UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material under §240.14a-12 |
SPIRIT AEROSYSTEMS HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 |  The 2021 Annual Meeting of Stockholders (the
 
| OF 2021 ANNUAL MEETING OF STOCKHOLDERS PURPOSE | ||
WEDNESDAY, APRIL 28, 2021 | ||||
11:00 a.m. Central Time | ||||
REVIEW YOUR PROXY STATEMENT AND VOTE IN THE FOLLOWING WAYS: | Items of business include: 1. Election of 10 nominees as directors; 2. Advisory vote to approve 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 2021; 4. The stockholder proposal requesting an amendment to the Company’s proxy access bylaw; and 5. The transaction of any other business that properly comes before the meeting. VIRTUAL MEETING ADMISSION In order to protect the health and safety of attendees in light of the COVID-19 pandemic, the Annual Meeting will be conducted virtually via live audio webcast. Stockholders can be admitted to and attend the virtual Annual Meeting at www.virtualshareholdermeeting.com/SPR2021 by entering the 16-digit voting control number found on the Notice (as defined below) or proxy card. Stockholders may vote and submit questions during the Annual Meeting by following the instructions available on the website above. RECORD DATE The record date for the Annual Meeting is March DOCUMENTS Pursuant to the rules of the Securities and Exchange Commission (the “SEC”), the Company has elected to primarily furnish its proxy materials over the internet rather than mailing paper copies. On Your vote is important. Regardless of whether you plan to virtually attend the Annual Meeting, we hope you will vote as soon as possible. Thank you for your ongoing support of Spirit. By order of the Board of Sincerely, | |||
 | INTERNET • Visit www.proxyvote.com prior to • During the Annual Meeting, | |||
 | MOBILE DEVICE • Use your tablet or smartphone to scan the | |||
 | PHONE • Call 1-800-690-6903 | |||
 | • Sign, date, and | |||
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 IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDER MEETING TO BE HELD ON APRIL 28, 2021: The Proxy Statement and Annual Report are available at www.proxyvote.com SPIRIT AEROSYSTEMS HOLDINGS, INC. 3801 S. Oliver St., Wichita, KS 67210-2112 | ||||
Vice President, Interim General Counsel and Corporate Secretary March 17, 2021 | ||||
3801 S. Oliver St.Wichita, KS 67210-2112
March 11, 2019
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON APRIL 24, 2019
The Proxy Statement and Annual Report are available at http://www.proxyvote.com
The 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of Spirit AeroSystems Holdings, Inc. (“Spirit” or the “Company”) will be held:
WEDNESDAY, APRIL 24, 2019
11:00 a.m. Eastern Time
Fairmont Hotel, Dumbarton Room
2401 M St. NW
Washington, DC 20037
Items of business include:
Election of nine nominees as directors;
Advisory vote to approve the compensation of the Company’s named executive officers;
Ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2019;
The stockholder proposal regarding enhancing proxy access described in this Proxy Statement, if properly presented at the meeting; and
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 25, 2019, are entitled to receive notice of, and may vote at, the Annual Meeting. We are furnishing proxy materials to our stockholders primarily over the internet rather than mailing paper copies. On March 11, 2019, 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 or voting information form. The Notice contains instructions on how to access and review the proxy materials, including this Proxy Statement and our Annual Report, on the internet and instructions on how to vote. Stockholders may vote in person at the Annual Meeting or by internet pursuant to the instructions set forth in the Proxy Statement. In addition, if you received a paper copy 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 not you plan to attend the Annual Meeting, we hope you will vote as soon as possible.
By order of the Board of Directors.
Sincerely,
StacyCozad
SeniorVicePresident,GeneralCounsel,ChiefComplianceOfficer,andCorporateSecretary
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 4
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 uponon at the Annual Meeting and our 20182020 performance, please review the entire Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2020.
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 to Be Voted On at the Annual Meeting
Stockholders of record of our Common Stock as of February 25, 2019,the Record Date, March 2, 2021, may vote their shares using any of the following methods:
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● During the Annual Meeting, visit |
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SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 75
HEADQUARTERS | Wichita, Kansas |
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WORLDWIDE EMPLOYEES | Approximately |
LOCATIONS | Kansas, |
MAJOR CUSTOMERS | Airbus, Boeing, |
Spirit is a leading tier-one global aerostructures provider. We manufacture large aerostructures, includingmanufacturer for commercial airplanes, military platforms, and business/regional jets. Spirit’s core products include fuselages, fully integrated wing structures and wing components, engine nacelles, pylons, fan cowls, thrust reversers, and systems integration for the world’s premier aircraft. Spirit’s capabilitiesCapabilities include metal manufacturing and assembly, precision assembly, and composites manufacturing.
Commercial. Our engineering capabilities and proprietary design tools, combined with our capacity for high-volume production, have positioned Spiritus as a leading commercial aerostructures supplier to both Airbus, Boeing, and Boeing.Bombardier. For Boeing, we manufacture the 737B737 fuselage, the front section of the 787 fuselage,B787, B777 and otherwise manufacture partsB767 fuselages, and other wing and engine components for every Boeing commercial aircraft currently in production. Further, for Airbus, we supply fuselage andand/or wing aerostructures content on the A350 XWB and wing aerostructures content on theA220, A320, A330, and A380.A350 XWB. We recently expanded our capabilities into many business aircraft ranging from the super mid-size to very large aircraft categories, which include the Bombardier Challenger and Global families of aircraft. Spirit also suppliesproduces aerostructures for various business/regional and business jet programs including pylons on the A220 and in-development Mitsubishi Regional Jet, as well as nacelles for Rolls-Royce engines used on Gulfstream aircraft.and others.
Defense. In addition to producing aerostructures for commercial aircraft, Spiritthe Company designs, engineers, and manufactures structural components for military programs. We have been awarded a significant amount of work for Boeing’sprograms including the Boeing P-8, C-40, and KC-46 tanker,Tanker, all of which are commercial aircraft modified for military use. We are also involved indevelop and manufacture the developmentfuselage and production of variousother parts for the Sikorsky CH-53K heavy-lift helicopter and Bell V-280 tiltrotor aircraft. In addition, Spirit isare a proud to be a member of the Northrop Grumman B-21 Raider industry team. Also, Spirit is partnered with Bell on the V-280 Valor rotorcraft as part of the U.S. Army’s Future Vertical Lift program. In 2020, Spirit acquired Fiber Materials Inc. (“FMI”), an industry-leading technology company specializing in multi-directional reinforced carbon-carbon composites that enable high-temperature applications such as thermal protection systems, hypersonic missiles, and re-entry vehicle nose tips, as well as rocket motor throats and nozzles. Spirit’s defense product portfolio is also expanding into Europe with Spirit Belfast leading Project Mosquito for the United Kingdom’s Ministry of Defence.
Aftermarket. Spirit provides a range of maintenance, repair, and overhaul solutions for the commercial and business/regional jet aftermarket. Our global aftermarket presence allows customers to have regional access to our maintenance, repair, and overhaul facilities that provide industry-leading repairs and solutions for a variety of aircraft, including both metallic and composite structures. Additionally, Spirit continues to produce and sell spare parts to our Original Equipment Manufacturer customers.
Other. Spirit is involved with a number of innovative transportation technologies. This includes the Aerion AS2 supersonic business jet program, for which Spirit is contributing to the preliminary design of the forward fuselage section of the AS2. Spirit has invested heavilyalso signed a memorandum of agreement with Aerion to produce the forward fuselage section. Also, in researchcollaboration with Virgin Hyperloop, Spirit is leveraging its design, fabrication, supply chain, and certification expertise to support the development labs that enable usof Virgin’s hyperloop technology. In 2020, Spirit entered into a temporary partnership with Vyaire Medical to deliver innovationproduce critical care ventilators for the Strategic National Stockpile under a contract with the U.S. Department of Health and value on defense programs.Human Services.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 86
Spirit Values and Fundamental Behaviors
At Spirit, we believe that culture and values play a determiningan important role in the success of corporate strategy. Values are demonstrated in the way we think, act, and ultimately achieve results. The following values guide our ways of working:
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 | 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. |
Built on a foundation of trust, speaking out enables us to demonstrate these values. We encourage all of our employees to speak out and listen up to ensure we consider other perspectives in our discussions in order to succeed.
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  | Safety | Our employees are our greatest asset. We are committed to conducting our operations in a manner that prioritizes the safety and |
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  | Quality | We are committed to continually improving our product quality and |
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  | On-Time Delivery |
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  | Customer Focused | 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 |
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SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 97
Spirit’s corporate values are demonstrated through commitments to key community initiatives, from volunteer activities to corporate- and employee-funded grants. Our values are demonstrated through the way we conduct our business and our commitments, which include the following:
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SPIRIT AEROSYSTEMS - 2019 Proxy Statement 10
About Spirit’s Director Nominees and Governance Practices
Name | Age | Director Since |
| Principal Occupation | Independent | Committee Memberships | Age | Director Since |
| Principal Occupation | Independent | Committee Memberships | No. of Other Public Company Boards |
Stephen A. Cambone | 68 | 2019 |
| Associate Vice Chancellor for Cyber Initiatives, Texas A&M University System | Yes |  | 0 | ||||||
Charles L. Chadwell | 78 | 2008 |
| Retired VP/GM of Commercial Engine Operations, GE Aircraft Engines | Yes | Governance (Chair) Compensation | 80 | 2008 |
| Retired VP/GM of Commercial Engine Operations, GE Aircraft Engines | Yes |  | 0 |
Irene M. Esteves | 60 | 2015 |
| Retired CFO, Time Warner Cable Inc. | Yes | Audit (Chair) Risk | 62 | 2015 |
| Retired EVP and CFO, Time Warner Cable Inc. | Yes |  | 3 |
Paul E. Fulchino | 72 | 2006 |
| Retired Chairman, President and CEO, Aviall, Inc. | Yes | Compensation (Chair) Governance | 74 | 2006 |
| Retired Chairman, President and CEO, Aviall, Inc. | Yes |  | 0 |
Thomas C. Gentile III | 54 | 2016 |
| President and CEO, Spirit AeroSystems Holdings, Inc. | No |
| 56 | 2016 |
| President and CEO, Spirit AeroSystems Holdings, Inc. | No |
| 0 |
Richard A. Gephardt | 78 | 2006 |
| President and CEO, Gephardt Consulting Group | No |
| 80 | 2006 |
| President and CEO, Gephardt Group | No |
| 1 |
Robert D. Johnson, Chairman | 71 | 2006 |
| Retired CEO, Dubai Aerospace Enterprise Ltd. | Yes | Compensation Governance | |||||||
Robert D. Johnson, Board Chairman | 73 | 2006 |
| Retired CEO, Dubai Aerospace Enterprise Ltd. | Yes |  | 2 | ||||||
Ronald T. Kadish | 70 | 2006 |
| Retired EVP, Booz Allen Hamilton | Yes | Risk (Chair) Governance | 72 | 2006 |
| Retired EVP, Booz Allen Hamilton | Yes |  | 0 |
John L. Plueger | 64 | 2014 |
| President and CEO, Air Lease Corporation | Yes | Audit Risk | 66 | 2014 |
| President and CEO, Air Lease Corporation | Yes | | 1 |
Laura H. Wright | 59 | 2018 |
| Retired SVP and CFO, Southwest Airlines | Yes | Audit Risk | 61 | 2018 |
| Retired SVP and CFO, Southwest Airlines | Yes |  | 2 |
 | Audit Committee |  | Risk Committee |  | Compensation Committee |  | Corporate Governance and Nominating Committee (the “Governance Committee”) | * (Chair) |
Director Nominee QualificationsExperience
Cambone | Chadwell | Esteves | Fulchino | Gentile | Gephardt | Johnson | Kadish | Plueger | Wright | |
PublicCompanyCEO | • | • | • | |||||||
PublicCompanyCFO | • | • | ||||||||
AviationOperationsManagement | • | • | • | • | • | • | • | |||
PublicCompanyBoard | • | • | • | • | ||||||
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| • | • | • | • | |||||||
ExecutiveCompensation | • | |||||||||
| • | • | • | • | • | ||||||
RiskManagement | • | • | • | • | • | • | ||||
M&A | • | • | • | |||||||
| • | • | |||||||||
SeniorGovernment | • | |||||||||
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 11
Corporate Governance Highlights
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 Independent Chairman of the Board |
| Proxy access right | ||||||||
 7 out of 9 director nominees are independent |
| Right to call special meetings | ||||||||
| Overboarding policy |
| Right to act by written consent | ||||||||
| Ongoing director education program Cyber | • |
| Active stockholder engagement program | |||||||
| Regular executive sessions of non-management directors |
| Annual say-on-pay vote | ||||||||
| Annual board and committee evaluations |
| Annual election of all directors | ||||||||
| Robust stock ownership requirements for directors |
| Majority voting standard in uncontested director elections | ||||||||
| Anti-hedging and pledging policy International | • |
| No poison pill or similar plan | • | • | • | ||||
| Robust risk oversight process with Board and committee roles Defense | • | • | • | • | • |
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SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 128
Two of our director nominees are women. In addition, one of the women is a member of an underrepresented ethnic group.
Corporate Governance Policies and Practices
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SPIRIT AEROSYSTEMS - 2021 Proxy Statement 9
About Spirit’s Executive Compensation Program and Practices
Overview of Spirit’s Executive Compensation Program
We provide highlightsHighlights of our executive compensation program are below. For a full understanding of the compensation paidwe pay to our named executive officers, please review our Compensation“Compensation Discussion and AnalysisAnalysis” and the related compensation tables in this Proxy Statement.
Our compensation objectives are to (i) to:
attract, retain, and motivate highly qualified executive officers, (ii) officers;
pay for performance using short-term and long-term incentives, (iii) incentives;
align the interests of the Company’s executive officers with those of the Company’s stockholders by using compensation performance measures that are meaningful to our stockholders,stockholders; and (iv)
ensure compensation does not encourage inappropriate risk-taking by diversifying performance measures, using payment caps, and maintaining a clawback policy,policies, among other things.
The 20182020 compensation structure (excluding perquisite, or “other” compensation)compensation, and changes in pension value) for our CEOChief Executive Officer (“CEO”) and the other named executive officers (“NEOs”) excluding Mr. Garcia is below. As the charts below demonstrate, 87%89% of our CEO’s direct compensation was variable based on performance, while 77%76% of the other NEOs’ direct compensation was variable based on performance.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 10
Executive Officer Compensation Practices ChecklistElements
Description | Changes in 2020 | Changes in 2021 | |
SALARY | Fixed element of annual compensation | Reduced pay by 20% for all executive officers in April 2020. | Restored pay to full amounts in January 2021. |
ANNUAL CASH INCENTIVE | Annual cash incentive that pays out based on achievement of the following: • Company performance goals (75-80% of award); and • individual performance goals (20-25% of award) | Modified Company performance metrics to Cash from Operating Activities (40%), Indirect Cost (30%), New Revenue Growth (15%), and Quality (15%). | Modified Company performance metrics to Adjusted Net Debt (40%), Operating Cost (30%), New Revenue Growth (15%), and Quality (15%). |
LONG-TERM | Long-term equity incentive structured as follows: • Time-based restricted stock vesting annually over • Performance-based restricted stock vesting based on actual performance at the end of a three-year performance period (40% of award) | No changes to existing award structure (performance-based restricted stock was tied equally to Free Cash Flow (“FCF”) as a Percentage of Revenue (“FCF Percentage”)* and Total Stockholder Return (“TSR”) vesting as the end of three-year performance period); Minor peer group changes for TSR. | Minor peer group changes for TSR; Reduction in maximum TSR performance goal from 90th percentile to 75th percentile (in line with market); 100% of performance-based award will be tied to TSR (removed metric tied to FCF Percentage*). |
* Please see AppendixA for an explanation and reconciliation of these non-GAAP measures. | |||
Best Practices | What the Company Doesn’t Do |
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| Clawback policy | 
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| No tax gross-ups related to a change-in-control |
| Performance goals are relevant and tied to creation of stockholder value |
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| Double-trigger change-in-control provisions |
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| Offer market-competitive benefits |
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| Pay long-term incentives entirely
| No accumulation of dividends on unvested performance-based restricted stock awards |
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 11
Guided by our core values of transparency, collaboration, and inspiration, Spirit brings innovation to the products we build, with a focus on the well-being of the environment, our employees, and our communities.
In 2021, Spirit will launch its first annual Sustainability Report (the “Report”), highlighting the Company’s work to meet its sustainability goals and objectives. The Report will describe Spirit’s efforts to support the United Nations’ Sustainable Development Goals (SDGs), and will include disclosures using the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and Task Force for Climate-Related Financial Disclosures (TCFD) frameworks.
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 our absolute Scope 1 and 2 greenhouse gas emissions by 30% below 2019 levels by 2030. Our strategies and programs consider the nexus between climate, water, waste, and biodiversity.
 | 100%WindEnergyinKansas By 2022, Spirit’s entire 12millionsquarefootfacility in Wichita will befullypoweredbyanearbywindfarm. The project is also designed to support local economic development. |  | WaterRecyclingatScale Spirit has one of the largestindustrialwaterreusesystems in the United States – recycling more than twomilliongallonsofprocesswaterdaily at our Wichita location. | |
Diversity, Equity, and Inclusion
At Spirit, we believe our success and the success of our employees depends 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 U.S.) to 20% by 2025. In 2021, Spirit will launch “The Power of Choice” leadership development program for women, and other underrepresented talent within our organization.
We believe in the power of innovative solutions, partnerships, and programs that bring communities together. In 2020, Spirit and its employees continued to support local communities, and contributed over 15,000 volunteer hours and donated $3.7 million through corporate grants, in-kind contributions, and employee donations.
 | COVID-19Support In 2020, Spirit employees around the world mobilized to support COVID-19 relief efforts. We partnered with Vyaire Medical to build 20,000 critical care ventilators that were delivered to 20 countries. In addition, Spirit employees in the U.S. created face shields and special examination booths to distribute to local hospitals, care facilities, and law enforcement, and a team of employees in Malaysia developed hands-free sanitizer stands for local schools. |
For more information, visit www.spiritaero.com/company/sustainability/overview/.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 12
The Board of Directors is elected each year at the Company’s annual meeting of stockholders. Spirit currently has nine10 directors. Each director elected at the Annual Meeting will serve until the 20202022 annual meeting of stockholders and until the election and qualification of his or her respective successor, subject to suchthe director’s earlier death or disability.
Based on the recommendations 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.a director. All nominees have served as directors of the Company since the 20182020 annual meeting of stockholders.
Each of the 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 unavailable 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.
The following information with respect to the nine10 nominees is based on information furnished to the Company by each nominee and highlights the specific experience, qualifications, attributes, and skills of the individual nominees that have led the Board to conclude that each should continue to serve on the Board.
  | Stephen A. Cambone | |
Age 68 Director Since 2019 Independent Director | ||
Recent Professional Experience: | Current Public Company Directorships: | |
• Associate Vice Chancellor for Cyber Initiatives, • Trustee, Rumsfeld Foundation (2012-present) • Founder, Adirondack Advisors, LLC (2012-2018) • Senior positions at QinetiQ, Inc. (2007-2012), including Executive Vice President, Strategic Development, and President, Missions Solution Group • Undersecretary of Defense for Intelligence, | • Spirit AeroSystems Holdings, Inc. (2019-present) Committee Assignments: • Audit • Risk | |
Qualifications,Experience,KeyAttributes,andSkills: Dr. Cambone brings to the Board extensive expertise in governmental affairs, defense, and intelligence, along with executive leadership experience 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 - 2021 Proxy Statement 13
 | Charles L. Chadwell | |
Age Director Since 2008 Independent Director | ||
Pre-Retirement Professional Experience: |
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• Vice President and General Manager of • Vice President, Operations, GE Aviation (1990-1994) • Vice President, Human Resources, GE Aviation (1988-1990) | • Spirit AeroSystems Holdings, Inc. (2008-present) | |
Former Public Company Directorships Held in the Past Ten Years: | ||
• B/E Aerospace (2007-2012) | ||
Committee Assignments: | ||
• Governance (Chair) • Compensation | ||
| Qualifications, Experience, Key Attributes, and Skills: Mr. Chadwell brings to the Board critical supply chain and manufacturing operations expertise, and executive leadership | |
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 14
  | Irene M. Esteves | |
Age Director Since 2015 Independent Director | ||
Pre-Retirement Professional Experience: | Current Public Company Directorships: | |
• Executive Vice President and Chief Financial Officer, Time Warner Cable Inc. (2011-2013) • Executive Vice President and Chief Financial Officer, • Senior Vice President and Chief Financial Officer, Regions Financial Corporation (2008-2010) | • Spirit AeroSystems Holdings, Inc. (2015-present) • Aramark Holdings Corp. (2015-present) • RR Donnelley & Sons Co. (2017-present) • KKR Real Estate Finance Trust Inc. (2018-present) | |
Former Public Company Directorships Held in Past | ||
• Level 3 Communications (2014-2017) • Time Warner Telecom Inc. (2014) | ||
Committee Assignments: | ||
• Audit (Chair) • Risk | ||
| Qualifications, Experience, Key Attributes, and Skills: Ms. Esteves has 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 | |
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 14
  | Paul E. Fulchino | |
Age Director Since 2006 Independent Director | ||
Recent Professional Experience: | Current Public Company Directorships: | |
• Operating Partner, AE Industrial Partners (“AEI”) (2015-present) • Senior Advisor, • Chairman, President and Chief Executive Officer, Aviall, Inc. (2000-2010) (Aviall became a • President and Chief Operating Officer, B/E Aerospace, Inc. (1996-1999) • President and Vice Chairman, Mercer | • Spirit AeroSystems Holdings, Inc. (2006-present) | |
Former Public Company Directorships Held in Past Ten Years: | ||
• Wesco Aircraft Holdings, Inc. | ||
Committee Assignments: | ||
• Compensation (Chair) • Governance | ||
| Qualifications, Experience, Key Attributes, and Skills: Mr. Fulchino provides the Board with executive leadership experience, and extensive knowledge and expertise regarding the commercial aviation industry, the Company’s customers and supply base, compensation and human resource matters, and mergers and acquisitions. Mr. Fulchino also brings to the Board experience as a public company director. | |
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 15
  | Thomas C. Gentile III | |
Age Director Since 2016 | ||
Recent Professional Experience: |
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• President and Chief Executive Officer, • Executive Vice President and Chief Operating • President and Chief Operating Officer, • President and Chief Executive Officer, • President and Chief Executive Officer, | • Spirit AeroSystems Holdings, Inc. (2016-present) Former Public Company Directorships Held in Past Ten Years: • Synchrony Financial Bank (2015) | |
| Qualifications, Experience, Key Attributes, and Skills: 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. Mr. Gentile also brings to the Board experience as a public company director. | |
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 15
  | Richard A. Gephardt | |
Age Director Since 2006 | ||
Recent Professional Experience: | Current Public Company Directorships: | |
• President and Chief Executive Officer, Gephardt Consulting Group (“GCG”) (2007-present) • President and Chief Executive Officer, Gephardt Governmental Affairs (together with GCG, the “Gephardt Group”) (2005-present) • Member, U.S. House of Representatives | • Spirit AeroSystems Holdings, Inc. (2006-present) • Centene | |
Former Public Company Directorships Held in Past | ||
• Century Link, Inc. (2007-2016) • Ford Motor Company (2009-2015) • U.S. Steel Corporation (2005-2015) | ||
| Qualifications, Experience, Key Attributes, and Skills: Mr. Gephardt brings governmental affairs and public relations | |
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 16
  | Robert D. Johnson, Chairman | |
Age Director Since 2006 Independent Director | ||
Pre-Retirement Professional Experience: | Current Public Company Directorships: | |
• Chief Executive Officer, Dubai Aerospace • Chairman, Honeywell Aerospace • President and Chief Executive Officer, Honeywell Aerospace • President and Chief Executive Officer, Electronic and Avionics Systems, Honeywell Aerospace (known as Allied Signal Aerospace at the time) (1997-1999) | • Spirit AeroSystems Holdings, Inc. (2006-present) • Roper Technologies, Inc. (2005-present) • Spirit Airlines, Inc. (2010-present) | |
Former Public Company Directorships Held in Past | ||
• Ariba, Inc. (2003-2012) | ||
Committee Assignments: | ||
• Compensation • Governance | ||
| Qualifications, Experience, Key Attributes, and Skills: Mr. Johnson, Chairman of the Board, has aviation industry executive leadership experience | |
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 16
  | Ronald T. Kadish | |
Age Director Since 2006 Independent Director | ||
Pre-Retirement Professional Experience: |
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• Consultant, Raytheon • Senior Executive Advisor, Booz Allen Hamilton • Executive Vice President, • Director, U.S. Missile Defense Agency, U.S. Department of Defense (2002-2004) • Director, Ballistic Missile Defense • Commander, Electronic Systems Center, | • Spirit AeroSystems Holdings, Inc. (2006-present) | |
Former Public Company Directorships Held in Past Ten Years: | ||
• Northrop Grumman Innovation Systems, Inc. (formerly known as Orbital ATK, • Orbital Sciences Corp. (2005-2015) | ||
Committee Assignments: | ||
• Risk (Chair) • Governance | ||
| Qualifications, Experience, Key Attributes, and Skills: 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. | |
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  | John L. Plueger | |
Age Director Since 2014 Independent Director | ||
Recent Professional Experience: | Current Public Company Directorships: | |
• Chief Executive Officer and President, • President and Chief Operating Officer, ALC (2010-2016) • President and Chief Executive Officer, International Lease • President and Chief Operating Officer, ILFC (2002-2010) | • Spirit AeroSystems Holdings, Inc. (2014-present) • ALC (2010-present) | |
Committee Assignments: | ||
• Audit • Risk | ||
| Qualifications, Experience, Key Attributes, and Skills: Mr. Plueger provides the Board with valuable insight into the aviation industry and aviation operations management stemming from his executive leadership roles at ILFC and 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 | |
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  | Laura H. Wright | |
Age Director Since 2018 Independent Director | ||
Pre-Retirement Professional Experience: | Current Public Company Directorships: | |
• 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) | • Spirit AeroSystems Holdings, Inc. (2018-present) • TE Connectivity Ltd. (2014-present) • CMS Energy Corp. (and its | |
Former Public Company Directorships Held in Past | ||
• Pebblebrook Hotel Trust (2009-2019) | ||
Committee Assignments: | ||
• Audit • Risk | ||
| Qualifications, Experience, Key Attributes, and Skills: Ms. Wright has experience in corporate finance and accounting, | |
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 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 Happenshappens if an Incumbent Director Nomineeincumbent director nominee is Not Electednot 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.
The Board recommends that you vote FOR each of the director nominees.
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The Company is governed by its Board of Directors. Other than with respect to matters reserved to stockholders, the Board is the ultimate decision-making body of the Company. The Board is responsible for overseeing the Company’s strategy and performance, and protecting stockholder interests and value. Further, the Board is responsible for selecting and overseeing the Company’s executive officers, who set and execute the Company’s business strategy and handle the Company’s day-to-day operations.
In carrying out its responsibilities, the Board has created and delegated certain responsibilities to four standing committees:
the Audit Committee, Committee;
the Compensation Committee, Committee;
the Governance Committee,Committee; and
the Risk Committee.
Additional information about these committees and their responsibilities is described under “Committees.”
Corporate Governance Guidelines
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 thatprovide transparency into the roles and responsibilities of the Board hasand management and the necessary authorityBoard’s governance philosophy and practices, in place to effectively review and evaluate the Company’s strategy and operations, to make decisions that are independentpromote functioning of the Company’s management,Board and its committees, describe a common set of expectations on how the Board should perform its functions, and promote effective governance. The Board is responsible for overseeing, counseling, and directing management; ensuring that our long-term interests and the long-term interests of our stockholders are being served; reviewing the major risks facing the Company and helping develop strategies to oversee management, and to monitoraddress those risks; assessing adherence to the Company’s standards and policies.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, the Board’s view on director age and term limits, and director attendance at meetings, among other things. The Governance Guidelines are available at http://investor.spiritaero.com/govdocscorporate-governance/govdocs/default.aspx.
Pursuant to our bylaws, the Board of Directors is required to consist of three or more directors and the size of the Board may be increased or decreased at any time by the Board of Directors. Currently, the Board of Directors consists of nine10 directors. Pursuant toAs stated in 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.
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The Company separateshas separated the roles of Chief Executive Officer (“CEO”)CEO and Chairman of the Board in recognition of the differences between the two roles and the value of independent leadership oversight.roles. The Board believes that role separation ofis appropriate for the rolesCompany as it maximizes the ability of the CEO to focus on managing Company operations, strategy, and operations without distraction,performance, while benefiting from the Chairman’s independent perspective and insight.
The Chairman of the Board performs the following duties:
Approves the agenda for Board meetings;
Presides over and manages Board meetings;
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 weekly to discuss Company performance and matters of significance.
Because Mr. Johnson, the Chairman of the Board, is 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.
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Selecting qualified individuals to serve as directors is key to the Board’s performance. The Governance Committee is responsible for 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. This responsibility is further described in the Governance Committee’s charter, which is available at: http://investor.spiritaero.com/govdocscorporate-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 Company may have based on its strategic initiatives, risks, and opportunities. The Company has engaged a third-party international executive search firm to assist the Governance Committee in identifying and evaluating potential director candidates.
In evaluating individual candidates, the Governance Committee considers the personal ethics and values, experience, judgment, and diversity of the candidates, among other things. It is the Board’s policy ofthat the Board that the Boardshould reflect diversity of viewpoint, professional experience, education, skill, expertise, industry knowledge, 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 candidates for the effectivenessboard regardless of gender, race, ethnicity, and national origin. Any search firm retained to assist the Board.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 interest 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 the duties of directors.director duties. For example, the Governance Guidelines limit the number of boards that any director may serve onadditional information, see “Overboarding Policy.”
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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 20202022 Annual Meeting.” Director candidates recommended by stockholders will be considered and evaluated in the same manner as candidates discovered through other sources.
The Company’s bylaws provide the 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 Company’s Board of Directors, provided that the stockholder(s) and the nominee(s) satisfy the applicable requirements in the bylaws.
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Director Tenure and Refreshment
While theThe Company has added fourfive new directors to its Board in the past seven years. The remaining five years, five of the nominees have served on the Board for more than ten10 years. Through its annual evaluation process, the Board has determined that each of thesethe five nominees who have served for more than 10 years provides diversity of experience and perspective, and plays an integral and necessary role in the boardroom.
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 and, thus, reduce stockholder value.service. Instead, the Board has determined tothat 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. The Board is committed to routine Board and director refreshment as needed to enhance Board effectiveness, and primarily uses rigorous boardBoard and committee evaluations and composition discussions as its refreshment mechanisms.
Board and Committee Evaluations
Each year, the Governance Committee oversees an evaluation of the Board and each committee. The 20182020 annual evaluation covered the following topics, among other things:
Composition of the Board and committees and whether the composition is appropriate in light of the Company’s strategic priorities;
Effectiveness of Board and committee leadership;
Strengths of the Board and committees and opportunities for improvement;
Quality of information provided to the Board;
Effectiveness of structures and practices;
Quality of the directors’ relationships with each other; and
Quality of the Board’s relationship with management.
A summary of the evaluation process is below:
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Our director education program is multifaceted and includes occasional site visits and tours in-depth(these did not occur in 2020 due to COVID-19 restrictions and precautions), education seminars on topics of interest conducted by senior management andor external advisors, provision of background material on the Company’s operations and strategy, and the regular provision of resources from various educational institutions to directors. (including the National Association of Corporate Directors).
Each new Board member receives onboarding programmingtraining that involves meetings with senior management, business overviews, and presentations on the Code of Business 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.
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, and the Audit, Governance, and Compensation Committees must consist solely 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, with the assistance of the 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 the NYSE’s independence standards.standards, as applicable to non-employee directors generally and as applicable to each committee. 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 E. Fulchino | When considering the independence of Mr. Fulchino, the Governance Committee and Board considered his role as an operating partner of 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. However, Mr. Fulchino | 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 | ||
Richard A. Gephardt | When considering Mr. Gephardt’s independence, the Governance Committee and Board considered his role as President and Chief Executive Officer of the Gephardt | The Governance Committee and Board affirmatively determined that, in light of Mr. Gephardt’s significant ownership and involvement in the Gephardt Group and the Gephardt Group’s dealings with the Company, Mr. Gephardt has a material relationship with the Company and is, therefore, not independent. |
Based on this analysis, the Board has determined that all the director nominees are independent under the NYSE’s criteria with the exclusion ofexcluding Messrs. Gentile and Gephardt. All the committees of the Board are comprisedmade up solely of independent directors. Messrs. Gentile and Gephardt are not members of any committee.
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The Board has four committees: the Audit Committee, Compensation Committee, Governance Committee, and Risk Committee. The Board has adopted written charters for each committee, which are available at http://investor.spiritaero.com/govdocscorporate-governance/govdocs/default.aspx. Information on each committee of the Board is set forth in the table below.
Committee | Members | Primary Responsibilities | No. of Meetings in
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Audit Committee* | Irene M. Esteves (Chair) Stephen A. Cambone John L. Plueger Laura H. Wright | (1) Oversee the quality and integrity of the Company’s financial reporting. (2) Oversee the Company’s compliance with legal and regulatory requirements. (3) Engage, compensate, and oversee performance and independence of the independent (4) Oversee performance of the Company’s internal audit function. (5) Review and discuss with management and the independent auditors the Company’s earnings releases and quarterly and annual reports on Forms 10-Q and (6) Consider the effectiveness of the Company’s internal controls over financial (7)
(8) Communicate with the (9) Oversee financial-related risk exposures and related policies and processes attempting to mitigate such risks. Oversee the Company’s Code of |
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Compensation Committee | Paul E. Fulchino (Chair) Robert D. Johnson Charles L. Chadwell | (1) Review and approve the compensation of the Company’s executive officers. (2) Oversee the administration of the Company’s compensation plans, policies, and programs. (3) Prepare the Compensation Committee Report in this Proxy Statement. (4)
(5) Review and make recommendations to the Board with respect to non-employee director compensation. |
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Governance Committee | Charles L. Chadwell (Chair) Robert D. Johnson Paul E. Fulchino Ronald T. Kadish | (1) Assist the Board in identifying qualified individuals to become Board members. (2) Determine the composition of the Board and its committees. (3) Lead the (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)
(7) Review the Company’s practices and reporting with respect to corporate responsibility, environmental, and social matters. |
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Risk Committee | Ronald T. Kadish (Chair) Stephen A. Cambone John L. Plueger Irene M. Esteves Laura H. Wright | (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, (2) Oversee the effectiveness of the Company’s cybersecurity programs and its practices for identifying, assessing, and mitigating cybersecurity risks. (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. |
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* The Board has determined that | |||
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The Board’s Role in Risk Oversight
Management’s Role in Risk Management
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) semi-annualcreating risk-assessment surveys and conducting interviews; (ii) reviewing, repositioning, and prioritizing identified risks by a risk council composed of executive leadership (the “Risk Council”);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;risk council; and (v) receiving oversight by 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. Risks that the Company focused on in 2020 included matters relating to the B737 MAX grounding, COVID-19 pandemic, financial liquidity, and cybersecurity, among other items.
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The Risk Committee of the Board is charged with oversight ofreviewing the Company’s cybersecurity matters. The Company hired a Chief Information Security Officer (“CISO”) in early 2018 to oversee the Company’s cybersecurity practices and procedures. The CISOManagement reports to the Risk Committee quarterly regarding suchcyber practices and procedures. The Company took several steps in 2018 to mitigate cybersecurity risks, such as upgrading operating and monitoring systems, hiring specialized personnel, and reviewing and improving applicable policies 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, and risk programs developed from industry accepted best practices. The framework for our programs is based on the Department of Defense Cybersecurity Maturity Model Certification (CMMC) and National Institute of Security and Technology (NIST) Frameworks, Generally Accepted Privacy Program (GAPP) guiding principles, and ISO 27001/2 standards. These standards reflect well-defined processes and best in class technology.
Stockholders and other interested persons may communicate with the Board, the Chairman of the Board, and individual members of the Board members of any committee of the Board, or one or more non-employee directorsand its committees through the following:
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BY EMAIL to CorporateSecretary@spiritaero.com | BY MAIL to Corporate Secretary Spirit AeroSystems Holdings, Inc. 3801 S. Oliver St. Wichita, KS 67210-2112 |
at the Annual Meeting via www.virtualshareholdermeeting.com/SPR2021
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The Corporate Secretary will forward communications received to the appropriate party. Receipt of communicationsCommunications clearly not appropriate for consideration by members of the Board such asor committees, including unsolicited advertisements, inquiries concerning the Company’s products and services, and harassing communications, are not forwarded to members of the Board.Board or committees.
Commitment to Stockholder Engagement and Responsiveness
We value the feedback and insight we gain from our engagement with stockholders. The Company’s management and subject-matter experts frequently meet with investors. In 2020, members of the Company’s management held more than 565 meetings with investors to discussand analysts. Members from the following Company functions participated in certain of these meetings, depending on the subject matter covered: Investor Relations, Communications, Government Relations, Executive Compensation, and Environmental, Health, and Safety. Key areas of discussion at the meetings included Company performance, governance practices, executive compensation, strategy, operations, sustainability programs, risk management, and other matters of importance to our stockholders. In 2018, members of the Company’s management held more than 560 in-person and telephonic meetings with investors and analysts, and traveled through the continental U.S. and to the U.K. to attend the meetings.
The Company is committed to maintaining a robust stockholder outreach program in addition to regular participation at investor and community events and meeting with analysts. The Company welcomes feedback from all stockholders. Stockholders can contact the Company’s Investor Relations team by calling 316-523-7040 or emailing investorrelations@spiritaero.com.
At the 2018 annual meeting, two proposals were put forth regarding the stockholders’ right to call special meetings. Proposal 4 was a proposal from the Company’s Board to reduce the threshold required to call a special meeting from a majority of stockholders to 25%. Proposal 5 was a stockholder proposal to reduce the threshold required to call a special meeting from a majority of stockholders to 10%. At the 2018 annual meeting, stockholders voted overwhelmingly in favor of Proposal 5. After the 2018 annual meeting, the Company’s management engaged with several stockholders on the matter and reported the conclusions from the engagement efforts to the Board. On July 23, 2018, after careful consideration of the matter, the Board amended the Company’s bylaws to lower the threshold required to call a special meeting from a majority of stockholders to 10%, consistent with Proposal 5. The Board also adopted a number of customary protections around the right to protect against misuse. The bylaws, as amended, are available on the Company’s website at http://investor.spiritaero.com/govdocs.
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20182020 Board and Committee Meetings and Attendance
During 2018,2020, there were four in-person meetings and seven telephonic27 meetings of the Board. Only one series of Board and committee meetings was held in person due to COVID-19 restrictions and precautions. All 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 2018.2020. The Company’s Governance Guidelines provide that director attendance is expected at annual meetings of stockholders, and allstockholders. All of the Company’s directors attended the 20182020 virtual annual meeting of stockholders.
In addition to scheduled Board meetings, the Board receives monthly reports from Mr. Gentilemanagement detailing financial results, operationaloperating highlights and challenges, and updates on strategic initiatives.
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As part of each quarterly in-person Board meeting in 2018,2020, the Company’s non-employee directors met without management present in an executive session, with Mr. Johnson as Chairman 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 (the non-employee directors excluding Mr. Gephardt) met in executive session at least one time in 2020 as required by the Governance Guidelines and NYSE rules.
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 date of this Proxy Statement.
Ms. Esteves currently serves on the audit committee for four public companies (including Spirit). On June 8, 2018 (prior to Ms. Esteves joining the fourth audit committee), and in light of her prior roles as a chief financial officer and professional training, the Company’s Board determined that such simultaneous service would not impair her ability to effectively serve on the Company’s Audit Committee, which is also noted under her biography at http://investor.spiritaero.com/corporate-governance/OD/default.aspx.
The Company is committed to the highest ethical standards and to complying with all laws and regulations applicable to the Company’s business. To support and articulate its commitment and personal responsibility in this regard, the Company has adopted the Code of 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 http://investor.spiritaero.com/govdocscorporate-governance/OD/default.aspx.
Sustainability Reporting and Oversight
In 2021, Spirit will launch the Report outlining our strategy, programs, goals, and objectives. The Report will highlight Spirit’s values and commitments to protecting the environment and human health, supporting a low carbon economy, creating an inclusive culture that supports growth, and uniting communities through innovation, partnerships, and programs. We will publicly disclose information relating to the following topics in the Report: Spirit’s environmental performance, health and safety, diversity and inclusion, community impact, ethics and compliance, and risk management. For additional information, see: https://www.spiritaero.com/company/sustainability/overview/.
As noted in its charter, the Company’s 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.
The Board is responsible for overseeing management succession planning. At least twice annually, the Board reviews candidates for succession with respect to the CEO role and other senior management roles. Succession plans have been developed for both ordinary course succession and contingency planning due tofor an unforeseen event.
The Board receives updates on the development of the succession candidates regularly. Directors engage with potential succession candidates during formal presentations at Board and committee meetings and at informal events with directors and candidates present.events.
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Response to Material Weakness in Internal Control Over Financial Reporting
As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, the Company identified a material weakness in its internal control over financial reporting as of December 31, 2019. The material weakness related to identifying claims and assertions and key judgments of its estimate-at-completion (“EAC”) process.
Our management team worked with the Audit Committee, along with external advisors, to evaluate the circumstances of the material weakness and identify necessary actions required to remediate the material weakness. As previously disclosed, these actions included:
Management changes;
Enhancement of training around the appropriate treatment of claims and assertions and other subjective elements and key judgments of our EAC process to reinforce existing written Company policies. This training focused on control owners within the EAC process, including program, accounting, and executive leadership; and
Reassessment of processes and design of controls to ensure that all customer claims and assertions are identified and evaluated in accordance with established Company policies and procedures. This remediation step included validation and reconciliation of claims data with our key customers and retention of this data in a centralized claims repository to facilitate the completeness of our accounting for claims and assertions.
Management has concluded that the material weakness was fully remediated in accordance with the remediation plan. The Audit Committee and the Board are committed to maintaining a strong internal control environment.
The Company adopted a limited duration stockholder rights agreement (the “rights plan”) on April 22, 2020, and declared a dividend of one right for each outstanding share of Common Stock as of May 1, 2020, the record date. The rights plan expires, without any further action being required to be taken by Board, on April 22, 2021. As of the filing date of this Proxy Statement, the Company does not intend to renew the rights plan when it expires.
Governance Documents Available on Our Website
We maintain governance documents on our website at http://investor.spiritaero.com/corporate-governance/govdocs/default.aspx. These documents include, without limitation, our:
Bylaws;
Governance Guidelines;
Committee Charters;
Code of Conduct;
Finance Code of Professional Conduct;
Supplier Code of Conduct;
Related Person Transaction Policy;
Discrimination and Harassment Policy; and
Anti-Hedging and Pledging Policy.
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Compensation of Non-Employee Directors
Non-employee directors receive annual cash and equity compensation as described below. Equity compensation is granted under the Director Stock Program adopted under the 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 their review, the Compensation Committee evaluates 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 approves 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 with respect to non-employee director compensation:
Compensation should be market-competitive in relation to comparably-situatedsimilarly-situated companies, including the Company’s proxy peer group;
Compensation should align directors’ interests with the long-term interests of the Company’s stockholders; and
The compensation structure should be simple, transparent, and easy for stockholders to understand.
The following table describes the elements of the 20182020 non-employee director compensation program:
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Element | 2019-2020 Term Amounts | 2020-2021 Term Amounts | |
Annual Board Cash Retainer | $105,000 | $89,250 | |
Annual Board Equity Retainer | $125,000 | $106,250 | |
Additional Retainer for Chairman of the Board | $100,000 | $85,000 | |
Additional Retainer for Chairman of the Audit Committee | $25,000 | $21,250 | |
Additional Retainer for Chairman of the Compensation Committee | $18,000 | $15,300 | |
Additional Retainer for Chairmen of Other Committees | $12,000 | $10,200 | |
In 2020, due to liquidity pressures relating to the COVID-19 pandemic and B737 MAX grounding, the Board elected to reduce each element of 2020-2021 term compensation by 15%.
Each Board member receives an annual cash retainer, which is paid quarterly. Further, theretainer. The Chairman of the Board and each committee chairman receives an additional cash retainer. Directors may elect to havereceive their retainers received 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 may be paid annually 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.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 interestsinterest 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 paiddelivered 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 paiddelivered out upon settlement. If the awards are forfeited, dividends or dividend equivalents,dividend-equivalents, as applicable, are also forfeited.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 2729
Board and Committee Meeting Fees
Until April 25, 2018, Board and committee meeting fees of $1,000 per meeting were paid for attendance at formal meetings where notice was duly given, a quorum was present, a matter was presented for consideration, the Board or committee took action on the matter, and minutes were taken. Meeting fees were paid in cash in arrears at the end of the quarter for which the fees were earned. Directors could choose to receive fees in the form of cash, restricted stock, or RSUs. A director was required to attend a majority of his or her required Board and committee meetings to receive any meeting fees. On April 25, 2018, the Board of Directors terminated the practice of paying meeting fees and changed the annual board equity retainer from $105,000 to $125,000.
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-employee directors are required to own stock equal to five times the annual Board cash retainer, which currently amounts to $525,000.$446,250 with respect to 2020-2021 term compensation. Non-employee directors have four years of Board service before they are required to meet the minimum stockholder requirements. Restricted stock and RSUs held by directors are counted in determining whether the minimum stockholding requirements are satisfied. 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.”
As of February 25, 2019,March 2, 2021, all non-employee directors, other than Ms. Wright and Dr. Cambone, were in compliance with the stock ownership requirements. Ms. Wright, who joined ourthe Board on February 20, 2018, has until February 20, 2022, to meet the requirements. Dr. Cambone, who joined the Board on October 22, 2019, has until October 22, 2023, to meet the requirements. Both Ms. Wright and Dr. Cambone are on track to achieve compliance in the required time frame.
Between March 3, 2020, and May 11, 2020, Mr. Gephardt was not in compliance with the stock ownership requirements because the Company’s Common Stock price dropped below $52.68 per share. On May 11, 2020, Mr. Gephardt became compliant with the stock ownership requirements after receiving the 2020-2021 term equity retainer.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 2830
20182020 Director Compensation Table
The following table sets forth non-employee director compensation for the fiscal year ended December 31, 2018.2020 (note that Mr. Gentile’s compensation is set forth in the “Summary Compensation Table” and not included below).
Name | Fees Earned or Paid in Cash ($) | (1)
| Stock Awards ($) | (2)
| All Other Compensation ($) | (3)
| Total ($) | Fees Earned or Paid in Cash ($) | (1)
| Stock Awards ($) | (2)
| All Other Compensation ($) | (3)
| Total ($) |
Stephen A. Cambone | 93,411 | (4) | 106,267 |
|
|
| 199,679 | |||||||
Charles L. Chadwell | 125,000 |
| 125,039 |
|
|
| 250,039 | 104,087 |
| 106,267 |
|
|
| 210,354 |
Irene M. Esteves |
|
| 271,099 | (4) |
|
| 271,099 | 115,652 | (5) | 106,267 |
|
|
| 221,920 |
Paul E. Fulchino |
|
| 262,054 | (5) |
|
| 262,054 | 109,425 | (6) | 106,267 |
|
|
| 215,692 |
Richard A. Gephardt | 108,000 |
| 125,039 |
| 275,604 |
| 508,643 | 93,411 |
| 106,267 |
| 60,000 |
| 259,679 |
Robert D. Johnson | 205,000 |
| 125,039 |
|
|
| 330,039 | 182,375 |
| 106,267 |
|
|
| 288,642 |
Ronald T. Kadish | 124,000 |
| 125,039 |
|
|
| 249,039 | 104,087 |
| 106,267 |
|
|
| 210,354 |
John L. Plueger |
|
| 245,053 | (6) |
|
| 245,053 | 93,411 | (7) | 106,267 |
|
|
| 199,679 |
Francis Raborn(7) | 61,500 |
|
|
|
|
| 61,500 | |||||||
Laura H. Wright | 72,148 |
| 168,205 | (8) |
|
| 240,353 | 93,411 | (8) | 106,267 |
|
|
| 199,679 |
(1) Includes cash retainer, additional Committee chairmen retainers, and meeting fees paid until April 25, 2018. Please refer to “Compensation of Non-Employee Directors — Compensation Elements — Board and Committee Meeting Fees.” (2) Except for Ms. Wright (see footnote (8) below): 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 7, 2018, each non-employee director received an annual grant of 1,493 shares of restricted stock or RSUs with an aggregate value of $125,000 based on $83.75 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 $125,039. In addition, certain directors elected to defer a portion or all of their annual cash retainer. Please see footnotes (4), (5), and (6), for more information. As of February 25, 2019, the balance of each non-employee director’s unvested restricted stock or unvested RSUs was as follows: Mr. Chadwell: 1,493 shares of restricted stock; Ms. Esteves: 3,237 RSUs (includes 1,744 RSUs for deferred retainer, committee chair, and meeting fees); Mr. Fulchino: 3,129 shares of restricted stock (includes 1,636 shares of restricted stock for deferred retainer, committee chair, and meeting fees); Mr. Gephardt: 1,493 shares of restricted stock; Mr. Johnson: 1,493 shares of restricted stock; Mr. Kadish: 1,493 shares of restricted stock; and Mr. Plueger: 2,926 shares of restricted stock (includes 1,493 shares of restricted stock for deferred retainer and meeting fees). (3) The amount of perquisites and other personal benefits has been excluded for all non-employee directors other than Mr. Gephardt, as the total value of each director’s perquisites and other personal benefits was less than $10,000. For Mr. Gephardt, this amount reflects consulting fees paid to the Gephardt Group for labor consulting services rendered in 2018, as further described under “Director Independence.” (4) Includes $105,000 in deferred cash retainer, $25,000 in deferred Committee chair cash retainer, and $16,000 in deferred meeting fees per Ms. Esteves’ election to receive her cash retainers and meeting fees in RSUs. (5) Includes $105,000 in deferred cash retainer, $18,000 in deferred Committee chair cash retainer, and $14,000 in deferred meeting fees per Mr. Fulchino’s election to receive his cash retainers and meeting fees in restricted stock. (6) Includes $105,000 in deferred cash retainer and $15,000 in deferred meeting fees per Mr. Plueger’s election to receive his cash retainer and meeting fees in restricted stock. (7) Mr. Raborn was a non-employee director of the Company until April 25, 2018, when he retired. Mr. Raborn’s fees were prorated to reflect his service in 2018. (8) Represents the aggregate grant date fair value of two stock awards computed in accordance with authoritative guidance on stock-based compensation accounting issued by the FASB: (a) The first stock award was issued on February 20, 2018, the date Ms. Wright joined the Board. On this date, Ms. Wright received a pro rata grant of 243 shares of restricted stock with an aggregate value of $22,094 based on $91.13, the average of the opening and closing prices of Common Stock on February 20, 2018. As a result of rounding up fractional share amounts, the grant was valued at $22,145. The amount of Ms. Wright’s stock award included $3,683 in deferred cash retainer. (b) The second stock award was issued on May 7, 2018, when the annual Board equity awards were granted. On this date, Ms. Wright received a grant of 1,493 shares of restricted stock with an aggregate value of $125,000 based on $83.75 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 grant was valued at $125,039. Ms. Wright also elected to defer $21,000 representing an additional 251 shares of restricted stock per Ms. Wright’s election to receive a portion of her cash retainer in restricted stock. As of February 25, 2019, the balance of Ms. Wright’s unvested restricted stock is 1,744 shares of restricted stock (including 251 shares of restricted stock for deferred cash retainer). | ||||||||||||||
(1) Includes annual cash retainer and committee chair retainers earned for 2020, including any such retainers that were paid in the form of restricted stock or RSUs in 2019 or 2020 by the director’s election in lieu of cash compensation for 2020. Dr. Cambone, Ms. Esteves, Mr. Fulchino, Mr. Plueger, and Ms. Wright elected to defer all or a portion of their annual cash retainers for 2020 as set forth in footnotes (4) - (8). (2) 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 11, 2020, each non-employee director received an annual grant of 5,458 shares of restricted stock or RSUs with an aggregate value of $106,250 based on $19.47 per share, the average of the opening and closing prices of Common Stock on the grant date. As a result of rounding of fractional share amounts, the grants were valued at $106,267. As of December 31, 2020, each non-employee director’s aggregate number of unvested restricted stock or RSUs was as follows: Dr. Cambone: 5,458 shares of restricted stock; Mr. Chadwell: 5,458 shares of restricted stock; Ms. Esteves: 11,133 RSUs (includes 5,675 RSUs received in lieu of 2020-2021 term annual cash and committee chair retainers); Mr. Fulchino: 10,827 shares of restricted stock (includes 5,369 shares of restricted stock received in lieu of 2020-2021 term annual cash and committee chair retainers); Mr. Gephardt: 5,458 shares of restricted stock; Mr. Johnson: 5,458 shares of restricted stock; Mr. Kadish: 5,458 shares of restricted stock; Mr. Plueger: 10,042 shares of restricted stock (includes 4,584 shares of restricted stock received in lieu of 2020-2021 term annual cash retainer); and Ms. Wright: 5,458 shares of restricted stock. Note that any RSUs or shares of restricted stock received in lieu of annual cash and committee chair retainers described in this footnote were granted in 2020 and relate to retainers earned over the director’s 2020-2021 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) The amount of perquisites and other personal benefits has been excluded for all non-employee directors other than Mr. Gephardt, as the total value of each other director’s perquisites and other personal benefits was less than $10,000. For Mr. Gephardt, this amount reflects consulting fees paid to the Gephardt Group for labor consulting services rendered in 2020, as further described under “Director Independence.” (4) Includes $32,308 in annual cash retainer that was paid in the form of 380 RSUs for Mr. Cambone pursuant to his election. The RSUs were granted to Mr. Cambone on November 4, 2019, but are included in this disclosure because the RSUs were granted in lieu of cash payments earned for service in 2020. (5) Includes $115,652 in annual cash retainer and committee chair retainers that were paid in the form of 4,345 RSUs for Ms. Esteves pursuant to her election. The RSUs were granted to Ms. Esteves in part on May 11, 2020, and in part on May 6, 2019, and are included in this disclosure because the RSUs were granted in lieu of cash payments earned for service in 2020. (6) Includes $109,425 in annual cash retainer and committee chair retainers that were paid in the form of 4,111 shares of restricted stock for Mr. Fulchino pursuant to his election. The restricted stock was granted to Mr. Fulchino in part on May 11, 2020, and in part on May 6, 2019, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2020. (7) Includes $93,411 in annual cash retainer that was paid in the form of 3,510 shares of restricted stock for Mr. Plueger pursuant to his election. The restricted stock was granted to Mr. Plueger in part on May 11, 2020, and in part on May 6, 2019, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2020. (8) Includes $6,462 in annual cash retainer that was paid in the form of 75 shares of restricted stock for Ms. Wright pursuant to her election. The restricted stock was granted to Ms. Wright on May 6, 2019, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2020.
| (1) Includes annual cash retainer and committee chair retainers earned for 2020, including any such retainers that were paid in the form of restricted stock or RSUs in 2019 or 2020 by the director’s election in lieu of cash compensation for 2020. Dr. Cambone, Ms. Esteves, Mr. Fulchino, Mr. Plueger, and Ms. Wright elected to defer all or a portion of their annual cash retainers for 2020 as set forth in footnotes (4) - (8). (2) 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 11, 2020, each non-employee director received an annual grant of 5,458 shares of restricted stock or RSUs with an aggregate value of $106,250 based on $19.47 per share, the average of the opening and closing prices of Common Stock on the grant date. As a result of rounding of fractional share amounts, the grants were valued at $106,267. As of December 31, 2020, each non-employee director’s aggregate number of unvested restricted stock or RSUs was as follows: Dr. Cambone: 5,458 shares of restricted stock; Mr. Chadwell: 5,458 shares of restricted stock; Ms. Esteves: 11,133 RSUs (includes 5,675 RSUs received in lieu of 2020-2021 term annual cash and committee chair retainers); Mr. Fulchino: 10,827 shares of restricted stock (includes 5,369 shares of restricted stock received in lieu of 2020-2021 term annual cash and committee chair retainers); Mr. Gephardt: 5,458 shares of restricted stock; Mr. Johnson: 5,458 shares of restricted stock; Mr. Kadish: 5,458 shares of restricted stock; Mr. Plueger: 10,042 shares of restricted stock (includes 4,584 shares of restricted stock received in lieu of 2020-2021 term annual cash retainer); and Ms. Wright: 5,458 shares of restricted stock. Note that any RSUs or shares of restricted stock received in lieu of annual cash and committee chair retainers described in this footnote were granted in 2020 and relate to retainers earned over the director’s 2020-2021 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) The amount of perquisites and other personal benefits has been excluded for all non-employee directors other than Mr. Gephardt, as the total value of each other director’s perquisites and other personal benefits was less than $10,000. For Mr. Gephardt, this amount reflects consulting fees paid to the Gephardt Group for labor consulting services rendered in 2020, as further described under “Director Independence.” (4) Includes $32,308 in annual cash retainer that was paid in the form of 380 RSUs for Mr. Cambone pursuant to his election. The RSUs were granted to Mr. Cambone on November 4, 2019, but are included in this disclosure because the RSUs were granted in lieu of cash payments earned for service in 2020. (5) Includes $115,652 in annual cash retainer and committee chair retainers that were paid in the form of 4,345 RSUs for Ms. Esteves pursuant to her election. The RSUs were granted to Ms. Esteves in part on May 11, 2020, and in part on May 6, 2019, and are included in this disclosure because the RSUs were granted in lieu of cash payments earned for service in 2020. (6) Includes $109,425 in annual cash retainer and committee chair retainers that were paid in the form of 4,111 shares of restricted stock for Mr. Fulchino pursuant to his election. The restricted stock was granted to Mr. Fulchino in part on May 11, 2020, and in part on May 6, 2019, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2020. (7) Includes $93,411 in annual cash retainer that was paid in the form of 3,510 shares of restricted stock for Mr. Plueger pursuant to his election. The restricted stock was granted to Mr. Plueger in part on May 11, 2020, and in part on May 6, 2019, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2020. (8) Includes $6,462 in annual cash retainer that was paid in the form of 75 shares of restricted stock for Ms. Wright pursuant to her election. The restricted stock was granted to Ms. Wright on May 6, 2019, and is included in this disclosure because the restricted stock was granted in lieu of cash payments earned for service in 2020.
| |||||||||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 2931
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/govdocsinvestor.spiritaero.com/corporate-governance/govdocs/default.aspx. The purpose 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 (as defined below) 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 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 thea 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, in coordination with the affected business unit or corporate function, 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 their 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.
See “Director Independence” for more information.
Certain Related Person Transactions
Below are the transactions that occurred betweensince January 1, 2018, and February 25, 2019,2020, and fall within the definition of related“related person transactiontransaction” in the RPT Policy or under Item 404 of Regulation S-K. With respect to each transaction, theThe Governance Committee reviewed the transaction in accordance with the RPT Policy and approved it on the basis that it was fair to, and in the best interests of, the Company. Transactions for Messrs. Fulchino and Gephardt were also reviewed under Item 404 and determined not to be related person transactions under the RPT Policy or under Item 404 of Regulation S-K - see “Independence” for more information on such transactions.
Related Person | Facts |
|
|
John A. Pilla | John A. Pilla, former Senior Vice President and Chief Technology |
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 3032
Beneficial Ownership of Directors and Executive Officers
The following table sets forth, as of February 25, 2019,March 2, 2021, the shares of Common Stock beneficially owned by each director and named executive officer, individually, and by all the Company’s directors and executive officers as a group. Individually and together, theythe directors and executive officers beneficially own less than 1%1.0% of our Common Stock. The table also includes information about RSUs credited to the accounts of certain non-employee directors. 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 25, 2019.March 2, 2021.
Name | Common Stock Beneficially Owned |
| Shares Vesting Within 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 Plus RSUs |
DIRECTORS Stephen A. Cambone |
|
|
| 5,458 |
| 5,458 |
1,356 |
|
6,814 |
Charles L. Chadwell | 15,253 |
|
| 5,458 |
| 20,711 | 4,884 |
| 25,595 |
Irene M. Esteves |
|
|
|
|
|
| 29,519 |
| 29,519 |
Paul E. Fulchino | 15,075 |
|
| 10,827 |
| 25,902 |
|
| 25,902 |
Richard A. Gephardt | 4,176 |
|
| 5,458 |
| 9,634 | 5,790 |
| 15,424 |
Robert D. Johnson | 13,167 |
|
| 5,458 |
| 18,625 |
|
| 18,625 |
Ronald T. Kadish | 20,105 |
|
| 5,458 |
| 25,563 |
|
| 25,563 |
John L. Plueger | 11,919 |
|
| 10,042 |
| 21,961 | 13,026 |
| 34,987 |
Laura H. Wright | 4,860 |
|
| 5,458 |
| 10,318 |
|
| 10,318 |
EXECUTIVE OFFICERS Thomas C. Gentile III |
142,189 |
|
28,089 |
175,642 |
|
345,920 |
100,164 |
|
446,084 |
Mark J. Suchinski | 23,066 |
| 3,438 | 20,193 |
| 46,697 | 14,710 |
| 61,407 |
Jose I. Garcia(3) | 12,281 |
|
| 3,131 |
| 15,412 |
|
| 15,412 |
Samantha J. Marnick | 56,250 |
| 4,646 | 29,050 |
| 89,946 | 20,944 |
| 110,890 |
Duane F. Hawkins(4) | 73,621 |
|
| 17,889 |
| 91,510 |
|
| 91,510 |
William E. Brown | 27,382 |
| 3,139 | 20,242 |
| 50,763 | 11,194 |
| 61,957 |
John A. Pilla(5) | 77,897 |
| 3,546 | 24,216 |
| 105,659 |
|
| 105,659 |
Mary M. (“Mindy”) McPheeters | 1,605 |
| 2,878 | 9,583 |
| 14,066 | 2,778 |
| 16,844 |
Terry J. George | 8,527 |
| 1,957 | 11,289 |
| 21,773 | 11,647 |
| 33,420 |
Kevin Matthies | 24,708 |
| 2,324 | 13,973 |
| 41,005 | 9,807 |
| 50,812 |
Scott M. McLarty | 12,095 |
| 1,916 | 13,290 |
| 27,301 | 9,575 |
| 36,876 |
All directors and executive officers as a group (20 persons) | 544,176 |
| 51,933 | 392,115 |
| 988,224 | 235,394 |
| 1,223,618 |
(1) For directors: includes unvested time-based restricted stock awards but excludes RSUs. RSUs do not confer voting rights until they are delivered upon the director’s departure, as described in footnote (2) below. For 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. This column does not include any time-based or performance-based restricted stock units as they do not confer voting rights. However, Mr. Hawkins time-based restricted stock units are included as described in footnote (4) below, does not. (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 delivered, 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 11,133 RSUs held by Ms. Esteves. For executives: reflects time-based restricted stock units granted on February 26, 2021, that vest in three annual increments beginning on February 26, 2022. Does not include performance-based restricted stock units granted in 2021 as the pricing for the awards was not available at the time this Proxy Statement was finalized. (3) Mr. Garcia was appointed to the position of Senior Vice President and Chief Financial Officer on January 9, 2019, and resigned from the position on January 29, 2020. For Mr. Garcia, values shown assume no transactions have taken place after Mr. Garcia’s receipt of severance benefits following his resignation. (4) Mr. Hawkins reached retirement eligibility for time-based restricted stock awards and restricted stock units in 2020 and, accordingly, all outstanding time-based restricted stock and restricted stock unit awards are included under the “Common Stock Beneficially Owned” column. (5) Excludes 16,023 phantom stock units that Mr. Pilla is entitled to receive upon his retirement from the Company under the frozen Supplement Executive Retirement Plan. | |||||||||
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 L. Chadwell |
12,328 |
|
|
1,493 |
|
13,821 |
4,884 |
|
18,705 |
Irene M. Esteves |
|
|
|
|
|
| 15,465 |
| 15,465 |
Paul E. Fulchino | 9,105 |
|
| 3,129 |
| 12,234 |
|
| 12,234 |
Richard A. Gephardt | 1,251 |
|
| 1,493 |
| 2,744 | 5,790 |
| 8,534 |
Robert D. Johnson | 12,742 |
|
| 1,493 |
| 14,235 |
|
| 14,235 |
Ronald T. Kadish | 17,180 |
|
| 1,493 |
| 18,673 |
|
| 18,673 |
John L. Plueger | 6,358 |
|
| 2,926 |
| 9,284 | 13,026 |
| 22,310 |
Laura H. Wright | 1,443 |
|
| 1,744 |
| 3,187 |
|
| 3,187 |
EXECUTIVE OFFICERS Thomas C. Gentile III |
65,645 |
|
|
182,921 |
|
248,566 |
|
|
248,566 |
Sanjay Kapoor(3) | 87,488 |
|
| 36,240 |
| 123,728 |
|
| 123,728 |
Samantha J. Marnick | 43,739 |
|
| 31,122 |
| 74,861 |
|
| 74,861 |
Duane F. Hawkins | 30,125 |
|
| 35,536 |
| 65,661 |
|
| 65,661 |
John A. Pilla(4) | 80,950 |
|
| 31,126 |
| 112,076 |
|
| 112,076 |
All directors and executive officers as a group (18 persons) | 430,551 |
|
| 421,417 |
| 851,968 | 39,165 |
| 891,133 |
(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 3,237 RSUs held by Ms. Esteves. (3) Mr. Kapoor retired from the position of Executive Vice President and Chief Financial Officer on February 9, 2019. The values shown in the table assume no transactions have taken place since February 9, 2019, when Mr. Kapoor ceased to be an executive officer of the Company. (4) Excludes 16,023 phantom stock units Mr. Pilla is entitled to receive upon his retirement from the Company under the frozen Supplement Executive Retirement Plan. | |||||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 3133
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 25, 2019.March 2, 2021. 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 |
5% STOCKHOLDERS The Vanguard Group(1) 100 Vanguard Blvd. Malvern, PA 19355 |
10,560,087 |
9.91% |
82,406 |
21,149 |
10,462,132 |
97,955 |
Blackrock, Inc.(2) 55 E. 52nd St. New York, NY 10005 | 7,376,265 | 7.0% | 6,606,277 |
| 7,376,265 |
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Darsana Capital Partners LP(3) Darsana Capital Partners GP LLC Darsana Master Fund LP Darsana Capital GP LLC Anand Desai 40 West 57th Street, 15th Floor New York, NY 10019 | 6,750,104 | 6.4% |
| 6,750,104 |
| 6,750,104 |
(1) Information is based on an amended Schedule 13G filed with the SEC on February 11, 2019. (2) Information is based on an amended Schedule 13G filed with the SEC on February 6, 2019. (3) Information is based on an amended Schedule 13G filed with the SEC on February 14, 2019.
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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 |
8,985,555 |
8.51% |
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68,726 |
8,836,800 |
148,755 |
Blackrock, Inc.(2) 55 E. 52nd St. New York, NY 10005 | 5,489,962 | 5.2% | 5,107,504 |
| 5,489,962 |
|
Scopia Capital Management LP(3) Scopia Management, Inc. Matthew Sirovich Jeremy Mindich 152 West 57th St., 33rd Floor New York, NY 10019 | 5,822,699 | 5.5% | 94,000 | 5,728,699 | 94,000 | 5,728,699 |
(1) Information is based on an amended Schedule 13G filed with the SEC on February 10, 2021. (2) Information is based on an amended Schedule 13G filed with the SEC on February 1, 2021. (3) Information is based on a Schedule 13G filed with the SEC on February 16, 2021. | ||||||
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 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. 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 2018,2020 except for oneMr. Hawkins’ Form 4 for Mr. Johnson (the “Late Form”). The Late Form regarded a sale of 500 sharesdue on March 1, 2018,15, 2020, which was Mr. Hawkins’ 62nd birthday and the date the Company was required to dispose of shares for tax purposes with respect to Mr. Hawkins’ unvested time-based restricted stock awards. The filing was missed due to an administrative error. A Form 5 was filed with the SEC on May 9, 2018. The Late Form was not filed on a timely basis becauseJanuary 29, 2021, to report the appropriate staff of the Company did not receive information about the sale until several weeks after it occurred.transactions.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 3234
StockholdersIn accordance with Section 14A of the Exchange Act, stockholders are being asked to approve, on an advisory basis, the compensation of the named executive officers, or NEOs, as set forth under the heading “Compensation Discussion and Analysis.” 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 executive compensation, as disclosed in this Proxy Statement, aligns with the Company’s peer group pay practices and furthers the Company’s compensation objectives.
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.
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 2.
With respect to Proposal 2, a stockholder may 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 at the Annual Meeting and, therefore, they will have the effect of votes “AGAINST” Proposal 2.
Under the NYSE 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.
The Board recommends you vote FOR the resolution approving the compensation of our named executive officers.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 3335
COMPENSATION DISCUSSION AND ANALYSIS
TABLE OF CONTENTS | ||
Our 20182020 Named Executive Officers
The following Compensation Discussion and Analysis describes the 20182020 compensation of our NEOs. Our 20182020 NEOs were:
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Mark J. Suchinski |
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| Former Senior Vice President and Chief Financial Officer (through January 29, 2020) | |||
Samantha J. | Executive Vice President | |||
Duane F. Hawkins |
Senior Vice President; President, Defense | |||
| Senior Vice President, Boeing Programs | |||
John A. Pilla* | Former Senior Vice President and Chief Technology Officer (through August 1, 2020) | |||
* Mr. Garcia resigned on January 29, 2020, and | ||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 3436
Our executive compensation program is designed to enable us to attract, retain, and incentivize executive officers who can deliver short-term performance results and longer-term stockholder value. The following highlights the key items the Compensation Committee considers in the development, review, and approval of the NEOs’ compensation.
The Company’s executive compensation program is designed to:
Attract,retain,andmotivatehighlyqualifiedexecutiveofficers. The Company aims to deliver compensation that is market-competitive and designed to retain qualified, experienced, and motivated executives in the competitive aerospace and defense industry.
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.
AligninterestsofexecutiveofficerswiththoseoftheCompany’sstockholders. In order to align such interests, metrics for determining Company performance should be aligned to the Company’s financial results and the creation of stockholder value. Variable compensation should focus on the achievement of financial targets such as revenue, free cash flow, and total shareholder return.
Ensurecompensationdoesnotencourageinappropriaterisk-taking. 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.
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, Willis Towers Watson, 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 consultant, along with other market data;
the individual responsibilities, goals, and challenges with respect to the position in question, along with question; and
the experience, prior performance, and potential of the individual in question.
The Company generally sets total annual direct compensation of the NEOs (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 circumstances and exceptions. Additional information about the Company’s peer group and compensation-setting process can be found under “The Compensation Decision-Making Process,”Process” and “Benchmarking” sections.
AligningHow We Align Pay with Performance
The Company’s success depends largely on the efforts and contributions of its executives and their teams 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 reward NEOs for their roles 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 2018, we linked pay with performance through the following variable pay:
 Substantial portion of pay is delivered through variable, at-risk compensation. 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. | Use balance of short- and long-term incentives and cash- and non-cash compensation. | ||
| Use performance metrics that are relevant to our strategic plan and matter to our stockholders, customers, and other stakeholders. See “Our Pay Metrics” for more information. | Performance goals are relevant, challenging, and tied to key measures of profitability and performance. See “Our Pay Metrics” for more information. |
AnnualCashIncentive(the“ACI”): 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 (“Adjusted EBIT”), and annual free cash flow, adjusted for certain items (“Adjusted 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-BasedRestrictedStock: 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 on free cash flow as a percentage of revenue (“FCF Percentage”) over such period.
Additional information on our incentives can be found under “2018 Compensation Program Elements.”
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 3537
The table below explains the metrics we used to measure performance for determining 2020 compensation. Goals are established with respectthe expectation that, if performance is aligned with our operating plans, target payout should be achieved. To obtain maximum goals, performance would have to the Company’s compensation.exceed our plans significantly. We expect that achievement of both maximum performance and below threshold performance will be infrequent.
Program | Metric | Percentage of Component
| How Performance is Calculated | Reason for Using Metric |
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Quality | 15% | Spirit’s quality index was developed using established measures our main customers use to evaluate Spirit’s quality performance across programs. Examples of quality measures used are defect count, and scrap, repair, and rework of fabricated parts and/or assemblies. | Quality is the main way our customers measure our compliance with product specifications. The success and growth of our business depends on meeting our customers’ quality standards. | |
AnnualCashIncentive-IndividualPerformanceComponent(20-25%oftotalACI) | Individual Performance Goals | 100% | Achievement of individual performance goals relevant to | To further incentivize personal performance and contributions to the |
Long-Term Incentive Program | Stock Price (Time-Based Restricted Stock) | 60% |
| This metric ties performance of executives’ restricted stock awards directly to stock price performance, thus aligning the interests of executives and |
TSR (Performance- | 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 | This metric ties executive interests to stockholder interests and aligns with | |
FCF Percentage* (Performance- | 20% | Performance is measured based on the Company’s | This metric is used to align long-term incentives with a key valuation driver of our business, which is |
* Please see AppendixA for an explanation and reconciliation of these non-GAAP metrics.
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 36
The Company’s one- and three-year total shareholder return compared to its peer group, the Russell 3000 index, and S&P 500 index, is set forth below.
Note: TSR is calculated in the chart above using adjusted close prices. Peer TSR is market-cap weighted at the beginning of each period. Three-year TSR is cumulative. The chart above includes data from all members of the Company’s 2016–18 proxy peer group, excluding companies that were acquired during such period (Orbital ATK, B/E Aerospace, Rockwell Collins). For additional information on the companies within our peer group, see “2018 Proxy Peer Group.” Source: S&P’s Capital IQ.
CEO Target Pay Compared to Peers
The target pay of our CEO as compared to the target pay of other CEOs in our peer group is set forth below:
Note: Represents 2017 target CEO pay for companies within our peer group and 2018 target CEO pay for the Company.
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 37
Significant Program-Wide Compensation Decisions in 2018
The Compensation Committee met in January 2018 to discuss and implement changes to the Company’s compensation program for the year. In large part, from a programmatic standpoint, the 2018 executive compensation program remained the same as the 2017 program except for the following:
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* Please see Appendix A for an explanation and reconciliation of these non-GAAP | ||||
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 38
2020 Compensation Impacts Due to B737 MAX Grounding and COVID-19 Pandemic
The Company took several actions in 2020 to reduce costs, increase liquidity, and strengthen our financial position in light of the significant negative economic impacts of the COVID-19 pandemic and the B737 MAX grounding. Compensation-related actions included reducing pay for all executives (including NEOs) by 20% from April 2020 through January 2021. The reduced salary levels resulted in reduced payouts under the 2020 ACI (defined below).
Further, due to the financial impact of the B737 MAX grounding and COVID-19 pandemic, the performance-based restricted stock awards granted in 2018 that were due to vest on December 31, 2020, subject to the Compensation Committee’s certification of performance, were forfeited in their entirety as performance levels fell below threshold.
Values of vested and unvested equity awards were negatively impacted as well. As of December 2, 2019, the closing stock price of the Company’s Common Stock was $85.78. On May 1, 2020, the closing price of the Company’s Common Stock was $20.47. On December 31, 2020, the closing price of the Company’s Common Stock was $39.09.
2020 Compensation Program Elements
There are three major components to the Company’s compensation program for NEOs:NEOs, which are described below. Levels for NEOs are set as described under “Compensation Overview - Setting Target Pay.”
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SPIRIT AEROSYSTEMS - 2019 Proxy Statement 38
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, and recognize responsibilities, experience, skill set, prior positions held, performance, and responsibility level.performance. The Company reviews each NEO’s base salary annually in January (and as circumstances or changes in responsibilities may require) and makes appropriate adjustments to account for performance, additional responsibilities, and market movement. We set baseBase salary amounts as set forth under “Setting Target Pay.”is paid in cash bi-weekly. Due to liquidity pressures relating to the B737 Max grounding and COVID-19 pandemic, each NEO’s salary was reduced by 20% in April 2020. The salary reductions continued until January 4, 2021.
The ACIAnnual Cash Incentive (“ACI”) is an annual cash award granted under the Company’s Short-Term Incentive Plan (the “STIP”) under the 2014 Omnibus Incentive Plan, as amended (the “OIP”).OIP. Each individual receives a total target ACI that is equal to a percentage of his or her total base salary. For 2018,2020, this target amount was equal to 140%145% of our CEO’s base salary andfor Mr. Gentile, 100% of the other NEOs’ (the “Other NEOs”) base salaries. We set ACI target amounts as set forth under “Setting Target Pay.”salary for Mr. Suchinski, Ms. Marnick, Mr. Hawkins, and Mr. Pilla, and 85% of base salary for Mr. Brown.
Payout of the ACI depends on the attainment of individual and Company performance goals. Depending on the level of performance achieved, payout can be between 0 —and 200% of target. The objectives of the ACI are to support our pay-for-performance philosophy, align the awards with stockholder interests, and motivate executives to achieve the Company’s near-term focus on safety, quality, delivery, and customer focus that drives the Company’s long-term performance.
The performance weightingweightings for the NEOs’ ACIs are as follows:
CEO: 80% Company performance; 20% individual performanceperformance; and
For all NEOs other than the CEO (“Other NEOs:NEOs”): 75% Company performance; 25% individual performanceperformance.
With respect to the measurement of the performance components, the Compensation Committee used a scoring scale of 0.0 to 2.0, with 0.0 for unacceptable performance and 2.0 for exceptional performance. Individual scores are calibratedPayout of the ACI is in cash and typically occurs in February of each year (after the Compensation Committee certifies performance in January).
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 39
For the Company’s2019 ACI, the Company performance scorecomponent was based on FCF (50%), earnings before taxes and interest (as adjusted) (“EBIT”) (30%), and revenue (20%), as further described below.disclosed in last year’s proxy statement. In light of impacts of the B737 MAX grounding and COVID-19 pandemic, the Company was unable to create a meaningful outlook for FCF, EBIT, and revenue for 2020 and, accordingly, revised the Company performance component metrics in order to incentivize our employees to perform toward meaningful and calculable goals.
The Company Performanceperformance component of each NEO’s 2018 ACI is scoredmetrics for 2020 to be based on the performanceGAAP Cash from Operating Activities (40%), Indirect Cost (30%), Quality (15%), and New Revenue Growth (15%). The reasons for each of these metrics is described under “Our Pay Metrics.”
In 2020, the Company with respect to three quantitative metrics, each overfell below threshold performance goals for both Cash from Operating Activities and New Revenue Growth. For Quality, the Company scored a one-year period:
Revenue, representing 20%1.85 out of total Company performance
Adjusted EBIT, representing 30% of total Company performance
Adjusted FCF, representing 50% of total Company performance
The manner in which Adjusted EBIT2.00, and Adjusted FCF are calculated is described in AppendixA.
In 2018,for Indirect Cost, the Company exceeded its targetmaximum performance goal with respect to revenue and Adjusted FCF, but did not reach its threshold goal with respect to Adjusted EBIT.at $1.172 billion. As a result, the Compensation Committee determined a 0.890.8775 total score had been achieved with respect to Company performance, representingout of a weightedpotential score of 0.712 for the CEO (representing 80% of his total ACI score), and 0.6675 for each of the Other NEOs (representing 75% of their total ACI scores).2.00. The following table summarizes the Company’s actual performance relative to the Company’s threshold, target, and maximum performance goals for 2018:2020.
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Measure | Weighting | Threshold | Target | Maximum | Actual Result | Assessment | Weighted Score |
Cash from Operating Activities | 40% | ($227 million) | ($177 million) | ($127 million) | ($658 million) | Below Threshold | 0.0000 |
Indirect Cost | 30% | $1.353 billion | $1.303 billion | $1.245 billion | $1.172 billion | Exceeded Maximum | 0.6000 |
New Revenue Growth | 15% | $927 million | $982 million | $1.037 billion | $927 million | Below Threshold | 0.0000 |
Quality | 15% | 0.5 | 1 | 2 | 1.85 | Between Target and Maximum | 0.2775 |
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* The manner in which Adjusted EBIT and Adjusted FCF are calculated is described in AppendixA.
The Individual Performanceindividual performance component of the ACI 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. This component was scored based on the achievement of such individual performance goals. Individual scores were calibrated to reflect the Company’s score, which was under the established target of 1.0 for 2018. For example, Mr. Gentile met expectations; however, because the Company score was a 0.89, his individual score was also a 0.89.score.
To determine the score for the CEO,Mr. Gentile, the Compensation Committee reviewed his annual performance and personal contributions to the Company’s financial and operationaloperating results. With respect to the Other NEOs, the Compensation Committee first considered theMr. Gentile’s report and recommendation of the CEO with respect to each person’s performance and score and, subsequently,score. Subsequently, the Compensation Committee conducted a subjective review of each NEO’s
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 39
contributions to the Company during the fiscal year. With respect to 20182020 performance, the NEOs received the following individual performance scores:scores out of a potential total score of 2.00: Gentile: 0.89, Kapoor: 0.89,0.8755, Suchinski: 0.9250, Marnick: 1.09,0.9600, Hawkins: 0.75,0.8775, and Pilla: 1.04.Brown: 0.7900. Mr. Pilla’s ACI payment was based solely on the Company performance component per the Pilla Agreement (as defined below).
For additional payout information, please see “2018 ACI Payouts.” Descriptions of the NEOs’ 20182020 individual performance contributions are set forth in “2018“2020 NEO Performance and Compensation Decisions.”
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 40
The formula for determining the 20182020 ACIs and the resulting payouts are reflected in the table below:below.
NEO | Base Salary ($) | (1) | × | Target (Percentage of Base Salary) (%) | = | Target Award ($) | × | Company Performance (80% weighting for CEO; 75% weighting for Other NEOs) |
(2) | + | Individual Performance (20% weighting for CEO; 25% weighting for Other NEOs) | (3) | = | 2018 Total Payout ($) |
Mr. Gentile | 1,241,233 |
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| 140 |
| 1,737,726 |
| 0.7120 |
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| 0.1780 |
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| 1,546,576 |
Mr. Kapoor | 650,000 |
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| 100 |
| 650,000 |
| 0.6675 |
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| 0.2225 |
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| 578,500 |
Ms. Marnick | 522,877 |
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| 100 |
| 522,877 |
| 0.6675 |
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| 0.2725 |
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| 491,504 |
Mr. Hawkins | 533,685 |
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| 100 |
| 533,685 |
| 0.6675 |
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| 0.1875 |
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| 456,301 |
Mr. Pilla | 456,041 |
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| 100 |
| 456,041 |
| 0.6675 |
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| 0.2600 |
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| 422,978 |
(1) With respect to all NEOs other than Mr. Kapoor (his salary did not change in 2018), the ACI payout was calculated using a weighted-average base salary that takes into account their salary changes in 2018. (2) Reflects a Company score of 0.89 multiplied by the weighting percentage. (3) Reflects individual performance scores multiplied by the weighting percentage. | ||||||||||||||
NEO | Base Salary ($) | (1) | × | Target (Percentage of Base Salary)(2) (%) | = | Target Award ($) | × | Company Performance (80% weighting for CEO; 75% weighting for Other NEOs) | (3) | + | Individual Performance (20% weighting for CEO; 25% weighting for Other NEOs) | (4) | = | 2020 Total Payout ($) |
Thomas C. Gentile III | 1,108,552 |
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| 145 |
| 1,607,400 |
| 0.702 |
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| 0.176 |
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| 1,410,494 |
Mark J. Suchinski | 414,481 |
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| 99 |
| 408,934 |
| 0.658 |
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| 0.231 |
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| 363,696 |
Samantha J. Marnick | 493,025 |
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| 100 |
| 493,025 |
| 0.658 |
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| 0.225 |
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| 442,799 |
Duane F. Hawkins | 456,212 |
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| 100 |
| 456,212 |
| 0.658 |
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| 0.219 |
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| 400,326 |
William E. Brown | 401,683 |
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| 85 |
| 341,431 |
| 0.657 |
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| 0.214 |
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| 292,137 |
John A. Pilla(5) | 405,048 |
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| 100 |
| 405,048 |
| N/A |
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| 355,429 |
(1) Represents weighted-average base salary that takes into account salary changes in 2020, including the 20% salary reduction in place from April 2020 through January 2021. (2) With respect to Mr. Suchinski, represents a weighted-average target that takes into account his target change in 2020 (actual number was 98.662). (3) Reflects a Company score of 0.8775 multiplied by the weighting percentage (scores are rounded) for all except Mr. Pilla. (4) Reflects individual performance scores multiplied by the weighting percentage (scores are rounded) for all except Mr. Pilla. (5) Mr. Pilla’s ACI was 100% based on the Company performance component per the Pilla Agreement (as defined below). | ||||||||||||||
Based on Company and individual performance results, the Compensation Committee believes the 20182020 NEO ACIs were appropriate and achieved the objectives of the executive compensation program. While the ACIs were earned based on performance in 2018,2020, they were paid out in January 2019.February 2021. The ACIsACI payouts are reported as 20182020 compensation in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.”
Long-term incentives are an important component of compensation, as they providehelp retain, motivate, and reward executives with respect to long-term equity-based variable incentive compensation in keepingperformance, align executives’ interests with the Company’s pay-for-performance philosophy for the entire executive group.stockholders’ interests, and promote stock ownership. Long-term incentives are delivered under the Company’s Long-Term Incentive Plan (the “LTIP”) under the OIP. Under the OIP,In January of each year, the Compensation Committee selects eligible personsindividuals to receive such awards and determinesapproves the nature and amount of each such award. Awards are granted and priced on the third trading day following the Company’s next earnings release. For 2018,2020, each NEO received an annual target LTIP award equal to the percentage of his or her total base salary aton the timegrant date of the award as provided in the table below:
NEO | Base Salary ($) | x | Target (Percentage of Base Salary) (%) | = | Target Award ($) |
Mr. Gentile | 1,250,000 |
| 500 |
| 6,250,000 |
Mr. Kapoor | 650,000 |
| 300 |
| 1,950,000 |
Ms. Marnick | 520,000 |
| 200 |
| 1,040,000 |
Mr. Hawkins | 535,000 |
| 230 |
| 1,230,500 |
Mr. Pilla | 455,000 |
| 190 |
| 864,500 |
NEO | Base Salary on Grant Date ($) | x | Target (Percentage of Base Salary) (%) | = | Target Award ($) |
Thomas C. Gentile III | 1,300,000 |
| 550 |
| 7,150,000 |
Mark J. Suchinski | 500,000 |
| 175 |
| 875,000 |
Samantha J. Marnick | 550,000 |
| 215 |
| 1,182,500 |
Duane F. Hawkins | 535,000 |
| 230 |
| 1,230,500 |
William E. Brown | 470,000 |
| 170 |
| 799,000 |
John A. Pilla | 475,000 |
| 190 |
| 902,500 |
The total annual target LTIP award consists of three components:
Time-Based Restricted Stock, representing 60% of the total target award amount;
Performance-Based Restricted Stock tied to relative TSR over a three-year performance period, representing 20% of the total target award amount; and
Performance-Based Restricted Stock tied to FCF Percentage over a three-year performance period, representing 20% of the total target award amount.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 4041
In 2018,2020, 60% of the target LTIP award amount was delivered in the form of a time-based restricted stock (“Time-Based Restricted StockStock”) award vesting in three equal installments on each of the first, second, and third anniversaries of the grant date, subject to the recipient being employed by the Company on the vesting date.date (subject to alternative vesting arrangements upon death, disability, retirement eligibility, 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 awards to assist in retaining NEOs and increase their stock ownership, which further aligns our NEOs’ interests with those of stockholders. Awards are approved by the Compensation Committee in January and 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 awards accrue from the grant date and are not paid out on vesting.until the vesting date. If the underlying award is forfeited, the accrued dividends are forfeited as well.
Performance-Based Restricted Stock Tied to Total ShareholderStockholder Return
In 2018,2020, 20% of the target LTIP award amount was delivered in the form of a performance-based restricted stock (“Performance-Based Restricted StockStock”) award tied to TSR. Payout of the award is based on the ranking of the Company’s TSR, expressed as a percentile, relative to the TSR of a group of the Company’s peers over a three-year trackingperformance 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 |
| Threshold(1) | Target | Maximum |
Performance Goal | (Percentile Ranking in Peer Group) | 25th | 50th | 90th | Percentile Ranking in Peer Group | 25th | 50th | 90th |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% | (% of Target Award) | 25% | 100% | 200% |
* If performance is below threshold, payout is zero. | ||||||||
(1) If performance is below threshold, payout is zero. | (1) If performance is below threshold, payout is zero. | |||||||
For grants made in 2018,2020, the performance period runs from January 1, 2018,2020, to December 31, 2020,2022, and the vesting of the awards is dependent upon the Compensation Committee’s certification of the performance goal being achieved.achieved (which typically occurs in January following the end of the performance period). 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.earned (subject to alternative vesting arrangements upon death, disability, retirement eligibility, or a qualifying termination in connection with a change-in-control as described under “Potential Payments Upon Termination or Change-in-Control”).
For grants made in 2018,2020, the TSR for the Company and each member of its peer group for the trackingperformance 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, 2017,2019, and the 20 trading days ending December 31, 2020.2022. If the Company’s TSR percentile ranking falls between the threshold and the target performance goals 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 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. If the Company’s TSR is negative, payout is capped at 100% regardless of percentile ranking. The Compensation Committee may apply negative discretion to the award payout. Dividends on Performance-Based Restricted Stock awards tied to TSR doare not accruepaid until the award vests.
Performance-Based Restricted Stock Tied to FCF PercentagePercentage*
In 2018,2020, 20% of the target LTIP 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 flowFCF as a percentage of revenuerevenue* over a three-year trackingperformance period as compared to threshold, target, and maximum performance goals. FCF PercentagePercentage* 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 on achievement of the target performance goal. The table below sets forth these performance goals and vesting percentages:
|
| Threshold* | Target | Maximum |
| Threshold(1) | Target | Maximum |
Performance Goal | FCF Percentage | 7.0% | 7.75% | 9.0% | FCF Percentage* | 7.0% | 7.75% | 9.0% |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% | (% of Target Award) | 25% | 100% | 200% |
* If performance is below threshold, payout is zero. | ||||||||
(1) If performance is below threshold, payout is zero. | (1) If performance is below threshold, payout is zero. | |||||||
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For grants made in 2018,2020, the performance period runs from January 1, 2018,2020, to December 31, 2020,2022, and the vesting of the awards is dependent on the Compensation Committee’s certification of the performance goal being achieved.achieved (which typically occurs in January following the end of the performance period). An individual must be continuously performing services (or deemed to be continuously performing services) through the entire performance period, or none of the award will be earned.earned (subject to alternative vesting arrangements upon death, disability, retirement eligibility, or a qualifying termination in connection with a change-in-control as described under “Potential Payments Upon Termination or Change-in-Control”).
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FCF PercentagePercentage* will be calculated on a cumulative basis over a three-year period (total free cash flowFCF* over three years divided by total revenue over three years). If the calculated percentage falls between the threshold and the target performance goals 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 greater than the maximum performance goal, the participant will be entitled to a number of vested shares equal to 200% of the target award. The Compensation Committee may apply negative discretion to the award payout. Dividends on Performance-Based Restricted Stock awards tied to FCF Percentage doPercentage* are not accruepaid until the award vests.
*For an explanation and reconciliation of FCF and Percentage, please see AAppendixppendix AA..
Changes for 2021 Executive Compensation
A summary of the significant changes approved by the Compensation Committee for the 2021 executive compensation program appears below.
Compensation Element | Change | Reason | |
Salary | Restored 20% salary reductions to full pay effective January 4, 2021. | To appropriately compensate executive officers for their roles and performance after working to stabilize liquidity in 2020. | |
Annual Cash Incentive | Modifying Company performance goals to be based on Adjusted Net Debt (40%), Operating Cost (30%), New Revenue Growth (15%), and Quality (15%). | Reducing net debt is a key objective and indicator to improve financial stability, return to investment grade, and reduce borrowing costs; controlling operating costs is key to demonstrating discipline and progress to achieving continuous margin improvement; new revenue growth and quality continue to be a focus for the reasons described under “Pay Metrics” above. | |
Long-Term Incentives | Reduce maximum TSR performance goal from 90th percentile to 75th percentile. | To better align award with market practices. | |
Performance-based component of award will be 100% based on TSR. | More objective and visible measure of performance against peer group, which will incentivize executives to perform. | ||
Minor peer group changes to TSR group. | To reflect acquisitions and additional appropriate peer companies. | ||
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Vested Performance-Based Restricted Stock Awards Granted in 2017
Two types of Performance-Based Restricted Stock awards vested and were delivered in 2020. The first type of award was tied to TSR, and payout of the award was based on the ranking of the Company’s TSR, expressed as a percentile, relative to the TSR of a group of the Company’s peers over a three-year performance period from January 1, 2017, to December 31, 2019, as compared to threshold, target, and maximum performance goals. On January 21, 2020, the Compensation Committee certified performance of the award at a percentile rank of 58th within the peer group. As a result, the award paid out at 120% (entirely in Common Stock), as demonstrated in the table below:
|
| Threshold | Target | Maximum | 2017 PB-TSR Actual Performance |
Performance Goal | (Percentile Ranking in Peer Group) | 25th | 50th | 90th | 58th |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% | 120% |
The second type of Performance-Based Restricted Stock award that vested in 2020 was tied to FCF Percentage.* Payout of the award was based on the Company’s FCF* as a percentage of revenue over a three-year performance period from January 1, 2017, to December 31, 2019, as compared to threshold, target, and maximum performance goals. On January 21, 2020, the Compensation Committee certified performance of the award at 7.82%, which reflected an adjustment to FCF* for the return of a cash payment of $236 million received from Boeing associated with the B787 interim pricing agreement. While the Company generally intends to base FCF Percentage* on FCF* as opposed to Adjusted FCF,* an adjustment was appropriate in this circumstance as the Company excluded the receipt of the cash payments from Boeing in 2015 ($192 million) and 2016 ($43 million) from its applicable FCF* performance determination. As a result, the award paid out at 200% (entirely in stock), as demonstrated in the table below:
|
| Threshold | Target | Maximum | 2017 PB-FCF Actual Performance |
Performance Goal | FCF Percentage* | 6.0% | 6.7% | 7.4% | 7.82% |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% | 200% |
* For an explanation and reconciliation of FCF Percentage and other non-GAAP measures, please see Appendix A. | |||||
Forfeited Performance-Based Restricted Stock Awards Granted in 2018
Two types of Performance-Based Restricted Stock awards were to vest and be delivered in 2021. The first type of award was tied to TSR and calculated consistent with the award granted in 2017 over a three-year performance period from January 1, 2018, to December 31, 2020, as compared to threshold, target, and maximum performance goals. On January 26, 2021, the Compensation Committee certified performance of the award below the threshold goal at the 7th percentile of the peer group. As a result, the award did not pay out and was forfeited, as demonstrated in the table below:
|
| Threshold | Target | Maximum | 2018 PB-TSR Actual Performance |
Performance Goal | (Percentile Ranking in Peer Group) | 25th | 50th | 90th | 7th |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% | 0% |
The second type of Performance-Based Restricted Stock award that vested in 2020 was tied to FCF Percentage* over a three-year performance period from January 1, 2018, to December 31, 2020, as compared to threshold, target, and maximum performance goals. On January 26, 2021, the Compensation Committee certified performance of the award below the threshold goal at 1.8%. As a result, the award did not pay out and was forfeited, as demonstrated in the table below:
|
| Threshold | Target | Maximum | 2018 PB-FCF Actual Performance |
Performance Goal | FCF Percentage* | 6.0% | 6.7% | 7.4% | 1.8% |
Vesting Percentage | (% of Target Award) | 25% | 100% | 200% | 0% |
* For an explanation and reconciliation of FCF Percentage and other non-GAAP measures, please see Appendix A. | |||||
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2020 NEO Performance and Compensation Decisions
Discussion below excludes Mr. Garcia as he resigned on January 29, 2020.
Mr. Gentile, President and Chief Executive Officer
20182020 Performance: Mr. Gentile’s 20182020 individual performance met expectations.expectations for compensation purposes. He continued the Company’s diversification and growth strategy with the FMI acquisition and acquisition of select assets of Bombardier aerostructures and aftermarket business, and by securing new work content from current and new customers. Mr. Gentile also successfully led the Company to overcome multiplethrough important customer negotiations, the B737 MAX grounding, supply chain challengesrisks, and achieve financial and operational results that aligned with our original plans. He reduced Company risk and strengthened our partnership with Boeing by securing a long-term contract that extends into the next decade, executed a new growth strategy by securing newly contracted work content on several programs, and continued to drive significant improvement in supply chain costs.safety improvements.
20182020 Compensation Decisions:
Salary: In January 2018, the Compensation Committee approved an increase from $1,150,000 to $1,250,000, effective February 2, 2018. The increase was based on an evaluation of Mr. Gentile’s performancesalary remained at $1,300,000. His 2020 salary was affected by a 20% reduction due to impacts from the COVID-19 pandemic and target compensation as compared to the Company’s peer group.B737 MAX grounding.
Annual Cash Incentive: No changes were made to Mr. Gentile’s target of 145% of base salary during 2018. Mr. Gentile’s target was 140% of salary.2020. In January 2019,2021, based on a review of Mr. Gentile’s and the Company’s performance during 2018,2020, the Compensation Committee approved an ACI payout of $1,546,576.$1,410,494.
Long-Term Incentives: The Compensation Committee approved an increase ofNo changes were made to Mr. Gentile’s target amount from 450% to 500% effective February 2, 2018. The increase was based on an evaluation of Mr. Gentile’s performance and target compensation as compared to the Company’s peer group.550% during 2020. In February 2018,2020, Mr. Gentile was granted awards with an aggregate grant date fair value of $6,250,140.$7,150,082. Aggregate grant date fair values were determined as set forth in footnote (6) to the “Summary Compensation Table.”
Mr. Kapoor, ExecutiveSuchinski, Senior Vice President and Chief Financial Officer
20182020 Performance: Mr. Kapoor’s 2018Suchinski’s 2020 individual performance metexceeded expectations. He led over $3 billion in liquidity actions and over $1 billion in annualized cost reductions compared to 2019, to end the year with a cash balance of $1.873 billion, providing Spirit increased flexibility and liquidity to manage through challenges related to the COVID-19 pandemic.
2020 Compensation Decisions:
Salary: Mr. Kapoor delivered significant improvements in working capital, refinanced our debt, and drove stockholder value by executing an accelerated share repurchase plan. Mr. Kapoor retired fromSuchinski was promoted to the position of ExecutiveSenior Vice President and Chief Financial Officer on January 9, 2019.
2018 Compensation Decisions:
Salary:29, 2020. His base salary was set at $500,000. His 2020 salary was affected by a 20% reduction due to impacts from the COVID-19 pandemic and B737 MAX grounding. On January 26, 2021, Mr. Kapoor’sSuchinski’s base salary remained at $650,000.was increased to $525,000 based on his performance and a review of peer and broad-based compensation for similar positions.
Annual Cash Incentive: NoAfter his promotion on January 29, 2020, no changes were made to Mr. Kapoor’sSuchinski’s target during 2018. Mr. Kapoor’s target wasof 100% of salary.base salary during 2020. In January 2019,2021, based on a review of Mr. Kapoor’sSuchinski’s and the Company’s performance during 2018,2020, the Compensation Committee approved an ACI payout of $578,500.$363,696.
Long-Term Incentives: The Compensation Committee approved an increaseOn January 29, 2020, Mr. Suchinski’s target was set at 175% of Mr. Kapoor’s target amount from 280% to 300% effective February 2, 2018. The increase was based on an evaluation of Mr. Kapoor’s performance and target compensation as compared to the Company’s peer group.his base salary for 2020. In February 2018,2020, Mr. KapoorSuchinski was granted awards with an aggregate grant date fair value of $1,950,174.$875,064. Aggregate grant date fair values were determined as set forth in footnote (6) to the “Summary Compensation Table.” On January 26, 2021, Mr. Suchinski’s target was raised to 200% of his base salary based on his performance and a review of peer and broad-based compensation for similar positions.
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Ms. Marnick, Executive Vice President and Chief AdministrationOperating Officer
20182020 Performance: Ms. Marnick’s 20182020 individual performance exceeded expectations. She successfully executedcontinued to advance the Company’s growth strategy through closing on the acquisitions of FMI and Bombardier’s sites in Texas, Morocco, and Northern Ireland. Ms. Marnick led the successful unification of the previously separate supply chain and fabrication organizations to a unified make/buy organization, enabling improved risk mitigation and value capture throughout the unprecedented challenges of 2020. She reduced spend on indirect costs across the enterprise, delivered substantial new business wins, realigned and developed senior talent, significantly improved fringe costs, secured critical government incentives for growth, executedachieved significant union contract extensions, led Company culture change, and improved key stakeholder relationships.labor relations results with the early negotiation of the Wichita IAM contract.
20182020 Compensation Decisions:
Salary: Ms. Marnick’s salary began 2020 at $550,000. On July 28, 2020, Ms. Marnick was promoted from Executive Vice President and Chief Administration Officer and Strategy, to Executive Vice President and Chief Operating Officer. In connection with the promotion, her base salary was increased to $620,000 effective July 28, 2020. Ms. Marnick’s 2020 salary was affected by a 20% reduction due to impacts from the COVID-19 pandemic and B737 MAX grounding. On January 2018, the Compensation Committee approved an increase from $490,00026, 2021, Ms. Marnick’s base salary was increased to $520,000, effective February 2, 2018. The increase was$650,000 based on an evaluationher performance and a review of Ms. Marnick’s performance, level of responsibility,peer and targetbroad-based compensation as compared to the Company’s peer group. In October 2018, the Compensation Committee approved an increase from $520,000 to $550,000, effective October 23, 2018. The increase was based on the addition of responsibilities to Ms. Marnick’s role, including strategy and business and regional jets.for similar positions.
Annual Cash Incentive: No changes were made to Ms. Marnick’s target during 2018. Ms. Marnick’s target wasof 100% of salary.base salary during 2020. In January 2019,2021, based on a review of Ms. Marnick’s and the Company’s performance during 2018,2020, the Compensation Committee approved an ACI payout of $491,504.$442,799.
Long-Term Incentives: The Compensation Committee approved an increaseMs. Marnick began 2020 with a target of Ms. Marnick’s target amount from 190% to 200% effective February 2, 2018. The increase was based on an evaluation215% of Ms. Marnick’s performance, level of responsibility, and target compensation as compared to the Company’s peer group.base salary. In February 2018,2020, Ms. Marnick was granted awards with an aggregate grant date fair value of $1,040,241.$1,182,567. Aggregate grant date fair values were determined as set forth in footnote (6) to the “Summary Compensation Table.” In October 2018, the Compensation Committee approved an increase ofWith Ms. Marnick’s promotion to Executive Vice President and Chief Operating Officer, Ms. Marnick’s target amount from 200%was raised to 215%230% of her base salary, effective October 23, 2018 (to affectJuly 28, 2020, which was after the grant date of the 2020 long-term incentives to be granted in future years). The increase was based onand, accordingly, did not impact the addition of responsibilities to Ms. Marnick’s role, including strategy and business and regional jets.grant amount.
20182020 Performance: Mr. Hawkins’ 20182020 individual performance met expectations overall. Despite multiple challenges in the Boeing 737 production line in 2018, he helped the line recover and ended the year strong on deliveries.expectations. He successfully exceeded expectationscompleted the development and integration of a comprehensive defense and fabrication business while executing superior performance of existing programs. He made significant progress on growing both businesses by expanding work on existing programs, new business wins, and established a healthy new business backlog. He successfully shaped and built strong relationships and increased Spirit’s brand awareness with key strategic customers and stakeholders, including defense programs, resulting in growthprimes and Congressional delegation leadership. He led the first defense acquisition and integration of FMI, combining strong material systems and industrialization capability to the Company’sstrategically position Spirit for high priority defense business.programs.
20182020 Compensation Decisions:
Salary: In January 2018, the Compensation Committee approved an increase from $520,000 to $535,000, effective February 2, 2018. The increase was based on an evaluation of Mr. Hawkins’ performance, level of responsibility,salary remained at $535,000. His 2020 salary was affected by a 20% reduction due to impacts from the COVID-19 pandemic and target compensation as compared to the Company’s peer group.B737 MAX grounding.
Annual Cash Incentive: No changes were made to Mr. Hawkins’ target during 2018. Mr. Hawkins’ target wasof 100% of salary.base salary during 2020. In January 2019,2021, based on a review of Mr. Hawkins’ and the Company’s performance during 2018,2020, the Compensation Committee approved an ACI payout of $456,301.$400,326.
Long-Term Incentives: The Compensation Committee approved an increase ofNo changes were made to Mr. Hawkins’ target amount from 220% toof 230% effective February 2, 2018. The increase was based on an evaluation of Mr. Hawkins’ performance, level of responsibility, and target compensation as compared to the Company’s peer group.base salary in 2020. In February 2018,2020, Mr. Hawkins was granted awards with an aggregate grant date fair value of $1,230,603.$1,230,597. Aggregate grant date fair values were determined as set forth in footnote (6) to the “Summary Compensation Table.”
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 46
Mr. Pilla,Brown, Senior Vice President, Chief Technology and Quality OfficerBoeing Programs
20182020 Performance: Mr. Pilla’s 2018Brown’s 2020 individual performance exceededmet expectations. He established new researchThe combined impact of the B737 MAX grounding and technology strategies positioningCOVID-19 had an outsized impact on Spirit’s Boeing program performance in 2020. Mr. Brown led Spirit through multiple production rate changes throughout the year on all Boeing programs. Additionally, to take on new commercialfacilitate the Company’s overall cash position, Mr. Brown successfully negotiated a cash advance and defense packages.payment deferments with Boeing. As the Company prepares to emerge stronger in 2021, Mr. PillaBrown also led Spirit engineeringthe initial phases of transforming the B737 production system by advancing critical projects in improved factory flow, automation, digitization, workforce training, and quality teams in factory automation efforts and initiatives that increased the factories’ ability to manage rate growth in the future.supplier health.
20182020 Compensation Decisions:
Salary: Mr. Brown’s salary remained at $470,000. His 2020 salary was affected by a 20% reduction due to impacts from the COVID-19 pandemic and B737 MAX grounding.
Annual Cash Incentive: No changes were made to Mr. Brown’s target of 85% of base salary during 2020. In January 2018,2021, based on a review of Mr. Brown’s and the Company’s performance during 2020, the Compensation Committee approved an increase from $425,000ACI payout of $292,137.
Long-Term Incentives: No changes were made to $455,000, effectiveMr. Brown’s target of 170% of base salary during 2020. In February 2, 2018. The increase2020, Mr. Brown was based ongranted awards with an evaluationaggregate grant date fair value of $799,042. Aggregate grant date fair values were determined as set forth in the “Summary Compensation Table.”
Mr. Pilla, Former Senior Vice President and Chief Technology Officer
2020 Performance and Retirement Agreement: Mr. Pilla’s 2020 individual performance levelmet expectations. While in the Senior Vice President and Chief Technology Officer role, Mr. Pilla executed multiple plans and initiatives for our information technology and research and technology functions, and supported program and mergers and acquisition activity that broadened Spirit’s footprint globally. Mr. Pilla also provided leadership and staffing to build up Spirit’s defense presence. On July 28, 2020, Mr. Pilla announced his retirement as Senior Vice President and Chief Technology Officer, effective August 1, 2020. On July 29, 2020, the Company and Mr. Pilla entered into a Retirement Agreement and General Release (the “Pilla Agreement”). Under the terms of responsibility,the Pilla Agreement, effective August 1, 2020, Mr. Pilla stepped down from his position and target compensation as comparedbecame a Senior Advisor to the Company’s peer group. In October 2018,Company; such position will continue until July 1, 2021, when he will formally retire from the Company (the “Retirement Date”). For a period of 13 months following the Retirement Date, Mr. Pilla will provide consulting and transition services to the Company. The Pilla Agreement is described further in “Summary Compensation Committee approved an increase from $455,000 to $475,000, effective October 23, 2018. The increase was based on an evaluation ofTable - Employment and Separation Agreements.”
2020 Compensation Decisions:
Salary: Mr. Pilla’s performance, additionalsalary remained at $475,000 (and will remain at such level of responsibility,until the Retirement Date). His 2020 salary was affected by a 20% reduction due to impacts from the COVID-19 pandemic and target compensation as compared to the Company’s peer group.B737 MAX grounding.
Annual Cash Incentive: No changes were made to Mr. Pilla’s target during 2018. Mr. Pilla’s target wasof 100% of salary.base salary applicable to 2020. In January 2019,2021, based on a reviewthe terms of the Pilla Agreement, Mr. Pilla’s and the Company’s performance during 2018, the Compensation Committee approvedPilla received an ACI payout of $422,978.$355,429, which was based solely on the Company performance component score of 0.8775.
Long-Term Incentives: No changes were made to Mr. Pilla’s target of 190% during 2018. Mr. Pilla’s target amount was 190%.2020. In February 2018,2020, Mr. Pilla was granted awards with an aggregate grant date fair value of $864,680. In October 2018, Mr. Pilla was granted a Time-Based Restricted Stock award with an aggregate grant date fair value of $500,064.$902,581. Aggregate grant date fair values were determined as set forth in footnote (6) to the “Summary Compensation Table.”
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The Compensation Decision-Making Process
TheAs set forth in its charter, 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:
The CEO’s self-assessment and performance reviewreviews of the Other NEOs;
The Compensation Committee’s and Board’s views of the NEOs’ performance;
The counsel and recommendations of the COO (who is responsible for the Company’s CEO and Chief Administration Officer;
Recommendations of other members of the Compensation Committee;human resources team);
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 Compensation Committee strives for internal pay equity among the Company’s NEOs and accordingly, the types of compensation and benefits offered to the Company’s NEOs are consistent among the group. However, pay equity must be balanced among a myriad of other factors. See “Consideration of Advisory Stockholder Vote and Stakeholder Feedback on Executive Compensation” for additional information. The Compensation Committee continues to examine existing and new compensation programs and practices to ensure that the Company’s compensation programs remain appropriate and consistent with the Company’s overall objectives and market practice.
The chart below reflects the annual compensation-setting process, by regularly scheduled meeting ofthough certain items may shift during the Compensation Committee.year. In addition to the following, the CEO’s performance, along with all Company performance metrics used in the ACI or long-term incentives, are monitored and discussed quarterly.
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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.
The Company uses its peer group as a reference point for compensation design and award decisions. The Company’s peer group consists of companies similar to Spirit in size and operations (emphasizing aerospace and defense and auto-component manufacturers) and/or companies that compete with Spirit for executive talent. For 2018,2020 compensation decisions, the Company’s peer group was as follows (the companiesis shown below (companies are ranked by revenue and all ticker symbols are for the NYSE):2019 revenue).
Company Name | 2017 Revenue ($ in billions) | Market Cap as of 12/31/2017 ($ in billions) | ||
Company Name (Ticker Symbol) | 2019 Revenue ($ in billions) | Market Cap as of 12/31/2019 ($ in billions) | ||
L3 Harris Technologies (LHX)* | 18.5 | 43.7 | ||
Tenneco (TEN) | 17.5 | 1.1 | ||
Parker-Hannifin (PH) | 14.3 | 26.4 | ||
Howmet Aerospace (HWM)** | 14.2 | 13.3 | ||
Textron (TXT) | 14.2 | 14.9 | 13.6 | 10.2 |
Ingersoll-Rand (IR) | 14.2 | 22.3 | ||
Arconic (ARNC) | 13.0 | 13.1 | ||
Parker-Hannifin Corporation (PH) | 12.0 | 26.6 | ||
Trane Technologies (TT)*** | 13.1 | 31.7 | ||
Borg Warner (BWA) | 9.8 | 10.8 | 10.2 | 9.0 |
L3 Technologies (LLL) | 9.6 | 15.5 | ||
Tenneco (TEN) | 9.3 | 3.0 | ||
Huntington Ingalls (HII) | 7.4 | 10.7 | 8.9 | 10.3 |
Spirit AeroSystems Holdings (SPR) | 7.0 | 10.1 | 7.9 | 7.5 |
Harris Corp (HRS) | 5.9 | 16.9 | ||
Terex (TEX) | 4.4 | 4.1 | 4.4 | 2.1 |
Triumph Group (TGI) | 3.5 | 1.4 | 3.4 | 1.3 |
Teledyne Technologies (TDY) | 2.6 | 6.4 | 3.2 | 12.6 |
Moog (MOG-A) | 2.5 | 3.1 | ||
Moog (MOG.A) | 2.9 | 3.0 | ||
Curtiss-Wright (CW) | 2.3 | 5.4 | 2.5 | 6.0 |
Esterline Technologies Corporation (ESL) | 2.0 | 2.2 | ||
Hexcel (HXL) | 2.4 | 6.2 | ||
* Formerly Harris Corp. Changed name following merger with L3. ** Formerly Arconic. Changed name after spinoff of rolled aluminum products division. *** Formerly Ingersoll Rand. Changed name after spin-off of new Ingersoll Rand in March 2020. | * Formerly Harris Corp. Changed name following merger with L3. ** Formerly Arconic. Changed name after spinoff of rolled aluminum products division. *** Formerly Ingersoll Rand. Changed name after spin-off of new Ingersoll Rand in March 2020. | |||
Changes to Proxy Peer Group Changes for 20192021
InThe Company revised its peer group for 2021 compensation decisions in January 2019,2021 due to the Compensation Committee evaluatedimpact of the Company’sB737 MAX grounding and COVID-19 implications on the size of the business. Specifically, the Company removed L3 Harris Technologies (LHX) and Tenneco (TEN) from its peer group and added Hexcel (HXL) to the peer group, effective with the Performance-Based Restricted Stock awards tied to TSR that were granted in February 2019.Oshkosh (OSK), Dana (DAN), and Parsons Corporation (PSN).
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-component, 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 compensation packages and target goals for the NEOs.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 4549
Independent Compensation Consultant
The Compensation Committee’s Chartercharter allows the committee to engage an independent compensation consultant to advise on executive compensation matters. For 2018,2020, the Compensation CommitteeCompany engaged Willis Towers Watson directly for the purpose of providing analysis and advice with respect to executive officer compensation matters. to the Compensation Committee. The consultant’s engagement and fees related to work conducted for the Compensation Committee were reviewed and pre-approved by the Compensation Committee.
Willis Towers Watson provided consulting services for the Compensation Committee in the amount of $298,697 in 2020. In addition, Willis Towers Watson provided other services to the Company during 2020 totaling $689,986. Of such amount, $48,750 was for due diligence support for acquisitions, and $641,236 was for various scopes of integration work for the Company’s acquisition of select assets from Bombardier.
The Compensation Committee has determined, after considering and discussing criteria from the SEC and NYSE and Willis Towers Watson’s annual independence letter, that Willis Towers Watson does not have any conflicts of interest that would prevent objectivity.
The Company’s ACI and LTIP awards are subject to the clawback provisions of the OIP, the Company’s 2017 Clawback Policy (the “2017 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 compensation recovery.
OIPClawback. 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, without the consent of the Company, 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 2017 Policy.
2017Policy. The 2017 Policy applies to the ACI and Performance-Based Restricted Stock awards (the “Covered Compensation”) held by current and former Section 16 officers of the Company (the “Covered Executives”). Specifically, in the event of a material restatement to the Company’s financial results due to material noncompliance by the Company with financial reporting requirements under applicable securities law (the “Triggering Event”), the result of which being that Covered Compensation would have been lower had it been calculated taking into account the effect of the Triggering Event, the Compensation Committee has the authority (subject to certain procedures and exceptions) to seek to recover excess compensation received by the Covered Executives.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 50
Consideration of Advisory Stockholder Vote and Stakeholder Feedback on Executive Compensation
The Company believes it is appropriate to seek and reflect the views of its stockholders and other stakeholders on the design and effectiveness of the Company’s executive compensation program. Accordingly, consistent with the Company’s most recent say-on-pay frequency vote in April 2017, the Company holds an annual say-on-pay vote. At the Company’s 20182020 annual meeting of stockholders, approximately 90%74% of stockholders present in person or by proxy 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. For a discussion of stockholder engagement, see “Board and Governance Matters - Commitment to Stockholder Engagement and Responsiveness.”
During 2020, the Company received the following feedback regarding its compensation program:
Stakeholders believed there was a disconnect between pay and performance due to the issuance of one-off awards to select NEOs; and
Stakeholders believed there was internal pay inequity because the CEO’s compensation was much higher than compensation received by the Other NEOs.
In response to the first item noted above, the Company’s Compensation Committee met and discussed its practice of occasionally issuing one-off special equity awards to NEOs due to certain circumstances. Historically, such special equity awards have only been issued when circumstances require action due to a retention risk, pay inequity, or special performance considerations. The Company is not always able to disclose the individual circumstances that lead to the granting of special one-off awards due to privacy concerns. However, going forward, the Company will work to improve its disclosure around the circumstances for these one-off awards and will consider the impact of granting such awards on pay-for-performance alignment. No special one-off awards were granted to any continuing NEOs in 2020.
The Compensation Committee also discussed the second item of feedback. The Committee believes that part of the reason for the inequity is that the Company has not had a chief operating officer since 2016. In 2020, Ms. Marnick was promoted to that role. While the Compensation Committee does consider equity of pay in setting target compensation (and will continue to do so), a number of factors are critical in the compensation-setting process, such as what other companies are paying individuals in similar roles; the experience, performance, and potential of the individual NEO; and other matters discussed under “Compensation Overview — Setting Target Pay,” above. The Compensation Committee seeks to balance these factors appropriately, with the advice of external advisors such as Willis Towers Watson, in setting pay levels.
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 relates to hedging, insiders of the Company are prohibited from purchasing or selling, or making any offer to purchase or offer to sell, derivative securities related to the Company’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 securities (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 securities in a margin account or otherwise pledging the Company’s securities as collateral for a loan.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 51
In October each year, andAnnually (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 2018,2020, our Compensation Committee reviewed the following risk factors relative to our current compensation programs:
Senior talent acquisition and the ability to recruit and retain talent at market-based compensation levels.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;
MatchingAlignment 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.retention;
Potential for unforeseen one-time events beyond management’s control that affect incentive plan calculations.
Potential for management decisions based on short-term objectives unbalanced with long-term Company performance.calculations; and
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:
We diversify the compensation delivered to executives — thewith individual components and 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 ACIs or performance-based long-term incentives is 200%;
The Compensation Committee reserves the right to exercise negative discretion over performance-based awards;
We delivermaintain clawback policies that allow recovery of certain compensation using several vehicles, including cash, stock, and perquisites;
We maintain a clawback policy that allows us to recover 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; and
We have engaged an independent compensation consultant to advise us on compensation practices.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 4652
Other Compensation Elements and Information
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 Compensation Table.” These benefits are based on an assessment of benefits offered by our peers and competitors and are important for retaining the Company’s executive officers.
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 • Transition Contribution: An additional contribution is available to employees who were previously Boeing employees and meet certain other requirements. Other than Mr. Pilla, none of the NEOs |
| Deferred Compensation Plan (the “DCP”) | This nonqualified plan allows eligible Spirit employees, including each of our NEOs, to defer receipt of a portion of their base salary or 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 |
Perquisite Allowance Plan | Under the Company’s Perquisite Allowance Plan (the “Perquisite Plan”), the CEO receives an annual allowance of $25,000, while the Other NEOs receive an annual allowance of $13,000. Participants may select the perquisite items to be funded from their allowances subject to certain limitations set forth in the Perquisite |
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Personal Corporate Aircraft Use | For security reasons, the Company’s CEO and |
Relocation Benefits |
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Post-Retirement Medical Coverage | The Company has two programs for post-retirement medical coverage. Under the first program, benefits are available to employees who were previously Boeing employees and who retire from the Company between the ages of 62 and 65 (and who meet certain other requirements). Under the second program, benefits are available to (i) employees who retire from the Company at age 55 or later with |
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. |
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 4753
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 (the “SERP”) and the Pension Value Plan (the “PVP”). A significant portion of Spirit’s operations related to Boeing aerostructures was owned and controlled by Boeing until 2005. In connection with the acquisition of these assets from Boeing, the Company adopted the SERP in order to attract certain employees from Boeing. The SERP provides supplemental, nonqualified retirement benefits to executives who (1)(i) had their benefits transferred from a Boeing nonqualified plan to the SERP, and (2)(ii) did not elect to convert their SERP benefit into phantom stock units as of June 17, 2005. Benefits under this plan were frozen as of the date of the Boeing acquisition. There are no SERP annuity benefits presently payable to any of the NEOs. Mr. Pilla elected to convert his SERP benefit as of June 17, 2005, into 16,023 phantom stock units.
Also in connection with the Boeing acquisition, the Company adopted the PVP for certain eligible employees of Boeing, and allowed for the transfer of pension values from Boeing pension plans. The PVP is a frozen plan andplan: no additional employees are becomingmay become participants in the PVP, and no current participants are accruing any additional benefits (other than interest credits). The PVP is fully paid for by the Company, and the Company’s employees are vested after reaching five years of service. Other than Mr. Pilla, none of the NEOs received benefits under the PVP or SERP in 20182020 or is eligible to participate in such plans. Mr. Pilla’s participation in the PVP is detailed under “Pension Benefits.” Mr. Pilla’s phantom stock units under the SERP are described under “Nonqualified Deferred Compensation.”
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 for 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. 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 2018, thecontrol. The ACI, long-term incentives, and Perquisite Allowance Plan are subject to a double trigger change-in-control provision.provisions.
You can find additional information regarding the Company’s practices in providing compensation in connection with termination of employment under the heading “Potential Payments Upon Termination or Change-in-Control.Change in 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 “IRC”) and Section 409A of the 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. While the tax impact of any compensation arrangement is one factor to be considered, such impact is evaluated in light of the Company’s overall compensation philosophy and objectives. The Compensation Committee believes that maintaining the discretion to evaluate the performance of executive officers is an important part of the Company’s responsibilities and benefits public stockholders, and therefore, the Compensation Committee may award compensation to the named executive officers that is not fully deductible if it is determined that such compensation is consistent with the Company’s compensation philosophy and benefits stockholders.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 54
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 stockCommon Stock required to be held) are based on a multiple of base salary tied to pay grade. The stock ownership requirementsposition, and establish the following target levels for Company stock ownership:
Officer Level | Target Level (Multiple of Annual Base Salary) |
Chief Executive Officer | 5x |
Executive Vice Presidents/Senior Vice Presidents | 3x |
Vice Presidents | 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 minimumapplicable stock ownership guideline.
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 48
The Company reviews ownership positions on an annual basis. Based on the review conducted in 2018,2020, 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 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 entering into short-term trades involvinghedging and pledging the Company’s securities. Further, the Company’s insider tradingFor additional information on this policy, also prohibits employees from pledging the Company’s securities as collateral for a loan.
Accountingsee “Policy Prohibiting Short Selling, Hedging, 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”) and Section 409A of the Code. Section 162(m) generally imposes a $1 million limit on the amount that a public company may deduct for compensation paid to “covered employees” each year. The Compensation Committee generally seeks to award compensation that would allow it to preserve tax deductions; however, the Compensation Committee reserves the right to set compensation at the levels and in the manner (tax-deductible or not) that it determines to be in the best interests of the Company and its stockholders.Pledging.”
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 4955
The following table summarizes the compensation of the NEOs for the last three fiscal years.
Name and Principal Position | Year | Salary ($) | (4) | Bonus ($) | (5) | Stock Awards ($) | (6) | Non-Equity Incentive Plan Compensation ($) | (7) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | (8) | All Other Compensation ($) | (9) | Total ($) |
Thomas C. Gentile III President and CEO(1) | 2018 | 1,241,233 |
|
|
| 6,250,140 |
| 1,546,576 |
|
|
| 861,744 |
| 9,899,693 |
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 EVP and CFO | 2018 | 650,000 |
|
|
| 1,950,174 |
| 578,500 |
|
|
| 81,541 |
| 3,260,215 |
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 | |
Samantha J. Marnick EVP, CAO and Strategy | 2018 | 522,877 |
|
|
| 1,040,241 |
| 491,504 |
|
|
| 149,309 |
| 2,203,930 |
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; President, Defense and Fabrication Division(2) | 2018 | 533,685 |
|
|
| 1,230,603 |
| 456,301 |
|
|
| 45,630 |
| 2,266,218 |
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 | |
John A. Pilla SVP, Chief Technology and Quality Officer(3) | 2018 | 456,041 |
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| 1,364,744 |
| 422,978 |
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| 61,064 |
| 2,304,827 |
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(1) Mr. Gentile was appointed Executive Vice President and Chief Operating Officer of the Company effective April 1, 2016. (2) Mr. Hawkins served as the Company’s SVP and GM, Boeing, Defense, Regional/Jet Programs, and Global Customer Support until October 1, 2018. Effective October 1, 2018, Mr. Hawkins was given responsibility for defense and fabrication operations. (3) Mr. Pilla was not an NEO in the fiscal years ended December 31, 2017 and 2016. Accordingly, no information is displayed for those years. (4) For NEOs who received salary increases during the fiscal year, these numbers reflect a weighted amount based on the portions of the years for which their new compensation arrangements applied. (5) 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. (6) 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 an NEO with respect to the award. In 2018, each NEO received a Time-Based Restricted Stock award (“RS”), a Performance-Based Restricted Stock award tied to TSR (“PB-TSR”), and a Performance-Based Restricted Stock award tied to FCF Percentage (“PB-FCF”). The assumptions made by the Company in calculating these amounts are incorporated herein by reference to Note 18 to the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for 2018. The grant date fair value of the RSs is equal to the number of shares granted multiplied by $89.32, the average of the opening and closing prices of Common Stock on February 7, 2018, the grant date. The grant date fair value of the PB-TSRs is equal to the number of shares granted at target multiplied by $112.55, 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 it is assumed that the maximum level of performance is achieved with respect to the PB-TSRs (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-TSRs would be as follows: Mr. Gentile: $1,984,154; Mr. Kapoor: $619,166; Ms. Marnick: $330,305; Mr. Hawkins: $390,686; and Mr. Pilla: $274,570. The grant date fair value of the PB-FCFs is equal to the number of shares granted at target multiplied by $89.18, the average of the opening and closing prices of Common Stock on the grant date, adjusted for dividends (as dividends do not accrue on PB-FCFs until vesting). If it is assumed that the maximum level of performance is achieved with respect to the PB-FCFs (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-FCFs would be as follows: Mr. Gentile: $2,503,997; Mr. Kapoor: $781,371; Ms. Marnick: $416,767; Mr. Hawkins: $493,046; and Mr. Pilla: $346,383. For additional information on the awards, see “2018 Compensation Program Elements.” In addition, Mr. Pilla’s amount includes the grant date fair value of an RS of 6,135 shares of Common Stock received on October 23, 2018. The same assumptions set forth above apply. The grant date fair value of this RS is equal to the number of shares granted multiplied by $81.51, the average of the opening and closing prices of Common Stock on October 23, 2018, the grant date. | ||||||||||||||
Name and Principal Position | Year | Salary ($) | (2) | Bonus ($) | (3) | Stock Awards ($) | (4) | Non-Equity Incentive Plan Compensation ($) | (6) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | (7) | All Other Compensation ($) | (8) | Total ($) |
Thomas C. Gentile III President and CEO | 2020 | 1,108,552 |
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| 7,150,082 |
| 1,410,494 |
|
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| 785,222 |
| 10,454,350 |
2019 | 1,295,753 |
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| 7,150,017 |
| 1,873,535 |
|
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| 752,844 |
| 11,072,149 | |
2018 | 1,241,233 |
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| 6,250,140 |
| 1,546,576 |
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| 861,744 |
| 9,899,693 | |
Mark J. Suchinski(1) SVP and CFO | 2020 | 414,481 |
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| 875,064 |
| 363,696 |
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| 42,311 |
| 1,695,552 |
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Jose I. Garcia(1) Former SVP and CFO | 2020 | 50,410 |
| 500,000 |
| 1,695,554 | (5) |
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| 1,655,049 |
| 3,901,013 |
2019 | 601,521 |
| 250,000 |
| 2,730,292 |
| 615,000 |
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| 310,950 |
| 4,507,763 | |
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Samantha J. Marnick EVP and COO | 2020 | 493,025 |
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| 1,182,567 |
| 442,799 |
|
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| 146,949 |
| 2,265,339 |
2019 | 550,000 |
|
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| 1,182,704 |
| 561,000 |
|
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| 151,808 |
| 2,445,512 | |
2018 | 522,877 |
|
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| 1,040,241 |
| 491,504 |
|
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| 149,309 |
| 2,203,930 | |
Duane F. Hawkins SVP; President, | 2020 | 456,212 |
|
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| 1,230,597 |
| 400,326 |
|
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| 40,904 |
| 2,128,039 |
2019 | 535,000 |
|
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| 1,230,696 |
| 536,338 |
|
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| 38,440 |
| 2,340,474 | |
2018 | 533,685 |
|
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| 1,230,603 |
| 456,301 |
|
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| 45,630 |
| 2,266,218 | |
William E. Brown(1) SVP, Boeing Programs | 2020 | 401,683 |
|
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| 799,043 |
| 292,137 |
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| 44,755 |
| 1,537,617 |
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John A. Pilla(1) Former SVP and Chief Technology Officer | 2020 | 405,048 |
|
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| 902,581 |
| 355,429 |
| 79,812 |
| 43,270 |
| 1,786,141 |
2019 | 475,000 |
|
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| 902,629 |
| 478,563 |
| 96,295 |
| 46,766 |
| 1,999,253 | |
2018 | 456,041 |
|
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| 1,364,744 |
| 422,978 |
|
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| 61,064 |
| 2,304,827 | |
(1) Mr. Garcia joined the Company on January 9, 2019, and resigned on January 29, 2020. Mr. Suchinski was appointed as SVP and CFO on January 29, 2020. Messrs. Suchinski and Brown were not NEOs in the fiscal years ended December 31, 2019, and December 31, 2018. Accordingly, information is not displayed for 2019 and 2018. Mr. Pilla stepped down from his executive officer role effective August 1, 2020, but continued employment with the Company as a Senior Advisor. (2) Reflects a weighted amount based on the portion of the year for which different base salaries applied. From April 2020 through January 2021, salaries were subject to a 20% reduction in light of impacts from the COVID-19 pandemic and B737 MAX grounding. For Mr. Garcia, the amount reflects amounts earned through January 29, 2020. Severance amounts paid to Mr. Garcia after that date are included in “All Other Compensation” (note, however, Mr. Garcia’s 2019 ACI award that was paid in February 2020 is reflected in his 2019 compensation under “Non-Equity Incentive Plan Compensation” in last year’s proxy statement). For Mr. Pilla, the amount reflects all salary amounts earned for the year, including amounts earned following August 1, 2020, the date he stepped down from his position as Senior Vice President and Chief Technology Officer. (3) Because the 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. Mr. Garcia’s 2019 amount represents a $250,000 cash sign-on bonus, and his 2020 amount represents a $500,000 cash sign-on bonus paid on January 9, 2020. | ||||||||||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5056
For all except Mr. Garcia: 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, 2020. In 2020, each NEO other than Mr. Garcia received a Time-Based Restricted Stock award (“RS”), a Performance-Based Restricted Stock award tied to TSR (“PB-TSR”), and a Performance-Based Restricted Stock award tied to FCF Percentage (“PB-FCF”). The grant date fair value of the RS awards is equal to the number of shares granted, multiplied by $50.91, which is the average of the opening and closing prices of the Common Stock on the grant date. The grant date fair value of the PB-TSRs is equal to the number of shares granted at target multiplied by $29.49, 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. If the maximum level of performance is achieved with respect to the PB-TSRs, the value of the PB-TSRs would be as follows: Mr. Gentile: $2,860,058; Mr. Suchinski: $350,046; Ms. Marnick: $473,020; Mr. Hawkins: $492,247; Mr. Brown: $319,613; and Mr. Pilla: $361,017. The grant date fair value of the PB-FCFs is equal to the number of shares granted at target multiplied by $50.80, the average of the opening and closing prices of the Common Stock on the grant date, adjusted for dividends. If the maximum level of performance is achieved with respect to the PB-FCFs, the value of the PB-FCFs would be as follows: Mr. Gentile: $2,860,040; Mr. Suchinski: $350,012; Ms. Marnick: $473,050; Mr. Hawkins: $492,252; Mr. Brown: $319,634; and Mr. Pilla: $361,086. For additional information on the awards, see “2020 Compensation Program Elements.” (5) For Mr. Garcia: On January 31, 2020, Mr. Garcia received accelerated vesting and continued vesting for various awards, as described further under “Employment and Separation Agreements.” Amounts shown represent the incremental fair value of the modification to these awards using the average of the open and closing stock prices for RSs and PB-FCF (with PB-FCF being adjusted for dividends), and the closing stock price for the PB-TSR in accordance with FASB ASC Topic 718. (6) Represents ACIs earned by the
|
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 57
The following table shows “All Other Compensation” amounts for our NEOs in |
Name | Life Insurance ($) | (a)
| Financial and Tax Services ($) | (b)
| Personal Aircraft Usage ($) | (c)
| Personal Travel Expenses ($) | (d)
| Home Security and IT Expenses ($) | (e)
| Deferred Compensation Plan Contributions ($) | (f)
| Company Contributions Under Tax- Qualified Contribution Plan ($) | (g)
| Other(h) ($) |
| Total ($) |
Thomas C. Gentile III | 837 |
| 18,100 |
| 112,075 |
| 19,806 |
| 5,449 |
| 600,000 |
| 18,825 |
| 10,130 |
| 785,222 |
Mark J. Suchinski | 837 |
|
|
|
|
|
|
| 5,449 |
|
|
| 23,025 |
| 13,000 |
| 42,311 |
Jose I. Garcia | 68 |
|
|
|
|
|
|
| 5,449 |
|
|
| 8,458 |
| 1,641,074 |
| 1,655,049 |
Samantha J. Marnick | 837 |
| 975 |
|
|
|
|
| 15,649 |
| 100,000 |
| 23,025 |
| 11,911 |
| 146,949 |
Duane F. Hawkins | 837 |
| 13,000 |
|
|
|
|
| 6,877 |
|
|
| 20,191 |
|
|
| 40,904 |
William E. Brown | 806 |
| 13,000 |
|
|
|
|
| 5,449 |
|
|
| 25,500 |
|
|
| 44,755 |
John A. Pilla | 796 |
|
|
|
|
|
|
| 5,449 |
|
|
| 37,025 |
|
|
| 43,270 |
(a) Amounts shown reflect Company contributions toward group life insurance. (b) Amounts shown reflect financial, tax-preparation, and other related services paid for by the Company. Amounts shown for Messrs. Gentile, Hawkins, and Brown were reimbursed under the Perquisite Plan. (c) Amounts shown reflect the 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 “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 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): Mr. Gentile - 70 hours; and Ms. Marnick - 25 hours. In 2020, Mr. Gentile used 37.6 hours of the 70 hours allotted by the Compensation Committee, and Ms. Marnick used 0 hours. With ferry flights, the total hours reported for Mr. Gentile in the table above for 2020 was 44 hours. (d) Amounts shown reflect the NEOs’ personal travel expenses, spousal travel expenses, and personal driving expenses paid for by the Company. (e) Amounts shown reflect the cost of home security and IT services for the NEOs. (f) Amounts shown reflect Company contributions to the accounts of its eligible NEOs under the DCP. See “Other Compensation Elements and Information — Benefits and Perquisites.” (g) Amounts shown reflect contributions made by the Company under the RSP. See “Other Compensation Elements and Information — Benefits and Perquisites.” (h) For Mr. Gentile, amount reflects the sum of (i) $6,550 in country and golf club membership expenses, which were reimbursed under the Perquisite Plan, and (ii) $3,580 in medical expenses for an annual physical examination. For Mr. Suchinski, amount reflects car payments reimbursed under the Perquisite Plan. For Ms. Marnick, amount reflects the sum of (i) $8,942 in tuition payments, and (ii) $2,969 in car payments, both of which were reimbursed under the Perquisite Plan. For Mr. Garcia, amount reflects the sum of (i) $13,000 in car payments reimbursed under the Perquisite Plan, (ii) $615,000, which is equal to one year of Mr. Garcia’s annual base salary in place on January 29, 2020, (iii) a lump sum of $20,000 for COBRA coverage over a 12-month period, (iv) a sum of $500,000 in lieu of the Subsequent Sign-On, as such term is defined under “Employment and Separation Agreements,” (v) a sum of $409,590 in lieu of receiving any portion of the annual 2020 LTIP awards, (vi) $75,000 in career transition services, and (vii) $8,484 in dividends paid on accelerated RSs. | |||||||||||||||||
Name | Life Insurance ($) | (a)
| Financial and Tax Services ($) | (b)
| Personal Aircraft Usage ($) | (c)
| Personal Travel Expenses ($) | (d)
| Personal Security ($) | (e)
| Relocation Expenses and Gross-Ups ($) | (f)
| Deferred Compensation Plan Contributions ($) | (g)
| Company Contributions Under Tax- Qualified Contribution Plan ($) | (h)
| Other(i) ($) |
| Total ($) |
Thomas C. Gentile III | 816 |
| 16,600 |
| 56,376 |
|
|
|
|
| 124,843 |
| 600,000 |
| 30,375 |
| 32,734 |
| 861,744 |
Sanjay Kapoor | 816 |
|
|
| 32,257 |
| 13,000 |
| 1,091 |
|
|
|
|
| 33,375 |
| 1,002 |
| 81,541 |
Samantha J. Marnick | 816 |
| 975 |
| 4,068 |
| 12,025 |
| 10,200 |
|
|
| 100,000 |
| 21,224 |
|
| 149,309 | |
Duane F. Hawkins | 816 |
| 13,000 |
| 4,068 |
|
|
| 1,091 |
|
|
|
|
| 26,654 |
|
|
| 45,630 |
John A. Pilla | 743 |
|
|
|
|
| 9,463 |
|
|
|
|
|
|
| 47,322 |
| 3,537 |
| 61,064 |
(a) Amounts shown reflect Company contributions toward 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 does not grant bonuses to cover, reimburse, or “gross-up” any income tax owed for personal travel on corporate aircraft. (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 and associated tax gross-ups. (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.” (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.” (i) For Mr. Gentile, amounts shown reflect executive physical costs of $2,750, costs relating to personal use of country club memberships of $5,036, personal driving fees of $16,548, and $8,400 for the value of forfeited shares in connection with Mr. Gentile’s resignation from a private company’s board of directors (such value was claimed by Mr. Gentile through the Company’s Perquisite Allowance Plan). For Messrs. Kapoor and Pilla, amounts shown reflect costs relating to personal use of a country club membership. | |||||||||||||||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5158
Employment and Separation Agreements
Spirit has employment agreements with all of its NEOs except for Mr. Pilla.currently employed NEOs. A brief description of certainthe material terms of Messrs. Gentile’s and Suchinski’s agreements is below. While Ms. Marnick, Mr. Brown, and Mr. Hawkins have employment agreements with the Company, their roles and compensation have significantly changed since the employment agreements were entered into, and all termination benefits expressly provided 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.” The material terms of the separation agreements of Messrs. Garcia and Pilla are included below.
Mr. Gentile’s Employment Agreement
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 $600,000.
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 vested on April 1, 2018.
Effective August 1, 2016 (in recognition of Mr. Gentile’s appointment as President and CEO), Mr. Gentile’s base salary was increased to $1,100,000 and his annual target LTIP award was increased to 400% of his annual base salary. EffectiveMr. Gentile received salary and LTIP target increases in the first quarter of 2017 and 2018. Most recently, in February 3, 2017, Mr. Gentile’s base salary was increased to $1,150,000, and his annual target LTIP award was increased to 450% of his base salary. In January 2018, Mr. Gentile’s salary was increased to $1,250,000, and his annual target LTIP award was increased to 500%. In January 2019, Mr. Gentile’s salary was increased to $1,300,000, his annual target ACI award was increased to 145% of his annual base salary, and his annual target LTIP award was increased to 550% of his annual base salary. Mr. Gentile’s compensation has not been increased since February 2019.
Potential payments and termination events under Mr. Gentile’s employment agreement are described under “Potential Payments Upon Termination or Change-in-Control — Employment Agreements.”
Mr. Kapoor’sSuchinski’s Employment Agreement
On August 23, 2013,January 29, 2020, we entered into an employment agreement effective September 23, 2013, with Mr. KapoorSuchinski with respect to his position as Senior Vice President and Chief Financial Officer. The agreement provided for a three-year initial term and would be automatically extended for successive one-year periods thereafter. Pursuant to the employment agreement, Mr. Kapoor was entitled toSuchinski received a base salary of $525,000, which could be changed based on performance.$500,000 per year. In addition, Mr. KapoorSuchinski was eligible for an ACI equal to 100% of his base salary, and an annual target LTIP award of 200%equal to 175% of his base salary, and, from time to time, a target discretionary bonus in the form of cash or equity of 10% of earned base salary. Mr. Kapoor was also entitled to participate in the executive relocation program.
The Company granted Mr. Kapoor $2,000,000 in restricted stock as a sign-on award, which fully vested in 2017. In addition, Mr. Kapoor received a cash signing bonus of $150,000 to be paid within 30 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, 2015,26, 2021, after a compensation and performance review, Mr. Kapoor’sSuchinski’s base salary was increased to $565,000. Effective February 5, 2016, Mr. Kapoor’s base salary was increased to $600,000,$525,000, and his annual target LTIP award was increased to 220%200% 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. On July 26, 2016, Mr. Kapoor’s title was changed to Executive Vice President and Chief Financial Officer. 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’sSuchinski’s employment agreement are described under “Potential Payments Upon Termination or Change-in-Control — Employment Agreements.”
Mr. Kapoor retired from theGarcia’s Employment Agreement and Resignation Agreement
On November 23, 2018, we entered into an employment agreement with Mr. Garcia with respect to his position of Executiveas Senior Vice President and Chief Financial Officer, oneffective January 9, 2019. Pursuant to the employment agreement, Mr. Garcia received a base salary of $615,000 per year. In addition, Mr. Garcia was eligible for an ACI with a target value equal to 100% of his base salary, and an annual target LTIP award equal to 200% of his base salary. Mr. Garcia was also entitled to receive an annual DCP Company contribution of $100,000.
Other Employment AgreementsThe Company granted Mr. Garcia a cash sign-on award of $750,000, of which $250,000 was paid in 2019, and $500,000 was paid in 2020. Mr. Garcia received a sign-on restricted stock award of $1,500,000. The first portion of this award (the “Initial Sign-On RS”) was granted on February 6, 2019, with a grant date fair value of $1,000,080, and the second award of $500,000 was to be granted no later than the first anniversary of the effective date (the “Subsequent Sign-On”). Each of the sign-on stock awards was to vest over three years.
Both Ms. MarnickOn January 29, 2020, Mr. Garcia resigned. On January 31, 2020, the Company and Mr. Hawkins have employment agreements with the Company. However, both of their roles have changed significantly since the employment agreements wereGarcia entered into a Resignation Agreement and all termination benefits expressly provided by the agreements have expired. Accordingly, the Company does not believe a description ofGeneral Release (the “Garcia Agreement”). Under the terms of such agreementsthe Garcia Agreement, and in consideration of Mr. Garcia’s future cooperation, release of claims, and compliance with certain obligations, including confidentiality, non-competition, non-solicitation, and non-disparagement covenants, Mr. Garcia received the following separation payments:
a sum of $615,000, which is necessaryequal to understandone year of Mr. Garcia’s annual base salary applicable on the information discloseddate of his resignation;
a payment of Mr. Garcia’s expected ACI award for 2019, based on an assumed score of 1.0;
a lump sum of $20,000 for COBRA coverage over a 12-month period;
full vesting with respect to 10,861 shares underlying the Initial Sign-On RS, 5,880 shares of the time-based restricted stock granted under the LTIP in November 2019, and 5,344 shares of the “Summary Compensation Table.”2019 RS;
a sum of $500,000 in lieu of the Subsequent Sign-On Award;
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 59
a sum of $409,590 in lieu of receiving any portion of the annual 2020 long-term incentives;
reimbursement of reasonable and documented career transition services through July 31, 2020; and
continued vesting (upon the contractual vesting date) with respect to 1,321 shares (based on target performance) of the 2019 PB-TSR and 1,810 shares (based on target performance) of the 2019 PB-FCF, subject to the Company’s certification of the satisfaction of applicable performance criteria.
52Mr. Pilla’s Retirement Agreement and General Release
On July 29, 2020, we entered into a retirement agreement and general release with Mr. Pilla (the “Pilla Agreement”). Under the terms of the Pilla Agreement, effective August 1, 2020, Mr. Pilla stepped down from his position as Senior Vice President and Chief Technology Officer and become a Senior Advisor to the Company. Such position will continue until July 1, 2021, the Retirement Date. For a period of 13 months following the Retirement Date (the “Consulting Term”), Mr. Pilla will provide consulting and transition services to the Company and Spirit.
In consideration of Mr. Pilla’s contributions to the Company (more than 39 years of service, including with Boeing prior to the Company’s divestiture), relationships with customers and key stakeholders in the industry, provision of advisory and consulting services, release of claims, and compliance with certain obligations, including confidentiality, non-competition, non-solicitation, and non-disparagement covenants, Mr. Pilla will receive the following:
From August 1, 2020, through the Retirement Date, Mr. Pilla will (i) receive an annual base salary of $475,000, and (ii) be eligible to receive an ACI award with a target value as follows: (a) for 2020, Mr. Pilla was entitled to an award of 100% of his base salary if target performance metrics are met, or 200% of his base salary if maximum performance metrics are met, and (b) for 2021, Mr. Pilla will be entitled to an award of 75% of his base salary if target performance metrics are met, or 150% of his base salary if maximum performance metrics are met, pro-rated based on the portion of the year in which he serves as Senior Advisor. Mr. Pilla will not be entitled to any new LTIP grants after August 1, 2020.
For the services to be provided during the Consulting Term, Mr. Pilla will receive $514,600 payable in equal installments over a 13-month period.
Mr. Pilla’s outstanding equity awards under the LTIP will be subject to continued vesting in accordance with their terms, including, in the case of performance-based grants, the satisfaction of applicable performance criteria.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 60
Grants of Plan-Based Awards in 20182020
The following table presents information regarding grants of plan-based awards to the NEOs during the fiscal year ended December 31, 2018.2020. Note that, for all equity awards below other than for Mr. Garcia, the date the award was approved by the Compensation Committee was January 21, 2020; however, the awards were not priced until the grant date of March 4, 2020. For more information on the terms applicable to thestatus of Mr. Pilla’s awards, reflected below, please see “2018“Summary Compensation Program Elements.Table - Employment and Separation Agreements – Mr. Pilla’s Retirement Agreement and General Release.”
|
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
| Estimated Future Payouts Under Equity Incentive Plan Awards |
| All Other Stock Awards |
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
| Estimated Future Payouts Under Equity Incentive Plan Awards |
| All Other Stock Awards | Grant Date Fair Value of Stock Awards ($) | ||||||||||
Name | Grant Date | Date Award Approved by Board | Threshold ($) | Target ($) | Maximum ($) |
| Threshold (#) | Target (#) | Maximum (#) |
| Number of Shares of Stock (#) | Grant Date Fair Value of Stock Awards ($) | Grant Date | Threshold ($) | Target ($) | Maximum ($) |
| Threshold (#) | Target (#) | Maximum (#) |
| Number of Shares of Stock (#) | |
Thomas C. Gentile III | Thomas C. Gentile III | Thomas C. Gentile III | |||||||||||||||||||||
ACI(1) |
| 434,432 | 1,737,726 | 3,475,452 |
|
| 401,850 | 1,607,400 | 3,214,801 |
|
|
|
|
|
| ||||||||
RS(2) | 2/7/2018 | 1/23/2018 |
| 41,984 | 3,750,011 | 3/4/2020 |
|
|
|
|
|
| 84,267 | 4,290,033 | |||||||||
PB-TSR(3) | 2/7/2018 | 1/23/2018 |
| 2,777 | 11,107 | 22,214 |
| 1,250,093 | 3/4/2020 |
|
|
| 12,123 | 48,492 | 96,984 |
|
| 1,430,029 | |||||
PB-FCF(4) | 2/7/2018 | 1/23/2018 |
| 3,505 | 14,017 | 28,034 |
| 1,250,036 | 3/4/2020 |
|
|
| 7,038 | 28,150 | 56,300 |
|
| 1,430,020 | |||||
Sanjay Kapoor |
| ||||||||||||||||||||||
Jose I. Garcia | Jose I. Garcia |
|
|
|
|
|
|
|
| ||||||||||||||
RS(5) | 1/31/2020 |
|
|
|
|
|
| 5,344 | 348,215 | ||||||||||||||
PB-TSR(6) | 1/31/2020 |
|
|
| 331 | 1,321 | 2,642 |
|
| 39,220 | |||||||||||||
PB-FCF(7) | 1/31/2020 |
|
|
| 453 | 1,810 | 3,620 |
|
| 217,275 | |||||||||||||
RS(8) | 1/31/2020 |
|
|
|
|
|
| 10,861 | 707,703 | ||||||||||||||
RS(9) | 1/31/2020 |
|
|
|
|
|
| 5,880 | 383,141 | ||||||||||||||
Mark J. Suchinski | Mark J. Suchinski |
|
|
|
|
|
|
|
| ||||||||||||||
ACI(1) |
| 162,500 | 650,000 | 1,300,000 |
|
| 102,234 | 408,934 | 817,869 |
|
|
|
|
|
| ||||||||
RS(2) | 2/7/2018 | 1/23/2018 |
| 13,099 | 1,170,003 | 3/4/2020 |
|
|
|
|
|
| 10,313 | 525,035 | |||||||||
PB-TSR(3) | 2/7/2018 | 1/23/2018 |
| 867 | 3,466 | 6,932 |
| 390,098 | 3/4/2020 |
|
|
| 1,484 | 5,935 | 11,870 |
|
| 175,023 | |||||
PB-FCF(4) | 2/7/2018 | 1/23/2018 |
| 1,094 | 4,374 | 8,748 |
| 390,073 | 3/4/2020 |
|
|
| 862 | 3,445 | 6,890 |
|
| 175,006 | |||||
Samantha J. Marnick | Samantha J. Marnick |
| Samantha J. Marnick |
|
|
|
|
|
|
|
| ||||||||||||
ACI(1) |
| 130,719 | 522,877 | 1,045,753 |
|
| 123,256 | 493,025 | 986,049 |
|
|
|
|
|
| ||||||||
RS(2) | 2/7/2018 | 1/23/2018 |
| 6,987 | 624,079 | 3/4/2020 |
|
|
|
|
|
| 13,937 | 709,533 | |||||||||
PB-TSR(3) | 2/7/2018 | 1/23/2018 |
| 463 | 1,849 | 3,698 |
| 208,105 | 3/4/2020 |
|
|
| 2,005 | 8,020 | 16,040 |
|
| 236,510 | |||||
PB-FCF(4) | 2/7/2018 | 1/23/2018 |
| 584 | 2,333 | 4,666 |
| 208,057 | 3/4/2020 |
|
|
| 1,164 | 4,656 | 9,312 |
|
| 236,525 | |||||
Duane F. Hawkins | Duane F. Hawkins |
| Duane F. Hawkins |
|
|
|
|
|
|
|
| ||||||||||||
ACI(1) |
| 133,421 | 533,685 | 1,067,370 |
|
| 114,053 | 456,212 | 912,423 |
|
|
|
|
|
| ||||||||
RS(2) | 2/7/2018 | 1/23/2018 |
| 8,266 | 738,319 | 3/4/2020 |
|
|
|
|
|
| 14,503 | 738,348 | |||||||||
PB-TSR(3) | 2/7/2018 | 1/23/2018 |
| 547 | 2,187 | 4,374 |
| 246,147 | 3/4/2020 |
|
|
| 2,087 | 8,346 | 16,692 |
|
| 246,124 | |||||
PB-FCF(4) | 2/7/2018 | 1/23/2018 |
| 690 | 2,760 | 5,520 |
| 246,137 | 3/4/2020 |
|
|
| 1,212 | 4,845 | 9,690 |
|
| 246,126 | |||||
William E. Brown | William E. Brown |
|
|
|
|
|
|
|
| ||||||||||||||
ACI(1) | ACI(1) | 85,358 | 341,431 | 682,861 |
|
|
|
|
|
| |||||||||||||
RS(2) | 3/4/2020 |
|
|
|
|
|
| 9,417 | 479,419 | ||||||||||||||
PB-TSR(3) | 3/4/2020 |
|
|
| 1,355 | 5,419 | 10,838 |
|
| 159,806 | |||||||||||||
PB-FCF(4) | 3/4/2020 |
|
|
| 787 | 3,146 | 6,292 |
|
| 159,817 | |||||||||||||
John A. Pilla | John A. Pilla |
| John A. Pilla |
|
|
|
|
|
|
|
| ||||||||||||
ACI(1) |
| 114,010 | 456,041 | 912,083 |
|
| 101,262 | 405,048 | 810,096 |
|
|
|
|
|
| ||||||||
RS(2) | 2/7/2018 | 1/23/2018 |
| 5,808 | 518,771 | 3/4/2020 |
|
|
|
|
|
| 10,637 | 541,530 | |||||||||
PB-TSR(3) | 2/7/2018 | 1/23/2018 |
| 385 | 1,537 | 3,074 |
| 172,989 | 3/4/2020 |
|
|
| 1,531 | 6,121 | 12,242 |
|
| 180,508 | |||||
PB-FCF(4) | 2/7/2018 | 1/23/2018 |
| 485 | 1,939 | 3,878 |
| 172,920 | |||||||||||||||
RS(5) | 10/23/2018 |
| 6,135 | 500,064 | |||||||||||||||||||
(1) Represents ACIs that were paid in February 2019 but granted and earned in 2018. 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 2018. (2) Represents RSs that vest annually over three years, beginning February 7, 2019, 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 $89.32, the average of the opening and closing prices of Common Stock on the grant date. (3) Represents PB-TSRs 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 $112.55, 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 range from 25% to 200% of the target shares granted. (4) Represents PB-FCFs 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 granted at target multiplied by $89.18, the average of the opening and closing prices of Common Stock on the grant date, adjusted for dividends. Actual payout may be zero or range from 25% to 200% of the target shares granted. (5) Represents a one-time RS that vests annually over three years, beginning October 23, 2019, if Mr. Pilla 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 $81.51, the average of the opening and closing prices of Common Stock on the grant date. | |||||||||||||||||||||||
PB-FCF(4) | 3/4/2020 | 889 | 3,554 | 7,108 | 180,543 |
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5361
(1) Represents ACIs that were paid in February 2021 but granted and earned in 2020. The actual ACI amounts are reported in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” 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 2020 (including the salary reductions that applied in 2020). (2) Represents RSs that vest annually over three years, beginning March 4, 2021, if such NEO remains employed by the Company on each annual vesting date or as otherwise provided under the Pilla Agreement. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will continue to vest in the RS even if 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 $50.91, the average of the opening and closing prices of the Common Stock on the grant date. (3) Represents PB-TSRs 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 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 $29.49, 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. |
(4) Represents PB-FCFs that vest at the end of the three-year performance period based upon the achievement of FCF Percentage on a cumulative basis over the 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 $50.80, the average of the open and closing prices of the Common Stock on the grant date, adjusted for dividends. Actual payout may be zero or range from 25% to 200% of the target shares granted. (5) Represents RS granted on February 6, 2019 (approved by the Compensation Committee on January 23, 2019), that would have been forfeited by its terms upon Mr. Garcia’s resignation. As a result of the Garcia Agreement, the incremental fair value of the modified award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $65.16, the average of the opening and closing prices of the Common Stock on January 31, 2020. (6) Represents PB-TSR granted on February 6, 2019 (approved by the Compensation Committee on January 23, 2019), that would have been forfeited by its terms upon Mr. Garcia’s resignation. As a result of the Garcia Agreement, the incremental fair value of the modified award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares at target multiplied by $29.69, 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 Common Stock on January 31, 2020. (7) Represents PB-FCF granted on February 6, 2019 (approved by the Compensation Committee on January 23, 2019), that would have been forfeited by its terms upon Mr. Garcia’s resignation. As a result of the Garcia Agreement, the incremental fair value of the modified award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares at target multiplied by $65.24, the average of the opening and closing prices of the Common Stock on January 31, 2020, adjusted for dividends, multiplied by 184%, the expected payout of the award as of January 31, 2020. (8) Represents Initial Sign-On RS granted on February 6, 2019 (approved by the Compensation Committee on November 20, 2018), that would have been forfeited by its terms upon Mr. Garcia’s resignation. As a result of the Garcia Agreement, the incremental fair value of the modified award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $65.16, the average of the opening and closing prices of the Common Stock on January 31, 2020. (9) Represents special RS granted on November 5, 2020 (approved by the Compensation Committee on October 22, 2020), that would have been forfeited by its terms upon Mr. Garcia’s resignation. As a result of the Garcia Agreement, the incremental fair value of the modified award, which is reported in the “Stock Awards” column of the “Summary Compensation Table,” is equal to the number of shares multiplied by $65.16, the average of the opening and closing prices of the Common Stock on January 31, 2020. |
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 62
Outstanding Equity Awards at 20182020 Fiscal Year End
The following table presents the outstanding equity awards held by the NEOs as of December 31, 2018.2020. 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 $72.09,$39.09, the closing price of the Common Stock on December 31, 2018.2020. For information on the effect of Mr. Garcia’s resignation on such awards, see “Employment and Separation Agreements.”
Name | Stock Awards | Stock Awards | ||||||||||
Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) |
| 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 ($) | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) |
| 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) | 2/7/2018 | 41,984 | 3,026,627 |
| 3/4/2020 | 84,267 | 3,293,997 |
|
|
| ||
PB-TSR(2) | 2/7/2018 |
| 22,214 | 1,601,407 | 3/4/2020 |
|
|
| 12,123 | 473,888 | ||
PB-FCF(3) | 2/7/2018 |
| 3,505 | 252,675 | 3/4/2020 |
|
|
| 7,038 | 275,115 | ||
RS(4) | 2/7/2017 | 36,915 | 2,661,202 |
| 2/6/2019 | 31,060 | 1,214,135 |
|
|
| ||
PB-TSR(5) | 2/7/2017 |
| 37,264 | 2,686,362 | 2/6/2019 |
|
|
| 2,878 | 112,501 | ||
PB-FCF(6) | 2/7/2017 |
| 4,709 | 339,472 | 2/6/2019 |
|
|
| 3,946 | 154,249 | ||
Sanjay Kapoor |
| |||||||||||
RS(7) | 2/7/2018 | 13,994 | 547,025 |
|
|
| ||||||
Jose I. Garcia |
|
|
|
|
|
| ||||||
PB-TSR(5) | 2/6/2019 |
|
|
| 331 | 12,939 | ||||||
PB-FCF(6) | 2/6/2019 |
|
|
| 453 | 17,708 | ||||||
Mark J. Suchinski |
|
|
|
|
|
| ||||||
RS(1) | 2/7/2018 | 13,099 | 944,307 |
| 3/4/2020 | 10,313 | 403,135 |
|
|
| ||
PB-TSR(2) | 2/7/2018 |
| 6,932 | 499,728 | 3/4/2020 |
|
|
| 1,484 | 58,010 | ||
PB-FCF(3) | 2/7/2018 |
| 1,094 | 78,866 | 3/4/2020 |
|
|
| 862 | 33,696 | ||
RS(4) | 2/7/2017 | 12,982 | 935,872 |
| 2/6/2019 | 1,882 | 73,567 |
|
|
| ||
PB-TSR(5) | 2/7/2017 |
| 13,106 | 944,812 | 2/6/2019 |
|
|
| 140 | 5,473 | ||
PB-FCF(6) | 2/7/2017 |
| 1,657 | 119,453 | 2/6/2019 |
|
|
| 192 | 7,505 | ||
Special RS(8) | 11/26/2018 | 1,674 | 65,437 |
|
|
| ||||||
RS(7) | 2/9/2016 | 7,607 | 548,389 |
| 2/7/2018 | 776 | 30,334 |
|
|
| ||
PB-TSR(8) | 2/9/2016 | 6,076 | 438,018 |
| ||||||||
Samantha J. Marnick |
|
|
|
|
|
|
| |||||
RS(1) | 2/7/2018 | 6,987 | 503,693 |
| 3/4/2020 | 13,937 | 544,797 |
|
|
| ||
PB-TSR(2) | 2/7/2018 |
| 3,698 | 266,589 | 3/4/2020 |
|
|
| 2,005 | 78,375 | ||
PB-FCF(3) | 2/7/2018 |
| 584 | 42,101 | 3/4/2020 |
|
|
| 1,164 | 45,501 | ||
RS(4) | 2/7/2017 | 6,641 | 478,750 |
| 2/6/2019 | 5,137 | 200,805 |
|
|
| ||
PB-TSR(5) | 2/7/2017 |
| 6,704 | 483,291 | 2/6/2019 |
|
|
| 476 | 18,607 | ||
PB-FCF(6) | 2/7/2017 |
| 848 | 61,132 | 2/6/2019 |
|
|
| 653 | 25,526 | ||
RS(7) | 2/9/2016 | 3,965 | 285,837 |
| 2/7/2018 | 2,329 | 91,040 |
|
|
| ||
PB-TSR(8) | 2/9/2016 | 3,167 | 228,309 |
| ||||||||
Duane F. Hawkins |
|
|
|
|
|
|
| |||||
RS(1) | 2/7/2018 | 8,266 | 595,896 |
| 3/4/2020 | 8,069 | 315,417 |
|
|
| ||
PB-TSR(2) | 2/7/2018 |
| 4,374 | 315,322 | 3/4/2020 |
|
|
| 2,087 | 81,581 | ||
PB-FCF(3) | 2/7/2018 |
| 690 | 49,742 | 3/4/2020 |
|
|
| 1,212 | 47,377 | ||
RS(4) | 2/7/2017 | 8,160 | 588,254 |
| 2/6/2019 | 2,974 | 116,254 |
|
|
| ||
PB-TSR(5) | 2/7/2017 |
| 8,238 | 593,877 | 2/6/2019 |
|
|
| 496 | 19,389 | ||
PB-FCF(6) | 2/7/2017 |
| 1,041 | 75,046 | 2/6/2019 |
|
|
| 680 | 26,581 | ||
RS(7) | 2/9/2016 | 5,764 | 415,527 |
| 2/7/2018 | 1,532 | 59,886 |
|
|
| ||
PB-TSR(8) | 2/9/2016 | 4,603 | 331,830 |
| ||||||||
William E. Brown |
|
|
|
|
|
| ||||||
RS(1) | 3/4/2020 | 9,417 | 368,111 |
|
|
| ||||||
PB-TSR(2) | 3/4/2020 |
|
|
| 1,355 | 52,967 | ||||||
PB-FCF(3) | 3/4/2020 |
|
|
| 787 | 30,764 | ||||||
RS(4) | 2/6/2019 | 3,471 | 135,681 |
|
|
| ||||||
PB-TSR(5) | 2/6/2019 |
|
|
| 322 | 12,587 | ||||||
PB-FCF(6) | 2/6/2019 |
|
|
| 441 | 17,239 | ||||||
Special RS(8) | 10/23/2018 | 613 | 23,962 |
|
|
| ||||||
RS(7) | 2/7/2018 | 1,128 | 44,094 |
|
|
| ||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5463
Name | Stock Awards | 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 ($) | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) |
| 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 ($) | |
John A. Pilla |
|
|
|
|
|
|
|
|
|
|
|
|
RS | 10/23/2018 | 6,135 | 442,272 |
| 3/4/2020 | 10,637 | 415,800 |
|
|
| ||
RS(1) | 2/7/2018 | 5,808 | 418,699 |
| ||||||||
PB-TSR(2) | 2/7/2018 |
| 3,074 | 221,607 | 3/4/2020 |
|
|
| 1,531 | 59,848 | ||
PB-FCF(3) | 2/7/2018 |
| 485 | 34,964 | 3/4/2020 |
|
|
| 889 | 34,751 | ||
RS(4) | 2/7/2017 | 5,489 | 395,702 |
| 2/6/2019 | 3,920 | 153,233 |
|
|
| ||
PB-TSR(5) | 2/7/2017 |
| 5,542 | 399,523 | 2/6/2019 |
|
|
| 364 | 14,229 | ||
PB-FCF(6) | 2/7/2017 |
| 701 | 50,535 | 2/6/2019 |
|
|
| 499 | 19,506 | ||
Special RS(8) | 10/23/2018 | 2,045 | 79,939 |
|
|
| ||||||
RS(7) | 2/9/2016 | 4,434 | 319,647 |
| 2/7/2018 | 1,936 | 75,678 |
|
|
| ||
PB-TSR(8) | 2/9/2016 | 3,542 | 255,343 |
| ||||||||
(1) Represents 2018 annual RSs. The first tranche of the award vested on February 7, 2019, and the second and third tranches will vest on February 7, 2020, and February 7, 2021, respectively, if the NEO continues to be employed by the Company on each vesting date. (2) Represents PB-TSRs granted in 2018 with a performance tracking period running from January 1, 2018, to December 31, 2020. PB-TSRs 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-TSRs that were granted in 2016 and vested in 2019. The award vesting date is December 31, 2020, subject to performance certification by the Compensation Committee. (3) Represents PB-FCFs granted in 2018 with a performance tracking period running from January 1, 2018, to December 31, 2020. PB-FCFs 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 December 31, 2020, subject to performance certification by the Compensation Committee. (4) Represents 2017 annual RSs. The first tranche of the award vested on February 7, 2018, the second tranche of the award vested on February 7, 2019, and the third tranche will vest on February 7, 2020, if the NEO continues to be employed by the Company on such vesting date. (5) Represents PB-TSRs granted in 2017 with a performance tracking period running from January 1, 2017, to December 31, 2019. PB-TSRs 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-TSRs that were granted in 2016 and vested in 2019. The award vesting date is February 7, 2020. (6) Represents PB-FCFs granted in 2017 with a performance tracking period running from January 1, 2017, to December 31, 2019. PB-FCFs 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. (7) Represents 2016 annual RSs. The first tranche of the award vested on February 9, 2017, the second tranche of the award vested on February 9, 2018, and the third tranche of the award vested on February 9, 2019. (8) Represents PB-TSRs granted in 2016 with a performance tracking period running from January 1, 2016, to December 31, 2018. PB-TSRs 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, 2018, at 100% (percentile rank of 50th), as certified by the Compensation Committee on January 23, 2019. The award vested on February 9, 2019. (9) Represents a one-time RS that vests annually over three years, beginning October 23, 2019, if Mr. Pilla remains employed by the Company on each annual vesting date. | ||||||||||||
(1) Represents 2020 annual RSs. The first tranche of the award vested on March 4, 2021, and the second and third tranches will vest on March 4, 2022, and March 4, 2023, respectively, if the NEO continues to be employed by the Company on each vesting date or as otherwise provided in the Pilla Agreement. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will continue to vest in the RS even if he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). For this reason, Mr. Hawkins’ amounts for the RS are shown as net shares, because shares were disposed of for tax purposes on the date he became retirement eligible in 2020 in accordance with IRC requirements. (2) Represents PB-TSRs granted in 2020 with a performance period running from January 1, 2020, to December 31, 2022. 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, 2020. The award vesting date is December 31, 2022, subject to performance certification by the Compensation Committee. (3) Represents PB-FCFs granted in 2020 with a performance period running from January 1, 2020, to December 31, 2022. The number of shares and market value shown reflects the achievement of a threshold performance goal based on FCF Percentage performance for the fiscal year ended December 31, 2020. The award vesting date is December 31, 2022, subject to performance certification by the Compensation Committee. (4) Represents 2019 annual RSs. The first tranche of the award vested on February 6, 2020, the second tranche vested on February 6, 2021, and the third tranche will vest on February 6, 2022, if the NEO continues to be employed by the Company on each such vesting date or as otherwise provided in the Pilla Agreement. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will continue to vest in the RS even if he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). For this reason, Mr. Hawkins’ amounts for the RS are shown as net shares, because shares were disposed of for tax purposes on the date he became retirement eligible in 2020 in accordance with IRC requirements. (5) Represents PB-TSRs granted in 2019 with a performance period running from January 1, 2019, to December 31, 2021. The number of shares and market value shown reflects the achievement of a threshold performance goal based on TSR performance during the fiscal year ended December 31, 2020. The award vesting date is December 31, 2021, subject to performance certification by the Compensation Committee. For information on the effect of Mr. Garcia’s resignation on such award, see “Employment and Separation Agreements.” (6) Represents PB-FCFs granted in 2019 with a performance period running from January 1, 2019, to December 31, 2021. The number of shares and market value shown reflects the achievement of a threshold performance goal based on FCF Percentage performance for the fiscal year ended December 31, 2020. The award vesting date is December 31, 2021, subject to performance certification by the Compensation Committee. For information on the effect of Mr. Garcia’s resignation on such award, see “Employment and Separation Agreements.” (7) Represents 2018 annual RSs. The first tranche of the award vested on February 7, 2019, the second tranche vested on February 7, 2020, and the third tranche vested on February 7, 2021. As Mr. Hawkins became retirement eligible in 2020, Mr. Hawkins’ amounts for the RS are shown as net shares, because shares were disposed of for tax purposes on the date he became retirement eligible in 2020 in accordance with IRC requirements. (8) Represents a special RS (each, a “Special RS”) that vests annually on the anniversary of the applicable grant date over three years, subject to the NEO remaining employed by the Company through each applicable vesting date or as otherwise provided in the Pilla Agreement. | (1) Represents 2020 annual RSs. The first tranche of the award vested on March 4, 2021, and the second and third tranches will vest on March 4, 2022, and March 4, 2023, respectively, if the NEO continues to be employed by the Company on each vesting date or as otherwise provided in the Pilla Agreement. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will continue to vest in the RS even if he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). For this reason, Mr. Hawkins’ amounts for the RS are shown as net shares, because shares were disposed of for tax purposes on the date he became retirement eligible in 2020 in accordance with IRC requirements. (2) Represents PB-TSRs granted in 2020 with a performance period running from January 1, 2020, to December 31, 2022. 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, 2020. The award vesting date is December 31, 2022, subject to performance certification by the Compensation Committee. (3) Represents PB-FCFs granted in 2020 with a performance period running from January 1, 2020, to December 31, 2022. The number of shares and market value shown reflects the achievement of a threshold performance goal based on FCF Percentage performance for the fiscal year ended December 31, 2020. The award vesting date is December 31, 2022, subject to performance certification by the Compensation Committee. (4) Represents 2019 annual RSs. The first tranche of the award vested on February 6, 2020, the second tranche vested on February 6, 2021, and the third tranche will vest on February 6, 2022, if the NEO continues to be employed by the Company on each such vesting date or as otherwise provided in the Pilla Agreement. However, Mr. Hawkins became retirement eligible in 2020 and, accordingly, will continue to vest in the RS even if he departs the Company (except under certain circumstances described under “Potential Payments Upon Termination or Change in Control”). For this reason, Mr. Hawkins’ amounts for the RS are shown as net shares, because shares were disposed of for tax purposes on the date he became retirement eligible in 2020 in accordance with IRC requirements. (5) Represents PB-TSRs granted in 2019 with a performance period running from January 1, 2019, to December 31, 2021. The number of shares and market value shown reflects the achievement of a threshold performance goal based on TSR performance during the fiscal year ended December 31, 2020. The award vesting date is December 31, 2021, subject to performance certification by the Compensation Committee. For information on the effect of Mr. Garcia’s resignation on such award, see “Employment and Separation Agreements.” (6) Represents PB-FCFs granted in 2019 with a performance period running from January 1, 2019, to December 31, 2021. The number of shares and market value shown reflects the achievement of a threshold performance goal based on FCF Percentage performance for the fiscal year ended December 31, 2020. The award vesting date is December 31, 2021, subject to performance certification by the Compensation Committee. For information on the effect of Mr. Garcia’s resignation on such award, see “Employment and Separation Agreements.” (7) Represents 2018 annual RSs. The first tranche of the award vested on February 7, 2019, the second tranche vested on February 7, 2020, and the third tranche vested on February 7, 2021. As Mr. Hawkins became retirement eligible in 2020, Mr. Hawkins’ amounts for the RS are shown as net shares, because shares were disposed of for tax purposes on the date he became retirement eligible in 2020 in accordance with IRC requirements. (8) Represents a special RS (each, a “Special RS”) that vests annually on the anniversary of the applicable grant date over three years, subject to the NEO remaining employed by the Company through each applicable vesting date or as otherwise provided in the Pilla Agreement. | |||||||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5564
Option Exercises and Stock Vested for Fiscal Year 20182020
The following table presents information regarding NEO stock awards that vested in 2018.2020. 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 average of the high and low prices of the Common Stock on the vesting date. The Company has not granted any options or option-like awards.
Name | Grant Date | Vesting Date | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Thomas C. Gentile III |
|
|
|
|
Sign-on(1) | 4/1/2016 | 4/1/2018 | 32,666 | 2,918,054 |
RS(2) | 2/7/2017 | 2/7/2018 | 18,458 | 1,657,344 |
TOTAL |
|
| 51,124 | 4,575,398 |
Sanjay Kapoor |
|
|
|
|
PB One-Time(3) | 6/4/2016 | 6/4/2018 | 14,137 | 1,227,798 |
PB-TSR(4) | 2/7/2015 | 2/7/2018 | 8,433 | 757,199 |
RS(2) | 2/7/2017 | 2/7/2018 | 6,492 | 582,917 |
RS(5) | 2/9/2016 | 2/9/2018 | 7,609 | 653,994 |
RS(6) | 2/7/2015 | 2/7/2018 | 5,790 | 519,884 |
TOTAL |
|
| 42,461 | 3,741,792 |
Samantha J. Marnick |
|
|
|
|
PB One-Time(3) | 6/4/2016 | 6/4/2018 | 7,369 | 639,998 |
PB-TSR(4) | 2/7/2015 | 2/7/2018 | 4,478 | 402,080 |
RS(2) | 2/7/2017 | 2/7/2018 | 3,321 | 298,193 |
RS(5) | 2/9/2016 | 2/9/2018 | 3,966 | 340,878 |
RS(6) | 2/7/2015 | 2/7/2018 | 3,074 | 276,014 |
TOTAL |
|
| 22,208 | 1,957,162 |
Duane F. Hawkins |
|
|
|
|
PB-TSR(4) | 2/7/2015 | 2/7/2018 | 4,703 | 422,282 |
RS(2) | 2/7/2017 | 2/7/2018 | 4,081 | 366,423 |
RS(5) | 2/9/2016 | 2/9/2018 | 5,764 | 495,416 |
RS(6) | 2/7/2015 | 2/7/2018 | 3,229 | 289,932 |
TOTAL |
|
| 17,777 | 1,574,063 |
John A. Pilla |
|
|
|
|
PB-TSR(4) | 2/7/2015 | 2/7/2018 | 5,531 | 496,628 |
RS(2) | 2/7/2017 | 2/7/2018 | 2,745 | 246,474 |
RS(5) | 2/9/2016 | 2/9/2018 | 4,436 | 381,274 |
RS(6) | 2/7/2015 | 2/7/2018 | 3,796 | 340,843 |
TOTAL |
|
| 16,508 | 1,465,219 |
(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 $83.99, the average of the high and low prices of Common Stock on March 29, 2018, the business day prior to the vesting date. (2) Represents shares vesting under the 2017 annual RS. The value realized on vesting represents the number of shares multiplied by $89.79, the average of the high and low prices of Common Stock on February 7, 2018, the vesting date. (3) Represents PB One-Time awards granted to each of Mr. Kapoor and Ms. Marnick in 2016. The value realized on vesting represents the number of shares multiplied by $86.85, the average of the high and low prices of Common Stock on June 4, 2018, the vesting date. (4) Represents shares under the 2015 PB-TSR with a performance tracking period from January 1, 2015, to December 31, 2017. Performance was certified by the Compensation Committee on January 23, 2018, at a percentile rank of 87th and a resulting payout of 192.5%. The value realized on vesting represents the number of shares multiplied by $89.79, the average of the high and low prices of Common Stock on February 7, 2018, the vesting date. (5) Represents shares vesting under the 2016 annual RS. The value realized on vesting represents the number of shares multiplied by $85.95, the average of the high and low prices of Common Stock on February 9, 2018, the vesting date. (6) Represents shares vesting under the 2015 annual RS. The value realized on vesting represents the number of shares multiplied by $89.79, the average of the high and low prices of Common Stock on February 7, 2018, the vesting date. | ||||
Name | Grant Date | Vesting Date | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Thomas C. Gentile III |
|
|
|
|
PB-TSR(1) | 2/7/2017 | 2/7/2020 | 22,358 | 1,556,229 |
PB-FCF(2) | 2/7/2017 | 2/7/2020 | 37,672 | 2,662,160 |
RS(3) | 2/7/2017 | 2/7/2020 | 18,457 | 1,284,699 |
RS(4) | 2/7/2018 | 2/7/2020 | 13,995 | 974,122 |
RS(5) | 2/6/2019 | 2/6/2020 | 15,530 | 1,064,504 |
TOTAL |
|
| 108,012 | 7,501,713 |
Jose I. Garcia |
|
|
|
|
RS(7) | 2/6/2019 | 1/31/2020 | 5,344 | 345,917 |
RS(8) | 2/6/2019 | 1/31/2020 | 10,861 | 703,033 |
Special RS(9) | 11/5/2019 | 1/31/2020 | 5,880 | 380,612 |
TOTAL |
|
| 22,085 | 1,429,562 |
Mark J. Suchinski |
|
|
|
|
PB-TSR(1) | 2/7/2017 | 2/7/2020 | 1,427 | 99,326 |
PB-FCF(2) | 2/7/2017 | 2/7/2020 | 2,404 | 167,330 |
RS(3) | 2/7/2017 | 2/7/2020 | 1,177 | 81,925 |
Special RS(6) | 2/28/2017 | 2/7/2020 | 866 | 60,278 |
RS(4) | 2/7/2018 | 2/7/2020 | 776 | 54,013 |
Special RS(6) | 11/26/2018 | 11/26/2020 | 1,674 | 59,226 |
RS(5) | 2/6/2019 | 2/6/2020 | 941 | 64,501 |
TOTAL |
|
| 9,265 | 586,600 |
Samantha J. Marnick |
|
|
|
|
PB-TSR(1) | 2/7/2017 | 2/7/2020 | 4,022 | 279,951 |
PB-FCF(2) | 2/7/2017 | 2/7/2020 | 6,778 | 471,783 |
RS(3) | 2/7/2017 | 2/7/2020 | 3,320 | 231,089 |
RS(4) | 2/7/2018 | 2/7/2020 | 2,329 | 162,110 |
RS(5) | 2/6/2019 | 2/6/2020 | 2,569 | 176,092 |
TOTAL |
|
| 19,018 | 1,321,025 |
Duane F. Hawkins |
|
|
|
|
PB-TSR(1) | 2/7/2017 | 2/7/2020 | 4,943 | 344,058 |
PB-FCF(2) | 2/7/2017 | 2/7/2020 | 8,328 | 579,670 |
RS(3) | 2/7/2017 | 2/7/2020 | 4,079 | 283,919 |
RS(4) | 2/7/2018 | 2/7/2020 | 2,756 | 191,831 |
RS(5) | 2/6/2019 | 2/6/2020 | 2,673 | 183,221 |
RS(10) | 2/7/2018 | 3/15/2020 | 1,222 | 42,874 |
RS(10) | 2/6/2019 | 3/15/2020 | 2,372 | 83,222 |
RS(10) | 3/4/2020 | 3/15/2020 | 6,434 | 225,737 |
TOTAL |
|
| 32,807 | 1,934,531 |
William E. Brown |
|
|
|
|
PB-TSR(1) | 2/7/2017 | 2/7/2020 | 2,100 | 146,171 |
PB-FCF(2) | 2/7/2017 | 2/7/2020 | 3,538 | 246,262 |
RS(3) | 2/7/2017 | 2/7/2020 | 1,733 | 120,625 |
RS(4) | 2/7/2018 | 2/7/2020 | 1,129 | 78,584 |
Special RS(6) | 10/23/2018 | 10/23/2020 | 614 | 12,441 |
RS(5) | 2/6/2019 | 2/6/2020 | 1,736 | 118,994 |
TOTAL |
|
| 10,850 | 723,078 |
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5665
Name | Grant Date | Vesting Date | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
John A. Pilla |
|
|
|
|
PB-TSR(1) | 2/7/2017 | 2/7/2020 | 3,325 | 231,437 |
PB-FCF(2) | 2/7/2017 | 2/7/2020 | 5,602 | 389,927 |
RS(3) | 2/7/2017 | 2/7/2020 | 2,744 | 190,996 |
RS(4) | 2/7/2018 | 2/7/2020 | 1,936 | 134,755 |
Special RS(6) | 10/23/2018 | 10/23/2020 | 2,045 | 41,437 |
RS(5) | 2/6/2019 | 2/6/2020 | 1,961 | 134,417 |
TOTAL |
|
| 17,613 | 1,122,969 |
(1) Represents shares under the 2017 PB-TSR with a performance period from January 1, 2017, to December 31, 2019. (2) Represents shares under the 2017 PB-FCF with a performance period from January 1, 2017, to December 31, 2019. (3) Represents shares vesting under the 2017 annual RS. (4) Represents shares vesting under the 2018 annual RS. (5) Represents shares vesting under the 2019 annual RS. (6) Represents shares vesting under a Special RS granted to the recipients in consideration of their performance or responsibilities, or for retention purposes. (7) Represents shares granted under the 2019 annual RS that were accelerated pursuant to the Garcia Agreement on January 31, 2020. (8) Represents shares vesting under Mr. Garcia’s Initial Sign-On RS that were accelerated pursuant to the Garcia Agreement on January 31, 2020. (9) Represents shares vesting under a Special RS that were accelerated pursuant to the Garcia Agreement on January 31, 2020. (10) Represents shares required to be withheld to satisfy tax obligations upon the date Mr. Hawkins became retirement eligible.
| ||||
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 66
The following table presents information concerning benefits receivedpayable under the Company’s Pension Value Plan (the “PVP”) byPVP for Mr. Pilla, during the fiscal year endedcomputed as of December 31, 2018.2020. No other NEOs receivedare entitled to receive any benefits under the PVP.
Name | Plan Name | Number of Years of Credited Service | (1) | Present Value of Accumulated Benefit ($) | (2) | Plan Name | Number of Years of Credited Service | (1) | Present Value of Accumulated Benefit ($) | (2) |
John A. Pilla | PVP | 24.0875 |
| 703,267 |
| PVP | 24.0875 |
| 879,374 |
|
(1) Please note credited service was frozen in the PVP as of June 16, 2005. There is no policy that provides for granting extra years of credited service. (2) Present value was calculated based on the assumption that Mr. Pilla’s benefit commences at age 60. Key assumptions reflected in present value include a 4.21% discount rate, a cash balance interest crediting rate of 5.25%, and the life annuity form of payment. In order to determine changes in the present value reported in the Summary Compensation Table, the value was also calculated as of December 31, 2017. For values as of December 31, 2017, the discount rate was 3.59%. The present value was calculated assuming Mr. Pilla retires and commences receipt of benefits at age 60. The mortality assumption for the fiscal year ending December 31, 2017, is Mercer’s MILES-2010 generational mortality table for the Auto, Industrial Goods, and Transportation group with MMP-2016 improvement scale, and the mortality assumption for fiscal year ending December 31, 2018, is Mercer’s MILES-2010 generational mortality table for the Auto, Industrial Goods, and Transportation group with MMP-2018 improvement scale. | ||||||||||
(1) Please note credited service was frozen in the PVP as of June 16, 2005. There is no policy that provides for granting extra years of credited service. (2) Present value was calculated based on the assumption that Mr. Pilla’s benefit commences at age 61.5. Key assumptions reflected in present value include a 2.31% discount rate, a cash balance interest crediting rate of 5.25%, and the life annuity form of payment. In order to determine changes in the present value reported in the “Summary Compensation Table,” the value was also calculated as of December 31, 2019. For values as of December 31, 2019, the discount rate was 3.19%. The present value was calculated assuming Mr. Pilla retires and commences receipt of benefits at age 61.5. The mortality assumption for the fiscal years ending December 31, 2019, and December 31, 2020, is Mercer’s MILES-2010 generational mortality table for the Auto, Industrial Goods, and Transportation group with the MMP-2019 improvement scale. | (1) Please note credited service was frozen in the PVP as of June 16, 2005. There is no policy that provides for granting extra years of credited service. (2) Present value was calculated based on the assumption that Mr. Pilla’s benefit commences at age 61.5. Key assumptions reflected in present value include a 2.31% discount rate, a cash balance interest crediting rate of 5.25%, and the life annuity form of payment. In order to determine changes in the present value reported in the “Summary Compensation Table,” the value was also calculated as of December 31, 2019. For values as of December 31, 2019, the discount rate was 3.19%. The present value was calculated assuming Mr. Pilla retires and commences receipt of benefits at age 61.5. The mortality assumption for the fiscal years ending December 31, 2019, and December 31, 2020, is Mercer’s MILES-2010 generational mortality table for the Auto, Industrial Goods, and Transportation group with the MMP-2019 improvement scale. | |||||||||
A significant portion of Spirit’s operations related to Boeing aerostructures was owned and controlled by Boeing until 2005. Boeing’s pension assets and liabilities were spun-off from Boeing’s qualified plans (each, a “Prior Plan”) into Spirit qualified plans for certain eligible Boeing employees who joined the Company. Credited service and benefit amounts under the Prior Plans were frozen as of June 16, 2005. Effective December 31, 2005, all Prior Plans were merged together into the PVP. The PVP is a frozen plan, so no additional employees are becomingmay become participants in the PVP, and no current participants are accruing any additional benefits (except for the interest credits described below). The PVP is fully paid for by the Company, and the Company’s employees are vested after reaching five years of service.
Mr. Pilla is the only NEO who participates in the PVP. Mr. Pilla is fully vested in his benefits. Benefits under the PVP for Mr. Pilla are based upon heritage benefits transferred into the Prior Plan and a cash balance benefit. Heritage benefits were indexed (increased) for base pay increases from the date the heritage benefit transferred to the Prior Plan until June 16, 2005. Under the cash balance benefit formula, employees received benefit credits based on their age at the end of each plan year through June 16, 2005. The annual benefit credit was a specified percentage of eligible pay, ranging from 3% at ages younger than 30, to 11% upon reaching age 50. Eligible pay included base pay and executive incentive pay, limited to Internal Revenue CodeIRC Section 401(a)(17) limits. The benefit credits ceased upon freezing the Prior Plan; however, employees continue to receive interest credits each year. Interest credits are calculated by applying simple interest to the Prior Plan balance at the beginning of the year and are accrued until the pension benefit begins. Interest credits are based on the 30-year Treasury Rate as of November of the prior year, with a minimum of 5.25% and a maximum of 10%.
The PVP benefits are payable as a life annuity (other annuity options are also available). To determine a participant’s pension benefit, the participant’s accumulated benefits are divided by 11 and further divided by a factor of 12 to produce a monthly benefit.
The normal retirement age under the PVP is age 65. Participants who have at least ten10 years of service and are at least age 55, or at least one year of service and are at least age 62, are eligible for early retirement. Mr. Pilla is currently 5961.5 years of age and is eligible for early retirement. A portion of the Prior Plan benefit is reduced by 2% for each year that benefits commence prior to age 60. Projected annual benefits payable upon retirement at age 60as of December 31, 2020, are $47,154$48,380 for Mr. Pilla. If he retires at age 65, the annual benefit amount is $51,633. Note that, while Mr. Pilla is no longer serving as Senior Vice President and Chief Technology Officer, he continues to serve in a Senior Advisor role for the Company and has not retired.
We also maintain the Supplemental Executive Retirement Plan (the “SERP”),SERP, which provides supplemental, nonqualified retirement benefits to executives who (1)(i) had their benefits transferred from a Boeing nonqualified plan to the SERP, and (2)(ii) did not elect to convert their SERP benefit into phantom stock units as of June 17, 2005. Benefits under this plan were also frozen as of the date of the Boeing acquisition. There are no SERP annuity benefits presently payable to any of the NEOs. Mr. Pilla was a participant in the SERP, but elected to convert his SERP benefit as of June 17, 2005, into 16,023 phantom stock units. For additional information, see “Nonqualified Deferred Compensation.”
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5767
Nonqualified Deferred Compensation
The following table presents information concerning each of the Company’s defined contribution or other plans that provide for the deferral of compensation of the NEOs on a basis that is not tax-qualified. In addition, and as discussed above under “Pension Benefits,” Mr. Pilla was a participant in the SERP, but elected to convert his SERP benefit as of June 17, 2005, into 16,023 phantom stock units. Mr. Pilla’s vested and undelivered phantom stock units and accrued dividend equivalents are reflected below and may be settled in cash or shares on the earlierearliest of his separation from service or a change-in-control.change in control (subject to the fulfillment of any applicable waiting period).
Name | Plan | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | (1) | Aggregate Earnings in Last FY ($) | (2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) |
| 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 |
| 27,143 |
|
| 1,234,122 | (3) | DCP |
| 600,000 |
| 48,780 |
|
| 2,537,882 | (4) |
Sanjay Kapoor | DCP |
|
|
|
|
|
|
|
| |||||||||
Jose I. Garcia | DCP |
|
|
| 1,109 |
| (101,109) |
|
| |||||||||
Samantha J. Marnick | DCP |
| 100,000 |
| 7,653 |
|
| 313,122 | (4) | DCP |
| 100,000 |
| 10,612 |
|
| 536,754 | (5) |
Duane F. Hawkins | DCP |
|
|
|
|
|
|
|
| |||||||||
John A. Pilla | DCP | 26,000 |
|
| 2,450 |
|
| 97,442 |
| DCP | 26,000 |
|
| 7,995 |
|
| 379,313 | (6) |
| SERP |
|
|
|
|
|
| 1,168,557 | (5) | SERP |
|
|
| (541,417) |
|
| 650,053 | (7) |
(1) These amounts represent Company contributions to the DCP and are included in the “All Other Compensation” column of the “Summary Compensation Table.” (2) Under the DCP, these amounts represent earnings on DCP balances from January 1 to December 31, 2018, and are not included in the “Summary Compensation Table.” For Mr. Pilla’s balance under the SERP, represents a decrease om value of $237,942, representing the change in market value of 16,023 phantom stock units and accrued dividend equivalents under the SERP from January 1 to December 31, 2018. The change in market value of the phantom stock units for Mr. Pilla was calculated using the closing prices of Common Stock on January 2, 2018, and December 31, 2018, respectively. (3) This amount includes $606,979 consisting of Company contributions and earnings on balances prior to 2018 (and as reported in our 2017 proxy statement). (4) This amount includes $205,469 consisting of Company contributions and earnings on balances prior to 2018 (and as reported in our 2017 proxy statement). (5) Represents the sum of (i) $1,155,098, which represents the 16,023 phantom stock units under the SERP multiplied by $72.09, the closing price of Common Stock on December 31, 2018, and (ii) $13,459 in accrued dividend equivalents on the phantom stock units under the SERP through December 31, 2018. | ||||||||||||||||||
(1) These amounts represent participant contributions to the DCP and are included in the “Salary” column of the “Summary Compensation Table.” (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, 2020, and are not included in the “Summary Compensation Table.” For Mr. Pilla’s balance under the SERP, represents a decrease in value equal to the change in market value of 16,023 phantom stock units and accrued dividend equivalents under the SERP from December 31, 2019, to December 31, 2020. The change in market value of the phantom stock units for Mr. Pilla was calculated using the closing prices of the Common Stock on December 31, 2019, and December 31, 2020, respectively. (4) This amount includes $1,800,000 consisting of aggregate Company contributions prior to 2020 (reported in the “Summary Compensation Table” of prior year’s proxy statements). (5) This amount includes $400,000 consisting of aggregate Company contributions prior to 2020 (reported in the “Summary Compensation Table” of prior year’s proxy statements). (6) This amount includes $339,349 consisting of aggregate individual contributions prior to 2020 (reported in the “Summary Compensation Table” of prior year’s proxy statements, when Mr. Pilla was a NEO). (7) Represents the sum of (i) $626,339 which represents the 16,023 phantom stock units under the SERP multiplied by $39.09, the closing price of the Common Stock on December 31, 2020, and (ii) $23,714 in accrued dividend equivalents on the phantom stock units through December 31, 2020. | (1) These amounts represent participant contributions to the DCP and are included in the “Salary” column of the “Summary Compensation Table.” (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, 2020, and are not included in the “Summary Compensation Table.” For Mr. Pilla’s balance under the SERP, represents a decrease in value equal to the change in market value of 16,023 phantom stock units and accrued dividend equivalents under the SERP from December 31, 2019, to December 31, 2020. The change in market value of the phantom stock units for Mr. Pilla was calculated using the closing prices of the Common Stock on December 31, 2019, and December 31, 2020, respectively. (4) This amount includes $1,800,000 consisting of aggregate Company contributions prior to 2020 (reported in the “Summary Compensation Table” of prior year’s proxy statements). (5) This amount includes $400,000 consisting of aggregate Company contributions prior to 2020 (reported in the “Summary Compensation Table” of prior year’s proxy statements). (6) This amount includes $339,349 consisting of aggregate individual contributions prior to 2020 (reported in the “Summary Compensation Table” of prior year’s proxy statements, when Mr. Pilla was a NEO). (7) Represents the sum of (i) $626,339 which represents the 16,023 phantom stock units under the SERP multiplied by $39.09, the closing price of the Common Stock on December 31, 2020, and (ii) $23,714 in accrued dividend equivalents on the phantom stock units through December 31, 2020. | |||||||||||||||||
More information on the DCP and SERP can be found under “Other Compensation Elements and Information” and “Potential Payments Upon Termination or Change-in-Control.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 2018,2020, as the Company used 120% of the applicable federal long-term rate to determine the amounts to be contributed.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 68
Potential Payments Upon Termination or Change-in-ControlChange in Control
The Company believes competitive severance protection is an appropriate incentive in attracting and retaining talent and, accordingly, has provided for certain termination compensation through individual employment agreements. In addition, when appropriate,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 specific 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 a table summarizing the monetary benefits payable upon triggering events.
SPIRIT AEROSYSTEMSevents assumed to occur on December 31, 2020. As Mr. Garcia left the Company prior to December 31, 2020, his termination benefits are not included in such table, but the details of his separation agreement (and the compensation and payments made thereunder) are set forth under “Summary Compensation Table - 2019 Proxy Statement 58
Back to ContentsEmployment and Separation Agreements” and “Mr. Garcia’s Resignation During Fiscal Year 2020.”
Only the employment agreements of Messrs. Gentile and KapoorSuchinski provide for any payments to be made, or benefits provided, beyond the date of termination as of December 31, 2018.2020. These benefits are paid only in the circumstances described below. 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. Gentile’s and a covenant not to solicit customersMr. Suchinski’s employment agreement, the non-solicitation and non-competition covenants apply for one year post-termination if terminated without cause, 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. Gentile and Kapoor will beSuchinski are only entitled to their compensation through the date of termination.
For Mr. Gentile, 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;
material underperformance, as reflected in two consecutive written performance reviews not less than six months apart; or
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.
Upon a termination by the Company without cause, Messrs. Gentile and Suchinski are entitled to one year of their base salary in effect prior to termination and the costs of providing COBRA medical and dental benefits coverage over a period of 12 months. In addition, if such a termination occurs before April 1, 2019, the following long-term incentives will vest:
66-2/3% of the RS granted tomonths for Mr. Gentile in 2017 (such vested shares to include any shares that have previously vested under such award), which, as of December 31, 2018, reflects an additional vesting amount of 18,457 shares of Common Stock (18,457 shares under such award already vested in February 2018); and
33-1/3% of the RS granted to 6 months for Mr. Gentile in 2018, which, as of December 31, 2018, reflects 13,994 shares of Common Stock.
Termination of Mr. Kapoor due to expiration of his employment agreement without renewal constitutes a termination without cause.Suchinski.
A termination for “good reason” is a voluntary termination of employment by the executive within 90 days after one of the following conditions:
For Mr. Gentile: If he is assigned to a diminished position prior to April 1, 2019.
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 the proceeds are distributed to the Company’s stockholders.
For context, a “for cause” termination is defined as a termination resulting from the following:
Commission of a material breach or acts involving moral turpitude, fraud, dishonesty, unauthorized disclosure of confidential information, the commission of a felony, or material violations of the Company’s 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 job duties and responsibilities if not remedied within 30 days after receiving written notice thereof;
Material underperformance, as reflected in two consecutive performance reviews provided no less than six months apart; or
Inability to obtain and maintain the appropriate level of U.S. security clearance.
Voluntary Termination without Good Reason
In the event Mr. Gentile had voluntarily terminated his employment with the Company before April 1, 2018, any unvested shares of restricted stock that were awarded as a signing bonus under his employment agreement will immediately vest. This provision no longer applies.
Awards under the Omnibus Incentive Plan: ACI and Long-Term Incentives
In the event of a “qualifying retirement” that occurs 90 days or more after the beginning of the plan year, the participant will be entitled to receive a prorated ACI based on full-year performance metrics actually achieved for such year. Other than Mr. Pilla, none of the NEOs qualify for this benefit as of December 31, 2018.
In the event of a change-in-control of the Company, each participant who incurs a qualifying termination, 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.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 5969
Long-Term Incentives under the Omnibus Incentive Plan
Pursuant to the provisions of the 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 (i) continue to vest in outstanding Time-Based Restricted Stock awards, and (ii) vest in a prorated portion of outstanding Performance-Based Restricted Stock awards (prorated based on the number of days continuously employed during the performance period) based on actual performance measured at the end of the applicable performance period. As of December 31, 2020, Mr. Hawkins was the only NEO who qualified for these benefits.
2018Death Long-Termor IncentivesDisability
In addition to the change-in-control treatment described below, each participant who is terminatedUpon a participant’s termination due to death or disability or retirement (termination afterprior to vesting, the employee has attained age 62)participant will (i) fully vest in his or her outstanding time-based restricted stock awardTime-Based Restricted Stock awards, and (ii) vest in a prorated portion of his or her performance-based restricted stock award,outstanding Performance-Based Restricted Stock awards (prorated based on the number of days continuously employed during the performance period) based on target performance in the case of death or disability, and actual performance measured at the end of the applicable performance period in the case of retirement. None of our NEOs are currently entitled to the retirement benefits.
performance.
2017Qualifying andTermination 2018in Long-TermConnection IncentiveswithaChangeinControl
Each participant who incurs a qualifying termination, 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 qualifying 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.
2016Long-TermIncentives
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 cause) 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 discretion of the Compensation Committee, be determined based upon actual performance through the date of the change-in-control 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 that would have been made to the participant 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.
“Qualifying termination” means athe participant’s termination, 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 closing of the change in control, (i) by the Company without cause, or (ii) by the participant for good reason.
“Cause” means 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:
Grossgross negligence or willful misconduct in the exercise of responsibilities;
Breachbreach of fiduciary duty;
Materialmaterial breach of any provision of an employment contract or consulting agreement;
Thethe commission of a felony crime or crime involving moral turpitude;
Theft,theft, fraud, misappropriation, or embezzlement (or reasonable suspicion of the same);
Willfulwillful violation of any federal, state, or local law (except traffic violations and other similar matters not involving moral turpitude); or
Refusalrefusal to obey any resolution or direction of the participant’s supervisor or the Board.
“Good 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.(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: (1)
a material diminution in the participant’s base compensation; (2) a material diminution in the participant’scompensation, authority, duties, or responsibilities, or associated job title; (3)
relocation of the participant’s principal office to a location that is greater than 50 miles from the location of the participant’s principal office immediately before such relocation; or (4)
any action or inaction with respect to the terms and conditions of the participant’s service that constitutes a material breach by the
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 60
Company of any written agreement between the participant and the Company.
“Retirement” is defined foras:
For purposes of the 2018 Long-Term Incentives, as termination on or after the date when the grantee has attained age 62.62; and
“Qualifying retirement” is defined, forSPIRIT AEROSYSTEMS - 2021 Proxy Statement 70
For purposes of the ACI, as a voluntaryall Long-Term Incentives issued after 2018, termination of employment 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
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
a merger or consolidation involving the Company in which the Company is not the surviving entity, or
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.
Upon the occurrence of a change-in-controlchange in control of the Company, an NEOa participant who incurs a qualifying 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,change 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 qualifying termination occurs, plus (2)(ii) an amount equal to 100% of the NEO’sparticipant’s allowance for the calendar year in which the qualifying termination occurs.
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-match account or employer discretionary 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 compliance by the participant with 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 below 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 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.
change in control.
Pursuant to the SERP, Mr. Pilla holds 16,023 phantom stock units. Upon a “Change-in-Control’’any termination of employment (including for cause) or “Separation from Service’’ following a “Liquidity Event’’ (each as definedchange in the SERP),control, Mr. Pilla is entitled to receive payment with respect to each of those phantom stock units in an amount equal to (i) the market value of one share of Class Athe Common stock in the CompanyStock (determined as of the business day immediately preceding the date of payment), plus (ii) the amount of all dividends (other than stock dividends), if any, actually paid on one share of Class Athe Common stock in the CompanyStock during the period from June 16, 2005, through the date payment is made. A “Change-in-Control’“Change in Control’’ under the SERP is a transaction pursuant to which a person acquires (i) more than 50% of the total voting power of the stock of the Company,Common Stock, or (ii) all or substantially all the assets of the Company or Spirit AeroSystems, Inc., the Company’s wholly owned subsidiary, and all or substantially all the proceeds from such transaction are distributed to the stockholders of the Company. A “Separation from Service’’ under the SERP is the termination of employment, including, without limitation, terminations of employment arise from a person’s death, disability, retirement, discharge (with or without cause), or voluntary termination. A “Liquidity Event’’ under the SERP includes the initial public offering consummated by the Company on November 27, 2006. Thus, Mr. Pilla will be entitled to payment under the SERP with respect to his phantom stock units upon any future “Change-in-Control’’ or “Separation from Service.’’ Payment under the SERP will be made in a single lump sum in cash or Common Stock following the change-in-controlchange in control or separation from service. Since Mr. Pilla’s SERP phantom stock units are fully vested, they are excluded from the table below.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 6171
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, 2018.2020. For equity valuation purposes, the table below uses $72.09,$39.09, the closing price of the Common Stock on December 31, 2018.2020. For purposes of presenting amounts payable over a period of time (e.g. salary continuation), the amounts are shown as a single total but not as a present value (i.e., the single sum does not reflect any discount). Mr. Garcia is not included below as he was not serving as a NEO on December 31, 2020.
Name | Severance ($) | (1)
| ACI ($) | (2)
| RS ($) |
| PB One-Time, PB-TSR and PB-FCF ($) |
| Cash Award in Respect of LTIP Awards ($) | (10)
| Perquisite Allowance Plan ($) | (11)
| Other Benefits ($) | (12)
| Total(13) ($) |
Thomas C. Gentile III |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary Termination without Cause/ Termination by Executive for Good Reason | 1,250,000 |
|
|
| 2,339,465 | (3) |
|
|
|
|
|
| 20,713 |
| 3,589,465 |
Change-in-Control and Qualifying Termination |
|
| 1,737,726 |
| 5,687,829 | (4) | 5,810,523 | (7) | 6,250,000 |
| 50,000 |
|
|
| 19,536,078 |
Death or Disability(14) |
|
|
|
| 3,026,627 |
| 603,793 |
|
|
|
|
|
|
| 3,630,356 |
Sanjay Kapoor(15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
Change-in-Control |
|
|
|
| 548,389 | (5) | 438,019 | (8) | 1,950,000 |
|
|
|
|
| 2,936,407 |
Change-in-Control and Qualifying Termination | 650,000 |
| 650,000 |
| 2,428,568 | (6) | 2,449,903 | (9) | 1,950,000 |
| 26,000 |
| 10,699 |
| 8,165,170 |
Death or Disability(14) |
|
|
|
| 944,307 |
| 188,395 |
|
|
|
|
|
|
| 1,132,702 |
Samantha J. Marnick |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change-in-Control |
|
|
|
| 285,837 | (5) | 228,309 | (8) | 1,182,500 |
|
|
|
|
| 1,696,646 |
Change-in-Control and Qualifying Termination |
|
| 522,877 |
| 1,268,279 | (6) | 1,262,937 | (9) | 1,182,500 |
| 26,000 |
|
|
| 4,262,593 |
Death or Disability(14) |
|
|
|
| 503,693 |
| 100,493 |
|
|
|
|
|
|
| 604,186 |
Duane F. Hawkins |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change-in-Control |
|
|
| �� | 415,527 | (5) | 331,830 | (8) | 1,230,500 |
|
|
|
|
| 1,977,857 |
Change-in-Control and Qualifying Termination |
|
| 533,685 |
| 1,599,677 | (6) | 1,597,005 | (9) | 1,230,500 |
| 26,000 |
|
|
| 4,986,867 |
Death or Disability(14) |
|
|
|
| 595,896 |
| 118,876 |
|
|
|
|
|
|
| 714,772 |
John A. Pilla |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change-in-Control |
|
|
|
| 319,647 | (5) | 255,343 | (8) | 902,500 |
|
|
| 1,168,557 |
| 2,646,047 |
Change-in-Control and Qualifying Termination |
|
| 456,041 |
| 1,576,320 | (6) | 1,111,174 | (9) | 902,500 |
| 26,000 |
| 1,168,557 |
| 5,240,593 |
Death or Disability(14) |
|
|
|
| 860,971 |
| 83,528 |
|
|
|
|
| 1,168,557 |
| 2,113,057 |
Qualifying Retirement |
|
| 422,978 |
|
|
|
|
|
|
|
|
| 1,168,557 |
| 1,591,535 |
Any Other Termination (including for cause) |
|
|
|
|
|
|
|
|
|
|
|
| 1,168,557 |
| 1,168,557 |
Name | Severance ($) | (1)
| RS ($) | (2)
| PB-TSR and PB-FCF(3) ($) |
| Cash Award under LTIP ($) | (4)
| Perquisite Plan ($) | (5)
| Other ($) | (6)
| Total(7) ($) | |
Thomas C. Gentile III |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Termination without Cause | 1,300,000 |
|
|
|
|
|
|
|
|
| 14,448 |
| 1,314,448 | |
Change in Control and Qualifying Termination | 1,300,000 |
| 5,055,158 |
|
|
| 7,150,000 |
| 25,000 |
| 14,448 |
| 13,544,606 | |
Death or Disability |
|
| 5,055,158 |
| 2,691,858 |
|
|
|
|
|
|
| 7,747,016 | |
Mark J. Suchinski |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Termination without Cause | 500,000 |
|
|
|
|
|
|
|
|
| 7,224 |
| 507,224 | |
Change in Control and Qualifying Termination | 500,000 |
| 572,473 |
|
|
| 875,000 |
| 13,000 |
| 7,224 |
| 1,967,697 | |
Death or Disability |
|
| 572,473 |
| 211,182 |
|
|
|
|
|
|
| 783,655 | |
Samantha J. Marnick |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Change in Control and Qualifying Termination |
|
| 836,643 |
|
|
| 1,426,000 |
| 13,000 |
|
|
| 2,275,643 | |
Death or Disability |
|
| 836,643 |
| 446,285 |
|
|
|
|
|
|
| 1,282,798 | |
Duane F. Hawkins |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Termination without Cause |
|
| 491,557 |
|
|
|
|
|
|
|
|
| 491,557 | |
Change in Control and Qualifying Termination |
|
| 491,557 |
|
|
| 1,230,500 |
| 13,000 |
|
|
| 1,735,057 | |
Death or Disability |
|
| 491,557 |
| 487,667 |
|
|
|
|
|
|
| 979,224 | |
Qualifying Retirement/Retirement |
|
| 491,557 |
|
|
|
|
|
|
|
|
| 491,557 | |
William E. Brown |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Change in Control and Qualifying Termination |
|
| 571,848 |
|
|
| 799,000 |
| 13,0 | 00 |
|
| 1,383,848 | |
Death or Disability |
|
| 571,848 |
| 270,334 |
|
|
|
|
|
|
| 842,181 | |
John A. Pilla |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Termination without Cause | 235,548 |
| 724,650 |
|
|
|
|
|
|
| 651,661 |
| 1,611,859 | |
Change in Control and Qualifying Termination | 235,548 |
| 724,650 |
|
|
| 902,500 |
|
|
| 651,661 |
| 2,514,359 | |
Death or Disability |
|
| 724,650 |
| 351,730 |
|
|
|
|
|
|
| 1,076,381 | |
(1) Under the “Termination without Cause” row, represents 12 months of annual base salary pursuant to their Messrs. Gentile’s and Suchinski’s employment agreements and the payment of Mr. Pilla’s salary as a Senior Advisor through July 1, 2021. Under the “Change-in-Control and Qualifying Termination” row, assumes a termination by the Company without cause under their respective employment agreements. (2) Represents a cash amount equal to all unvested RSs multiplied by $39.09. Mr. Hawkins became retirement eligible in 2020 and, accordingly, will continue to vest in the RS even if he departs the Company (except under certain circumstances). (3) Under the “Change-in-Control and Qualifying Termination” row, represents the sum of cash amounts equal to the target amount of unvested PB-TSRs and PB-FCFs multiplied by $39.09 and multiplied by 0%, the projected payout for each award as of December 31, 2020. Under the “Death or Disability” row, represents a prorated cash amount equal to the number of target shares in the unvested PB-TSRs and PB-FCFs multiplied by $39.09. Under the “Qualifying Retirement/Retirement” row, represents a prorated cash amount equal to the number of target shares in the unvested PB-TSRs and PB-FCFs multiplied by $39.09 and multiplied by 0%, the project payout for each award as of December 31, 2020. Under Mr. Pilla’s “Termination without Cause” row, represents a prorated cash amount equal to the number of target shares in the unvested PB-TSRs and PB-FCFs multiplied by $39.09 and multiplied by 0%, the project payout for each award as of December 31, 2020. (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. | ||||||||||||||
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 62
(5) Represents a cash
Represents 12 months of COBRA benefits for Mr. Gentile and 6 months of COBRA benefits for Mr. Suchinski under their respective employment agreements. For Mr. Pilla includes (i) $475,000 in consulting payments under the Pilla Agreement, and (ii) $176,661 as a 2021 ACI payment, using the target amount (performance could exceed the target as the payment is based upon actual performance). (7) For Messrs. Gentile and
their respective employment agreements. |
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 6372
2018Mr. Garcia’s Resignation During Fiscal Year 2020
As described above, under “Summary Compensation Table – Employment and Separation Agreements – Mr. Garcia’s Employment Agreement and Resignation Agreement,” Mr. Garcia resigned from the Company on January 29, 2020. The descriptions therein of the amounts received by Mr. Garcia in connection with his resignation is incorporated into this description by reference and quantified in the table below.
Name | Severance ($)(1) | ACI for 2019 ($)(2) | RS ($)(3) | PB-TSR and PB-FCF ($)(4) | COBRA Coverage ($)(5) | Outplacement ($)(6) | Other(7) | Total ($) |
Jose I. Garcia | 615,000 | 615,000 | 1,439,059 |
| 20,000 | 75,000 | 918,074 | 3,682,133 |
(1) Represents a cash amount equal to one year of Mr. Garcia’s annual base salary applicable on the date of his resignation. (2) Represents the payment of Mr. Garcia’s ACI award for 2019. (3) Represents accelerated vesting as of January 31, 2020, with respect to 10,861 shares underlying the Initial Sign-On RS award, 5,880 shares of a Special RS award, and 5,344 shares, of the 2019 RS award, calculated based on the average of the opening and closing prices of the Common Stock on January 31, 2020. (4) Mr. Garcia is entitled to continued vesting (upon the contractual vesting date) with respect to 1,321 shares (based on target performance) of the 2019 PB-TSR and 1,810 shares (based on target performance) of the 2019 PB-FCF, subject to the Company’s certification of the satisfaction of applicable performance criteria. Because the ultimate amount, if any, that may become payable under these awards is based on future performance and, as of December 31, 2020, management does not believe the 2019 PB-TSR and PB-FCF will pay out, the table above does not include any amounts to be realized from the continued vesting of these awards. (5) Represents COBRA coverage paid under the Garcia Agreement. (6) Represents reimbursement of reasonable and documented career transition services through July 31, 2020. (7) Represents sum of (i) cash in lieu of 2020 long-term incentive grants ($409,590), (ii) cash in lieu of Mr. Garcia’s Subsequent Sign-On Award ($500,000), and (iii) $8,484 in dividends paid on accelerated shares described under footnote (3).
| ||||||||
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 73
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of annual total compensation of our median employee and the annual total compensation of our President and CEO. For 2020, our last completed fiscal year, our ratio as calculated pursuant to Item 402(u) was as follows:
The 20182020 annual total compensation of the Company’s CEO was $9,899,693. $10,454,350.
The 20182020 annual total compensation of the median employee (excluding the CEO) was $78,740. The$64,775.
Based on this information, for 2020, the ratio betweenof the two amounts is 126:annual total compensation of our CEO to the annual total compensation of our median employee was reasonably estimated to be 161:1.
Determining the Median Employee
The Company believes that the ratio of pay included above is a reasonable estimate calculated in a manner consistent with applicable SEC rules.
Due to significant changes in the Company’s employee population in 2020 and as a change in individual compensation circumstances, it is no longer appropriate forresult of workforce reductions due to impacts from the B737 MAX grounding and the COVID-19 pandemic, and the closing of the Bombardier acquisition, the Company determined that it was necessary to use the median employee identified in 2017, and, therefore, the Company has identifiedidentify a new median employee for 2018.
2020. To identify the median employee in 2018,for 2020, we reviewed base pay paid to all of our employees as of October 1, 2017December 31, 2020 (the “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 base pay of each of those 90150 employees as of October 12, 2017,December 31, 2020, as reflected in the Company’s payroll records, and estimated total compensation for each of those employees through December 31, 2017.records. Comparing total and expected earningsthe base pay of each of the 90150 employees, we identified 10 employees with similar median pay. In 2018,the eight middlemost employees. For 2020, we studied each of the teneight employees’ specificbase pay and employment circumstancesvariable pay for the year of performance to determine the median and eliminated nineseven employees from the group, including the median employee from 2017, who had significant variations in their pay due to one-time events occurring in 2018.group. The remaining employee from that analysis is our median employee.employee for 2020.
The Pay Ratio Employee Population was the same as the population identified in 2017, and 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, 2020 (including after giving effect to the Bombardier Acquisition). 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 the 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 who were not employed by us for the full 2017-yearall of 2020 through October 12, 2017.
December 31, 2020. As required by SEC rules, after identifying our median employee, we calculated annual total compensation for both our median employee and our CEO using the same methodology that we used to determine our NEOs’ annual total compensation for the “Summary Compensation 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.
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 be included in this Proxy Statement for the 20192021 Annual Meeting of Stockholders, and also be incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year 2018.2020.
Compensation Committee
Paul E. Fulchino, Chairman
Charles L. Chadwell
Robert D. Johnson
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 6474
Ernst & Young LLP (“E&Y”) conducted the audit of the Company’s accounts for fiscal year 2018.2020. The Audit Committee has selected E&Y as the Company’s independent registered public accounting firm for fiscal year 2019,2021, and the Board is asking the Company’s stockholders to ratify that selection. The Company expects that representatives of E&Y will be 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.
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 3. With respect to Proposal 3, a stockholder may vote “FOR,” “AGAINST,” or “ABSTAIN.” Abstentions will not be counted as votes “FOR” or “AGAINST” Proposal 3; however, because abstentions will be counted as present at the Annual Meeting,Meeting; therefore, they will have the effect of votes “AGAINST” Proposal 3. 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. 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 favor of the selection, 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.
The Board recommends you vote “FOR” the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm.firm for 2021.
The Audit Committee has adopted a policy governing the pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. 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 2018,For the fiscal years ended December 31, 2019, and December 31, 2020, all of the Company’s audit and permissible non-audit services provided by E&Y were pre-approved by the Audit Committee.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 6575
The fees incurred by the Company, including its majority-owned subsidiaries, for services provided by E&Y in 20172020 and 20182019 are set forth below. All the fees set forth below and associated services were pre-approved by the Audit Committee. The Audit Committee concluded that the provision of the non-audit services listed below was compatible with E&Y’s independence.
| December 31, | December 31, | ||
(Dollars in thousands) | 2017 ($) | 2018 ($) | 2019 ($) | 2020 ($) |
Audit Fees(1) | 3,724.9 | 3,822.1 | 4,480.8 | 4,630.0 |
Audit-Related Fees(2) | 960.1 | 1,639.2 | 628.4 | 140.0 |
Tax Fees(3) | 259.5 | 206.4 | 172.0 | 10.0 |
All Other Fees(4) | 2.0 | 2.0 | 7.2 | |
TOTAL | 4,946.5 | 5,669.7 | 5,288.4 | 4,787.2 |
(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 2018, represents $188.0 in fees related to the implementation of FASB’s new revenue recognition standard, $43.5 in fees related to the implementation of FASB’s new leasing standard, $1,333.1 in fees related to merger and acquisition analysis, and $74.6 in fees related to comfort letters. For 2017, represents $575.3 in fees related to implementation of FASB’s new revenue recognition standard, $367.0 related to merger and acquisition analysis, and $17.8 in fees related to Exchange Act filings, comfort letters, and related matters. 2017 fees related to merger and acquisition analysis were reclassified from All Other Fees to Audit-Related Fees to be consistent with 2018 presentation. (3) Represents fees and expenses for tax consultations and advice related to compliance with tax laws and tax-planning strategies. (4) For 2018 and 2017, represents fees related to research tools. 2017 fees related to merger and acquisition analysis were reclassified from All Other Fees to Audit-Related Fees to be consistent with 2018 presentation. | ||||
(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 2020, represents fees related to comfort letters. For 2019, represents fees related to merger and acquisition analysis. (3) Represents fees and expenses for tax consultations and advice related to compliance with tax laws and tax-planning strategies. (4) Represents fees related to research tools. | (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 2020, represents fees related to comfort letters. For 2019, represents fees related to merger and acquisition analysis. (3) Represents fees and expenses for tax consultations and advice related to compliance with tax laws and tax-planning strategies. (4) Represents fees related to research tools. | |||
ThefollowingreportoftheAuditCommitteedoesnotconstitutesolicitingmaterialandshouldnotbedeemedfiledorincorporatedbyreferenceintoanyfuturefilingsundertheSecuritiesActortheExchangeAct,excepttotheextentwespecificallyincorporatethisreportbyreference.
The Audit Committee currently consists of threefour non-employee directors. Each of the Audit Committee members satisfies the NYSE’s requirements with respect to independence and financial literacyliteracy. Ms. Esteves, Ms. Wright, and qualifiesMr. Plueger qualify as an audit committee financial expertexperts 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 met nine15 times in 2018.2020.
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 control over financial reporting. The Company’s internal auditors are responsible for conducting internal audits intended to evaluate the adequacy and effectiveness of this system. Ernst & Young LLP (“E&Y”),&Y, the Company’s independent registered public accounting firm for 2018,2020, 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:
Reviewed and discussed with management and E&Y the Company’s audited financial statements as of and for the year ended December 31, 2018,2020, as well as the representations of management regarding the Company’s internal control over financial reporting;
Reviewed and discussed with E&Y all itemsthe matters 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 the American Institute of Certified Public Accountants, Professional Standards, Vol. 1, AU section 380, as adopted by the PCAOB in Rule 3200T, CommunicationwithAuditCommittees;SEC; and
Received and reviewed the written disclosures and the letter from E&Y required by applicable requirements of the PCAOB regarding E&Y’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with E&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, 2018,2020, 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 2019.2021.
Audit Committee
Irene M. Esteves, Chair
Stephen A. Cambone
John L. Plueger
Laura H. Wright
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 6676
Resolved: Stockholders askJohn Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, California, 90278, beneficial owner of 200 shares of Common Stock, is the proponent of the following stockholder proposal:
Shareholders request that our board of directors take the steps necessary to amend itsenable as many shareholders as may be needed to combine their shares to equal 3% of our stock owned continuously for 3-years in order to enable shareholder proxy access bylaw provisions and any associated documents,access.
The current arbitrary ration of 20 shareholders to include the following change:
Ainitiate shareholder proxy access director candidate shall notcan be called Catch-22 Proxy Access. To assemble 20 shareholders, who have owned 3% of company stock for an unbroken 3-years, one would reasonably need to obtain a specific percentage vote in order to qualify as a shareholderstart with 60 activist shareholders who own 9% of company stock for an unbroken 3-years because initiating proxy access director candidate at any future shareholder meeting.is a complicated process that is easily susceptible to errors. It is also highly susceptible to dropouts.
This proposal is importantThe 60 activist shareholders could then be whittled down to 40 shareholders because some shareholders would be unable to timely meet all the paper chase requirements. After the 40 shareholders submit their paperwork to management – then management might arbitrarily claim that 10 shareholders do not meet the requirements (figuring that shareholders do not want a shareholder proxy access candidatebattle in court) and management might convince another 10 shareholders to drop out – leaving 20 shareholders. But the current bylaws do not get a 25%-vote even if he or she is the mostallow 40 shareholders to submit their paperwork to management to end up with 20 qualified candidate to join our Boardshareholders.
And 60 shareholders who own 9% of Directors. Currently, a proxy access director candidate must obtain a 25% vote or that candidate is disqualified to be a candidate in the following year.
Shareholders may simply believe that at the time of the annual meeting that the company is not ripestock for a proxy access candidate and hence may not vote in favor of the candidate simply because the timing is not right. A year later a majority of shareholdersan unbroken 3-years might determine that they own 51% of company stock when length of unbroken stock ownership is factored out.
But how does one begin to assemble a group of 60 potential participants if potential participants cannot even be guaranteed participant status after following the timing is right and hence they should nottedious rules that are 2700-words of dense legalese – because a single shareholder always takes the risk that one will be deprivedthe 21st shareholder that could be eliminated after a substantial investment of voting fortime by the most qualified candidate.
The following are just a fewarbitrary ration of the companies that do not require a20 shareholders. Thus, our current proxy access is proxy access that comes with its own poison pill.
More emphasis should be given to improving proxy access because of new limitations on shareholder rights. The shareholder right to call a special meeting has taken a big hit due to the avalanche of online shareholder meetings that can now be tightly controlled bare bones meetings where all challenging questions and comments are screened out by management.
For instance the Goodyear shareholder meeting was spoiled by a trigger-happy management mute button for shareholders that was used to quash constructive criticism. AT&T would not even allow shareholders to speak.
Please see: Goodyear’s virtual meeting creates issues with shareholder https://www.crainscleveland.com/manufacturing/goodyears-virtual-meeting-creates-issues-shareholder
Please see: AT&T investors denied a dial-in as annual meeting goes online
https://whbl.com/2020/04/17/att-investors-denied-a-dial-in-as-annual-meeting-goes-online/1007928/
Adoption of this proposal might incentivize the Chair of our Audit Committee Ms. Irene Esteves to perform better in regard to shareholder voting. Ms. Esteves received the highest 2020 negative director candidate to obtain a specific percentage vote:
Citigroup (C)eBay (EBAY)FedEx (FDX)Goodyear (GT)Home Depot (HD)votes – 70-times higher than 3 of her director peers.
Please vote yes: Enhance ShareholderImprove Our Catch-22 Proxy Access —– Proposal 4.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 77
The Board of Directors’ Statement in Opposition
After consideration, the Board of Directors has concluded that the adoption of this proposal is not in the best interests of our stockholders.
The Company is committed to robust corporate governance practices and stockholder rights with appropriate safeguards against abuse. In November 2016, after careful consideration, the Board adopted its proxy access bylaw. The bylaw permits a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding 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 2 individuals or 20% of the Company’s Board of Directors, provided that the stockholder(s) and nominee(s) satisfy certain requirements.requirements set forth in our bylaws. The Board believes that the Company’s current proxy access bylaw, including the minimum level of support for renominationmaximum stockholder group size that Proposal 4 seeks to effectively eliminate, provides meaningful and robust proxy access rights to our stockholders with appropriate safeguards against abuse by stockholdersindividuals with special interests that are not shared by a significant percentage of our stockholders. Further, a majority of our peer group and S&P 500 index companies that have adopted proxy access bylaws also requireset forth a minimum levelmaximum stockholder group size for the purposes of support for renomination.meeting the ownership threshold of 3%. Implementation of the change sought by Proposal 4 would make the Company an outlier among public companies that have adopted proxy access.
TheOverall, our proxy access bylaw is well within the mainstream of public company practices and it shares similar features with the proxy access bylaws of many other companies. We strongly believe that revising the maximum stockholder group size could have unintended effects that could negatively impact stockholder value, including promoting the use of proxy access to lay the groundwork for effecting a change of control; encouraging the pursuit of special interests at the expense of a holistic, long-term strategic view; or otherwise disrupting the effective functioning of the Board. Moreover, the Board believes this proposalthat it is not insensible to impose a reasonable limit on the best interestnumber of stockholders because it will effectively eliminate onethat may aggregate their ownership for the purposes of meeting the safeguards against abuse ofownership threshold in order to simplify the proxy access process, by small groups of stockholders. The provision that Proposal 4 seeksboth for stockholders and for the Company. With each stockholder who is added to eliminate states that athe proxy access nominee who does not receive at least 25% of the votes cast in favor of the nominee’s election at an annual meeting cannot be renominated for the next 2 years. The Board believes this provision is reasonable because each time a stockholder nominates a director nominee using proxy access, it will require a commitment ofprocess, additional time and resources by the Board and Governance Committee will be required in order to effectively evaluate the candidate. As described under “Board and Governance Matters —stockholder’s eligibility. The Board Composition” in this Proxy Statement,also believes that a limit of 20 stockholders provides our investors with significant flexibility without unduly increasing the Governance Committee and Boardrisk that activists will attempt to use the provision to engage in a thorough evaluation processinvestor solicitation without complying with respect to each nominee, including those nominated by stockholders. Once that evaluation is completed, the Company would expend further time and resources putting together appropriate proxy materials with respect to the nominee. The safeguard Proposal 4 seeks to eliminate ensuresfederal securities laws. In addition, we note that the Company’s time and money will not be devoted to nominees who only represent narrow, unpopular interests that appeal to less than 25% of our stockholder base. Generally, as was the case in 2018, our director nominees are elected by a significant margin above 90%. A nominee vote of less than 25% of our stockholders would represent a clear departure from that trend, and continuing to put such candidate up for election in subsequent years would put the Company and stockholders through the unnecessary expense and effort of responding consecutively tocurrent proxy access for a particular candidate whom stockholders did not elect or meaningfully support. Further, this provisionbylaw does not prevent any such director nomineea group of stockholders from being renominated inevaluating their eligibility prior to submitting a proxy access request to the third year following his or her original nomination.
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 67
Back to ContentsCompany, thereby increasing the likelihood of their success.
The Board believes that the Company’s current proxy access bylaw reflects an appropriate balance between stockholder rights and mitigating the risk of the misuse of the proxy access right, and that it is fair to both the Company and its stockholders. Our Board has also shown an ongoing commitment to having effective, balanced corporate governance while also continually engaging with stockholders. The Board continues to believe that these objectives are being achieved through the Company’s current governance processes and that changing our proxy access framework, as outlined by the proposal, is unnecessary, unwarranted, and potentially detrimental to stockholder value.
For the reasons noted above, the Board requests that you vote “AGAINST” the foregoing stockholder proposal, Proposal 4.
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,Meeting; therefore, 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 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.
TheBoardrecommendsthatyouvote “AGAINST” “AGAINST”theforegoingstockholderproposal.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 6878
GENERAL INFORMATION REGARDING THE ANNUAL MEETING
Questions and Answers About the Annual Meeting and Voting
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 viaand is otherwise required by SEC rules. The Annual Meeting will take place virtually on April 28, 2021, at 11:00 a.m. Central 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:
The Proxy Statement for the 2021 Annual Meeting of Stockholders; and
The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
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, February 25, 2019 (the “Record Date”).Record Date, March 2, 2021. On the Record Date, there were 105,671,395105,440,975 shares of Common Stock outstanding. Each outstanding share of Common Stock is entitled to one vote.
Why is the Annual Meeting being held in a virtual format?
The Annual Meeting will be conducted virtually via live audio webcast. We are conducting the Annual Meeting solely online due to the continuing impact of and uncertainty surrounding the COVID-19 pandemic and to support the health and well-being of our stockholders; however, we also believe a virtual format facilitates stockholder attendance and participation by leveraging technology to allow us to communicate more effectively and efficiently with our stockholders. For example,
WeEncourageQuestions. 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?”
WeBelieveinTransparency. 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 http://investor.spiritaero.com/news-presentations/Presentations/default.aspx.
WeProactivelyTakeStepstoFacilitateYourParticipation. 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/SPR2021 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.
The Company is committed to returning to in-person annual stockholder meetings as soon as practicable.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 79
Why did I receive a Notice and not a full set of materials?
We primarily deliver our proxy materials to stockholders primarily over the internet 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. 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?”
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 as to how to vote your shares.
How do I view the 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:
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BY INTERNET
| BY EMAIL
| BY |
Visit www.proxyvote.com | To sendmaterial@proxyvote.com | Toll-free at 1-800-579-1639 |
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.
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 69
How can I vote my shares?shares before the Annual Meeting?
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BY INTERNET
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| BY MAIL
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SPIRIT AEROSYSTEMS - 2021 Proxy Statement 80
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/SPR2021. 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/SPR2021. 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 March 2, 2021, 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.
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 or proxy card to log into www.virtualshareholdermeeting.com/SPR2021. We encourage you to access the meeting beginning at 10:45 a.m. Central Time on April 28, 2021. 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/SPR2021.
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/SPR2021. 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.
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 that 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 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 proposal.
Proposals 2 through 4 require the affirmative “FOR” vote of a majority of shares present, in person or by proxy.proxy, and entitled to vote. With respect to Proposals 2 and 4, abstentions and broker non-votes will have the effect of a vote against the proposal. With respect to Proposal 3, abstentions will have the effect of a vote against the proposal. No broker non-votes are expected in connection with Proposal 3 since, due to its routine nature, brokers may vote in their discretion.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 81
StockholderofRecord: 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?”
BeneficialOwnerofSharesHeldinStreetName: 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 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 Proposal 1, 2, or 4, but may still be permitted to vote your shares in their discretion on Proposal 3.
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 separately as set forth under “How can I vote my shares?shares before the Annual Meeting?” or “How can I vote my shares during the Annual Meeting?”
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 70
If I vote by proxy, what voting options do I have?
The Board-designated proxies are Robert D. Johnson and Stacy Cozad.Samantha J. Marnick. With respect to all proposals, 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” each director nominee, “FOR” the advisory vote to approve NEO compensation, “FOR” ratification of the appointment of the independent registered public accounting firm, and “AGAINST” the stockholder proposal.
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 providecan do so by submitting a later-dated vote online during the Annual Meeting, via the Internet, by telephone, by mail, or by delivering written instructions by internet, in writing to the Company’sour Corporate Secretary before the Annual Meeting commences at Spirit AeroSystems Holdings, Inc., 3801 S. Oliver St., Wichita, KS 67210-2112, or by voting in person at the Annual Meeting.67210-2112.
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 mustfour 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 email CorporateSecretary@spiritaero.com. Your request must be received by the close of business on April 23, 2019. At the meeting, we will request a government-issued photo identification 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 Samantha J. Marnick 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 cameras will not be allowed into the meeting or any other related areas, except by credentialed media. We realize that many cellular phones and other wireless mobile devices have built-in digital cameras, and while these devices may be brought into the venue, the camera function may not be used at any time.Meeting.
SPIRIT AEROSYSTEMS - 2021 Proxy Statement 82
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. This allows us to eliminate multiple unnecessary mailings. If this situation applies to you and you want to receive more than one set of proxy materials, pleasethe Company will promptly deliver, upon oral or written request, a separate 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:
Registered stockholders who wish to receive a separate set of proxy materials in the future should contact Broadridge Financial Solutions, Inc. by calling 1-866-540-7095 or writing to Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717, Attention: Householding Department.
Beneficial shareholdersstockholders who wish to receive a separate set of proxy materials in the future should contact their broker, bank, or other holder of record.
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 71
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 the costs of solicitation of proxies will be paid by the Company.
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 the NYSE listing standards and 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?
Prior to the conclusion of the Annual Meeting, we will announce preliminary voting 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 - 20192021 Proxy Statement 7283
Stockholder Proposals and Director Nominations for the 20202022 Annual Meeting
Proposals of stockholdersStockholder proposals intended to be included in the Company’s proxy statement for presentation at the Company’s 20202022 annual meeting of stockholders must be properly and timely submitted and received by the Company at its offices no later than November 12, 201918, 2021 (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 20202022 annual meeting of stockholders.
In addition, pursuant to the Company’s bylaws, a stockholder desiring to propose any matter for consideration at the 20202022 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, 201930, 2021 (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 20202022 annual meeting of stockholders by providing notice to the Company’s Corporate Secretary at the address set forth below by December 26, 201930, 2021 (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.
Stockholder recommendations and nominations for candidates to the Board as described above should be sent to the Company’s Corporate Secretary at 3801 S. Oliver St., Wichita, KS 67210-2112.
The Company’s 20182020 Annual Report on Form 10-K is available at http://www.spiritaero.comortheSEC’swebsiteathttp://www.sec.gov. The Company will provide to any stockholder, without charge, a paper copy of the 20182020 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.
Sincerely,
StacyMindy CozadMcPheetersSenior
Vice President, InterimGeneral CounselChiefComplianceOfficer, and Corporate Secretary
Spirit AeroSystems Holdings,Inc.
March 11, 201917, 2021
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 7384
CAUTIONARY STATEMENTNOTE REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement includes “forward-looking statements.”statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that may 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:
the impact of the COVID-19 pandemic on our business and operations, including on the demand for our and our customers’ products and services, on trade and transport restrictions, on the global aerospace supply chain, on our ability to continue to grow our businessretain the skilled work force necessary for production and execute our growth strategy, including the timing, execution,development, and profitability of new and maturing programs;
generally on our ability to performeffectively manage the impacts of the COVID-19 pandemic on our obligations underbusiness operations; demand for our newproducts and maturing commercial, business aircraft, and military development programs,services and the related recurring production, including our ability to meet contractually required production rate increases;
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 and other programs;
margin pressures and the potential for additional forward losses on new and maturing programs;
our ability and our suppliers’ ability to accommodate, and the cost of accommodating, announced increases in the build rates of certain aircraft and expanding model mixes;
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;
customer cancellations or deferrals as a result of global economic uncertainty or otherwise;
thegeneral effect of economic or geopolitical conditions, or other events, such as pandemics, in the industries and markets in which we operate in the U.S. and globallyglobally; 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 changes therein,residual impacts of the B737 MAX grounding on production rates for the aircraft; our reliance on Boeing and Airbus for a significant portion of our revenues; the business condition and liquidity of our customers and their ability to satisfy their contractual obligations to the Company; the certainty of our backlog, including fluctuations in foreign currency exchange rates;
the success and timely executionability of key milestones such as the receipt of necessary regulatory approvals, includingcustomers to cancel or delay orders prior to shipment; our ability to obtain in a timely fashion any required regulatory or other third party approvalsaccurately estimate and manage performance, cost, margins, and revenue under our contracts, and the potential for the consummation ofadditional forward losses on new and maturing programs; our announced acquisition of Asco,accounting estimates for revenue and customer adherencecosts for our contracts and potential changes to their announced schedules;
those estimates; our ability to successfully negotiate, or re-negotiate, future pricing undercontinue to grow and diversify our supply agreements with Boeingbusiness, execute our growth strategy, and our other customers;
secure replacement programs, including our ability to enter into profitable supply arrangements with additional customers;
the abilityoutcome of all parties to satisfy their performance requirements, including our ability to timely deliver quality products, 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,product warranty 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 assetsdefective product claims and the impact of future discount rate changes on pension obligations;
our ability to borrow additional funds or refinance debt, including our ability to obtain the debt to finance the purchase price for our announced acquisition of Asco on favorable terms or at all;
competition from or in-sourcing by commercial aerospace original equipment manufacturers and competition from 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 effectsettlement of such changes;
any reduction inclaims may have on our credit ratings;
accounting assumptions; our dependence on our suppliers, as well as the cost and availability of raw materials and purchased components;
our ability and our suppliers’ ability to meet stringent delivery (including quality and timeliness) standards and accommodate changes in the build rates of aircraft; our ability to maintain continuing, uninterrupted production at our manufacturing facilities and our suppliers’ facilities; competitive conditions in the markets in which we operate, including in-sourcing by commercial aerospace original equipment manufacturers; our ability to successfully negotiate, or re-negotiate, future pricing under our supply agreements with Boeing, Airbus and other customers; our ability to effectively integrate the acquisition of select assets of Bombardier along with other acquisitions that 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; the possibility that our cash flows may not be adequate for our additional capital needs; any reduction in our credit ratings; our ability to access the capital markets to fund our liquidity needs, and the costs and terms of any additional financing; our ability to avoid or recover from cyber or other security attacks and other operations disruptions; 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; our ability to recruit and retain a critical mass of highly skilled employees andemployees; our relationships with the unions representing many of our employees, including our ability to avoid labor disputes and work stoppages with respect to our union employees;
spending by the U.S. and other governments on defense;
the possibility that our cash flows pension plan assumptions and our credit facility may not be adequate for our additional capital needs or for payment of interest on and principal of our indebtedness;
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 74
our exposure under our revolving credit facility to higher interest payments should interest rates increase substantially;
the effectiveness of any interest rate hedging programs;
future contributions; the effectiveness of our internal control over financial reporting;
the outcome or impact of ongoing or future litigation, arbitration, claims, and regulatory actions;
actions or investigations, including our exposure to potential product liability and warranty claims;
our ability to effectively assess, manage, and integrate acquisitions that we pursue, including our ability to successfully integrate the Asco business and generate synergies and other cost savings;
the consummation adequacy of our announced acquisition of Asco while avoiding any unexpected costs, charges, expenses, and adverse changes to business relationships and other business disruptions for ourselves and Asco as a result of the acquisition;
insurance coverage; our ability to continue selling certain receivables through our supplier financing program;
programs; and the risks of doing business internationally, including fluctuations in foreign currency exchange rates, impositions of tariffs or embargoes, trade restrictions, compliance with foreign laws, and domestic and foreign government policies; andpolicies.
prolonged periods of inflation where we do not have adequate inflation protection in our customer contracts, among other things.
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 sections 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 a more complete discussion of these and other factors that may affect our business.
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 7585
In addition to reporting our financial information in our Annual Report on Form 10-K using U.S. Generally Accepted Accounting Principles (“GAAP”),GAAP, certain non-GAAP financial measures (which are indicated generally by * in this Proxy Statement) are used with respect to our ACI and long-term incentives. Such non-GAAP financial measures include (i) free cash flow (“Free Cash Flow”),FCF, (ii) adjusted free cash flowFCF (“Adjusted FCF”), and (iii) adjusted earnings before interest and taxes (“Adjusted EBIT”), and (iv) free cash flow as a percentage of revenue (“FCF Percentage”),Percentage, 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.
Cash Flow Measures and Reconciliation: Free Cash FlowFCF and Adjusted FCF
Free Cash FlowFCF is defined as GAAP cash from 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 stockholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long-term value creation. Free Cash FlowFCF 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.
FCF Percentage is the Company’s Free Cash Flow (as defined under “Free Cash Flow” above)FCF or Adjusted FCF, as appropriate, as a percentage of revenue over a three-year performance period (cumulative Free Cash FlowFCF/Adjusted FCF over the performance period divided by cumulative GAAP revenue over the performance period). This metric is used to align long-term incentives with a key valuation driver of our business, which is Free Cash Flow. Since the Company does not provide multi-year Free Cash Flow guidance, aFCF/Adjusted FCF. A percentage of sales is used to drive sustained cash flow performance consistent with our established long-term goal of 7-9% of revenue. We use Free Cash Flow to calculate FCF Percentage under the FCF Percentage long-term incentive.
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 FCF is defined as Free Cash Flow lessFCF adjusted for 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.
The table below presents a reconciliation of Free Cash FlowFCF and Adjusted FCF to cash from operating activities for each of the periods presented, and also demonstrates a reconciliation of FCF Percentage. For reference, revenues for the fiscal years ended December 31, 2020, 2019, and 2018 were $3,405 million, $7,863 million, and $7,222 million, respectively.
($ in millions) | Fiscal Year Ended December 31, |
| As a Percentage of Revenue | Fiscal Year Ended December 31, |
| As a Percentage of Revenue (FCF Percentage) |
| ||||||||||||||||||||
2018 |
| 2017 |
| 2016 |
|
| 2018 |
| 2017 |
| 2016 | 2020 |
| 2019 |
| 2018 |
|
| 2020 |
| 2019 |
| 2018 |
| |||
Cash from Operating Activities | 770 |
| 574 |
| 717 |
|
| 11% |
| 8% |
| 11% | (745) |
| 923 |
| 770 |
|
|
|
|
|
|
|
| ||
Capital Expenditures | (271 | ) | (273 | ) | (254 | ) |
| 4% |
| 4% |
| 4% | (119) |
| (232) |
| (271 | ) |
|
|
|
|
|
|
| ||
Free Cash Flow (Used for FCF Percentage) | 499 |
| 301 |
| 463 |
|
| 7% |
| 4% |
| 7% | |||||||||||||||
Cash (Received)/Returned under 787 Interim Pricing Agreement |
|
| 236 |
| (43 | ) |
|
|
|
|
|
| |||||||||||||||
Costs Related to Asco Acquisition | 66 |
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
FCF | (864) |
| 691 |
| 499 |
|
| ** |
| 9% |
| 7% |
| ||||||||||||||
Cash Received under B787 Interim Pricing Agreement | * |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Costs Related to Planned Acquisitions | * |
| 32 |
| 66 |
|
|
|
|
|
|
|
| ||||||||||||||
Adjusted FCF | 565 |
| 537 |
| 420 |
|
|
|
|
|
|
| * |
| 723 |
| 565 |
|
| * |
| 9% |
| 7% |
| ||
* Not reported. ** Less than zero percent. | * Not reported. ** Less than zero percent. | ||||||||||||||||||||||||||
SPIRIT AEROSYSTEMS - 20192021 Proxy Statement 7686
Adjusted EBIT and Reconciliation
As presented in this Proxy Statement, Adjusted EBIT is defined as earnings before interest and taxes as adjusted to exclude certain non-operating and/or non-recurring items that the Company believes are not reflective of operating performance. The table below presents a reconciliation of Adjusted EBIT to net income (loss) for each of the periods presented.
| ($ in millions) | Fiscal Year Ended December 31, | |||||
| 2018 | 2017 | 2016 | ||||
| Net Income | 617.0 | 354.9 | 469.7 | |||
| Interest Expense and Financing Fee Amortization | 80.0 | 41.7 | 53.7 | |||
| Income Tax Provision | 139.8 | 180.0 | 192.1 | |||
| Equity in Net (Income) Loss of Non-Wholly Owned Affiliates | (0.6) | (0.3 | ) | (1.3 | ) | |
| Interest Income | (8.0) | (6.4 | ) | |||
| EBIT | 828.2 | 569.9 | 714.2 | |||
| Impact From Severe Weather Event | 12.1 | |||||
| Other(1) | 51.7 | 346.0 | 176.3 | |||
| Adjusted EBIT | 879.9 | 915.9 | 902.6 | |||
(1) Includes adjustments to reflect expenses related to the Asco acquisition and related debt financing, customer settlements, amounts paid to our former CEO upon his retirement, and other non-recurring items. | ||||||
SPIRIT AEROSYSTEMS - 2019 Proxy Statement 77
No ongoing