Spirit AeroSystems shareholders to vote on exec pay at annual meeting
By Molly McMillin, The Wichita Eagle | |
McClatchy-Tribune Information Services |
Those who can't attend may vote by mail.
Shareholders will cast votes on a board of directors to lead the company, a 2014 omnibus incentive plan and whether to change the number of votes a stockholder has to one vote per share.
In addition, they will cast a non-binding vote on the approval of executive compensation.
The board recommends acceptance of the nominees for directors, the incentive plan and the executive compensation. It recommends rejection of the change in voting to one vote per share.
The vote for executive compensation will serve as an advisory, the company said. Spirit considers the outcome of the vote when the board makes compensation decisions, the company said in a filing with the
Pay for Spirit's top executives typically includes a base salary, as well as short- and long-term incentives, a discretionary award based on company performance and retirement and health care benefits.
When Spirit was formed in 2005 after
But it offered above-market median annual incentives as a way to give executives the opportunity to earn the market median.
That's changing.
"To enable the company to attract high caliber external candidates with specialized skills, the Compensation Committee has determined that executive officers' base salaries should be paid at market median," the filing said.
It remains committed to pay for performance to increase the alignment between the interests of the executives and the stockholders, it said.
Last year, Spirit's leadership team changed significantly with the retirement of Spirit CEO
In addition, several members of the leadership team changed roles and added responsibilities. Most received increases in their base salaries in 2013 to align with their new duties and to bring them up to the market.
However, Spirit fell short in 2013 of its financial and other targets that had been set as criteria for a short-term incentive plan payout.
That meant, except for Lawson and Kapoor, the executives' pay for performance in the short-term incentive plan was less than half of what it would have been had Spirit met the targets, the filing said.
Spirit's board is seeking to replace four incentive plans with a 2014 Omnibus Plan to be funded with 8.5 million shares of stock. That's roughly 500,000 shares of stock less than what had been allocated to the four plans.
It will retain a commitment to pay for performance to link it with its short- and long-term business goals, the filing said.
The purpose is to provide an equity incentive plan to attract and retain key employees, independent contractors, consultants and directors and give them a greater interest in and closer identity with Spirit's financial success, it said.
The 2014 Omnibus Plan authorizes Spirit to grant incentive stock options, restricted stock, stock appreciation rights, dividend equivalents and other stock-based or cash awards, the filing said.
Spirit will continue to reward executives for meeting short-term incentives, although new weightings in 2014 are based on company, program and individual performance, it said. It eliminated qualitative performance measures.
It eliminated the discretionary awards for 2014.
When Spirit hired Lawson to replace Turner as CEO in
His initial employment agreement runs through
"As our new CEO,
Lawson's compensation included a base salary of
Lawson's 2013 total compensation package including salary, stock and other compensation totaled
Turner, meanwhile, earned
Kapoor, Spirit's CFO who joined the company in September, earned
And
Except for Lawson and Kapoor, the executives earned less than half of their targeted incentives because Spirit did not meet the goals set for a full payout.
Spirit compared its pay packages to comparably sized U.S. companies in the aerospace, defense and auto component manufacturing industries, it said.
"Our success as a company depends largely on the contributions of our senior executives and their efforts to deliver strong business results and increase shareholder value," the company said in the
Shareholders will vote on a proposal brought by Spirit shareholder,
Chevedden wants to see that the company's outstanding stock has one vote per share in each voting situation.
Currently, Spirit has two classes of stock -- Class A common stock and Class B common stock.
Holders of Class A stock are entitled to one vote per share, while holders of Class B stock have 10 votes per share.
"
Without a voice, shareholders can't hold management accountable, it said.
Investment research firm GMI Ratings has rated Spirit a D when it comes to ownership and control, according to the proposal found in the
GMI said shareholders rights are limited by the dual-class structure.
"GMI negatively flagged a number of issues with our corporate governance," the proposal said. "In regard to our Board, GMI said there were issues such as too many executives also serving as directors, board attendance failure, related party transactions, directors with too many outside commitments and a lack of risk management expertise."
It noted Spirit's pre-tax charge of
"In regard to executive pay, there were golden hellos, a lack of a clawback policy to recoup unearned executive pay based on fraud or error and a lack of peer performance measures," it said.
GMI also said that Spirit's environmental impact disclosure practices were significantly worse than its peers in the sector.
"Spirit had not adopted alternative energy practices that would lower its future environmental impacts," the proposal said. "Spirit had not incorporated links to environmental or social performance in its incentive pay policies."
Spirit's board of directors recommends a vote against the proposal on the stockholder votes.
Shareholders also will vote on whether to reelect the 10 nominees for the board of directors. All are current members of the board.
The slate of nominees are current board members, and include
The board recommends approval of the nominees.
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