mr. Shanahan in connection with his appointment as President and CEO. The first, second, and third tranches of the award will vest on September 30, 2024, September 30, 2025, and September 30, 2026, respectively, if Mr. Shanahan continues to be employed by the Company on each vesting date.
(3)
Represents 2023 annual RSUs. The first tranche of the award vested on February 10, 2024, and the second and third tranches will vest on February 10, 2025, and February 10, 2026, respectively, if the NEO continues to be employed by the Company on each vesting date. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will become 100% vested in the RSUs when he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). This retirement eligibility required the Company to withhold shares for certain tax purposes in the year of grant. For this reason, Mr. Hawkins' amounts for the RSUs are shown as net shares, because shares were disposed of for tax purposes in the year of grant in accordance with IRC requirements.
(4)
Represents PB-TSRs granted in 2023, with a performance period running from January 1, 2023, to December 31, 2025. The number of shares and market value shown reflects the achievement of a threshold performance goal based on TSR performance for the fiscal year ended December 31, 2023. The award will vest upon performance certification by the Compensation Committee following the end of the performance period.
(5)
Represents PB-FCFs granted in 2023, with a performance period running from January 1, 2023, to December 31, 2025. The number of shares and market value shown reflects the achievement of a threshold performance goal based on FCF performance for the fiscal year ended December 31, 2023. The award will vest upon performance certification by the Compensation Committee following the end of the performance period. Please see Appendix A for an explanation and reconciliation of non-GAAP measures.
(6)
Represents PB-RGs granted in 2023, with a performance period running from January 1, 2023, to December 31, 2025. The number of shares and market value shown reflects the achievement of a maximum performance goal based on RG performance for the fiscal year ended December 31, 2023. The award will vest upon performance certification by the Compensation Committee following the end of the performance period. Please see Appendix A for an explanation and reconciliation of non-GAAP measures.
(7)
Represents 2022 annual RSUs. The first and second tranches of the award vested on February 7, 2023 and February 7, 2024, respectively, and the third tranche will vest on February 7, 2025, respectively, if the NEO continues to be employed by the Company on each vesting date. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will become 100% vested in the RSUs when he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). This retirement eligibility required the Company to withhold shares for certain tax purposes in the year of grant. For this reason, Mr. Hawkins' amounts for the RSUs are shown as net shares, because shares were disposed of for tax purposes in the year of grant in accordance with IRC requirements.
(8)
Represents PB-TSRs granted in 2022, with a performance period running from January 1, 2022, to December 31, 2024. The number of shares and market value shown reflects the achievement of a threshold performance goal based on TSR performance for the fiscal year ended December 31, 2023. The award will vest upon performance certification by the Compensation Committee following the end of the performance period.
(9)
Represents 2021 annual RSUs. The first, second, and third tranches of the award vested on February 26, 2022, February 26, 2023, and February 26, 2024, respectively. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will become 100% vested in the RSUs when he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). This retirement eligibility required the Company to withhold shares for certain tax purposes in the year of grant. For this reason, Mr. Hawkins' amounts for the RSUs are shown as net shares, because shares were disposed of for tax purposes in the year of grant in accordance with IRC requirements.
(10)
This disclosure does not include amounts attributable to Mr. Young’s spouse, who is also an employee of the Company. See sections titled “Related Persons Transactions” and “Beneficial Ownership of Directors and Officers” for more information.
(11)
Represents additional 2022 annual RSUs granted to Mr. Young. The first and second tranches of the award vested on March 4, 2023, and March 4, 2024, respectively, and the third tranche will vest on March 4, 2025, if Mr. Young continues to be employed by the Company on such vesting date.
(12)
The Company waived the requirement that Mr. Gentile remain employed by the Company through the applicable vesting dates in February 2024 with respect to the RSUs granted on February 26, 2021, February 7, 2022, and February 10, 2023, in connection with his separation of employment from the Company, effective as of September 30, 2023, subject to his continued compliance with certain post-employment covenants.
Option Exercises and Stock Vested for Fiscal Year 2023
The following table presents information regarding NEO stock awards that vested in 2023. Values reflected below are gross amounts that do not include any reductions for tax withholding. The value realized on vesting represents the number of shares multiplied by the closing price of the Common Stock on the vesting date. The Company has not granted any options or option-like awards.
| | Spirit AeroSystems2024 Proxy Statement | | | 58 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | Name | | | Grant Date | | | Vesting Date | | | Number of Shares
Acquired on Vesting
(#) | | | Value Realized
on Vesting
($) | |
| | Patrick M. Shanahan | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(1) | | | | | 5/9/2022 | | | | | | 5/9/2023 | | | | | | 4,775 | | | | | | 115,842 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 4,775 | | | | | | 115,842 | | |
| | Mark J. Suchinski | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 3,437 | | | | | | 117,270 | | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 4,904 | | | | | | 166,491 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 4,851 | | | | | | 185,696 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 13,192 | | | | | | 469,457 | | |
| | William E. Brown | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 3,139 | | | | | | 107,103 | | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 3,732 | | | | | | 126,701 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 2,697 | | | | | | 103,241 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 9,568 | | | | | | 337,045 | | |
| | Alan Young | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 1,201 | | | | | | 40,978 | | |
| | RS(2) | | | | | 4/2/2020 | | | | | | 4/2/2023 | | | | | | 3,332 | | | | | | 115,420 | | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 2,256 | | | | | | 76,591 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 1,630 | | | | | | 62,396 | | |
| | RSUs(4) | | | | | 3/4/2022 | | | | | | 3/4/2023 | | | | | | 2,500 | | | | | | 85,300 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 10,919 | | | | | | 380,685 | | |
| | Scott M. McLarty | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 1,915 | | | | | | 65,340 | | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 3,192 | | | | | | 108,368 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 2,514 | | | | | | 96,236 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 7,621 | | | | | | 269,944 | | |
| | Duane F. Hawkins | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 2,689 | | | | | | 91,749 | | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 5,561 | | | | | | 188,796 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 4,031 | | | | | | 154,307 | | |
| | RSUs(5) | | | | | 2/10/2023 | | | | | | 11/15/2023 | | | | | | 616 | | | | | | 15,474 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 12,897 | | | | | | 450,326 | | |
| | Thomas C. Gentile III | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 28,089 | | | | | | 958,397 | | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 33,388 | | | | | | 1,133,523 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 24,128 | | | | | | 923,620 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 85,605 | | | | | | 3,015,540 | | |
| | Samantha J. Marnick | | | | | | | | | | | | | | | | | | | | | | | | | |
| | RS(2) | | | | | 3/4/2020 | | | | | | 3/4/2023 | | | | | | 4,645 | | | | | | 158,487 | | |
| | 59 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | Name | | | Grant Date | | | Vesting Date | | | Number of Shares
Acquired on Vesting
(#) | | | Value Realized
on Vesting
($) | |
| | RSUs(3) | | | | | 2/26/2021 | | | | | | 2/26/2023 | | | | | | 6,982 | | | | | | 237,039 | | |
| | RSUs(4) | | | | | 2/7/2022 | | | | | | 2/7/2023 | | | | | | 6,024 | | | | | | 230,599 | | |
| | TOTAL | | | | | | | | | | | | | | | | | 17,651 | | | | | | 626,125 | | |
(1)
Represents shares vesting under the 2022 non-employee director compensation program.
(2)
Represents shares vesting under the 2020 annual RS.
(3)
Represents shares vesting under the 2021 annual RSUs.
(4)
Represents shares vesting under the 2022 annual RSUs.
(5)
Represents shares required to be withheld to satisfy tax obligations upon the grant date as Mr. Hawkins was retirement eligible.
2023 Nonqualified Deferred Compensation
The following table presents information concerning each of the Company’s defined contribution or other plans that provide for the deferral of compensation of the NEOs on a basis that is not tax-qualified.
| | Name | | | Plan | | | Executive
Contributions
in Last FY(1)
($) | | | Registrant
Contributions
in Last FY(2)
($) | | | Aggregate
Earnings
in Last FY(3)
($) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate
Balance at
Last FYE
($) | |
| | Thomas C. Gentile III | | | | | DCP | | | | | | | | | 600,000 | | | | | | 170,794 | | | | | | | | | 4,619,304(4) | | |
| | Samantha J. Marnick | | | | | DCP | | | | | | | | | 200,000 | | | | | | 43,751 | | | | | | | | | 1,206,689(5) | | |
(1)
These amounts represent participant contributions to the DCP and would be included in the “Salary” column of the “Summary Compensation Table.” No participant contributions were made in 2023.
(2)
These amounts represent Company contributions to the DCP and are included in the “All Other Compensation” column of the “Summary Compensation Table.”
(3)
Under the DCP, these amounts represent earnings on DCP balances from January 1 to December 31, 2023, and are not included in the “Summary Compensation Table.”
(4)
This amount includes $3,600,000 consisting of aggregate Company contributions prior to 2023 (reported in the “Summary Compensation Table” of prior year’s Proxy Statements).
(5)
This amount includes $900,000 consisting of aggregate Company contributions prior to 2023 (reported in the “Summary Compensation Table” of prior year’s Proxy Statements).
More information on the DCP can be found under “Other Compensation Elements and Information” and “Potential Payments Upon Termination or Change in Control.” There were no “above-market” earnings (defined by SEC rule as that portion of interest that exceeds 120% of the applicable federal long-term rate) under the DCP during fiscal year 2023, as the Company used 120% of the applicable federal long-term rate to determine the amounts to be contributed.
Summary Table — Potential Payments Upon Termination or Change in Control
The following table summarizes the value of compensation and benefits payable to each NEO upon termination that would exceed the compensation or benefits generally available to salaried employees. Benefits and payments are calculated using a termination date of December 31, 2023. For equity valuation purposes, the table below uses $31.78, the closing price of the Common Stock on December 29, 2023, which was the last trading day in calendar year 2023. For purposes of presenting amounts payable over a period of time (e.g., salary continuation), the amounts are shown as a single total but not as a present value (i.e., the single sum does not reflect any discount).
| | Spirit AeroSystems2024 Proxy Statement | | | 60 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
| | Name | | | Severance(1)
($) | | | RSUs and
RS(2)
($) | | | PB-TSR, PB-FCF
and PB-RG(3)
($) | | | Cash Award
under LTIP(4)
($) | | | Perquisite
Plan(5)
($) | | | Other(6)
($) | | | Total(7)
($) | |
| | Patrick M. Shanahan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination without Cause or for Good Reason | | | | | | | | | | | 15,752,138 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,752,138 | | |
| | Change in Control and Qualifying Termination(8) | | | | | 3,500,000 | | | | | | 15,946,632 | | | | | | | | | | | | | | | | | | 25,000 | | | | | | | | | | | | 19,471,632 | | |
| | Death or Disability | | | | | | | | | | | 15,752,138 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,752,138 | | |
| | Mark J. Suchinski | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination without Cause | | | | | 625,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,322 | | | | | | 634,322 | | |
| | Change in Control and Qualifying Termination | | | | | 625,000 | | | | | | 1,124,694 | | | | | | 330,321 | | | | | | 1,437,500 | | | | | | 13,000 | | | | | | 9,322 | | | | | | 3,539,837 | | |
| | Death or Disability | | | | | | | | | | | 1,124,694 | | | | | | 528,480 | | | | | | | | | | | | | | | | | | | | | | | | 1,653,174 | | |
| | William E. Brown(10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Change in Control and Qualifying Termination | | | | | | | | | | | 675,897 | | | | | | 193,032 | | | | | | 840,000 | | | | | | 13,000 | | | | | | | | | | | | 1,721,929 | | |
| | Death or Disability | | | | | | | | | | | 675,897 | | | | | | 300,026 | | | | | | | | | | | | | | | | | | | | | | | | 975,923 | | |
| | Alan Young | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Change in Control and Qualifying Termination | | | | | | | | | | | 647,804 | | | | | | 156,866 | | | | | | 682,500 | | | | | | 13,000 | | | | | | | | | | | | 1,500,170 | | |
| | Death or Disability | | | | | | | | | | | 647,804 | | | | | | 208,149 | | | | | | | | | | | | | | | | | | | | | | | | 855,953 | | |
| | Scott M. McLarty | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination in Lieu of Notice(9) | | | | | 342,383 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 350,393 | | |
| | Change in Control and Qualifying Termination | | | | | | | | | | | 566,351 | | | | | | 152,608 | | | | | | 684,767 | | | | | | 13,000 | | | | | | | | | | | | 1,416,726 | | |
| | Death or Disability | | | | | | | | | | | 566,351 | | | | | | 261,491 | | | | | | | | | | | | | | | | | | | | | | | | 827,842 | | |
| | Duane F. Hawkins(7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination without Cause | | | | | | | | | | | 1,048,549 | | | | | | 101,283 | | | | | | | | | | | | | | | | | | | | | | | | 1,149,832 | | |
| | Change in Control and Qualifying Termination | | | | | | | | | | | 1,048,549 | | | | | | 303,880 | | | | | | 1,322,500 | | | | | | 13,000 | | | | | | | | | | | | 2,687,929 | | |
| | Death or Disability | | | | | | | | | | | 1,048,549 | | | | | | 486,207 | | | | | | | | | | | | | | | | | | | | | | | | 1,534,756 | | |
| | Retirement | | | | | | | | | | | 1,048,549 | | | | | | 101,283 | | | | | | | | | | | | | | | | | | | | | | | | 1,149,832 | | |
(1)
Under the “Termination without Cause” row, represents 12 months of annual base salary pursuant to Mr. Suchinski’s employment agreement. Under the “Change in Control and Qualifying Termination” row, assumes a termination by the Company without cause (or in the case of Mr. Shanahan, a termination by the Company without cause or by Mr. Shanahan for good reason) under their respective employment agreements in connection with a change in control; this row represents 12 months of annual base salary for Mr. Shanahan and the remaining amount of his base salary he would have received had his employment continued through the first anniversary of his employment agreement.
(2)
Under the “Termination without Cause” row, represents a cash amount equal to all unvested RSUs and RS multiplied by $31.78 for Mr. Hawkins because he became retirement eligible in 2020, and accordingly, will become 100% vested in the RSUs and RS when he departs the Company.
(3)
Under the “Change in Control and Qualifying Termination” row, represents the amount of unvested PB-TSRs, PB-FCFs and PB-RGs (based on the projected payout for each award as of December 31, 2023) multiplied by $31.78. Under the “Death or Disability” row, represents a prorated amount equal to the number of target shares in the unvested PB-TSRs, PB-FCFs, and PB-RGs multiplied by $31.78. Under the “Retirement” row, represents a prorated amount of unvested PB-TSRs, PB-FCFs and PB-RGs (based on the projected payout for each award as of December 31, 2023) multiplied by $31.78. Please see Appendix A for an explanation and reconciliation of non-GAAP measures.
(4)
Represents a cash amount equal to the value of the full-year long-term incentive that would have been made to such NEO in the ordinary course of business within the 12-month period following the date of the change in control and qualifying termination based on the participant’s annual base pay in effect on such date.
(5)
Represents a cash award of the allowance the NEO would receive for 2023.
(6)
Represents 6 months of COBRA benefits for Mr. Suchinski under his employment agreement.
(7)
In January 2023, we entered into a Retirement Agreement and General Release with Mr. Hawkins, setting out the terms of his separation from the Company. The amounts reported here reflect his entitlements as of December 31, 2023. See “Employment and Separation Agreements — 2023 Agreements” below.
(8)
In addition to the RSUs granted to Mr. Shanahan on September 30, 2023 pursuant to his employment agreement, the non-employee director grant of RSUs that Mr. Shanahan received on May 8, 2023, will also vest upon a Change in Control and Qualifying Termination.
| | 61 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
(9)
Pursuant to the terms of Mr. McLarty’s employment agreement, termination of Mr. McLarty’s employment by the Company is subject to a minimum notice period of 9 months. Upon a termination by the Company (i) for reasons other than gross negligence and (ii) before the expiration of the required notice period, Mr. McLarty is entitled to 9 months base salary, less any salary paid for services provided by Mr. McLarty during the notice period. Because Mr. McLarty’s base salary is established and paid in GBP, the USD amount reflected in this row was calculated based on the average daily exchange rate in 2023.
(10)
In February 2024, we entered into a Retirement Agreement and General Release with Mr. Brown, setting out the terms of his separation from the Company. The amounts reported here reflect his entitlements as of December 31, 2023, and therefore do not reflect the subsequent agreement. See “Employment and Separation Agreements — 2024 Agreements” below.
Employment and Separation Agreements
Spirit has employment agreements with all of its currently employed NEOs. A brief description of certainthe material terms of Messrs. Shanahan’s and Suchinski’s agreements is below.
While Messrs. Young, Brown, McLarty and Hawkins have employment agreements with the Company, their roles and compensation have significantly changed since the employment agreements were entered into, and, except in the case of Mr. McLarty, all termination benefits expressly provided by the agreements have expired. As described in the footnote to the “Potential Payments Upon Termination or Change in Control” table, Mr. McLarty may receive a separation payment if he is terminated without the notice provided for in his employment agreement. Accordingly, the Company does not believe a description of the terms of such agreements is necessary to understand the information disclosed in the “Summary Compensation Table.”
Mr. Shanahan’s Employment Agreement
On September 30, 2023, we entered into an employment agreement with Mr. Shanahan with respect to his position as President and Chief Executive Officer. Pursuant to the employment agreement, Mr. Shanahan receives a base salary of $2,000,000 per year. In addition, Mr. Shanahan received (i) a one-time award of RSUs under the LTIP with an aggregate target grant date fair value equal to 400% of his base salary, (ii) use of temporary housing benefits in Wichita, Kansas provided in accordance with the terms and conditions of the Company’s relocation policy, (iii) use of the Company’s aircraft in accordance with the terms and conditions of the Company’s aircraft policy, and (iv) an automobile allowance provided in accordance with the terms and conditions of the Company’s automobile policy. Mr Shanahan is not eligible for an ACI award.
Potential payments and termination events under Mr. Shanahan’s employment agreement are described under “Potential Payments Upon Termination or Change in Control — Employment Agreements.”
Mr. Suchinski’s Employment Agreement
On January 29, 2020, we entered into an employment agreement with Mr. Suchinski with respect to his position as Senior Vice President and Chief Financial Officer. Pursuant to the employment agreement, Mr. Suchinski received a base salary of $500,000 per year. In addition, Mr. Suchinski was eligible for an ACI equal to 100% of his base salary, and an annual target LTIP award equal to 175% of his base salary. Effective January 26, 2021, after a compensation and performance review, Mr. Suchinski’s base salary increased to $525,000, and his annual target LTIP award increased to 200% of his annual base salary. Effective October 1, 2021, after a compensation and performance review, Mr. Suchinski’s base salary increased to $550,000, and his annual target LTIP award increased to 220% of his annual base salary.
Potential payments and termination events under Mr. Suchinski’s employment agreement are described under “Potential Payments Upon Termination or Change in Control — Employment Agreements.”
Mr. Gentile’s Employment Agreement
The following description of Mr. Gentile’s employment agreement applied during his period of employment with the Company through September 30, 2023. On February 13, 2016, we entered into an employment agreement, effective April 1, 2016, with Mr. Gentile with respect to his position as Executive Vice President and Chief Operating Officer. Pursuant to the employment agreement, Mr. Gentile received a base salary of $1,000,000 per year, which could be changed based on performance.year. In addition, Mr. Gentile was eligible for an ACI equal to 140% of his base salary, and an annual target LTIP award equal to 300% of his base salary. Mr. Gentile was also(and continues to be) entitled to participate in the executive relocation program and receive an annual DCP Company contribution of $500,000.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 48
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The Company granted Mr. Gentile a sign-on award of $3,000,000 in shares of restricted stock. Half of the award vested on April 1, 2017, and the other half will vest on April 1, 2018.
On July 27, 2016, to be effective on$600,000.
Effective August 1, 2016 (in recognition of Mr. Gentile’s appointment as President and CEO), the Board approved an increase in Mr. Gentile’s base salary increased to $1,100,000 annual DCP contribution to $600,000, and his annual target LTIP award increased to 400% of his annual base salary. EffectiveMr. Gentile received salary and
| | Spirit AeroSystems2024 Proxy Statement | | | 62 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
LTIP target increases in the first quarter of 2017 and 2018. Most recently, in February 3, 2017,2019, Mr. Gentile’s base salary was increased to $1,150,000,$1,300,000, his annual target ACI award increased to 145% of his annual base salary, and his annual target LTIP award was increased to 450%550% of his annual base salary. In January 2018,No further increases were made to Mr. Gentile’s salary was increased to $1,250,000 and his annual target LTIP award was increased to 500%.Potential payments and termination events under compensation following February 2019.
2023 Agreements
Mr.
Gentile’s employment agreement are described under “Potential Payments Upon Termination or Change-in-Control - Employment Agreements.”Mr. Kapoor’s Employment Agreement
On August 23, 2013,Hawkins
As previously disclosed, on January 16, 2023, we entered into an employment agreement, effective September 23, 2013,a Retirement Agreement and General Release with Mr. KapoorHawkins that provides effective April 1, 2023, Mr. Hawkins resigned from his position as Executive Vice President, President of Defense & Space of Spirit and the Company and commenced his position as Senior Advisor. Mr. Hawkins is expected to remain as an employee of the Company until April 1, 2024, or such other date as may be mutually agreed (the “Retirement Date”) to facilitate an orderly transition of his duties. Mr. Hawkins continues to receive his current base salary through the Retirement Date and received a bonus of $44,803 for 2023, based on a target award opportunity of 100% of his annual base salary from January 1, 2023, through March 31, 2023, and 75% of his annual base salary from April 1, 2023, through December 31, 2023. From January 1, 2024, until the Retirement Date, Mr. Hawkins will be eligible to receive a prorated bonus for such period based on a target award opportunity of 75% of his annual base salary, subject to actual achievement of performance under the STIP. Mr. Hawkins is not entitled to any new LTIP grants for 2024 and will continue to vest in the awards previously granted to him under the OIP until the Retirement Date in accordance with their terms, which include, by reason of Mr. Hawkins’ retirement after reaching age 62, accelerated vesting of certain time-based awards and prorated accelerated vesting of certain performance-based awards, subject to satisfaction of performance conditions, as described below. The agreement with Mr. Hawkins also contains non-competition and non-solicitation provisions, as well as confidentiality and non-disparagement provisions and a general release of claims against the Company.
Mr. Gentile
On October 1, 2023, we entered into a Separation Agreement and General Release with Mr. Gentile to set out the terms of his separation from the Company, effective as of September 30, 2023. In consideration of Mr. Gentile’s release of claims, future cooperation and compliance with certain obligations, including confidentiality, non-competition, non-solicitation and mutual non-disparagement covenants, Mr. Gentile received separation payments and benefits comprised of the following: (i) a payment of $1,300,000, paid in substantially equal installments, which is equal to one year of Mr. Gentile’s base salary; (ii) an amount equal to Mr. Gentile’s monthly COBRA premium until the earliest to occur of: (a) October 30, 2024, and (b) the date that Mr. Gentile is no longer eligible to receive COBRA continuation coverage; (iii) waiver of continuation of employment requirements with respect to the vesting of 91,978 RSUs granted pursuant to the LTIP; (iv) up to $100,000 in outplacement services costs actually incurred; and (v) up to $25,000 in legal fees actually incurred by Mr. Gentile in connection with the negotiation and documentation of his separation agreement. Additionally, Mr. Gentile received a $50,000 consulting fee retainer.
| | Type of Benefit | | | Value of Benefit ($) | |
| | Severance Payment(1) | | | | | 1,300,000 | | |
| | COBRA Continuation Coverage(2) | | | | | 20,207 | | |
| | LTIP Award(3) | | | | | 1,484,525 | | |
| | Outplacement Services(4) | | | | | 100,000 | | |
| | Attorney’s Fees | | | | | 25,000 | | |
| | Consulting Retainer | | | | | 50,000 | | |
| | Total | | | | | 2,979,732 | | |
(1)
As of December 31, 2023, the Company had paid to Mr. Gentile $270,000 in severance payments.
(2)
The amount of the COBRA benefit was calculated assuming the Mr. Gentile elected COBRA continuation coverage through October 30, 2024.
(3)
The value of the waiver of continuation of employment requirements with respect to 91,978 RSUs was calculated based on the closing price of $16.14 on September 29, 2023, the last trading day immediately prior to Mr. Gentile’s termination.
| | 63 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
(4)
As of December 31, 2023, Mr. Gentile had not requested, and the Company had not paid any amount in connection with outplacement services.
Ms. Marnick
On November 30, 2023, we entered into a Separation Agreement and General Release with Ms. Marnick to set out the terms of her separation from the Company, effective as of November 27, 2023. In consideration of Ms. Marnick’s release of claims, future cooperation and compliance with certain obligations, including confidentiality, non-competition, non-solicitation and mutual non-disparagement covenants, Ms. Marnick received separation payments and benefits comprised of the following: (i) a severance payment of $720,000, which is equal to one year of Ms. Marnick’s base salary of $700,000 and an additional sum of $20,000 to assist with the costs associated with COBRA continuation coverage; (ii) a lump sum payment of $556,850 in recognition of certain awards granted to Ms. Marnick pursuant to the LTIP that were forfeited upon her separation; (iv) a lump sum payment of $75,000 for the purpose of obtaining transition services; and (v) reimbursement of up to $15,000 in legal fees actually incurred by Ms. Marnick in connection with the negotiation and documentation of her separation agreement.
| | Type of Benefit | | | Value of Benefit ($) | |
| | Severance Payment | | | | | 720,000 | | |
| | Award Equivalent Payment | | | | | 556,850 | | |
| | Transition Services | | | | | 75,000 | | |
| | Attorney’s Fees | | | | | 15,000 | | |
| | Total | | | | | 1,366,850 | | |
2024 Agreements
Mr. Brown
On February 20, 2024, we entered into a Retirement Agreement and General Release with Mr. Brown that provides effective March 17, 2024, Mr. Brown will resign from his position as Senior Vice President, Quality of Spirit and CFO. The agreement provided for a three-year initial termthe Company and wouldwill commence his position as Senior Advisor. Mr. Brown is expected to remain as an employee of the Company until March 17, 2025, or such other date as may be automatically extended for successive one-year periods thereafter. Pursuantmutually agreed (the “Retirement Date”) to the employment agreement,facilitate an orderly transition of his duties. Mr. Kapoor was entitledBrown will continue to areceive his current base salary of $525,000, which couldthrough the Retirement Date. From January 1, 2024, until the Retirement Date, Mr. Brown will be changedeligible to receive a prorated bonus for such period based on performance. In addition, Mr. Kapoor was eligible for an ACI equal toa target award opportunity of 100% of his annual base salary, an annual targetsubject to actual achievement of performance under the STIP. Mr. Brown is not entitled to any new LTIP award of 200% of his base salary,grants for 2025 and from timewill continue to time, a target discretionary bonusvest in the formawards previously granted to him under the OIP until the Retirement Date in accordance with their terms, which include, by reason of cash or equityMr. Brown’s retirement after reaching age 62, accelerated vesting of 10%certain time-based awards and prorated accelerated vesting of earned base salary. Mr. Kapoor was also entitledcertain performance-based awards, subject to participate in the executive relocation program.The Company granted Mr. Kapoor $2,000,000 in restricted stocksatisfaction of performance conditions, as a sign-on award.described below. The first $1,000,000 vested in equal portions annually over a three-year period, while the second $1,000,000 vested in equal portions annually over a four-year period (the final tranche of the second $1,000,000 vested in 2017). In addition, Mr. Kapoor received a cash signing bonus of $150,000 to be paid within thirty days of the effective date, and an additional cash signing bonus of $100,000 to be paid on the first pay period following the first anniversary of the effective date.
Effective January 30, 2015, Mr. Kapoor’s base salary was increased to $565,000. Effective February 5, 2016, Mr. Kapoor’s base salary was increased to $600,000, and his annual target LTIP award was increased to 220% of his base salary. In May 2016, the Board increased Mr. Kapoor’s base salary to $650,000 and his annual target LTIP award to 280% of his base salary. In January 2018, Mr. Kapoor’s annual target LTIP award was increased to 300% of his base salary.
Potential payments and termination events under Mr. Kapoor’s employment agreement are described under “Potential Payments Upon Termination or Change-in-Control - Employment Agreements.”
Ms. Lohmeier’s Employment Agreement
On June 10, 2015, we entered into an employment agreement with Ms. Lohmeier with respect to her positionMr. Brown also contains non-competition and non-solicitation provisions, as Senior Vice Presidentwell as confidentiality and non-disparagement provisions and a general release of Airbus Programs. The agreement provided for a two-year initial term with automatic extensions for one-year periods thereafter. Pursuant toclaims against the employment agreement, Ms. Lohmeier was entitled to a base salary of $450,000, which could be changed based on performance. In addition, Ms. Lohmeier was eligible for an ACI equal to 100% of her base salary, a n annual target LTIP award of 170% of her base salary, and an annual DCP Company contribution of 10% of her base salary. Ms. Lohmeier was also entitled to receive executive relocation benefits. Ms. Lohmeier received a cash signing bonus of $250,000, along with a gross-up amount to cover her tax liability on the bonus. In addition, Ms. Lohmeier was granted restricted stock in the amount of $1,165,000, vesting in equal portions on February 7, 2016, February 7, 2017, and February 8, 2018.
Effective February 5, 2016, Ms. Lohmeier’s base salary was increased to $475,000. In January 2018, Ms. Lohmeier’s base salary was increased to $500,000, and her annual target LTIP award was increased to 180% of her base salary.
During the two-year initial term of her agreement, Ms. Lohmeier was entitled to certain benefits that provided for compensation past her date of termination. However, those benefits expired on June 10, 2017.
Other Employment Agreements
Both Ms. Marnick and Mr. Hawkins have employment agreements with the Company. However, both of their roles have changed significantly since the employment agreements were entered into and all termination benefits expressly provide d by the agreements have expired. Accordingly, the Company does not believe a description of the terms of such agreements is necessary to understand the information disclosed in the “ Summary Compensation Table .”
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 49
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Grants of Plan-Based Awards in 2017
The following table presents information regarding grants of plan-based awards to the NEOs during the fiscal year ended December 31, 2017. For more information on the terms applicable to the awards reflected below, please see “2017 Compensation Program Elements” on page 35.
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards |
Name | Grant
Date | Date Award Approved by Board | | Threshold ($) | Target
($) | Maximum ($) | | Threshold
(#) | Target
(#) | Maximum (#) | | Number of Shares of Stock (#) | Grant Date Fair Value of Stock Awards ($) |
Thomas C. Gentile, III | | | | | | | | | | | | |
ACI(1) | | | | 400,918 | 1,603,671 | 3,207,342 | | | | | | | |
RS(2) | 2/7/2017 | 1/25/2017 | | | | | | | | | | 55,373 | 3,105,041 |
PB-TSR(3) | 2/7/2017 | 1/25/2017 | | | | | | 4,658 | 18,632 | 37,264 | | | 1,035,008 |
PB-FCF(4) | 2/7/2017 | 1/25/2017 | | | | | | 4,709 | 18,836 | 37,672 | | | 1,035,038 |
Sanjay Kapoor | | | | | | | | | | | | | |
ACI(1) | | | | 162,500 | 650,000 | 1,300,000 | | | | | | | |
RS(2) | 2/7/2017 | 1/25/2017 | | | | | | | | | | 19,474 | 1,092,005 |
PB-TSR(3) | 2/7/2017 | 1/25/2017 | | | | | | 1,63 8 | 6,553 | 13,106 | | | 364,019 |
PB-FCF(4) | 2/7/2017 | 1/25/2017 | | | | | | 1,65 6 | 6,625 | 13,250 | | | 364,044 |
Samantha Marnick | | | | | | | | | | | |
ACI(1) | | | | 122,500 | 490,000 | 980,000 | | | | | | | |
RS(2) | 2/7/2017 | 1/25/2017 | | | | | | | | | | 9,962 | 558,619 |
PB-TSR(3) | 2/7/2017 | 1/25/2017 | | | | | | 838 | 3,352 | 6,704 | | | 186,204 |
PB-FCF(4) | 2/7/2017 | 1/25/2017 | | | | | | 84 7 | 3,389 | 6,778 | | | 186,226 |
Duane F. Hawkins | | | | | | | | | | | | |
ACI(1) | | | | 129,548 | 518,192 | 1,036,384 | | | | | | | |
RS(2) | 2/7/2017 | 1/25/2017 | | | | | | | | | | 12,241 | 686,414 |
PB-TSR(3) | 2/7/2017 | 1/25/2017 | | | | | | 1,030 | 4,119 | 8,238 | | | 228,810 |
PB-FCF(4) | 2/7/2017 | 1/25/2017 | | | | | | 1,041 | 4,164 | 8,328 | | | 228,812 |
Michelle J. Lohmeier | | | | | | | | | | | | |
ACI(1) | | | | 118,750 | 475,000 | 950,000 | | | | | | | |
RS(2) | 2/7/2017 | 1/25/2017 | | | | | | | | | | 8,641 | 484,544 |
PB-TSR(3) | 2/7/2017 | 1/25/2017 | | | | | | 727 | 2,908 | 5,816 | | | 161,539 |
PB-FCF(4) | 2/7/2017 | 1/25/2017 | | | | | | 735 | 2,940 | 5,880 | | | 161,553 |
| |
(1) Represents ACIs that were paid in February 2018 but granted and earned in 2017. The actual ACI amounts are reported in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” The threshold, target, and maximum figures were calculated on a weighted average basis, giving effect to any changes made to the applicable NEO’s base salary or ACI target during 2017. (2) Represents RS awards that vest annually over three years, beginning February 7, 2018, if such NEO remains employed by the Company on each annual vesting date. The grant date fair value of the award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $56.075, the average of the opening and closing prices of Common Stock on the grant date. (3) Represents PB-TSR awards that vest at the end of the three-year performance period based on the ranking of the Company’s TSR relative to the TSR of each of the companies in the Company’s peer group. The grant date fair value of the award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares granted at target multiplied by $55.55, which was determined using a Monte Carlo simulation based on the probable ranking of the Company’s TSR relative to a group of the Company’s peers. Actual payout may be zero or a range from 25% to 200% of the target shares granted. (4) Represents PB-FCF awards that vest at the end of the three-year performance period based upon the achievement of a certain percentage of free cash flow as a percentage of revenue on a cumulative basis over the period. The grant date fair value of the award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $54.95, the average of the opening and closing prices of Common Stock on the grant date, adjusted for dividends. Actual payout may be zero or a range from 25% to 200% of the target shares granted. |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 50
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Outstanding Equity Awards at Fiscal Year End
The following table presents the outstanding equity awards held by the NEOs as of December 31, 2017. The Company has not granted any options or option-like awards. The market value of the awards is determined by multiplying the number of shares shown in the applicable columns below by $87.25, the closing price of Common Stock on December 29, 2017.
Name | Stock Awards |
Grant Date | Number of Shares or Units of Stock That Have Not Vested
(#) | Market Value of Shares or Units of Stock That Have Not Vested
($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested
(#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) |
Thomas C. Gentile, III |
RS(1) | 2/7/2017 | 55,373 | 4,831,294 | | |
PB-TSR(2) | 2/7/2017 | | | 37,264 | 3,251,284 |
PB-FCF(3) | 2/7/2017 | | | 4,709 | 410,860 |
Sign-on(4) | 5/5/2016 | 32,666 | 2,850,109 | | |
Sanjay Kapoor | | | | | |
RS(1) | 2/7/2017 | 19,474 | 1,699,107 | | |
PB-TSR(2) | 2/7/2017 | | | 13,106 | 1,143,499 |
PB-FCF(3) | 2/7/2017 | | | 1,657 | 144,573 |
PB One-Time(5) | 6/4/2016 | | | 14,137 | 1,233,453 |
RS(6) | 2/9/2016 | 15,216 | 1,327,596 | | |
PB-TSR(7) | 2/9/2016 | | | 12,152 | 1,060,262 |
RS(8) | 2/7/2015 | 5,790 | 505,178 | | |
PB-TSR(9) | 2/7/2015 | 8,433 | 735,779 | | |
Samantha Marnick |
RS(1) | 2/7/2017 | 9,962 | 869,185 | | |
PB-TSR(2) | 2/7/2017 | | | 6,704 | 584,924 |
PB-FCF(3) | 2/7/2017 | | | 848 | 73,988 |
PB One-Time(5) | 6/4/2016 | | | 7,369 | 642,945 |
RS(6) | 2/9/2016 | 7,931 | 691,980 | | |
PB-TSR(7) | 2/9/2016 | | | 6,334 | 552,642 |
RS(8) | 2/7/2015 | 3,074 | 268,207 | | |
PB-TSR(9) | 2/7/2015 | 4,478 | 390,706 | | |
Duane F. Hawkins |
RS(1) | 2/7/2017 | 12,241 | 1,068,027 | | |
PB-TSR(2) | 2/7/2017 | | | 8,238 | 718,766 |
PB-FCF(3) | 2/7/2017 | | | 1,041 | 90,827 |
RS(6) | 2/9/2016 | 11,528 | 1,005,818 | | |
PB-TSR(7) | 2/9/2016 | | | 9,206 | 803,224 |
RS(8) | 2/7/2015 | 3,229 | 281,730 | | |
PB-TSR(9) | 2/7/2015 | 4,703 | 410,337 | | |
Michelle J. Lohmeier |
RS(1) | 2/7/2017 | 8,641 | 753,927 | | |
PB-TSR(2) | 2/7/2017 | | | 5,816 | 507,446 |
PB-FCF(3) | 2/7/2017 | | | 735 | 64,129 |
RS(6) | 2/9/2016 | 9,308 | 812,123 | | |
PB-TSR(7) | 2/9/2016 | | | 7,434 | 648,617 |
Sign-on(10) | 8/4/2015 | 6,889 | 601,065 | | |
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(1)
Represents RS awards. The first tranche of the award vested on February 7, 2018, and the second and third tranches will vest on February 7, 2019, and February 7, 2020, respectively, if the NEO continues to be employed by the Company on each vesting date.
(2)
Represents PB-TSR awards granted in 2017 with a performance tracking period running from January 1, 2017, to December 31, 2019. PB-TSR awards are earned and paid out in shares of Common Stock at the end of the three-year tracking period based upon the ranking of the Company’s TSR relative to the TSR of a group of the Company’s peers over such period. The number of shares and market value shown is based upon the achievement of a maximum performance goal based on the Company’s achievement of the target performance goal with respect to the PB-TSR awards that were granted in 2015 and vested in 2017. The award vesting date is February 7, 2020.
(3)
Represents PB-FCF awards granted in 2017 with a performance tracking period running from January 1, 2017, to December 31, 2019. PB-FCF awards are earned and paid out in shares of Common Stock at the end of the three-year tracking period based upon the achievement of the Company’s goals relating to free cash flow as a percentage of revenue. The number of shares and market value shown is based upon the achievement of a threshold performance goal. The award vesting date is February 7, 2020.
(4)
Represents a sign-on award granted under Mr. Gentile’s employment agreement. The first tranche of the award vested on April 1, 2017, and the second tranche will vest on April 1, 2018, if Mr. Gentile continues to be employed by the Company on the vesting date.
(5)
Represents a special one-time Performance-Based Restricted Stock (“PB One-Time”) award granted to each of Mr. Kapoor and Ms. Marnick by the Board in 2016. The first tranche of the award vested on June 4, 2017, and the second tranche of the award will vest on June 4, 2018, provided the recipient achieves satisfactory performance.
(6)
Represents RS awards. The first and second tranches of the awards vested on February 9, 2017, and February 9, 2018, respectively, and the third tranche will vest on February 9, 2019, if the NEO continues to be employed by the Company on each vesting date.
(7)
Represents PB-TSR awards granted in 2016 with a performance tracking period running from January 1, 2016, to December 31, 2018. PB-TSR awards are earned and paid out in shares of Common Stock at the end of the three-year tracking period based upon the ranking of the Company’s TSR relative to the TSR of a group of the Company’s peers over such period. The number of shares and market value shown is based upon the achievement of a maximum performance goal based on the Company’s achievement of the target performance goal with respect to the PB-TSR awards that were granted in 2015 and vested in 2017. The award vesting date is February 9, 2019.
(8)
Represents RS awards. The first, second, and third tranches of the awards vested on February 7, 2016, February 7, 2017, and February 7, 2018, respectively.
(9)
Represents PB-TSR awards granted in 2015 with a performance tracking period running from January 1, 2015, to December 31, 2017. PB-TSR awards are earned and paid out in shares of Common Stock at the end of the three-year tracking period based upon the ranking of the Company’s TSR relative to the TSR of a group of the Company’s peers over such period. The number of shares and market value shown is based upon actual award performance through December 31, 2017, of 192.5% (percentile rank of 87th), as certified by the Compensation Committee on January 24, 2018. The award vested on February 7, 2018.
(10)
Represents a sign-on award granted under Ms. Lohmeier’s employment agreement. The first, second, and third tranches of the award vested on February 7, 2016, February 7, 2017, and February 7, 2018, respectively.
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SPIRIT AEROSYSTEMS - 2018 Proxy Statement 52
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Option Exercises and Stock Vested for Fiscal Year 2017
The following table presents information regarding NEO stock awards that vested in 2017. Values reflected below are gross amounts that do not include any reductions for tax withholding. The Company has not granted any options or option-like awards.
| Grant Date | Vesting Date | No. of Shares Acquired on Vesting (#) | Value Realized on Vesting
($) |
Thomas C. Gentile, III | | | | |
Sign-on(1) | 4/1/2016 | 4/1/2017 | 32,666 | 1,912,758 |
TOTAL | | | 32,666 | 1,912,758 |
Sanjay Kapoor | | | | |
Sign-on(2) | 11/6/2013 | 9/23/2017 | 8,464 | 666,049 |
PB One-Time(3) | 6/4/2016 | 6/4/2017 | 14,138 | 797,666 |
PB-TSR(4) | 5/8/2014 | 5/8/2017 | 7,912 | 423,015 |
RS(5) | 5/8/2014 | 5/8/2017 | 11,658 | 623,295 |
RS(6) | 2/9/2016 | 2/9/2017 | 7,609 | 428,311 |
RS(7) | 2/7/2015 | 2/7/2017 | 5,787 | 327,718 |
TOTAL | 55,568 | 3,266,054 |
Samantha Marnick |
PB One-Time(3) | 6/4/2016 | 6/4/2017 | 7,369 | 415,759 |
PB-TSR(4) | 5/8/2014 | 5/8/2017 | 6,246 | 333,942 |
RS(5) | 5/8/2014 | 5/8/2017 | 4,239 | 226,638 |
RS(8) | 5/7/2013 | 5/7/2017 | 7,921 | 426,189 |
RS(8) | 5/7/2013 | 5/7/2017 | 7,921 | 426,189 |
RS(6) | 2/9/2016 | 2/9/2017 | 3,966 | 223,246 |
RS(7) | 2/7/2015 | 2/7/2017 | 3,073 | 174,024 |
TOTAL | 40,735 | 2,225,988 |
Duane F. Hawkins | | | | |
PB-TSR(4) | 5/8/2014 | 5/8/2017 | 5,330 | 284,968 |
RS(5) | 5/8/2014 | 5/8/2017 | 3,616 | 193,329 |
Sign-on(9) | 8/15/2013 | 5/7/2017 | 6,105 | 328,480 |
RS(6) | 2/9/2016 | 2/9/2017 | 5,764 | 324,456 |
RS(7) | 2/7/2015 | 2/7/2017 | 3,226 | 182,688 |
TOTAL | 24,041 | 1,313,921 |
Michelle J. Lohmeier | | | | |
RS(6) | 2/9/2016 | 2/9/2017 | 4,655 | 262,030 |
Sign-on(10) | 8/4/2015 | 2/7/2017 | 6,889 | 390,124 |
TOTAL | 11,544 | 652,154 |
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(1)
Represents shares received as a sign-on award under Mr. Gentile’s employment agreement. The value realized on vesting represents the number of shares multiplied by $58.555, the average of the high and low prices of Common Stock on March 31, 2017, the business day prior to the vesting date.
(2)
Represents shares received as a sign-on award under Mr. Kapoor’s employment agreement. The value realized on vesting represents the number of shares multiplied by $78.692, the average of the high and low prices of Common Stock on September 22, 2017, the business day prior to the vesting date.
(3)
Represents PB One-Time awards granted to each of Mr. Kapoor and Ms. Marnick. The value realized on vesting represents the number of shares multiplied by $56.42, the average of the high and low prices of Common Stock on June 2, 2017, the business day prior to the vesting date.
(4)
Represents shares under a PB-TSR award with a performance tracking period from May 1, 2014, to April 30, 2017. Performance was certified by the Compensation Committee on May 8, 2017, at a percentile rank of 98.8th and a resulting payout of 200%. The value realized on vesting represents the number of shares multiplied by $53.465, the average of the high and low prices of Common Stock on the vesting date.
(5)
Represents shares under a RS award. The value realized on vesting represents the number of shares multiplied by $53.465, the average of the high and low prices of Common Stock on the vesting date.
(6)
Represents shares under a RS award. The value realized on vesting represents the number of shares multiplied by $56.29, the average of the high and low prices of Common Stock on the vesting date.
(7)
Represents shares under a RS award. The value realized on vesting represents the number of shares multiplied by $56.63, the average of the high and low prices of Common Stock on the vesting date.
(8)
Represents shares under a RS award. The value realized on vesting represents the number of shares multiplied by $53.805, the average of the high and low prices of Common Stock on May 5, 2017, the business day prior to the vesting date.
(9)
Represents shares received as a sign-on award under Mr. Hawkins’ employment agreement. The value realized on vesting represents the number of shares multiplied by $53.805, the average of the high and low prices of Common Stock on May 5, 2017, the business day prior to the vesting date.
(10)
Represents shares received as a sign-on award under Ms. Lohmeier’s employment agreement. The value realized on vesting represents the number of shares multiplied by $56.63, the average of the high and low prices of Common Stock on the vesting date.
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Nonqualified Deferred Compensation
The following table presents information concerning each of the Company’s defined contribution or other plans that provides for the deferral of compensation of the NEOs on a basis that is not tax qualified.
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | (1) | Aggregate Earnings in Last FY
($) | (2) | Aggregate Withdrawals/
Distributions ($) | Aggregate
Balance at
Last FYE ($) | |
Thomas C. Gentile, III | | 600,000 | | 6,979 | | | 606,979 | |
Sanjay Kapoor | | | | | | | | |
Samantha Marnick | | 100,000 | | 3,548 | | | 205,469 | (3) |
Duane F. Hawkins | | | | | | | | |
Michelle J. Lohmeier | | 47,500 | | 1,719 | | | 122,664 | (4) |
| |
(1) These amounts represent Company contributions to the DCP and are included in the “All Other Compensation” column of the “ Summary Compensation Table .” (2) These amounts represent earnings on plan balances from January 1-December 31, 2017 and are not included in the “ Summary Compensation Table .” (3) This amount includes $101,921 consisting of executive contributions, Company contributions, and earnings on balances prior to 2017 (and as reported in our 2016 proxy statement). (4) This amount includes $73,445 consisting of executive contributions, Company contributions, and earnings on balances prior to 2017 (and as reported in our 2016 proxy statement). |
More information on the DCP can be found under “Other Compensation Elements and Information - Benefits and Perquisites” on page 45. There were no “above-market” earnings (defined by SEC rule as that portion of interest that exceeds 120% of the applicable federal long-term rate) under the DCP during fiscal year 2017, as the Company used 120% of the applicable federal long-term rate to determine the amounts to be contributed.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 54
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Potential Payments Upon Termination or Change-in-Control
The Company believes competitive severance protection is an appropriate incentiveChange in attracting and retaining talent and, accordingly, has provided for certain termination compensation through individual employment agreements. In addition, when appropriate,Control
While the Company has also agreed to individual severance arrangements at the time of termination of employment, taking into account the specific facts and circumstances of termination. The Company does not maintain any change-in-controlspecific change in control agreements or other similar plans or arrangements intended specifically to provide income protection for executive officers upon a change-in-control.In addition,change in control, the Company maintainshas several programs -— Employment Agreements, the STIP,ACI, the LTIP, the Perquisite Allowance Program,Plan, and the DCP -— that deliver benefits upon certain types of termination or a change-in-control.
change in control.
Information about these severance or change in control benefits is contained below, followed by aand in the table above titled “Potential Payments Upon Termination or Change in Control” summarizing the monetary benefits payable upon triggering events.events assumed to have occurred on December 31, 2023.
Employment Agreements
Spirit maintains employment agreements with all of its NEOs. However, onlyOnly the employment agreements of Messrs. GentileShanahan, Suchinski and Kapoor currentlyMcLarty provide for any payments to be made, or benefits provided, beyond the date of termination. Thesetermination as of December 31, 2023. In the cases of Messrs. Shanahan and Suchinski,
| | Spirit AeroSystems2024 Proxy Statement | | | 64 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
these benefits are paid only in the circumstances described below. In the case of Mr. McLarty, these benefits are paid only in the circumstances described in footnote 9 to the “Potential Payments Upon Termination or Change in Control” table above.
Receipt of these benefits is conditioned upon the execution of a release of claims against the Company and satisfaction of a covenant notcertain covenants, including non-solicitation and non-competition covenants. Pursuant to competeMr. Shanahan’s and a covenant not to solicit customersMr. Suchinski’s employment agreements, the non-solicitation and non-competition covenants apply for one year post-termination if terminated without cause and, in the case of Mr. Shanahan, termination for good reason, or employees of Spirit.two years post-termination if terminated for any other reason.
Termination
Withoutby the Company for Cause
or For Good Reason
Upon a termination withoutfor cause, or for good reason, Messrs. GentileShanahan and Kapoor will beSuchinski are only entitled to their compensation through the date of termination.
For Mr. Shanahan, a “for cause” termination is defined as a termination resulting from the following:
■
commission of a material breach of the employment agreement, acts involving fraud, material and intentional dishonesty, material and intentional unauthorized disclosure of confidential information, a felony or other crime involving moral turpitude, or a material violation of Company policies; direct and deliberate acts constituting a material breach of the duty of loyalty;
■
refusal or material failure, other than by reason of disability, to perform duties and responsibilities, if such refusal or failure is not remedied within 30 days after receipt of written notice thereof from the Board;
■
inability to obtain and maintain the appropriate level of U.S. security clearance.
For Mr. Suchinski, a “for cause” termination is defined as a termination resulting from the following:
■
commission of a material breach of the employment agreement that, if curable, is not cured within 10 business days after written notice thereof;
■
acts involving moral turpitude, including fraud, material and willful dishonesty, material and intentional unauthorized disclosure of confidential information, the commission of a felony or other crime involving moral turpitude, or material violation of Company policies;
■
direct and deliberate acts constituting a material breach of the duty of loyalty; or
■
willful or continuous refusal, or material failure, other than by reason of disability, to perform the duties reasonably assigned to Mr. Suchinski if such refusal is not remedied within 10 business days after written notice thereof.
Termination without Cause
Upon a termination by the Company without cause, Mr. Shanahan is entitled to be treated as 100% vested in all time-based LTIP awards granted on September 30, 2023.
Upon a termination by the Company without cause, Mr. Suchinski is entitled to one year of his base salary in effect prior to termination and the costs of providing COBRA medical and dental benefits coverage forover a period of six months.
Termination for Good Reason
Upon a termination by Mr. Shanahan for good reason, Mr. Shanahan is entitled to be treated as 100% vested in all time-based LTIP awards granted on September 30, 2023.
Termination without Cause or for Good Reason Upon a Change in Control
Upon a termination by the Company without cause or by Mr. Shanahan for good reason within 12
months. In addition, if suchmonths following a “change in control,” Mr. Shanahan is entitled to one year of his base salary in effect prior to termination, payable in a single lump-sum cash payment. To the extent the “change in control” and termination occurs
for Mr. Gentile before April 1, 2018, any unvested shares of restricted stock that were awarded as a signing bonus under his employment agreement will immediately vest. In addition, if such a termination occurs before April 1, 2019, the following long-term incentives will vest to the extent not previously vested:•
66 2/3% of the RS award granted to Mr. Gentile in 2017 - 36,915 shares of Common Stock; and
•
33 1/3% of the RS award granted to Mr. Gentile in 2018 (provided the 2018 RS awards have been made on or prior to the first anniversary of the effective date of termination) - 13,994 sharesMr. Shanahan’s employment agreement, Mr. Shanahan is also entitled to a single lump-sum cash payment equal to the remaining
| | 65 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
amount of Common Stock.
Terminationhis base salary that he would have received if he had remained employed through the first anniversary of Mr. Kapoor due to expirationthe effective date of his employment agreement.
Pursuant to the terms of Mr. Shanahan’s employment agreement, without renewal constitutes a termination without cause.A termination for “good reason” is a voluntary termination of employment by the executive within 90 days after one of the following conditions:
(1)
For Mr. Gentile: If he is assigned to a diminished position prior to April 1, 2019.
(2)
For Mr. Kapoor: Upon a change-in-control or within 12 months thereafter, the executive is not offered continued employment in a position other than a diminished position.
A position is a “diminished position” if it reflects: (1) a material diminution in base compensation; (2) a material diminution in authority, duties, or responsibilities; (3) a change in reporting requirements; (4) relocation of the executive’s principal office to a location greater than 50 miles from Wichita, Kansas; or (5) any action or inaction on Spirit’s part that constitutes a material breach by Spirit of the employment agreement.
For Mr. Kapoor, a “ change-in-control” means (a) a transaction where any person acquires more than 50% of the Company’s total voting power, or (b) a transaction where the Company sells or transfers all or substantially all of its assets to a person if all or substantially all of the proceeds are distributed to the Company’s stockholders.
For context, a “for cause” termination is defined as a termination resulting from the following:
following, subject to a notice and cure period: ■
(1)
Commission of a material breachdiminution in Mr. Shanahan’s base salary, other than a general reduction that does not exceed 20% and that affects similarly situated executives in substantially the same proportions;
■
a material diminution in Mr. Shanahan’s title, authority, duties, reporting relationships or acts involving moral turpitude, fraud, dishonesty, unauthorized disclosureresponsibilities;
■
a requirement that Mr. Shanahan report to anyone other than the Board; or
■
any other action or inaction with respect to the terms and conditions of confidential information, the commission of a felony, or material violations of the Company’s policies;
(2)
Direct and deliberate acts constitutingMr. Shanahan’s employment that constitutes a material breach of Mr. Shanahan’s employment agreement.
Pursuant to the dutyterms of loyalty;Mr. Shanahan’s employment agreement, a “change in control” is defined as:
(1)
(3)
Refusala transaction pursuant to which a person, or material failure (othermore than by reasonone person acting as a group, acquires more than 50% of disability) to perform job duties and responsibilities if not remedied within 30 days after receiving written notice thereof;
the Common Stock; or(4)
material underperformance, as reflected in two consecutive performance reviews provided no less than six months apart; or
(2)
(5)
inability to obtain and maintain the appropriate level of U.S. security clearance.
Voluntary Termination without Good Reason
In the event Mr. Gentile voluntarily terminates his employment witha merger or consolidation involving the Company in which the Company is not the surviving entity; or
(3)
a transaction that is a sale of all or substantially all of the Company’s assets if all or substantially all the proceeds from such transaction are distributed to the stockholders of the Company; or
(4)
a majority of the members of the Board are replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the Board before April 1, 2018, any unvested sharesthe date of restricted stock that were awarded as a signing bonus under his employment agreement will immediately vest.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 55
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Awardsappointment or election.
Long-Term Incentives under the OIP: ACI and Long-Term IncentivesOmnibus Incentive Plan
Annual Cash Incentive
InPursuant to the event of a “ q ualifying r etirement” that occurs 90 days or more after the beginningprovisions of the plan year,OIP, the LTIP, and/or the relevant award agreements, our NEOs are entitled to the following payments or benefits upon retirement, death or disability, or qualifying termination in connection with a change in control.
Retirement
Upon a participant’s termination due to “retirement,” the participant will be entitled to receive(i) become 100% vested in outstanding Time-Based Restricted Stock Unit and Restricted Stock awards, and (ii) vest in a prorated ACIportion of outstanding Performance-Based Restricted Stock awards (prorated based on full-yearthe number of days continuously employed during the performance metrics actually achieved for such year. Noneperiod) based on actual performance measured at the end of the NEOs qualify for this benefit.Inapplicable performance period.
Death or Disability
Upon a participant’s termination due to death or disability prior to vesting, except with respect to the eventgrant that Mr. Shanahan received as a non-employee director, the participant will (i) fully vest in his or her outstanding Time-Based Restricted Stock Unit and Restricted Stock awards, and (ii) vest in a prorated portion of his or her outstanding Performance-Based Restricted Stock Unit and Restricted Stock awards (prorated based on the number of days continuously employed during the performance period) based on target performance.
Qualifying Termination in Connection with a change-in-control of the Company, eachChange in Control
Each participant who incurs a q ualifying t ermination, either in anticipation of the change-in-control or during the period beginning 30 days before the date of the change-in-control and ending two years after the change-in-control, will be entitled to receive a cash award equal to the full-year ACI that the participant would have been entitled to receive for the year during which such termination occurs had the target performance metrics established for that year been met.Long-Term Incentives
2017 Long-Term Incentives. Except as otherwise provided in a participant’s award agreement, each participant who incurs a q ualifying t ermination either in anticipation of the change-in-control or during the period beginning 30 days before the date of the change-in-control and ending two years after the change-in-control,“qualifying termination” will become fully vested upon termination of employment. If an award is subject to performance conditions, the portion that vests will, at the discretion of the Compensation Committee, be determined based upon actual performance through the date of the change-in-controlchange in control (or, if later, the date of the q ualifyingqualifying termination) or, if the Compensation Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance.
In addition, each such participant who qualifies for accelerated vesting above will also receive a cash award equal to the dollar value of the long-term incentive award that would have been made to the participant in the ordinary course of business within the 12-month period following the date of qualifying termination, based on the participant’s annual base pay in effect on the date of qualifying termination.
| | Spirit AeroSystems2024 Proxy Statement | | | 66 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Definitions:
“Qualifying termination” means the participant’s termination, .2015 and 2016 Long-Term Incentives. Except as otherwise providedeither in a participant’s award agreement, the unvested long-term incentives of a participant who is employed by Spirit on the date of a change-in-control, or whose employment was involuntarily terminated by Spirit (other than for c ause) within the ninety (90) days preceding a change-in-control, become fully vested upon a change-in-control. If an award is subject to performance conditions, the portion that vests will, at the discretionanticipation of the Compensation Committee, be determined based upon actual performance throughchange in control or during the period beginning 30 days before the date of the change-in-control or, ifchange in control and ending two years after the Compensation Committee determines that measurement of actual performance cannot be reasonably assessed, the assumed achievement of target performance.
In addition, each such participant who qualifies for accelerated vesting above will also receive a cash award equal to the dollar valueclosing of the long-term incentive that would have been made to the participantchange in the ordinary course of business within the 12-month period following the date of the change-in-control based on the participant’s annual base pay in effect on the date of the change-in-control or termination, if earlier .
Definitions:
“Qualifying termination” means a participant’s termination eithercontrol, (i) by the Company without c ause,cause, or (ii) by the participant for g ood r eason.
good reason.
“Cause” means unless an award agreement states otherwise, that the Company has “cause” to terminate the employee, as defined in any applicable employment or consulting agreement, or any of the following has occurred:
■
(1)
gross negligence or willful misconduct in the exercise of responsibilities;
(2)■
breach of fiduciary duty;
(3)■
material breach of any provision of an employment contract or consulting agreement;
(4)■
the commission of a felony crime or crime involving moral turpitude;
(5)■
theft, fraud, misappropriation, or embezzlement (or reasonable suspicion of the same);
(6)■
willful violation of any federal, state, or local law (except traffic violations and other similar matters not involving moral turpitude); or
(7)■
refusal to obey any resolution or direction of the participant’s supervisor or the Board.
“Good r eason”reason” means a voluntary termination within ninety (90)90 days after the participant is assigned to a diminished position so long as the participant has, within thirty (30) days after being assigned to such diminished position, notified the Company of the participant’s intent to terminate as a result of such assignment and within thirty (30) days after receipt of that notice the Company has not reassigned the participant to a position that is not a diminished position.“Diminished(provided certain conditions are met). “Diminished position” means a position that reflects any of the following changes or actions, unless the participant has consented to the change or action in writing: (A)
■
a material diminution in the participant’s base compensation; (B) a material diminution in the participant’scompensation, authority, duties, or responsibilities, or associated job title; (C)
■
relocation of the participant’s principal office to a locationSPIRIT AEROSYSTEMS - 2018 Proxy Statement 56
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that is greater than 50 miles from the location of the participant’s principal office immediately before such relocation; or (D)
■
any action or inaction with respect to the terms and conditions of the participant’s service that constitutes a material breach by the Company of any written agreement between the participant and the Company.
“Qualifying r etirement”Retirement” is defined for purposes of the ACI , as a voluntary termination of employmentas:
■
Termination on or after attaining the date when the grantee has attained age of 55 with at least 10 years of service with62, other than a termination by the Company and its affiliatesfor cause or termination by the age of 60 withCompany at least five years of such service.the time cause exists.
A change-in-control is “change in control” is:
(1)
a transaction pursuant to which a person, or more than one person acting as a group, acquires more than 50% of the total voting power of the stock of the Company, Common Stock; or
(2)
a merger or consolidation involving the Company in which the Company is not the surviving entity,entity; or
(3)
a transaction that is a sale of all or substantially all the assets of the CompanyCompany’s assets if all or substantially all the proceeds from such transaction are distributed to the stockholders of the Company.
Perquisite Allowance Plan
Upon the occurrence of a change-in-controlchange in control of the Company, an NEOa participant who incurs a q ualifying t erminationqualifying termination (as defined under the OIP above) either in anticipation of the change-in-controlchange in control or during the period beginning 30 days before the change-in-controlchange in control and ending two years after the closing of the change-in-control would have beenchange in control, is entitled to receive a cash award equal to (1)(i) any remaining unused portion of the NEO’sparticipant’s allowance for the calendar year in which the q ualifying t erminationqualifying termination occurs, plus (2)(ii) an amount equal to 100% of the NEO’sparticipant’s allowance for the calendar year in which the q ualifying t erminationqualifying termination occurs.
Deferred Compensation Plan
Individuals participating in the DCP are entitled to receive payment of amounts credited to their deferred compensation accounts under the DCP upon a separation from service.service (subject to the expiry of any applicable waiting period). However, in the event of a termination for cause, as defined under the OIP, no amounts credited to the employer matchemployer-match account or employer discretionary
| | 67 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
contribution amount shall be payable to the participant. Payment to a participant of any employer matchingemployer-matching or discretionary contributions made under the DCP is subject to satisfactioncompliance by the participant ofwith non-competition, non-solicitation, and confidentiality requirements during the term of the participant’s employment and for so long as the participant receives payments under the DCP.For purposes The descriptions of the amounts payable by the Company that are included in the section entitled “Nonqualified Deferred Compensation” are incorporated by reference herein. DCP a “termination for cause” meansamounts are excluded from the table above titled “Potential Payments Upon Termination or Change in Control” because, while certain DCP benefits may become payable upon a separation from service, involving (1) gross negligenceno DCP benefits are enhanced or willful misconduct in the exercise of responsibilities; (2) breach of fiduciary duty; (3) material breach of any provision of an employment contract; (4) the commissionaccelerated as a result of a felony crimetermination of employment or crime involving moral turpitude; (5) theft, fraud, misappropriation, or embezzlement (or suspicionchange in control.
2023 CEO Pay Ratio
As required by Section 953(b) of the same); (6) willful violationDodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of any federal, state, or local law (except traffic violationsRegulation S-K, we are providing the following information about the relationship of annual total compensation of our median employee and other similar matters not involving moral turpitude); or (7) refusalthe annual total compensation of our President and CEO, Mr. Shanahan. For 2023, our last completed fiscal year, our ratio as calculated pursuant to obey any resolution or direction of the participant’s supervisor or the Board.SPIRIT AEROSYSTEMS - 2018 Proxy Statement 57
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Summary Table-Potential Payments Upon Termination or Change-in-Control
Item 402(u) was as follows: ■
The following table summarizes the value of compensation and benefits payable to each NEO upon termination that would exceed the compensation or benefits generally available to salaried employees. Benefits and payments are calculated using a termination date of December 31, 2017. For valuation purposes, the table below uses $87.25, the closing price of Common Stock on December 29, 2017. For purposes of presenting amounts payable over a period of time (e.g., salary continuation), the amounts are shown as a single total but not as a present value (i.e., the single sum does not reflect any discount). | Severance(1) ($) | ACI(2) ($) | RS ($) | PB One-Time, PB-TSR and PB-FCF ($) | Cash Award in Respect of LTIP Awards(15) ($) | Perquisite Allowance Plan(16) ($) | Other Benefits(17) ($) | Total ($) |
Tom C. Gentile, III | | | | | | | | |
Voluntary Termination | | | 2,850,109(3) | | | | | 2,850,109 |
Termination for Cause | | | | | | | | |
Involuntary Termination without Cause/ Termination by Executive for Good Reason | 1,150,000 | | 6,070,942(4) | | | | 20,713 | 7,241,655 |
Death or Disability | | | | | | | | |
Change-in-Control | | | 2,850,109(5) | | 5,175,000 | | | 8,025,109 |
Change-in-Control and Qualifying Termination | | 1,603,671 | 7,681,403(6) | 2,641,668(11) | 5,175,000 | 50,000 | | 17,151,742 |
Sanjay Kapoor | | | | | | | | |
Voluntary Termination | | | | | | | | |
Termination for Cause | | | | | | | | |
Involuntary Termination without Cause/ Termination by Executive for Good Reason | 650,000 | | | | | | 10,699 | 660,699 |
Termination Upon Expiration of Employment Agreement | 650,000 | | | | | | 10,699 | 660,699 |
Death or Disability | | | | | | | | |
Change-in-Control | | | 1,832,774(7) | 2,764, 429(12) | 1,820,000 | | | 6,417, 203 |
Change-in-Control and Qualifying Termination | 650,000 | 650,000 | 3,531,880(8) | 3,693, 554(13) | 1,820,000 | 26,000 | 10,699 | 10,382, 133 |
Samantha Marnick | | | | | | | | |
Change-in-Control | | | 960,186(7) | 1,448,176(12) | 931,000 | | | 3,339,362 |
Change-in-Control and Qualifying Termination | | 490,000 | 1,829,371(8) | 1,923,426(13) | 931,000 | 26,000 | | 5,199,797 |
Duane F. Hawkins | | | | | | | | |
Change-in-Control | | | 1,287,548(7) | 1,012,798(12) | 1,144,000 | | | 3,444,346 |
Change-in-Control and Qualifying Termination | | 518,192 | 2,355,576(8) | 1,596,850(13) | 1,144,000 | 26,000 | | 5,640,618 |
Michelle J. Lohmeier | | | | | | | |
Change-in-Control | | | 1,413,188(9) | 486,506(14) | 807,500 | | | 2,707,194 |
Change-in-Control and Qualifying Termination | | 475,000 | 2,167,116(10) | 898,850(13) | 807,500 | 26,000 | | 4,374,466 |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 58
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(1)
Represents annual base salary for 12 months pursuant to each recipient’s employment agreement. For Mr. Kapoor, with respect to the row titled “Change-in-Control and Qualifying Termination,” represents payment of severance to Mr. Kapoor provided he is not offered continued employment in a position other than a diminished position.
(2)
Represents a cash amount equal to the value of the full-year ACI that such NEO would have been entitled to receive for 2017 had the target performance metrics for 2017 been met.
(3)
Represents a cash amount equal to the unvested shares under Mr. Gentile’s sign-on award multiplied by $87.25.
(4)
Represents a cash amount equal to the unvested shares under Mr. Gentile’s sign-on award and 66 2/3% of the RS award granted to Mr. Gentile in 2017 multiplied by $87.25.
(5)
Represents a cash amount equal to the unvested shares under Mr. Gentile’s sign-on award multiplied by $87.25.
(6)
Represents a cash amount equal to the unvested shares under Mr. Gentile’s sign-on award and the unvested shares in the 2017 RS award multiplied by $87.25.
(7)
Represents a cash amount equal to the unvested shares under the 2015 and 2016 RS awards (awards granted prior to 2017 were subject to a single-trigger) multiplied by $87.25.
(8)
Represents a cash amount equal to the unvested shares under the 2015, 2016, and 2017 RS awards multiplied by $87.25.
(9)
Represents a cash amount equal to the unvested shares under Ms. Lohmeier’s sign-on award and the 2016 RS award multiplied by $87.25.
(10)
Represents a cash amount equal to the unvested shares under Ms. Lohmeier’s sign-on award and the unvested shares under the 2016 and 2017 RS awards multiplied by $87.25.
(11)
Represents the sum of the following: (i) a cash amount equal to the number of target shares with respect to the 2017 PB-TSR award multiplied by 162.5%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25, plus (ii) a cash amount equal to the number of target shares in the 2017 PB-FCF award multiplied by 0.00%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25.
(12)
Represents the sum of the following: (i) a cash amount equal to the number of target shares in the 2015 PB-TSR award multiplied by 192.5%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25, plus (ii) a cash amount equal to the number of target shares in the 2016 PB-TSR award multiplied by 150.0%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25, plus (iii) for Mr. Kapoor and Ms. Marnick, a cash amount equal to the unvested shares under PB One-Time awards granted to Mr. Kapoor and Ms. Marnick in May 2016 multiplied by $87.25 (assuming full vesting of such awards upon a change-in-control based on an assumed determination of the Board of satisfactory performance as of the date of such change-in-control).
(13)
Represents the sum of the amount included in each person’s “Change-in-Control” row plus a cash amount equal to the number of target shares in the 2017 PB-TSR award multiplied by 162.5%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25. Represents a cash amount equal to the number of target shares in the 2017 PB-FCF award multiplied by 0.00%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25.
(14)
Represents a cash amount equal to the number of target shares in the 2016 PB-TSR award multiplied by 150.0%, the projected payout percentage of the award as of December 29, 2017, multiplied by $87.25.
(15)
Represents a cash amount equal to the value of the full-year long-term incentive that would have been made to such NEO in the ordinary course of business within the 12-month period following the date of the change-in-control or qualifying termination, as applicable, based on the participant’s annual base pay in effect on such date.
(16)
Assumes that each NEO’s allowance for 2017 was entirely unused upon the occurrence of the qualifying termination . Represents a cash award of (i) the remaining 2017 annual allowance, plus (ii) the allowance the NEO would receive for 2018.
(17)
Represents average monthly contribution toward COBRA medical and dental benefits coverage for 12 months pursuant to each recipient’s employment agreement.
|
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 59
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2017 CEO Pay Ratio
The 20172023 annual total compensation of the Company’s CEO was $9,907,398. $11,147,557.
■
The 20172023 annual total compensation of the median employee (excluding the CEO) was $70,452. The$64,171.
■
The Company believes that the ratio of pay included above is a reasonable estimate calculated in a manner consistent with applicable SEC
rules.rules and guidance.
Determining the CEO’s Compensation
The annual total compensation of our CEO was $11,147,557. This amount equals the CEO’s compensation as reported in the “Summary Compensation Table” (excluding amounts earned in his capacity as a non-employee director prior to his appointment as our CEO) plus an additional amount that reflects the annualizing of his base salary and the elements of other compensation included in the “All Other Compensation” column of the “Summary Compensation Table,” consistent with the applicable SEC rules and guidance.
Determining the Median Employee
To identify the median employee for 2023, we reviewed base pay paid to all of our employees as of October 1, 2017December 31, 2023 (the “ Pay“Pay Ratio Employee Population”). We used base pay as our compensation measure to avoid variations in pay due to overtime worked or other items that may yield one-time pay increases. As a result of such review, we identified 901the 50 middlemost employees with similar median base pay.of the Pay Ratio Employee Population. Subsequently, we reviewed total compensation paid tothe pay of each of those 90150 employees as of October 12, 2017,December 31, 2023, as reflected in the Compa n y’sCompany’s payroll records, and estimated total compensation for each of those employees through December 31, 2017.records. Comparing total and expected earningsthe pay of each of the 90150 employees, we identified ten employees with similar median pay. Wethe eight middlemost employees. For 2023, we studied each of the teneight employees’ specific pay and employment circumstancesfor the year of performance to determine the median and eliminated nineseven employees from the group that had significant variations in their pay due to one-time events occurring in 2017.group. The remaining employee from that analysis is our median employee.employee for 2023.
The Pay Ratio Employee Population included all U.S. and non-U.S. personsindividuals employed by the Company on a full-time, part-time, seasonal, or temporary basis.basis as of December 31, 2023. Further, the Pay Ratio Employee Population excluded independent contractors and leased workers who provide services to the Company but are employed, and whose compensation is determined, by an unaffiliated third party.
In calculating base pay for the Pay Ratio Employee Population and the group of eight employees, we did not make any assumptions, adjustments (including cost of living adjustments), or estimates with respect to base pay,compensation, and we did not annualize base pay. In calculating total compensation of each person in the group of 901 employees, we did not make any assumptions or adjustments (including cost of living adjustments), and we did not estimate annualized compensation for any full-time employees thatwho were not employed by us for the full 2017-yearall of 2023 through October 12, 2017.December 31, 2023. As required by SEC rules, after identifying our median employee, we calculated annual total compensation for both our median employee and our CEOfor 2023 using the same methodology that we used to determine our NEOs’ annual total compensation for the “Summary Compensation Table . Table.”
Given the different methodologies that companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies. | | Spirit AeroSystems2024 Proxy Statement | | | 68 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Pay versus Performance
The Company believes in the importance of maintaining a strong link between executive pay and company performance. As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, the following disclosure is provided about the relationship between executive compensation and the Company’s performance on select financial metrics. For a complete description regarding the Company’s compensation program, please see “Compensation Discussion and Analysis.”
| | Year | | | Summary
Compensation
Table Total
for CEO —
Gentile(1)
($) | | | Compensation
Actually
Paid to CEO —
Gentile(2)
($) | | | Summary
Compensation
Table Total
for CEO —
Shanahan(1)
($) | | | Compensation
Actually
Paid to CEO —
Shanahan(2)
($) | | | Average
Summary
Compensation
Table Total for
non-CEO NEOs(3)
($) | | | Average
Compensation
Actually
Paid to non-CEO
NEOs(4)
($) | | | Value of
Initial Fixed
$100 Investment
Based On | | | Net Income/
(Loss)
($)
(in millions) | | | Revenue
($)
(in millions) | |
| | TSR
($) | | | Proxy Peer
Group TSR
($)(5) | |
| | 2023 | | | 11,807,067 | | | (296,375) | | | 8,919,114 | | | 16,736,531 | | | 2,119,556 | | | 1,561,915 | | | 43.76 | | | 119.09 | | | (633.0) | | | 6,047.9 | |
| | 2022(6) | | | 11,728,900 | | | 3,412,855 | | | N/A | | | N/A | | | 2,528,563 | | | 970,473 | | | 40.76 | | | 111.54 | | | (545.7) | | | 5,029.6 | |
| | 2021(6) | | | 10,849,938 | | | 9,924,685 | | | N/A | | | N/A | | | 2,231,105 | | | 2,043,078 | | | 59.28 | | | 95.03 | | | (540.8) | | | 3,953.0 | |
| | 2020(6) | | | 10,454,350 | | | 2,195,855 | | | N/A | | | N/A | | | 2,218,950 | | | 713,360 | | | 53.73 | | | 83.94 | | | (870.3) | | | 3,404.8 | |
(1)
Represents total compensation for Messrs. Gentile and Shanahan as reported in the “Summary Compensation Table.” Mr. Shanahan became our President and CEO on September 30, 2023 and accordingly no calculations are provided for him for 2020 to 2022.
(2)
The following supplemental table presents a reconciliation of Messrs. Gentile’s and Shanahan’s “Summary Compensation Table” totals to the compensation actually paid for 2023, as defined and computed in accordance with Item 402(v) of Regulation S-K. However, not all of such amounts were actually earned or received by Messrs. Gentile or Shanahan during 2023. As neither Messrs. Gentile and Shanahan participate in any defined benefit plans, no adjustments were required to amounts reported in the “Summary Compensation Table” totals related to the value of benefits under such plans.
CEO Reconciliation for 2023
| | | | | | | | | | | | | | | | | | | | | | | Equity Award Adjustments | | | | | | | |
| | CEO | | | Summary
Compensation
Table Total
($) | | | Value of Equity
Awards Reported
in Summary
Compensation
Table
($) | | | Year End Fair
Value of Equity
Awards Granted
in the Year
($) | | | Change in Fair
Value Equity
Awards
Granted in Prior
Years that are
Unvested at
Year End
($) | | | Change in Fair
Value of Equity
Awards Granted
in Prior Years
that Vested in the
Year
($) | | | Fair Value of
Equity Awards
Granted in Prior
Years that
Forfeited in the
Year
($) | | | Value of
Dividends or
other Earnings
Paid on Stock
Awards not
Otherwise
Reflected
($) | | | Total
Compensation
Actually Paid
($) | |
| | Shanahan | | | | | 8,919,114 | | | | | | (8,149,986) | | | | | | 15,946,632 | | | | | | — | | | | | | 20,771 | | | | | | — | | | | | | — | | | | | | 16,736,531 | | |
| | Gentile | | | | | 11,807,067 | | | | | | (9,529,351) | | | | | | 1,095,202 | | | | | | 125,385 | | | | | | (366,882) | | | | | | (3,427,796) | | | | | | — | | | | | | (296,375) | | |
(3)
Includes the average total compensation for Messrs. Suchinski, Brown, Young, McLarty, and Hawkins and Ms. Marnick in 2023; Messrs. Suchinski, Hawkins, and Matthies and Ms. Marnick in 2022 and 2021; and Messrs. Suchinski, Hawkins, and Brown, Jose I. Garcia, John A. Pilla, and Ms. Marnick in 2020. Total compensation for non-CEO NEOs are as reported in the “Summary Compensation Table.”
(4)
The following supplemental table presents a reconciliation of the average non-CEO NEO “Summary Compensation Table” total to the compensation actually paid for 2023, as defined and computed in accordance with Item 402(v) of Regulation S-K. However, not all of such amounts were actually earned or received by the non-CEO NEOs during 2023. As none of the non-CEO NEOs participate in any defined benefit plans, no adjustments were required to amounts reported in the “Summary Compensation Table” totals related to the value of benefits under such plans. With respect to Mr. Hawkins, the year end fair value of equity awards granted in 2023 have been reduced to reflect his retirement eligibility.
| | 69 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Non-CEO NEO Reconciliation for 2023
| | | | | | | | | | | | | | | | | Equity Award Adjustments | | | | | | | |
| | Year | | | Average
Summary
Compensation
Table Total
($) | | | Average
Value of Equity
Awards
Reported in
Summary
Compensation
Table
($) | | | Average
Year End Fair
Value of Equity
Awards
Granted in the
Year(a)
($) | | | Average
Change in Fair
Value Equity
Awards
Granted in Prior
Years that are
Unvested at
Year End
($) | | | Average Fair
Value of
Equity
Awards
Granted in
the Year that
Vested in the
Year
($) | | | Average
Change in Fair
Value of Equity
Awards
Granted in Prior
Years that
Vested in the
Year
($) | | | Average Fair
Value of Equity
Awards Granted
in Prior Years
that Forfeited in
the Year
($) | | | Average
Value of
Dividends or
other Earnings
Paid on Stock
Awards not
Otherwise
Reflected
($) | | | Average Total
Compensation
Actually Paid
($) | |
| | 2023 | | | | | 2,119,556 | | | | | | (1,262,410) | | | | | | 792,795 | | | | | | 160,345 | | | | | | 2,579 | | | | | | (49,202) | | | | | | (201,747) | | | | | | — | | | | | | 1,561,915 | | |
(a)
With respect to Mr. Hawkins, the year end fair value of equity awards granted in 2023 have been reduced to reflect withholding in connection with his retirement eligibility.
(5)
The peer group used for this purpose is the S&P 500 Aerospace & Defense Index.
(6)
The numbers in these rows have been revised from the numbers previously reported in last year’s “Pay versus Performance Table” in order to correct an administrative error.
Description of Relationships Between Compensation and Performance
The graph below illustrates trends in “compensation actually paid,” Company TSR performance, and TSR performance of the S&P 500 Aerospace & Defense Index (the “A&D Index”) over the four most recent fiscal years. This illustrates that our compensation generally moves directionally with our TSR performance. The “compensation actually paid” included for our current CEO, Mr. Shanahan, reflects the increase in our stock price during the last quarter of 2023.
Compensation Actually Paid vs. TSR
Additionally, the graphs below compare the trend in “compensation actually paid” over four years to Company Net Income/(Loss) and Company Revenue. These illustrate the rigor of our compensation measures. Although “compensation actually paid” increased from 2020 to 2021, consistent with substantial improvements in Net Income/(Loss) and Revenue, it did not increase from 2021 to 2022 as improvement in Net Income/(Loss) was inconsistent with projections, although Revenue did improve. The “compensation actually paid” included in 2023 for Messrs. Gentile and Shanahan and our other NEOs increased as a result of an increase in our stock price.
| | Spirit AeroSystems2024 Proxy Statement | | | 70 | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Compensation Actually Paid vs. Net Income (Loss)
Compensation Actually Paid vs. Revenue
As also required by Item 402(v) of Regulation S-K, below is a list of the performance measures that were considered the most important by the Compensation Committee in determining executive compensation for the 2023 performance year and in linking executive compensation actually paid to Company performance. Our executive compensation program and compensation decisions reflect the guiding principles of being linked to long-term performance and aligned with stockholder interests. The metrics used within our incentive plans are selected to support these objectives. See “Proxy Statement Summary — Executive Compensation At-A-Glance” for a discussion of these metrics, “Compensation Discussion and Analysis” for a discussion on their use in our incentive compensation programs for 2023 and Appendix A for an explanation and reconciliation of non-GAAP measures.
■
Free Cash Flow*
■
EBIT*
■
Revenue
■
Quality
| | 71 | | | Spirit AeroSystems2024 Proxy Statement | |
COMPENSATION DISCUSSION AND ANALYSIS (continued)
Compensation Committee Report The Compensation Committee establishes and oversees the design and functioning of the Company’s executive compensation program. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section in this Proxy Statement with the Company’s management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K be included in this Proxy Statement for the 20182024 Annual Meeting of Stockholders, and also be incorporated by reference in the Company’s Annual Report on Form 10-K for the 2023 fiscal year.
Compensation Committee
Paul E. Fulchino, Chair
Irene M. Esteves
John L. Plueger
Robert D. Johnson
James R. Ray, Jr.
| | Spirit AeroSystems2024 Proxy Statement | | | 72 | |
| | PROPOSAL 3 | | | APPROVAL OF AMENDED AND RESTATED
EMPLOYEE STOCK PURCHASE PLAN | |
Background and Purpose of the Proposal
The Spirit AeroSystems Employee Stock Purchase Plan was adopted by the Company and approved by our stockholders effective as of October 1, 2017, and was subsequently amended in 2020, 2021, and 2022 to reflect administrative updates (as amended through October 21, 2022, the “ESPP”). The ESPP is a broad-based plan that provides an opportunity for eligible employees of the Company and its designated subsidiaries and affiliates to purchase shares of our Common Stock at a discount from the then-current market price. As of March 7, 2024, there were 271,776 shares available for future purchase under the ESPP.
In light of the number of shares remaining available under the ESPP, the Board adopted, subject to approval by our stockholders at the Annual Meeting, an amendment and restatement of the ESPP (the “Amended ESPP”) on February 26, 2024, to increase the number of shares of Common Stock available for issuance under the ESPP from 1,000,000 to 4,500,000 shares. All other terms and provisions of the ESPP remain the same and are summarized below. A copy of the Amended ESPP is attached as Appendix B to this Proxy Statement.
In the event that the additional shares are approved for issuance pursuant to the Amended ESPP, the Company will promptly register the additional shares with the SEC on a registration statement on Form S-8.
Consequences of Failing to Approve the Proposal
The Amended ESPP will not be implemented unless it is approved by our stockholders. If the Amended ESPP is not approved by our stockholders, the ESPP will remain in effect in its present form and the Company will be unable to issue any additional shares under the ESPP (beyond those remaining available for issuance prior to the Amended ESPP) to eligible participants. Failure of our stockholders to approve this Proposal 3 will not affect the rights of existing award holders under the ESPP or under any previously granted awards under the ESPP.
Summary of the Amended ESPP
The following description of the Amended ESPP is only a summary of the material features and does not describe all of its provisions. This summary is qualified in its entirety by reference to the text of the Amended ESPP, attached as Appendix B.
Purpose
The purpose of the Amended ESPP is to provide an added incentive for eligible employees of the Company to promote the Company’s best interests by providing an opportunity for those employees to purchase shares of Common Stock at below-market prices through payroll deductions. The Amended ESPP is intended to align the interests of the Company’s stockholders and employees by increasing the proprietary interest of employees in the Company’s growth and success, advance the interests of the Company by attracting and retaining employees and motivate employees to act in the long-term best interests of the Company.
Administration
The Amended ESPP is administered by the Compensation Committee of the Board (the “Compensation Committee”), which has full and discretionary authority to conclusively determine the answers to any questions that may arise regarding the interpretation and application of the provisions of the Amended ESPP and to make decisions and adopt rules, regulations, policies and procedures for administering the Amended ESPP as it deems necessary. The Compensation Committee may correct any defect or omission or reconcile any inconsistency in the Amended ESPP in the manner and to the extent it deems necessary or appropriate. The Compensation Committee also has the discretion to adopt rules regarding the administration of the Amended ESPP to conform to local laws or to enable employees of the Company or certain subsidiaries or affiliates to participate in the plan. Any determinations will be made by the Compensation Committee in its sole discretion and will be final and conclusive. The Compensation Committee is authorized to delegate some or all of its authority under the Amended ESPP to one or more employees or officers of the Company as it deems necessary, appropriate or advisable.
| | 73 | | | Spirit AeroSystems2024 Proxy Statement | |
The rights to purchase Common Stock granted under the Amended ESPP are intended to be treated as either:
■
Options issued by the Company or any designated subsidiary under an employee stock purchase plan that is intended to qualify under the terms of Section 423(b) of the Internal Revenue Code (the “423 Plan”); or
■
Options issued by a designated affiliate of the Company under an employee stock purchase plan that is not subject to the terms and conditions of Section 423(b) of the Internal Revenue Code (the “Non-423 Plan”).
The Compensation Committee will have the discretion to designate whether individual subsidiaries or affiliates of the Company will participate in the ESPP and whether they will participate in the 423 Plan or the Non-423 Plan. To be eligible for participation in the 423 Plan, a subsidiary must be at least 50% owned by the Company or another entity at least 50% owned by the Company and must satisfy the other requirements of Section 424(f) of the Internal Revenue Code.
Eligibility
Generally, any person who is employed by the Company or by a subsidiary or affiliate of the Company that has been designated by the Compensation Committee may participate in the ESPP. However, no employee will be granted an option to participate in the ESPP to the extent that (1) immediately after such grant, such employee would own stock and/or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of the Common Stock or (2) such employee’s rights to purchase the Common Stock under the ESPP would accrue at a rate that exceeds $25,000 in fair market value of such stock (determined at the time such option is granted) for each calendar year 201in which such option is outstanding.
As of March 7, 2024, approximately 20,822 individuals are eligible to participate in the Amended ESPP.
Shares Available for Issuance
If approved by the Company’s stockholders at the Annual Meeting, the maximum number of shares of Common Stock that may be purchased under the Amended ESPP will be 4,500,000 shares, subject to adjustment for stock dividends, stock splits or combinations of shares of the Company’s stock. As of March 7, 2024, the market value of the 4,500,000 shares reserved for issuance under the Amended ESPP was $160,650,000.
Offering Periods
The Amended ESPP is currently implemented over consecutive six-month offering periods, beginning on April 1 and October 1 of each year and ending on the last day of September and March, respectively. Shares are issued on the last trading day of each six-month offering period. The Compensation Committee has the power to change the beginning date, ending date and duration of offering periods with respect to future offerings without stockholder approval if such change is announced at least five days before the scheduled beginning of the next offering period.
Participation in the Plan
An eligible employee may become a participant in the Amended ESPP by giving instructions to the plan recordkeeper authorizing payroll deductions, and payroll deductions for such employee will begin as soon as administratively feasible after such instructions are received in good order, subject to compliance with the Company’s insider trading policies and such rules and procedures as may be established by the Compensation Committee in connection therewith.
An employee’s payroll deductions or other contributions under the Amended ESPP may not exceed (1) 15% (or such other percentage as the Compensation Committee may determine) of such employee’s “Compensation” (as defined in the Amended ESPP) or (2) $25,000 for each year (or such lower annual dollar limit as may be designated by the Compensation Committee).
The per-share purchase price for the Common Stock purchased under the Amended ESPP is the lesser of 85% of the fair market value of a share of such Common Stock on the last trading day of the offering period or 85% of the fair market value of a share of such Common Stock on the first day of the offering period. Upon the completion of the offering period, the Company will automatically apply the funds in the participant’s account to purchase the largest number of shares of Common Stock at the designated purchase price (which may include a fractional share), provided that in no event will any participant purchase more than 30,000 shares during an offering period (subject to the limitations described above).
Once made, a participant’s payroll deduction election will automatically remain in effect for successive offering periods until the participant provides new instructions for a subsequent offering period, withdraws from the Amended ESPP or terminates his or her employment; provided, however, a participant is allowed to decrease payroll deductions once during an offering period (but
| | Spirit AeroSystems2024 Proxy Statement | | | 74 | |
may not increase payroll deductions within an offering period). Otherwise, a participant’s payroll deduction election may not be modified during an offering period except if the participant withdraws from the Amended ESPP or elects to terminate payroll deductions during an offering period.
Withdrawal from the Plan
A participant may elect to withdraw and terminate payroll deductions from the Amended ESPP at any time. An election to withdraw from participation will become effective as soon as administratively feasible following the date such election is received by the recordkeeper and will remain in effect until the participant provides new enrollment instructions. A participant who withdraws from participation during an offering period may not make a new payroll deduction election that is effective any sooner than the next offering period that begins on or after the date of the participant’s withdrawal.
Upon a participant’s withdrawal and request to terminate payroll deductions from the Amended ESPP at least five calendar days before the last day of the then-current offering period, all payroll deductions credited to the participant’s account during such offering period will be returned to the participant in cash, without interest. To the extent that a participant does not give proper instructions to terminate payroll deductions at least five calendar days before the last day of the then-current offering period, the participant will be deemed to have elected to exercise the participant’s option for purchase of shares of Common Stock on the next purchase date. Unless the participant instructs the recordkeeper to terminate the participant’s account, the recordkeeper will continue to maintain the account after termination of payroll deductions. Upon termination of the participant’s account, any fractional shares will be paid to the participant in cash following such termination.
Upon a participant’s termination of employment for any reason, payroll deductions credited to such participant’s account during the then-current offering period that have not yet been used to exercise the option will be returned without interest to the participant (or in the case of death, to the participant’s beneficiary) and the participant’s option will automatically be terminated. Upon termination, the participant (or the participant’s beneficiary) will direct the recordkeeper to (i) transfer all shares of Common Stock out of the participant’s account into either a separate account with the recordkeeper or a separate account chosen by the participant, (ii) pay any cash dividends and the value of any fractional shares to the participant (or the participant’s beneficiary) in cash, and (iii) terminate the participant’s account.
Restrictions on Transfer
Rights granted under the Amended ESPP are not transferable by a participant other than by will or the laws of inheritance following the participant’s death.
Duration, Amendment and Termination
The Board has the power to amend or terminate the Amended ESPP, subject to compliance with applicable law and NYSE requirements. However, stockholder approval is required within 12 months before or after the Board adopts an amendment to increase the maximum number of shares issuable under the Amended ESPP (other than for adjustments upon changes in the Company’s capitalization as described in the following paragraph), to amend the requirements as to the class of employees eligible to participate in the Amended ESPP or to change the granting corporation or the stock available for purchase under the Amended ESPP.
Adjustments Upon Changes in Capitalization
In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification or other extraordinary corporate event, the CompensationCommitteePaul Fulchino, Chairman
Charles Chadwell
Robert Johnson
SPIRIT AEROSYSTEMS - 2018 shall proportionally adjust the maximum number of shares issuable under the Amended ESPP, the price per share and the number of shares of Common Stock covered by each option under the Amended ESPP that has not yet been exercised in order to prevent dilution or enlargement of the rights of participants.
Dissolution or Liquidation
Unless provided otherwise by the Compensation Committee, in the event of the proposed dissolution or liquidation of the Company, the offering period then in progress will be shortened (with the exercise date for the purchase of shares in that offering period being on the last day of the shortened offering period) and will terminate immediately prior to the consummation of the proposed dissolution or liquidation, unless otherwise determined by the Compensation Committee.
| | 75 | | | Spirit AeroSystems2024 Proxy Statement | |
Asset Sale, Merger or Consolidation
In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger or consolidation of the Company with or into another entity, the Compensation Committee will shorten any offering period then in progress by setting a new exercise date for the purchase of shares for that offering period, which will occur prior to the proposed asset sale or merger.
Participation by the Company’s Named Executive Officers
The Company’s named executive officers are currently eligible to participate in the ESPP on the same terms and conditions as all other participants and will continue to remain eligible if the stockholders approve the Amended ESPP.
United States Federal Income Tax Consequences
The following summary briefly describes U.S. federal income tax consequences of rights under the Amended ESPP, but is not a detailed or complete description of all U.S. federal tax laws or regulations that may apply, and does not address any local, state or other country laws. Therefore, no one should rely on this summary for individual tax compliance, planning or decisions. Participants in the Amended ESPP should consult their own professional tax advisors concerning tax aspects of rights under the Amended ESPP. This Proxy Statement 60
Backis not written or intended to Contents
be used, and cannot be used, for the purposes of avoiding taxpayer penalties. The discussion below concerning tax deductions that may become available to the Company under U.S. federal tax law is not intended to imply that the Company will necessarily obtain a tax benefit or asset from those deductions. Taxation of equity-based payments in other countries is complex, does not generally correspond to U.S. federal tax laws and is not covered by the summary below. 423 Plan. If the Amended ESPP is approved by the Company’s stockholders, options to purchase shares granted under the 423 Plan are intended to qualify for favorable federal income tax treatment associated with rights granted under an employee stock purchase plan that qualifies under the provisions of Section 423(b) of the Internal Revenue Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the Amended ESPP are sold or otherwise disposed of. If the shares are disposed of within two years from the grant date or within one year from the purchase date of the shares, a transaction referred to as a “disqualifying disposition,” the participant will realize ordinary income in the year of such disposition equal to the difference between the fair market value of the stock on the purchase date and the purchase price. The amount of such ordinary income will be added to the participant’s basis in the shares, and any additional gain or resulting loss recognized on the disposition of the shares after such basis adjustment will be a capital gain or loss. A capital gain or loss will be long-term if the participant holds the shares for more than one year after the purchase date.
If the stock purchased under the Amended ESPP is sold (or otherwise disposed of) more than two years after the grant date and more than one year from the purchase date of the stock, then the lesser of (a) the excess of the fair market value of the stock at the time of such disposition over the purchase price and (b) the excess of the fair market value of the stock as of the grant date over the purchase price will be treated as ordinary income. The amount of such ordinary income will be added to the participant’s basis in the shares, and any additional gain recognized on the disposition of the shares after such basis adjustment will be long-term capital gain. If the fair market value of the shares on the date of disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a capital loss.
The Company will generally be entitled to a deduction in the year of a disqualifying disposition equal to the amount of ordinary income realized in the United States by the participant as a result of such disposition, subject to the satisfaction of any tax-reporting obligations. In all other cases, no deduction is allowed.
Non-423 Plan. With respect to options to purchase shares granted under the Non-423 Plan, an amount equal to the difference between the fair market value of the stock on the purchase date and the purchase price will be treated as ordinary income at the time of such purchase. In such instances, the amount of such ordinary income will be added to the participant’s basis in the shares, and any additional gain or resulting loss recognized on the disposition of the shares after such basis adjustment will be a capital gain or loss. A capital gain or loss will be long-term if the participant holds the shares for more than one year after the purchase date.
The Company will generally be entitled to a deduction in the year of purchase equal to the amount of ordinary income realized by the participant in the United States as a result of such disposition, subject to the satisfaction of any tax-reporting obligations. For U.S. participants, FICA/FUTA taxes will be due in relation to ordinary income earned as a result of participation in the Non-423 Plan.
| | Spirit AeroSystems2024 Proxy Statement | | | 76 | |
RATIFICATION
New Plan Benefits
The benefits to be received pursuant to the Amended ESPP, by the Company’s employees are not currently determinable as they will depend on the purchase price of our shares in offering periods after the implementation of the Amended ESPP, the market value of our shares on various future dates, the amount of contributions that eligible employees elect to make under the Amended ESPP, and similar factors. As of the date of this Proxy Statement, no employee has been granted an option to purchase additional shares under the ESPP that is conditioned on approval of the Amended ESPP.
Securities Authorized for Issuance under the Company’s Equity Compensation Plans
The following table represents securities authorized for issuance under the Company’s equity compensation plans as of December 31, 2023.
Equity Compensation Plan Information
| | Plan Category | | | Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and Rights
(a)(3),(4) | | | Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights
(b) | | | Number of
Securities
Remaining
Available for
Future
Issuances
Under the Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column(a))
(c) | |
| | Equity compensation plans approved by security holders | | | | | 2,633,244 | | | | | $ | — | | | | | | 7,032,102 | | |
| | ■
Omnibus Incentive Plan of 2014(1) | | | | | 2,633,244 | | | | | | — | | | | | | 6,760,326 | | |
| | ■
Employee Stock Purchase Plan(2) | | | | | — | | | | | | — | | | | | | 271,776 | | |
| | Equity compensation plans not approved by security holders | | | | | — | | | | | $ | — | | | | | | — | | |
| | Total | | | | | 2,633,244 | | | | | $ | — | | | | | | 7,032,102 | | |
(1)
The Company’s 2014 Omnibus Incentive Plan, as amended (the “Omnibus Plan”) provides for the issuance of incentive awards to officers, directors, employees, and consultants in the form of restricted stock, restricted stock units, stock appreciation rights, and other equity or equity-based compensation awards.
(2)
The Company maintains the Employee Stock Purchase Plan, as amended (the “ESPP”).
(3)
The subject securities are not included in the weighted-average exercise price column as they are issuable for no consideration.
(4)
Represents time-based and performance-based long-term incentives that may be issued under the Omnibus Plan. For outstanding performance-based awards, the amounts reflect the maximum payout under best-case performance goals that may nor may not be achieved. The amount of shares that could be paid out under the performance-based awards ranges from 0-200% based on actual performance, with a target award equal to 100% of the shares denominated under the award.
The Board recommends you vote “FOR” approval of the Company’s Amended and Restated Employee Stock Purchase Plan. | | | Voting Standard | | |
| | | The Amended ESPP becomes effective on its approval by our stockholders. The affirmative vote of a majority of votes cast, in person or by proxy, will constitute the stockholders’ approval with respect to Proposal 3. A stockholder may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to Proposal 3. Any shares not voted (whether by abstention, broker non-vote, or otherwise) will have no impact on this Proposal 3. Before voting on this proposal, stockholders are encouraged to read and consider the proposal as described herein, as well as the Amended ESPP attached as Appendix B to this Proxy Statement. Proposal 3 is considered a non-routine matter under NYSE rules. Under the NYSE rules, brokers are prohibited from giving proxies to vote on non-routine matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to Proposal 3 if you want your broker to vote your shares on the matter. | | |
| | 77 | | | Spirit AeroSystems2024 Proxy Statement | |
Overview
| | PROPOSAL 4 | | | RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS | |
Ernst & Young LLP (“E&Y”) conducted the audit of the Company’s accounts for fiscal year 2017.2023. The Audit Committee has selected E&Y as the Company’s independent registered public accounting firm for fiscal year 2018,2024, and the Board is asking the Company’s stockholders to ratify that selection. The Company expects that representatives of E&Y will be virtually present at the Annual Meeting and they may make a statement if they desire to do so. Further, the Company expects that such representatives will be available to respond to appropriate questions.Voting Standard
The affirmativeBoard recommends you vote “FOR” ratification of a majoritythe appointment of stockholders present, in person or by proxy, will constituteErnst & Young LLP as the stockholders’ non-binding approval with respect to Proposal 3. With respect to Proposal 3, a stockholder may vote “FOR,” “AGAINST,” or “ABSTAIN.” Abstentions and broker non-votes will not be counted as votes “FOR” or “AGAINST” Proposal 3. However, because abstentions and broker non-votes will be counted as present at the Annual Meeting, they will have the effect of votes “AGAINST” Proposal 3. Unless otherwise instructed, the proxy holders will vote proxies received by them “FOR” the proposal.
Company’s independent auditors for 2024.
| | | Voting Standard | | |
| | | The affirmative vote of a majority of votes cast, in person or by proxy, will constitute the stockholders’ non-binding approval with respect to Proposal 4. A stockholder may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to Proposal 4. Any shares not voted (whether by abstention, broker non-vote or otherwise) will have no impact on this Proposal 4. Proposal 4 is considered a routine matter under NYSE rules. As a result, brokers who do not receive voting instructions generally may vote on Proposal 4 in their discretion. Unless otherwise instructed, the proxy holders will vote proxies received by them “FOR” the proposal. | | |
If a majority of votes cast on this matter are not cast in favor of the selection of E&Y, the Audit Committee will reconsider the selection of such firm as the Company’s independent registered public accounting firm. Even if the Company’s stockholders vote on an advisory (non-binding) basis in favordo ratify the appointment of the selection,E&Y, the Audit Committee may, in its discretion, direct the selection of a different independent auditor at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.Proposal 3 is considered a routine matter under NYSE rules. As a result, brokers who do not receive voting instructions generally may vote on Proposal 3 in their discretion.
Pre-Approval Policy
✓
The Board recommends you vote “FOR” the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 61
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Policy on Audit Committee Pre-Approvalhas adopted a policy governing the pre-approval of Audit and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm
The Audit Committee’s pre-approval policy requires the Audit Committee to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm prior to engagement.auditors. Under this policy, the Audit Committee has delegated approval authority to the Chair of the Audit Committee, provided the Chair reports all pre-approval decisions in writing to the Audit Committee, and the decisions are discussed at the Audit Committee’s next scheduled meeting. In 2017,For the fiscal years ended December 31, 2022, and December 31, 2023, all of the Company’s audit and permissible non-audit services provided by E&Y were pre-approved by the Audit Committee.
| | Spirit AeroSystems2024 Proxy Statement | | | 78 | |
Audit and Other Fees
The fees incurred by the Company, including its majority-owned subsidiaries, for services provided by E&Y in 20162023 and 20172022 are set forth below. The Audit Committee concluded that the provision of the non-audit services listed below was compatible with E&Y’s independence.
| | | | | December 31, | |
| | (Dollars in thousands) | | | 2023
($) | | | 2022
($) | |
| | Audit Fees(1) | | | | | 5,431.9 | | | | | | 4,882.5 | | |
| | Audit-Related Fees(2) | | | | | 70.0 | | | | | | 249.0 | | |
| | Tax Fees(3) | | | | | 0.4 | | | | | | 3.4 | | |
| | All Other Fees | | | | | — | | | | | | — | | |
| | TOTAL | | | | | 5,502.3 | | | | | | 5,134.9 | | |
| December 31, |
| 2016 (Dollars in thousands)
($) | 2017 (Dollars in thousands)
($) |
Audit Fees(1) | 3,419.7 | 3,724.9 |
Audit-Related Fees(2) | 230.5 | 593.1 |
Tax Fees(3) | 128.9 | 259.5 |
All Other Fees(4) | 0 | 369.0 |
TOTAL | 3,779.1 | 4,946.5 |
(1) Represents fees and expenses for professional services provided in connection with the audit of the Company’s annual financial statements and review of the Company’s quarterly financial statements, statutory audits, and advice on accounting matters directly related to the audit. (2) For 2017, represents $575.3 (in thousands) in fees related to implementation of FASB’s new revenue recognition standard and $17.8 (in thousands) in fees related to Exchange Act filings, comfort letters, and related matters. For 2016, represents $155.4 (in thousands) in fees related to implementation of FASB’s new revenue recognition standard and $75.1 (in thousands) in fees related to services provided in connection with the refinancing of our credit facility and bonds. (3) Represents fees and expenses for tax consultations and advice related to compliance with tax laws and tax planning strategies. (4) For 2017, represents amount billed to the Company related to merger and acquisition analysis. |
(1)
Represents fees and expenses for professional services provided in connection with the audit of the Company’s annual financial statements and review of the Company’s quarterly financial statements, statutory audits, and advice on accounting matters directly related to the audit.
(2)
Represents fees related to non-financial assurance and due diligence.
(3)
Represents fees and expenses for tax consultations and advice related to compliance with tax laws and tax-planning strategies.
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Audit Committee Report
The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any future filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this report by reference.
The Audit Committee currently consists of threefour non-employee directors. Each of the members of the Audit Committee members satisfies the NYSE’s requirements with respect to independence and financial literacy. In addition, the Board of Directors has determined that Ms. Esteves and Mr. Raborn arePlueger qualify as audit committee financial experts as defined by the SEC. The responsibilities of the Audit Committee are set forth in its charter, which is available on our website at http://investor.spiritaero.com/govdocscorporate-governance/govdocs/default.aspx. The Audit Committee’s responsibilities include the appointment, compensation, and oversight of the independent registered public accounting firm.The Audit Committee has reviewedmet six times in 2023.
The Company’s management is responsible for preparing and presenting the Company’s consolidated financial statements, and developing and maintaining the Company’s system of internal controls over financial reporting. The Company’s internal auditors are responsible for conducting internal audits intended to evaluate the adequacy and effectiveness of this system. E&Y, the Company’s independent registered public accounting firm for 2023, is responsible for auditing the Company’s consolidated financial statements and issuing an opinion as to whether the financial statements fairly present the Company’s financial position in conformity with U.S. generally accepted accounting principles. E&Y is also responsible for auditing the Company’s internal control over financial reporting.
In fulfilling its oversight responsibilities, the Audit Committee has:
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Reviewed and discussed with management and the independent registered public accounting firmE&Y the Company’s audited financial statements as of and for the year ended December 31, 2017,2023, as well as the representations of management regarding the Company’s internal controlcontrols over financial reporting. The Audit Committee hasreporting;
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Reviewed and discussed with E&Y the independent registered public accounting firm all itemsmatters required to be discussed by the standardsapplicable requirements of the Public Company Accounting Oversight Board (“PCAOB”), including and the Statement on Auditing Standards, No. 61, as amended by American Institute of Certified Public Accountants, Professional Standards, Vol. 1, AU section 380, as adopted by the PCAOB in Rule 3200T, CommunicationwithAuditCommittees. The Audit Committee has receivedSEC; and
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Received and reviewed the written disclosures and the letter from the independent registered public accounting firmE&Y required by applicable requirements of the PCAOB regarding the independent accountant’sE&Y’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with the independent registered public accounting firmE&Y its independence from the Company and its management.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,2023, for filing with the SEC, and the Board approved the Audit Committee’s recommendation. The Audit Committee selected E&Y as the Company’s independent registered public accounting firm for fiscal year 2018.2024.
AuditCommittee
Irene M. Esteves, Chair
Stephen A. Cambone
William A. Fitzgerald
John L. Plueger
Francis RabornSPIRIT AEROSYSTEMS - 2018 Proxy Statement 62
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BOARD’S PROPOSAL TO LOWER THE SPECIAL MEETING OWNERSHIP THRESHOLD TO 25%
| | PROPOSAL 5 | | | STOCKHOLDER PROPOSAL:
TRANSPARENCY IN POLITICAL SPENDING | |
Overview
The Company’s bylaws currently provide thatCompany has received a special meetingstockholder proposal titled “Transparency in Political Spending” from John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California, 90278, beneficial owner of stockholders may be called by the holders200 shares of a majority of the Company’s outstanding Common Stock. After conducting a peer and market review, and incareful consideration, of corporate governance best practices, the Board of Directors believes that it is appropriate to lower the threshold required to call special meetings to holders of 25% of the Company’s outstanding Common Stock. Accordingly, the Board has determined that stockholders should be provided the opportunity to consider this proposal that provides stockholders an enhanced right to request a special meeting and provides an appropriate balance of the competing interests described below.Stockholders are being asked to approve, on a non-binding advisory basis, the Board’s proposal to allow stockholders who own at least 25% of the outstanding Common Stock and satisfy certain other procedures and requirements, to require the Company to call a special meeting of stockholders.
Elements of Proposal 4
The Board is requestingrecommends that stockholders vote “ FOR”“AGAINST” this proposal. The proposal and supporting statement are presented below as received. The Company is not responsible for their content.
Stockholder Proposal:
Proposal 5 — Transparency in Political Spending
Resolved, Shareholders request that Spirit AeroSystems provide a report, updated semiannually, disclosing the Company’s:
1.
Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an enhanced stockholder right to call special meetings that contains the following elements:•
A special meeting of stockholders may be called by the written request of oneelection or more stockholders of record representingreferendum.
2.
Monetary and non-monetary contributions and expenditures (direct and indirect) used in the aggregate at least 25%manner described in section 1 above, including:
a.
The identity of the outstanding sharesrecipient as well as the amount paid to each; and
b.
The title(s) of Common Stock.
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Stock ownership is determined under a “ net long” standard to provide assurances that stockholders possess full voting rights and the full economic interestperson(s) in the shares that they purportCompany responsible for decision-making.
The report shall be presented to hold. Borrowed, loaned,the Board or hedged shares will generally not count as owned.
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Stockholders requesting to call a special meeting will be required to provide information similar to information required for stockholder proposalsrelevant Board committee and director nominations inposted on the Company’s current bylaws.
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The special meeting right would be designed to prevent duplicative and unnecessary meetings and a special meeting request would not be valid if (i) the request relates to an item of business that is not a proper subject for stockholder action under applicable law, (ii) the request is receivedwebsite within 90 days prior to the anniversary of the previous annual meeting and before12 months from the date of the next annual meeting, or (iii) an annual or special meeting of the stockholders that included an identical or substantially similar item of business (“Similar Business”) was held not more than 120 days before the date that the request was received by the Company. The nomination, election, or removal of directors shall be deemed to be Similar Business with respect to all items of business involving the nomination, election, or removal of directors, changing the size of the Board and filling of vacancies and/or newly created directorships resulting from any increase in the authorized number of directors.
The Board’s Reasoning
The Board believes that the right of stockholders to call a special meeting is a very important and fundamental right to public company stock ownership. However, overuse of the special meeting request right, or use of the mechanism by stockholders to advance their own narrow interests, could result in significant costs to the Company. Therefore, the Board seeks to achieve a balance between enhancing the stockholders’ right to request special meetings and preventing the Company and its stockholders from the expensive, disruptive, unproductive use of this right by a small minority of stockholders with narrow interests. The Board believes that 25% is the appropriate threshold to effectively create that balance.
Special meetings of stockholders cost the Company tens of thousands of dollars. This is due to the legal, printing, and mailing expenses involved with providing sufficient notice and information about such meetings and the expenses required to host the meeting. In addition, preparing for a special meeting requires significant attention from our management and diverts their attention from their primary role of creating long-term stockholder value by successfully executing our business strategy and operations.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 63
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Due to the financial impact to the Company and significant focus required by the Board and management, stockholder meetings should be reserved to consider matters that a significant portion of stockholders believes warrant immediate attention and cannot be delayed for consideration until the next annual meeting. The Board considered the Company’s largely institutional ownership and market capitalization, relative to larger companies that have adopted a 25% threshold, when considering the appropriate threshold.
The adoption of special meeting rights with a meaningful threshold has become common among large public companies. The specific threshold varies from company to company, but for a number of years, 25% has been the most common threshold for public companies that have adopted a special meeting right. In addition, the Company engages with its stockholders frequently and on many topics. The Company is committed to listening and, when appropriate, taking action based on stockholder concerns. Our commitment to a strong engagement program and the value we place on stockholder input mitigates the need for stockholders to call special meetings. As a result of the Company’s engagement with stockholders and commitment to corporate governance best practices, the Company has adopted a proxy access right, has adopted a majority voting standard for uncontested director elections, and does not have super majority voting requirements for approval of a merger or amendments to the Company’s certificate of incorporation or bylaws. In addition, the Company does not have a classified board structure and has separated the roles of the chairman of the Board and the CEO. The Board is strongly committed to good corporate governance practices and, for the foregoing reasons, the Board believes that its Proposal 4 is in the best interests of the Company and all of its stockholders and should be approved.
Proposal 4 versus Proposal 5
Proposal 4 reflects the views of the Board and management, after consideration of corporate governance best practices and after conducting a peer and market review, while Proposal 5 reflects the view of one stockholder. The Board believes that the special meeting threshold of 10% sought by Proposal 5 would not effectively balance the interests of the stockholders against the potential for corporate waste. At a 10% threshold, owners of a small minority of shares could call a special meeting to consider a matter of little or no interest to most stockholders, while a 25% threshold, coupled with procedural requirements, appropriately advances the rights of stockholders. Accordingly, the Board requests you to vote “ FOR” Proposal 4 and “ AGAINST” Proposal 5.
Effect of Voting Outcome
You should carefully read the descriptions of each proposal, and the Board’s statement in opposition to Proposal 5. Although Proposal 4 and Proposal 5 concern the same subject matter, the terms and effects of each proposal differ. You may vote for both proposals, and approval of one proposal is not conditioned on approval or disapproval of the other.
If Proposal 4 is approved by a majority of stockholders present at the Annual Meeting, the Board will amend the Company’s bylaws to provide for an enhanced special meeting right with the elements described under “ Elements of Proposal 4,” above. However, because Proposal 4 is non-binding, if Proposal 4 is not approved, the Board will take Proposal 4 under further advisement to determine appropriate next steps and may nevertheless amend the Company’s bylaws to reflect the enhanced special meeting right.
If both Proposal 4 and Proposal 5 are approved, then the stockholders will have approved two different and conflicting proposals. In such case, the Board expects that it will implement the special meeting right it believes is appropriate, based on the reasons set forth above, which is set forth in this Proposal 4. The Board will consider approval of this Proposal 4 as supporting the implementation of such proposal, even if Proposal 5 is also approved.
Voting Standard
The affirmative vote of a majority of stockholders present, in person or by proxy, will constitute the stockholders’ non-binding approval with respect to Proposal 4.
With respect to Proposal 4, a stockholder may vote “ FOR,” “ AGAINST,” or “ ABSTAIN.” Abstentions and broker non-votes will not be counted as votes “ FOR” or “ AGAINST” Proposal 4. However, because abstentions and broker non-votes will be counted as present at the Annual Meeting, they will have the effect of votes “ AGAINST” Proposal 4.
Under the rules of the NYSE, brokers are prohibited from giving proxies to vote on non-routine matters such as this one unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to Proposal 4 if you want your broker to vote your shares on the matter.
✓
The Board recommends that you vote “FOR” the Board’s proposal to lower the special meeting ownership threshold to 25%.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 64
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STOCKHOLDER PROPOSAL: SPECIAL SHAREOWNER MEETING IMPROVEMENT
Resolved, Shareowners ask our board to take the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing document to give holders in the aggregate of 10% of our outstanding common stock the power to call a special shareowner meeting. This proposal does not impact our board’s current power to callencompass lobbying spending.
Supporting Statement
As a special meeting.Scoreslong-term shareholder of Fortune 500 companies allow 10% of shares to callSpirit, I support transparency and accountability in corporate electoral spending. This includes any activity considered intervention in a special meeting. Special meetings allow shareowners to vote on important matters,political campaign under the Internal Revenue Code, such as electingdirect and indirect contributions to political candidates, parties, or organizations, and independent expenditures or electioneering communications on behalf of federal, state, or local candidates.
A company’s reputation, value, and bottom line can be adversely impacted by political spending. The risk is especially serious when giving to trade associations, Super PACs, 527 committees, and “social welfare” organizations — groups that routinely pass money to or spend on behalf of candidates and political causes that a company might not otherwise wish to support.
The Conference Board’s 2021 “Under a Microscope” report details these risks, recommends the process suggested in this proposal, and warns “a new directorsera of stakeholder scrutiny, social media, and political polarization has propelled corporate political activity — and the risks that come with it — into the spotlight. Political activity can arise between annual meetings. pose increasingly significant risks for companies, including the perception that political contributions — and other forms of activity — are at odds with core company values.”
Publicly available records show Spirit has contributed at least $500,000 in corporate funds since the 2010 election cycle.
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This proposal asks Spirit AeroSystems to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organizations which may be particularly timely becauseused for electoral purposes — and are otherwise undisclosed. This would bring our Company in line with a growing number of leading companies, including Northrop Grumman, Illinois Tool Works, and United Parcel Service, which present this information on their websites.
Without knowing the recipients of our company’s political dollars we may now havecannot sufficiently assess whether our company’s election-related spending aligns or conflicts with its policies on climate change and sustainability, or other areas of concern. Thus it will be a needbest practice for board refreshment after 2018 with 3 directors past age 73:Charles Chadwell
Richard Gephardt
Francis Raborn
Any claim that a shareholder rightSpirit AeroSystems to call a special meeting can be costly—may be largely moot. When shareholders have a good reason to call a special meeting - our board should be able to take positive responding action to make a special meeting unnecessary.
Please vote to improve management accountability to shareholders: SpecialShareholderMeetingImprovement—Proposal5
expand its political spending disclosure.
The Board of Directors’ Statement in Opposition
The Company’s Political Activities and Lobbying Policy prohibits the “use of corporate funds to make contributions to candidates for election to a federal office.” Consistent with this prohibition, since 2019, Spirit has not used any Company agrees that an enhanced special meeting right is an important corporate governance practice. However,funds for political contributions. As a result, the Board believes that a special meeting right requiring a threshold of only 10% may result in disruptive, unproductive use of the mechanismreport required by this proposal is unnecessary and recommends that is not in the best interests of the Company and its stockholders. Due to the Company’s largely institutional ownership,you vote “AGAINST” this could mean that only one or two stockholders (among tens of thousands) could call a special meeting. This is particularly true considering the Company’s market capitalization relative to other companies that have determined that thresholds higher than 10% are appropriate. Such a threshold could result in the Company and other stockholders being held hostage to topics that do not concern them or may be of little or no importance to them. Accordingly, theproposal.
The Board recommends
that stockholders vote “ AGAINST” Proposal 5.As mentioned in Proposal 4, an effective enhanced special meeting right must appropriately guard against misuse. A special meeting is a time-consuming process that will draw the Board and management’s attention away from business operations and maximizing stockholder value through appropriate strategic initiatives. The process will also divert Company funds towards preparing and distributing proxy materials and preparing for the meeting.
After balancing these important, yet competing interests, the Board determined that the 25% threshold proposed by the Board in Proposal 4 effectively safeguards the interests of the Company and its stockholders. It is small enough for stockholders that feel the same way about a topic to effectively pool together and request a meeting. However, it is not so small that it allows the special meeting process to be held hostage by minority stockholders seeking to advance their own interests.
For these reasons, the Board requests that you vote “AGAINST” the foregoing stockholder proposal, Proposal 5.
Voting Standard
The affirmative vote of a majority of stockholders present, in person or by proxy, will constitute the stockholders’ non-binding approval with respect to Proposal 5.
With respect to Proposal 5, a stockholder may vote “ FOR,” “ AGAINST,” or “ ABSTAIN.” Abstentions and broker non-votes will not be counted as votes “ FOR” or “ AGAINST” Proposal 5. However, because abstentions and broker non-votes will be counted as present at the Annual Meeting, they will have the effect of votes “ AGAINST” Proposal 5.
Under the rules of the NYSE, brokers are prohibited from giving proxies to vote on non-routine matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to Proposal 5 if you want your broker to vote your shares on the matter.
proposal. | | | Voting Standard | | |
| | | The affirmative vote of a majority of votes cast, in person or by proxy, will constitute the stockholders’ approval with respect to Proposal 5. A stockholder may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to Proposal 5. Any shares not voted (whether by abstention, broker non-vote, or otherwise) will have no impact on this Proposal 5. Proposal 5 is considered a non-routine matter under NYSE rules. Under the NYSE rules, brokers are prohibited from giving proxies to vote on executive compensation matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that, if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to Proposal 5 if you want your broker to vote your shares on the matter. | | |
×
The Board recommends that you vote “AGAINST” the foregoing stockholder proposal.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 65
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GENERAL INFORMATION REGARDING THE ANNUAL MEETING
Questions and Answers About the Annual Meeting and Voting
Why am I being asked to vote?
The Company’s Board of Directors is asking you to vote with respect to proposals being presented at the Company’s Annual Meeting. You may either vote in personThis Proxy Statement includes information that is relevant to the proposals to be voted on at the Annual Meeting throughand is otherwise required by SEC rules. The Annual Meeting will take place virtually on April 24, 2024, at 10:00 a.m. Central Daylight Time. See “How can I vote my shares before the Internet, or, ifAnnual Meeting?” and “How can I vote my shares during the Annual Meeting?” below for information on how you received a paper copycan vote your shares.
What is included in these materials?
These materials include:
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The Proxy Statement for the 2024 Annual Meeting of Stockholders; and
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The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
If you wish to receive printed versions of the materials, by returning a proxy card or voting information form. If you want to vote in person by attending the Annual Meeting,above, please readreference “How do I attend the Annual Meeting?’request a printed set of proxy materials?”
Who can vote at the Annual Meeting?
You are entitled to vote if our records show that you were a stockholder of record as of the record date,Record Date, February 26, 2018.2024. On the Record Date, there were 114,631,080116,225,090 shares of Common Stock outstanding. Each outstanding share of Common Stock is entitled to one vote.
Holders of Common Stock do not have the right to cumulative voting in the election of directors. In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be accessible by appointment for ten days prior to the meeting by contacting our Corporate Secretary at CorporateSecretary@spiritaero.com.
How is the Annual Meeting being held?
The Annual Meeting will be conducted virtually via live audio webcast.
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We Encourage Questions. Stockholders may submit questions before the meeting and during the meeting by following the instructions under “How can I submit questions for the Annual Meeting?”
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We Believe in Transparency. Although the live audio webcast is available only to stockholders at the time of the meeting, following completion of the Annual Meeting, a webcast replay will be posted to our Investor Relations website at https://investor.spiritaero.com/news-presentations/Presentations/default.aspx.
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We Proactively Take Steps to Facilitate Your Participation. During the Annual Meeting, technicians will be available to assist you with technical difficulties. Anyone who has technical difficulties accessing or using www.virtualshareholdermeeting.com/SPR2024 during the Annual Meeting should call the technical support number on the website. The virtual meeting site is supported on browsers (e.g., Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Each participant should ensure strong Wi-Fi or other internet connection.
Why did I receive a Notice and not a full set of materials?
In 2018, we primarily deliveredWe deliver our proxy materials to stockholders primarily over the Internetinternet by using “notice and access” delivery, rather than mailing paper copies to each stockholder. Using this method has reduced our printing and mailing costs and the impact of our Proxy Statement on the environment. If you received a Notice by mail or email, you will not receive a paper copy of the proxy materials or Annual Report unless you request one. Instead, the Notice will tell you how to access these materials over the Internet.internet. If you received a Notice and would like to request a full set of printed materials, you may do so by following the instructions provided under, “How do I request a printed set of proxy materials?”
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GENERAL INFORMATION (continued)
If you are a beneficial owner, the Notice has been forwarded to you by your broker or bank, who is considered, with respect to your shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank, or other holder of record onas to how to vote your shares.
How do I view thethis Proxy Statement online?
Go to http:// www.proxyvote.com and follow the instructions to view the materials.
How do I request a printed set of proxy materials?
You can easily request a paper copy of the proxy materials at no cost to you using one of the following methods:
•
ByInternet at http:// www.proxyvote.com
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By Telephone, toll free at 1-800-579-1639
![[MISSING IMAGE: tm2213929d10-fc_request4c.jpg]](/files/DEF 14A/0001104659-24-033265/tm2213929d10-fc_request4c.jpg)
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By Email to sendmaterial@proxyvote.com
You will need to provide the 16-digit voting control number printed in the box marked by the arrow located on the Notice. When sending your request by email, send a blank email with the 16-digit voting control number in the subject line.
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How can I vote my shares?By Internet.
You may vote your shares via the Internet at http:// www.proxyvote.com.
In Person atbefore the Annual Meeting.
You may vote your shares in person at the Annual Meeting. Please see “How do I attend the annual meeting?”
By Mail.
If you received a paper copy of the proxy materials, you may vote your shares by returning your completed and executed proxy card or voting instruction form by mail.
Meeting?
You are encouraged to read all of the proxy materials before voting your shares as they contain important information for making an informed voting decision.
How can I vote my shares during the Annual Meeting?
For information on how to attend the virtual Annual Meeting, see, “How can I attend the Annual Meeting?”
If you are a stockholder of record as of the Record Date, you may vote your shares electronically during the Annual Meeting by following the instructions on www.virtualshareholdermeeting.com/SPR2024. If you are the beneficial owner of your shares, you may also vote electronically during the Annual Meeting by following the instructions at www.virtualshareholdermeeting.com/SPR2024. Even if you plan to attend the Annual Meeting, we recommend that you vote by proxy ahead of the Annual Meeting, as described under “How can I vote my shares before the Annual Meeting?” so that your vote will be counted if you later decide not to participate in the Annual Meeting.
How can I attend the Annual Meeting?
You are entitled to attend and participate in the virtual Annual Meeting only if you were a stockholder as of the close of business on February 26, 2024, or if you hold a valid proxy for the Annual Meeting. If you are not a stockholder, you may still view the meeting after the recording has been posted on our Investor Relations website.
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GENERAL INFORMATION (continued)
If you plan to attend the Annual Meeting online, please be aware of what you will need to gain admission, as described below. If you do not comply with the procedures described here for attending the Annual Meeting online, you will not be able to participate in the Annual Meeting.
To attend online and participate in the Annual Meeting, stockholders of record and beneficial stockholders must use their 16-digit control number on their Notice of Internet Availability, voting instruction form or proxy card to log into www.virtualshareholdermeeting.com/SPR2024. Beneficial stockholders who do not have a control number may gain access to the Annual Meeting by logging into their brokerage firm’s website and selecting the stockholder communications mailbox to link through to the Annual Meeting; instructions should also be provided on the voting instruction card provided by the broker, bank or other nominee. We encourage you to access the meeting beginning at 9:45 a.m. Central Daylight Time on April 24, 2024. We will have technicians ready to assist if you have difficulties accessing the virtual meeting during check-in or during the Annual Meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or course of the Annual Meeting, please call the number indicated on www.virtualshareholdermeeting.com/SPR2024.
For information on how to vote shares during the Annual Meeting, see “How can I vote my shares during the Annual Meeting?”
How can I submit questions for the Annual Meeting?
Stockholders may submit questions before the Annual Meeting at www.proxyvote.com. In addition, stockholders may submit questions during the Annual Meeting at www.virtualshareholdermeeting.com/SPR2024. We reserve the right to edit profanity or other inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or Company business. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition. Questions will be answered as time permits.
How many shares must be present to hold the meeting?
A quorum is necessary for us to hold the Annual Meeting. A quorum is the presence, in person or by proxy, of stockholders entitled to cast a majority of the votes whichthat all stockholders are entitled to vote. Your shares will be counted as being present for purposes of determining a quorum if you attend the Annual Meeting and vote in person virtually or properly return proxy instructions. Abstentions (where you abstain from voting) will be counted for purposes of establishing a quorum. Further, the Company will also count broker non-votes for the purpose of determining the presence or absence of a quorum. Broker non-votes occur when a person holding shares through a bank or brokerage account does not provide instructions as to how his or her shares should be voted and the broker does not have authority to exercise discretion to vote those shares on a particular matter.
What vote is required to approve each item?
For Proposal 1 -— the Election of Directors -— a director nominee will be elected if the votes “FOR” that nominee exceed the votes “AGAINST” that nominee. Abstentions and broker non-votes will have no effect on the vote of this proposal.
Proposals 2-52 through 5 require the affirmative “FOR” vote of a majority of shares present,votes cast, in person or by proxy. Abstentions and broker non-votes will have no effect on the effectvote of these proposals.
Stockholder of Record: You are a stockholder of record if your shares are registered directly in your name with the Company’s transfer agent, Computershare, Inc. As a stockholder of record, you can vote your shares as provided under “How can I vote my shares before the Annual Meeting?” and “How can I vote my shares during the Annual Meeting?”
Beneficial Owner of Shares Held in Street Name: If you own your shares in an account at a bank, brokerage firm, broker-dealer, or other nominee, then you are the beneficial owner of shares held in “street name.” The firm holding your account is the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to direct your broker, bank, or other holder of record as to how to vote your shares. If you hold your stock as a beneficial owner, you may
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GENERAL INFORMATION (continued)
vote as provided under “How can I vote my shares?” If you want to vote in person atshares before the Annual Meeting, you must obtain a legal proxy from your broker, bank, or other nomineeMeeting?” and bring it to“How can I vote my shares during the meeting, and submit it with your vote.Annual Meeting?” If you do not submit voting instructions to your broker, bank, or other nominee, your broker, bank, or other nominee will not be permitted to vote your shares in their discretion on ProposalProposals 1, 2, 4,3 or 5, but may still be permitted to vote your shares in their discretion on Proposal 3.4.
Why did I receive more than one proxy card or voting information form, or Notice?instruction form?
If you received more than one proxy card or voting informationinstruction form, or Notice, you own shares in more than one account. To ensure that all of your shares are voted, please vote each account separatelyall proxy cards and voting instruction forms that you receive as set forth under “How can I vote my shares?shares before the Annual Meeting?”SPIRIT AEROSYSTEMS - 2018 Proxy Statement 67
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or “How can I vote my shares during the Annual Meeting?”
If I vote by proxy, what voting options do I have?
The Board-designated proxies are Robert D. Johnson and Stacy Cozad.Justin Welner. With respect to all proposals,Proposals 1-5, you may instruct the proxies to vote “FOR” or “AGAINST” each proposal, or you may instruct the proxies to “ABSTAIN” from voting. The shares will be voted in accordance with the instructions specified on the proxy card or voting informationinstruction form. If no instructions are provided, your shares will be voted as recommended by the Board of Directors: “ FOR”Board: “FOR” each director nominee, “ FOR” ratification of the appointment of the independent registered public accounting firm, “ FOR”“FOR” the advisory vote to approve NEO compensation, “FOR” approval of the Amended and Restated Employee Stock Purchase Plan, “FOR” ratification of the appointment of the independent registered public accounting firm, “FOR” the Board’sand “AGAINST” stockholder proposal to lower the special meeting ownership threshold to 25%, andtitle “ AGAINST” the stockholder proposal.
Transparency in Political Spending”.
Can I change my vote?
Before the Annual Meeting, you have the power to revoke your proxy and change your vote. If you hold your shares in street name, you must follow the instructions of your broker, bank, or other nominee to revoke your proxy. If you are a holder of record and wish to revoke your proxy, you must provide instructionscan do so by submitting a later-dated vote online during the Annual Meeting, via the Internet, in writingby telephone, by mail, or by voting in person atdelivering written instructions to our Corporate Secretary before the Annual Meeting. The Company’s principal executive offices are locatedMeeting commences at Spirit AeroSystems Holdings, Inc., 3801 S .S. Oliver St., Wichita, KS 67210-2112.
Who counts the votes?
Votes will be received and tabulated by Broadridge, the Company’s inspector of electionselection for the Annual Meeting.
How do I attendWhat will happen if additional proposals are presented at the Annual Meeting?
To attendOther than the meeting, you mustfive proposals described in this Proxy Statement, we do not expect any matters to be presented for a stockholder as ofvote at the Record Date. For stockholders of record who received a paper copy of the proxy materials, the top half of your proxy card is your admission ticket. For stockholders of record who received a Notice, please request an admission ticket by writing to the Corporate Secretary, Spirit AeroSystems Holdings, Inc., 3801 S. Oliver St., Wichita, KS 67210-2112 or send an email to CorporateSecretary@spiritaero.com. Your request must be received by the close of business on April 24, 2018. At the meeting, we will request a government-issued photo i.d. and confirm your Common Stock ownership against our list of registered stockholders.
Annual Meeting. If you hold your shares in street name, yougrant a proxy, Robert D. Johnson and Justin Welner will need to request an admission ticket in writing as set forth above and will need to bring proof of Common Stock ownership to be admitted tohave the meeting. A recent brokerage statement or a letter from your bank or broker are examples of proof of ownership. If you wantdiscretion to vote your shares held in street name in person, you must geton any additional matters properly presented for a legal proxy in your name from the broker, bank, or other nominee that holds your shares, and submit it with your vote.
Please note that the use of camerasvote at the Annual Meeting is prohibited and they will not be allowed intoMeeting.
How can I contact the meeting or any other related areas, except by credentialed media. We realize that many cellular phonesCompany’s non-management directors?
Stockholders and other wireless mobile devices have built in digital cameras,interested persons may communicate with the Board, the Chair of the Board, and while these devices may be brought intoindividual members of the venue,Board and its committees through the camera function mayfollowing:
| | Spirit AeroSystems2024 Proxy Statement | | | 86 | |
GENERAL INFORMATION (continued)
What is householding?
SEC rules permit us to deliver a single copy of proxy materials to stockholders residing at the same address unless the stockholders have notified us to deliver multiple copies .copies. This allows us to eliminate multiple unnecessary mailings. If this situation applies to you and you want to receive more than one set please followof proxy materials, the instructions under “How do ICompany will promptly deliver, upon oral or written request, a printedseparate copy of the proxy materials to a stockholder at a shared address to which only a single copy of such documents was delivered. Please let us know of any request for a separate copy by following the applicable instructions below:
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■
Beneficial stockholders who wish to receive a separate set of proxy materials in the future should contact their broker, bank, or other holder of record.
Who is paying for this proxy solicitation?
The Company is soliciting the proxies accompanying this Proxy Statement. Proxies may be solicited by officers, directors, and regular supervisory and executive employees of Spirit, none of whom will receive any additional compensation for their services. We have retained D.F. King & Co., Inc. to assist in the solicitation of proxies for a fee of $15,000 plus reimbursement of out-of-pocket expenses. The Company will pay persons holding shares of Common Stock in their names or in the names of nominees, but not owning such shares beneficially, such as brokerage houses, banks, and other fiduciaries, for the expense of forwarding solicitation materials to their principals. All of the costs of solicitation of proxies will be paid by the Company.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 68
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What happens if an incumbent director nominee is not elected at the Annual Meeting?
If an incumbent director nominee is not elected and no one is elected in his or her place, then, under Delaware General Corporation Law, the director would continue to serve as a “hold-over director.” Under our bylaws, the director is required to tender hisa resignation to the Board. Upon receipt of the resignation, the Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation. In considering the tendered resignation, the Board will consider the Governance Committee’s recommendation as well as any other factors it deems relevant, which may include:
■
•
The qualifications of the director whose resignation has been tendered;
•■
The director’s past and expected future contributions to the Company;
•■
The overall composition of the Board and its committees;
•■
Whether accepting the tendered resignation would cause the Company to fail to meet any applicable rule or regulation (including NYSE listing standardsrules and the federal securities laws); and
•■
The percentage of outstanding shares represented by the votes cast at the Annual Meeting.
The Board will act on a tendered resignation within 90 days following certification of the stockholder vote for the Annual Meeting, and will promptly disclose its decision and rationale as to whether to accept or reject the resignation (or the reasons for rejecting the resignation, if applicable) in a press release, in a filing with the SEC, or by other public announcement, which may include a posting on the Company’s website. If a director’s resignation is accepted by the Board, or if a nominee for director who is not an incumbent director is not elected, the Board may fill the resulting vacancy or may decrease the size of the Board pursuant to the Company’s bylaws.
Where can I find the voting results after the Annual Meeting?
AtPrior to the conclusion of the Annual Meeting, we will announce preliminary voting results.results at the Annual Meeting. Final voting results will be disclosed in a Current Report on Form 8-K filed with the SEC within four business days following the Annual Meeting.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 69
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Stockholder Proposals and Director Nominations for the
20192025 Annual Meeting
Proposals of stockholdersStockholders
Stockholder proposals intended to be included in the Company’s proxy statement for presentation at the Company’s 20192025 Annual Meeting of Stockholders must be properly and timely submitted and received by the Company at its offices no later than November 12, 20182024 (120 days preceding the one-year anniversary of the Mailing Date)mailing date for the immediately preceding annual meeting), and must otherwise comply with SEC rules in order to be eligible for inclusion in the proxy statement for the 20192025 Annual Meeting of Stockholders. In addition, pursuant to the Company’s bylaws, a stockholder desiring to propose any matter for consideration at the 20192025 Annual Meeting of Stockholders, other than through inclusion in the Company’s proxy materials, must notify the Company’s Corporate Secretary at the Company’s offices on or before December 26, 201825, 2024 (120 days prior to the one-year anniversary of the immediately preceding annual meeting). Pursuant to our bylaws, a stockholder may nominate an individual for election as a director at the 20192025 Annual Meeting of Stockholders by providing notice to the Company’s Corporate Secretary at the address set forth below by December 26, 201825, 2024 (120 days preceding the one-year anniversary of the immediately preceding annual meeting) (the “Nominee Deadline”). Further, pursuant to the Company’s proxy access right, a stockholder may elect to have their nominee included in the Company’s proxy statement if the stockholder provides notice to the Company’s Corporate Secretary at the address set forth below by the Nominee Deadline and expressly elects to have such nominee included in the Company’s proxy materials pursuant to Section 1.13 of the Company’s bylaws. Any notice of a nomination must be made in compliance with the procedures required by the Company’s bylaws. In addition to satisfying the foregoing requirements, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also comply with all applicable requirements of Rule 14a-19 under the Exchange Act. The advance notice requirement under Rule 14a-19 does not override or supersede the longer advance notice requirement under our bylaws.
Stockholder recommendations and nominations for candidates to the Board as described above should be sent to the Company’s Corporate Secretary at 3801 SS. Oliver St., Wichita, KS 67210-2112.
The Company’s
20172023 Annual Report on Form 10-K is available at
http:https://www.spiritaero.com or on the SEC’s website at https://www.sec.gov. The Company will provide to any stockholder, without charge, a paper copy of the
20172023 Annual Report on Form 10-K upon written request to Spirit AeroSystems Holdings, Inc., Corporate Secretary, 3801 S. Oliver St., Wichita, KS 67210-2112.
By order of the Board of Directors.
Stacy Cozad
Mindy McPheeters
Senior Vice President, General Counsel Chief Compliance Officer ,
and Corporate Secretary
Spirit AeroSystems Holdings, Inc. March 12,
, 2018SPIRIT AEROSYSTEMS - 2018 Proxy Statement 70
2024
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CAUTIONARY STATEMENTNOTE REGARDING
FORWARD-LOOKING STATEMENTS
This Proxy Statement includes “forward-looking statements.”statements” that involve many risks and uncertainties. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “aim,” “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “forecast,“goal,” “goal,“forecast,” “intend,” “may,” “might,” “model,” “objective,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” and other similar words, or phrases, or the negative thereof, unless the context requires otherwise. These statements are based on circumstances as of the date on which the statements are made and they reflect management’s current views with respect to future events and are subject to risks and uncertainties, both known and unknown, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K.unknown. Our actual results may vary materially from those anticipated in forward-looking statements. We caution investors not to place undue reliance on any forward-looking statements.
Important factors that could cause actual results to differ materially from those reflected in such forward-looking statements and that should be considered in evaluating our outlook include, but are not limited to, the following:• our ability to continue to grow our business and execute our growth strategy,
■
the continued fragility of the global aerospace supply chain including the timing, execution, and profitability of new and maturing programs;• our ability to perform our obligations under our new and maturing commercial, business aircraft, and military development programs, and the related recurring production;
• our ability to accurately estimate and manage performance, cost, and revenue under our contracts, including our ability to achieve certain cost reductions with respect to the B787 program;
• margin pressures and the potential for additional forward losses on new and maturing programs;
• our ability to accommodate, and the cost of accommodating, announced increases in the build rates of certain aircraft;
• the effect on aircraft demand and build rates of changing customer preferences for business aircraft, including the effect of global economic conditions on the business aircraft market and expanding conflicts or political unrest in the Middle East or Asia;
• customer cancellations or deferrals as a result of global economic uncertainty or otherwise;
• the effect of economic conditions in the industries and markets in which we operate in the U.S. and globally and any changes therein, including fluctuations in foreign currency exchange rates;
• the success and timely execution of key milestones such as the receipt of necessary regulatory approvals and customer adherence to their announced schedules;
• our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing and our other customers;
• our ability to enter into profitable supply arrangements with additional customers;
• the ability of all parties to satisfy their performance requirements under existing supply contracts with our two major customers, Boeing and Airbus, and other customers, and the risk of non-payment by such customers;
• any adverse impact on Boeing’s and Airbus’ production of aircraft resulting from cancellations, deferrals, or reduced orders by their customers or from labor disputes, domestic or international hostilities, or acts of terrorism;
• any adverse impact on the demand for air travel or our operations from the outbreak of diseases or epidemic or pandemic outbreaks;
• our ability to avoid or recover from cyber-based or other security attacks, information technology failures, or other disruptions;
• returns on pension plan assets and the impact of future discount rate changes on pension obligations;
• our ability to borrow additional funds or refinance debt;
• competition from commercial aerospace original equipment manufacturers and other aerostructures suppliers;
• the effect of governmental laws, such as U.S. export control laws and U.S. and foreign anti-bribery laws such as the Foreign Corrupt Practices Act and the United Kingdom Bribery Act, and environmental laws and agency regulations, both in the U.S. and abroad;
• the effect of changes in tax law, such as the effect of The Tax Cuts and Jobs Act that was enacted on December 22, 2017, and changes to the interpretations of or guidance related thereto, and the Company’s ability to accurately calculate and estimate the effect of such changes;
• our ability to effectively assess, manage, and integrate acquisitions that we pursue;
• our ability to continue selling certain of our receivables through our supplier financing program;
• any reduction in our credit ratings;
• our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components;
• components, including increases in energy, freight, and other raw material costs as a result of inflation or continued global inflationary pressures;
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our ability and our suppliers’ ability to meet stringent delivery (including quality and timeliness) standards and accommodate changes in the build rates or model mix of aircraft under existing contractual commitments, including the ability or willingness to staff appropriately or expend capital for current production volumes and anticipated production volume increases;
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our ability to recruitmaintain continuing, uninterrupted production at our manufacturing facilities and our suppliers’ facilities;
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our ability, and our suppliers’ ability, to attract and retain a critical massthe skilled work force necessary for production and development in an extremely competitive market;
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the effect of highly-skilled employeeseconomic conditions, including increases in interest rates and inflation, on the demand for our and our customers’ products and services, on the industries and markets in which we operate in the U.S. and globally, and on the global aerospace supply chain;
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the general effect of geopolitical conditions, including Russia’s invasion of Ukraine and the resultant sanctions being imposed in response to the conflict, including any trade and transport restrictions;
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the recent outbreak of war in Israel and the Gaza Strip and the potential for expansion of the conflict in the surrounding region, which may impact certain suppliers’ ability to continue production or make timely deliveries of supplies required to produce and timely deliver our products, and may result in sanctions being imposed in response to the conflict, including trade and transport restrictions;
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our relationships with the unions representing many of our employees, including our ability to successfully negotiate new agreements, and avoid labor disputes and work stoppages with respect to our union-represented employees;•
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the impact of significant health events, such as pandemics, contagions or other public health emergencies (including the COVID-19 pandemic) or fear of such events, on the demand for our and our customers’ products and services, the industries and the markets in which we operate in the U.S. and globally;
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the timing and conditions surrounding the full worldwide return to service (including receiving the remaining regulatory approvals) of the B737 MAX, future demand for the aircraft, and any residual impacts of the B737 MAX grounding on production rates for the aircraft;
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our reliance on The Boeing Company (“Boeing”) and Airbus Group SE and its affiliates (collectively, “Airbus”) for a significant portion of our revenues;
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the business condition and liquidity of our customers and their ability to satisfy their contractual obligations to the Company;
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the certainty of our backlog, including the ability of customers to cancel or delay orders prior to shipment on short notice, and the potential impact of regulatory approvals of existing and derivative models;
■
our ability to accurately estimate and manage performance, cost, margins, and revenue under our contracts, and the potential for additional forward losses on new and maturing programs;
■
our accounting estimates for revenue and costs for our contracts and potential changes to those estimates;
| | 89 | | | Spirit AeroSystems2024 Proxy Statement | |
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS (continued)
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our ability to continue to grow and diversify our business, execute our growth strategy, and secure replacement programs, including our ability to enter into profitable supply arrangements with additional customers;
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the outcome of product warranty or defective product claims and the impact settlement of such claims may have on our accounting assumptions;
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competitive conditions in the markets in which we operate, including in-sourcing by commercial aerospace original equipment manufacturers;
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our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing, Airbus and other customers;
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the possibility that our cash flows may not be adequate for our additional capital needs;
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any reduction in our credit ratings;
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our ability to access the capital markets to fund our liquidity needs, and the costs and terms of any additional financing;
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our ability to avoid or recover from cyber or other security attacks and other operations disruptions;
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legislative or regulatory actions, both domestic and foreign, impacting our operations, including the effect of changes in tax laws and rates and our ability to accurately calculate and estimate the effect of such changes;
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spending by the U.S. and other governments on defense;SPIRIT AEROSYSTEMS - 2018 Proxy Statement 71
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•
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pension plan assumptions and future contributions;
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the possibility that our cash flows and our credit facility may not be adequate for our additional capital needs or for payment of interest on and principaleffectiveness of our indebtedness;•internal control over financial reporting;
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the outcome or impact of ongoing or future litigation, arbitration, claims, and regulatory actions or investigations, including our exposure underto potential product liability and warranty claims;
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adequacy of our revolverinsurance coverage;
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our ability to higher interest payments should interest rates increase substantially;• continue selling certain receivables through our receivables financing programs;
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our ability to effectively integrate recent acquisitions, along with other acquisitions we pursue, and generate synergies and other cost savings therefrom, while avoiding unexpected costs, charges, expenses, and adverse changes to business relationships and business disruptions; and
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the risks of doing business internationally, including fluctuations in foreign currentcurrency exchange rates, impositions of tariffs or embargoes, trade restrictions, compliance with foreign laws, and domestic and foreign government policies, among other things;• the effectiveness of any interest rate hedging programs;
• the effectiveness of our internal control over financial reporting;
• the outcome or impact of ongoing or future litigation, claims, and regulatory actions; and
• our exposure to potential product liability and warranty claims.
policies.
These factors are not exhaustive and it is not possible for us to predict all factors that could cause actual results to differ materially from those reflected in our forward-looking statements. These factors speak only as of the date hereof, and new factors may emerge or changes to the foregoing factors may occur that could impact our business. As with any projection or forecast, these statements are inherently susceptible to uncertainty and changes in circumstances. Except to the extent required by law, we undertake no obligation to, and expressly disclaim any obligation to, publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should review carefully the
sectionssection captioned “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K
for the year ended December 31, 2023, for a more complete discussion of these and other factors that may affect our business.
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 72
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Overview
In addition to reporting our financial information in our Annual Report on Form 10-K using U.S. Generally Accepted Accounting Principles (“GAAP”), management believes thatGAAP, certain non-GAAP financial measures (which are indicated generally by * or footnotes in this Proxy Statement) provide investorsare used with important perspectives into the Company’s on-going business performance. Therespect to our incentives. Such non-GAAP financial measures we use in this Proxy Statement are (i) adjusted diluted earnings per share (“Adjusted EPS”), (ii) free cash flow (“Free Cash Flow”), (iii) adjusted free cash flow (“Adjusted Free Cash Flow”),include FCF and (iv) adjusted earnings before interest and taxes (“Adjusted EBIT”),EBIT, which are described further below. The Company does not intend for the information to be considered in isolation or as a substitute for the related GAAP financial measures. Other companies may define and calculate the measures differently than we do, limiting the usefulness of the measures for comparison with other companies.
Use of Non-GAAP Financial Measures with Respect to Annual EBIT, Annual FCF, and FCF Percentage
We use Adjusted EBIT (as set forth below) to calculate Annual EBIT under the ACI. We use Adjusted Free Cash Flow to calculate Annual Reconciliation
FCF under the ACI. We use Free Cash Flow to calculate FCF Percentage under the PB-FCF (cumulative Free Cash Flow over the performance period divided by cumulative GAAP revenue over the performance period).Adjusted EPS and Reconciliation
To provide additional transparency, we have disclosed non-GAAP Adjusted EPS. This metric excludes various items that are not considered to be directly related to our operating performance. Management uses Adjusted EPS as a measure of business performance and we believe this information is useful in providing period-to-period comparisons of our results. The most comparable GAAP measure is diluted earnings per share. The table below presents a reconciliation of GAAP earnings per share to non-GAAP Adjusted EPS:
| Fiscal Year Ended December 31, |
2017 | | 2016 | | 2015 | |
Diluted Earnings Per Share ($) | 3.01 | | 3.70 | | 5.66 | |
Impact of Airbus Agreement, CEO Retirement, and Debt Refinancing | | | 0.86 | | | |
Impact of Partial Release of Deferred Tax Asset Valuation Allowance | | | | | (1.74) | |
Impact of U.S. Tax Reform | 2.10 | | | | | |
Impact of MOU with Boeing | 0.24 | | | | | |
Adjusted Diluted Earnings Per Share ($) | 5.35 | | 4.56 | | 3.92 | |
Diluted Shares (millions) | 117.9 | | 127.0 | | 139.4 | |
SPIRIT AEROSYSTEMS - 2018 Proxy Statement 73
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Cash Flow Measures and Reconciliation: Free Cash Flow and Adjusted Free Cash Flow
Free Cash Flow
Free Cash Flow is defined as GAAP cash from operations ,operating activities, less capital expenditures for property, plant, and equipment. Management believes Free Cash FlowFCF provides investors with an important perspective on the cash available for stock holders,stockholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long termlong-term value creation. Free Cash Flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures. Management uses Free Cash FlowFCF as a measure to assess both business performance and overall liquidity.
Adjusted Free Cash Flow
Management considers certain items that arise from time to time to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. Accordingly, Adjusted Free Cash Flow is defined as Free Cash Flow less these special items. The most comparable GAAP measure is cash provided by operating activities. The tables below provide reconciliations between the GAAP and non-GAAP measures.
Reconciliation
The table below presents a reconciliation of Free Cash Flow and Adjusted Free Cash FlowFCF to cash from operationsoperating activities for each of the periods presented.
| | | | | Fiscal Year Ended
December 31, | |
| | ($ in millions) | | | 2023 | | | 2022 | | | 2021 | |
| | Cash from Operating Activities | | | | | (226) | | | | | | (395) | | | | | | (63) | | |
| | Capital Expenditures | | | | | (148) | | | | | | (122) | | | | | | (151) | | |
| | FCF | | | | | (374) | | | | | | (516) | | | | | | (214) | | |
| Fiscal Year Ended December 31, |
2017 | | 2016 | | 2015 | |
| | ($ in millions) |
Cash from Operations | 574 | | 717 | | 1,290 | |
| (273) | | (254) | | (360 | ) |
Free Cash Flow (Used for FCF Percentage) | 301 | | 463 | | 930 | |
Cash (Received)/Returned under 787 Interim Pricing Agreement | 236 | | (43) | | (192) | |
Adjusted Free Cash Flow (Annual FCF) | 537 | | 420 | | 738 | |
Adjusted EBIT and Reconciliation
As presented in this Proxy Statement, Adjusted
EBIT is defined as earnings before interest and taxes and is calculated by subtracting interest expense and financing fee amortization from loss before income taxes and equity in net loss of affiliates. This metric is used to measure operating performance.
| | ($ in millions) | | | 2023 | | | 2022 | |
| | Loss before income taxes and equity in net loss of affiliates | | | | | (593) | | | | | | (539) | | |
| | Interest expense and financing fee amortization | | | | | (319) | | | | | | (244) | | |
| | EBIT | | | | | (274) | | | | | | (295) | | |
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED SPIRIT AEROSYSTEMS
EMPLOYEE STOCK PURCHASE PLAN
Effective as adjustedof February 26, 2024
1.
PURPOSE
1.1
Purpose. The purpose of this Spirit AeroSystems Employee Stock Purchase Plan is to exclude certain non-operating and/provide employees of Spirit AeroSystems Holdings, Inc. (the “Company”), Spirit AeroSystems, Inc. (“Spirit”), and any other Participating Company with an opportunity to purchase shares of common stock of the Company under a plan that satisfies the requirements of an “employee stock purchase plan” under Section 423 of the Internal Revenue Code.
In addition, this Plan provides for the purchase of shares under a plan which is not subject to Section 423 of the Code pursuant to rules, procedures, or non-recurring itemssub-plans adopted by the Committee designed to achieve tax, securities law, or other objectives for eligible employees of Designated Affiliates of the Company. Except as otherwise provided herein, the portion of the Plan that does not satisfy the requirements of Code Section 423 will operate and be administered in the same manner as the portion of the Plan that does satisfy such requirements.
2.
DEFINITIONS
2.1
“Account” means the brokerage account maintained on behalf of each participant by the Recordkeeper for the purpose of investing in Stock and engaging in other transactions permitted under the Plan.
2.2
“Affiliate” means a Subsidiary or other entity in which the Company believeshas a direct or indirect controlling interest.
2.3
“Board of Directors” or “Board” means the board of directors of the Company.
2.4
“Committee” means the Compensation Committee of the Board of Directors or a subcommittee thereof or any other committee designated by the Board to administer this Plan. The Board may take any action under the Plan that would otherwise be the responsibility of the Committee.
2.5
“Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations issued thereunder and successor provisions and regulations thereto.
2.6
“Company” means Spirit AeroSystems Holdings, Inc.
2.7
“Compensation” means base salary or other base pay, overtime, and shift differential pay paid during the calendar year before elective payroll deduction contributions to any employee benefit plan or program offered by the Company. The Committee may, in its discretion, establish a different definition of Compensation on a uniform and nondiscriminatory basis for any subsequent Offering Period.
2.8
“Designated Affiliate” means any Affiliate that is designated by the Committee to be eligible to participate in the portion of the Plan that is not subject to Code Section 423.
2.9
“Employee” means any common law employee who is employed by the Company, a Participating Company, or a Designated Affiliate. If an individual is not classified by the employer as a common law employee, no reclassification of a person’s status with the employer, for any reason, without regard to whether it is initiated by a court, governmental agency, or otherwise, and without regard to whether or not the employer agrees to such reclassification, either retroactively or prospectively, will result in the person being regarded as a common law employee during such time or as an “Employee” for purposes of this Plan.
Notwithstanding the foregoing, employees who are citizens or residents of a foreign jurisdiction (without regard to whether they are also citizens of the United States or resident aliens) will not reflectivebe treated as Employees of operating performance.the Company or a Participating Company for purposes of the Plan if either the grant of an option under the Plan to a citizen or resident of the foreign jurisdiction is prohibited under the laws of such jurisdiction or compliance with the laws of the foreign jurisdiction would cause the portion of the Plan that is intended to be subject to Code Section 423 to violate the requirements of such Code Section.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
2.10
“Fair Market Value” means the fair market value of a share of Stock, which, as of any given date, will be the average of the highest and lowest sales prices of a share of Stock reported on a consolidated basis for securities listed on the New York Stock Exchange for trades on the date as of which such value is being determined or, if that day is not a Trading Day, then on the immediately preceding Trading Day.
2.11
“Offering Date” means the first Trading Day of each Offering Period as designated by the Committee.
2.12
“Offering Period” means the approximately six-month period beginning on the first Trading Day on or after April 1 and October 1 of a calendar year and ending on the last Trading Day in September and March, respectively, of such calendar year, except that the initial six-month period will begin on the first Trading Day in October 2017 and end on the last Trading Day in March 2018. See also Section 4.2 regarding the Committee’s power to make changes with respect to future Offering Periods.
2.13
“Participating Company” means (i) the Company, (ii) Spirit, and (iii) each present or future Subsidiary designated by the Committee as eligible to participate in the portion of this Plan that is subject to Code Section 423. The table below presentsCommittee may designate Participating Companies from time to time from among a reconciliationgroup consisting of Adjusted EBITthe Company and its Subsidiaries. The group from among which such designations are permitted without additional stockholder approval may include corporations or other entities that become Subsidiaries after the adoption and approval of the Plan.
Only Participating Companies may participate in the portion of the Plan subject to net income (loss)Code Section 423. A Participating Company will cease to be a Participating Company on the earlier of (i) the date the Committee determines that such entity is no longer a Participating Company, or (ii) when such Participating Company ceases for any reason to be a Subsidiary.
2.14
“Plan” means this Amended and Restated Spirit AeroSystems Employee Stock Purchase Plan, as may be further amended and from time to time.
2.15
“Purchase Date” means the last Trading Day of each Offering Period.
2.16
“Purchase Price” means an amount equal to the lesser of (i) 85% of the Fair Market Value of a share of Stock on the Offering Date or (ii) 85% of the Fair Market Value of a share of Stock on the Purchase Date; provided, that, the Purchase Price per share of Common Stock will in no event be less than par value of the Common Stock.
2.17
“Recordkeeper” means Morgan Stanley Shareworks, or its successor, or such replacement recordkeeper as may be appointed or contracted to assist with the recordkeeping and administration of this Plan.
2.18
“Reserves” means the number of shares of Stock covered by all options under the Plan that have not yet been exercised and the number of shares of Stock which have been authorized for issuance under the Plan but which have not yet become subject to options.
2.19
“Stock” means the Company’s Class A common stock and such other securities as may be substituted (or resubstituted) for Stock pursuant to Section 10.6.
2.20
“Subsidiary” means any corporation or other entity (other than the Company) in an unbroken chain of entities beginning with the Company, if (a) each of the periods presented.entities other than the last entity in the unbroken chain owns stock or other ownership interests possessing 50% or more of the total combined voting power in one of the other entities in such chain, or (b) the entity otherwise satisfies the requirements of Code Section 424(f) and applicable regulations and other guidance issued thereunder.
| Fiscal Year Ended
December 31, | |
| | 2017 | | 2016 | | 2015 | |
| | ($ in millions) | |
Net Income | 354.9 | | 469.7 | | 788.7 | |
Interest E xpense, N et | 41.7 | | 53.7 | | 50.6 | |
Income T ax P rovision | 180.0 | | 192.1 | | 20.6 | |
Equity in N et ( I ncome) L oss of N on- W holly O wned A ffiliates | (0.3) | | (1.3) | | (1.2) | |
| (6.4) | | | | | |
EBIT | 569.9 | | 714.2 | | 858.7 | |
Impact F rom S evere W eather E vent | | | 12.1 | | | |
Other(1) | 346.0 | | 176.3 | | 37.1 | |
Adjusted EBIT (Annual EBIT) | 915.9 | | 902.6 | | 895.8 | |
2.21
“Trading Day” means a day on which the New York Stock Exchange is open for trading.
3.
ELIGIBILITY AND PARTICIPATION
3.1
Initial Eligibility. Each Employee is eligible to participate in the Plan beginning on the later of the date the participant first becomes an Employee or October 1, 2017, except that, with respect to employees of a Designated Affiliate, only those specified employees who work for a Designated Affiliate in a particular country or countries as determined by the Committee may participate in the Plan. All Employees working for a Participating Company may participate in the Plan except as otherwise provided herein.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
3.2
Participation. An Employee may become a participant in the Plan by giving instructions to reflectthe Recordkeeper authorizing payroll deductions. Participant instructions must be given at such time and in such form and manner as may be prescribed by the Committee or its designee. Payroll deductions for an Employee will begin as soon as administratively feasible after the instructions are received in good order. All elections to participate in the Plan must be made in compliance with the Company’s insider trading policies and such rules and procedures as may be established by the Committee or its delegates in connection therewith.
3.3
Restrictions on Participation. Notwithstanding any provisions of the Plan to the contrary, no Employee will be granted an option to participate in the Plan to the extent that:
(a)
Immediately after the grant, such Employee would own stock and/or hold outstanding options to purchase stock possessing 5% or more of the total combined voting power or value of all classes of the Company’s stock (determined under the rules of Section 424(d) of the Code); or
(b)
The Employee’s rights to purchase Stock under the Plan would accrue at a rate that exceeds $25,000 in fair market value of the Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding.
4.
OFFERINGS
4.1
Semi-Annual Offerings. The Plan will be implemented by semi-annual offerings of Stock beginning on the first Trading Day on or after April 1 and October 1 of each calendar year and terminating on the last Trading Day of September and March of such calendar year, respectively, except that the first Offering Period will begin on the first Trading Day of October 2017 and end on the last Trading Day of March 2018.
4.2
Changes in Offering Periods. The Committee will have the power to change the beginning date, ending date, and duration of Offering Periods with respect to future offerings without stockholder approval if such change is announced at least five days before the scheduled beginning of the first Offering Period to be affected thereafter, provided that Offering Periods will in all cases comply with applicable limitations under Code Section 423(b)(7).
5.
PAYROLL DEDUCTIONS
5.1
Amount and Timing of Deduction.
(a)
A participant may elect to have deductions made for each payroll period during an Offering Period in an amount equal to any whole percentage of the participant’s Compensation received for the payroll period, subject to the limitations of Section 3.3, except that the maximum amount of payroll deductions may not exceed (i) a specified maximum percentage of the participant’s Compensation for each payroll period as may be designated from time to time by the Committee (which initially will be 15%), or (ii) $25,000 for each year (or such lower annual dollar limit as may be designated by the Committee). The Committee, in its discretion, may increase and decrease the maximum percentage amount (but not the maximum dollar amount) contemplated under the immediately preceding sentence without formally amending the Plan, so long as the maximum percentage amount is a uniform percentage of Compensation for all participants.
(b)
The time and manner in which payroll deduction elections must be made will be established pursuant to rules and procedures adopted by the Committee, in its discretion. Such rules may provide (among other things) that participants must make payroll deduction elections within a sufficient period before the beginning of an Offering Period to allow for processing and implementation of such elections by the beginning of the Offering Period.
(c)
If a participant is not paid through the participant’s employer’s payroll (e.g., the participant is paid by a third party payroll vendor), the Committee or its delegate will establish such reasonable and uniform policies and procedures to facilitate contribution to an Account by any such participant wishing to participate with respect to an Offering Period.
5.2
Continuation of Payroll Deduction. A participant’s payroll deduction election will automatically remain in effect for successive Offering Periods, unless modified or terminated in accordance with the terms of the Plan.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
5.3
Participant’s Account. An individual Account will be maintained by the Recordkeeper for each participant in the Plan. All payroll deductions made for a participant (together with any other contributions permitted by the Plan or any rules or policies established by the Committee) will be credited to the participant’s Account. No interest will accrue or be paid on any payroll deductions or any other amounts credited to a participant’s Account.
5.4
Changes in Payroll Deductions. During an Offering Period, a participant may decrease the rate of payroll deductions applicable to such Offering Period only once; no increase of payroll deductions is permitted during an Offering Period. To make such a change, the participant must give instructions to the Recordkeeper decreasing payroll deductions no later than thirty calendar days before the last day of such Offering Period. Participant instructions must be given in such form and manner as may be prescribed by the Committee or its designee. The new rate of payroll deductions for an Employee will begin as soon as administratively feasible after the instructions are received in good order. Otherwise, a participant’s payroll deduction election will remain in effect until the participant provides new instructions for a subsequent Offering Period, withdraws as provided in Sections 5.5 and 7.1, or terminates employment as provided in Section 7.2.
5.5
Withdrawal. Notwithstanding the limitations in Section 5.4, a participant may elect to withdraw from participation in the Plan at any time. Upon withdrawal, the provisions of Section 7.1 will apply. An election to withdraw from participation will become effective as soon as administratively feasible following the date such election is received by the Recordkeeper and will remain in effect for successive Offering Periods until the participant provides new instructions.
6.
GRANT AND EXERCISE OF OPTION
6.1
Number of Option Shares. On the first day of each Offering Period, each Employee participating in such Offering Period will be granted an option to purchase, on the Purchase Date of such Offering Period, a number of shares determined by dividing the participant’s accumulated payroll deductions by the applicable Purchase Price; provided, however, that in no event will any participant purchase more than 30,000 shares during an Offering Period (subject to the limitations set forth in Section 3.3 ($25,000 and 5% limitations) and Section 8.1 (maximum number of shares)). Exercise of the option will occur as provided in Section 6.2, unless the participant has withdrawn the amount credited to the participant’s Account upon withdrawal from the Plan pursuant to Section 7.1 or such amount has been distributed to the participant upon termination of employment pursuant to Section 7.2. To the extent not exercised, the option will expire on the last day of the Offering Period.
6.2
Automatic Purchase. A participant’s option for the purchase of shares will be exercised automatically on the Purchase Date. The number of shares purchased will be equal to the largest number of shares of Stock (which may include a fractional share) that may be purchased at the applicable Purchase Price with the accumulated payroll deductions credited to the participant’s Account. To the extent not automatically exercised as provided in this Section 6.2, the option will expire on the last day of the Offering Period.
6.3
Transferability of Option. During a participant’s lifetime, options held by such participant will be exercisable only by that participant.
6.4
Delivery of Shares.
(a)
At or as promptly as practicable after the Purchase Date for an Offering Period, the Company will deliver the shares of Stock purchased to the Recordkeeper to be deposited in the participants’ Accounts.
(b)
Once a participant has acquired shares of Stock under the Plan, any cash dividends that are paid with respect to that Stock will be credited to participants’ Accounts as of the dividend payment date in cash, unless the participant elects to have such amounts automatically reinvested in additional shares of Stock. The time and manner in which such election must be made will be determined in accordance with Section 5.1(b). If the participant elects to have such amounts automatically reinvested in additional shares of Stock, purchases of Stock for purposes of reinvestment of dividends will be exercised automatically as promptly as possible following any dividend payment date and the shares of Stock purchased will be deposited in the participants’ Accounts. The number of shares purchased for such participant will be the number of whole or fractional shares of Stock that may be purchased with the accumulated cash dividends credited to the participant’s Account.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
(c)
Each participant will be entitled to vote the number of shares of Stock (which may include a fractional share) credited to the participant’s Account on any matter as to which the approval of the Company’s stockholders is sought. If a participant does not vote or grant a valid proxy with respect to shares credited to the participant’s Account, such shares will be voted by the custodian in accordance with any stock exchange or other rules governing the custodian in the voting of shares held for customer settlements, amountsaccounts. Similar procedures will apply in the case of any consent solicitation of the Company’s stockholders.
7.
WITHDRAWAL FROM PLAN AND TERMINATION OF EMPLOYMENT
7.1
Termination of Payroll Deductions; Termination of Account. If a participant elects to terminate payroll deductions during an Offering Period as provided in Section 5.5, the participant will be reimbursed, without interest, all of the payroll deductions credited to the participant’s Account during the current Offering Period, so long as the election to withdraw is made no later than five calendar days before the last day of such Offering Period. If the participant does not give proper instructions to the Recordkeeper to terminate payroll deductions, as applicable in a timely manner, the participant will be deemed to have elected to exercise the participant’s option for the purchase of Stock on the next following Purchase Date. Unless the participant instructs the Recordkeeper to terminate the Account, the Recordkeeper will continue to maintain the participant’s Account after termination of payroll deductions. Upon termination of the Account, fractional shares will not be issued and the value of any such fractional shares will be paid to our former CEOthe participant in cash following such termination. A participant who withdraws from participation during an Offering Period may make a new payroll deduction election during the enrollment period for the next Offering Period.
7.2
Termination of Employment. Upon a participant’s termination of employment with the Company and all Participating Companies for any reason (including termination because of the participant’s death), the payroll deductions credited to such participant’s Account during the Offering Period but not yet used to exercise the option will be returned, without interest, to such participant or, in the case of the participant’s death, to the person or persons entitled thereto under Section 10.1, and such participant’s option will be automatically terminated. Upon a participant’s termination of employment, the participant or, in the case of death, the participant’s beneficiary, as provided in Section 10.1, will direct the Recordkeeper to (i) transfer all Stock out of the Account into a separate account with the Recordkeeper (or an account chosen by the participant (or the participant’s beneficiary in the case of termination due to death)), (ii) pay any cash dividends and the value of any fractional shares to the participant or beneficiary in cash and (iii) terminate the participant’s Account.
7.3
Leave of Absence. If a participant goes on an authorized leave of absence for any reason, such participant will have the right to elect to: (a) withdraw all of the payroll deductions credited to the participant’s Account, as provided in Sections 5.5 and 7.1, or (b) remain a participant in the Plan during such leave of absence, authorizing deductions to be made from payments by the Company to the participant during such leave of absence. Any such elections, however, must be made in compliance with the Company’s insider trading policies and such rules and procedures as may be established by the Committee or its delegates in connection therewith. Unless a participant on an authorized leave of absence returns to employment with the Company or a Participating Company or Designated Affiliate no later than the first anniversary of the first day of the participant’s authorized leave of absence, such participant will be deemed to have terminated employment as of the first anniversary of the first day of the leave of absence and the provisions of Section 7.2 will apply.
8.
STOCK
8.1
Maximum Shares. The maximum number of shares of Stock that may be issued under the Plan is 4,500,000 shares of Stock, subject to adjustment upon his retirement,changes in capitalization of the Company as provided in Section 10.6.
8.2
Share Usage. Shares of stock covered by an option that expires or remains unexercised after the latest date on which exercise may occur will again be available for option grants under the Plan.
8.3
Participant’s Interest in Option Stock. A participant will have no interest in Stock covered by the participant’s option until such option has been exercised.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
9.
ADMINISTRATION
9.1
Authority of the Committee. The Plan will be administered by the Committee. Subject to the express provisions of the Plan, the Committee will have full and discretionary authority to interpret and construe all provisions of the Plan, to adopt rules, regulations, policies, and procedures for administering the Plan, and to make any and all determinations deemed necessary or advisable for administering the Plan. The Committee may correct any defect or omission or reconcile any inconsistency in the Plan in the manner and to the extent it deems necessary or appropriate. The Committee’s determinations on the foregoing matters will be final and conclusive. The Committee may, in its discretion, delegate some or all of its authority to one or more employees or officers of the Company, in which case any references in this Plan to the Committee will also refer to such delegate.
The provisions of the portion of the Plan intended to be subject to Code Section 423 will be construed in a manner consistent with the requirements of that Code Section. The Committee will have the discretion to determine whether a Subsidiary will be a Participating Company with respect to the portion of the Plan subject to Code Section 423 and whether an Affiliate will be a Designated Affiliate with respect to the portion of the Plan not subject to Code Section 423.
Additionally, the Committee will have discretion to adopt rules regarding Plan administration to conform to local laws or to enable eligible employees of the Company, Participating Companies, and Designated Affiliates to participate in the Plan. The Committee may also adopt rules, procedures, or sub-plans applicable to particular Designated Affiliates, which sub-plans may be designed to be outside the scope of Code Section 423. Without limiting the generality of the foregoing, the Committee is specifically authorized to adopt rules and procedures regarding the handling of payroll deductions or other contributions by participants, payment of interest, conversion of local currency, data privacy and security, payroll tax, withholding procedures, and handling of stock certificates, which rules and procedures may vary according to local requirements, as part of the portion of the Plan not subject to Code Section 423.
The rules of any sub-plans designed to be outside the scope of Code Section 423 may take precedence over other provisions of the Plan, except that, unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan will govern the operation of such sub-plan and no such sub-plan may (i) supersede the provisions of Sections 3.3(a) and 8.1, (ii) provide participants with a discount (whether through a reduced purchase price or as a result of employer matching contributions) of greater than 15% of the Fair Market Value of a share of Stock on the Purchase Date, or (iii) provide for payroll deductions or other contributions by participants in excess of the maximum dollar amount set forth in Section 5.1. The Committee has the authority to suspend or limit participation in the portion of the Plan not subject to Code Section 423 (including any or all sub-plans thereunder) for any reason, including administrative or economic reasons. The approval of the stockholders of the Company is not required before the adoption, amendment, or termination of any sub-plan designed to be outside the scope of Code Section 423, unless required by the laws of the foreign jurisdiction in which eligible employees participating in the sub-plan are located or by any other applicable laws, rules, or regulations, including, without limitation, the rules or standards of any stock exchange on which shares of Stock are listed.
9.2
Rules Governing the Administration of the Committee. The Committee will hold its meetings at such times and places as it deems advisable and may hold telephonic meetings. A majority of its members will constitute a quorum. All determinations of the Committee will be made by a majority of its members. Any decision, determination, or action may be made or taken without a meeting by written consent of all members of the Committee.
9.3
Indemnification. Members of the Committee, and any officer or employee of the Company acting at the direction, or on behalf, of the Committee will not be personally liable for any action or determination taken or made in good faith with respect to the Plan and will, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.
9.4
Recordkeeper. The Recordkeeper will act as recordkeeper under the Plan, and will perform such duties as are set forth in the Plan and in any agreement between the Company and the Recordkeeper. The Recordkeeper will establish and maintain for each participant a brokerage account.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
9.5
Administrative Costs. The costs and expenses incurred in the administration of the Plan and maintenance of Accounts will be paid by the Company, including, but not limited to, annual fees of the Recordkeeper and any brokerage fees and commissions for the purchase of Stock upon reinvestment of dividends and distributions. The foregoing notwithstanding, the Recordkeeper may impose or pass through to the participants a reasonable fee for the withdrawal of Stock in the form of stock certificates and reasonable fees for other services unrelated to the purchase of Stock under the Plan, to the extent approved in writing by the Company and communicated to participants. Under no circumstance will the Company pay any brokerage fees or commissions for the sale of Stock acquired under the Plan by a participant.
9.6
Action by the Board. Notwithstanding anything to the contrary contained in the Plan, the Board will have and may exercise all the authority granted to the Committee under the Plan. However, any such actions by the Board will be subject to the applicable rules of the New York Stock Exchange or any other securities exchange or inter-dealer quotation system on which the Stock is listed or quoted.
10.
MISCELLANEOUS
10.1
Designation of Beneficiary. A participant may designate a beneficiary who is to receive any shares of Stock and cash with respect to any payroll deductions and/or dividends, if any, from the participant’s Account under the Plan in the event of such participant’s death. If a participant has not designated a beneficiary or the beneficiary does not survive the participant, amounts due hereunder will be paid to the participant’s surviving spouse, or if none, to the participant’s estate.
10.2
Transferability. Neither payroll deductions credited to a participant’s Account nor any rights with regard to the exercise of an option or to receive Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the participant other than by will or the laws of descent and distribution or as provided in Section 10.1. Any such attempted assignment, transfer, pledge, or other disposition will be without effect.
10.3
Withholding. The Company, any Participating Company, and any Designated Affiliate is authorized to withhold from any payment to be made to a participant any taxes or other withholding amounts due in connection with any transaction under the Plan, including any disposition of shares acquired under the Plan, and a participant’s enrollment in the Plan will be deemed to constitute the participant’s consent to such withholding. At the time of a participant’s exercise of an option or disposition of shares acquired under the Plan, the Company may require the participant to make other arrangements to meet tax withholding obligations as a condition to exercise of rights or distribution of shares or cash from the participant’s Account. In addition, a participant may be required to advise the Company of sales and other non-recurring items.dispositions of Stock acquired under the Plan in order to permit the Company to comply with tax laws and to claim any tax deductions to which the Company may be entitled with respect to the Plan.
Without limiting the generality of the foregoing, the Committee may permit or require a participant to satisfy, in whole or in part, any withholding liability by any of the following methods or any combination of the following methods: (A) delivering shares of Stock (that are not subject to any pledge or other security interest) owned by the participant having a Fair Market Value equal to such withholding liability; (B) having the Company withhold from the number of shares of Stock otherwise issuable or deliverable pursuant to the exercise of an option a number of shares with a Fair Market Value equal to such withholding liability, except that with respect to shares withheld pursuant to this clause (B), the number of such shares may not have a Fair Market Value greater than the minimum required statutory withholding liability; (C) requiring the participant, as a condition precedent to transfer of the shares, to make a payment in an amount equal to the amount of the withholdings or reductions; or (D) such other method or combination of methods as the Committee deems appropriate, in its sole discretion.
The Committee will have the right, in its sole discretion, to require, as a condition precedent to the transfer of any shares under this Plan, that the transferee execute a power of attorney or such other agreement or document as the Committee deems necessary or appropriate to facilitate, directly or indirectly, the withholding of taxes with respect to any transaction arising under or in connection with this Plan.
10.4
Use of Funds. All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose, and the Company is not obligated to segregate such payroll deductions.
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
10.5
Reports. Statements of Account will be given to each participant at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased, any remaining cash balance, and other information deemed relevant by the Committee.
10.6
Adjustments Upon Changes in Capitalization.
(a)
Changes in Capitalization. The Committee will proportionately adjust the Reserves and the price per share and the number of shares of Stock covered by each option under the Plan that has not yet been exercised for any increase or decrease in the number of issued shares of Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Stock, or other extraordinary corporate event that affects the Stock in order to prevent dilution or enlargement of the rights of participants. The determination of the Committee with respect to any such adjustment will be final, binding, and conclusive.
(b)
Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately before the consummation of such proposed action, unless otherwise provided by the Committee.
(c)
Asset Sale or Merger. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, the Committee will shorten the Offering Period then in progress by setting a new Purchase Date (the “New Purchase Date”). The New Purchase Date will be before the date of the Company’s proposed asset sale or merger. The Committee will notify each participant in writing, at least ten business days before the New Purchase Date, that the Purchase Date for the participant’s purchase has been changed to the New Purchase Date and that the participant’s option will be exercised automatically on the New Purchase Date, unless before such date the participant has withdrawn the amount credited to the participant’s Account upon withdrawal from the Plan pursuant to Section 7.1 or such amount has been distributed to the participant upon termination of employment pursuant to Section 7.2.
10.7
Amendment and Termination. The Board of Directors has the complete power and authority to terminate the Plan at any time. Any amendment to the Plan to increase the maximum number of shares of Stock that may be issued under any Offering (except pursuant to Section 10.6), to amend the requirements as to the class of employees eligible to purchase Stock under the Plan (except for designations of Participating Companies and Designated Affiliates pursuant to Sections 2.8, 2.12 and 9.1), or to change the granting corporation or the Stock available for purchase under the Plan may be made only by the Board of Directors with the approval of the Company’s stockholders within 12 months before or after the date such amendment is adopted by the Board. Any other amendment to the Plan may be made by either the Board of Directors or the Committee, unless otherwise required by any applicable law, rule, or regulation, including, without limitation, the rules and regulations of the New York Stock Exchange. No termination, modification, or amendment of the Plan may, without the consent of an employee then having an option under the Plan to purchase Stock, adversely affect the rights of such employee under such option.
10.8
No Right to Employment. The Plan does not, directly or indirectly, create any right for the benefit of any employee or class of employees to purchase any shares of Stock under the Plan except as expressly provided, or create in any employee or class of employees any right with respect to continuation of employment, and the existence of this Plan will not be deemed to interfere in any way with an employer’s right to terminate, or otherwise modify, an employee’s employment at any time.
10.9
Notices. All notices or other communications by a participant to the Company or to the Recordkeeper will be deemed to have been duly given when received in the manner and form specified by the Company or the Recordkeeper, whichever is applicable, at the location, or by the person, designated by the Company, or Recordkeeper, for the receipt thereof.
10.10
Elections. All elections and notices made by a participant to the Recordkeeper may be made telephonically or electronically in accordance with procedures established by the Committee and the Recordkeeper.
10.11
Conditions Upon Issuance of Shares. The Company is not obligated to issue shares of Stock with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto complies with all
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APPENDIX B — AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN (continued)
applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange or automated quotation system upon which the shares may then be listed or quoted.
10.12
Effect of Plan. The provisions of the Plan are binding upon, and will inure to the benefit of, all successors of each participant, including, without limitation, such participant’s estate and the executors, administrators, or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy, or representative of creditors of such participant.
10.13
Effective Date. The Plan is effective as of October 1, 2017, as amended effective as of January 21, 2020, September 1, 2021 and October 21, 2022 and further amended on February 26, 2024.
10.14
Governing Law. The law of the state of Delaware applicable to contracts made and performed wholly within the state of Delaware will govern all matters relating to this Plan except to the extent it is superseded by the laws of the United States.
* * * * *
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Spirit AeroSystems is one of the world’s largest manufacturers of aerostructures for commercial airplanes, defense platforms, and business/regional jets. With expertise in aluminum and advanced composite manufacturing solutions, the company’s core products include fuselages, integrated wings and wing components, pylons, and nacelles. We are leveraging decades of design and manufacturing expertise to be the most innovative and reliable supplier of military aerostructures, and specialty high-temperature materials, enabling warfighters to execute complex, critical missions. Spirit also serves the aftermarket for commercial and business/regional jets. Headquartered in Wichita, Kansas, Spirit has facilities in the U.S., U.K., France, Malaysia and Morocco.
More information is available at www.spiritaero.com.
Spirit AeroSystems Holdings, Inc. :: 3801 South Oliver St. :: Wichita, Kansas 67210
www.spiritaero.com
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SPIRIT AEROSYSTEMS HOLDINGS, INC. 3801 S. OLIVER ST.WICHITA, KS 67210 VOTE BY INTERNETBefore The Meeting - 2018Go to www.proxyvote.com or scan the QR Barcode aboveUse the Internet to transmit your voting instructions up until 11:59 p.m. Eastern Time on April 23, 2024. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/SPR2024You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on April 23, 2024. Have your proxy card in hand when you call and then follow the instructions.VOTE BY MAILMark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: V31239-P04730 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
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Please keep this ticket to be admitted virtually to the Annual Meeting NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS Time:10:00 a.m. Central Time on Wednesday, April 24, 2024 Place:www.virtualshareholdermeeting.com/SPR2024 Who May Vote:You may vote if you were a stockholder of record at the close of business on February 26, 2024 By order of the Board of Directors, Mindy McPheetersSenior Vice President, General Counsel and Corporate SecretaryImportant Notice Regarding the Internet Availability of Proxy Materials for Spirit AeroSystems Holdings, Inc.'s 2024 Annual Meeting of Stockholders.The Notice and Proxy Statement 74
Backand the 2023 Annual Report are available at: www.proxyvote.com PLEASE FOLD ALONG THE PERFORATION, DETACH, AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. V31240-P04730Proxy — Spirit AeroSystems Holdings, Inc.PROXY / VOTING INSTRUCTIONS SOLICITED BY THE BOARD OF DIRECTORS OF SPIRIT AEROSYSTEMS HOLDINGS, INC.2024 ANNUAL MEETING OF STOCKHOLDERS — APRIL 24, 2024Each signatory on the reverse side hereby appoints Robert D. Johnson and Justin Welner, and each of them, with the power of substitution, as proxies for the undersigned and authorizes them to Contents
Backrepresent and vote all of the shares of stock of Spirit AeroSystems Holdings, Inc. that the undersigned may be entitled to Contents
Backvote at the Annual Meeting of Stockholders to Contents
be held on Wednesday, April 24, 2024 (the "Meeting"), and at any adjournment or postponement thereof, with respect to all of the proposals indicated on the reverse side of this card, and with discretionary authority as to any other matters that may properly come before the Meeting, in accordance with and as described in the Notice and Proxy Statement for the Meeting.This proxy, when properly executed, will be voted as directed or, if no such direction is given, will be voted FOR Proposals 1, 2, 3, and 4 and AGAINST Proposal 5.IMPORTANT: PLEASE MARK, SIGN, AND DATE THIS PROXY ON THE REVERSE SIDE.
0001364885 4 2023-01-01 2023-12-31
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