Preliminary Proxy Statement | |||||
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
Definitive Proxy Statement | |||||
☐ | Definitive Additional Materials | ||||
☐ | Soliciting Material Pursuant to §240.14a-12 |
☒ | No fee required. | |||||||||||||
☐ | Fee paid previously with preliminary material | |||||||||||||
☐ | Fee computed on table in exhibit required by item 25(p) per Exchange Act Rules 14a-6(i)(4) and 0-1 |
2345 Crystal Drive, Suite 1000 Arlington, Virginia 22202 Tel: 703-416-8000 Fax: 972-9885-5885 | |||||||||||
Notice of Annual Meeting of Stockholders To facilitate broad stockholder attendance and participation and provide a consistent experience to all stockholders, regardless of location, this year’s Annual Meeting (the “Annual Meeting”) of Stockholders of Leonardo DRS, Inc. (“Leonardo DRS,” the “Company,” “we,” “our” or “us”) will be held virtually at the date and time below. There will be no in-person meeting location. At the Annual Meeting, stockholders will be asked to consider and vote upon the matters set forth in this notice. The purpose of our Annual Meeting is to: | |||||||||||
Date: Wednesday, May 15, 2024 Time: 9:00 a.m., ET Place: The Annual Meeting will be held through a virtual web conference at www.virtualshareholdermeeting.com/DRS2024. To participate in the Annual Meeting, you will need your 16-digit control number included in your Notice of Internet Availability of the Proxy Materials, on your proxy card, or any additional voting instructions accompanying these Proxy Materials. | |||||||||||
Elect the following nine nominees to the Board of Directors (the “Board”): William J. Lynn III, Frances F. Townsend, Gail S. Baker, Dr. Louis R. Brothers, David W. Carey, General George W. Casey, Jr., Mary E. Gallagher, Kenneth J. Krieg, and Eric C. Salzman; | |||||||||||
Approve, in a non-binding advisory resolution, the compensation of the Company’s named executive officers (“NEOs”); | |||||||||||
Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024; | |||||||||||
Approve the Leonardo DRS, Inc. Employee Stock Purchase Plan (the “ESPP”); | |||||||||||
Approve the amendment and restatement of the Leonardo DRS, Inc. 2022 Omnibus Equity Compensation Plan (the “ECP,” which, once amended, the “Amended ECP”); | |||||||||||
Approve one or more adjournments of the Annual Meeting to a later date or dates if necessary or appropriate to solicit additional proxies if there are insufficient votes to approve the other proposals at the time of the Annual Meeting; and | |||||||||||
Transact other business that properly comes before the meeting or any postponement or adjournment thereof. | |||||||||||
Stockholders who owned Leonardo DRS common stock at the close of business on the record date, March 25, 2024, are entitled to vote at the Annual Meeting, or any postponement or adjournment thereof. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, including consolidated financial statements (the “2023 Annual Report”), are available to you at www.proxydocs.com. |
YOUR VOTE IS IMPORTANT Even if you plan to attend the Annual Meeting (virtually), please date, sign, and return your proxy card in the enclosed envelope, or vote via telephone or the Internet as instructed on the proxy card or Notice of Internet Availability, before the meeting and as soon as possible. Your prompt response is helpful and your cooperation will be appreciated. | ||||||||
IMPORTANT NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS The Securities and Exchange Commission’s (the “SEC”) “Notice and Access” rule enables us to deliver a Notice of Internet Availability of Proxy Materials to stockholders in lieu of a paper copy of the proxy statement, related materials, and our 2023 Annual Report. It contains instructions on how to access our proxy statement and 2023 Annual Report and how to vote online. We appreciate your continued support of Leonardo DRS, Inc. By Order of the Board of Directors, LEONARDO DRS, INC. Mark A. Dorfman Executive Vice President, General Counsel and Corporate Secretary April 5, 2024 | ||||||||
Leonardo DRS | 1 | 2024 Proxy Statement |
VOTE The Board unanimously recommends that the stockholders vote “FOR” the election of each director named in proposal 1 and “FOR” proposals 2, 3, 4, 5 and 6, each as listed above. | ||
Even if you plan to attend the Annual Meeting (virtually), please date, sign, and return your proxy card in the enclosed envelope, or vote via telephone or the internet as instructed on the proxy card or Notice of Internet Availability, prior to the meeting and as soon as possible. Your prompt response is helpful and your cooperation will be appreciated. | 2 | 2024 Proxy Statement |
Non-Employee Director Compensation | |||||||||||
Compensation Discussion and Analysis | |||||||||||
Compensation Committee Report | |||||||||||
Executive Compensation | |||||||||||
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The election of nine directors named in this proxy statement to hold office until the annual meeting of stockholders in 2025 or until their successors are duly elected and qualified; | |||||
The approval of an advisory resolution regarding the compensation of the Company’s NEOs; | |||||
The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024; | |||||
The approval of the ESPP; | |||||
The approval of the Amended ECP; | |||||
The | |||||
Any other business that may properly come before the meeting. | |||||
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Board Recommendation | Proposal | ||||
FOR | Proposal One: The election of the Board’s nine nominees named in this proxy statement to the Board; | ||||
FOR | Proposal Two: The advisory resolution regarding the compensation of the Company’s NEOs; | ||||
FOR | Proposal Three: The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024; | ||||
FOR | Proposal Four: The approval of the ESPP; | ||||
FOR | Proposal Five: The approval of the Amended ECP; and | ||||
FOR | Proposal Six: The approval of one or more adjournments of the Annual Meeting to a later date or dates if necessary or appropriate to solicit additional proxies if there are insufficient votes to approve the other proposals at the time of the Annual Meeting. |
Prior to the Annual Meeting You can vote via the Internet by navigating to www.proxyvote.com and entering the 16-digit control number included on the Notice, proxy card or voting instructions form previously distributed; or | At the Annual Meeting You may vote via the Internet at the Annual Meeting by attending the live meeting at www.virtualshareholdermeeting.com/DRS2024 and entering the 16-digit control number included on the Notice, proxy card or voting instructions form previously distributed. |
Vote by Telephone You can vote by proxy by calling the toll-free number found on your proxy card or voting instruction form. You will need to use the 16-digit control number included on the proxy card to vote by telephone. The availability of telephone voting may depend on the voting process of the organization that holds your shares; or | Vote by Mail You can vote by completing, dating, signing and returning the proxy card or voting instruction form. |
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Leonardo DRS’s Fourth Amended and Restated Bylaws (the “Bylaws”) provide that the Board must consist of no less than one director nor more than ten directors. The exact number of directors serving on the Board is determined from time to time as specified in the Amended and Restated Proxy Agreement (the “Proxy Agreement”) by and among the Company, the individual proxy holders that are signatories thereto, Leonardo US Holding, LLC (“US Holding”), Leonardo – Societa per Azioni (“Leonardo S.p.A.”) and the U.S. Department of Defense (the “DoD”) and the Commitment Letter (the “Commitment Letter”) by and among the Company, US Holding, Leonardo S.p.A. and the Defense Counterintelligence and Security Agency (the “DCSA”), which are discussed in the “Certain Relationships and Related Party Transactions” section in this proxy statement. The Company’s Bylaws provide that directors are elected by a plurality vote. This means that the nominees receiving the highest number of affirmative votes will be elected as directors. In other words, because there are no other nominees for election as directors other than the persons named in the enclosed proxy card, and assuming each of those persons receives at least one vote, all such nominees will be elected to our Board. A stockholder may choose to withhold his or her vote in lieu of voting “for” any director nominee. Withheld votes have the same effect as votes against the director nominee. The director nominees identified in this proxy statement are standing for election at the Annual Meeting and have been nominated by the Board at the recommendation of the Nominating and Corporate Governance Committee of the Board (the “Nominating Committee”) to hold office for a one-year term expiring at the annual meeting of stockholders in 2025 or until their successors, if any, are elected and qualified. Unless contrary instructions are given, the shares represented by your proxy will be voted FOR the election of all director nominees named in this proxy statement. The Board has determined that each director nominee, other than Mr. Lynn, if elected, would be an independent director. All of the director nominees listed below have consented to being named in this proxy statement and to serve if elected. However, if any nominee becomes unable to serve, proxy holders will have discretion and authority to vote for another nominee proposed by our Board. | VOTE The Board unanimously recommends that you vote “FOR” the election of each nominee presented in Proposal 1. |
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Position | Committee | Director Since | Proxy Holder? | |||||||||||||||||||||||
William J. Lynn III | Chairman & CEO | Government Security | 2012 | No | ||||||||||||||||||||||
Frances F. Townsend | Lead Ind. Director | Compensation (Chair) & Government Security | 2009 | Yes | ||||||||||||||||||||||
Gail S. Baker | Director | Compensation | 2021 | No | ||||||||||||||||||||||
Dr. Louis R. Brothers | Director | Audit & Government Security | 2023 | Yes | ||||||||||||||||||||||
David W. Carey | Director | Audit, Government Security (Chair) & Nominating | 2009 | Yes | ||||||||||||||||||||||
General George W. Casey, Jr. | Director | Compensation & Government Security | 2020 | Yes | ||||||||||||||||||||||
Mary E. Gallagher | Director | Audit (Chair) | 2021 | No | ||||||||||||||||||||||
Kenneth J. Krieg | Director | Compensation, Nominating (Chair) & Government Security | 2009 | Yes | ||||||||||||||||||||||
Eric C. Salzman | Director | Audit & Nominating | 2022 | No |
William J. Lynn III | ||||||||||||||||||||
has been Chairman of the Board since 2021 and Chief Executive Officer (“CEO”) since January | 2012. | |||||||||||||||||||
Relevant Experience and Skills: •30th United States Deputy Secretary of Defense (2009-2011) •Senior Vice President of Government Operations and Strategy at Raytheon Company (2002-2009) •Chief Financial Officer and Under Secretary of Defense (Comptroller) (1997-2001) •Director of Program Analysis and Evaluation for the Department of Defense (1993-1997) •Counsel to the Senate Armed Forces Committee under Senator Ted Kennedy (1987-1993) •Serves on the boards of Accenture Federal Services, the •Skilled and experienced in matters of national security, both in government and industry •Numerous recognitions for professional and service contributions, including four Department of Defense Distinguished Public Service medals and the Distinguished Civilian Services Award | ||||||||||||||||||||
William J. Lynn III Age: 70 Director Since: 2012 Board Committee: Government Security | ||||||||||||||||||||
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Frances F. Townsend | ||||||||||||||||||||
has been Lead Director since 2023 and Chair of the Compensation Committee since Other Public Company Directorships: •Chubb Limited (NYSE: CB) (2020-present) •Freeport-McMoRan Inc. (NYSE: FCX) (2013-present) •SciPlay Corporation (NASDAQ: SCPL) (2019-2020) •Scientific Games Corporation (n/k/a Light & Wonder) (NASDAQ: LNW) (2010-2020) •Western Union Company (NYSE: WU) (2013-2020) | ||||||||||||||||||||
Relevant Experience and Skills: •Founder, Frances Fragos Townsend LLC (2022-present) •EVP of Corporate Affairs, Corporate Secretary, and Chief Compliance Officer at Activision Blizzard (2020-2022) •Vice Chairman, General Counsel, and Chief Administrative Officer at MacAndrews & Forbes •On-air national security analyst for CBS news (2016-2022) •Corporate partner with the law firm Baker Botts, LLP (2009-2010) •Served as Assistant to President George W. Bush for Homeland Security and Counter terrorism and chaired the Homeland Security Council (2004-2008) •Served as Deputy National Security Advisor for Combating Terrorism (2003-2004) •Served in various senior positions at the U.S. Department of Justice (1990-2001) •Serves on several non-profit boards including the Council on Foreign Relations, the Atlantic Council, the Center for Strategic and International Studies, the McCain Institute and the Hospital for Special Surgery •Skilled and experienced in matters of national security and law, business, and government | ||||||||||||||||||||
Frances F. Townsend Age: 62 Director Since: 2009 Board Committees: Compensation (Chair), Government Security Proxy Holder Independent | ||||||||||||||||||||
Leonardo DRS | 9 | 2024 Proxy Statement |
Other Public Company Directorships: •Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) | ||||||||||||||||||||
Relevant Experience and Skills: •Serves on the board of advisors of Argosy Investment Partners-Capewell Aerial Systems (2022- present) •Consultant to Arcline Investment Management, L.P. (2022-present) •President, Aftermarket •President, Intelligence, Surveillance, Reconnaissance, and Space Systems at Collins Aerospace (2017-2019) •President, Air Management Systems, European Entities and Aftermarket •President, Aerospace Customers and Business Development for UTC Aerospace Systems (2011-2015) • •Holds a top-secret U.S. clearance •Serves on the non-profit board for the Hartford Bishops Foundation as Executive Chair of the | ||||||||||||||||||||
Gail S. Baker Age: 61 Director Since: 2021 Board Committee: Compensation Independent | ||||||||||||||||||||
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Other Public Company Directorships: •Redwire (NYSE: RDW) (2021-present) •BigBear.ai (NYSE: BBAI) (2020-2022) | ||||||||||||||||||||
Relevant Experience and Skills: •Principal with the MIT Lincoln Laboratory (2023-present) •Operating Partner at AE Industrial Partners (2022-present) • • •Principal with The Chertoff Group (2017-2018) •Under Secretary for Science and Technology at the U.S. Department of Homeland Security (2014-2017) •Deputy Assistant Secretary of Defense for Research at the Department of Defense (2011-2014) •Served in various senior roles at the Defense Advanced Research Projects Agency, BAE Systems, Draper Laboratory, and Envoy Networks •Serves on the non-profit board of Riverside Research (2017-present) •Skilled and experienced in matters of defense, government services, and technology industries | ||||||||||||||||||||
Director Since: Board Proxy Holder Independent | ||||||||||||||||||||
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David W. Carey has been the Chair of the Government Security Committee since Other Public Company Directorships: •ImageWare Systems, Inc (OTCQB: IWSY) (2006-2020) | ||||||||||||||||||||
Relevant Experience and Skills: •Serves on the board of OnPoint Consulting, Inc.(2009-present) and Informatica Federal Operations Corp. (2015-present) •Executive Director at Blackbird Technologies, Inc. (2005-2008) •Vice President, Information Assurance at Oracle Corporation (2001-2005) •Held several senior positions during a 32-year career at the Central Intelligence Agency including service as Executive Director until 2001 •Previously served on several boards to include Qinetiq North America (2014-2019), the advisory board of Recorded Future Inc. (2011-2019) as well as on the non-profit board of the CIA Officers Memorial Foundation until 2022 •Skilled and experienced in matters of national security, business development, and defense and intelligence electronics | ||||||||||||||||||||
Director Since: Board Proxy Holder Independent | ||||||||||||||||||||
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Relevant Experience and Skills: •Served 41 years in the U.S. Army, including from 2007-2011 as the 36th Chief of Staff of the U.S. Army •Commanded the Multi-National Force – Iraq, a coalition of more than 30 countries (2004-2007) •Serves as Distinguished Senior Lecturer of Leadership at the SC Johnson College of Business, Cornell University, and • •Skilled and experienced in the matters of military | ||||||||||||||||||||
General George W. Casey, Jr. (Ret.) Age: 75 Director Since: 2020 Board Committees: Compensation, Government Security Proxy Holder Independent | ||||||||||||||||||||
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Mary E. Gallagher | ||||||||||||||||||||
has been the Chair of the Audit Committee since Other Public Company Directorships: •American Outdoor Brands (NASDAQ: AOUT) (2020-present) •Served as director of IronNet | ||||||||||||||||||||
Relevant Experience and Skills: •Serves as director of Novaria Group (2020-present) •Chief Financial Officer at Wheels Up (2016-2018) •Served in a variety of top financial roles at United Technologies Corporation (now Raytheon Technologies Corporation) (2004-2016) most recently serving as Chief Financial Officer at Sikorsky Aircraft (2013-2016) •Vice President Controller and Chief Accounting Officer at Olin Corporation (1996-2004) •Served for nine years with KPMG in various positions in the audit, mergers/acquisitions, consulting, and training groups (1987-1996) •Skilled and experienced in the matters of business administration, accounting, financial leadership, and defense | ||||||||||||||||||||
Mary E. Gallagher Age: 58 Director Since: 2021 Board Committee: Audit (Chair) Independent | ||||||||||||||||||||
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Kenneth J. Krieg | ||||||||||||||||||||
has been the Chair of the Nominating Committee since Other Public Company Directorships: •BWX Technologies, Inc. (NYSE: BWXT) (2016-present) | ||||||||||||||||||||
Relevant Experience and Skills: •Head of Samford Global Strategies, an advisory and consulting practice which Mr. Krieg founded in 2007 •Served as Executive in Residence with Renaissance Strategic Advisors, a leading consultancy supporting premier firms in the aerospace, defense, space, intelligence and government services industry (2010-present) •Served in several positions within the Department of Defense (2001-2007), including as Undersecretary of Defense for Acquisition, Technology, and Logistics (2005-2007) •Spent 11 years working for the International Paper Company, most recently as Vice President and General Manager of the Office and Consumer Papers Division •Served on the boards of Tempus Applied Solutions Holdings, Inc. (2014-2016) •Serves on a number of private and foreign ownership control and influence (“FOCI”) mitigation boards •Skilled and experienced in the matters of overseeing research, development, acquisitions, FOCI mitigation, public company governance, and government | ||||||||||||||||||||
Kenneth J. Krieg Age: 63 Director Since: 2009 Board Committees: Compensation, Nominating (Chair), Government Security Proxy Holder Independent | ||||||||||||||||||||
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Other Public Company Directorships: •Movella Holdings Inc. (NASDAQ: MVLA) | • | |||||||||||||||||||
8x8, Inc. (NASDAQ: EGHT) (2012-March 2024) | ||||||||||||||||||||
Relevant Experience and Skills: • •Former Chief Executive Officer at Safeguard Scientifics, Inc. (NASDAQ:SFE) •Director of Prognos Health (2022-present), meQuilibrium (2022-present), and Aktana (2022-2023) •Managing Member of SarniHaan Capital Partners LLC, a private boutique consulting firm that provides capital and expertise to support the growth of technology driven business in healthcare, financial services and digital media (2011-present) •Served nearly ten years as Managing Director for Lehman Brothers Holdings in the Private Equity and Principle Investing Group as well as in the Global Trading Strategies Division •Served as a board member, investor, and strategic advisor for public and private growth companies for over 25 years •Served as an independent director, executive chairman, non-executive chairman, audit committee chairman, compensation committee chairman, and M&A committee chairman at over 25 public and private companies • | ||||||||||||||||||||
Eric C. Salzman Age: 57 Director Since: 2022 Board Committees: Audit, Nominating Independent | ||||||||||||||||||||
VOTE | |||||
The Board unanimously recommends that stockholders vote “FOR” | the election of each nominee. |
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Senior Exec of Public Company | Manufacturing/ Operations | Industrial/ National Security | Financial Literacy | ||||||||||||||||||||||||||
M&A | |||||||||||||||||||||||||||||
Government Experience | Technical Expertise | Global Experience | Military/Defense Experience | ||||||||||||||||||||||||||
William J. Lynn III | l | l | l | l | l | l | |||||||||||||||||||||||
Frances F. Townsend | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||
Gail S. Baker | l | l | l | l | l | l | l | ||||||||||||||||||||||
Dr. Louis R. Brothers | l | l | l | l | l | l | l | ||||||||||||||||||||||
David W. Carey | l | l | l | l | l | ||||||||||||||||||||||||
General George W. Casey, Jr. | l | l | l | l | l | l | |||||||||||||||||||||||
Mary E. Gallagher | l | l | l | l | l | l | l | l | |||||||||||||||||||||
Kenneth J. Krieg | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||
Eric C. Salzman | l | l | l | l | l | l |
Leonardo DRS | 17 | 2024 Proxy Statement |
Board Diversity Matrix | ||||||||||||||||||||||||||
As of April 5, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||
Total Number of Directors | 9 | 9 | ||||||||||||||||||||||||
Part I: Gender Identity | Female | Male | Non-Binary | Did Not Disclose Gender | Female | Male | Non-Binary | Did Not Disclose Gender | ||||||||||||||||||
Directors | 3 | 6 | 3 | 6 | ||||||||||||||||||||||
Part II: Demographic Background | ||||||||||||||||||||||||||
African American or Black | 1 | 1 | ||||||||||||||||||||||||
Alaskan Native or Native American | ||||||||||||||||||||||||||
Asian | ||||||||||||||||||||||||||
Hispanic or Latinx | ||||||||||||||||||||||||||
Native Hawaiian or Pacific Islander | ||||||||||||||||||||||||||
White | 3 | 4 | 3 | 4 | ||||||||||||||||||||||
Two or More Races or Ethnicities | ||||||||||||||||||||||||||
LGBTQ+ | ||||||||||||||||||||||||||
Did Not Disclose Demographic Background | 1 | 1 |
Leonardo DRS | 18 | 2024 Proxy Statement |
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•100% Independent Nominating and Compensation Committee Members •Lead Director •Annual Board and Committee Evaluations •Director Overboarding Policy •Periodic Review of Committee Charters and Governance Policies •Regular Meetings of Independent Directors without Management Present | •Formal CEO Evaluation Process •Stockholder Engagement Program •Stock Ownership Guidelines for Directors and Officers •Codes of Conduct for Directors, Officers and Employees •Succession Planning Process •Corporate Governance Guidelines |
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Name | Audit | Compensation | Nominating | Government Security | |||||||||||||||||||||||||||||||
William J. Lynn III | l | ||||||||||||||||||||||||||||||||||
Frances F. Townsend* | l | ||||||||||||||||||||||||||||||||||
Gail S. Baker | l | ||||||||||||||||||||||||||||||||||
Dr. Louis R. Brothers* | l | ||||||||||||||||||||||||||||||||||
David W. Carey* | l | l | |||||||||||||||||||||||||||||||||
George W. Casey, Jr.* | l | ||||||||||||||||||||||||||||||||||
Mary E. Gallagher | l | ||||||||||||||||||||||||||||||||||
Kenneth J. Krieg* | l | l | |||||||||||||||||||||||||||||||||
Eric C. Salzman | l | l | |||||||||||||||||||||||||||||||||
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Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation($)(2) | Total(2)($) | ||||||||||||||||||||||
Frances Townsend(3) | $200,000 | $139,137 | $2,299 | $341,437 | ||||||||||||||||||||||
Philip Odeen(4) | $112,500 | $— | $39,019 | $151,519 | ||||||||||||||||||||||
General George Casey, Jr. | $150,000 | $139,137 | $2,796 | $291,933 | ||||||||||||||||||||||
Kenneth Krieg | $200,000 | $139,137 | $9,274 | $348,411 | ||||||||||||||||||||||
David W. Carey(3) | $200,000 | $139,137 | $806 | $339,944 | ||||||||||||||||||||||
Peter Marino(5) | $200,000 | $70,501 | $2,817 | $273,318 | ||||||||||||||||||||||
Mary Gallagher | $200,000 | $139,137 | $1,228 | $340,365 | ||||||||||||||||||||||
Gail Baker | $150,000 | $139,137 | $3,003 | $292,140 | ||||||||||||||||||||||
Eric Salzman(6) | $8,900 | $68,636 | $— | $77,536 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($)(2) | ||||||||||||||||||||||
Frances F. Townsend | 180,000 | 150,004 | 24,419 | 354,423 | ||||||||||||||||||||||
Gail S. Baker | 100,000 | 150,004 | 6,356 | 256,360 | ||||||||||||||||||||||
Dr. Louis R. Brothers(3) | 100,000 | 210,391 | 60 | 310,451 | ||||||||||||||||||||||
David W. Carey | 140,000 | 150,004 | 5,873 | 295,877 | ||||||||||||||||||||||
General George W. Casey, Jr. | 100,000 | 150,004 | 610 | 250,614 | ||||||||||||||||||||||
Mary E. Gallagher | 140,000 | 150,004 | 19,369 | 309,373 | ||||||||||||||||||||||
Kenneth J. Krieg | 140,000 | 150,004 | 12,093 | 302,097 | ||||||||||||||||||||||
Eric C. Salzman | 100,000 | 150,004 | 13,455 | 263,459 |
Leonardo DRS | 29 | 2024 Proxy Statement |
Approval of Advisory Resolution Regarding the Compensation of the Company’s NEOs | ||||||||
As required by Section 14A of the Exchange Act, we are offering our stockholders an opportunity to cast an advisory vote on the compensation of our NEOs, as disclosed in this proxy statement. Although the vote is non-binding, we value continuing and constructive feedback from our stockholders on compensation and other important matters. The Board and the Compensation Committee will consider the voting results when making future compensation decisions. The Company is committed to maintaining executive compensation programs and practices that are aligned with the Company’s business strategy. As a result, the Company has a strong pay-for-performance philosophy that greatly impacts its decisions regarding executive compensation. Our executive compensation programs seek to align management’s interests with our stockholders’ interests to support long-term value creation and pay for performance. This philosophy and the compensation structure are essential to the Company’s ability to attract, retain and motivate individuals who can achieve superior financial results in the best interests of the Company and its stockholders. To that end, our program links pay to performance by delivering a substantial component of the total compensation opportunity of our NEOs in variable or performance-based compensation programs (annual and long-term incentive plans). Performance measures used in the Company’s annual and long-term incentive plans support the Company’s annual operating plan and longer-term strategy and are tied to key Company measures of short and long-term performance. Our program also aligns our NEOs’ financial interest with those of our stockholders by delivering a substantial portion of their total compensation in the form of equity awards and other long-term incentive vehicles. The affirmative vote of the holders of a majority of shares of Leonardo DRS common stock present in person (virtually) or by proxy and entitled to vote on the matter at the Annual Meeting will be required for the approval of this proposal. Abstentions will count as a vote “against” the proposal. Broker non-votes will have no effect on the outcome of the vote. We urge our stockholders to read the section entitled “Compensation Discussion and Analysis” below, which describes in detail how our executive compensation program and practices operate and are designed to achieve our compensation objectives, as well as the accompanying compensation tables which provide detailed information on the compensation of our NEOs. For these reasons, we recommend that stockholders vote in favor of the following advisory resolution: “RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion presented in the Company’s proxy statement for its 2024 Annual Meeting of Stockholders, is hereby APPROVED.” The Board unanimously recommends that stockholders vote “FOR” the advisory resolution. | VOTE The Board unanimously recommends that you vote “FOR” the advisory resolution presented in Proposal 2. |
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Name | Position | ||||
William J. Lynn III | CEO | ||||
Mike Dippold | Executive Vice President, CFO | ||||
John Baylouny | Executive Vice President, Chief Operating Officer (“COO”) | ||||
Mark Dorfman | Executive Vice President, General Counsel and Secretary | ||||
Sally Wallace | Executive Vice President, Operations |
Leonardo DRS | 31 | 2024 Proxy Statement |
Principle | Philosophy | ||||
Pay for Performance | Our compensation program is designed to reward superior past performance and create incentives for future exemplary performance that will create long-term value. | ||||
Competitive Pay | We do not target NEO total direct compensation (which includes base salary, annual incentive compensation, and long-term incentive compensation) at a specific market level. When determining the total direct compensation opportunity for individual NEOs, the Compensation Committee takes many factors into account, including (i) such executive’s experience, responsibilities, management abilities and job performance, (ii) the performance of the Company as a whole, (iii) current market conditions, (iv) an assessment of competitive pay for similar positions at comparable companies and at companies in other industries that could recruit the Company’s executives, and (v) pay relative to other executives at the Company. To understand the appropriate markets for executive compensation, the Compensation Committee considers benchmark data from both a targeted industry and size-relevant peer group, and a broader general industry data set. Our program is structured to provide the opportunity for above-median pay for above-median performance and below-median pay for below-median performance. | ||||
Strategic Goals and Metrics | Annual incentive metrics and targets are driven by the Company’s strategic, financial, and operational business goals. Long-term incentive performance restricted stock units (“PRSUs”) provide NEOs with a significant personal stake in the long-term success of the business by tying awards to a three-year performance period and aligning incentives with our long-term strategic goals. | ||||
Leadership Recruitment and Retention | Our compensation program is designed to recruit, motivate, retain, and reward NEOs through a balanced mix of fixed and variable compensation, and time-based and performance-based awards. | ||||
Alignment between Executives’ and Stockholders’ Interests | In connection with our becoming a public company, in 2022, we transitioned from granting executives and other key employees long-term incentives under our cash-based long-term incentive program to equity-based long-term incentives under the ECP to align executives’ interests with those of our stockholders. |
2022 CEO Compensation | ||||||||||||||||||||
Base Salary | Annual Cash Incentive (target) | LTI PRSU (target) | LTI RSU | |||||||||||||||||
19% | 21% | 30% | 30% | |||||||||||||||||
51% Performance Based / 81% At Risk |
Leonardo DRS | 32 | 2024 Proxy Statement |
2022 Other NEO Compensation (Average) | ||||||||||||||||||||
Base Salary | Annual Cash Incentive (target) | LTI PRSU (target) | LTI RSU | |||||||||||||||||
31% | 23% | 23% | 23% | |||||||||||||||||
46% Performance Based / 69% At Risk |
* represents compensation opportunity for Mr. Lynn in 2023 1.Earned based on service and performance (reflected at target) 2.Earned based on service |
* represents average compensation opportunities for Mr. Dippold, Mr. Baylouny, Mr. Dorfman and Ms. Wallace in 2023 1.Earned based on service and performance (reflected at target) 2.Earned based on service |
Leonardo DRS | 33 | 2024 Proxy Statement |
What We Do | What We Don’t Do | ||||||||||||||||
No guaranteed minimum pay-out for our annual | |||||||||||||||||
Align pay and performance using annual and multi-year measures of financial, operational, and business objectives | No single trigger on change in control, with change in control benefits provided only if there is both a change in control and a qualifying termination | ||||||||||||||||
Review and assess compensation policies annually to ensure features of the plan are reflective of market practice and do not encourage undue risk to the Company | No excise tax gross-ups for severance, excise tax, or other benefits provided to our executives | ||||||||||||||||
Cap incentive compensation awards at two times target | No excessive perquisites for executives | ||||||||||||||||
No hedging or pledging of Company stock | |||||||||||||||||
Robust stock ownership guidelines for directors and executives, including our | No employment agreements with any of our executives, with the exception of our CEO |
Leonardo DRS | 34 | 2024 Proxy Statement |
Leonardo DRS | 35 | 2024 Proxy Statement |
Peer Group Companies(1) | ||||||||
AAR Corporation (AIR) | ||||||||
Curtiss-Wright Corporation (CW) | Science Applications International Corporation (SAIC) | |||||||
Aerojet Rocketdyne Holdings, Inc. (AJRD) | Huntington Ingalls Industries Inc. (HII)(2) | Teledyne Technologies Inc. (TDY) | ||||||
BWX Technologies Inc. (BWXT)(2) | ITT Inc. (ITT)(2) | Unisys Corporation (UIS) | ||||||
CACI International Inc. (CACI) | Oshkosh Corporation (OSK) | Viasat, Inc. (VSAT) | ||||||
Crane Co. (CR) | Parsons Corporation (PSN) | Woodward, Inc. (WWD) |
Leonardo DRS | 36 | 2024 Proxy Statement |
Name | 2021 Base Salary (as of April 2021) | 2022 Base Salary (as of March 2022) | Approx.% of Increase(1) | ||||||||
William J. Lynn | $1,157,249 | $1,157,249 | —% | ||||||||
Mike Dippold | $476,000 | $496,000 | 4% | ||||||||
John Baylouny | $522,500 | $555,000 | 6% | ||||||||
Mark Dorfman | $430,540 | $448,000 | 4% | ||||||||
Sally Wallace | $440,840 | $459,000 | 4% |
Name | 2022 Base Salary (as of March 2022) ($) | 2023 Base Salary (as of March 2023) ($) | Approximate Increase (%)(1) | ||||||||
William J. Lynn III | 1,157,249 | 1,157,249 | — | ||||||||
Mike Dippold | 496,000 | 514,000 | 3.6 | ||||||||
John Baylouny | 555,000 | 575,000 | 3.6 | ||||||||
Mark Dorfman | 448,000 | 464,000 | 3.6 | ||||||||
Sally Wallace | 459,000 | 475,000 | 3.5 |
Leonardo DRS | 37 | 2024 Proxy Statement |
Metric | Weighting | Background, Definition and Rationale | ||||||
Adjusted EBITDA | 30% of Company Financial Performance | •Adjusted EBITDA is calculated as our net earnings before income taxes, depreciation, amortization of acquired intangible assets, restructuring costs, interest, acquisition and divestiture related expenses, foreign exchange, non-service pension expenditures and other one-time non-operational events. •The Adjusted EBITDA metric is important for the Company to measure and assess operating performance and increase profit levels to enhance stockholder value. | ||||||
Free Cash Flow (FCF) | 25% of Company Financial Performance | •FCF is calculated as the (i) sum of the cash flows provided by (used in) operating activities, the cash flows provided by (used in) investing activities pertaining to capital expenditures, proceeds generated from the sale of capital assets and dividends received from investments, less (ii) the sum of transaction-related expenditures (net of tax) and tax payments on disposals. •The FCF metric provides management and investors with an important measure of our ability to generate cash on a normalized basis. FCF also provides insight into our flexibility to allocate capital and pursue opportunities that may enhance stockholder value. | ||||||
Working Capital | 25% of Company Financial Performance | •Working Capital is based on the quarterly turns and weighted based on quarterly achievement. •The Working Capital metric is implemented to drive the Company to improve cash performance and quality of cash generation, reducing the cost of holding inventory and excess working capital. | ||||||
Bookings | 20% of Company Financial Performance | • •The Bookings metric is important for the Company to monitor the value of new contract awards received which will underpin confidence in future growth. | ||||||
2022 Financial Performance Metrics (% Weighting of Company Performance Goal) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Achieved | Bookings (in millions) (20% of Goal) | Work Capital(1) (25% of Goal) | EBITDA – Adjusted (in millions) (30% of Goal) | FCF (in millions) (25% of Goal) | Performance Payout Threshold (interpolation used between these points) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 Company Financial Performance Targets by Threshold | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 Company Financial Performance Targets by Threshold | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 Company Financial Performance Targets by Threshold | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Thresholds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Thresholds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Thresholds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | Minimum | $2,455 | See table | $294 | $148 | 90% of Target | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Target | Target | $2,728 | See table | $327 | $165 | 100% of Target | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Target | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Target | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | Maximum | $3,410 | See table | $409 | $206 | 125% of Target | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum |
Quarter | Weighting (%) | Minimum ($ in millions) | Target ($ in millions) | Maximum ($ in millions) | ||||||||||||||||||||||
Q1 | 10 | 1.89 | 2.10 | 2.62 | ||||||||||||||||||||||
Q2 | 10 | 2.18 | 2.42 | 3.02 | ||||||||||||||||||||||
Q3 | 10 | 2.29 | 2.55 | 3.19 | ||||||||||||||||||||||
Q4 | 70 | 2.67 | 2.97 | 3.71 |
Leonardo DRS | 38 | 2024 Proxy Statement |
Quarter | Weighting | Minimum (in millions) | Target (in millions) | Maximum (in millions) | ||||||||||||||||||||||
Q1 | 10% | 2.44 | 2.71 | 3.38 | ||||||||||||||||||||||
Q2 | 10% | 2.54 | 2.83 | 3.53 | ||||||||||||||||||||||
Q3 | 10% | 2.82 | 3.13 | 3.92 | ||||||||||||||||||||||
Q4 | 70% | 3.69 | 4.10 | 5.13 |
Performance Metric | 2022 Target (in millions) | 2022 Actual Performance (in millions) | % Performance Achieved | ICP Performance Factor(1) | Weighting | Weighted Performance Factor(2) | ||||||||||||||||||||||||||||||||
(a) | (b) | (c) = (b) ÷ (a) | (d) | (e) | (f) = (d) × (e) | |||||||||||||||||||||||||||||||||
Bookings | $2,728 | $3,147.6 | 115% | 160% | 20% | 32% | ||||||||||||||||||||||||||||||||
Working Capital(4) | Refer to Working Capital Achievement Table | 25% | 2.5% | |||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $327 | $309 | 95% | 70% | 30% | 21% | ||||||||||||||||||||||||||||||||
Free Cash Flow | $165 | $66 | 40% | —% | 25% | —% | ||||||||||||||||||||||||||||||||
Total Financial Performance Achievement(3) | 100% | 55.5% |
2023 Company Financial Performance Achievement | ||||||||||||||||||||||||||||||||||||||
Performance Metric | 2023 Target (in millions) ($) | 2023 Actual Performance (in millions) ($) | % Performance Achieved (%) | ICP Performance Factor(1) (%) | Weighting (%) | Weighted Performance Factor(2) (%) | ||||||||||||||||||||||||||||||||
(a) | (b) | (c) = (b) ÷ (a) | (d) | (e) | (f) = (d) × (e) | |||||||||||||||||||||||||||||||||
Adjusted EBITDA | 346 | 324 | 94 | 64 | 30 | 19.2 | ||||||||||||||||||||||||||||||||
FCF | 139 | 159 | 114 | 156 | 25 | 39.0 | ||||||||||||||||||||||||||||||||
Working Capital(4) | Refer to Working Capital Achievement Table | 25 | 21.1 | |||||||||||||||||||||||||||||||||||
Bookings | 2,839 | 3,516 | 124 | 196 | 20 | 39.2 | ||||||||||||||||||||||||||||||||
Total Financial Performance Achievement(3) | 100 | 118.5 |
Quarter | Quarter | 2022 Target (in millions) | Actual 2022 Performance (in millions) | % Performance Achieved | ICP Performance Factor | Weighting | Weighted Performance Factor | Quarter | 2023 Target (in millions) ($) | Actual 2023 Performance (in millions) ($) | % Performance Achieved (%) | ICP Performance Factor (%) | Weighting (%) | Weighted Performance Factor (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) = (b) ÷ (a) | (d) | (e) | (f) = (d) × (e) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | (a) | (b) | (c) = (b) ÷ (a) | (d) | (e) | (f) = (d) × (e) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q1 | Q1 | 2.71 | 2.72 | 100% | 100% | 10% | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q2 | Q2 | 2.83 | 2.51 | —% | —% | 10% | —% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q3 | Q3 | 3.13 | 2.53 | —% | —% | 10% | —% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q4 | Q4 | 4.10 | 2.77 | —% | —% | 70% | —% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total WC Achievement | 0.1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Working Capital Achievement | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Working Capital Weighted Financial Performance Factor | Working Capital Weighted Financial Performance Factor | 2.5% |
Leonardo DRS | 39 | 2024 Proxy Statement |
William J. Lynn III | |||||
•Continued focus on employees by recruiting and retaining the highest caliber of talent by creating a cross-Company recruiting program with enhanced training for recruiters, automation of additional processes, and expanded social media efforts. Enhanced employee benefit offerings while minimizing the cost to employees. Continued to provide growth opportunities to develop talent and cultivate new leaders throughout the Company by creating a high potential program, and through expansion of the mentorship program. Created strong succession plans and the identification of high potential employees. Continued to improve the diversity of the workforce by attracting and retaining top tier talent across all levels of the Company, and increased our commitment to the communities where we do business through Company-sponsored volunteering and charitable giving. For these efforts, the Company continued to receive recognition awards from organizations such as Great Places to Work, HireVets, Military Times, and Disability Index. | |||||
•Ensured full compliance of all security regulations to maintain Company and national security interests and strengthened all aspects of the Ethics Program to align with federal guidance and industry best practices. Led the progress on key sustainability initiatives such as completing two new solar power projects, and continued facility upgrades and improvements to drive energy efficiency. Completed a Nasdaq assessment of our |
Mike Dippold | |||||
Worked closely with our financial leaders across the Company to monitor and deliver solid financial performance on a quarterly and | |||||
•Led the |
John Baylouny | |||||
•Improved supply chain strategy by utilizing advance of contract methodology to drive revenue predictability and | |||||
Mark Dorfman | |||||
•Ensured the successful integration of RADA Technologies Ltd (“RADA”) through increased oversight, professionalization of legal and compliance | |||||
Leonardo DRS | 41 | 2024 Proxy Statement |
Sally Wallace | |||||
Improved |
•Led our continuous improvement team, APEX, which resulted in significant cost savings, improved on-time delivery and customer satisfaction scores across the Company. | |||||
•Worked closely with our IT/ERP team for new or enhanced processes and tools to improve business capability and use. Enhanced the use of PowerBI and updated tools for new reporting capability on risk and opportunity management to allow for the identification, analysis, and escalation of programmatic issues earlier in the process. Implemented | |||||
•To increase our profitable growth, supported the business leaders on specific execution challenges to drive greater customer satisfaction, improve design challenges, and provide critical insights on strategy and negotiations. Focused on enhancing the business proposal process to ensure clear understanding of costs, price to win, and understanding of challenges to lead to a path towards winning proposals. Provided support on next level strategic planning analysis throughout planning cycle, to model the direct linkages between strategic planning and | |||||
Name | Target Incentive (% of Base) | Target Incentive | Financial Achievement(1) | Individual Performance Achievement(2) | Calculated Award(3) | Discretionary Factor Award(4) | Earned Award(5) | Overall Achievement(6) | ||||||||||||||||||||||||||||||||||||||||||
William J. Lynn | 110% | $1,272,974 | $529,875 | $636,487 | $1,166,362 | 1.2 | $1,399,700 | 110% | ||||||||||||||||||||||||||||||||||||||||||
Mike Dippold | 75% | $372,000 | $154,845 | $186,000 | $340,845 | 1.2 | $409,100 | 110% | ||||||||||||||||||||||||||||||||||||||||||
John Baylouny | 80% | $444,000 | $184,815 | $222,000 | $406,815 | 1.2 | $488,200 | 110% | ||||||||||||||||||||||||||||||||||||||||||
Mark Dorfman | 65% | $291,200 | $121,212 | $145,600 | $266,812 | 1.2 | $320,200 | 110% | ||||||||||||||||||||||||||||||||||||||||||
Sally Wallace | 65% | $298,350 | $124,188 | $119,340 | $243,528 | 1.2 | $292,300 | 98% |
Name | Target Incentive (% of Base) | Target Incentive ($) | Financial Achievement ($)(1) | Individual Performance Achievement ($)(2) | Calculated Award ($)(3) | Discretionary Factor Award(4) | Earned Award ($)(5) | Overall Achievement (%)(6) | ||||||||||||||||||||||||||||||||||||||||||
William J. Lynn III | 120 | 1,388,699 | 1,234,206 | 694,350 | 1,928,556 | 1.2 | 2,314,300 | 167 | ||||||||||||||||||||||||||||||||||||||||||
Mike Dippold | 75 | 385,500 | 342,613 | 192,750 | 535,363 | 1.2 | 642,500 | 167 | ||||||||||||||||||||||||||||||||||||||||||
John Baylouny | 80 | 460,000 | 408,825 | 230,000 | 638,825 | 1.2 | 766,600 | 167 | ||||||||||||||||||||||||||||||||||||||||||
Mark Dorfman | 70 | 324,800 | 288,666 | 162,400 | 451,066 | 1.2 | 541,300 | 167 | ||||||||||||||||||||||||||||||||||||||||||
Sally Wallace | 65 | 308,750 | 274,402 | 138,938 | 413,340 | 1.2 | 496,100 | 161 |
Leonardo DRS | 42 | 2024 Proxy Statement |
Leonardo DRS | 43 | 2024 Proxy Statement |
Metric | Weighting | Background, Definition and Rationale | ||||||
Relative Total Shareholder Return (TSR) | 40% of PRSU award | •The performance period for Relative TSR for the •Focuses on alignment of executive pay with value creation for our stockholders relative to our peers. | ||||||
3-year Revenue Growth | 30% of PRSU award | •Revenue Growth is measured based on the Compound Annual Growth Rate (CAGR) for the three-year performance period •Long-term revenue growth is a key driver of stockholder value creation. | ||||||
3-year Average Return on Invested Capital (ROIC) | 30% of PRSU award | •Measured over the three-year performance period •ROIC measures our executives’ ability to generate sustained returns on our invested capital. |
2023-2025 PRSUs – Relative TSR Comparison Group(1) | |||||||||||
AAR Corporation | Elbit Systems | Mercury Systems, Inc. | Science Applications International Corporation | ||||||||
BAE Systems | Huntington Ingalls | Moog, Inc. | Teledyne Technologies, Inc. | ||||||||
CACI International Inc. | |||||||||||
KRATOS Defense & Security Solutions, Inc. | Oshkosh Corporation | ||||||||||
Crane Co. | L-3 Harris Technologies | Parsons Corporation | |||||||||
Curtiss-Wright Corporation | Leidos Corporation | Rheinmetall Corporation |
Leonardo DRS | 44 | 2024 Proxy Statement |
2021 - 2023 Company Performance Targets by Threshold | |||||||||||||||||||||||||||||||||||
Performance Threshold | Relative Adjusted Net Earnings (40% Weighting) (percentile) | 3-Year Revenue Growth (30% Weighting) (%) | 3-Year Average ROIC (30% Weighting) (%) | Performance Payout Threshold (interpolation used between these points) (%) | |||||||||||||||||||||||||||||||
Minimum | 40th Percentile | 3.0 percent | 11.0 percent | 50% of Target | |||||||||||||||||||||||||||||||
Target | 60th Percentile | 5.0 percent | 12.5 percent | 100% of Target | |||||||||||||||||||||||||||||||
Maximum | 80th Percentile | 8.0 percent | 14.0 percent | 200% of Target |
Performance Metric | 2021 to 2023 Target | 2021 to 2023 Actual Performance | LTIP Performance Factor(1) | Weighting (%) | Weighted Performance Factor(2) (%) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) = (c) × (d) | ||||||||||||||||||||||||||||
Relative Adjusted Net Earnings | 60th Percentile | 72nd Percentile | 161 | 40 | 64.4 | |||||||||||||||||||||||||||
3-Year Revenue Growth | 5.0 percent | 0.6 percent | — | 30 | — | |||||||||||||||||||||||||||
3-Year Average ROIC | 12.5 percent | 15.2 percent | 200 | 30 | 60.0 | |||||||||||||||||||||||||||
Total Financial Performance Achievement(3) | 100 | 124.4 |
Leonardo DRS | 45 | 2024 Proxy Statement |
Leonardo DRS | 46 | 2024 Proxy Statement |
Leonardo DRS | 47 | 2024 Proxy Statement |
Position | Required Share Ownership Level (multiple of base salary) | ||||
CEO | 5x | ||||
Other NEOs | 3x | ||||
Other Senior Vice Presidents | 1x |
Leonardo DRS | 48 | 2024 Proxy Statement |
Compensation Committee: | Frances F. Townsend, Chair | ||||
Gail S. Baker | |||||
George W. Casey, Jr. | |||||
Kenneth J. Krieg |
Leonardo DRS | 49 | 2024 Proxy Statement |
Name and Principal Position | Fiscal Year | Salary | Stock Awards(1) | Non-Equity Incentive Plan Compensation(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) | All Other Compensation(4) | Total | |||||||||||||||||||||||||||||||||||||
William Lynn | 2022 | $ | 1,160,428 | $ | 5,881,020 | $ | 3,905,700 | n/a | $ | 103,130 | $ | 11,050,279 | ||||||||||||||||||||||||||||||||
Chief Executive Officer | 2021 | $ | 1,156,439 | n/a | $ | 5,067,533 | n/a | $ | 99,632 | $ | 6,323,603 | |||||||||||||||||||||||||||||||||
2020 | $ | 1,137,185 | n/a | $ | 3,767,700 | n/a | $ | 98,807 | $ | 5,003,692 | ||||||||||||||||||||||||||||||||||
Michael Dippold | 2022 | $ | 493,901 | $ | 1,351,936 | $ | 969,100 | n/a | $ | 52,885 | $2,867,822 | |||||||||||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer | 2021 | $ | 468,341 | n/a | $ | 1,198,567 | n/a | $ | 51,904 | $ | 1,718,811 | |||||||||||||||||||||||||||||||||
2020 | $ | 420,885 | n/a | $ | 901,900 | n/a | $ | 51,280 | $ | 1,374,065 | ||||||||||||||||||||||||||||||||||
John Baylouny | 2022 | $ | 550,900 | $ | 1,664,807 | $ | 1,170,700 | n/a | $ | 53,779 | $ | 3,440,186 | ||||||||||||||||||||||||||||||||
Executive Vice President, Chief Operating Officer | 2021 | $ | 515,584 | n/a | $ | 1,441,400 | n/a | $ | 52,865 | $ | 2,009,849 | |||||||||||||||||||||||||||||||||
2020 | $ | 470,346 | n/a | $ | 1,109,000 | n/a | $ | 52,145 | $ | 1,631,492 | ||||||||||||||||||||||||||||||||||
Mark Dorfman | 2022 | $ | 446,209 | $ | 1,037,649 | $ | 712,200 | n/a | $ | 52,010 | $ | 2,248,069 | ||||||||||||||||||||||||||||||||
Executive Vice President General Counsel & Secretary | 2021 | $ | 429,518 | n/a | $ | 902,167 | n/a | $ | 52,169 | $ | 1,383,854 | |||||||||||||||||||||||||||||||||
2020 | $ | 418,717 | n/a | $ | 752,000 | n/a | $ | 47,224 | $ | 1,217,940 | ||||||||||||||||||||||||||||||||||
Sally Wallace | 2022 | $ | 456,681 | $ | 777,480 | $ | 684,300 | n/a | $ | 52,208 | $ | 1,970,670 | ||||||||||||||||||||||||||||||||
Executive Vice President, Operations | 2021 | $ | 439,793 | n/a | $ | 876,867 | n/a | $ | 51,962 | $ | 1,368,622 | |||||||||||||||||||||||||||||||||
2020 | $ | 428,914 | n/a | $ | 742,900 | $ | 28,991 | $ | 51,859 | $ | 1,252,664 |
Name and Principal Position | Fiscal Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||||||||||||||||||
William J. Lynn III Chief Executive Officer | 2023 | 1,160,428 | 3,263,996 | 5,137,726 | — | 112,826 | 9,674,976 | |||||||||||||||||||||||||||||||||||||
2022 | 1,160,428 | 5,881,020 | 3,905,700 | — | 103,130 | 11,050,279 | ||||||||||||||||||||||||||||||||||||||
2021 | 1,156,439 | — | 5,067,533 | — | 99,632 | 6,323,603 | ||||||||||||||||||||||||||||||||||||||
Mike Dippold Executive Vice President, Chief Financial Officer | 2023 | 512,346 | 729,385 | 1,273,434 | — | 57,819 | 2,572,985 | |||||||||||||||||||||||||||||||||||||
2022 | 493,901 | 1,351,936 | 969,100 | — | 52,885 | 2,867,822 | ||||||||||||||||||||||||||||||||||||||
2021 | 468,341 | — | 1,198,567 | — | 51,904 | 1,718,811 | ||||||||||||||||||||||||||||||||||||||
John Baylouny Executive Vice President, Chief Operating Officer | 2023 | 573,165 | 888,952 | 1,535,550 | — | 59,873 | 3,057,540 | |||||||||||||||||||||||||||||||||||||
2022 | 550,900 | 1,664,807 | 1,170,700 | — | 53,779 | 3,440,186 | ||||||||||||||||||||||||||||||||||||||
2021 | 515,584 | — | 1,441,400 | — | 52,865 | 2,009,849 | ||||||||||||||||||||||||||||||||||||||
Mark Dorfman Executive Vice President General Counsel & Secretary | 2023 | 462,550 | 510,562 | 982,954 | — | 57,491 | 2,013,557 | |||||||||||||||||||||||||||||||||||||
2022 | 446,209 | 1,037,649 | 712,200 | — | 52,010 | 2,248,069 | ||||||||||||||||||||||||||||||||||||||
2021 | 429,518 | — | 902,167 | — | 52,169 | 1,383,854 | ||||||||||||||||||||||||||||||||||||||
Sally Wallace Executive Vice President, Operations | 2023 | 474,205 | 510,562 | 937,754 | 39,512 | 57,011 | 2,019,045 | |||||||||||||||||||||||||||||||||||||
2022 | 456,681 | 777,480 | 684,300 | — | 52,208 | 1,970,670 | ||||||||||||||||||||||||||||||||||||||
2021 | 439,793 | — | 876,867 | — | 51,962 | 1,368,622 |
Name | 2022 PRSUs (at maximum) | Founders Award PRSUs (at maximum) | Total Aggregate Value of PRSUs (at maximum) | |||||||||||||||||
William J. Lynn | $3,617,730 | $872,144 | $4,489,874 | |||||||||||||||||
Michael Dippold | $808,432 | $209,316 | $1,017,748 | |||||||||||||||||
John Baylouny | $985,292 | $261,644 | $1,246,936 | |||||||||||||||||
Mark Dorfman | $565,904 | $181,408 | $747,312 | |||||||||||||||||
Sally Wallace | $565,904 | $81,982 | $647,886 |
Leonardo DRS | 50 | 2024 Proxy Statement |
Name | 401(k) Plan Contributions(1) | Life Insurance(2) | Executive Allowance Program(3) | Vacation Benefits(4) | Other Benefits(5) | |||||||||||||||||||||||||||
William J. Lynn | $14,250 | $23,680 | $39,308 | $22,255 | $3,638 | |||||||||||||||||||||||||||
Michael Dippold | $14,250 | n/a | $29,481 | $9,154 | n/a | |||||||||||||||||||||||||||
John Baylouny | $14,250 | n/a | $29,481 | $10,048 | n/a | |||||||||||||||||||||||||||
Mark Dorfman | $14,250 | n/a | $29,481 | $8,280 | $600 | |||||||||||||||||||||||||||
Sally Wallace | $14,250 | n/a | $29,481 | $8,478 | n/a |
Name | 401(k) Plan Contributions ($)(a) | Life Insurance ($)(b) | Executive Allowance Program ($)(c) | Vacation Benefits ($)(d) | Other Benefits ($)(e) | |||||||||||||||||||||||||||
William J. Lynn III | 16,691 | 23,680 | 50,000 | 22,255 | 200 | |||||||||||||||||||||||||||
Mike Dippold | 18,881 | — | 29,400 | 9,538 | — | |||||||||||||||||||||||||||
John Baylouny | 19,800 | — | 29,400 | 10,673 | — | |||||||||||||||||||||||||||
Mark Dorfman | 18,875 | — | 29,400 | 8,615 | 600 | |||||||||||||||||||||||||||
Sally Wallace | 18,784 | — | 29,400 | 8,827 | — |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(1) | |||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||
William J. Lynn III | ||||||||||||||||||||||||||||||||
(2) | 555,480 | 1,388,699 | 2,314,498 | |||||||||||||||||||||||||||||
(3) | 596,666 | |||||||||||||||||||||||||||||||
(4) | 4/18/23 | 69,542 | 139,083 | 278,166 | 1,213,913 | |||||||||||||||||||||||||||
(4) | 4/18/23 | 139,083 | 2,050,083 | |||||||||||||||||||||||||||||
Mike Dippold | ||||||||||||||||||||||||||||||||
(2) | 154,200 | 385,500 | 771,000 | |||||||||||||||||||||||||||||
(3) | 133,334 | |||||||||||||||||||||||||||||||
(4) | 4/18/23 | 15,540 | 31,080 | 62,160 | 271,266 | |||||||||||||||||||||||||||
(4) | 4/18/23 | 31,080 | 458,119 | |||||||||||||||||||||||||||||
John Baylouny | ||||||||||||||||||||||||||||||||
(2) | 184,000 | 460,000 | 920,000 | |||||||||||||||||||||||||||||
(3) | 162,500 | |||||||||||||||||||||||||||||||
(4) | 4/18/23 | 18,940 | 37,879 | 75,758 | 330,616 | |||||||||||||||||||||||||||
(4) | 4/18/23 | 37,879 | 558,336 | |||||||||||||||||||||||||||||
Leonardo DRS | 51 | 2024 Proxy Statement |
Name | Grant Date | Committee Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated future payouts under equity incentive plan awards | All Other Stock Awards: Number of Shares of Stock or | Grant Date Fair Value of Stock | ||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Units (#) | Awards ($)(1) | |||||||||||||||||||||||||
William J. Lynn | ||||||||||||||||||||||||||||||||
(2) | 509,190 | 1,272,974 | 2,314,498 | |||||||||||||||||||||||||||||
(3) | 1,909,333 | |||||||||||||||||||||||||||||||
(4) | 596,667 | |||||||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 90,679 | 181,358 | 362,716 | 1,808,865 | ||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 181,358 | 1,790,003 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 214,286 | 872,144 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 142,858 | 1,410,008 | ||||||||||||||||||||||||||||
Michael Dippold | ||||||||||||||||||||||||||||||||
(2) | 148,800 | 372,000 | 744,000 | |||||||||||||||||||||||||||||
(3) | 426,667 | |||||||||||||||||||||||||||||||
(4) | 133,333 | |||||||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 20,264 | 40,527 | 81,054 | 404,216 | ||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 40,527 | 400,001 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 51,429 | 209,316 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 34,286 | 338,403 | ||||||||||||||||||||||||||||
John Baylouny | ||||||||||||||||||||||||||||||||
(2) | 177,600 | 444,000 | 888,000 | |||||||||||||||||||||||||||||
(3) | 520,000 | |||||||||||||||||||||||||||||||
(4) | 162,500 | |||||||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 24,697 | 49,393 | 98,786 | 492,646 | ||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 49,393 | 487,509 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 64,286 | 261,644 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 42,858 | 423,008 | ||||||||||||||||||||||||||||
Mark Dorfman | ||||||||||||||||||||||||||||||||
(2) | 116,480 | 291,200 | 582,400 | |||||||||||||||||||||||||||||
(3) | 298,667 | |||||||||||||||||||||||||||||||
(4) | 93,333 | |||||||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 14,185 | 28,369 | 56,738 | 282,952 | ||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 28,369 | 280,002 |
(6) | 11/28/22 | 11/13/22 | 44,572 | 181,408 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 29,715 | 293,287 | ||||||||||||||||||||||||||||
Sally Wallace | ||||||||||||||||||||||||||||||||
(2) | 119,340 | 298,350 | 596,700 | |||||||||||||||||||||||||||||
(3) | 298,667 | |||||||||||||||||||||||||||||||
(4) | 93,333 | |||||||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 14,185 | 28,369 | 56,738 | 282,952 | ||||||||||||||||||||||||||
(5) | 11/28/22 | 7/13/22 | 28,369 | 280,002 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 20,143 | 81,982 | ||||||||||||||||||||||||||||
(6) | 11/28/22 | 11/13/22 | 13,429 | 132,544 |
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($)(1) | |||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||
Mark Dorfman | ||||||||||||||||||||||||||||||||
(2) | 129,290 | 324,800 | 649,600 | |||||||||||||||||||||||||||||
(3) | 93,334 | |||||||||||||||||||||||||||||||
(4) | 4/18/23 | 10,878 | 21,756 | 43,512 | 189,879 | |||||||||||||||||||||||||||
(4) | 4/18/23 | 21,756 | 320,683 | |||||||||||||||||||||||||||||
Sally Wallace | ||||||||||||||||||||||||||||||||
(2) | 123,500 | 308,750 | 617,500 | |||||||||||||||||||||||||||||
(3) | 93,334 | |||||||||||||||||||||||||||||||
(4) | 4/18/23 | 10,878 | 21,756 | 43,512 | 189,879 | |||||||||||||||||||||||||||
(4) | 4/18/23 | 21,756 | 320,683 |
Leonardo DRS | 52 | 2024 Proxy Statement |
Name | Stock Awards(1) | |||||||||||||||||||||||||
Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |||||||||||||||||||||||
William J. Lynn | 181,358(3) | 2,317,755 | 90,679(5) | 1,158,878 | ||||||||||||||||||||||
142,858(4) | 1,825,725 | 214,286(6) | 2,738,575 | |||||||||||||||||||||||
Michael Dippold | 40,527(3) | 517,935 | 20,263(5) | 258,961 | ||||||||||||||||||||||
34,286(4) | 438,175 | 51,429(6) | 657,263 | |||||||||||||||||||||||
John Baylouny | 49,393(3) | 631,243 | 24,696(5) | 315,615 | ||||||||||||||||||||||
42,858(4) | 547,725 | 64,286(6) | 821,575 | |||||||||||||||||||||||
Mark Dorfman | 28,369(3) | 362,556 | 14,184(5) | 181,272 | ||||||||||||||||||||||
29,715(4) | 379,758 | 44,572(6) | 569,630 | |||||||||||||||||||||||
Sally Wallace | 28,369(3) | 362,556 | 14,184(5) | 181,272 | ||||||||||||||||||||||
13,429(4) | 171,623 | 20,143(6) | 257,428 |
Name | Grant Date | Stock Awards(1) | |||||||||||||||||||||||||||
Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | ||||||||||||||||||||||||||
William J. Lynn III | 4/18/2023 | 139,083 | 2,787,223(3) | 278,166 | 5,574,447(6) | ||||||||||||||||||||||||
11/29/2022 | 120,905 | 2,422,936(3) | 362,716 | 7,268,829(7) | |||||||||||||||||||||||||
11/29/2022 | 142,858 | 2,862,874(4) | 128,572 | 2,576,583(8) | |||||||||||||||||||||||||
11/29/2022 | 85,714 | 1,717,709(5) | |||||||||||||||||||||||||||
Leonardo DRS | 53 | 2024 Proxy Statement |
Name | Grant Date | Stock Awards(1) | |||||||||||||||||||||||||||
Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | ||||||||||||||||||||||||||
Mike Dippold | 4/18/2023 | 31,080 | 622,843(3) | 62,160 | 1,245,686(6) | ||||||||||||||||||||||||
11/29/2022 | 27,018 | 541,441(3) | 81,054 | 1,624,322(7) | |||||||||||||||||||||||||
11/29/2022 | 34,286 | 687,091(4) | 30,857 | 618,374(8) | |||||||||||||||||||||||||
11/29/2022 | 20,572 | 412,263(5) | |||||||||||||||||||||||||||
John Baylouny | 4/18/2023 | 37,879 | 759,095(3) | 75,758 | 1,518,190(6) | ||||||||||||||||||||||||
11/29/2022 | 32,929 | 659,897(3) | 98,786 | 1,979,671(7) | |||||||||||||||||||||||||
11/29/2022 | 42,858 | 858,874(4) | 38,572 | 772,983(8) | |||||||||||||||||||||||||
11/29/2022 | 25,714 | 515,309(5) | |||||||||||||||||||||||||||
Mark Dorfman | 4/18/2023 | 21,756 | 435,990(3) | 43,512 | 871,980(6) | ||||||||||||||||||||||||
11/29/2022 | 18,913 | 379,017(3) | 56,738 | 1,137,030(7) | |||||||||||||||||||||||||
11/29/2022 | 29,715 | 595,489(4) | 26,743 | 535,930(8) | |||||||||||||||||||||||||
11/29/2022 | 17,829 | 357,293(5) | |||||||||||||||||||||||||||
Sally Wallace | 4/18/2023 | 21,756 | 435,990(3) | 43,512 | 871,980(6) | ||||||||||||||||||||||||
11/29/2022 | 18,913 | 379,017(3) | 56,738 | 1,137,030(7) | |||||||||||||||||||||||||
11/29/2022 | 13,429 | 269,117(4) | 12,086 | 242,203(8) | |||||||||||||||||||||||||
11/29/2022 | 8,057 | 161,462(5) |
Leonardo DRS | 54 | 2024 Proxy Statement |
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
William J. Lynn III | 60,453 | 746,595 | ||||||
Mike Dippold | 13,509 | 166,836 | ||||||
John Baylouny | 16,464 | 203,330 | ||||||
Mark Dorfman | 9,456 | 116,782 | ||||||
Sally Wallace | 9,456 | 116,782 |
Name | Plan Name(1) | Number of Years Credited Service | Present Value of Accumulated Benefit ($)(2) | Payments during the last fiscal year ($) | ||||||||||||||||||||||
Sally Wallace | Naval Power Systems Pension Plan | 15.9 | $ | 454,636 | $ | — |
Name | Plan Name(1) | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(2) | Payments during last fiscal year ($) | ||||||||||||||||||||||
Sally Wallace | Naval Power Systems Pension Plan | 15.9 | 494,148 | — |
Leonardo DRS | 55 | 2024 Proxy Statement |
Named Executive Officer And Triggering Event | Cash Severance ($)(1) | Continuation of Medical/Welfare Benefits (Present Value)(2) | Accelerated Vesting or Payout of Long-Term Incentive Awards(3) | Total Termination Benefits | ||||||||||
William Lynn | ||||||||||||||
• Involuntary Termination without Cause (or for Good Reason) With Change in Control | $ | 7,348,531 | $ | 136,913 | $ | 14,092,477 | $ | 21,577,922 | ||||||
• Involuntary Termination without Cause or Termination due to Material Breach by the Company | $ | 7,348,531 | $ | 82,148 | $ | 12,547,307 | $ | 19,977,986 | ||||||
• Retirement | $ | 1,272,974 | $ | 82,148 | $ | 5,670,692 | $ | 7,025,814 | ||||||
• Voluntary Termination (or Involuntary Termination for Cause) | $ | — | $ | — | $ | — | $ | — | ||||||
• Disability or Death | $ | 1,272,974 | $ | — | $ | 14,092,477 | $ | 15,365,451 | ||||||
Michael Dippold | ||||||||||||||
• Involuntary Termination without Cause (or for Good Reason) With Change in Control | $ | 2,542,000 | $ | 78,436 | $ | 3,224,641 | $ | 5,845,000 | ||||||
• Involuntary Termination without Cause | $ | 1,116,000 | $ | 47,061 | $ | 2,188,771 | $ | 3,351,832 | ||||||
• Voluntary Termination (or Involuntary Termination for Cause) | $ | — | $ | — | $ | — | $ | — | ||||||
• Disability or Death | $ | 372,000 | $ | — | $ | 2,691,308 | $ | 3,063,308 | ||||||
John Baylouny | ||||||||||||||
• Involuntary Termination without Cause (or for Good Reason) With Change in Control | $ | 2,941,500 | $ | 55,453 | $ | 3,964,285 | $ | 6,961,238 | ||||||
• Involuntary Termination without Cause | $ | 1,276,500 | $ | 33,272 | $ | 2,701,800 | $ | 4,011,572 | ||||||
• Voluntary Termination (or Involuntary Termination for Cause) | $ | — | $ | — | $ | — | $ | — | ||||||
• Disability or Death | 444,000 | $ | — | $ | 3,314,285 | $ | 3,758,285 | |||||||
Mark Dorfman | ||||||||||||||
• Involuntary Termination without Cause (or for Good Reason) With Change in Control | $ | 2,139,200 | $ | 78,436 | $ | 2,439,833 | $ | 4,657,469 | ||||||
• Involuntary Termination without Cause | $ | 963,200 | $ | 47,061 | $ | 1,714,721 | $ | 2,724,983 | ||||||
• Voluntary Termination (or Involuntary Termination for Cause) | $ | — | $ | — | $ | — | $ | — | ||||||
• Disability or Death | $ | 291,200 | $ | — | $ | 2,066,500 | $ | 2,357,700 |
Sally Wallace | ||||||||||||||
• Involuntary Termination without Cause (or for Good Reason) With Change in Control | $ | 2,191,725 | $ | 78,436 | $ | 1,919,495 | $ | 4,189,656 | ||||||
• Involuntary Termination without Cause | $ | 986,850 | $ | 47,061 | $ | 1,194,383 | $ | 2,228,295 | ||||||
• Voluntary Termination (or Involuntary Termination for Cause) | $ | — | $ | — | $ | — | $ | — | ||||||
• Disability or Death | $ | 298,350 | $ | — | $ | 1,546,162 | $ | 1,844,512 |
Named Executive Officer | Triggering Event | Cash Severance ($)(1) | Continuation of Medical/Welfare Benefits (Present Value) ($)(2) | Accelerated Vesting or Payout of Long-Term Incentive Awards ($)(3) | Total Termination Benefits ($) | |||||||||||||||
William J. Lynn III | •Involuntary Termination without Cause (or for Good Reason) With Change in Control | 7,753,568 | 154,796 | 21,612,389 | 29,520,753 | |||||||||||||||
•Involuntary Termination without Cause or Termination due to Material Breach by the Company | 7,753,568 | 92,878 | 18,542,769 | 26,389,215 | ||||||||||||||||
•Retirement | 2,314,300 | 92,878 | 6,175,443 | 8,582,621 | ||||||||||||||||
•Voluntary Termination (or Involuntary Termination for Cause) | — | — | — | — | ||||||||||||||||
•Disability or Death | 2,314,300 | — | 21,612,389 | 23,926,689 | ||||||||||||||||
Mike Dippold | •Involuntary Termination without Cause (or for Good Reason) With Change in Control | 2,634,250 | 96,511 | 4,947,951 | 7,678,712 | |||||||||||||||
•Involuntary Termination without Cause | 1,156,500 | 57,907 | — | 1,214,407 | ||||||||||||||||
•Voluntary Termination (or Involuntary Termination for Cause) | — | — | — | — | ||||||||||||||||
•Disability or Death | 642,500 | — | 4,947,951 | 5,590,451 | ||||||||||||||||
John Baylouny | •Involuntary Termination without Cause (or for Good Reason) With Change in Control | 3,047,500 | 67,783 | 6,084,039 | 9,199,322 | |||||||||||||||
•Involuntary Termination without Cause | 1,322,500 | 40,670 | — | 1,363,170 | ||||||||||||||||
•Voluntary Termination (or Involuntary Termination for Cause) | — | — | — | — | ||||||||||||||||
•Disability or Death | 766,600 | — | 6,084,039 | 6,850,639 | ||||||||||||||||
Mark Dorfman | •Involuntary Termination without Cause (or for Good Reason) With Change in Control | 2,296,800 | 96,511 | 3,749,877 | 6,143,188 | |||||||||||||||
•Involuntary Termination without Cause | 1,020,800 | 57,907 | — | 1,078,707 | ||||||||||||||||
•Voluntary Termination (or Involuntary Termination for Cause) | — | — | — | — | ||||||||||||||||
•Disability or Death | 541,300 | — | 3,749,877 | 4,291,177 | ||||||||||||||||
Sally Wallace | •Involuntary Termination without Cause (or for Good Reason) With Change in Control | 2,268,125 | 96,511 | 2,933,949 | 5,298,585 | |||||||||||||||
•Involuntary Termination without Cause | 1,021,250 | 57,907 | — | 1,079,157 | ||||||||||||||||
•Voluntary Termination (or Involuntary Termination for Cause) | — | — | — | — | ||||||||||||||||
•Disability or Death | 496,100 | — | 2,933,949 | 3,430,049 |
Leonardo DRS | 56 | 2024 Proxy Statement |
Leonardo DRS | 57 | 2024 Proxy Statement |
Leonardo DRS | 58 | 2024 Proxy Statement |
Leonardo DRS | 59 | 2024 Proxy Statement |
Median Employee total annual compensation | $ | ||||
Total Compensation of our CEO | $ | ||||
Ratio of CEO to Median Employee compensation |
Leonardo DRS | 60 | 2024 Proxy Statement |
Plan category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)(1) | (b) Weighted average exercise price of outstanding options, warrants and rights ($)(2) | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (#)(3) | |||||||||||||||||
Equity compensation plans approved by security holders | 8,023,262 | $10.18 | 1,957,289 | |||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
Total | 8,023,262 | $10.18 | 1,957,289 |
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Value of Initial Fixed $100 Investment Based on(4): | ||||||||||||||||||||||||||
Year(a)(1) | SCT Total for PEO(b) | Compensation Actually Paid to PEO(c)(2) | Average SCT Total for Non-PEO Named Executive Officers(d)(3) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(e)(2)(3) | Total Shareholder Return(f) | Peer Group Total Shareholder Return(g) | Net Income (h) | Adjusted EBITDA (i)(5) | ||||||||||||||||||
2022 | $11,050,279 | $13,210,191 | $2,631,687 | $3,087,365 | $116 | $102 | $405 | $318 | ||||||||||||||||||
2021 | $6,323,603 | $6,323,603 | $1,620,284 | $1,620,284 | n/a | n/a | $154 | $310 | ||||||||||||||||||
2020 | $5,003,692 | $5,003,692 | $1,369,040 | $1,362,156 | n/a | n/a | $84 | $85 |
SCT Total for PEO ($) | Compensation Actually Paid to PEO ($)(2) | Average SCT Total for Non-PEO Named Executive Officers ($)(3) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($)(2)(3) | Value of Initial Fixed $100 Investment Based on(4): | |||||||||||||||||||||||||
Year(1) | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | Net Income ($ in millions) | Adjusted EBITDA ($ in millions)(5) | |||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | |||||||||||||||||||||
2023 | 9,674,976 | 19,073,744 | 2,415,782 | 4,326,151 | 182 | 127 | 168 | 324 | |||||||||||||||||||||
2022 | 11,050,279 | 13,210,191 | 2,631,687 | 3,087,365 | 116 | 102 | 405 | 318 | |||||||||||||||||||||
2021 | 6,323,603 | 6,323,603 | 1,620,284 | 1,620,284 | n/a | n/a | 154 | 310 | |||||||||||||||||||||
2020 | 5,003,692 | 5,003,692 | 1,369,040 | 1,362,156 | n/a | n/a | 84 | 85 |
Covered Fiscal Year | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | ||||||||||
SCT Total for PEO | 9,674,976 | 11,050,279 | 6,323,603 | 5,003,692 | ||||||||||
Pension Adjustments(i) | ||||||||||||||
Subtract “Change in Actuarial Present Value” reported in the SCT for the covered fiscal year | — | — | — | — | ||||||||||
Add pension value attributable to covered fiscal year’s “service cost” | — | — | — | — | ||||||||||
Add pension value attributable to the entire “prior service cost” of benefits granted (or credit for benefits reduced) in a plan amendment made in the covered fiscal year attributable to prior service periods | — | — | — | — |
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Adjustments to Determine CAP for PEO | |||||||||||||||||||||||||
Covered Fiscal Year | Covered Fiscal Year | 2022 | 2021 | 2020 | Covered Fiscal Year | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | ||||||||||||||||
SCT Total for PEO | $11,050,279 | $6,323,603 | $5,003,692 | ||||||||||||||||||||||
Pension Adjustments(i) | |||||||||||||||||||||||||
Subtract “Change in Actuarial Present Value” reported in the SCT for the covered fiscal year | $0 | ||||||||||||||||||||||||
Add pension value attributable to covered fiscal year’s “service cost” | $0 | ||||||||||||||||||||||||
Add pension value attributable to the entire “prior service cost” of benefits granted (or credit for benefits reduced) in a plan amendment made in the covered fiscal year attributable to prior service periods | $0 | ||||||||||||||||||||||||
Equity Adjustments(ii) | Equity Adjustments(ii) | ||||||||||||||||||||||||
Subtract fair value (as of grant date) reported in the “Stock Awards” and “Option Awards” columns in the SCT for the covered fiscal year | |||||||||||||||||||||||||
Subtract fair value (as of grant date) reported in the “Stock Awards” and “Option Awards” columns in the SCT for the covered fiscal year | |||||||||||||||||||||||||
Subtract fair value (as of grant date) reported in the “Stock Awards” and “Option Awards” columns in the SCT for the covered fiscal year | Subtract fair value (as of grant date) reported in the “Stock Awards” and “Option Awards” columns in the SCT for the covered fiscal year | $5,881,021 | $0 | ||||||||||||||||||||||
Add fair value (as of end of year) of equity awards granted during the covered fiscal year that remain unvested as of year end | Add fair value (as of end of year) of equity awards granted during the covered fiscal year that remain unvested as of year end | $8,040,933 | $0 | ||||||||||||||||||||||
Add fair value (as of vesting date) of equity awards granted during the covered fiscal year that vest during the covered year | Add fair value (as of vesting date) of equity awards granted during the covered fiscal year that vest during the covered year | $0 | |||||||||||||||||||||||
Add/Subtract the change in fair value from the prior year-end to the covered fiscal year-end for equity awards granted in prior fiscal years that were outstanding and unvested at the end of the prior year | $0 | ||||||||||||||||||||||||
Add/Subtract the change in fair value from the prior year-end to covered year-end for equity awards granted in prior fiscal years that vested during covered fiscal year | $0 | ||||||||||||||||||||||||
Add the change in fair value from the prior year-end to the covered fiscal year-end for equity awards granted in prior fiscal years that remain outstanding and unvested at the end of the covered fiscal year | |||||||||||||||||||||||||
Add the change in fair value from the prior year-end to vesting date for equity awards granted in prior fiscal years that vested during covered fiscal year | |||||||||||||||||||||||||
Subtract fair value (as of end of prior year) for equity awards granted in prior fiscal years that were forfeited during covered fiscal year | Subtract fair value (as of end of prior year) for equity awards granted in prior fiscal years that were forfeited during covered fiscal year | $0 | |||||||||||||||||||||||
Add incremental fair value (as of modification date) of equity awards modified during covered fiscal year | Add incremental fair value (as of modification date) of equity awards modified during covered fiscal year | $0 | |||||||||||||||||||||||
Add dividends or other earnings paid on equity awards during covered fiscal year prior to vesting date of award that are not otherwise included in the total compensation for the covered fiscal year | Add dividends or other earnings paid on equity awards during covered fiscal year prior to vesting date of award that are not otherwise included in the total compensation for the covered fiscal year | $0 | |||||||||||||||||||||||
Total Adjustments | Total Adjustments | $2,159,912 | $0 | ||||||||||||||||||||||
CAP Total for PEO | CAP Total for PEO | $13,210,191 | $6,323,603 | $5,003,692 | CAP Total for PEO | 19,073,744 | 13,210,191 | 13,210,191 | 6,323,603 | 5,003,692 |
Covered Fiscal Year | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | ||||||||||
Average SCT Total for Non-PEO NEOs | 2,415,782 | 2,631,687 | 1,620,284 | 1,369,040 | ||||||||||
Pension Adjustments(i) | ||||||||||||||
Subtract “Change in Actuarial Present Value” reported in the SCT for the covered fiscal year | 9,878 | — | — | 7,248 | ||||||||||
Add pension value attributable to covered fiscal year’s “service cost” | — | — | — | — | ||||||||||
Add pension value attributable to the entire “prior service cost” of benefits granted (or credit for benefits reduced) in a plan amendment made in the covered fiscal year attributable to prior service periods | — | — | — | — |
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Adjustments to Determine Average CAP for Non-PEO Named Executive Officers as a Group | |||||||||||
Covered Fiscal Year | 2022 | 2021 | 2020 | ||||||||
Average SCT Total for Non-PEO NEOs | $2,631,687 | $1,620,284 | $1,369,040 | ||||||||
Pension Adjustments(i) | |||||||||||
Subtract “Change in Actuarial Present Value” reported in the SCT for the covered fiscal year | $0 | $0 | $7,248 | ||||||||
Add pension value attributable to covered fiscal year’s “service cost” | $0 | $0 | $0 | ||||||||
Add pension value attributable to the entire “prior service cost” of benefits granted (or credit for benefits reduced) in a plan amendment made in the covered fiscal year attributable to prior service periods | $0 | $0 | $0 | ||||||||
Equity Adjustments(ii) | |||||||||||
Subtract fair value (as of grant date) reported in the “Stock Awards” and “Option Awards” columns in the SCT for the covered fiscal year | $1,207,969 | $0 | $0 | ||||||||
Add fair value (as of end of year) of equity awards granted during the covered fiscal year that remain unvested as of year end | $1,663,647 | $0 | $0 | ||||||||
Add fair value (as of vesting date) of equity awards granted during the covered fiscal year that vest during the covered year | $0 | $0 | $0 | ||||||||
Add/Subtract the change in fair value from the prior year-end to the covered fiscal year-end for equity awards granted in prior fiscal years that were outstanding and unvested at the end of the prior year | $0 | $0 | $0 | ||||||||
Add/Subtract the change in fair value from the prior year-end to covered year-end for equity awards granted in prior fiscal years that vested during covered fiscal year | $0 | $0 | $0 | ||||||||
Subtract fair value (as of end of prior year) for equity awards granted in prior fiscal years that were forfeited during covered fiscal year | $0 | $0 | $0 | ||||||||
Add incremental fair value (as of modification date) of equity awards modified during covered fiscal year | $0 | $0 | $0 | ||||||||
Add dividends or other earnings paid on equity awards during covered fiscal year prior to vesting date of award that are not otherwise included in the total compensation for the covered fiscal year | $0 | $0 | $0 | ||||||||
Total Adjustments | $455,678 | $0 | $0 | ||||||||
CAP Total for Non-PEO NEOs | $3,087,365 | $1,620,284 | $1,362,156 |
Covered Fiscal Year | 2023 ($) | 2022 ($) | 2021 ($) | 2020 ($) | ||||||||||
Equity Adjustments(ii) | ||||||||||||||
Subtract fair value (as of grant date) reported in the “Stock Awards” and “Option Awards” columns in the SCT for the covered fiscal year | 659,865 | 1,207,969 | — | — | ||||||||||
Add fair value (as of end of year) of equity awards granted during the covered fiscal year that remain unvested as of year end | 1,234,256 | 1,663,647 | — | — | ||||||||||
Add fair value (as of vesting date) of equity awards granted during the covered fiscal year that vest during the covered year | — | — | — | — | ||||||||||
Add the change in fair value from the prior year-end to the covered fiscal year-end for equity awards granted in prior fiscal years that remain outstanding and unvested at the end of the covered fiscal year | 1,351,114 | — | — | — | ||||||||||
Add the change in fair value from the prior year-end to vesting date for equity awards granted in prior fiscal years that vested during covered fiscal year | (5,258) | — | — | — | ||||||||||
Subtract fair value (as of end of prior year) for equity awards granted in prior fiscal years that were forfeited during covered fiscal year | — | — | — | — | ||||||||||
Add incremental fair value (as of modification date) of equity awards modified during covered fiscal year | — | — | — | — | ||||||||||
Add dividends or other earnings paid on equity awards during covered fiscal year prior to vesting date of award that are not otherwise included in the total compensation for the covered fiscal year | — | — | — | — | ||||||||||
Total Adjustments | 1,910,369 | 455,678 | — | (7,248) | ||||||||||
CAP Total for Non-PEO NEOs | 4,326,151 | 3,087,365 | 1,620,284 | 1,362,156 |
Most Important Performance Measures | ||
Revenue | ||
Adjusted EBITDA | ||
Free Cash Flow |
Leonardo DRS | 64 | 2024 Proxy Statement |
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The Audit Committee has selected the accounting firm of Ernst & Young LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024. The decision of the Audit Committee to appoint Ernst & Young LLP was based on careful consideration of the firm’s qualifications as an independent registered public accounting firm. Ernst & Young LLP was originally selected by the Audit Committee as the Company’s independent registered public accounting firm effective March 28, 2022. Although the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company, the Audit Committee and the Board are requesting, as a matter of policy, that stockholders ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024. The Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. However, if the stockholders do not ratify the appointment, the Audit Committee would investigate the reasons for the stockholders’ rejection and would consider whether to retain Ernst & Young LLP or to appoint another independent registered public accounting firm. Furthermore, even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm 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. Change in Auditor On March 18, 2022, the Audit Committee approved the engagement of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2022 and dismissed KPMG LLP from that role. Accordingly, the Company notified KPMG that it had been dismissed as its independent registered public accounting firm as of March 28, 2022. KPMG LLP served as the independent registered public accounting firm of the Company from 2012 to 2022. A proposal to ratify the appointment of Ernst & Young LLP for the current year will be presented at the Annual Meeting. A representative from Ernst & Young LLP is expected to attend the Annual Meeting and will have the opportunity to make a statement, if he or she desires to do so, and be available to answer appropriate questions. The affirmative vote of the holders of a majority of shares of Leonardo DRS common stock present in person (virtually) or by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify this proposal. Abstentions will count as a vote “against” the proposal. Absent specific instructions on this proposal brokers are permitted to exercise voting discretion with respect to such proposal. | VOTE The Board unanimously recommends a vote |
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Audit Committee: | Mary E. Gallagher, Chair | ||||||||||
Dr. Louis R. Brothers | |||||||||||
David W. Carey | |||||||||||
Eric C. Salzman |
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Year Ended December 31 | Year Ended December 31 | 2022($) | 2021($) | Year Ended December 31 | 2023 ($) | 2022 ($) | |||||||||||||||||||||||||||||||
Audit Fees(1) | Audit Fees(1) | $ | 5,320,000 | $ | 3,870,549 | ||||||||||||||||||||||||||||||||
Audit Related Fees(2) | $ | 65,000 | |||||||||||||||||||||||||||||||||||
Audit Related Fees | |||||||||||||||||||||||||||||||||||||
Tax Fees | Tax Fees | ||||||||||||||||||||||||||||||||||||
All Other Fees(3) | $ | 811,097 | |||||||||||||||||||||||||||||||||||
All Other Fees | |||||||||||||||||||||||||||||||||||||
Total | Total | $ | 5,320,000 | $ | 4,746,646 |
VOTE | ||
The Board unanimously recommends that stockholders vote “FOR” the ratification of the Appointment of the Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2024. |
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Approval of the ESPP | ||||||||
Introduction We are asking stockholders to approve the Leonardo DRS, Inc. Employee Stock Purchase Plan (referred to herein as the ESPP). Our Board approved the ESPP, subject to stockholder approval, on February 20, 2024. Based on the closing price on the Nasdaq on March 25, 2024 of $21.75 per share of our common stock, the aggregate market value as of March 25, 2024 of the 2,000,000 shares of common stock requested to be made available for purchase by our employees under the ESPP was $43,500,000. Reasons to Adopt the ESPP After careful consideration, the Board believes that approving the ESPP is in the best interests of the Company. The ESPP promotes the financial interests of the Company, including its growth and performance, by providing eligible employees the opportunity to purchase an ownership position in the Company. We believe the ESPP will offer a convenient means for our employees who might not otherwise own our common stock to purchase and hold shares. We are seeking stockholder approval to qualify the ESPP as an “employee stock purchase plan” under Section 423 of the Code and the related regulations. Board Recommendation The Board is recommending that the Company’s stockholders vote in favor of the ESPP. If the ESPP is approved by stockholders, it will be effective as of the day of the Annual Meeting. In evaluating this proposal to approve the ESPP, stockholders should consider all of the information provided herein. | VOTE The Board unanimously recommends that you vote “FOR” the Approval of the ESPP presented in Proposal 4. |
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VOTE | ||
The Board unanimously recommends that stockholders vote “FOR” the approval of the ESPP. |
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Approval of the Amended ECP | ||||||||
Introduction We are asking stockholders to approve the amendment and restatement of the Leonardo DRS, Inc. 2022 Omnibus Equity Compensation Plan (referred to herein as the ECP, with the amendment and restatement referred to as the Amended ECP). Key Aspects of the Amended ECP The Board approved and adopted the Amended ECP on March 19, 2024, subject to approval by our stockholders at the Annual Meeting (such stockholder approval date, the “Amended ECP Effective Date”). The material differences between the Amended ECP and the ECP include (i) an increase of 8,100,000 shares of our common stock available for issuance under the ECP, and (ii) an extension of the term of the plan so that it will terminate on the day before the tenth anniversary of the Amended ECP Effective Date, unless earlier terminated by the Board. As of December 31, 2023, we had 3,140,459 shares of our common stock remaining available for issuance of future awards under the ECP (assuming PRSUs at target). If the share reserve increase is approved, then as of December 31, 2023, we would have had 11,240,459 shares of our common stock available for issuance for future awards under the Amended ECP. Based on the closing price on the Nasdaq on March 25, 2024 of $21.75 per share of our common stock, the aggregate market value as of March 25, 2024 of the new 8,100,000 shares of common stock requested under the Amended ECP was $176,175,000. Reasons to Adopt the Amended ECP The Board believes that it is advisable to adopt the Amended ECP to continue to give the Company ongoing flexibility to attract, retain and reward the Company’s employees, directors and consultants. In determining the number of additional shares of common stock to become available under the Amended ECP, the Board considered the following factors: •Forecasted Share Usage. Based on current expectations for possible future awards, the Company is recommending that an additional 8,100,000 shares of our common stock be made available for issuance under the Amended ECP. We believe that this increase in shares will allow us to continue to issue shares under the Amended ECP for approximately five years based on our current and anticipated grant practices, subject to oversight and approval of the Compensation Committee. Despite this estimate, the duration of the share reserve may be shorter or longer depending on various factors such as stock price, aggregate equity needs and equity award type mix. | VOTE The Board unanimously recommends that you vote |
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Equity Usage | As of March 25, 2024 | |||||||
Number of stock options outstanding | 2,926,589 | |||||||
Weighted average exercise price of outstanding stock options | $10.34 | |||||||
Weighted average remaining term of outstanding stock options | 4 years | |||||||
Number of RSUs outstanding | 1,591,883 | |||||||
Number of PRSUs outstanding (reported at target) | 1,737,678 | |||||||
Shares remaining available for issuance under the ECP | 3,187,029 | |||||||
Additional shares requested for issuance under the Amended ECP | 8,100,000 | |||||||
Total Shares available for issuance under the Amended ECP | 11,287,029 |
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Name and Position | Dollar Value ($)(1) | |||||||
William J. Lynn III Chief Executive Officer | N/A | |||||||
Mike Dippold Executive Vice President, Chief Financial Officer | N/A | |||||||
John Baylouny Executive Vice President, Chief Operating Officer | N/A | |||||||
Mark Dorfman Executive Vice President, General Counsel and Secretary | N/A | |||||||
Sally Wallace Executive Vice President, Operations | N/A | |||||||
Executive Officers as a Group | N/A | |||||||
Non-Executive Directors as a Group | 1,200,000 | |||||||
Non-Executive Officer Employees as a Group | N/A |
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VOTE | ||
The Board unanimously recommends that stockholders vote “FOR” the approval of the Amended ECP. |
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Approval of One or More Adjournments of the Annual Meeting to a Later Date or Dates If Necessary or Appropriate to Solicit Additional Proxies If There Are Insufficient Votes to Approve the Other Proposals at the Time of the Annual Meeting. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We are requesting that our stockholders approve a proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate to solicit additional proxies if there are insufficient votes to approve any of the proposals
Stock Ownership of Management Table The following table shows how much Leonardo DRS common stock was beneficially owned, as of
Persons Owning More than 5% of Leonardo DRS Common Stock The following table shows how many shares of Leonardo DRS common stock were owned by each person known to us to own more than five percent of our common stock as of outstanding on
Certain Relationships and Related Party Transactions General The Company's Nominating Committee Charter provides that the Committee has the primary responsibility for reviewing and approving or rejecting “related-party transactions,” which are transactions between the Company and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or may have a direct or indirect material interest (“Related Party Transactions”) (the “RPT Policy”). The RPT Policy defines Relationship with Leonardo S.p.A. Commitment Letter/Proxy Agreement In February 2022, the Company entered into a Commitment Letter with the proxy holders, Leonardo S.p.A., US Holding and the DCSA, which provides the Since the Company has an Italian majority stockholder, the Company is deemed to be operating under •provides that the shares of the Company common stock owned directly by US Holding and indirectly by Leonardo S.p.A. are voted through proxy holders, who must be independent from current and prior affiliation with Leonardo S.p.A. and its subsidiaries (including us and US Holding) and must maintain adequate security clearance; •provides that the proxy holders are appointed by US Holding (in consultation with Leonardo S.p.A.), but the appointment is subject to approval of DCSA, and that the proxy holders must be members of the Company’s Board; •restricts the Company’s ability to share facilities and personnel with and receive certain services from Leonardo S.p.A. or its other subsidiaries; •requires the Company to maintain a Government Security Committee consisting of all proxy holders; •requires that the Audit Committee appoint an independent auditor to conduct an annual audit of the Company's books and records; •requires proxy holders to meet as necessary to satisfy their responsibilities under the Proxy Agreement and requires the Board to meet at least four times a year in addition to any separate meetings of the proxy holders; and
Certain Relationships and Related Party Transactions •restricts the Company’s ability to share facilities and personnel with and receive certain services from Leonardo S.p.A. or its other subsidiaries. The Proxy Agreement will automatically terminate Proxy Holders The Proxy Agreement requires the appointment of five proxy holders, who must be independent from current and prior affiliation with Leonardo S.p.A. and its subsidiaries, maintain adequate security clearances, and
The Proxy Agreement confers on the proxy holders the right to vote US Holding’s and Leonardo The proxy holders are permitted to vote for or consent to certain matters in their sole and absolute discretion, without consultation with US Holding or Leonardo S.p.A., while for other matters, the proxy holders may only vote for or consent to certain matters with the express written approval of US Holding. The proxy holders may only vote to declare or suspend dividends after prior consultation with US Holding. Board of Directors Under the terms of the Proxy Agreement, the proxy holders will, in their discretion and in consultation with the Nominating Committee, nominate four additional individuals who are not proxy holders, selected from candidates proposed by US Holding, in consultation with the Nominating Committee, as candidates for election to our Board (the “non-proxy holder director nominees”). The non-proxy holder director nominees will include (i) our CEO and (ii) three additional individuals. The Nominating Committee will nominate the proxy holders for election as directors at any meeting of the Company’s stockholders at which directors are to be elected. At any such meeting, the proxy holders will vote on behalf of US Holding to elect the then-current proxy holders and the non-proxy holder director nominees to serve on the Board for the succeeding year. The proxy holders may remove any non-proxy holder director nominee from the Board by majority vote after consultation with US Holding.
Certain Relationships and Related Party Transactions In the event of a material breach of the Proxy Agreement, the DoD may (i) novate our classified contracts to a company not under FOCI at our expense, (ii) terminate our classified contracts and deny us new classified contracts, (iii) revoke our facility security clearance and/or (iv) suspend or debar us from participation in all U.S. government contracts. DCSA may terminate the Proxy Agreement if it deems it is no longer necessary in order to maintain our facility security clearance or if our facility security clearance is no longer necessary, if there has been a breach of the Proxy Agreement that requires its termination or if DCSA determines that terminating is necessary for national security or, in DCSA’s sole discretion, upon petition by us or US Holding. The Proxy Agreement automatically terminates upon the sale of our business or all of US Holding’s interest in a person or entity not controlled by Leonardo S.p.A. or if US Holding holds less than 50% of our outstanding shares of common stock and DCSA determines that FOCI mitigation is no longer necessary. Other Agreements The Company and US Holding entered into a The Company has also entered into a The Company also entered into a Leonardo DRS, US Holding and Leonardo S.p.A. also entered into a Affiliated Operations Plan (the “AOP”) Services Agreements Although the Company operates largely independently from Leonardo S.p.A., the Company, Leonardo S.p.A. and Leonardo S.p.A.’s subsidiaries each provide certain services to each other, share certain services and rely on certain third-party service providers to provide services pursuant to shared services contracts, subject to the terms of the Proxy Agreement and in accordance with the AOP, approved by DCSA. The AOP currently governs the following types of arrangements: •services Leonardo S.p.A. or its subsidiaries receive pursuant to a contract with a third-party service provider, which Leonardo S.p.A. or its subsidiaries then provide to us on a pass-through basis; •services we receive pursuant to a contract with a third-party service provider, which we then provide to Leonardo S.p.A. or its subsidiaries (excluding us) on a pass-through basis;
Certain Relationships and Related Party Transactions •certain services we receive directly from Leonardo S.p.A. or its subsidiaries; and •certain services we provide directly to Leonardo S.p.A. or its subsidiaries. The fees for each of the services to be provided under the AOP are mutually agreed upon as part of the negotiation of the services agreement and may vary on the basis of usage and other factors. Although we seek to implement commercially reasonable terms (including fees for the services provided) that could have been negotiated with an independent third party, the terms of such agreement may later prove to be more or less favorable than arrangements we could make to provide these services internally or to obtain them from unaffiliated service providers in the future. Sales The Company has various related-party sales and purchases with US Holding and its other affiliates that occur in the regular course of business. Related-party sales for these transactions are included in revenues and were
Stockholder Communications with the Board of Directors Stockholders may send communications to the Board by submitting a letter addressed to: Leonardo DRS, Inc., Attn: Corporate Secretary, 2345 Crystal Drive, Suite 1000, Arlington, Virginia 22202. The Board has instructed the Corporate Secretary to forward such communications to the Lead Director. The Board has also instructed the Corporate Secretary to review such correspondence and, at the Corporate Secretary’s discretion, not to forward correspondence which is deemed of a commercial or frivolous nature or inappropriate for Board consideration. The Corporate Secretary may also forward the stockholder communication within the Company to the CEO or to another executive officer to facilitate an appropriate response. The Corporate Secretary maintains a log of all communications from stockholders and the disposition of such communications, which the directors review at least annually.
Stockholder Nominations and Proposals for Stockholders who, in accordance with SEC Rule 14a-8, wish to present proposals for inclusion in our proxy statement and form of proxy to be distributed in connection with next year’s Under our Bylaws, certain procedures are provided that a stockholder must follow to nominate persons for election as directors or to introduce an item of business at an annual meeting of stockholders (other than a proposal brought pursuant to SEC Rule 14a-8). These procedures provide that nominations for director and/or an item of business to be introduced at an annual meeting of stockholders must be submitted in writing to the Corporate Secretary of the Company at our principal executive offices by a stockholder of record on both the date of giving notice and the record date for the annual meeting. In general, our Bylaws require that such a notice for nominating a director or introducing an item of business at the Notices of intention to nominate a director or present proposals at the
Householding of Proxy Materials In an effort to reduce printing costs and postage fees, we have adopted a practice approved by the SEC called “householding.” Under this practice, stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our Notice or, if you have elected to receive hard copies, our proxy materials, unless one or more of these stockholders notifies us that he or she wishes to continue receiving individual copies. Stockholders who participate in householding will continue to receive separate proxy cards. If you share an address with another stockholder and received only one Notice or one set of proxy materials and would like to request a separate copy of these materials or any other proxy materials in the future, please: (1) mail your request to Leonardo DRS, Inc., 2345 Crystal Drive, Suite 1000, Arlington, Virginia 22202, Attn: Corporate Secretary; (2) send an e-mail to stephen.vather@drs.com; or (3) call our Investor Relations department at 703-416-8000. Additional copies of the proxy materials will be sent within 30 days after receipt of your request. Similarly, you may also contact us if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future. Annual Report on Form 10-K You may obtain a free copy of our Annual Report on Form 10-K for the year ended December 31, Other Matters Leonardo DRS is soliciting this proxy on behalf of its Board and will bear the entire cost of proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the Notice and proxy materials. This solicitation is being made by mail, but also may be made personally or by facsimile, telephone, messenger, or via the Internet. The Company will also pay the regular charge of brokers and other nominees who hold shares of record for forwarding proxy material to the beneficial owners of such shares. We are not aware of any additional matters to be acted upon at the Annual Meeting other than those discussed in this statement. If any other matter is presented, proxy holders will vote on the matter in their discretion. By Order of the Board of Directors, LEONARDO DRS, INC. Mark A. Dorfman Executive Vice President, General Counsel and Corporate Secretary
LEONARDO DRS, INC. APPROVED BY THE STOCKHOLDER ON MAY 15, 20241 1. PURPOSE. (a) The purpose of this Plan is to promote the financial interests of the (b) This Plan is intended to qualify as an “employee stock purchase plan” as that term is defined in Section 423(b) of the 2. ADMINISTRATION. (a) The Plan shall be administered by the Committee, as such Committee may be constituted from time to time and including any successor committee. The Committee shall have the final power to determine all questions of (i) To determine when and how rights to purchase Shares of the Company shall be granted and the provisions of each Offering of such rights (which need not be identical). (ii) To designate from time to time which subsidiaries of the Company shall be eligible to participate in the Plan as a Designated Subsidiary. (iii) To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective. (iv) To amend the Plan as provided in Section 12. (v) Generally, to exercise such powers and to perform such acts as the Committee deems necessary or expedient to promote the best interests of the Company and its affiliates and to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code. (b) The Committee shall also have the power to adopt such procedures and sub-plans as are necessary or appropriate to permit the participation in the Plan by employees who are foreign nationals or employed outside the U.S., the terms of which sub-plans may take precedence over other provisions of this Plan, with the exception of Section 3(a), but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan will govern the operation of such sub-plan. In addition, without limiting the generality of Section 2(a), the Committee is
Appendix A eligibility to participate, the definition of Compensation, handling of payroll deductions, making of contributions to the Plan (including, without limitation, in forms other than payroll deductions), establishment of bank or trust accounts to hold Participant contributions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of stock certificates that vary with applicable local requirements. The Committee also is authorized to determine whether, to the extent permitted by U.S. Treasury Regulation Section 1.423-2(f), the terms of a purchase right granted under the Plan or an Offering to citizens or residents of a non-U.S. jurisdiction will be less favorable than the terms of a purchase right granted under the Plan or the same Offering to employees residing solely in the U.S. (c) The determination of the Committee on all matters relating to the Plan will be final, binding and conclusive. The Committee may allocate among its members and delegate to any person who is not a member of the Committee, or to any administrative group within the Company, any of its powers, responsibilities or duties. Except as specifically provided to the contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated its duties and powers. (d) Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee herein. (e) Any interpretation of the Plan by the Committee of any decision made by it under the Plan shall be final and binding on all persons. 3. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 11 relating to adjustments upon changes in stock, the stock that may be sold pursuant to rights granted under the Plan shall not exceed in the aggregate 2,000,000 Shares. If any right granted under the Plan shall for any reason terminate without having been exercised, Shares not purchased under such right shall again become available for the Plan. (b) The stock subject to the Plan may be unissued Shares or reacquired Shares, bought on the market or otherwise. Shares may be issued upon exercise of a right to purchase Shares pursuant to an Offering from authorized but unissued Shares, from Shares held in the treasury of the Company, or from any other proper source. If the total number of Shares specified in elections to be purchased under any Offering plus the number of Shares purchased under previous Offerings under this Plan exceeds the maximum number of Shares issuable under this Plan, the Committee will allot the Shares then available on a pro-rata basis. 4. GRANT OF RIGHTS; OFFERING. The Committee may from time to time grant or provide for the grant of rights to purchase Shares of the Company under the Plan to Participants (an “Offering”) on a date (the
Appendix A 5. ELIGIBILITY. (a) Any individual who, on the day preceding an Offering Date, qualifies as an Eligible Employee may elect to become a Participant in the Plan, as provided in Section 7. Notwithstanding the foregoing, the Company retains the discretion to determine which Eligible Employees may participate in an Offering pursuant to and consistent with U.S. Treasury Regulation Section 1.423-2(e). (b) No Participant may be granted a right to purchase Shares hereunder if such Participant, immediately after such right is granted, owns five percent (5%) or more of 6. RIGHTS; PURCHASE PRICE. (a) On each Offering Date, each Participant, pursuant to an Offering made under the (b) In connection with each Offering made under the Plan, the Committee may specify a maximum number of Shares that may be purchased by any Participant as well as a maximum aggregate number of Shares that may be purchased by all Participants pursuant to such Offering. (c) The purchase price of each Share acquired pursuant to rights granted under the Plan for each Offering shall be an amount equal to ninety percent (90%) of the (d) Notwithstanding anything to the contrary herein, no Participant may be granted a right to purchase Shares which permits the Participant’s rights to purchase Shares under this Plan and any other employee stock purchase plan (as defined in Section 423(b) of the Code) of the Company and its subsidiaries, to accrue at a rate which exceeds $25,000, measured by reference to the Fair Market Value of such Shares (determined at the date such right is granted) for each calendar year in which the right is outstanding at any time. 7. PARTICIPATION; WITHDRAWAL; TERMINATION. (a) An Eligible Employee may become a Participant in the Plan pursuant to an Offering by delivering an enrollment agreement to the Company within the time specified in the Offering, in such form as the Company provides. Each such agreement shall authorize payroll deductions in whole percentages of no less than one percent (1%) and no more than ten percent (10%) of such Participant’s Compensation on each pay day occurring during the Offering. (b) The payroll deductions made for each Participant shall commence on the first pay day following the Offering Date and will end on the last pay day on or prior to the Purchase Date of such Offering to which such authorization is applicable, unless sooner terminated by the Participant as provided in this Section 7. Payroll deductions shall be credited to an account for such Participant under the Plan and shall be deposited with the general funds of the Company.
Appendix A (c) A Participant may not change the rate of his or her payroll deductions elected in his or her enrollment materials during an Offering. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 6(d), a Participant’s payroll deductions may be decreased to zero percent (0%) at any time during an Offering. Subject to Section 423(b)(8) of the Code and Section 6(d), payroll deductions will recommence at the rate originally elected by the Participant effective as of the beginning of the first Offering scheduled to end in the following calendar year, unless such payroll deductions are terminated by the Participant as provided in this Section 7. (d) A Participant may make cash payments instead of payroll deductions into his or her account only if (i) specifically provided for in the Offering, (ii) the Participant has not had the maximum amount permitted hereunder withheld during the Offering and (iii) the Committee determines that cash contributions are permissible under Code Section 423. (e) At any time during an Offering, a Participant may terminate his or her payroll deductions under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal in such form as the Company provides. Such withdrawal may be elected at any time prior to the end of the Offering except as provided by the Committee in the Offering. Upon such withdrawal from the Offering by a Participant, the Company shall distribute to such Participant all of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire stock for the Participant) under the Offering, without interest, and such Participant’s interest in that Offering shall be automatically terminated. A Participant’s withdrawal from an Offering will have no effect upon such Participant’s eligibility to participate in any other Offerings under the Plan but such Participant will be required to deliver a new enrollment agreement in order to participate in subsequent Offerings under the Plan. (f) Unless otherwise required by applicable law, rights granted pursuant to any Offering under the Plan shall terminate immediately if the Participant either (i) terminates employment or service with the Company and any Designated Subsidiary for any reason or (ii) is otherwise no longer an Eligible Employee under the Plan. The Company shall distribute to such individual all of his or her accumulated, unused payroll deductions or other cash contributions under the Offering, without interest. (g) Rights granted under the Plan shall not be transferable by a Participant other than by will or the laws of descent and distribution, or by a beneficiary designation as provided in Section 16, and during a Participant’s lifetime, shall be exercisable only by such Participant. (h) Unless otherwise specified in the Offering or as required by applicable law, the Company will have no obligation to pay interest on payroll deductions or other cash contributions. 8. EXERCISE. (a) On each Purchase Date specified therefor in the relevant Offering, each Participant’s accumulated payroll deductions and other cash contributions specifically provided for in the Offering (without any increase for interest) will be applied to the purchase of whole Shares of the Company, up to the maximum number of Shares permitted pursuant to the terms of the Plan and the applicable Offering, at a Purchase Price equal to ninety percent (90%) of the Fair Market Value of a Share on the Purchase Date. No fractional Shares shall be issued upon the exercise of rights granted under the Plan. The amount, if any, of accumulated payroll deductions and other cash contributions remaining in each Participant’s account after the purchase of Shares which is less than the amount required to purchase one Share on the final Purchase Date of an Offering shall be held in each such Participant’s account for the purchase of Shares under the next Offering under the Plan, unless such Participant does not participate in or withdraws from such next Offering, as provided in Section 7(e), or is no longer eligible to be granted rights under the Plan, as provided in Section 5 and Section 6(d), in which case such amount shall be distributed to the Participant after such final Purchase Date, without interest. The amount, if any, of accumulated payroll deductions and other cash contributions remaining in any Participant’s account after the purchase of Shares which is equal to the amount required to purchase one or more whole Shares on the final Purchase Date of an Offering shall be distributed in full to the Participant after such Purchase Date, without interest.
Appendix A (b) No rights granted under the Plan may be exercised to any extent unless the Shares to be issued upon such exercise under the Plan (including rights granted thereunder) are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan is not so registered or in such compliance, no rights granted under the Plan or any Offering shall be exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If on the Purchase Date of any Offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, no rights granted under the Plan or any Offering shall be exercised and all payroll deductions and other cash contributions accumulated during the Offering (reduced to the extent, if any, such deductions have been used to acquire stock) shall be distributed to the Participants, without interest. 9. ACCOUNTING AND USE OF FUNDS. Payroll deductions and other cash contributions for each Participant shall be credited to an account established under the Plan. Such account shall be solely for bookkeeping purposes and no separate fund or trust shall be established hereunder. Proceeds from the sale of Shares pursuant to rights granted under the Plan shall constitute general funds of the Company. 10. NO RIGHTS AS A STOCKHOLDER; NO RIGHT TO CONTINUED SERVICE. (a) A Participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Shares subject to rights granted under the Plan unless and until the Participant’s Shares acquired upon exercise of rights under the Plan are recorded in the books of the Company (or its transfer agent). Until the applicable Shares are issued (as evidenced by the appropriate entry on the books of the Company or its transfer agent), a Participant shall only have the rights of an unsecured creditor with respect to cash contributions under the Plan and such Shares. (b) Participation in the Plan by a Participant will not be construed as giving a Participant the right to be retained as an employee of the Company or a Designated Subsidiary or affiliate of the Company, as applicable. Further, the Company or a Designated Subsidiary or affiliate of the Company may dismiss a Participant from employment at any time, free from any liability or any claim under the Plan. 11. ADJUSTMENTS UPON CHANGES IN STOCK. (a) If any change is made in the Shares subject to the Plan, or subject to any rights granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan and outstanding rights will be appropriately adjusted in the class(es) and maximum number of Shares subject to the Plan and the class(es) and number of Shares and price per Share subject to outstanding rights. Such adjustments shall be made by the Committee, the determination of which shall be final, binding and conclusive. The conversion of any convertible securities of the Company shall not be treated as a “transaction not involving the receipt of consideration by the Company.” (b) In the event of a Change in Control, the Committee may take any one or more of the following actions as to outstanding rights to purchase Shares on such terms as the Committee determines: (i) provide that such rights shall be assumed, or substantially equivalent rights shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon written notice to the Participants, provide that all outstanding rights to purchase Shares will be terminated immediately prior to the consummation of such Change in Control and that all such outstanding rights to purchase Shares will become exercisable to the extent of accumulated payroll deductions as of a date specified by the Committee in such notice, which date shall not be less than ten (10) calendar days preceding the effective date of the Change in Control, (iii) upon written notice to the Participants, provide that all outstanding rights to
Appendix A purchase Shares will be cancelled as of a date prior to the effective date of the Change in Control and that all accumulated payroll deductions will be returned to such Participants on such date, (iv) in the event of a Change in Control under the terms of which holders of Shares will receive upon consummation thereof a cash payment for each Share surrendered in the Change in Control (the “Acquisition Price”), change the last day of the Offering to be the date of the consummation of the Change in Control and make or provide for a cash payment to each participating Participant equal to (A) (i) the Acquisition Price times (ii) the number of Shares that such Participant’s accumulated payroll deductions as of immediately prior to the Change in Control could purchase at the Purchase Price, where the Acquisition Price is treated as the Fair Market Value of the Shares on the last day of the applicable Offering for purposes of determining the Purchase Price, and where the number of Shares that could be purchased is subject to the limitations set forth in Section 8 minus (B) the result of multiplying such number of Shares by such Purchase Price, (v) provide that, in connection with a liquidation or dissolution of the Company, rights to purchase Shares shall convert into the right to receive liquidation proceeds (net of the Purchase Price thereof) and (vi) any combination of the foregoing. (c) For purposes of Section 11(b)(i) above, a right to purchase Shares shall be considered assumed if, following consummation of the Change in Control, the right to purchase Shares confers the right to purchase, for each Share subject to the right immediately prior to the consummation of the Change in Control, the consideration (whether cash, securities or other property) received as a result of the Change in Control by holders of Shares for each Share held immediately prior to the consummation of the Change in Control (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the 12. AMENDMENT OF THE PLAN OR OFFERINGS. (a) The Committee at any time, and from time to time, may amend the Plan or the terms of one or more Offerings. However, except as provided in Section 11 relating to adjustments upon changes in Shares, no amendment shall be effective unless approved by the stockholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment will: (i) Increase the number of Shares reserved for rights under the Plan; (ii) Modify the provisions as to eligibility for participation in the Plan or an Offering (to the extent such modification requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3); or (iii) Modify the Plan or an Offering in any other way if such modification requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3. It is expressly contemplated that the Committee may amend the Plan or an Offering in any respect the Committee deems necessary or advisable to provide Participants with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to employee stock purchase plans and/or to bring the Plan and/or rights granted under an Offering into compliance therewith. (b) The Committee may, in its sole discretion, submit any amendment to the Plan or an Offering for stockholder approval. Without stockholder consent and without limiting Section 17(a), the Committee
Appendix A will be entitled to (c) Rights and 13. COMPANY POLICIES. Any Shares purchased pursuant to the 14. AUTHORIZATION OF SUB-PLANS. The Committee may from time to time establish one or more sub-plans under the Plan with respect to one or more Designated Subsidiaries, provided that such sub-plan complies with Section 423 of the Code. 15. WITHHOLDING. If applicable tax laws impose a tax withholding obligation, each affected Participant shall, no later than the date of the event creating the tax liability, make provision satisfactory to the Committee for 16. DESIGNATION OF BENEFICIARY. (a) A Participant may file a written designation of a beneficiary who is (b) Such designation of beneficiary may be
Appendix A 17. TERMINATION OR SUSPENSION OF THE PLAN. (a) The Committee, in its discretion, may suspend or terminate the Plan at any time. No rights may be granted under the Plan while the Plan is suspended or after it is terminated. If the Plan is terminated, the Committee, in its discretion, may elect to (b) Rights and obligations under any rights granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulation, or except as necessary to ensure that the Plan and/or rights granted under an Offering comply with the requirements of Section 423 of the Code. 18. NOTICE OF DISQUALIFYING DISPOSITIONS. Each Participant shall give the Company prompt written notice of any disposition or other transfer of Shares acquired pursuant to the exercise of a right under the Plan if such disposition or transfer is made within two (2) years after the Offering Date or within one year after the Purchase Date. 19. EFFECTIVE DATE OF PLAN. The Plan was adopted by the Board on February 20, 2024 and became effective after it was approved by the Company’s stockholders on May 15, 2024 (the “Effective Date”). The Plan will terminate on the tenth (10th) anniversary of the Effective Date. 20. CHOICE OF LAW. All questions concerning the construction, validity and interpretation of this Plan shall be governed by the law of the State of Delaware, without regard to such state’s conflict of laws rules. 21. DEFINITIONS. (c) “Change in Control” shall have the meaning ascribed to it in the Company’s 2022 Omnibus Equity Compensation Plan. (d) “Code” means the Internal Revenue Code of 1986, as amended. (e) “Committee” means the Compensation Committee of the Board. (f) “Company” means Leonardo DRS, Inc., a Delaware corporation. (g) “Compensation” means a Participant’s regular base salary or base hourly wages that are actually paid to the Participant. Compensation shall not include forms of compensation that are not part of an employee’s regular rate of pay, such as overtime pay, additional compensation in the form of premium pay, differential pay or allowance pay in excess of base wage (e.g., danger pay, hazard pay or hardship pay), commissions, bonuses, other incentive compensation (whether cash- or Share-based), the cost of employee benefits paid for by the Company or an affiliate, education or tuition reimbursements, imputed income
Appendix A arising under any group insurance or benefit program, traveling expenses, business and moving expense reimbursements, contributions made by the Company or an affiliate under any employee benefit plan, and similar items of compensation, as determined by the Committee. Notwithstanding the foregoing, the Committee may modify the definition of “Compensation” with respect to one or more Offerings as the Committee determines appropriate, provided such modification is on a uniform and nondiscriminatory basis. (h) “Designated Subsidiary” means a subsidiary (as defined in Section 424(f) of the Code) of the Company that has been designated by the Committee from time to time in its sole discretion as eligible to participate in the Plan, or if applicable, an Offering. (i) “Effective Date” shall have the meaning ascribed to it in Section 19. (j) “Eligible Employee” means, subject to the limitations set forth in Section 5(b) and Section 6(d), all individuals who are common law employees providing services to the Company or a Designated Subsidiary who (i) are employed by, and providing services to, the Company or a Designated Subsidiary prior to the beginning of any Offering; (ii) have completed more than six (6)-months of service with the Company or a Designated Subsidiary since their last hire date; (iii) are customarily employed by the Company or a Designated Subsidiary for more than twenty (20) hours a week; (iv) are customarily employed by the Company or a Designated Subsidiary for more than five (5) months in any calendar year and (v) are not an Ineligible Non-U.S. Employees. Notwithstanding the foregoing, the Plan excludes from participation any individual who is a “highly compensated employee” (withing the meaning of Section 414(q) of the Code) and subject to the disclosure requirements of Section 16(a) of the Exchange Act; provided, with respect to the Plan and each Offering, this exclusion is applied in an identical manner to all highly compensated employees of the Company or Designated Subsidiary whose Eligible Employees are participating in such Offering. For purposes of the Plan, the employment relationship will be treated as continuing intact while an individual is on sick leave or other leave of absence that the Company or Designated Subsidiary approves or is legally protected under applicable law. Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated three (3) months and one (1) day following the commencement of such leave. (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended. (l) “Fair Market Value” as of a particular date shall mean: (i) if the Shares are listed on any established stock exchange or a national market system, including, without limitation, the New York Stock Exchange or the Nasdaq Stock Market, the Fair Market Value shall be the closing price of a Share (or if no sales were reported, the closing price on the date immediately preceding such date) as quoted on such exchange or system on the day of determination; (ii) if the Shares are not then listed on a national securities exchange, the average of the highest reported bid and lowest reported asked prices for a Share as reported by the National Association of Securities Dealers, Inc. Automated Quotations System for the last preceding date on which there was a sale of such stock in such market; or (iii) whether or not the Shares are then listed on a national securities exchange or traded in an over-the-counter market or the value of such Shares is not otherwise determinable, such value as determined by the Committee in good faith and in a manner not inconsistent with the regulations under Section 409A of the Code. (m) “Ineligible Non-U.S. Employee” means an individual who would otherwise be an Eligible Employee, but for the fact that they are a citizen or resident of a non-U.S. jurisdiction (without regard to whether they also are a citizen or resident of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) and (i) the individual’s participation in the Plan is prohibited under the laws of the applicable jurisdiction or (ii) if in order to permit the individual to participate, the Plan or and Offering would need to be modified to comply with the laws of the applicable jurisdiction, but in doing so, would cause the Plan or the Offering to violate Section 423 of the Code. (n) “Offering” shall have the meaning ascribed to it in Section 3(a).
Appendix A (o) “Offering Date” shall have the meaning ascribed to it in Section 3(a). (p) “Participant” means an Eligible Employee who participates in the Plan. (q) “Plan” means the Leonardo DRS, Inc. Employee Stock Purchase Plan, as may be amended from time to time. (r) “Purchase Date” shall have the meaning ascribed to it in Section 6(a). (s) “Purchase Price” shall have the meaning ascribed to it in Section 6(c). (t) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any comparable successor rule. (u) “Securities Act” means the Securities Act of 1933, as amended. (v) “Shares” means shares of the common stock of the Company, par value $0.01 per share.
Appendix B Leonardo DRS, Inc. 2022 OMNIBUS EQUITY COMPENSATION PLAN Amended and Restated Effective May 15, 20241 ARTICLE I GENERAL 1.1 Purpose The purpose of the Leonardo DRS, Inc. 2022 Omnibus Equity Compensation Plan (as amended from time to time, the “Plan”) is to help the Company (as hereinafter defined): (1) attract, retain and motivate key employees (including prospective employees), consultants and non-employee directors of Leonardo DRS, Inc., a Delaware corporation (the “Company”); (2) align the interests of such persons with the Company’s stockholders; and (3) promote ownership ofthe Company’s equity. 1.2 Definitions of Certain Terms For purposes of this Plan, the following terms have the meanings set forth below: 1.2.1 “Acquisition Awards” has the meaning set forth in Section 1.6.1. 1.2.2 “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under section 12 of the Exchange Act. 1.2.3 “Award” means an award made pursuant to the Plan. 1.2.4 “Award Agreement” means the written document by which each Award is evidenced, and which may, but need not be (as determined by the Committee) executed or acknowledged (including any electronic acceptance or acknowledgement) by a Participant as a condition to receiving an Award, and which sets forth the terms and provisions applicable to Awards granted under the Plan to such Participant. Any reference herein to an agreement in writing will be deemed to include an electronic writing to the extent permitted by applicable law. 1.2.5 “Board” means the Board of Directors of the Company. 1.2.6 “Business Combination” has the meaning provided in Section 1.2.9(c). 1.2.7 “Cause” means (a) with respect to a Participant employed pursuant to a written employment agreement which agreement includes a definition of “Cause,” “Cause” as defined in that agreement or (b) with respect to any other Participant, the occurrence of any of the following: (i) the Participant’s repeated or continued failure to perform his or her duties to the Company’s satisfaction (other than any such failure resulting from incapacity due to physical or mental illness), as determined in the Company’s sole discretion; (ii) the Participant’s engagement in dishonesty, illegal conduct or misconduct; (iii) the Participant’s embezzlement, misappropriation or fraud, whether or not related to the Participant’s employment with the Company; (iv) the Participant’s conviction of, or plea of guilty or nolo contendere to, a crime that constitutes a felony (or state law equivalent) or crime that constitutes a misdemeanor involving moral turpitude; or (v) the Participant’s violations of the Company’s code of ethics and business conduct, as amended from time to time, as determined in the Company’s sole discretion.
Appendix B 1.2.8 “Certificate” means a stock certificate (or other appropriate document or evidence of ownership) representing Shares. 1.2.9 “Change in Control” means: (a) during any period of 12 months, individuals who constitute the Board as of the date hereof (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, providedthat any person becoming a director subsequent to the beginning of such period, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) will be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or publicly threatened election contest with respect to directors or as a result of any other actual or publicly threatened solicitation of proxies by or on behalf of any person other than the Board will be deemed to be an Incumbent Director; provided, further, that this Section 1.2.9(a) shall not be in effect until there are no Leonardo S.p.A “Proxy Holders” (as defined in the Proxy Agreement between Leonardo S.p.A, the Company and other parties thereto, dated as of October 26, 2017) on the Board; (b) any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then-outstanding securities eligible to vote for the election of the Board (“Company Voting Securities”); provided, however, that the event described in this paragraph (b) will not be deemed to be a Change in Control by virtue of the ownership, or acquisition, of Company Voting Securities: (A) by the Company, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (c) of this definition), or (E) by Leonardo S.p.A or any of its direct or indirect Subsidiaries; (c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involvingthe Company that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), excluding such a Business Combination with Leonardo S.p.A or any of its direct or indirect subsidiaries, unless immediately following such Business Combination: (A) more than 60% of the total voting power of (x) the entity resulting from such Business Combination (the “Surviving Entity”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting power, is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than Leonardo S.p.A or any employee benefit plan (or related trust) sponsored or maintained by the Surviving Entity or the parent), becomes the beneficial owner, directly or indirectly, of 30% or more of the total voting power of the outstanding voting securities eligible to elect directors of the parent (or, if there is no parent, the Surviving Entity) and (C) at least a majority of the members of the board of directors of the parent (or, if there is no parent, the Surviving Entity) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) of this paragraph (c) will be deemed to be a “Non-Qualifying Transaction”); or (d) the consummation of a sale of all or substantially all of the Company’s assets (other than to Leonardo S.p.A or any of its direct or indirect Subsidiaries or an Affiliate ofthe Company); or
Appendix B (e) the Company’s stockholdersapprove a plan of complete liquidation or dissolution of the Company. Notwithstanding the foregoing, a Change in Control will not be deemed to occur solely because any person acquires beneficial ownership of more than 30% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; providedthat if after such acquisition by the Company such person (other than Leonardo S.p.A or any of its direct or indirect Subsidiaries) becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control will then occur. 1.2.10 “Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the applicable rulings and regulations thereunder. 1.2.11 “Committee” has the meaning set forth in Section 1.3.1. 1.2.12 “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other securities or property issued in exchange therefor or in lieu thereof pursuant to Section 1.6.3. 1.2.13 “Company” means Leonardo DRS, Inc., and any successor entity thereto. 1.2.14 “Company Voting Securities” has the meaning provided in the definition of Change in Control. 1.2.15 “Consent” has the meaning set forth in Section 3.3.2. 1.2.16 “Consultant” means any individual (other than a non-employee director), corporation, partnership, limited liability company or other entity that provides bona fide consulting or advisory services to the Company. 1.2.17 “Covered Person” has the meaning set forth in Section 1.3.4. 1.2.18 “Director” means a member of the Board. 1.2.19 “Disability” means, unless otherwise defined in an employment agreement between the Participant and the Company, a Participant’s inability to perform the duties of his or her employment on a full-time basis for six (6) consecutive months, as determined by the Committee. 1.2.20 “Effective Date” has the meaning set forth in Section 3.25. 1.2.21 “Employee” means a regular, active employee or a prospective employee of the Company, but not including a non-employee director. 1.2.22 “Employment” means a Participant’s performance of services for the Company, as determined by the Committee. The terms “employ” and “employed” will have their correlative meanings. The Committee in its sole discretion may determine (a) whether and when a Participant’s leave of absence results in a termination of Employment, (b) whether and when a change in a Participant’s association with the Company results in a termination of Employment and (c) the impact, if any, of any such leave of absence or change in association on outstanding Awards. Unless expressly provided otherwise, any references in the Plan or any Award Agreement to a Participant’s Employment being terminated will include both voluntary and involuntary terminations. 1.2.23 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder.
Appendix B 1.2.24 “Fair Market Value” means, with respect to a Share, the closing price reported for the Common Stock on the applicable date as reported on the NASDAQ Stock Marketor, if not so reported, as determined in accordance with a valuation methodology approved by the Committee, unless determined as otherwise specified herein. For purposes of the grant of any Award, the applicable date will be the trading day on which the Award is granted or, if the date the Award is granted is not a trading day, the trading day immediately prior to the date the Award is granted. For purposes of the exercise of any Award, the applicable date is the date a notice of exercise is received by the Company or, if such date is not a trading day, the trading day immediately following the date a notice of exercise is received by the Company. 1.2.25 “Good Reason” means, following a Change in Control, (a) with respect to a Participant employed pursuant to a written employment agreement which agreement includes a definition of “Good Reason,” “Good Reason” as defined in that agreement or (b) with respect to any other Participant, the occurrence of any of the following in the absence of the Participant’s written consent: (i) a material diminution in the Participant’s authority, duties, or responsibilities (other than temporarily while the Participant is physically or mentally incapacitated or as required by law), (ii) a material diminution in the Participant’s base salary, (iii) the relocation of the Participant’s principal place of employment to a location more than fifty (50) miles from the Participant’s principal place of employment immediately prior to the Change in Control, which constitutes a material adverse change in the geographic location with respect to such Participant or (iv) the Company’s material breach of any employment agreement to which the Company and the Participant are party at the time of such breach; provided that in any case such event is not cured by the Company (if susceptible to cure by the Company) within thirty (30) days after the Company has received written notice from the affected Participant within ninety (90) days of the initial existence of the event or condition constituting Good Reason specifying the particular events or conditions which constitute Good Reason. 1.2.26 “Incentive Stock Option” means a stock option to purchase Shares that is intended to be an “incentive stock option” within the meaning of Sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is designated as an Incentive Stock Option in the applicable Award Agreement. 1.2.27 “Incumbent Directors” has the meaning provided in the definition of Change in Control. 1.2.28 “Non-Qualifying Transaction” has the meaning provided in the definition of Change in Control. 1.2.29 “Original Adoption Date” has the meaning set forth in Section 3.25. 1.2.30 “Other Stock-Based or Cash-Based Awards” has the meaning set forth in Section 2.8.1. 1.2.31 “Participant” means an Employee, Consultant or non-employee director who receives an Award. 1.2.32 “Performance-Based Awards” means certain Other Stock-Based or Cash-Based Awards granted pursuant to Section 2.8.2. 1.2.33 “Performance Criteria” has the meaning set forth in Section 2.8.2. 1.2.34 “Performance Goals” means the performance goals established by the Committee in connection with the grant of Awards, which may or may not be based on Performance Criteria. 1.2.35 “Plan” has the meaning set forth in Section 1.1. 1.2.36 “Plan Action” has the meaning set forth in Section 3.3.1.
Appendix B 1.2.37 “Section 409A” means Section 409A of the Code, including any amendments or successor provisions to that section, and any regulations and other administrative guidance thereunder, in each case as they may be from time to time amended or interpreted through further administrative guidance. 1.2.38 “Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor thereto, and the applicable rules and regulations thereunder. 1.2.39 “Share Limit” has the meaning set forth in Section 1.6.1. 1.2.40 “Shares” means shares of Common Stock. 1.2.41 “Subsidiary” means any corporation, partnership, limited liability company or other legal entity in which the Company, directly or indirectly, owns stock or other equity interests possessing 25% or more of the total combined voting power of all classes of the then-outstanding stock or other equity interests. 1.2.42 “Surviving Entity” has the meaning provided in the definition of Change in Control. 1.2.43 “Ten Percent Stockholder” means a person owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company and of any Subsidiary or parent corporation of the Company. 1.2.44 “Treasury Regulations” means the regulations promulgated under the Code by the United States Treasury Department, as amended. 1.3 Administration 1.3.1 The Compensation Committee of the Board (as constituted from time to time, and including any successor committee, the “Committee”) will administer the Plan. In particular, the Committee will have the authority in its sole discretion to: (a) exercise all of the powers granted to it under the Plan; (b) construe, interpret and implement the Plan and all Award Agreements; (c) prescribe, amend and rescind rules and regulations relating to the Plan, including rules governing the Committee’s own operations; (d) make all determinations necessary or advisable in administering the Plan; (e) correct any defect, supply any omission and reconcile any inconsistency in the Plan; (f) amend the Plan to reflect changes in applicable law; (g) grant, or recommend to the Board for approval to grant, Awards and determine who will receive Awards, when such Awards will be granted and the terms of such Awards, including setting forth provisions with regard to the effect of a termination of Employment on such Awards and conditioning the vesting of, or the lapsing of any applicable vesting restrictions or other vesting conditions on, Awards upon the attainment of Performance Goals and/or upon continued service; (h) amend any outstanding Award Agreement in any respect including, without limitation, to (1) accelerate the time or times at which the Award becomes vested, unrestricted or may be exercised (and, in connection with such acceleration, the Committee may provide that any
Appendix B Shares acquired pursuant to such Award will be restricted Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s underlying Award), (2) accelerate the time or times at which Shares are delivered under the Award (and, without limitation on the Committee’s rights, in connection with such acceleration, the Committee may provide that any Shares delivered pursuant to such Award will be restricted Shares, which are subject to vesting, transfer, forfeiture or repayment provisions similar to those in the Participant’s underlying Award), (3) waive or amend any goals, restrictions, vesting provisions or conditions set forth in such Award Agreement, or impose new goals, restrictions, vesting provisions and conditions or (4) reflect a change in the Participant’s circumstances (e.g., a change to part-time employment status or a change in position, duties or responsibilities); and (i) determine at any time whether, to what extent and under what circumstances and method or methods, subject to Section 3.14, (1) Awards may be (A) settled in cash, Shares, other securities, other Awards or other property (in which event, the Committee may specify what other effects such settlement will have on the Participant’s Award, including the effect on any repayment provisions under the Plan or Award Agreement), (B) exercised or (C) canceled, forfeited or suspended, (2) Shares, other securities, other Awards or other property and other amounts payable with respect to an Award may be deferred either automatically or at the election of the Participant thereof or of the Committee, (3) Awards may be settled by the Company, any of its Subsidiaries or Affiliates or any of their designees and (4) the exercise price for any stock option (other than an Incentive Stock Option, unless the Committee determines that such a stock option will no longer constitute an Incentive Stock Option) or stock appreciation right may be reset subject to Section 3.20. 1.3.2 Actions of the Committee may be taken by the vote of a majority of its members present at a meeting (which may be held telephonically). Any action may be taken by a written instrument signed by a majority of the Committee members, and action so taken will be as fully effective as if it had been taken by a vote at a meeting. The determination of the Committee on all matters relating to the Plan or any Award Agreement will be final, binding and conclusive. The Committee may allocate among its members and delegate to any person who is not a member of the Committee, or to any administrative group within the Company, any of its powers, responsibilities or duties. Except as specifically provided to the contrary, references to the Committee include any administrative group, individual or individuals to whom the Committee has delegated its duties and powers. 1.3.3 Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant Awards or administer the Plan. In any such case, the Board will have all of the authority and responsibility granted to the Committee herein.
Appendix B 1.3.4 No member of the Committee, Board or any person to whom the Committee delegates its powers, responsibilities or duties in writing, including by resolution (each such person, a “Covered Person”), will have any liability to any person (including any Participant) for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award, except as expressly provided by statute. Each Covered Person will be indemnified and held harmless by the Company against and from: (a) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each case, in good faith and (b) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, providedthat the Company will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company will have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification will not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful misconduct. The foregoing right of indemnification will not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s certificate of incorporation or bylaws, pursuant to any individual indemnification agreements between such Covered Person and the Company, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless. 1.4 Persons Eligible for Awards Awards under the Plan may be made to Employees, Consultants and non-employee directors. 1.5 Types of Awards Under Plan Awards may be made under the Plan in the form of cash-based or stock-based Awards. Stock-based Awards may be in the form of any of the following, in each case in respect of Common Stock: (a) stock options, (b) stock appreciation rights, (c) restricted Shares, (d) restricted stock units, (e) dividend equivalent rights and (f) other equity-based or equity-related Awards (as further described in Section 2.8), that the Committee determines to be consistent with the purposes of the Plan and the interests of the Company.
Appendix B 1.6 Shares of Common Stock Available for Awards 1.6.1 Shares Subject to the Plan. Subject to the other provisions of this Section 1.6, a total of 20,516,484 Shares shall be reserved for issuance under the Plan during its term which consists of the sum of (a) the 12,416,484 Shares previously authorized and approved for issuance under the Plan as of the Plan’s Original Adoption Date and (b) 8,100,000 Shares authorized and approved for issuance under the Plan as of the Company’s 2024 annual meeting of stockholders (the “Share Limit”). Shares of Common Stock subject to awards that are assumed, converted or substituted under the Plan as a result of the Company’s acquisition of another company (including by way of merger, combination or similar transaction) (“Acquisition Awards”) will not count against the number of Shares that may be granted under the Plan. Available Shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for Awards under the Plan and do not reduce the maximum number of Shares available for grant under the Plan, subject to applicable stock exchange requirements. 1.6.2 Replacement of Shares. Shares subject to an Award that is forfeited (including any restricted Shares repurchased by the Company at the same price paid by the Participant so that such Shares are returned to the Company), expires or is settled for cash (in whole or in part), to the extent of such forfeiture, expiration or cash settlement will be available for future grants of Awards under the Plan and will be added back in the same number of Shares as were deducted in respect of the grant of such Award. The payment of dividend equivalent rights in cash in conjunction with any outstanding Awards will not be counted against the Shares available for issuance under the Plan. In the case of stock appreciation rights, the difference between the number of Shares covered by the exercised portion of the stock appreciation right and the number of Shares actually delivered upon exercise shall not be restored or available for future issuance under the Plan. Shares tendered by a Participant or withheld by the Company in payment of the exercise price of a stock option or to satisfy any tax withholding obligation with respect to an Award will not again be available for Awards. Shares repurchased using stock option proceeds will not be made available for future issuance of Awards. 1.6.3 Adjustments. The Committee will: (a) adjust the number and type of property or securities authorized pursuant to Section 1.6.1, (b) adjust the individual Participant limitations set forth in Sections 1.6, 2.4.1 and 2.5.1, (c) adjust the number and type of property or securities set forth in Section 2.3.2 that can be issued through Incentive Stock Options and (d) adjust the terms of any outstanding Awards (including, without limitation, the number of Shares covered by each outstanding Award, the type of property or securities to which the Award relates and the exercise or strike price of any Award), in such manner as it deems appropriate (including, without limitation, by payment of cash) to prevent the enlargement or dilution of rights, as a result of any increase or decrease in the number of issued Shares (or issuance of securities other than Shares) resulting from a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchange of Shares, merger, consolidation, rights offering, separation, reorganization or liquidation or any other change in the corporate structure or Shares, including any extraordinary dividend or extraordinary distribution; providedthat no such adjustment may be made if or to the extent that it would cause an outstanding Award to cease to be exempt from, or to fail to comply with, Section 409A of the Code.
Appendix B ARTICLE II AWARDS UNDER THE PLAN 2.1 Agreements Evidencing Awards Each Award granted under the Plan will be evidenced by an Award Agreement that will contain such provisions and conditions as the Committee deems appropriate. Unless otherwise provided herein, the Committee may grant Awards in tandem with or, subject to Section 3.14, in substitution for or satisfaction of any other Award or Awards granted under the Plan or any award granted under any other plan of the Company. By accepting an Award pursuant to the Plan, a Participant thereby agrees that the Award will be subject to all of the terms and provisions of the Plan and the applicable Award Agreement. 2.2 No Rights as a Stockholder No Participant (or other person having rights pursuant to an Award) will have any of the rights of a stockholder of the Companywith respect to Shares subject to an Award until the delivery of such Shares. Except as otherwise provided in Section 1.6.3, no adjustments will be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, Common Stock, other securities or other property) for which the record date is before the date the Certificates for the Shares are delivered, or in the event the Committee elects to use another system, such as book entries by the transfer agent, before the date in which such system evidences the Participant’s ownership of such Shares. 2.3 Options 2.3.1 Grant. Stock options may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee may determine; provided, however, that the maximum number of Shares as to which stock options may be granted under the Plan to any one individual in any fiscal year may not exceedthe Share Limit (as adjusted pursuant to the provisions of Section 1.6.3). 2.3.2 Incentive Stock Options. At the time of grant, the Committee will determine: (a) whether all or any part of a stock option granted to an eligible Employee will be an Incentive Stock Option and (b) the number of Shares subject to such Incentive Stock Option; provided, however, that (1) the aggregate Fair Market Value (determined as of the time the option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by an eligible Employee during any fiscal year (under all such plans of the Companyand of any Subsidiary or parent corporation of the Company) may not exceed $100,000 and (2) no Incentive Stock Option (other than an Incentive Stock Option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code applies) may be granted to a person who is not eligible to receive an Incentive Stock Option under the Code. The form of any stock option which is entirely or in part an Incentive Stock Option will clearly indicate that such stock option is an Incentive Stock Option or, if applicable, the number of Shares subject to the Incentive Stock Option. No more than the Share Limit (as adjusted pursuant to the provisions of Section 1.6.3) that can be delivered under the Plan may be issued through Incentive Stock Options. 2.3.3 Exercise Price. The exercise price per Share with respect to each stock option will be determined by the Committee but, except for Acquisition Awards or as otherwise permitted by Section 1.6.3, may never be less than the Fair Market Value of a share of Common Stock (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110% of the Fair Market Value). Unless
Appendix B otherwise noted in the Award Agreement, the Fair Market Value of the Common Stock will be its Fair Market Valueon the date of grant of the Award of stock options. 2.3.4 Term of Stock Option. In no event will any stock option be exercisable after the expiration of 10 years (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 5 years) from the date on which the stock option is granted. 2.3.5 Vesting and Exercise of Stock Option and Payment for Shares. A stock option may vest and be exercised at such time or times and subject to such terms and conditions as will be determined by the Committee at the time the stock option is granted and set forth in the Award Agreement. Subject to any limitations in the applicable Award Agreement, any Shares not acquired pursuant to the exercise of a stock option on the applicable vesting date may be acquired thereafter at any time before the final expiration of the stock option. To exercise a stock option, the Participant must give written notice or, to the extent permitted by the Company, electronic notice to the Company specifying the number of Shares to be acquired and accompanied by payment of the full purchase price therefor in cash or by certified or official bank check, or in another form as determined by the Company, which may include: (a) personal check, (b) Shares, based on the Fair Market Value as of the exercise date, (c) any other form of consideration approved by the Company and permitted by applicable law and (d) any combination of the foregoing. The Committee may also make arrangements for the cashless exercise of a stock option. Any person exercising a stock option will make such representations and agreements and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance by the Company on terms acceptable to the Company with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. The Committee may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars. If a Participant so requests, Shares acquired pursuant to the exercise of a stock option may be issued in the name of the Participant and another jointly with the right of survivorship. 2.4 Stock Appreciation Rights 2.4.1 Grant. Stock appreciation rights may be granted to eligible recipients in such number and at such times during the term of the Plan as the Committee may determine; provided, however, that the maximum number of Shares as to which stock appreciation rights may be granted under the Plan to any one individual in any fiscal year may not exceed the Share Limit (as adjusted pursuant to the provisions of Section 1.6.3). 2.4.2 Exercise Price. The exercise price per Share with respect to each stock appreciation right will be determined by the Committee but, except for Acquisition Awards or as otherwise permitted by Section 1.6.3, may never be less than the Fair Market Value of the Common Stock. Unless otherwise noted in the Award Agreement, the Fair Market Value of the Common Stock will be its Fair Market Valueon the date of grant of the Award of stock appreciation rights. 2.4.3 Term of Stock Appreciation Right. In no event will any stock appreciation right be exercisable after the expiration of 10 years from the date on which the stock appreciation right is granted.
Appendix B 2.4.4 Vesting and Exercise of Stock Appreciation Right and Delivery of Shares. Each stock appreciation right may vest and be exercised at such time or times as may be determined in the Award Agreement at the time the stock appreciation right is granted. Subject to any limitations in the applicable Award Agreement, any stock appreciation rights not exercised on the applicable vesting date may be exercised thereafter at any time before the final expiration of the stock appreciation right. To exercise a stock appreciation right, the Participant must give written notice to the Company specifying the number of stock appreciation rights to be exercised. Upon exercise of stock appreciation rights, Shares, cash or other securities or property, or a combination thereof, as specified by the Committee, equal in value to: (a) the excess of: (1) the Fair Market Value of the Common Stock on the date of exercise over (2) the exercise price of such stock appreciation right multiplied by (b) the number of stock appreciation rights exercised, will be delivered to the Participant. Any person exercising a stock appreciation right will make such representations and agreements and furnish such information as the Committee may, in its sole discretion, deem necessary or desirable to effect or assure compliance by the Company on terms acceptable to the Company with the provisions of the Securities Act, the Exchange Act and any other applicable legal requirements. If a Participant so requests, Shares purchased may be issued in the name of the Participant and another jointly with the right of survivorship. 2.5 Restricted Shares 2.5.1 Grants. The Committee may grant or offer for sale restricted Shares in such amounts and subject to such terms and conditions as the Committee may determine. Upon the delivery of such Shares, the Participant will have the rights of a stockholder with respect to the restricted Shares, subject to any other restrictions and conditions as the Committee may include in the applicable Award Agreement. Each Participant of an Award of restricted Shares will be issued a Certificate in respect of such Shares, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of such Shares. In the event that a Certificate is issued in respect of restricted Shares, such Certificate may be registered in the name of the Participant, and will, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, but will be held by the Company or its designated agent until the time the restrictions lapse. 2.5.2 Right to Vote and Receive Dividends on Restricted Shares. Each Participant of an Award of restricted Shares will, during the period of restriction, be the beneficial and record owner of such restricted shares and will have full voting rights with respect thereto. Unless the Committee determines otherwise in an Award Agreement, during the period of restriction, all ordinary cash dividends or other ordinary distributions paid upon any restricted Share will be retained by the Company and will be paid to the relevant Participant (without interest) when the Award of restricted Shares vests and will revert back to the Company if for any reason the restricted Share upon which such dividends or other distributions were paid reverts back to the Company (any extraordinary dividends or other extraordinary distributions will be treated in accordance with Section 1.6.3). 2.6 Restricted Stock Units The Committee may grant Awards of restricted stock units in such amounts and subject to such terms and conditions as the Committee may determine. A Participant of a restricted stock unit will
Appendix B have only the rights of a general unsecured creditor ofthe Company, until delivery of Shares, cash or other securities or property is made as specified in the applicable Award Agreement. On the delivery date specified in the Award Agreement, the Participant of each restricted stock unit not previously forfeited or terminated will receive one share of Common Stock, cash or other securities or property equal in value to a share of Common Stock or a combination thereof, as specified by the Committee. 2.7 Dividend Equivalent Rights The Committee may include in the Award Agreement with respect to any Award a dividend equivalent right entitling the Participant to receive amounts equal to all or any portion of the regular cash dividends that would be paid on the Shares covered by such Award if such Shares had been delivered pursuant to such Award. The grantee of a dividend equivalent right will have only the rights of a general unsecured creditor of the Company until payment of such amounts is made as specified in the applicable Award Agreement. In the event such a provision is included in an Award Agreement, the Committee will determine whether such payments will be made in cash, in Shares or in another form, whether they will be conditioned upon the exercise of the Award to which they relate (subject to compliance with Section 409A of the Code), the time or times at which they will be made, and such other terms and conditions as the Committee will deem appropriate; provided that in no event may such payments may be made unless and until the Award to which they relate vests. 2.8 Other Stock-Based or Cash-Based Awards 2.8.1 Grant. The Committee may grant other types of equity-based, equity-related or cash-based Awards (including the grant or offer for sale of unrestricted Shares, performance share awards and performance units settled in cash) (“Other Stock-Based or Cash-Based Awards”) in such amounts and subject to such terms and conditions as the Committee may determine. The terms and conditions set forth by the Committee in the applicable Award Agreement may relate to the achievement of Performance Goals, as determined by the Committee at the time of grant. Such Awards may entail the transfer of actual Shares to Award recipients and may include Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States. 2.8.2 Establishment of the Performance Period, Performance Goals and Certification. A Participant’s Performance-Based Award will be determined based on the attainment of written Performance Goals approved by the Committee for a performance period established by the Committee. The Committee may prescribe a formula to determine the amount of the Performance-Based Award that may be payable based upon the level of attainment of the Performance Goals during the performance period. The Performance Goals will be based on criteria determined by the Committee from time to time, and as may be adjusted, modified or amended by the Committee (“Performance Criteria”). Any Performance Goals may be measured in absolute terms or relative to historic performance or the performance of other companies or an index. Following the completion of each performance period, the Committee will have the sole discretion to determine whether the applicable Performance Goals have been met with respect to a given Participant and, if they have, will determine the amount of the applicable Performance-Based Award. The amount of the Performance-Based Award determined by the Committee for a performance period will be paid to the Participant at such time as determined by the Committee in its sole discretion after the end of such performance period. 2.9 Repayment If Conditions Not Met If the Committee determines that all terms and conditions of the Plan and a Participant’s Award Agreement were not satisfied, and that the failure to satisfy such terms and conditions is material, then the Participant will be obligated to pay the Company immediately upon demand therefor, (a) with respect to a stock option and a stock appreciation right, an amount equal to the excess of the Fair Market Value (determined at the time of exercise) of the Shares that were delivered in respect of such exercised stock option or stock appreciation right, as applicable, over the exercise price paid therefor, (b) with respect to restricted Shares, an amount equal to the Fair Market Value (determined at the time such Shares became
Appendix B vested) of such restricted Shares and (c) with respect to restricted stock units, an amount equal to the Fair Market Value (determined at the time of delivery) of the Shares delivered with respect to the applicable delivery date, in each case with respect to clauses (a), (b) and (c) of this Section 2.9, without reduction for any amount applied to satisfy withholding tax or other obligations in respect of such Award. 2.10 Continuous Employment Requirement Unless otherwise provided herein, in an Award Agreement, in an employment agreement or in other arrangement of the Company or its Affiliates, in the event of Participant’s termination of Employment prior to the vesting of all of the Awards, any unvested Awards will terminate automatically without any further action by the Company and be forfeited without further notice and at no cost to the Company. ARTICLE III MISCELLANEOUS 3.1 Amendment of the Plan 3.1.1 Unless otherwise provided in the Plan or in an Award Agreement, the Board may at any time and from time to time suspend, discontinue, revise or amend the Plan in any respect whatsoever but, subject to Sections1.3, 1.6.3 and 3.7, no such amendment may materially adversely impair the rights of the Participant of any Award without the Participant’s consent. Subject to Sections1.3, 1.6.3 and 3.7, an Award Agreement may not be amended to materially adversely impair the rights of a Participant without the Participant’s consent. 3.1.2 Unless otherwise determined by the Board, stockholder approval of any suspension, discontinuance, revision or amendment will be obtained only to the extent necessary to comply with any applicable laws, regulations or rules of a securities exchange or self-regulatory agency; provided, however, if and to the extent the Board determines it is appropriate for the Plan to comply with the provisions of Section 422 of the Code, no amendment that would require stockholder approval under Section 422 of the Code will be effective without the approval of the Company’s stockholders. 3.2 Tax Withholding Participants will be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any Award. As a condition to the delivery of any Shares, cash or other securities or property pursuant to any Award or the lifting or lapse of restrictions on any Award, or in connection with any other event that gives rise to a federal or other governmental tax withholding obligation on the part of the Company relating to an Award (including, without limitation, the Federal Insurance Contributions Act (FICA) tax), (a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a Participant whether or not pursuant to the Plan (including Shares otherwise deliverable), (b) the Committee will be entitled to require that the Participant remit cash to the Company (through payroll deduction or otherwise), or (c) the Company may enter into any other suitable arrangements to withhold, in each case in the Company’s discretion the amounts of such taxes to be withheld based on the individual tax rates applicable to the Participant.
Appendix B 3.3 Required Consents and Legends 3.3.1 If the Committee at any time determines that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of Shares or the delivery of any cash, securities or other property under the Plan, or the taking of any other action thereunder (each such action a “Plan Action”), then, subject to Section 3.14 such Plan Action will not be taken, in whole or in part, unless and until such Consent will have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any Certificate evidencing Shares delivered pursuant to the Plan will bear a legend setting forth such restrictions on transferability as the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop transfer order against any legended Shares. 3.3.2 The term “Consent” as used in this Article III with respect to any Plan Action includes: (a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state, or local law, or law, rule or regulation of a jurisdiction outside the United States, (b) any and all written agreements and representations by the Participant with respect to the disposition of Shares, or with respect to any other matter, which the Committee may deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made, (c) any and all other consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory body or any stock exchange or self-regulatory agency, (d) any and all consents by the Participant to: (i) the Company’s supplying to any third party recordkeeper of the Plan such personal information as the Committee deems advisable to administer the Plan, (ii) the Company’s deducting amounts from the Participant’s wages, or another arrangement satisfactory to the Committee, to reimburse the Company for advances made on the Participant’s behalf to satisfy certain withholding and other tax obligations in connection with an Award and (iii) the Company’s imposing sales and transfer procedures and restrictions and hedging restrictions on Shares delivered under the Plan and (e) any and all consents or authorizations required to comply with, or required to be obtained under, applicable local law or otherwise required by the Committee. Nothing herein will require the Company to list, register or qualify the Shares on any securities exchange. 3.4 Right of Offset The Company will have the right to offset against its obligation to deliver Shares (or other property or cash) under the Plan or any Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, relocation reimbursement, sign-on bonus, loans, repayment obligations under any Awards, or amounts repayable to the Company pursuant to tax equalization, housing or other employee programs) that the Participant then owes to the Company and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an Award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Committee will have no right to offset against its obligation to deliver Shares (or other property or cash) under the Plan or any Award Agreement if such offset could subject the Participant to the additional tax imposed under Section 409A of the Code in respect of an outstanding Award.
Appendix B 3.5 Non-assignability; No Hedging Unless otherwise provided in an Award Agreement, no Award (or any rights and obligations thereunder) granted to any person under the Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged, in any manner (including through the use of any cash-settled instrument), whether voluntarily or involuntarily and whether by operation of law or otherwise, other than by will or by the laws of descent and distribution, and all such Awards (and any rights thereunder) will be exercisable during the life of the Participant only by the Participant or the Participant’s legal representative. Notwithstanding the foregoing, the Committee may permit, under such terms and conditions that it deems appropriate in its sole discretion, a Participant to transfer any Award to any person or entity that the Committee so determines. Any sale, exchange, transfer, assignment, pledge, hypothecation, or other disposition in violation of the provisions of this Section 3.5 will be null and void and any Award which is hedged in any manner will immediately be forfeited. All of the terms and conditions of the Plan and the Award Agreements will be binding upon any permitted successors and assigns. 3.6 Change in Control 3.6.1 Unless the Committee determines otherwise or as otherwise provided in the applicable Award Agreement or the Company’s Executive Severance Plan, or successor thereof, if a Participant’s Employment is terminated by the Company or any successor entity thereto without Cause on or within one (1) year after a Change in Control, (i) each Award granted to such Participant prior to such Change in Control will become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable, and (ii) any Shares deliverable pursuant to restricted stock units will be delivered promptly (but no later than 15 days) following such Participant’s termination of Employment. 3.6.2 Unless the Committee determines otherwise or as otherwise provided in the applicable Award Agreement or the Company’s Executive Severance Plan, or successor thereof, for any Participant who is an “Eligible Employee” under the Company’s Executive Severance Plan, if such Participant resigns his or her Employment for Good Reason, on or within one (1) year after a Change in Control, (i) each Award granted to such Participant prior to such Change in Control will become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable, and (ii) any Shares deliverable pursuant to restricted stock units will be delivered promptly (but no later than 15 days) following such Participant’s termination of Employment. 3.6.3 Notwithstanding the foregoing, in the event of a Change in Control, a Participant’s Award will be treated, to the extent determined by the Committee to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Committee in its sole discretion: (i) settle such Awards for an amount of cash or securities equal to their value, where in the case of stock options and stock appreciation rights, the value of such awards, if any, will be equal to their in-the-money spread value (if any), as determined in the sole discretion of the Committee; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of Employment within a specified period after a Change in Control) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate; (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Committee) after closing or (v) provide that for a period of at least 20 days prior to the Change in Control, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Change in Control will be exercisable as to all Shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. In the event that the consideration paid in the Change in Control includes contingent value rights, earnout or indemnity payments or similar payments,
Appendix B then the Committee will determine if Awards settled under clause (i) above are (a) valued at closing taking into account such contingent consideration (with the value determined by the Committee in its sole discretion) or (b) entitled to a share of such contingent consideration. For the avoidance of doubt, in the event of a Change in Control where all stock options and stock appreciation rights are settled for an amount (as determined in the sole discretion of the Committee) of cash or securities, the Committee may, in its sole discretion, terminate any stock option or stock appreciation right for which the exercise price is equal to or exceeds the per Share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor. Similar actions to those specified in this Section 3.6.2 may be taken in the event of a merger or other corporate reorganization that does not constitute a Change in Control. 3.7 No Continued Employment or Engagement; Right of Discharge Reserved Neither the adoption of the Plan nor the grant of any Award (or any provision in the Plan or Award Agreement) will confer upon any Participant any right to continued Employment, or other engagement, with the Company, nor will it interfere in any way with the right of the Company to terminate, or alter the terms and conditions of, such Employment or other engagement at any time. 3.8 Nature of Payments 3.8.1 Any and all grants of Awards and deliveries of Common Stock, cash, securities or other property under the Plan will be in consideration of services performed or to be performed for the Company by the Participant. Awards under the Plan may, in the discretion of the Committee, be made in substitution in whole or in part for cash or other compensation otherwise payable to a Participant. Only whole Shares will be delivered under the Plan. Awards will, to the extent reasonably practicable, be aggregated in order to eliminate any fractional Shares. Fractional Shares may, in the discretion of the Committee, be forfeited or be settled in cash or otherwise as the Committee may determine. 3.8.2 All such grants and deliveries of Shares, cash, securities or other property under the Plan will constitute a special discretionary incentive payment to the Participant, will not entitle the Participant to the grant of any future Awards and will not be required to be taken into account in computing the amount of salary or compensation of the Participant for the purpose of determining any contributions to or any benefits under any pension, retirement, profit-sharing, bonus, life insurance, severance or other benefit plan of the Company or under any agreement with the Participant, unless the Company specifically provides otherwise. 3.9 Non-Uniform Determinations 3.9.1 The Committee’s determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a Participant’s Employment has been terminated for purposes of the Plan. 3.9.2 To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practices and to further the purposes of the Plan, the Committee may, in its sole discretion and without amending the Plan, (a) establish special rules applicable to Awards to Participants who are foreign nationals, are employed outside the United States or both and grant Awards (or amend existing Awards) in accordance with those rules and (b) cause the Companyto enter into an agreement with any local Subsidiary pursuant to which such Subsidiary will reimburse the Company for the cost of such equity incentives.
Appendix B 3.10 Other Payments or Awards Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. 3.11 Plan Headings The headings in the Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof. 3.12 Termination of Plan The Board reserves the right to terminate the Plan at any time; provided, however, that in any case, the Plan will terminate on the day before the tenth anniversary of the Effective Date, and providedfurther,that all Awards made under the Plan before its termination will remain in effect until such Awards have been satisfied or terminated in accordance with the terms and provisions of the Plan and the applicable Award Agreements. 3.13 Clawback/Recapture Policy Awards under the Plan will be subject to any clawback or recapture policy that the Company may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that the Awards be repaid to the Company after they have been distributed to the Participant. 3.14 Section 409A 3.14.1 All Awards made under the Plan that are intended to be “deferred compensation” subject to Section 409A will be interpreted, administered and construed to comply with Section 409A, and all Awards made under the Plan that are intended to be exempt from Section 409A will be interpreted, administered and construed to comply with and preserve such exemption. The Board and the Committee will have full authority to give effect to the intent of the foregoing sentence. To the extent necessary to give effect to this intent, in the case of any conflict or potential inconsistency between the Plan and a provision of any Award or Award Agreement with respect to an Award, the Plan will govern. 3.14.2 Without limiting the generality of Section 3.14.1, with respect to any Award made under the Plan that is intended to be “deferred compensation” subject to Section 409A: (a) any payment due upon a Participant’s termination of Employment will be paid only upon such Participant’s separation from service from the Company within the meaning of Section 409A; (b) any payment due upon a Change in Control of the Company will be paid only if such Change in Control constitutes a “change in ownership” or “change in effective control” within the meaning of Section 409A, and in the event that such Change in Control does not constitute a “change in the ownership” or “change in the effective control” within the meaning of Section 409A, such Award will vest upon the Change in Control and any payment will be delayed until the first compliant date under Section 409A; (c) any payment to be made with respect to such Award in connection with the Participant’s separation from service from the Company within the meaning of Section 409A (and any other payment that would be subject to the limitations in Section 409A(a)(2)(B) of the Code) will be delayed until six months after the Participant’s separation from service (or earlier death) in accordance with the requirements of Section 409A;
Appendix B (d) to the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver in lieu of Shares in respect of an Award will not have the effect of deferring delivery or payment beyond the date on which such delivery or payment would occur with respect to the Shares that would otherwise have been deliverable (unless the Committee elects a later date for this purpose in accordance with the requirements of Section 409A); (e) with respect to any required Consent described in Section 3.3 or the applicable Award Agreement, if such Consent has not been effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay of payment is not permitted in accordance with the requirements of Section 409A, such Award or portion thereof, as applicable, will be forfeited and terminate notwithstanding any prior earning or vesting; (f) if the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Participant’s right to the series of installment payments will be treated as a right to a series of separate payments and not as a right to a single payment; (g) if the Award includes “dividend equivalents” (within the meaning of Section 1.409A-3(e) of the Treasury Regulations), the Participant’s right to the dividend equivalents will be treated separately from the right to other amounts under the Award; and (h) for purposes of determining whether the Participant has experienced a separation from service from the Company within the meaning of Section 409A, “subsidiary” will mean a corporation or other entity in a chain of corporations or other entities in which each corporation or other entity, starting with the Company, has a controlling interest in another corporation or other entity in the chain, ending with such corporation or other entity. For purposes of the preceding sentence, the term “controlling interest” has the same meaning as provided in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations, providedthat the language “at least 20 percent” is used instead of “at least 80 percent” each place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations. 3.15 Governing Law The laws of the Commonwealth of Virginia shall govern the interpretation, validity, administration, enforcement and performance of the terms of the Plan and all Awards regardless of the law that might be applied under principles of conflicts of laws. 3.16 Disputes; Choice of Forum 3.16.1 The Company and each Participant, as a condition to such Participant’s participation in the Plan, agree that any suit, action, or proceeding arising out of or relating to the Plan shall be brought to the exclusive jurisdiction of the Circuit Court of Arlington County (Virginia) or the United States District Court for the Eastern District of Virginia (Alexandria Division). The parties irrevocably waive, to the fullest extent permitted by law, any objection a party may have to the laying of venue for any such suit, action or proceeding brought in such court. If any one or more provisions of the Plan shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable. The Company and each Participant, as a condition to such Participant’s participation in the Plan, acknowledge that the forum designated by this Section 3.16.1 has a reasonable relation to the Plan and to the relationship between such Participant and the Company. Notwithstanding the foregoing, nothing herein will preclude the Company from bringing any action or proceeding in any other court for the purpose of enforcing the provisions of this Section 3.16.1. 3.16.2 The agreement by the Company and each Participant as to forum is independent of the law that may be applied in the action, and the Company and each Participant, as a condition to such Participant’s participation in the Plan, (i) agree to such forum even if the forum may under applicable law choose to apply non-forum law, (ii) hereby waive, to the fullest extent permitted by applicable law, any objection which the
Appendix B Company or such Participant now or hereafter may have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding in any court referred to in Section 3.16.1, (iii) undertake not to commence any action arising out of or relating to or concerning the Plan in any forum other than the forum described in this Section 3.16 and (iv) agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action or proceeding in any such court will be conclusive and binding upon the Company and each Participant. 3.16.3 Each Participant, as a condition to such Participant’s participation in the Plan, hereby irrevocably appoints the General Counsel of the Company as such Participant’s agent for service of process in connection with any action, suit or proceeding arising out of or relating to or concerning the Plan, who will promptly advise such Participant of any such service of process. 3.16.4 Each Participant, as a condition to such Participant’s participation in the Plan, agrees to keep confidential the existence of, and any information concerning, a dispute, controversy or claim described in Section 3.18, except that a Participant may disclose information concerning such dispute, controversy or claim to the court that is considering such dispute, controversy or claim or to such Participant’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute, controversy or claim). 3.17 Waiver of Jury Trial EACH PARTICIPANT WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THE PLAN. 3.18 Waiver of Claims Each Participant of an Award recognizes and agrees that before being selected by the Committee to receive an Award the Participant has no right to any benefits under the Plan. Accordingly, in consideration of the Participant’s receipt of any Award hereunder, the Participant expressly waives any right to contest the amount of any Award, the terms of any Award Agreement, any determination, action or omission hereunder or under any Award Agreement by the Committee, the Company or the Board, or any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award Agreement to which his or her consent is expressly required by the express terms of an Award Agreement). Nothing contained in the Plan, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974 (ERISA), as amended. 3.19 Shortened Statute of Limitations Each Participant agrees to shorten the applicable statute of limitations and agrees that no claims or causes of actions may be brought against the Company or any its Subsidiaries or Affiliates or any of their directors, officers, employees, controlling persons, agents or representatives based upon, directly or indirectly, any claim that arises under this Plan or any Award Agreement more than twelve (12) months after the date of the action that is the subject of the claim or lawsuit. Each Participant agrees to waive any statute of limitations to the contrary. 3.20 No Repricing or Reloads Except as otherwise permitted by Section 1.6.3, reducing the exercise price of stock options or stock appreciation rights issued and outstanding under the Plan, including through amendment, cancellation in exchange for the grant of a substitute Award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), will require approval ofthe Company’s stockholders. The Company will not grant any stock options or stock appreciation rights with automatic reload features.
Appendix B 3.21 Severability; Entire Agreement If any of the provisions of the Plan or any Award Agreement is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision will be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions will not be affected thereby; providedthat if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope determined to be acceptable to permit such provision to be enforceable, such provision will be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder. The Plan and any Award Agreements contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof. 3.22 No Liability with Respect to Tax Qualification or Adverse Tax Treatment Notwithstanding anything to the contrary contained herein, in no event will the Company be liable to a Participant on account of an Award’s failure to (a) qualify for favorable United States federal, state or local, or foreign, tax treatment or (b) avoid adverse tax treatment under United States or foreign law, including, without limitation, Section 409A. 3.23 No Third-Party Beneficiaries Except as expressly provided in an Award Agreement, neither the Plan nor any Award Agreement will confer on any person other than the Company and the Participant of any Award any rights or remedies thereunder. The exculpation and indemnification provisions of Section 1.3.4 will inure to the benefit of a Covered Person’s estate and beneficiaries and legatees. 3.24 Successors and Assigns of the Company The terms of the Plan will be binding upon and inure to the benefit of the Company and any successor entity, including as contemplated by Section 3.6. 3.25 Date of Adoption and Approval of Stockholders This Plan was originally adopted on November 23, 2022 (the “Original Adoption Date”). The Board approved an amendment and restatement of the original Plan on March 19, 2024, and the Company’s stockholders approved the amendment and restatement of the Plan effective as of May 15, 2024 (the “Effective Date”). 3.26 Limits on Compensation to Non-Employee Directors. No non-employee director of the Companymay be granted (in any calendar year) compensation with a value in excess of $500,000, with the value of any equity-based awards based on the accounting grant date value of such award.
Appendix C Non-GAAP Financial Measures We believe the non-GAAP financial measures presented in this document will help investors understand our financial condition and operating results and assess our future prospects. We believe these non-GAAP financial measures, each of which is discussed in greater detail below, are important supplemental measures because they exclude unusual or non-recurring items as well as non-cash items that are unrelated to or may not be indicative of our ongoing operating results. Further, when read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as a tool to help make financial, operational and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies in our industry by providing more comparable measures that are less affected by factors such as capital structure. We recognize that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes, thereby affecting their comparability from company to company. In order to compensate for these and the other limitations discussed below, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP. Readers should review the reconciliations below and should not rely on any single financial measure to evaluate our business.
We define adjusted EBITDA as our net earnings before income taxes, amortization of acquired intangible assets, depreciation, restructuring costs, interest, deal-related transaction costs, other non-operating expenses such as foreign exchange, non-service pension expenditures, legal liability accrual reversals, and other one-time non-operational events as well as gains (losses) on business disposals. Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by revenue.
Appendix C
We define adjusted net earnings as net earnings excluding deal-related transaction costs, amortization of acquired intangible assets, restructuring costs, other non-operating expenses such as foreign exchange, non-service pension expenditures, legal liability accrual reversals, and other one-time non-operational events offset by the tax effect of such adjustments, as well as gains (losses) on business disposals (net of tax).
We define free cash flow as the sum of the cash flows provided by (used in) operating activities, the cash flows provided by (used in) investing activities pertaining to capital expenditures, proceeds generated from the sale of capital assets and dividends received from investments, less transaction-related expenditures (net of tax) and tax payments on disposals.
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