Aerojet Rocketdyne Holdings
AEROJET ROCKETDYNE HOLDINGS, INC. (Form: DEF 14A, Received: 03/29/2018 16:19:09)



 
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Filed by a Party other than the Registrant ¨

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¨ Preliminary Proxy Statement
¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to §240.14a-12
Aerojet Rocketdyne Holdings, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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222 N. Sepulveda Blvd., Suite 500
El Segundo, CA 90245
March 29, 2018
Dear Stockholder:
You are cordially invited to attend the 2018 Annual Meeting of Stockholders of Aerojet Rocketdyne Holdings, Inc., which will be held at 9:00 a.m. Pacific Time , on May 8, 2018 . Our 2018 Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the meeting on the Internet and submit your questions during the meeting by visiting ajrd.onlineshareholdermeeting.com. Details regarding how to attend the meeting online and the business to be presented at the meeting can be found in the accompanying Notice of Annual Meeting and Proxy Statement.
We have elected to take advantage of the Securities and Exchange Commission’s rule that allows us to furnish our proxy materials to our stockholders over the Internet. We believe electronic delivery will expedite the receipt of materials and, by printing and mailing a smaller volume, will reduce the environmental impact of our annual meeting materials and help lower our costs. On or about March 29, 2018, a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) will be mailed to our stockholders. This Notice will contain instructions on how to access the Notice of Annual Meeting, the Proxy Statement and the Company’s Annual Report for 2017 on Form 10-K (the “2017 Annual Report”) to Stockholders online. You will not receive a printed copy of these materials, unless you specifically request one. The Notice of Internet Availability contains instructions on how to receive a paper copy of the proxy materials. For those participants who hold shares of the Company’s common stock in the Aerojet Rocketdyne Retirement Savings Plan, you will receive a full set of annual meeting materials and a proxy card by mail.
On behalf of the Board of Directors and the management of Aerojet Rocketdyne Holdings, Inc., I extend our appreciation for your continued support.
Very truly yours,
/s/ Warren G. Lichtenstein
WARREN G. LICHTENSTEIN
Executive Chairman






 
 
 
 
  
222 N. Sepulveda Blvd., Suite 500                  
El Segundo, CA 90245
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME:    
 
9:00 a.m. Pacific Time on Tuesday, May 8, 2018
PLACE:
 
Online at ajrd.onlineshareholdermeeting.com
ITEMS OF BUSINESS:
  
1.   To elect eight directors to our Board of Directors to serve until the 2019 annual meeting of stockholders and until their respective successors have been duly elected and qualified;
 
 
 
 
2.   To consider and approve an advisory resolution approving executive compensation;
 
 
 
 
 
  
3.  To ratify the appointment of PricewaterhouseCoopers LLP, an independent registered public accounting firm, as independent auditors of the Company for the fiscal year ending December 31, 2018;
 
 
 
 
4.  To approve the 2018 Equity and Performance Incentive Plan; and
 
 
 
 
  
5.   To consider and act on such other business as may properly be brought before the meeting or any adjournments or postponements thereof.
 
 
RECORD DATE:
  
You are entitled to vote at the 2018 Annual Meeting if you were a stockholder of record at the close of business on March 12, 2018.
 
 
VIRTUAL ANNUAL MEETING ADMISSION:
  
Stockholders of record on the record date will be able to participate in the 2018 Annual Meeting of Stockholders via the Internet by visiting ajrd.onlineshareholdermeeting.com. To participate in the meeting, you will need the control number included on your Notice of Internet Availability, on your proxy card, or on the instructions that accompanied your proxy materials.
 
 
PROXY VOTING:
  
It is important that your shares be represented and voted at the meeting. You may vote your shares by voting electronically at the meeting by visiting ajrd.onlineshareholdermeeting.com and following the instructions, by Internet, by telephone or by completing, signing, dating and returning a proxy card which will be mailed to you if you request delivery of a full set of proxy materials. Participants in the Aerojet Rocketdyne Retirement Savings Plan must follow the voting instructions provided by Fidelity Management Trust Company. See details under the heading “How do I vote?”
 
 
INSPECTION OF LIST OF
STOCKHOLDERS OF RECORD:
  
A list of the stockholders of record as of the record date will be available for inspection electronically during the virtual Annual Meeting.
 
 
 
By Order of the Board of Directors,
/s/ Arjun L. Kampani
ARJUN L. KAMPANI
Vice President,
General Counsel and Secretary





TABLE OF CONTENTS
 
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222 N. Sepulveda Blvd., Suite 500
El Segundo, CA 90245
PROXY STATEMENT
FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 8, 2018
GENERAL INFORMATION
The Board of Directors (the “Board”) of Aerojet Rocketdyne Holdings, Inc., a Delaware corporation (“Aerojet Rocketdyne” or the “Company”) solicits the enclosed proxy for use at the Company’s 2018 annual meeting of stockholders (the “Annual Meeting”) to be held on May 8, 2018 at 9:00 a.m. Pacific Time . As in previous years, our 2018 Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You can attend the Annual Meeting online, vote your shares electronically and submit questions during the meeting by visiting ajrd.onlineshareholdermeeting.com.
FREQUENTLY ASKED QUESTIONS
WHY DID I RECEIVE THIS PROXY STATEMENT?
The Board is soliciting your proxy to vote at the Annual Meeting because you were a stockholder of the Company’s common stock, par value $0.10 per share (“Common Stock”), at the close of business (5:00 p.m. Eastern time) on March 12, 2018 (the “Record Date”), and therefore you are entitled to vote at the Annual Meeting. This Proxy Statement contains information about the matters to be voted on at the meeting and the voting process, as well as information about the Company’s directors (“Directors”) and executive officers.
We are providing you with a Notice of Internet Availability and access to these proxy materials in connection with the solicitation by the Board to be used at the Annual Meeting and at any adjournment or postponement thereof. The Notice of Internet Availability will be sent to stockholders of record and beneficial stockholders as of the Record Date starting on or around March 29, 2018. The Proxy materials, including the Notice of Annual Meeting, this Proxy Statement, and the 2017 Annual Report, will be made available to stockholders on the Internet on March 29, 2018. For those participants who hold shares of Common Stock in the Aerojet Rocketdyne Retirement Savings Plan, you will receive a full set of annual meeting materials and a proxy card for those shares.
WHY DID I RECEIVE A NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS THIS YEAR INSTEAD OF A FULL SET OF PROXY MATERIALS?
As in previous years, pursuant to the rules of the Securities and Exchange Commission (the “SEC”), we are providing access to the Company’s proxy materials over the Internet rather than printing and mailing them to all stockholders. We believe electronic delivery will expedite the receipt of these materials, reduce the environmental impact of our annual meeting materials and will help lower our costs. Therefore, the Notice of Internet Availability will be mailed to stockholders (or e-mailed, in the case of stockholders that have previously requested to receive proxy materials electronically) starting on or around March 29, 2018. The Notice of Internet Availability will provide instructions as to how stockholders may access and review the proxy materials on the website referred to in the Notice of Internet Availability or, alternatively, how to request that a copy of the proxy materials, including a proxy card, be sent to them by mail. The Notice of Internet Availability will also provide voting instructions. In addition, stockholders may request to receive the proxy materials in printed form by mail or electronically by e-mail on an ongoing basis for future stockholder meetings. Please note that, while our proxy materials are available at www.proxyvote.com referenced in the Notice of Internet Availability, no other information contained on the website is incorporated by reference in or considered to be a part of this Proxy Statement.

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WHY DID I RECEIVE MORE THAN ONE NOTICE OF INTERNET AVAILABILITY?
You may receive multiple Notices of Internet Availability if you hold your shares of Common Stock in multiple accounts (such as through a brokerage account). If you hold your shares of Common Stock in multiple accounts you should vote your shares as described in each separate Notice of Internet Availability you receive.
IF AEROJET ROCKETDYNE IS UTILIZING NOTICE OF INTERNET AVAILABILILTY, WHY DID I RECEIVE A FULL SET OF ANNUAL MEETING MATERIALS AND A PROXY CARD?
For those participants who hold shares of Common Stock in the Aerojet Rocketdyne Retirement Savings Plan, you will receive a full set of annual meeting materials and a proxy card for those shares because Fidelity Management Trust Company (the “Trustee”) is not utilizing a Notice of Internet Availability for the Aerojet Rocketdyne Retirement Savings Plan participants.
WHAT AM I VOTING ON?
You are voting on the following items of business at the Annual Meeting:
To elect eight directors to our Board to serve until the 2019 annual meeting of stockholders and until their respective successors have been duly elected and qualified (the Board’s nominees are: Thomas A. Corcoran; Eileen P. Drake; James R. Henderson; Warren G. Lichtenstein; Lance W. Lord; Merrill A. McPeak; James H. Perry; and Martin Turchin) (“Proposal 1”);
To consider and approve an advisory resolution approving executive compensation (“Proposal 2”);
To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”), an independent registered public accounting firm, as independent auditors of the Company for the fiscal year ending December 31, 2018 (“Proposal 3”);
The approval of the 2018 Equity and Performance Incentive Plan (“Proposal 4”); and
Any other matter that may properly be brought before the Annual Meeting.
WHO IS ENTITLED TO VOTE?
Stockholders of record as of the Record Date are entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote.
WHAT ARE THE VOTING RECOMMENDATIONS OF THE BOARD?
The Board recommends that you vote your shares “FOR” each of the Board’s eight nominees standing for election to the Board; “FOR” the advisory resolution to approve executive compensation; “FOR” the ratification of PwC as independent auditors of the Company, and “FOR” the approval of the 2018 Equity and Performance Incentive Plan.
HOW DO I VOTE?
This year’s Annual Meeting will be held entirely online to allow greater participation. Stockholders may participate in the Annual Meeting by visiting ajrd.onlineshareholdermeeting.com on the Internet.
To participate in the Annual Meeting you will need the control number included on your Notice of Internet Availability, on your proxy card, or on the instructions that accompanied your proxy materials. Even if you plan to participate in the Annual Meeting online, we urge you to vote as soon as possible by one of the following methods to make sure your shares are represented if you later decide not to participate in the virtual Annual Meeting online.
SHARES HELD IN THE AEROJET ROCKETDYNE RETIREMENT SAVINGS PLAN
Please follow the voting instructions provided by Fidelity Management Trust Company, the Trustee. You may sign, date and return a voting instruction card to the Trustee or submit voting instructions by telephone or the Internet. If you provide voting instructions by mail, telephone, or the Internet, the Trustee will vote your shares as you have directed (or not vote your shares, if that is your direction). If you do not provide voting instructions, the Trustee will vote your

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shares in the same proportion as shares for which the Trustee has received voting instructions. You must submit voting instructions to the Trustee by no later than May 3, 2018 at 11:59 p.m. Eastern time in order for your shares to be voted as you have directed by the Trustee at the Annual Meeting. Aerojet Rocketdyne Retirement Savings Plan participants may not vote their Plan shares in person at the Annual Meeting.
SHARES HELD BY YOU, YOUR BROKER, BANK OR OTHER HOLDER OF RECORD
You may vote in several different ways:
By Internet during the Annual Meeting: You may vote electronically during the Annual Meeting on Tuesday, May 8, 2018 at 9:00 a.m. Pacific Time via the Internet at ajrd.onlineshareholdermeeting.com using the control number we have provided to you. You may also be represented by another person at the meeting by executing a proxy properly designating that person. If you are the beneficial owner of shares held in “street name,” and wish to vote electronically during the Annual Meeting, you must obtain a legal proxy from your broker, bank or other holder of record.
By Telephone: You may vote by calling the toll-free telephone number indicated on your proxy card. Easy-to-follow voice prompts allow you to vote your shares and confirm that your voting instructions have been properly recorded.
By Internet before the meeting date: You may vote by going to the Internet website indicated on your proxy card. Confirmation that your voting instructions have been properly recorded will be provided.
By Mail: You may vote by completing, signing, dating and returning a proxy card which will be mailed to you if you request delivery of a full set of proxy materials. A postage-paid envelope will be provided along with the proxy card.
Telephone and Internet voting before the meeting date for stockholders of record will be available until 11:59 p.m. Eastern time on May 7, 2018. A mailed proxy card must be received by May 7, 2018 in order to be voted at the Annual Meeting. The availability of telephone and Internet voting for beneficial owners of other shares held in “street name” will depend on your broker, bank or other holder of record and we recommend that you follow the voting instructions on the Notice of Internet Availability that you receive from them.
If you are mailed a set of proxy materials and a proxy card or voting instruction card and you choose to vote by telephone or by Internet, you do not have to return your proxy card or voting instruction card. However, even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the meeting.
IS MY VOTE CONFIDENTIAL?
Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed, either within the Company or to third parties, except: (1) as necessary to meet applicable legal requirements; (2) to allow for the tabulation of votes and certification of the vote; and (3) to facilitate a successful proxy solicitation. Occasionally, stockholders provide written comments on their proxy card, which are then forwarded to management.
MAY I ATTEND THE MEETING?
All stockholders and properly appointed proxy holders may attend the Annual Meeting over the Internet at ajrd.onlineshareholdermeeting.com. Stockholders who plan to attend must have access to the control number we have provided to you to join the virtual Annual Meeting. Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at ajrd.onlineshareholdermeeting.com. Stockholders of record will be verified against an official list available electronically at the Annual Meeting. The Company reserves the right to deny admittance to anyone who cannot adequately show proof of share ownership as of the Record Date.

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WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
If your shares are registered directly in your name with Aerojet Rocketdyne’s transfer agent, Computershare, Inc., you are considered a “stockholder of record” or a “registered stockholder” of those shares. In this case, your Notice of Internet Availability has been sent to you directly by Broadridge Financial Solutions, Inc. If your shares are held in a stock brokerage account or by a bank, trust or other nominee or custodian, including shares you may own as a participant in the Aerojet Rocketdyne Retirement Savings Plan, you are considered the “beneficial owner” of those shares, which are held in “street name.” A Notice of Internet Availability has been forwarded to you by or on behalf of your broker, bank, trustee or other holder who is considered the stockholder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank, trustee or other holder of record as to how to vote your shares by following their instructions for voting.
WHAT ARE BROKER NON-VOTES AND HOW ARE THEY COUNTED?
Broker non-votes occur when nominees, such as brokers and banks holding shares on behalf of the beneficial owners, are prohibited from exercising discretionary voting authority for beneficial owners who have not provided voting instructions at least ten days before the Annual Meeting. If no instructions are given within that time frame, the nominees may vote those shares on matters deemed “routine” by the New York Stock Exchange (“NYSE”). Proposals 1, 2 and 4 are non-routine matters and, nominees cannot vote without instructions from the beneficial owner, resulting in so-called “broker non-votes.” Broker non-votes are not counted for the purposes of determining the number of shares present in person or represented by proxy on a voting matter. For these reasons, please promptly vote by telephone, or Internet, or sign, date and return the voting instruction card your broker or nominee has enclosed, in accordance with the instructions on the card.
MAY I CHANGE MY VOTE?
If you are a stockholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting by:
Returning a signed proxy card bearing a later date;
Sending written notice of revocation to the Company, c/o the Secretary;
Submitting a new, proper proxy by telephone, Internet or paper ballot, after the date of the earlier voted proxy; or
Attending the Annual Meeting via the Internet at ajrd.onlineshareholdermeeting.com and voting using the control number we have provided to you.
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other nominee. You may also vote at the Annual Meeting via the Internet at ajrd.onlineshareholdermeeting.com if you obtain a legal proxy as described above.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
Directors are elected by a plurality of the votes cast at the Annual Meeting. Votes cast for a nominee will be counted in favor of election. Abstentions and broker non-votes will not count either in favor of, or against, the election of a nominee. Proxies cannot be voted for a greater number of persons than the number of Directors set by the Board for election.
Proposals 2 through 4 will require the affirmative vote of the holders of at least a majority of the shares present in person or represented by proxy and entitled to vote. Broker non-votes will have no effect on the outcome of the vote on Proposals 2 through 4. Abstentions will have the same effect as a vote against Proposals 2 through 4.
DO STOCKHOLDERS HAVE CUMULATIVE VOTING RIGHTS WITH RESPECT TO THE ELECTION OF DIRECTORS?
No. Stockholders do not have cumulative voting rights with respect to the election of Directors.

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WHAT CONSTITUTES A QUORUM?
As of the Record Date, 75,558,306 shares of Common Stock were outstanding. A majority of the outstanding shares entitled to vote at the Annual Meeting, represented in person or by proxy, will constitute a quorum. Shares represented by a proxy that directs that the shares abstain from voting or that a vote be withheld on a matter and broker “non-votes” will be included at the Annual Meeting for quorum purposes. Shares represented by proxy as to which no voting instructions are given as to matters to be voted upon will be included at the Annual Meeting for quorum purposes.
WHAT IS THE COMPANY’S INTERNET ADDRESS?
The Company’s Internet address is www.AerojetRocketdyne.com. You can access this Proxy Statement and 2017 Annual Report at this Internet address. The Company’s filings with the SEC are available free of charge via a link from this address. Copies are also available in print to any stockholder or other interested person who sends a written request to Secretary, Aerojet Rocketdyne Holdings, Inc., 222 N. Sepulveda Blvd., Suite 500, El Segundo, California 90245.
WILL ANY OTHER MATTERS BE VOTED ON?
As of the date of this Proxy Statement, our management knows of no other matter that will be presented for consideration at the Annual Meeting other than those matters discussed in this Proxy Statement. If any other matters properly come before the Annual Meeting and call for a vote of the stockholders, validly executed proxies in the enclosed form will be voted in accordance with the recommendation of the Board.
WHO IS SOLICITING PROXIES UNDER THIS PROXY STATEMENT?
The proxies being solicited hereby are being solicited by our Board. The cost of soliciting proxies in the enclosed form will be borne by the Company. Officers and regular employees of the Company may, but without receiving additional compensation other than their regular compensation, solicit proxies by further mailing, personal conversations, by telephone, facsimile, or electronic means. The Company will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of the stock. The Company has retained Okapi Partners, an independent proxy solicitation firm, to assist in soliciting proxies on its behalf.  The Company has agreed to pay Okapi Partners a fee of $10,000, plus costs and expenses, for these services.  If stockholders need assistance with casting or changing their vote, they should contact our proxy solicitor, Okapi Partners, toll-free at 1-877-566-1922.
ARE THERE DISSENTER’S OR APPRAISAL RIGHTS?
The Company’s stockholders are not entitled to dissenter’s or appraisal rights under Delaware law in connection with any of the items of business currently contemplated to be voted upon at the Annual Meeting.

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PROPOSAL 1
ELECTION OF DIRECTORS


The Company’s Second Amended and Restated Bylaws (the “Bylaws”) provide that the entire Board shall consist of one or more Directors, the total number thereof to be authorized first by the incorporator of the Company, and thereafter authorized by resolution of the Board by the affirmative vote of a majority of the Directors then in office. The Board has fixed the number of Directors to serve on the Board at eight.
The Board has proposed the following nominees for election as Directors at the Annual Meeting: Thomas A. Corcoran; Eileen P. Drake; James R. Henderson; Warren G. Lichtenstein; Lance W. Lord; Merrill A. McPeak; James H. Perry; and Martin Turchin. Each nominee elected as a Director will continue in office until the next annual meeting of stockholders at which their successor has been elected and qualified, or until his/her resignation, removal from office, or death, whichever is earlier.
Each nominee receiving a plurality of the affirmative votes cast at the Annual Meeting will be elected to the Board. Abstentions and broker non-votes will not count either in favor of, or against, the election of a nominee.
The Board recommends a vote FOR the election of these nominees as Directors.
Director Qualifications and Experience
The Board, acting through the Corporate Governance & Nominating Committee, seeks a Board that, as a whole, possesses the experience, skills, background and qualifications appropriate to function effectively in light of the Company’s current and evolving business circumstances. The Corporate Governance & Nominating Committee reviews the size of the Board, the tenure of its Directors and their skills, backgrounds and experiences in determining the slate of nominees and whether to seek one or more new candidates. The Corporate Governance & Nominating Committee seeks directors with established records of significant accomplishments in business and areas relevant to the Company’s strategies. With respect to the nomination of continuing Directors for re-election, the individual’s contributions to the Board are also considered.
All of our Directors bring to our Board a wealth of executive leadership experience derived from their service as executives and, in some cases, chief executive officers of large corporations. They also bring extensive board experience. The process undertaken by the Corporate Governance & Nominating Committee in recommending qualified director candidates is described in the Director Nominations section on page 14.
Set forth below are the names and ages of the nominees for Directors and their principal occupations at present and for the past five years, as well as their particular experience, qualifications, attributes or skills that led the Board to conclude that the person should serve as a Director for the Company. There are, to the knowledge of the Company, no agreements or understandings by which these individuals were so selected. No family relationships exist between any Directors or executive officers, as such term is defined in Item 402 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The information concerning the nominees set forth below is given as of December 31, 2017.
THOMAS A. CORCORAN
Director since 2008
Age 73
Mr. Corcoran has been President of Corcoran Enterprises, LLC, a management consulting company, since 2001. Previously, Mr. Corcoran was also the President and Chief Executive Officer (“CEO”) of Gemini Air Cargo, Inc., a cargo airline owned by The Carlyle Group, from 2001 to 2004. Subsequently, he had been a Senior Advisor of the Carlyle Group. Prior to that, Mr. Corcoran was President and CEO of Allegheny Teledyne Incorporated, a diversified business from 1999 through 2000. Prior to that, Mr. Corcoran was President and Chief Operating Officer (“COO”) of Lockheed Martin’s Electronics and Space Sectors from 1993 to 1999. Mr. Corcoran began his career in 1967 at General Electric Company in various positions. In 1990, Mr. Corcoran was elected a corporate officer and rose to the number two position in G.E. Aerospace as Vice President (“VP”) and General Manager of G.E. Aerospace Operations.

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Mr. Corcoran is a director with L3 Technologies, Inc. (Audit Committee member). Mr. Corcoran was a director with Force Protection, Inc., REMEC, Inc., United Industrial Corporation, ONPATH Technologies, Inc. (Chairman), LaBarge, Inc. (Audit Committee member), StandardAero (Audit Committee Chairman), ARINC, Inc. (Audit Committee member), Aer Lingus, Ltd. based in Dublin, Ireland and Serco, Ltd. based in Surry, UK. Mr. Corcoran serves as a director of American Ireland Fund, is on the board of trustees of Stevens Institute of Technology and is a trustee emeritus at Worcester Polytechnic Institute. Mr. Corcoran brings to the Board considerable industry knowledge gained from extensive experience as a senior executive in the aerospace industry. Mr. Corcoran also brings to the Board significant public company board experience, including service as a director of a Fortune 500 company. Mr. Corcoran currently serves as a member of the Organization & Compensation Committee and as a member of the Corporate Governance & Nominating Committee.
EILEEN P. DRAKE
Director since 2015
Age 51
Ms. Drake has served as CEO and President of the Company since June 2015. She served as COO of the Company from March 2015 to June 2015. Ms. Drake has served as a director of Woodward, Inc., a designer, manufacturer, and service provider of control system solutions and components for the aerospace and industrial markets, since February 2017. Ms. Drake was previously with United Technologies Corporation (“UTC”) where she served as President of Pratt & Whitney AeroPower’s auxiliary power unit and small turbojet propulsion business. She also served as VP of Operations and VP of Quality, Environmental, Health & Safety, and Achieving Competitive Excellence for UTC’s Carrier Corporation, as well as for Pratt & Whitney. Prior to joining UTC, Ms. Drake managed production operations at both the Ford Motor Company and Visteon Corporation where she was Ford’s product line manager for steering systems and plant manager of Visteon’s fuel system operation. During her military career, Ms. Drake served on active duty for seven years as a U.S. Army aviator and airfield commander of Davison Army Airfield in Fort Belvoir, Virginia. She is a distinguished military graduate of the U.S. Army Aviation Officer School. She received a Master of Business Administration from Butler University and a Bachelor of Arts from The College of New Rochelle. She also holds commercial and private pilot’s licenses in both fixed-wing and rotary-wing aircraft. Ms. Drake’s extensive experience provides the Board with significant operational expertise and an in-depth knowledge of the aerospace and defense industry.
JAMES R. HENDERSON
Director since 2008
Age 60
Mr. Henderson has been CEO of ModusLink Corporation since March 2016 and CEO of Steel Connect, Inc. (formerly known as ModusLink Global Solutions, Inc.) since June 2016, a corporation that executes comprehensive supply chain and logistics services. Mr. Henderson was a Managing Director and operating partner of Steel Partners LLC, a subsidiary of Steel Partners Holdings L.P. (“SPLP”), a global diversified holding company that owns and operates businesses and has significant interests in leading companies in a variety of industries, including diversified industrial products, energy, defense, banking, insurance, and food products and services, until April 2011. He was associated with Steel Partners LLC and its affiliates from August 1999 until April 2011. Mr. Henderson served as a director of DGT Holdings Corp., a manufacturer of proprietary high-voltage power conversion subsystems and components, from November 2003 until December 2011. Mr. Henderson served on the Board of Aviat Network from January 2015 to November 2016. Mr. Henderson also served as a director of SL Industries, Inc. (“SLI”), a company that designs, manufactures and markets power electronics, motion control, power protection, power quality electromagnetic and specialized communication equipment, from January 2002 to March 2010. Mr. Henderson was an Executive VP of SP Acquisition Holdings, Inc., a company formed for the purpose of acquiring one or more businesses or assets, from February 2007 until October 2009. He was a director of Angelica Corporation, a provider of healthcare linen management services, from August 2006 to August 2008. Mr. Henderson was a director and CEO of the predecessor entity of SPLP, WebFinancial Corporation (“WebFinancial”), from June 2005 to April 2008, President and COO from November 2003 to April 2008, and was the VP of Operations from September 2000 to December 2003. He was also the CEO of WebBank, a wholly-owned subsidiary of SPLP, from November 2004 to May 2005. He was a director of ECC International Corp., a manufacturer and marketer of computer controlled simulators for training

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personnel to perform maintenance and operation procedures on military weapons, from December 1999 to September 2003 and was acting CEO from July 2002 to March 2003. He served as the Chairman of the Board of Point Blank Solutions, Inc. (“Point Blank”), a designer and manufacturer of protective body armor, from August 2008 until October 2011, CEO from June 2009 until October 2011, and was Acting CEO from April 2009 to May 2009. Mr. Henderson was also the CEO and Chairman of the Board of certain subsidiaries of Point Blank. On April 14, 2010, Point Blank and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Chapter 11 petitions are being jointly administered under the caption “In re Point Blank Solutions, Inc., et. al.” Case No. 10-11255, which case is ongoing. He served as the CEO of Point Blank Enterprises, Inc., the successor to the business of Point Blank, from October 2011 to September 2012. Mr. Henderson serves as a Manager of the Board of Managers of Easton Development Company, LLC, a subsidiary of Aerojet Rocketdyne. He served as Acting CEO of School Specialty, Inc., a company that provides education-related products, programs and services from July 2013 to April 2014, and has served as director since June 2013. Mr. Henderson served as a director of RELM Wireless Corporation from March 2014 to September 2015. Mr. Henderson has served on the Board of Armor Express since September 2015. Mr. Henderson’s substantial experience advising and managing public companies provides the Board with well-developed leadership skills and ability to promote the best interests of stockholders. Mr. Henderson currently serves as the Chairman of the Corporate Governance & Nominating Committee and as a member of the Audit Committee.
WARREN G. LICHTENSTEIN
Director since 2008
Age 52

Mr. Lichtenstein has served as our Executive Chairman since June 2016. He served as the Chairman of the Board from March 2013 through June 2016. Mr. Lichtenstein served as the Chairman and CEO of Steel Partners Holdings GP Inc., the general partner of SPLP, from July 15, 2009 until February 26, 2013, at which time he became the Executive Chairman. Mr. Lichtenstein has served on the board of directors of over twenty public companies. Mr. Lichtenstein served as Chairman of the Board of Handy & Harman Ltd. (now a subsidiary of SPLP) since July 2005. Mr. Lichtenstein served as a director of SLI from March 2010 to June 2016 (when SLI was acquired by SPLP). Mr. Lichtenstein has served as a director of Steel Excel Inc. (now a subsidiary of SPLP) since October 2010 and Chairman since May 2011. Mr. Lichtenstein has been associated with SPLP and its predecessors and affiliates since 1990. Mr. Lichtenstein served as Chairman of the Board of Steel Connect, Inc. (formerly known as ModusLink Global Solutions, Inc.), a NASDAQ company providing customized supply chain management services to the world’s leading high technology companies from March 2013 until June 2016, at which time he was appointed Executive Chairman. Mr. Lichtenstein also served as interim CEO of Steel Connect, Inc. from March 2016 to June 2016. Mr. Lichtenstein is qualified to serve as a director due to his expertise in corporate finance, record of success in managing private investment funds and his service as a director of, and advisor to, a diverse group of public companies.
GENERAL LANCE W. LORD
USAF (Ret.)
Director since 2015
Age 71
Gen. Lord retired in April 2006 after 37 years of military service. He last served as Commander, Air Force Space Command (from 2002 to 2006) during which he was responsible for the development, acquisition and operation of Air Force space and missile weapon systems. He led more than 39,700 personnel who provided space and intercontinental ballistic missile combat capabilities to North American Aerospace Defense Command and U.S. Strategic Command. Gen. Lord currently serves as a member of the Board of the Sletten Construction Company, Marotta Controls Corporation, Frequency Electronics Corporation, Boneal Company and Measured Risk, LLC. Gen. Lord is the Executive Chairman and founder of L2 Aerospace, LLC (since 2010). He is the 2014 recipient of the American Astronautical Society Military Astronautics Award. He is a Senior Associate of HF GlobalNET, LLC (since 2014). He is a Senior Associate of the Four Star Group (since 2008); a member of the Iridium Corporation’s Government Advisory Board; an emeritus member of the Board of Advisors for the Challenger Learning Center in Colorado Springs, Colorado; chairman of the Board of Advisors to USO Colorado Springs; a Falcon Foundation Trustee; and President

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of the Association of Air Force Missileers and Executive Board member of Von’s Vision, Denver, Colorado. Gen. Lord currently serves as a member of the Audit Committee and as a member of the Organization & Compensation Committee.
GENERAL MERRILL A. McPEAK
USAF (Ret.)
Director since 2013
Age 81
Gen. McPeak (USAF, retired) was Chief of Staff of the U.S. Air Force and a member of the Joint Chiefs of Staff from October 1990 until October 1994. During this period, he was the senior officer responsible for organization, training and equipage of a combined active duty, National Guard, Reserve and civilian work force of over 850,000 people serving at 1,300 locations in the United States and abroad. As a member of the Joint Chiefs of Staff, he and the other service chiefs were military advisors to the Secretary of Defense, the National Security Council and the President of the United States. Following retirement from active service, Gen. McPeak began a second career in business. Since 1995, Gen. McPeak has been President of McPeak and Associates, a management consulting firm that is active as an investor, advisor and director of early development stage companies. A subsidiary, Lost Wingman Press, recently published Hangar Flying, Below the Zone and Roles and Missions; a three volume memoir. Gen. McPeak has long service as a director of public companies, including Tektronix, Inc. and Trans World Airlines, Inc. He was for several years Chairman of ECC International Corp. His current public company directorships include Lilis Energy, Inc. (since 2015) (and member of the Audit Committee); Iovance Biotherapeutics, Inc. (and member of the Audit Committee) (f/k/a Genesis Biopharma) (since 2011, and for which he was acting CEO from January to July 2013) focused on immunology for treatment of Stage IV metastatic melanoma; Research Solutions, Inc. (and member of the Audit Committee) (f/k/a Derycz Scientific) (since 2010), publishing and distributing scientific journal articles. He previously served as a director of DGT Holdings Corp. (since 2005) (and member of the Audit Committee), a real estate business, Miller Energy Resources (Lead Outside Director 2010—2014); Mosquito Consolidated Gold (Chairman, 2011—2012); Point Blank Solutions, Inc. (2008—2011); MathStar, Inc. (2005—2010); QPC Lasers (Vice Chairman, 2006—2009); and Gigabeam Corp. (2004—2009). From 2003 to 2012, Gen. McPeak was Chairman of Ethicspoint, Inc., a Portland, Oregon-based startup that became a leading provider of risk management and compliance software-as-a-service. In February 2012, Ethicspoint was bought by a private equity firm, merged with other companies and rebranded as NAVEX Global. Gen. McPeak remained a board member of NAVEX Global, which was sold again in 2014 for a price that established it as the most successful business startup in recent Oregon history. From 2012 to 2014, he was Chairman of Coast Plating, Inc., a Los Angeles-based, privately held provider of metal processing and finishing services, primarily to the aerospace industry. Coast Plating was acquired by Private Equity, renamed Valence Surface Technologies, and is now the largest privately held firm of its kind in the country. Gen. McPeak remains a director. Gen. McPeak received a Bachelor of Arts degree in economics from San Diego State College and a Master of Science degree in international relations from George Washington University. In 1992, San Diego State University honored Gen. McPeak with its first ever Lifetime Achievement Award. In 1995, George Washington University gave him its Distinguished Alumni Award, the “George.” He was among the initial seven inductees to the Oregon Aviation Hall of Honor. He is a member of the Council on Foreign Relations, New York City. In 2008 and 2009, Gen. McPeak was a national co-chairman of Obama for President. From 2010 to 2017, he was Chairman of the American Battle Monuments Commission, the federal agency that oversees care and maintenance of 24 cemeteries abroad that constitute the final resting place for almost 125,000 American war dead. Gen. McPeak brings to the Board extensive experience in management consulting and a successful military career, including his position as Chief of Staff of the U.S. Air Force and a member of the Joint Chiefs of Staff. Gen. McPeak currently serves as Chairman of the Organization & Compensation Committee and as a member of the Corporate Governance & Nominating Committee.
JAMES H. PERRY
Director since 2008
Age 56
Mr. Perry, until his retirement in 2008, served as VP of United Industrial Corporation, which, through its wholly-owned subsidiary AAI Corporation, designs, produces and supports aerospace and defense systems, from 1998 to 2007, as Chief Financial Officer (“CFO”) from 1995 to 2007, as Treasurer from 1994 to 2005, and as Controller from 2005 to 2007. Mr. Perry served as CFO of AAI Corporation from 2000 to 2007, as Treasurer from 2000 to 2005, and

9



as VP from 1997 to 2007. Mr. Perry, a certified public accountant, held various positions in the Assurance practice of Ernst & Young LLP, a global leader in assurance, tax, transaction and advisory services, from 1987 to 1994. Mr. Perry’s qualifications which encompass his executive leadership skills in the aerospace and defense industry and experience as a certified public accountant including his tenure with a major accounting firm servicing numerous publicly traded companies provides the Board with sophisticated financial expertise and oversight. Mr. Perry currently serves as Chairman of the Audit Committee and as a member of the Organization & Compensation Committee.
MARTIN TURCHIN
Director since 2008
Age 76
Mr. Turchin is a non-executive Vice Chairman of CB Richard Ellis, the world’s largest real estate services company, a position he has held since 2003. Previously, Mr. Turchin served as a Vice Chairman of a subsidiary of Insignia Financial Group, a real estate brokerage, consulting and management firm from 1996 to 2003. Prior to that, Mr. Turchin was a principal and Vice Chairman of Edward S. Gordon Company, a real estate brokerage, consulting and management firm from 1985 to 1996. Mr. Turchin has been a director of Boston Properties, Inc., (Audit Committee member since 2016), a real estate investment trust, for more than ten years. Mr. Turchin held various positions with Kenneth E. Laub & Company, Inc., a real estate company, where he was involved in real estate acquisition, financing, leasing and consulting from 1971 to 1985. Mr. Turchin also serves as a trustee for the Turchin Family Charitable Foundation. Mr. Turchin serves as a Manager of the Board of Managers of Easton Development Company, LLC, a subsidiary of Aerojet Rocketdyne. Mr. Turchin’s considerable experience in the real estate industry and service as a director of public companies provides the Board with valuable expertise in real estate matters and experience in advising companies. Mr. Turchin currently serves as a member of the Audit Committee and as a member of the Corporate Governance & Nominating Committee.
The Board unanimously recommends that stockholders vote FOR each of these nominees as Directors by executing and returning the proxy card or voting by one of the other ways indicated thereon. Proxies solicited by the Board will be so voted unless stockholders specify otherwise.

INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Voting for Directors
The Company has no provision for cumulative voting in the election of Directors. Therefore, holders of Common Stock are entitled to cast one vote for each share held on the Record Date for each of the candidates for election. Directors are elected by a plurality of the votes cast at the Annual Meeting; however, the Board has adopted a majority vote policy. Pursuant to such policy, in an uncontested election, any nominee for Director who receives a greater number of votes “withheld” for his election than votes “for” such election (a “Majority Withheld Vote”) shall promptly tender his resignation after such election for consideration by the Corporate Governance & Nominating Committee. In determining its recommendation to the Board, the Corporate Governance & Nominating Committee will consider all factors deemed relevant by its members. These factors may include the underlying reasons why stockholders “withheld” votes for election from such Director (if ascertainable), the length of service and qualifications of the Director whose resignation has been tendered, the Director’s contributions to the Company, whether by accepting such resignation the Company will no longer be in compliance with any applicable law, rule, regulation or governing document, and whether or not accepting the resignation is in the best interests of the Company and our stockholders. Within 90 days thereafter, the Board, taking into account the recommendation of the Corporate Governance & Nominating Committee and such additional information and factors that the Board believes to be relevant, must determine whether to accept or reject the resignation. The Director that tendered the resignation shall not participate in the consideration or determination of whether to accept such resignation. The Board shall disclose by press release its decision to accept or reject the resignation and, if applicable, the reasons for rejecting the resignation. If a majority of the Corporate Governance & Nominating Committee members receive a Majority Withheld Vote at the same election, then the independent Directors who did not receive a Majority Withheld Vote will appoint a committee of independent Directors to consider the resignation offers and recommend to the Board whether to accept or reject them.

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Votes cast for a nominee will be counted in favor of election. Abstentions and broker non-votes will not count either in favor of, or against, election of a nominee. It is the intention of the persons named in the accompanying form of proxy to vote for the election of the Board’s nominees, unless authorization to do so is withheld. Proxies cannot be voted for a greater number of persons than the number of Directors set by the Board for election. If, prior to the Annual Meeting, a nominee becomes unable to serve as a Director for any reason, the proxy holders reserve the right to substitute another person of their choice in such nominee’s place and stead. It is not anticipated that any nominee will be unavailable for election at the Annual Meeting.
Retirement Policy
The Company does not have a mandatory retirement policy for Directors.
Meetings of the Board
The Board held 9 meetings during fiscal 2017. All of the Directors who served during fiscal 2017 attended at least 75% of the regularly scheduled and special meetings of the Board and Board committees on which they served and to which they were invited in fiscal 2017. All of the Board’s nominees for election at the Annual Meeting are expected to attend the Annual Meeting. All of the Directors nominated for election at the 2017 annual meeting of stockholders were present at such meeting.
Meetings of Non-Employee Directors
Non-employee Directors (consists of all Directors other than Mr. Lichtenstein and Ms. Drake), all of whom are independent, meet in executive session as part of each regularly scheduled Board meeting. The presiding Director position at each such executive session is rotated in alphabetical order among the non-employee Directors.
Board Leadership Structure
The Company determines the most suitable leadership structure pursuant to its Certificate of Incorporation, the Bylaws and corporate governance guidelines. At least annually, as part of the Board’s self-evaluation process, the Board evaluates the Company’s leadership structure to ensure that it provides the optimal structure for the Company and its stockholders.
In February 2007, the Board made a decision to separate the positions of Chairman of the Board from CEO and President. Prior to February 2007, the position of Chairman of the Board and the position of CEO and President were historically held by the same person.
In June 2016, the Board decided to create an Executive Chairman of the Board (“Executive Chairman”) role. Currently, Warren Lichtenstein is our Executive Chairman and Eileen Drake is our CEO and President. We believe this structure is the most advantageous for the Company at this time as Mr. Lichtenstein’s financial acumen, knowledge of the Company, and business contacts are valuable as an executive in a management capacity.
Pursuant to the Company’s corporate governance guidelines, the duties of the Executive Chairman include among other things:
leading the Board in all aspects of its role, including regularity and frequency of meetings, and agenda setting;
establishing the style and tone of Board discussions to promote effective decision-making;
presiding over meetings of the Board (other than executive sessions of the independent Directors), and annual and special meetings of stockholders;
ensuring that the Board functions at a high level on a continuing basis;
supporting the recruitment and training, as necessary, of new members of the Board;
ensuring effective implementation of Board decisions;
facilitating communication between and among independent Directors and management;

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leading senior management in developing recommendations for the Company’s strategy for presentation to the Board for approval;
supporting the CEO and President in implementing and executing Company strategy; and
fostering open communication with major stockholders through stockholder outreach and engagement initiatives.
All of the Company’s remaining Directors are independent, including the chair and members of each of the Company’s Audit Committee, Corporate Governance & Nominating Committee, and Organization & Compensation Committee. While the Board has not formally appointed a lead independent Director, the Board believes that the current composition of the Board and the functioning of the independent Directors effectively maintain oversight of the Company’s management. However, the Board recognizes that there is no single, generally accepted approach to providing corporate leadership, and the Company’s leadership structure may change in the future as circumstances warrant.
Board Role in Risk Oversight
Management has the primary responsibility for identifying and managing the risks facing the Company, subject to the oversight of the Board. The Board strives to effectively oversee the Company’s enterprise-wide risk management in a way that balances managing risks while enhancing the long-term value of the Company for the benefit of the stockholders. The Board understands that its focus on effective risk oversight is critical to setting the Company’s tone and culture towards effective risk management. To administer its oversight function, the Board seeks to understand the Company’s risk philosophy by having discussions with management to establish a mutual understanding of the Company’s overall appetite for risk. The Company’s Board maintains an active dialogue with management about existing risk management processes and how management identifies, assesses and manages the Company’s most significant risk exposures. The Company’s Board receives frequent updates from management about the Company’s most significant risks so as to enable it to evaluate whether management is responding appropriately.
The Board relies on each of its committees to help oversee the risk management responsibilities relating to the functions performed by such committees. The Audit Committee periodically discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. The Audit Committee also reviews and oversees the Company’s compliance with legal and regulatory requirements, including the effectiveness of the Company’s corporate Ethics and Compliance Program. The Organization & Compensation Committee helps the Board identify the Company’s exposure to any risks potentially created by our compensation programs and practices. The Corporate Governance & Nominating Committee periodically reviews and advises the Board regarding significant matters of public policy, including proposed actions by foreign and domestic governments that may significantly affect the Company. Each of these committees is required to regularly report on its actions and to make recommendations to the Board, including recommendations to assist the Board with its overall risk oversight function. The Board retains oversight responsibility for all subject matters not specifically assigned to a committee, including risks presented by the Company’s business strategy, competition, regulation, general industry trends, and capital structure.
The Organization & Compensation Committee believes that the Company’s compensation policies and practices are structured to discourage inappropriate risk taking by our executives and that none of the Company’s compensation policies and practices are reasonably likely to have a material adverse effect on the Company. The Company believes that its compensation plans effectively balance risk and reward and are generally uniform in design and operation throughout the Company.
Determination of Independence of Directors
The Board has determined that to be considered independent, a Director may not have a direct or indirect material relationship with the Company. A material relationship is one which impairs or inhibits, or has the potential to impair or inhibit, a Director’s exercise of critical and disinterested judgment on behalf of the Company and its stockholders. In making its assessment of independence, the Board considers any and all material relationships not merely from the standpoint of the Director, but also from that of persons or organizations with which the Director has or has had an affiliation, or those relationships which may be material, including commercial, industrial, banking, consulting, legal,

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accounting, charitable and familial relationships, among others. The Board also considers whether a Director was an employee of the Company within the last three years. The Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent” Director, including those set forth in pertinent listing standards of the NYSE as in effect from time to time. The NYSE’s listing standards require that all listed companies have a majority of independent directors. For a director to be “independent” under the NYSE listing standards, the board of directors of a listed company must affirmatively determine that the director has no material relationship with the company, or its subsidiaries or affiliates, either directly or as a partner, stockholder or officer of an organization that has a relationship with the company or its subsidiaries or affiliates. In accordance with the NYSE listing standards, the Board has affirmatively determined that each of the Board’s nominees for Director, other than Mr. Lichtenstein and Ms. Drake, have no material relationships with the Company, either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company and are “independent” by the NYSE listing standards.
Board Committees
The Board maintains three standing committees: the Audit Committee; the Corporate Governance & Nominating Committee; and the Organization & Compensation Committee. Assignments to, and chairs of, the standing committees are recommended by the Corporate Governance & Nominating Committee and approved by the Board. All committees report on their activities to the Board. Each standing committee operates under a charter approved by the Board. The charters for each of the standing committees are posted on the Company’s website at www.AerojetRocketdyne.com and are available in print to any stockholder or interested party who sends a written request to Secretary, Aerojet Rocketdyne Holdings, Inc., 222 N. Sepulveda Blvd., Suite 500, El Segundo, California 90245. In addition, non-standing committees of the Board include the Authorization Committee, the Benefits Management Committee, the Pricing Committee, and the Special Committee, which was disbanded in May 2017.
The following table provides the membership and total number of meetings held by each standing committee of the Board in fiscal 2017:
 
Name
Audit
Corporate
Governance &
Nominating
Organization &
Compensation
Thomas A. Corcoran
 
James R. Henderson
  X*
 
Lance W. Lord
 
X
Merrill A. McPeak
 
  X*
James H. Perry
  X*
 
X
Martin Turchin
 
Total meetings in fiscal 2017
6
2
6
*
Committee Chairman
The Audit Committee is a separately designated standing committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Board has determined that each member of the Audit Committee meets all applicable independence and financial literacy requirements under the NYSE listing standards. The Board has also determined that Mr. Perry is an “audit committee financial expert” under the applicable rules promulgated pursuant to the Exchange Act. The Audit Committee reviews and evaluates the scope of the audits to be performed by, the adequacy of services performed by, and the fees and compensation of, the independent auditors. The Audit Committee also reviews the Company’s audited financial statements with management and with the Company’s independent auditors and recommends to the Board to include the audited financial statements in the Company’s Annual Reports on Form 10-K; approves in advance all audit and permitted non-audit services to be provided by the independent auditors; reviews and considers matters that may have a bearing upon continuing audit or independence; prepares the report of the Audit Committee to be included in the Company’s Proxy Statement; appoints the independent auditors to examine the consolidated financial statements of the Company; reviews and evaluates the scope and appropriateness of the Company’s internal audit function, internal audit plans and system of internal controls; reviews and evaluates the appropriateness of the Company’s selection or application of accounting principles, practices and financial reporting;

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receives periodic reports from the internal audit and law departments; and reviews and oversees the Company’s compliance with legal and regulatory requirements, including the effectiveness of the Company’s corporate Ethics and Compliance Program.
The Corporate Governance & Nominating Committee periodically reviews and makes recommendations to the Board concerning the criteria for selection and retention of Directors, the composition of the Board (including the Chairman of the Board), the structure and function of Board committees, and the retirement policy of Directors. The Corporate Governance & Nominating Committee also assists in identifying and recommending to the Board, qualified candidates to serve as Directors of the Company and considers and makes recommendations to the Board concerning Director nominations submitted by stockholders. The Corporate Governance & Nominating Committee also periodically reviews and advises the Board regarding significant matters of public policy, including proposed actions by foreign and domestic governments that may significantly affect the Company; and reviews and advises the Board regarding adoption or amendment of major Company policies and programs relating to matters of public policy. The Board has determined that each member of the Corporate Governance & Nominating Committee meets all applicable independence requirements under the NYSE listing standards.
The Organization & Compensation Committee reviews and approves the total compensation of the CEO and President and the Executive Chairman. The Organization & Compensation Committee also administers the Company’s deferred compensation plan and the Aerojet Rocketdyne Amended and Restated 2009 Equity and Performance Incentive Plan (the “2009 Incentive Plan”). The Organization & Compensation Committee periodically reviews the organization of the Company and its management, including major changes in the organization of the Company and the responsibility of management as proposed by the CEO and President; monitors executive development and succession planning; reviews the effectiveness and performance of senior management and makes recommendations to the Board concerning the appointment and removal of officers; periodically reviews the compensation philosophy, policies and practices of the Company and makes recommendations to the Board concerning major changes, as appropriate; annually reviews changes in the Company’s employee benefit, savings and retirement plans and reports thereon to the Board; and approves, and in some cases recommends to the Board for approval, the compensation of executive officers of the Company. The Organization & Compensation Committee delegates to the CEO and President the right to establish the salaries and annual incentive compensation of the other officers of the Company. The Organization & Compensation Committee also reviews and makes recommendations to the Board regarding the compensation and benefits for Directors. The Board has determined that each member of the Organization & Compensation Committee meets all applicable independence requirements under the NYSE and SEC listing standards. In making its determination, the Board considered all factors specifically relevant to determining whether a Director has a relationship to the Company which is material to that Director’s ability to be independent from management in connection with the duties of an Organization & Compensation Committee member, including but not limited to, (i) the source of the Director’s compensation, including any consulting, advisory or other compensatory fees paid by the Company; and (ii) whether the Director has an affiliate relationship with the Company.
From time to time, the Board forms special committees to address specific matters.
Director Nominations
The Corporate Governance & Nominating Committee identifies potential Director candidates through a variety of means, including recommendations from members of the Corporate Governance & Nominating Committee, the Board, management and stockholders. The Corporate Governance & Nominating Committee also may retain the services of a consultant to assist in identifying candidates. The Corporate Governance & Nominating Committee will consider nominations submitted by stockholders. A stockholder who would like to recommend a nominee should write to the Chairman of the Corporate Governance & Nominating Committee, c/o Secretary, Aerojet Rocketdyne Holdings, Inc., 222 N. Sepulveda Blvd., Suite 500, El Segundo, California 90245. Any such recommendation must meet all of the requirements contained in the Bylaws and include (i) all information relating to the person that is required to be disclosed in solicitations of proxies for the election of directors or is otherwise required, pursuant to Section 14(a) of the Exchange Act; and (ii) the candidate’s signed consent to be named in the Proxy Statement as a nominee and to serve as a Director if elected.
Such nominations must be received by the Chairman of the Corporate Governance & Nominating Committee no later than the close of business on February 7, 2019, nor earlier than the close of business on January 8, 2019.

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The Company’s Bylaws contain advance notice provisions that a stockholder must follow if he, she or it intends to make a director nomination before a meeting of stockholders. These advance notice provisions provide, among other things that:
for an annual meeting of stockholders, written notice of a stockholder’s intention to make business proposals or nominate persons for election to the Board must be delivered to the Company not later than the ninetieth (90 th ) day or earlier than the one hundred twentieth (120 th ) day prior to the first anniversary of the preceding year’s annual meeting. If an annual meeting of stockholders is held more than thirty (30) days before or more than seventy (70) days after the first anniversary of the preceding year’s annual meeting, notice by the stockholder must be delivered (i) not earlier than one hundred twenty (120) days prior to such annual meeting; and (ii) not later than the close of business on the later of the ninetieth (90 th ) day prior to such annual meeting or the tenth (10 th ) day following the day on which public announcement is first made of the date of the annual meeting; and
if the Company has called a special meeting for the purpose of electing one or more directors to the Board, written notice of a stockholder’s intention to nominate persons for election to the Board before such special meeting must be delivered to the Company (i) not earlier than the one hundred twentieth (120 th ) day; and (ii) not later than the close of business on the later of the ninetieth (90 th ) day prior to such special meeting or the tenth (10 th ) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.
The Corporate Governance & Nominating Committee seeks to create a Board that is, as a whole, strong in its collective knowledge and diversity of skills and experience and background with respect to accounting and finance, management and leadership, business judgment, industry knowledge and corporate governance. Although the Corporate Governance & Nominating Committee does not have a formal diversity policy relating to the identification and evaluation of nominees, the Corporate Governance & Nominating Committee, in addition to reviewing a candidate’s qualifications and experience in light of the needs of the Board and the Company at that time, reviews candidates in the context of the current composition of the Board and the evolving needs of the Company’s businesses.
Communications with Directors
Stockholders and other interested parties may communicate with the Board or individual Directors by mail addressed to: Chairman of the Corporate Governance & Nominating Committee, c/o Secretary, Aerojet Rocketdyne Holdings, Inc., 222 N. Sepulveda Blvd., Suite 500, El Segundo, California 90245. The Secretary may initially review communications to the Board or individual Directors and transmit a summary to the Board or individual Directors, but has discretion to exclude from transmittal any communications that are, in the reasonable judgment of the Secretary, inappropriate for submission to the intended recipient(s). Examples of communications that would be considered inappropriate for submission to the Board or a Director include, without limitation, customer complaints, solicitations, commercial advertisements, communications that do not relate directly or indirectly to the Company’s business or communications that relate to improper or irrelevant topics.
Compensation Committee Interlocks and Insider Participation
The Organization & Compensation Committee is composed entirely of non-employee independent Directors. As of December 31, 2017, the members of the Organization & Compensation Committee included Merrill A. McPeak (Chairman), Thomas A. Corcoran, Lance W. Lord and James H. Perry. All non-employee independent Directors on the Organization & Compensation Committee participate in decisions regarding the compensation of the CEO and President. None of the Company’s executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of the Company’s Organization & Compensation Committee. In addition, none of the Company’s executive officers serve as a member of the Organization & Compensation Committee of any entity that has one or more of its executive officers serving as a member of the Company’s Board.


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Director Compensation
The compensation of the Company’s non-employee Directors is determined by the Board upon the recommendations made by the Organization & Compensation Committee. The Director compensation program for non-employee Directors in effect until November 2017 was implemented by the Company in 2013 after evaluation of the recommendations by Korn Ferry Hay Group, the company that was retained by the Organization & Compensation Committee as outside consultants to assess the overall compensation structure for its non-employee Directors subsequent to the acquisition of the Pratt & Whitney Rocketdyne division of UTC. Specifically, the Organization & Compensation Committee requested that Korn Ferry Hay Group measure the Company’s Director compensation (in total and by pay component) against similarly sized U.S. companies in the aerospace and defense industry based on information disclosed in recent SEC filings, and in the broader general industry, using both proprietary compensation surveys and its knowledge of industry practices. Director pay was benchmarked at the median level. In November 2017, Korn Ferry Hay Group recommended and the Organization & Compensation Committee approved certain changes to the Director compensation program for non-employee Directors to maintain competitiveness and aid in director recruitment. These changes were effective beginning November 15, 2017. The Director compensation program, including changes effective November 15, 2017, is more fully described below.
Annual Retainer Fees
Annual retainer fees under our Director compensation program for non-employee Directors are summarized below:
 
Annual Amount ($)
Component
11/2013 - 11/14/2017
11/15/2017 - Present
Annual Retainer
$
55,000

$
70,000

Members of each of the Corporate Governance & Nominating Committee, and the Organization & Compensation Committee
7,500

7,500

Chairmen of the Corporate Governance & Nominating Committee, and the Organization & Compensation Committee*
10,000

10,000

Members of the Audit Committee
10,000

10,000

Chairman of the Audit Committee*
15,000

15,000

Members of a long-term special committee
5,000

5,000

Members of a limited purpose special committee
3,250

3,250

Per meeting attendance at Board meetings in excess of six meetings between any two annual meetings of stockholders
2,000


Per meeting attendance at standing or long-term special committee meetings in excess of six meetings between any two annual meetings of stockholders
1,500


Managers on the Board of Managers of Easton Development Company, LLC
15,000

15,000

*
Committee chairmen also receive the committee membership retainer
Non-employee Directors are given a choice to receive all such Director fees in cash or to receive all or a portion, but no less than 50%, of such fees in the form of fully vested Company Common Stock, calculated based on the closing price of the Common Stock as reported in the NYSE Composite Transactions (or if such information in such source is unavailable, a source providing similar information selected by the Company) as of the applicable Director pay date, pursuant to the 2009 Incentive Plan. If a non-employee Director elects for any year to receive all or a portion of such fees in the form of fully vested Common Stock, an additional grant of restricted shares of Common Stock will be given equal in value to 50% of the amount of fees paid in fully vested Common Stock vesting on the earlier of the Director’s retirement from service from the Board or one year from the date of grant. Non-employee Directors and the Executive Chairman also have a choice to defer all or a portion of fully vested and restricted shares of Common Stock. Distribution of deferred stock can be made in a single payment or at least two but no more than 10 annual installments, with a choice to begin distribution 30 days following retirement from the Board, on a date specified by the participant, or upon attainment of an age specified by the participating Director.

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Equity Grants
Equity grants under our Director compensation program for non-employee Directors are summarized below:
 
Annual Amount
Grant Type
11/2013 - 11/14/2017
11/15/2017 - Present
Annual Award of restricted stock
$
90,000

$
100,000

Initial election to the Board
500 shares of restricted stock

500 shares of restricted stock

In May 2017, each non-employee Director received $90,000 worth of equity compensation pursuant to the 2009 Incentive Plan. This grant consisted of 4,085 restricted shares of Common Stock for each non-employee Director. These awards vest in 50% increments on the six-month and twelve-month anniversary of the grant date. All restricted shares of Common Stock may be voted, but ownership may not transfer until such shares are vested. Unless otherwise approved by the Board, unvested shares will be forfeited in the event of a voluntary resignation or refusal to stand for re-election.
Compensation of Executive Chairman
Mr. Lichtenstein was appointed Executive Chairman of the Company on June 24, 2016. Prior to such date, Mr. Lichtenstein served as Chairman of the Board. Since his appointment as Chairman of the Board in 2013, Mr. Lichtenstein has been instrumental in guiding strategic direction, capital allocation, financing, and merger & acquisition activity. In appointing Mr. Lichtenstein as Executive Chairman in 2016, the Company’s Board, excluding Mr. Lichtenstein, determined that Mr. Lichtenstein’s financial acumen, knowledge of the Company, and business contacts would be more valuable as an executive in a management capacity with a greater time commitment. In this expanded role, Mr. Lichtenstein is expected to continue to have a substantial impact on driving strategy and results of the Company beyond his responsibilities as the Chairman of the Board.
An Advisory Committee, consisting of Merrill A. McPeak (Chairman), Thomas A. Corcoran, Lance W. Lord, and James H. Perry, was formed in July 2016 (and disbanded in October 2016) to review and recommend a compensation package for the Executive Chairman.
Rationale for Equity Grants
In structuring and approving the equity grants that comprised the compensation package for the Executive Chairman, the Advisory Committee, the Organization & Compensation Committee and the Board considered various factors it viewed as significant, including:
the role of the Executive Chairman at the Company in strategic and operational positioning of the business, with enterprise-wide accountability;
the substantial time commitment required of the Executive Chairman;
the importance of the Executive Chairman to the success of the business; and
the intention that the grants will cover two years of service for the Executive Chairman.
In addition, the Advisory and Organization & Compensation Committees and the Board took into account information provided by the independent executive compensation consultant, Korn Ferry Hay Group, regarding the competitive positioning of the potential grants, market pay practices of its aerospace and defense peers, trends in the broader market relating to pay levels and pay structure of executive chairs, and the range of potential pay packages for the executive chairman role. Korn Ferry Hay Group had determined that the proposed grants presented for its analysis were within the range of competitive market practice for the role and the substantial involvement of the Executive Chairman at the Company. Further, Korn Ferry Hay Group noted that the composition of the grants as sixty percent (60%) performance-based (restricted shares and stock options) would be a positive feature in assessing the overall grant package.

17



Design and consideration of compensation proposal
For his services as Executive Chairman, the Advisory and Organization & Compensation Committees requested that an appropriate compensation package be developed of equity-based awards relating to the Company’s Common Stock. A proposal consisting of service-based restricted stock, performance-based restricted stock, and performance-based stock options, each with vesting in three equal increments, was designed in concert with the independent compensation advisor of the Organization & Compensation Committee, Korn Ferry Hay Group, and Aon plc. With the input of the independent advisor, the proposed equity grants for the Executive Chairman were considered by the Advisory and the Organization & Compensation Committees.
Size and features of equity grants
On August 19, 2016, the Board, upon the recommendation of the Advisory and Organization & Compensation Committees, approved the following grants to Mr. Lichtenstein to cover his compensation as Executive Chairman for a period of two years pursuant to the Company’s 2009 Incentive Plan:
(i)      in lieu of salary, 180,000 shares of service-based restricted stock vesting in 1/3 increments on August 19, 2017, August 19, 2018 and August 19, 2019, having an aggregate grant date fair value of approximately $3.2 million;
(ii)      200,000 shares of performance-based restricted stock of the Company, 1/3 to vest upon the attainment of a share price of $22 no later than August 19, 2019, an additional 1/3 to vest upon the attainment of a share price of $24 no later than August 19, 2020, and an additional 1/3 to vest upon the attainment of a share price of $26 no later than August 19, 2021, with the share price in all cases being determined on the basis of the 20-day volume weighted average price of the Company’s stock, which performance-based restricted shares had an aggregate grant date fair value of approximately $2.6 million; and
(iii)      200,000 options to purchase shares of the Company’s Common Stock with a grant price of $18.01 with 1/3 to vest upon the attainment of a share price of $23 no later than August 19, 2019, an additional 1/3 to vest upon the attainment of a share price of $25 no later than August 19, 2020, and an additional 1/3 to vest upon the attainment of a share price of $27 no later than August 19, 2021, with the share price in all cases being determined on the basis of the 20-day volume weighted average price of the Company’s Common Stock, which performance-based stock options had an aggregate grant date fair value of approximately $1.2 million.
If Mr. Lichtenstein’s employment with the Company terminates for any reason upon a Change in Control, any unvested service-based restricted stock and any unvested performance-based stock and/or options will be evaluated and may, upon the approval of the Board in its full discretion, become immediately vested. Since the awards were designed to compensate Mr. Lichtenstein for two years of service as Executive Chair (with no subsequent award for the second year), the annualized amount of such compensation is approximately $3.5 million.
Equity Ownership Guidelines for Non-Employee Directors
In October 2007, the Board adopted equity ownership guidelines that were subsequently revised in November 2013 under which non-employee Directors are required to own equity in the Company in an amount equal to five times the annual cash retainer at that time or $275,000. In calculating the amount of equity owned by a Director, the Board looks at the value of Common Stock owned by such Director (restricted stock and stock owned outright), the value of any phantom stock owned by such Director as part of the Deferred Compensation Plan for Non-Employee Directors, if any and the value of any vested “in the money” options or Stock Appreciation Rights (“SARs”) (i.e. market value of Company stock in excess of the strike price for the stock option or SAR). Directors have five years from the date of their election to the Board to meet the thresholds set forth in these equity ownership guidelines. The Board routinely reviews these guidelines and considers adjustments when appropriate, including adjustments for material fluctuations in the Company’s stock price.
As of December 31, 2017, all of the non-employee Directors held equity in the Company equal in market value to the guidelines in place at the time. The following table shows the current status of equity ownership for each non-employee Director as of December 31, 2017.

18



Name
Value of Equity
Ownership*
Date of Election
Years as a Director
Thomas A. Corcoran
$
4,364,236

09/24/2008
9.3
James R. Henderson
3,217,874

03/05/2008
9.8
Lance W. Lord
680,971

02/02/2015
2.9
Merrill A. McPeak
1,847,607

03/27/2013
4.8
James H. Perry
4,720,111

05/16/2008
9.6
Martin Turchin
5,154,160

03/05/2008
9.8
 
*
Value is based on the stock price on December 29, 2017 of $31.20.
Equity Ownership Guidelines for the Executive Chairman
The Organization & Compensation Committee has share ownership guidelines that apply to executive officers which apply to the Executive Chairman. Under these guidelines the Executive Chairman is expected to have equity in the Company equal in aggregate market value to six times the CEO base salary. See Executive Stock Ownership Guidelines on page 26 for an explanation of how equity ownership is calculated for the Executive Chairman. Mr. Lichtenstein’s value of equity ownership as of December 31, 2017 was $23,192,393.
Other
The Aerojet Rocketdyne Foundation matches employee and Director gifts to accredited, non-profit colleges, universities, secondary and elementary public or private schools located in the United States. Gifts made in fiscal 2016 were matched dollar for dollar up to $3,000 per calendar year. Gifts made in fiscal 2017 were matched dollar for dollar up to $1,000 per calendar year.
Non-employee Directors may also elect to participate in the same health benefits programs at the same cost as offered to all of the Company’s employees. The Company also reimburses Directors for reasonable travel and other expenses incurred in attending Board and Committee meetings.
2017 DIRECTOR COMPENSATION TABLE
The following table sets forth information regarding compensation earned or paid to each non-employee Director who served on the Board in fiscal 2017 and the Executive Chairman. Employee Directors are not compensated for services as a Director.
Name
Fees Earned
or Paid
($) (1)
Stock Awards
($) (2)(3)
Option
Awards
($) (2)(3)
All Other
Compensation
($)
Total
($)
Thomas A. Corcoran
$
84,230

$
132,109

$

$
3,000

$
219,339

James R. Henderson
109,726

144,857



254,583

Warren G. Lichtenstein (4)





Lance W. Lord
79,741

109,910



189,651

Merrill A. McPeak
89,229

134,608



223,837

James H. Perry
108,226

144,107



252,333

Martin Turchin
96,728

138,358



235,086

(1)
The amounts reported in this column for each non-employee Director reflect the dollar amount of the Board and Committee fees paid in fiscal 2017 . Non-employee Directors have a choice to receive all or a portion of their Director fees in fully vested Common Stock of the Company, in which the number of shares is determined by the closing price of the Common Stock as of the applicable pay date. If a Director elects to receive fees in Common Stock, an additional grant of restricted shares of Common Stock are given in an amount equal in value to 50% of the amount of fees paid in fully vested Common Stock. This additional grant is reported in the “Stock Awards” column. Non-employee Directors and the Executive Chairman also have a choice to defer all or a portion of fully vested and restricted shares of Common Stock. Distribution of deferred stock can be made in a single payment or at least two but no more than 10 annual installments, with a choice to begin distribution 30 days following retirement from the Board, on a date specified by the participant, or upon attainment of an age specified by the participating Director. The following table shows Director fees that were paid in fully vested Common Stock in fiscal 2017 .

19



Name
Grant
Date
Stock
Awards
(#)
Grant Date
Fair Value
($)
Thomas A. Corcoran
02/15/2017
712

$
13,742


05/15/2017
1,884

39,244

 
08/15/2017
504

13,749


11/15/2017
606

17,495

 
Total
3,706

84,230

James R. Henderson
02/15/2017
712

13,742

 
05/15/2017
3,108

64,740


08/15/2017
504

13,749

 
11/15/2017
606

17,495

 
Total
4,930

109,726

Lance W. Lord
02/15/2017
356

6,871

 
05/15/2017
834

17,372

 
08/15/2017
252

6,875

 
11/15/2017
303

8,748

 
Total
1,745

39,866

Merrill A. McPeak
02/15/2017
712

13,742

 
05/15/2017
2,124

44,243

 
08/15/2017
504

13,749

 
11/15/2017
606

17,495

 
Total
3,946

89,229

James H. Perry
02/15/2017
712

13,742

 
05/15/2017
3,036

63,240

 
08/15/2017
504

13,749

 
11/15/2017
606

17,495

 
Total
4,858

108,226

Martin Turchin
02/15/2017
712

13,742

 
05/15/2017
2,484

51,742

 
08/15/2017
504

13,749

 
11/15/2017
606

17,495

 
Total
4,306

96,728

(2)
The amounts reported in these columns for each non-employee Director reflect the grant date fair value of stock awards in fiscal 2017 . A description of these awards can be found under the section entitled Long-Term Incentives (Equity-Based Compensation) on page 32. A discussion of the assumptions used in calculating these values may be found in Note 9(d) in the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 . The following table shows each grant of restricted shares of Common Stock granted during fiscal 2017 to each non-employee Director who served as a Director in fiscal 2017 , and the aggregate grant date fair value for each award.

20



Name
Grant        
Date
    Stock Awards    
(#)
Grant Date    
Fair Value
($)
Thomas A. Corcoran
02/15/2017
356

(A)  
$
6,871

 
05/04/2017
4,085

(B)  
89,993

 
05/15/2017
942

(A)  
19,622

 
08/15/2017
252

(A)  
6,875

 
11/15/2017
303

(A)  
8,748

 
Total
5,938

 
132,109

James R. Henderson
02/15/2017
356

(A)  
6,871

 
05/04/2017
4,085

(B)  
89,993

 
05/15/2017
1,554

(A)  
32,370

 
08/15/2017
252

(A)  
6,875

 
11/15/2017
303

(A)  
8,748

 
Total
6,550

 
144,857

Lance W. Lord
02/15/2017
178

(A)  
3,435

 
05/04/2017
4,085

(B)  
89,993

 
05/15/2017
417

(A)  
8,686

 
08/15/2017
126

(A)  
3,437

 
11/15/2017
151

(A)  
4,359

 
Total
4,957

 
109,910

Merrill A. McPeak
02/15/2017
356

(A)  
6,871

 
05/04/2017
4,085

(B)  
89,993

 
05/15/2017
1,062

(A)  
22,121

 
08/15/2017
252

(A)  
6,875

 
11/15/2017
303

(A)  
8,748

 
Total
6,058

 
134,608

James H. Perry
02/15/2017
356

(A)  
6,871

 
05/04/2017
4,085

(B)  
89,993

 
05/15/2017
1,518

(A)  
31,620

 
08/15/2017
252

(A)  
6,875

 
11/15/2017
303

(A)  
8,748

 
Total
6,514

 
144,107

Martin Turchin
02/15/2017
356

(A)  
6,871

 
05/04/2017
4,085

(B)  
89,993

 
05/15/2017
1,242

(A)  
25,871

 
08/15/2017
252

(A)  
6,875

 
11/15/2017
303

(A)  
8,748

 
Total
6,238

 
138,358

(A)
These shares vest on the earlier of the Director’s retirement from the Board or the one year anniversary of the grant date.
(B)
These equity awards vest in 50% increments on the six-month and twelve-month anniversary of the grant date.
(3)
The following table shows the amount of unvested stock awards and outstanding and unexercised SARs awards as of December 31, 2017 for each non-employee Director who served as a Director in fiscal 2017 and the Executive Chairman.
Name
Unvested Stock Awards
Outstanding and
Unexercised SARs and Stock Options
Thomas A. Corcoran
3,896

45,428

James R. Henderson
4,508


Warren G. Lichtenstein
120,000

305,936

Lance W. Lord
3,415


Merrill A. McPeak
4,016

7,355

James H. Perry
4,472

26,974

Martin Turchin
4,196

60,428

(4)
See the section entitled Compensation of Executive Chairman on page 17 for additional information regarding Mr. Lichtenstein’s compensation.
 

21



Security Ownership of Officers and Directors
The following table lists share ownership of Common Stock by the Company’s current Directors, nominees and the named executive officers, as well as the number of shares beneficially owned by all of the current Directors and executive officers as a group. Unless otherwise indicated, share ownership is direct. Amounts owned reflect ownership as of March 12, 2018.
Beneficial Owner
Amount and Nature of
Beneficial  Ownership (1)(2)
Percent of Class
Directors
 
 
 
Thomas A. Corcoran (3)
105,650

 
*
James R. Henderson (4)
104,088

 
*
Warren G. Lichtenstein (5)
809,794

 
1.1%
Lance W. Lord (6)
22,301

 
*
Merrill A. McPeak (7)
55,933

 
*
James H. Perry
131,818

 
*
Martin Turchin (8)
120,145

 
*
Executive Officers
 
 
 
Eileen P. Drake
525,906

 
*
Mark A. Tucker
197,201

 
*
Paul R. Lundstrom
122,409

 
*
John D. Schumacher
119,078

 
*
Arjun L. Kampani
109,871

 
*
All Current Directors and Executive Officers as a group (12 persons)
2,424,194

 
3.2%
 
*
Less than 1.0%
(1)
Includes restricted shares granted under the 1999 Equity and Performance Incentive Plan, the 2009 Incentive Plan, and shares owned outright. The number of shares beneficially owned by a current officer of the Company includes shares credited in the Aerojet Rocketdyne Retirement Savings Plan as of March 12, 2018.
(2)
Includes shares issuable upon the exercise of stock options that may be exercised within 60 days after March 12, 2018 as follows: Mr. Lichtenstein — 243,546 ; Ms. Drake — 17,848 ; Mr. Tucker — 12,594 ; Mr. Schumacher — 11,610 , and all current Directors and executive officers as a group — 285,598 shares.
(3)
Includes 100,803 shares held in the Thomas A. Corcoran TTEE U/A DTD 07/16/2001.
(4)
Includes 55,981 shares held in the name of the Rabbi Trust.
(5)
Includes 465,931 shares held in the name of the Rabbi Trust and 60,546 shares held through Steel Partners, Ltd. (“SPL”). Mr. Lichtenstein, as the CEO and sole director of SPL, may be deemed to beneficially own the shares of Common Stock owned directly by SPL. Mr. Lichtenstein disclaims beneficial ownership of such shares owned by SPL except to the extent of his pecuniary interest therein.
(6)
Includes 22,301shares held in the name of the Rabbi Trust.
(7)
Includes 55,933 shares held in the name of the Rabbi Trust.
(8)
Includes 11,495 shares held in the name of the Rabbi Trust, 7,500 shares held in the name of Martin Turchin IRA Rollover, 3,000 shares held in the name of Peter Turchin Trust, 1,000 shares held in the name of Coulter Turchin Trust, and 1,000 shares held in the name of Tyler Turchin Trust.
Code of Ethics and Corporate Governance Guidelines
The Company has adopted a code of ethics known as the Aerojet Rocketdyne Code of Conduct Manual that applies to the Company’s employees including the principal executive officer and principal financial officer. Amendments to the Aerojet Rocketdyne Code of Conduct Manual and any grant of a waiver from the provision of the Aerojet Rocketdyne Code of Conduct Manual requiring disclosure under applicable SEC rules will be disclosed on the Company’s website at www.AerojetRocketdyne.com. Copies of the Aerojet Rocketdyne Code of Conduct Manual and the Company’s Corporate Governance Guidelines are also available on the Company’s website (copies are available in print to any stockholder or other interested person who sends a written request to Secretary, Aerojet Rocketdyne Holdings, Inc., 222 N. Sepulveda Blvd., Suite 500, El Segundo, California 90245).

22



Related Person Transaction Policy
The Company has a written policy for the review of transactions in which the Company is a participant, the amount exceeds $120,000, and in which the Company’s 5% or more stockholders, or any of the Company’s Directors or executive officers, or their immediate family members, had a direct or indirect material interest (a “Related Party Transaction”). Pursuant to such policy, any Related Party Transaction must be in the best interest of the Company and its stockholders and upon terms no less favorable to the Company than if such Related Party Transaction was with an unaffiliated third party. The Company’s Audit Committee is responsible for approving any such Related Party Transactions and the Company’s General Counsel and Corporate Secretary is responsible for maintaining a list of all existing Related Party Transactions.
Warren G. Lichtenstein, the Executive Chairman of the Company is also the Executive Chairman of SPLP and the CEO of Steel Partners Ltd. (“SPL”), which entities beneficially own 6% and less than 1%, respectively, of the Company’s Common Stock according to a Schedule 13D/A filed on December 26, 2017 by SPLP, SPL and certain other reporting persons listed therein. The Company received services of $0.6 million and $0.9 million in fiscal 2017 and 2016, respectively, from SPLP and SPL, which primarily included administrative services and the use of an aircraft for business travel. As of December 31, 2017 and 2016, the Company had liabilities due to such entities of $0.2 million for both periods.
Lucas-Milhaupt, Inc., an indirect wholly-owned subsidiary of SPLP, sold $0.2 million in raw materials to the Company for the manufacture of its products in fiscal 2017.
GAMCO Investors, Inc. (“GAMCO”) owned 12% of the Company’s Common Stock at December 31, 2017 and 2016. The Company received services of $1.1 million in both fiscal 2017 and 2016 from GAMCO for investment management fees of the Company’s defined benefit pension plan assets.
BlackRock, Inc. (“BlackRock”) owned 15% and 12% of the Company’s Common Stock at December 31, 2017 and 2016, respectively. The Company invests in money market funds managed by BlackRock.
FMR LLC (“FMR”) owned 3% and 13% of the Company’s Common Stock at December 31, 2017 and 2016, respectively. FMR is the parent company of Fidelity Workplace Services, LLC, Fidelity Stock Plan Services, LLC and other Fidelity subsidiaries which provide certain benefit services such as 401(k) plan administration, Health Savings Accounts administration, Employee stock-based compensation administration, and Employee Stock Purchase Plan administration. In addition, certain of the investment alternatives provided through the Company’s 401(k) savings plan include funds managed by FMR. The Company received services of $0.8 million and $0.3 million in fiscal 2017 and fiscal 2016, respectively, from FMR primarily for employee benefit services. These amounts exclude expenses charged to the Company’s employees by FMR for investment management services. As of December 31, 2017 and 2016, the Company had a payable due to FMR of less than $0.1 million for both periods.
The Vanguard Group, Inc. (“Vanguard”) owned 10% of the Company’s common stock at December 31, 2017. Certain of the investment alternatives offered through the Company’s 401(k) savings plan include funds managed by Vanguard.
Victory Capital Management Inc. (“Victory Capital”) owned 4% and 7% of the Company’s common stock as of December 31, 2017 and 2016, respectively. Certain of the investment alternatives offered through the Company’s 401(k) savings plan include a fund managed by Sycamore Capital, a Victory Capital franchise.


23



REPORT OF THE AUDIT COMMITTEE

The Audit Committee assists the Board in its general oversight of the Company’s financial reporting processes. The Audit Committee Charter describes in greater detail the full responsibilities of the Audit Committee. During each fiscal year, the Audit Committee reviews the Company's consolidated financial statements, internal control over financial reporting, audit matters and reports from management. In connection with these reviews, the Audit Committee meets with management and the independent public accountants (PricewaterhouseCoopers (“PwC”)) at least once each quarter. The Audit Committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. These meetings include, whenever appropriate, executive sessions in which the Audit Committee meets separately with the independent public accountants, internal auditors, management personnel and legal counsel.
As part of its review of audit matters, the Audit Committee supervises the relationship between the Company and its independent public accountants, including: having direct responsibility for their appointment, compensation and retention; reviewing the nature and type of their services; approving their audit and non-audit services; reviewing the plan for and results of the annual integrated audit and quarterly reviews of the Company's consolidated financial statements; and confirming their independence. The Audit Committee has evaluated PwC's qualifications, performance and independence, including that of the lead audit partner. The Audit Committee and senior financial management determine the selection of the lead audit partner, working with PwC. As part of the engagement process, the Audit Committee considers whether to rotate the independent public accountants. Although the Audit Committee has the sole authority to appoint the independent public accountants, the Audit Committee will continue its longstanding practice of recommending that the Board ask the stockholders to ratify the appointment of the independent public accountants at the Annual Meeting.
In addition, the Audit Committee reviews key initiatives and programs aimed at maintaining the effectiveness of the Company's internal control over financial reporting. Together with senior members of the Company's management team, the Audit Committee reviews the plans of the internal auditors, the results of internal audit examinations and evaluations by management and the Company's independent public accountants of the Company's internal control over financial reporting and the quality of the Company's financial reporting. As part of this process, the Audit Committee monitors the scope and adequacy of the Company's internal auditing program, including reviewing internal audit department staffing levels and steps taken to maintain the effectiveness of internal procedures and controls.
In performing all of these functions, the Audit Committee acts in an oversight capacity. The Audit Committee reviews and discusses the quarterly unaudited and annual audited consolidated financial statements with management, the internal auditors and the independent public accountants prior to their issuance. In its oversight role, the Audit Committee relies on the work and assurances of the Company's management, which is responsible for establishing and maintaining adequate internal control over financial reporting, preparing the consolidated financial statements and other reports and maintaining policies relating to legal and regulatory compliance, ethics and conflicts of interest. PwC is responsible for performing an independent audit of the annual consolidated financial statements and expressing an opinion on the conformity of those consolidated financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
The Audit Committee has reviewed with the independent public accountants the matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” including a discussion with management and the independent public accountants about the quality (and not merely the acceptability) of the Company's accounting principles, the reasonableness of significant estimates, judgments and the transparency of disclosures in the Company's consolidated financial statements. In addition, the Audit Committee reviewed and discussed with PwC matters related to its independence, including a review of audit and non-audit fees and the written disclosures in the letters from PwC to the Committee required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent public accountant's communication with the Audit Committee concerning independence. The Audit Committee concluded that PwC is independent from the Company and its management.
The Audit Committee met 6 times during fiscal 2017 .
In reliance on the reviews and discussions referred to in the foregoing paragraphs, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the 2017

24



Annual Report for filing with the SEC. The Audit Committee appointed PwC as the Company’s independent registered public accounting firm for fiscal 2018.
Submitted by the Audit Committee,
James H. Perry, Chairman
James R. Henderson
Lance W. Lord
Martin Turchin
February 27, 2018



25



ORGANIZATION & COMPENSATION COMMITTEE REPORT
The Organization & Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Organization & Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and the 2017 Annual Report. The Board has approved that recommendation.
The Organization & Compensation Committee met 6 times during fiscal 2017 .
Submitted by the Organization & Compensation Committee,
Merrill A. McPeak, Chairman
Thomas A. Corcoran
Lance W. Lord
James H. Perry
February 27, 2018

EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is given as of February 15, 2018.
Name
 
Title
 
Other Business Experience
 
Age
Warren G. Lichtenstein
 
Executive Chairman (since June 2016)

 
Chairman, March 2013 - June 2016 (Director since 2008); Executive Chairman of Steel Partners Holdings GP Inc., the general partner of SPLP February 2013 - Present; Chairman and CEO of general partner of SPLP July 2009 - February 2013; Chairman, Handy & Harman Ltd. (formerly known as WHX Corporation) July 2005 - Present; Executive Chairman, Steel Connect, Inc. June 2016 - Present; Interim CEO, Steel Connect, Inc. March 2016 - June 2016; Chairman, Steel Connect, Inc. March 2013 - June 2016. Chairman Steel Excel May 2011 - Present (director since 2010); Director SLI March 2010 - Present; Director (formerly Chairman) SLI January 2002 - May 2008; CEO SLI February 2002 - August 2005.
 
52
Eileen P. Drake
 
Chief Executive Officer and President (since June 2015)
 
Chief Operating Officer, March 2015 - June 2015; Director, Woodward, Inc. February 2017 - Present; President of Pratt & Whitney AeroPower’s auxiliary power unit and small turbojet propulsion business, UTC 2012 - 2015; VP of Operations, UTC 2009 - 2012; VP of Quality, Environmental Health & Safety, and Achieving Competitive Excellence, UTC 2003 - 2009; Product Line Manager and Plant Manager, Ford Motor Company 1996 - 2003; United States Army 1989 - 1996.
 
52
Mark A. Tucker
 
Chief Operating Officer (since June 2015)
 
Senior VP, Enterprise Operations and Engineering, Aerojet Rocketdyne, Inc. October 2013 - June 2015; VP Special Programs, Aerospace Systems Sector, Northrop Grumman 1983 - 2013.
 
59

26



Name
 
Title
 
Other Business Experience
 
Age
Paul R. Lundstrom
 
Vice President, Chief Financial Officer (since November 2016)
 
VP, Investor Relations, UTC 2014 - 2016; VP, Chief Financial Officer, Building & Industrial systems - North Asia (a UTC division) 2013 - 2014; VP, Chief Financial Officer, Climate/Controls/Security - Asia (a UTC division) 2011 - 2013; VP, Chief Financial Officer, Carrier Building Systems and Services, Carrier Corporation (a UTC division) 2009 - 2011.
 
42
John D. Schumacher
 
Vice President, Washington Operations (since June 2015)
 
VP, Business Relations April 2013 - June 2015; President, Aerojet Rocketdyne Foundation since October 2013; President, Astrium Americas and VP, Space, EADS North America April 2011 - April 2013; VP, Washington Operations, Aerojet May 2006 - April 2011; Director, Whitney, Bradley & Brown Consulting September 2005 - May 2006; Chief of Staff, National Aeronautics and Space Administration (“NASA”) May 2003 - September 2005; Associate Administrator for External Relations, NASA 1994 - 2003; Deputy Associate Administrator, NASA 1990 - 1994; Advisor to the Administrator, NASA 1989 - 1990; Associate, Rogers & Wells, NY, 1987 - 1989; Captain, Naval Reserve 1984 - 2006; Active Duty U.S. Navy 1972 - 1984.
 
63
Arjun L. Kampani
 
Vice President, General Counsel and Secretary (since April 2016)
 
VP, General Counsel and Corporate Secretary, General Dynamics Land Systems, Inc. 2010 - 2016; Director & Assistant General Counsel, Mergers and Acquisitions, General Dynamics Corporation 2006 - 2009; Assistant General Counsel and Assistant Corporate Secretary, Anteon International Corporation 2004 - 2006; Attorney, Business and Finance Department, Thelen Reid & Priest, LLP 1999 - 2004.
 
46
Gregory A. Jones
 
Senior Vice President, Strategy and Business Development (since February 2018)
 
VP, Corporate Business Development & International Programs, Orbital ATK February 2015 - January 2018; VP, Corporate Strategy & Business Development, Orbital Sciences Corporation, 2005 - 2015; Senior Director of Strategy & Business Development, IDS, The Boeing Company 2003 - 2005.
 
56
The Company’s executive officers generally hold terms of office of one year and/or until their successors are elected and serve at the discretion of the Board.


27



EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Our compensation program is designed to support our business goals and promote both short- and long-term growth using a pay-for-performance model for alignment of the financial interests of our executive team with the interests of our stockholders.
The overall objectives of our compensation program are as follows:
Stakeholder Incentives - promote an ownership interest that aligns management and stockholders. In this regard, the Organization & Compensation Committee approved robust share ownership guidelines that apply to our named executive officers, where over a period of time, each named executive officer is expected to own shares of our Common Stock equal in total market value to a designated multiple of such named executive officer’s annual salary;
Competitive Compensation - attract and retain high caliber executives and key personnel by providing compensation that is competitive with compensation for executive officers providing comparable services to similarly-situated companies, taking into account our size and complexity and the markets we serve;
Retention Incentives - retain high caliber executives by providing incentives for long-term continued employment with the Company; and
Performance Incentives - align the compensation structure of executives with goals of the Company by basing a meaningful portion of total compensation on achievement of performance goals.
In this section of the Proxy Statement, we explain how our compensation program is designed and operates with respect to our named executive officers, including how their pay is reflected in the Company’s performance on relevant financial measures. The following named executive officers are included in this proxy statement:
Ms. Drake is included as the Company’s current Principal Executive Officer (“PEO”).
Mr. Lundstrom is included as the Company’s current Principal Financial Officer (“PFO”).
Messrs. Tucker, Schumacher, and Kampani are included as the three most highly compensated officers other than the PEO and PFO.
Under the direction of the Organization & Compensation Committee of our Board, we have designed our executive compensation program pertaining to the named executive officers to attract and retain highly qualified executive officers and to directly link pay to performance. In fiscal 2017 our strategic goals continued to be focused on improving our financial performance, which resulted in the Organization & Compensation Committee maintaining the same performance measures within our annual incentive plan as in the previous year. Specifically, the Committee used the following measures for our named executive officers within our fiscal 2017 annual incentive plan:
Adjusted earnings before interest, taxes, depreciation, amortization and pension expense (“EBITDAP”);
Corporate cash flow from operations;
Aerojet Rocketdyne bookings; and
certain other goals that include individual performance and accomplishments of each named executive officer (this final component is only payable to the extent that all three aforementioned financial metrics are met or are above the threshold level).
The Organization & Compensation Committee also granted named executive officers fiscal 2017 equity, in the same form as was granted in 2016, of SARs (25% of award) and performance-based restricted stock (75% of award). The performance-based restricted stock vesting is subject to achievement of performance targets based on the following five metrics: revenue; adjusted EBITDAP; return on invested capital (“ROIC”); cumulative Competitive Improvement

28



Plan (“CIP”) investment; and cumulative CIP savings. The CIP is comprised of activities and initiatives aimed at reducing costs for the Company to continue to compete successfully.
A full discussion of our executive compensation program is described in the remainder of this section.
Say-on-Pay
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company provides our stockholders with the opportunity to cast an advisory vote regarding the compensation of our named executive officers. At the Annual Meeting of Stockholders of Aerojet Rocketdyne Holdings, Inc. held on May 4, 2017, 83% of the votes cast (excluding those who abstained or were broker non-votes) were in favor of the Company’s executive compensation program as described in that year’s annual Proxy Statement. After considering the outcome of this advisory vote and other relevant facts and circumstances relating to the Company’s executive pay, the Organization & Compensation Committee determined not to make any changes to our executive compensation policies as a result of the vote.
Compensation Elements for the Named Executive Officers
The compensation program for executive officers has historically consisted of the following principal elements:
Base salary;
Short-term annual cash incentive awards;
Long-term equity incentive awards, including restricted stock, performance-based restricted stock, stock options and cash-settled SARs; and
In-service and post-retirement/employment benefits - pension and 401(k) savings plans; however, defined benefit pension benefits were frozen effective fiscal 2009.
The Organization & Compensation Committee believes that these elements of compensation create a flexible package that reflects the long-term nature of the Company’s businesses and rewards both short- and long-term performance of the Company and each individual in accordance with the objectives of the compensation program. A description of these four components and related programs follows.
Base Salaries
Base salaries are used to provide a fixed amount of compensation for each executive’s regular work. Base salary increases for the CEO and President and the other named executive officers must be approved by the Organization & Compensation Committee. Base salary increases for other officers of the Company must be approved by the CEO and President. Typically, the effective date of merit increases in base salaries is in late March or early April of each year. Base salary increases can also occur upon an executive’s promotion. In determining the amount of any increases in salaries, the Organization & Compensation Committee and/or CEO and President (i) evaluates the executive’s performance in the most recent fiscal year as well as the strategic importance of the executive to the Company; (ii) compares current base, target total cash, and target total direct compensation with compensation for relevant executive positions set forth in peer group and survey benchmarking prepared by Korn Ferry Hay Group as well as industry-specific compensation surveys; and (iii) takes into account the timing and amount of the last salary increase for each of the executives.
In fiscal 2017, the Organization & Compensation Committee approved an increase in base salary for certain of the Company’s named executive officers based on several factors, including each individual’s performance, sustained levels of contribution to the Company, the wage increase during the previous fiscal year, a review of the executive and senior management total compensation study conducted by Korn Ferry Hay Group in 2017 on the Company’s behalf. Based on the foregoing and as reflected in the 2017 Summary Compensation Table , Ms. Drake’s base salary increased 4.0% , Mr. Tucker’s base salary increased 4.0% , Mr. Lundstrom’s base salary increased 3.0% , Mr. Schumacher’s base salary increased 4.0% , and Mr. Kampani’s base salary increased 4.0% .

29



Annual Cash Incentive Program
The primary objective of our annual cash incentive program is to drive current fiscal year performance and achievement of designated strategic business and financial goals, and to the extent these goals are achieved, to provide competitive compensation to our senior management team. To those ends, the Organization & Compensation Committee sets performance targets such that total cash compensation (base salary plus annual cash incentive) will be within a competitive range of total cash compensation against the market if performance targets are met.
In addition, our senior management team has individual performance targets. The annual cash incentive program follows our “pay-for-performance” philosophy. If business metrics are met at the threshold level, cash incentives for individual performance targets are paid; if such minimum threshold metrics are not met, no cash incentives for individual performance targets are paid. If metrics are met at the maximum or higher, the Organization & Compensation Committee has discretion to adjust payments to the executives. The Organization & Compensation Committee has discretion to increase, reduce or eliminate payments within the parameters of the cash incentive program.
Fiscal 2017 performance targets consisted of adjusted EBITDAP, Corporate operating cash flow, Aerojet Rocketdyne bookings, and certain other individual goals and had a 12-month performance period. With the input from our CEO and President; our Executive Chairman; our VP, CFO; and VP, Human Resources Business Partners and Labor Relations (“HRBP”); the Organization & Compensation Committee:
sets the overall Company and individual performance objectives and corresponding performance and payout ranges for the fiscal year;
establishes a threshold, target, and maximum incentive opportunity for each executive officer; and
measures performance and determines awards for the prior fiscal year.
Annual cash incentives are paid at the beginning of each fiscal year for the prior fiscal year’s performance. Incentives paid are based upon the Organization & Compensation Committee’s (with input from the CEO and President; the Executive Chairman; the VP, CFO; and VP, HRBP) assessment of actual performance (individually and Company-wide) against pre-established Company and business segment performance objectives, as appropriate, to determine the amount payable with respect to the applicable target incentive opportunity.
The Organization & Compensation Committee tailors both performance measures and targets in order to most accurately approximate success criteria for both of our business segments and the Company’s performance overall. The payout levels are subject to change every year. For fiscal 2017, our current named executive officers were eligible for a target payout level (as a percentage of base salary) based on their position in the Company, as set forth below:
Eileen P. Drake, CEO and President - 100%;
Mark A. Tucker, COO - 65%;
Paul R. Lundstrom, VP, CFO - 65%;
John D. Schumacher, VP, Washington Operations - 55%; and
Arjun L. Kampani, VP, General Counsel and Secretary - 55%.

30



The Corporate criteria for the annual cash incentives used for fiscal 2017 performance applicable to all of the named executive officers were the following:
Executive Targets
Threshold
Opportunity
Target
Opportunity
Maximum
Opportunity
  Actual  Performance
Actual  Achievement
(Dollars in Millions)
Adjusted EBITDAP (1)
15.0%
30.0%
60.0
%
 
$
232.7

43.2%
Ÿ Threshold — $192.5
 
 
 
 
 
 
Ÿ Target — $213.9
 
 
 
 
 
 
Ÿ Maximum — $256.7
 
 
 

 
 
 
Corporate Cash Flow from Operations (2)
15.0%
30.0%
60.0
%
 
$
212.9

60.0%
Ÿ Threshold — $ 60.7
 
 
 
 
 
 
Ÿ Target — $ 67.5
 
 
 
 
 
 
Ÿ Maximum — $ 80.9
 
 
 

 
 
 
Aerojet Rocketdyne Bookings (3)
15.0%
30.0%
60.0
%
 
$
1,671.6

44.7%
Ÿ Threshold — $ 1,370.4
 
 
 
 
 
 
Ÿ Target — $ 1,522.6
 
 
 
 
 
 
Ÿ Maximum — $ 1,827.1
 
 
 

 
 
 
Personal Factors (4)
5.0%
10.0%
20.0
%
 
 
20.0%
Ÿ Threshold — 0 x multiplier
 
 
 
 
 
 
Ÿ Target — 1 x multiplier
 
 
 

 
 
 
Totals   
50.0%
100.0%
200.0
%
(5)  
 
167.9%
(1)
We defined Adjusted EBITDAP to be earnings before interest, taxes, depreciation, amortization and retirement benefit expense adjusted for unusual items.
(2)
We defined Corporate Cash Flow from Operations to be the Company’s cash provided by operating activities net of cash used in financing activities, exclusive of debt issuance costs, repayments on debt and proceeds from the issuance of debt.
(3)
We defined Aerojet Rocketdyne Bookings to be the amount of money to be received for a contract of our Aerospace and Defense segment for which funding is authorized and has been directly appropriated and contractually obligated by the customer.
(4)
Personal Factors are only applicable after achieving all three financial metrics at the threshold level.
(5)
Under the terms of the Company’s annual incentive plan, the named executive officers had the opportunity to earn up to 2x the following payout levels as a percent of base salary: 100% for Ms. Drake; 65% for Messrs. Tucker and Lundstrom; and 55% for Messrs. Schumacher and Kampani.
The calculations for the final payment of the annual cash incentive award for each named executive officer for fiscal 2017 performance were as follows, which are also reported in the “Non-Equity Incentive Plan Compensation” column of the 2017 Summary Compensation Table , which follows this Compensation Discussion and Analysis:
Name
Payout
Level
Base Salary
Cash Incentive Awards
Award at
100%
Target
Performance
Award at
200%
Maximum
Performance
Actual
Performance
Achievement
Percentage
Actual
Payout at
Achievement
Percentage
Eileen P. Drake
100%
$
728,000

$
728,000

$
1,456,000

167.9%
$
1,222,312

Mark A. Tucker
65%
454,272

295,277

590,554

167.9%
495,770

Paul R. Lundstrom
65%
442,900

287,885

575,770

167.9%
483,359

John D. Schumacher
55%
351,801

193,490

386,981

167.9%
324,870

Arjun L. Kampani
55%
338,000

185,900

371,800

167.9%
312,126

On February 27, 2018, the Organization & Compensation Committee met and approved fiscal 2017 annual cash incentive awards, which are reported above and in the “Non-Equity Incentive Plan Compensation” column of the 2017 Summary Compensation Table , which follows this Compensation Discussion and Analysis.

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Long-Term Incentives (Equity-Based Compensation)
The Company, upon the recommendation and approval of the Organization & Compensation Committee, established the performance objectives and other terms of the Company’s 2017 Long-Term Incentive Program (the “2017 LTIP”) for executive officers and other eligible employees of the Company. The 2017 LTIP has a 36-month performance period for performance-based grants and a three-year vesting period for service-based grants. The Company uses long-term incentive compensation for executives to reinforce four strategic objectives:
to focus on the importance of returns to stockholders;
to promote the achievement of long-term performance goals;
to encourage executive retention; and
to promote higher levels of Company stock ownership by executives for increased alignment with stockholder interests.
Historically, the Company has strived to provide a sizable portion of the named executive officer’s compensation in an equity-based form. This type of compensation, coupled with the Company’s share ownership guidelines, will result in the executives becoming stockholders with considerable personal financial interest in the fiscal health and performance of the Company.
The amount of equity-based awards granted to executives has been determined by subtracting the executive’s annual cash compensation opportunity from the total targeted direct compensation that is competitive with the market based on SEC filings for our peer group and broad-based industry studies. The ultimate value of these equity-based awards at grant has been driven in part by the executive’s performance in the past fiscal year and in part by their ability to increase the value of the Company going forward.
Our equity-based compensation in fiscal 2017 for the named executive officers included awards of service-based SARs, and performance-based restricted stock and is more fully described as follows:
SARs (service-based) - A grant of SARs represents the right to receive a payment, during a defined period of time in the future (assuming continued employment), of an amount equal to the increase in measured value of a specified number of the Company’s Common Stock. SARs are designed to attract and retain executives by compensating them for increases in stockholder value over time. Service-based SARs are generally exercisable in three years from the date of grant. All SARs have a seven-year contractual life from the date of grant. As with restricted stock grants, executives who voluntarily resign or are terminated for cause immediately forfeit all unvested SARs unless otherwise determined by the Organization & Compensation Committee.
Restricted stock (performance-based) - A grant of performance-based restricted stock is an award of shares of Common Stock that vests over a period of time after the grant date (depending upon the vesting conditions set by the Organization & Compensation Committee) provided that the relevant performance goals are met. Performance-based restricted stock awards are designed to drive financial performance as the awards vest from 50% to 200% of target based on performance, attract and retain executives by providing them with some of the benefits associated with stock ownership during the restriction period, while incentivizing them to remain with the Company. During the restricted performance period, the executives may not sell, transfer, pledge, assign or otherwise convey their restricted stock. However, executives may vote their shares and are entitled to receive dividend payments, if any are made. Executives who voluntarily resign or are terminated for cause prior to the end of the restriction period forfeit their restricted stock unless otherwise determined by the Organization & Compensation Committee.
In determining the grants of the 2017 LTIP, a 75% weighting was given on performance-based awards and a 25% weighting was put on service-based awards for the named executive officers. This mix was given to promote the achievement of long-term performance goals to add value to the Company, focus on returns to stockholders, encourage retention, and align with our pay-for-performance philosophy.
The grants for the 2017 LTIP were made in May of 2017. The performance-based grants vest on or about February 28, 2020, based on meeting performance targets for the three-year performance period ending December 31, 2019 and subject to approval by the Organization & Compensation Committee in early 2020. The service-based grants vest in

32



May of 2020. See the 2017 Grants of Plan-Based Awards table for share amounts and grant date fair value of these grants specific to the named executive officers.
The performance metrics for the performance-based grant are: revenue, EBITDAP, ROIC, cumulative CIP investment, and cumulative CIP savings metrics for the performance period. The vesting of the performance-based restricted stock depends on the level of achievement against target, with a minimum threshold level, and ranges from 50% to 200% of the target award. No performance-based restricted stock will vest if the threshold level of performance against all the specified metrics is not achieved.
All of the named executive officers were participants in the performance-based restricted stock grant and the service-based SAR grant made in May of 2017.
On February 27, 2018, performance-based grants from the 2015 Long-Term Incentive Program (“2015 LTIP”) vested at 127.82% resulting in 20,784 shares vesting for Ms. Drake, 14,667 shares vesting for Mr. Tucker, and 13,520 shares vesting for Mr. Schumacher. The performance metrics were EBITDAP, ROIC, cumulative CIP Phase I investments, and cumulative Phase I savings. The 2015 LTIP performance-based awards were granted on March 30, 2015 with a three-year performance period.
Our equity-based compensation in fiscal 2018 for the named executive officers includes two additional components of awards under the 2009 Incentive Plan consisting of service-based restricted stock, and performance-based restricted stock and is more fully described as follows:
Restricted stock (service-based) - A grant of service-based restricted stock is an award of shares of Common Stock that vests over a period of time after the grant date (assuming continued employment). Service-based stock is designed to attract and retain executives. Service-based restricted shares generally vest in 1/3 increments on the first, second, and third anniversaries of the grant date. During the restricted period, the executives may not sell, transfer, pledge, assign or otherwise convey their restricted stock. However, executives may vote their shares and are entitled to receive dividend payments, if any are made. Executives who voluntarily resign or are terminated for cause prior to the end of the restriction period forfeit their restricted stock unless otherwise determined by the Organization & Compensation Committee.
Restricted stock (price performance-based) - A grant of price performance-based restricted stock is an award of shares of Common Stock that vests over a period of time after the grant date (depending upon the vesting conditions set by the Organization & Compensation Committee) provided that the relevant share price goals are met. Price performance-based restricted stock awards are designed to attract and retain executives by compensating them for increases in stockholder value over time. During the restricted performance period, the executives may not sell, transfer, pledge, assign or otherwise convey their restricted stock. However, executives may vote their shares and are entitled to receive dividend payments, if any are made. Executives who voluntarily resign or are terminated for cause prior to the end of the restriction period forfeit their restricted stock unless otherwise determined by the Organization & Compensation Committee
Administration of the Executive Compensation Program
The Organization & Compensation Committee determines most matters of executive compensation and benefits, although the committee has delegated to the CEO and President the authority to establish base salaries and annual incentive compensation of the officers of the Company other than herself, and the named executive officers. Our CEO and President; our Executive Chairman; our VP, CFO; and our VP, HRBP (who was our Acting VP, Human Resources in fiscal 2017) provided input to the Organization & Compensation Committee with respect to the fiscal 2017 compensation program. The Organization & Compensation Committee reviews and approves the total compensation for the CEO and President, and the other named executive officers.
In assessing competitive overall compensation, the Organization & Compensation Committee engages, from time to time, an independent outside consulting firm to aid in the review and evaluation of the total compensation provided to the named executive officers. Since fiscal 2010, the Company has retained Korn Ferry Hay Group (which includes Hay Group prior to its acquisition) to review the design of the Company’s annual and long-term incentive programs and to assist in developing an executive compensation structure that is based on the internal hierarchy of jobs and is

33



aligned with external market practices. In performing its duties, Korn Ferry Hay Group worked with senior management and the Chairman of the Organization & Compensation Committee to understand the Company’s business strategy, the competitive market for talent, and the accountabilities of the executives and perceptions of the Company’s current compensation programs. Korn Ferry Hay Group was also instructed to develop an executive compensation comparator group of publicly traded companies in the aerospace and defense industry. Based on the information presented by Korn Ferry Hay Group and input from our CEO and President; our Executive Chairman; our VP, CFO; and our VP, HRBP, the Organization & Compensation Committee exercised its business judgment in setting base salaries and incentive compensation levels and correlating performance levels for incentive-based compensation for the named executive officers.
Independent Executive Compensation Consultant’s Role
Both management and the Organization & Compensation Committee retain Korn Ferry Hay Group to provide objective analysis, advice and information to each of them, including competitive market data and compensation recommendations related to the CEO and President, the Executive Chairman, other senior executives, and the Board. Korn Ferry Hay Group served as the independent executive compensation consultant to management and to the Organization & Compensation Committee during fiscal 2017. The executive compensation consultant reports to the VP, HRBP and the Chairman of the Organization & Compensation Committee, and has direct access to the other members of the Organization & Compensation Committee as well as senior management. The fees incurred in fiscal 2017 to Korn Ferry for compensation services provided by Korn Ferry Hay Group to management and the Organization & Compensation Committee related to executive and Director compensation totaled $291,015 which was a $57,623 reduction from fiscal 2016 fees. These fees were driven by Korn Ferry Hay Group’s annual assistance with our executive compensation programs. In addition, Korn Ferry provided certain services to the Company at the request of management consisting of four senior executive searches and a leadership institute totaling $560,470. The total fees incurred for the services provided by Korn Ferry to the Company in fiscal 2017 were $851,485.
The Organization & Compensation Committee believes Korn Ferry’s work for the Company, consisting of four senior executive searches and consulting leadership institute, did not raise a conflict of interest and did not impair Korn Ferry Hay Group’s ability to provide independent advice to the Organization & Compensation Committee concerning executive compensation matters.
In making the overall determination of the independence of Korn Ferry Hay Group and their lead advisor to the Organization & Compensation Committee, the Organization & Compensation Committee considered, among other things, the factors on independence adopted in final SEC rules and approved in NYSE listing standards.
The decisions made by the Organization & Compensation Committee are the responsibility of the Organization & Compensation Committee and may reflect factors and considerations other than the information and recommendations provided by Korn Ferry Hay Group.
Consideration of Competitive Market Data Regarding Executive Compensation
The Organization & Compensation Committee and the CEO and President used the results of the compensation study completed by Korn Ferry Hay Group in fiscal 2017 to determine pay for fiscal 2017. The Organization & Compensation Committee set base salaries, target annual cash incentive levels and target annual long-term incentive award values for the named executive officers generally at or below the 50 th percentile of competitive market levels for comparable aerospace and defense companies. This approach was the starting point of the analysis, then adjustments were made to some executives’ target compensation to reflect other factors such as the executives’ experience, breadth of responsibilities, tenure in the position, overall individual performance, and the Company’s performance overall.
The study conducted by Korn Ferry Hay Group in fiscal 2017 compared total executive compensation against similarly sized U.S. companies in the aerospace and defense industry and in the broader general industry, using data from Korn Ferry Hay Group’s Executive Compensation Survey. In addition, Korn Ferry Hay Group was instructed to develop an executive compensation comparator group of publicly traded companies in the aerospace and defense industry. In selecting the comparator group, the Company generally considered companies with revenues of approximately one-half to two times the Company’s revenues and companies in the aerospace and defense industry, excluding those that were exclusively focused on services. The purpose of the comparator group was to compare target

34



and actual compensation levels of the Company’s named executive officers to the named executive officers of the comparator group. No changes were made to the comparator group from the group used for compensation benchmarking in fiscal 2016.
The table below shows information for the comparator group used for benchmarking in fiscal 2017:
 
($ in millions)
 
FY 2016 Sales
FY 2016 Net Income (Loss)
Market Capitalization on 12/31/2016
Company
 
 
 
 
Aerojet Rocketdyne Holdings, Inc.
$
1,761

$
18

$
1,231

 
 
 
 
AAR Corp.
1,663

48

1,135

Barnes Group Inc.
1,231

136

2,552

BE Aerospace Inc.
2,933

311

6,115

Crane Co.
2,748

124

4,227

Cubic Corp.
1,462

2

1,294

Curtiss Wright Corp.
2,109

187

4,350

Ducommun, Inc.
551

25

286

Esterline Technologies Corp.
1,993

102

2,625

Heico Corp.
1,376

176

5,191

Hexcel Corp.
2,004

250

4,727

Kaman Corp.
1,808

59

1,327

Kratos Defense & Security Solutions, Inc.
669

(61
)
448

MOOG Inc.
2,412

124

2,356

Orbital ATK Inc.
4,455

293

5,142

Teledyne Technologies Incorporated.
2,150

191

4,298

Triumph Group Inc.
3,886

(1,048
)
1,312

Woodward Inc.
2,023

181

4,242

Pension Plans, 401(k) Savings Plan and Benefit Restoration Plans
Pension Plans
The Company’s defined benefit pension and benefits restoration plans (“BRP”) include the Qualified Pension Plan, a tax-qualified defined benefit plan; and the 2009 Pension BRP Plan, a non-qualified defined benefit plan. These plans are frozen and effective February 1, 2009 and July 31, 2009, future benefit accruals for all non-collective bargaining-unit employees, including the named executive officers, and collective bargaining-unit employees respectively, were discontinued. No employees lost their previously earned pension benefits. Mr. Schumacher is the only named executive officer that has an accrued balance in the same frozen pension plans as other employees. Mr. Schumacher’s pension benefits were earned from his previous employment with the Company beginning June 12, 2006 through the pension freeze date for non-collective bargaining-unit employees of February 1, 2009. All the other named executive officers do not participate in a pension plan because their employment commenced after benefit accruals were discontinued. Further details regarding benefits under these plans, including the estimated value of pension benefits for Mr. Schumacher, are found in the section entitled 2017 Pension Benefits on page 45.
401(k) Savings Plan
The named executive officers are also eligible to participate in the Aerojet Rocketdyne Retirement Savings Plan, a 401(k) tax-qualified defined contribution savings plan which is available to all Company employees. The Company

35



matches 100% of the first 3% of employee contributions, and 50% of the next 3% of employee contributions for all participating employees.
2009 401(k) Benefits Restoration Plan
The named executive officers participate in the related non-qualified, unfunded 2009 BRP Plan for the Aerojet Rocketdyne Holdings, Inc. 401(k) Plan (the “2009 401(k) BRP Plan”) which enables participants to defer their compensation on a pre-tax basis. The Company matches employee contributions if the participant has reached the 402(g) limit in the 401(k) savings plan. Details about the 2009 401(k) BRP Plan are presented in the section entitled 2017 Non-qualified Deferred Compensation on page 46.
Executive Stock Ownership Guidelines
In order to strengthen the alignment between the financial interests of stockholders and the financial interests of executives of the Company, the Organization & Compensation Committee has share ownership guidelines that apply to the Company’s executive officers. Under these guidelines, each executive officer is expected to have equity in the Company equal in aggregate market value to a designated multiple of such officer’s annual salary. The multiples are as follows: Executive Chairman and CEO and President - six times CEO base salary; CFO, COO, and General Counsel - three times base salary; Senior VPs - two times base salary; and all other VPs subject to the guidelines - one time base salary.
In calculating the amount of equity owned by an executive, the Organization & Compensation Committee looks at the value of Company stock owned by the executive which includes vested or unvested restricted stock as well as unvested performance-based restricted shares at the percentage expected to vest, and the value of any vested “in the money” stock options or SARs (i.e. market value of stock in excess of the strike price for the stock option or SAR.) Newly appointed executives are expected to be in compliance with the ownership guidelines within five years of their appointments. Each executive is required to retain 50% of his or her net shares obtained through vesting of shares or exercising stock options until the executive is in compliance with the established guidelines. Executives must remain in compliance with the established guidelines after any sale of shares of the Company’s Common Stock.
As of December 31, 2017, all of the named executive officers either held equity in the Company equal in market value to the guidelines in place at that time or are in the transition period set forth in the guidelines and are anticipated to meet the guidelines by the end of the transition period. The Organization & Compensation Committee routinely reviews the guidelines, and considers adjustments when appropriate. The following table shows the current status of equity ownership for each current named executive officer as of December 31, 2017.
Name
Value of Equity    
Ownership *     
Date of Election
Years as an Officer
Eileen P. Drake
8,299,418

03/02/2015
2.8
Mark A. Tucker
2,897,357

10/07/2013
4.2
Paul R. Lundstrom
1,652,461

11/07/2016
1.2
John D. Schumacher
2,233,149

04/29/2013
4.7
Arjun L. Kampani
1,868,880

04/11/2016
1.8
*
Value is based on the stock price on December 29, 2017 of $31.20.
Transactions in Company Securities
The Company’s insider trading policy prohibits Directors, officers, and employees from engaging in certain short-term or speculative transactions involving the securities of the Company. Pursuant to the policy, Directors, officers, and employees may not engage in short sales of the Company’s stock nor buy or sell puts, future contracts, or other forms of derivative securities relating to the Company’s securities.

36



Employment Agreement and Plan Provisions
Eileen P. Drake Employment Agreement
On March 13, 2018, the Company entered into an amended and restated employment agreement with Ms. Drake, pursuant to which Ms. Drake agreed to continue to serve as the Company’s CEO and President.  The agreement provides for an initial one-year term, which will be automatically extended, upon the same terms and conditions, for successive one-year periods unless either party, at least 60 days prior to the expiration of the then-current term, gives written notice to the other of its intention not to renew such employment. The agreement provides that Ms. Drake will receive an annual base salary increase from $728,000 to $825,000 with such base salary increase effective March 24, 2018.  Additionally, the agreement provides to Ms. Drake, among other things, (i) an annual bonus based on a target opportunity pursuant to the Company’s Annual Incentive Plan which shall be adopted annually by the Board (currently at 100% of annual base salary); and (ii) annual equity awards based on a target opportunity of 345.5% (increased from 200%) pursuant to the terms of the 2009 Incentive Plan.
In the event that the Company terminates Ms. Drake’s employment for Cause or Ms. Drake resigns other than for Good Reason (as such terms are defined in the agreement), the Company’s obligations will generally be limited to (i) payment of her base salary accrued up to and including the date of termination or resignation, to be paid at termination, (ii) payment in lieu of any accrued but unused vacation time, in accordance with the Company’s vacation policy, (iii) payment of any unreimbursed expenses in accordance with the Company’s business reimbursement policy, and (iv) payments and benefits under any Company benefit plan, program or policy that Ms. Drake participated in during employment and paid pursuant to the terms of such plan, program and policy (the “Accrued Obligations”).  
If Ms. Drake’s employment is terminated at any time due to her Death or Disability (as such terms are defined in the agreement), Ms. Drake shall be entitled to receive the Accrued Obligations and severance payments and benefits equal to the following: (i) twelve (12) months of her base salary paid in installments; (ii) any bonuses earned and paid by the date of termination; (iii) other than a performance-based award granted on November 18, 2015 which shall not vest, to the extent unvested at the time of Ms. Drake’s termination of employment, immediate full vesting of all of Ms. Drake’s equity awards; (iv) outplacement services provided by the Company-designated outplacement firm for a period of eighteen (18) months starting no later than ninety (90) days from the date of termination with a maximum value of $25,000; (v) in the case of Death, life insurance benefits paid in accordance with the terms of the policy and coverage in which Ms. Drake was enrolled before the date of Death; and (vi) in the case of termination due to Disability, the Company shall pay for the premiums associated with a six (6) month continuation, without any required contributions from Ms. Drake (but subject to all other plan and policy terms) in Ms. Drake’s Company provided life insurance policy in which she is enrolled before the date of termination; and (vii) provided Ms. Drake timely elects and is eligible for COBRA coverage, the Company shall pay for the premiums associated with six (6) months of Ms. Drake’s continued participation, without any required contributions from Ms. Drake (but subject to all other plan terms, including co-payments and deductibles) in the Aerojet Rocketdyne Medical Plan, the Aerojet Rocketdyne Dental Plan, and the Aerojet Rocketdyne Vision Plan (the “Benefit Plans”) in which she is enrolled before the date of termination.   
  If Ms. Drake’s employment is terminated at the Company’s election at any time for reasons other than Cause, or by Ms. Drake for Good Reason (and not for Death or Disability or in connection with a change in control), then Ms. Drake shall be entitled to receive the Accrued Obligations and severance payments and benefits equal to the following: (i) twelve (12) months of her base salary paid in installments; (ii) other than a performance-based award granted on November 18, 2015 which shall not vest, to the extent unvested at the time of Ms. Drake’s termination of employment, immediate full vesting of all of Ms. Drake’s equity awards; (iii) Ms. Drake will have the opportunity to continue to participate in the Company provided life insurance policy in which she is enrolled before the date of termination at an amount of 1x Base Salary for a period of twelve (12) months following the date of termination; (iv) provided Ms. Drake timely elects and is eligible for COBRA coverage, the Company shall pay for the premiums associated with eighteen (18) months of Ms. Drake’s continued participation, without any required contributions from Ms. Drake (but subject to all other plan terms, including co-payments and deductibles) in the Benefit Plans in which she is enrolled prior to the date of termination; and (v) outplacement services provided by the Company-designated outplacement firm for a period of eighteen (18) months starting no later than ninety (90) days from the date of termination with a maximum value of $25,000. 

37



If Ms. Drake’s employment is terminated by the Company without Cause (excluding due to a Death or Disability) or by Ms. Drake for Good Reason within eighteen (18) months following a Change in Control (as defined in the 2009 Incentive Plan or, if more inclusive, such definition set forth in any successor or replacement equity compensation plan of the Company) then Ms. Drake shall be entitled to the following payments and benefits: (i) the Accrued Obligations; (ii) annual target bonus for the pro-rated portion of the fiscal year prior to the Change in Control paid in a lump sum; (iii)  a severance payment equal to eighteen (18) months of (y) Ms. Drake’s base salary and (z) annual target bonus paid in a lump sum; (iv) to the extent unvested at the time of Ms. Drake’s termination of employment, immediate full vesting of all of Ms. Drake’s equity awards; (v) Ms. Drake will have the opportunity to continue to participate in the Company provided life insurance policy in which she is enrolled before the date of termination at an amount of 1x Base Salary for a period of twelve (12) months following the date of termination; (vi) provided Ms. Drake timely elects and is eligible for COBRA coverage, the Company shall pay for the premiums associated with eighteen (18) months of Ms. Drake’s continued participation, without any required contributions from Ms. Drake (but subject to all other plan terms, including co-payments and deductibles) in the Benefit Plans in which Ms. Drake is enrolled prior to the date of termination; and (vii) outplacement services provided by the Company-designated outplacement firm for a period of eighteen (18) months starting no later than ninety (90) days from Ms. Drake’s date of termination with a maximum value of $25,000.
Clawbacks
Both the 2017 annual incentive program, under which annual cash incentives are paid, and the 2009 Incentive Plan include provisions for seeking the return (clawback) from participants of incentive cash payments and stock sale proceeds in the event that those amounts had been inflated due to financial results that later had to be restated. In addition, both plans provide that the Organization & Compensation Committee must first determine that the applicable participant engaged in misconduct contributing to the reason for the misstatement.
Other
The Aerojet Rocketdyne Foundation matches all employee and Director gifts to accredited, non-profit colleges, universities, secondary and elementary public or private schools located in the United States. Gifts made in fiscal 2016 were matched dollar for dollar up to $3,000 per calendar year per donor. Gifts made in fiscal 2017 were matched dollar for dollar up to $1,000 per calendar year per donor.
Impact of Accounting Guidance for Stock-Based Compensation
The accounting standards applicable to stock-based compensation are one factor that the Company and the Organization & Compensation Committee consider in the design of its long-term equity incentive programs. Other factors include the link to the performance that each vehicle provides, the degree of upside leverage and downside risk inherent in each vehicle, the impact on dilution and overhang that the vehicles have, and the role that each vehicle has in the attraction, retention, and motivation of our executive and key employee talent. The Company monitors its stock-based compensation expense to ensure that it is reasonable, but expense will not be the most important factor in making decisions about our long-term incentive plans.
Tax Deductibility under Section 162(m)
Section 162(m) of the Code limits the amount of compensation that may be deducted by the Company for federal income tax purposes to $1,000,000 for compensation paid to our CEO and President, our VP, CFO, and our other three most highly compensated executive officers that must be reported to stockholders under the Exchange Act (referred to as “covered employees”). Prior to the Tax Cuts and Jobs Act, “performance-based” compensation that has been approved by our stockholders and otherwise satisfies the performance-based requirements under Section 162(m) of the Code is not subject to the Code’s $1,000,000 deduction limit. The 2017 tax legislation eliminated the performance-based exemption, expanded the group of “covered employees” subject to the limitations of Section 162(m) of the Code, and made “covered employee” status permanent, even after an employee’s termination of employment (including by death). While the Organization & Compensation Committee prefers compensation paid to our named executive officers to be tax deductible under the Code, the Organization & Compensation Committee also recognizes the need to retain flexibility to make compensation decisions that may not meet the limitations of Section 162(m) when it determines is necessary or appropriate to enable the Company to continue to attract, retain, reward and motivate its highly qualified executives.

38



Therefore, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible.
Limited Government Reimbursement of Compensation
As a government contractor, the Company is subject to the Federal Acquisition Regulation, which limits the reimbursement of costs by our government customers for senior executive compensation to a benchmark compensation cap established each year. The cap applies to all employees of the Company. Any amounts over the cap are considered unallowable and, therefore, not billed to the government.

39



2017 SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation for each of the named executive officers for fiscal years 2017, 2016 and 2015 and one-month ended December 31, 2015.
Name and Principal Position
Fiscal Period
Salary (1)
Bonus
Stock Awards (2)
Options/SARs
Awards (2)
Non-Equity Incentive Plan Compensation (3)
All Other Compensation (4)
Total
Eileen P. Drake (5)
2017
$
721,538

$

 
$
1,091,999

(6)  
$
501,131

 
$
1,222,312

$
24,224

$
3,561,204

Chief Executive Officer and President
2016
702,692


 
1,049,998

 
501,060

 
951,673

40,229

3,245,652

Dec 2015
61,923


 

 

 
80,827


142,750

2015
477,695

200,000

 
3,916,338

 
241,662

 
574,587

76,585

5,486,867

Mark A. Tucker (7)
2017
450,240


 
459,963

(8)  
211,072

 
495,770

11,532

1,628,577

Chief Operating Officer
2016
434,538


 
409,503

 
195,415

 
421,589

11,925

1,472,970

Dec 2015
37,154


 

 

 
35,806


72,960

2015
384,341


 
264,614

 
170,523

 
256,536

10,921

1,086,935

Paul R. Lundstrom (9)
2017
439,923


 
448,453

(10)  
205,790

 
483,359

29,520

1,607,045

Vice President, Chief Financial Officer
2016
66,154

100,000

 
656,400

 

 
59,762

359,599

1,241,915

John D. Schumacher
 
 
 
 
 
 
 
 
 
 
 
Vice President, Washington Operations
2017
348,678


 
263,864

(11)  
121,087

 
324,870

14,750

1,073,249

Arjun L. Kampani (12)
2017
335,000


 
253,516

(13)  
116,333

 
312,126

12,150

1,029,125

Vice President, General Counsel and Secretary
2016
237,500

100,000

 
872,156

 
117,563

 
263,656

92,874

1,683,749

(1)
The amount reported in this column reflects the dollar amount of base salary earned in each listed fiscal period.
(2)
The amounts reported in these columns represent the aggregate grant date fair value of awards granted in each of the periods presented. The grant date fair value of stock awards is computed in accordance with GAAP excluding the effect of estimated forfeitures and is equal to the closing price of our stock on the date of grant times the number of shares awarded and in the case of performance grants, adjusted for the probable outcome of achieving performance metrics. The grant date fair value of stock options and SARs awards was estimated using the Black-Scholes Model. A discussion of the assumptions used in calculating these values may be found in Note 9(d) in the audited financial statements in the Company’s Annual Report on Form 10-K for fiscal 2017. A description of these awards can be found under the section entitled Long-Term Incentives (Equity-Based Compensation) on page 32.
(3)
The amount reported in this column reflects annual cash incentive compensation, which is based on performance in each listed fiscal period. This annual incentive compensation is discussed further under the section entitled Annual Cash Incentive Program on page 30.
(4)
The amount reported in this column includes the following for fiscal 2017:
Name
Company
Matching
Contribution to
401(k) Plan
Company
Matching
Contribution to
Benefits
Restoration
Plan-
Savings Plan
Matching Gift
by the Aerojet Rocketdyne
Foundation
Perquisites
And Other
Personal
Benefits (A)
Total
Eileen P. Drake
$
12,150

$

$

$
12,074

$
24,224

Mark A. Tucker
11,532




11,532

Paul R. Lundstrom
12,011



17,509

29,520

John D. Schumacher
12,150


2,600


14,750

Arjun L. Kampani
12,150




12,150

(A) This column includes items paid by the Company or reimbursed to the employee for relocation expenses.
 
(5)
Ms. Drake commenced her employment with the Company on March 2, 2015.
(6)
Ms. Drake’s stock awards compensation consists of $1,091,999 for a performance-based restricted stock grant that vests based on revenue, EBITDAP, ROIC, cumulative CIP investment, and cumulative CIP savings metrics for fiscal 2019. The grant date fair value of the performance based restricted stock grant at the maximum vesting of 200% would be $ 2,183,997 .
(7)
Mr. Tucker was appointed COO on June 25, 2015.
(8)
Mr. Tucker’s stock awards compensation consists of $459,963 for a performance-based restricted stock grant that vests based on revenue, EBITDAP, ROIC, cumulative CIP investment, and cumulative CIP savings metrics for fiscal 2019. The grant date fair value of the performance based restricted stock grant at the maximum vesting of 200% would be $919,904.
(9)
Mr. Lundstrom commenced his employment with the Company on November 7, 2016.

40



(10)
Mr. Lundstrom’s stock awards compensation consists of $448,453 for a performance-based restricted stock grant that vests based on revenue, EBITDAP, ROIC, cumulative CIP investment, and cumulative CIP savings metrics for fiscal 2019. The grant date fair value of the performance based restricted stock grant at the maximum vesting of 200% would be $896,883.
(11)
Mr. Schumacher’s stock awards compensation consists of $263,864 for a performance-based restricted stock grant that vests based on revenue, EBITDAP, ROIC, cumulative CIP investment, and cumulative CIP savings metrics for fiscal 2019. The grant date fair value of the performance based restricted stock grant at the maximum vesting of 200% would be $527,706.
(12)
Mr. Kampani commenced his employment with the Company on April 11, 2016.
(13)
Mr. Kampani’s stock awards compensation consists of $253,516 for a performance-based restricted stock grant that vests based on revenue, EBITDAP, ROIC, cumulative CIP investment, and cumulative CIP savings metrics for fiscal 2019. The grant date fair value of the performance based restricted stock grant at the maximum vesting of 200% would be $507,010.



41



2017 GRANTS OF PLAN-BASED AWARDS
The following table provides information for each of the named executive officers for fiscal 2017 annual and long-term incentive award opportunities, including the range of possible payments under non-equity incentive plans.
Name
Grant
Date
Estimated Possible Payouts Under
Non-Equity Incentive Plan
Awards ($)
(1)
Estimated Future Payouts
Under Equity Incentive Plan
Awards (#)
Other
Stock
Awards:
Number
of Shares
of Stock
or
Units (#)
All
Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
Exercise
or Base
Price of
Options/SARs
($/Sh)
Grant Date
Fair Value of
Stock and
Option/SARs
Awards ($)
Threshold  (2)
Target
Maximum
Threshold
Target
Maximum
Eileen P. Drake
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 
$

$
728,000

$
1,456,000

 
 
 
 
 
 
 
 
Restricted Stock
05/01/2017
 
 
 
24,430

48,859

97,718

 
 
 
$
1,091,999

(3)  
SARs
05/01/2017
 
 
 
 
 
 
 
53,028

$
22.35

501,131

(4)  
Mark A. Tucker
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

295,277

590,554

 
 
 
 
 
 
 
 
Restricted Stock
05/01/2017
 
 
 
10,290

20,580

41,159

 
 
 
459,963

(3)  
SARs
05/01/2017
 
 
 
 
 
 
 
22,335

22.35

211,072

(4)  
Paul R. Lundstrom
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

287,885

575,770

 
 
 
 
 
 
 
 
Restricted Stock
05/01/2017
 
 
 
10,033

20,065

40,129

 
 
 
448,453

(3)  
SARs
05/01/2017
 
 
 
 
 
 
 
21,776

22.35

205,790

(4)  
John D. Schumacher
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

193,490

386,981

 
 
 
 
 
 
 
 
Restricted Stock
05/01/2017
 
 
 
5,903

11,806

23,611

 
 
 
263,864

(3)  
SARs
05/01/2017
 
 
 
 
 
 
 
12,813

22.35

121,087

(4)  
Arjun L. Kampani
 
 
 
 
 
 
 
 
 
 
 
   
Annual Incentive Award
 

185,900

371,800

 
 
 
 
 
 
 
 
Restricted Stock
05/01/2017
 
 
 
5,672

11,343

22,685

 
 
 
253,516

(3)  
SARs
05/01/2017
 
 
 
 
 
 
 
12,310

22.35

116,333

(4)  
(1)
Reflects the possible payout amounts of non-equity incentive plan awards that could have been earned in fiscal 2017. See the 2017 Summary Compensation Table on page 40 for the amounts actually earned in fiscal 2017 and paid out in the first quarter of fiscal 2018.
(2)
If all financial metrics are not met at the threshold level, the annual incentive award will not be earned.
(3)
Vesting of this performance-based restricted stock grant is based on financial performance for fiscal 2019. The grant date fair value at the maximum of 200% vesting would be $ 2,183,997 for Ms. Drake, $ 919,904 for Mr. Tucker, $ 896,883 for Mr. Lundstrom, $ 527,706 for Mr. Schumacher, and $ 507,010 for Mr. Kampani.
(4)
The fair value of these SAR grants were estimated using the Black-Scholes Model with the following weighted average assumptions at the grant date: expected life - seven years; volatility - 36.72%; risk-free interest rate - 2.268%; dividend yield - 00.0%.






42



OUTSTANDING EQUITY AWARDS AT 2017 FISCAL YEAR END
The following table provides information for each of the named executive officers regarding outstanding stock options, SARs, and stock awards held by the officers as of December 31, 2017.
Name
Option/SARs Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options/SARs
(#)
Exercisable
    Number of
    Securities
    Underlying
    Unexercised
    Options/SARs
    (#)
    Unexercisable
    Equity
    Incentive
    Plan Awards:
    Number of
    Securities
    Underlying
    Unexercised
    Unearned
    Option/SARs
    (#)
Option/
SARs
Exercise
Price
($)
Option/
SARs
Expiration
Year
Service-Based Equity
Awards
Equity Incentive
Plan Awards
    Number of
    Shares or
    Units of
    Stock That
    Have Not
    Vested
    (#)
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($) (1)
    Number of
    Unearned
    Shares, Units
    or Other
    Rights That
    Have Not
    Vested
    (#)
    Market or
    Payout Value
    of Unearned
    Shares,
Units
    or Other
    Rights That
    Have Not
    Vested
    ($) (1)
Eileen P. Drake
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted Stock  
 
 
 
 
 
 
 

 
$

97,718

(2)  
$
3,048,802

 
 
 
 
 
 
 
 

 

131,414

(3)  
4,100,117

 
 
 
 
 
 
 
 

 

40,000

(4)  
1,248,000

 
 
 
 
 
 
 
 

 

32,522

(5)  
1,014,686

 
 
 
 
 
 
 
 
25,667

(6)  
800,810


 

SARs

53,028

(7)  

 
$
22.35

2024
 
 
 
 
 
 
 

68,189

(8)  

 
15.98

2023
 
 
 
 
 
 
Stock Options  

17,848

(9)  

 
23.06

2022
 
 
 
 
 
 
Mark A. Tucker
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted Stock
 
 
 
 
 
 
 

 

41,159

(2)  
1,284,161

 
 
 
 
 
 
 
 

 

51,252

(3)  
1,599,062

 
 
 
 
 
 
 
 

 

22,950

(5)  
716,040

SARs

22,335

(7)  

 
22.35

2024
 
 
 
 
 
 
 

26,594

(8)  

 
15.98

2023
 
 
 
 
 
 
Stock Options

12,594

(9)  

 
23.06

2022
 
 
 
 
 
 
Paul R. Lundstrom
 
 
 
 
 
 
 
 
 
 
 
 
 
Restricted Stock
 
 
 
 
 
 
 

 

40,129

(2)  
1,252,025

 
 
 
 
 
 
 
 
26,666

(10)  
831,979