Document



 
 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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þ     Definitive Proxy Statement
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¨     Soliciting Material Under §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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http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12800827&doc=2
  
222 N. Pacific Coast Highway, Suite 500
El Segundo, CA 90245
March 26, 2019

Dear Stockholder:
You are cordially invited to attend the 2019 Annual Meeting of Stockholders of Aerojet Rocketdyne Holdings, Inc., which will be held at 9:00 a.m. Pacific Time, on May 9, 2019. Our 2019 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, 2019 a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”) will be mailed to our stockholders. This Notice of Internet Availability will contain instructions on how to access the Notice of Annual Meeting, the Proxy Statement and the Company’s Annual Report for 2018 on Form 10-K (the “2018 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






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AEROJET ROCKETDYNE HOLDINGS, INC. NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS
DATE
 
TIME
 
RECORD DATE
Thursday, May 9, 2019
 
9:00 A.M. Pacific Time
 
Wednesday, March 13, 2019
HOW TO CAST YOUR VOTE
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?on page 65.
ONLINE
 
BY PHONE
 
BY MAIL
Vote online at www.proxyvote.com. You may also vote online during the meeting at ajrd.onlineshareholdermeeting.com
 
Vote by phone by calling 1-800-690-6903
 
If you have received a printed version of these proxy materials you may vote by mail using the postage-paid envelope provided
HOW TO ATTEND THE MEETING
Attend the 2019 annual meeting of stockholders (the “Annual Meeting”) online at ajrd.onlineshareholdermeeting.com.
The Annual Meeting will begin at 9:00 a.m. Pacific Time on Thursday, May 9, 2019.
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.
The record date for the Annual Meeting is Wednesday, March 13, 2019. This means you are entitled to receive notice of the meeting and vote shares at the meeting if you were a stockholder of record as of the close of business on Wednesday, March 13, 2019.
ITEMS OF BUSINESS
1.
To elect the seven directors named in the Proxy Statement to our Board of Directors to serve until the 2020 annual meeting of stockholders and until their respective successors have been duly elected and qualified;
2.
To consider and approve an advisory vote to approve Aerojet Rocketdyne’s executive compensation;
3.
To ratify the appointment of PricewaterhouseCoopers LLP, an independent registered public accounting firm, as independent auditors of the Company for the year ending December 31, 2019;
4.
To Approve the Company’s 2019 Equity and Performance Incentive Plan;
5.
To consider and act on such other business as may properly be brought before the meeting or any adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ Arjun L. Kampani
ARJUN L. KAMPANI
Vice President,
General Counsel and Secretary
Important Notice Regarding the Availability of proxy materials for the 2019 Annual Meeting of Stockholders to be held on May 9, 2019: The Proxy Statement and the Company’s 2018 Annual Report are available at www.proxyvote.com





TABLE OF CONTENTS
 
Page
 






PROXY STATEMENT SUMMARY
This summary highlights selected information that is provided in more detail throughout this Proxy Statement. For additional information about these topics, refer to the discussions contained throughout this document and in the Company’s 2018 Annual Report. You should read the full Proxy Statement before casting your vote. This Proxy Statement contains certain non-GAAP (accounting principles generally accepted in the United States of America) financial measures, which are identified with asterisks. For more information on these non-GAAP financial measures, see Appendix A.
Annual Stockholders’ Meeting
 
Time: May 9, 2019, 9:00 a.m. Pacific Time
Record Date: You are entitled to vote if you were a shareholder of record at the close of business on March 13, 2019.
Place: Online at ajrd.onlineshareholdermeeting.com
 
Voting Matters and Board Recommendations
 
 
Proposals
Board Vote Recommendation
Page Reference
Proposal 1: Election of Directors
FOR 
each Director Nominee
Proposal 2: Advisory Vote to Approve Aerojet Rocketdyne’s Executive Compensation
FOR
Proposal 3: Ratification of the Appointment of Independent Auditors
FOR
Proposal 4: Approval of the Company’s 2019 Equity and Performance Incentive Plan
FOR

1




2018 Performance Highlights
Net sales were impacted by the adoption of new revenue recognition guidance effective January 1, 2018.
Net sales in 2018 would have been $1,910 million under the previous revenue guidance.
Increase of $126 million in defense programs primarily driven by increased deliveries on the Standard Missile and PAC-3 programs.
Decrease of $95 million in space programs primarily driven by cost growth and performance issues on the Commercial Crew Development program and lower deliveries on the Atlas V program.
Net income increased primarily due to:
Decrease of $45 million in income taxes.
One-time benefit of $43 million from increased recoverability of environmental remediation costs.
Improved contract performance resulting in an increase of $22 million in favorable changes in contract estimates.
Decrease of $16 million in retirement benefits expense.
Cash flow provided by operating activities increased primarily due to:
Improved operating results.
Decrease in retirement benefit cash funding.
(In millions)

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* These are non-GAAP financial measures. For more information, see Appendix A - Use of Non-GAAP Financial Measures.

2




2018 Executive Compensation Highlights
We have designed our executive compensation program pertaining to the named executive officers (“NEOs”) to attract and retain highly qualified executive officers and to directly link pay to performance. In 2018 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 NEOs within our 2018 annual incentive plan:
Adjusted earnings before interest, taxes, depreciation, amortization and pension expense (“EBITDAP”);
Cash flow from operations;
Aerojet Rocketdyne bookings; and
Certain other goals that include individual performance and accomplishments of each NEO.
The Organization & Compensation Committee also granted NEOs 2018 equity-based compensation in the same form as was granted in 2017, consisting of stock appreciation rights (“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 three metrics: revenue; adjusted EBITDAP; and return on invested capital (“ROIC”). In addition, the 2018 equity-based compensation included two additional components of awards consisting of service-based restricted stock and stock price performance-based restricted stock.
Board of Director Nominees and Committees
 
 
 
Committee Membership
Name
Age(1)
Director Since
Audit
Corporate
Governance &
Nominating
Organization &
Compensation
Kevin P. Chilton
64
2018
 
 
 
Thomas A. Corcoran
74
2008
 
M
M
Eileen P. Drake
52
2015
 
 
 
James R. Henderson
61
2008
C
C
 
Warren G. Lichtenstein
53
2008
 
 
 
Lance W. Lord
72
2015
M
 
M
Merrill A. McPeak(2)
82
2013
 
M
C
Martin Turchin
77
2008
M
M
 
M = Committee Member C = Committee Chairman
 
(1)
Age as of December 31, 2018.
(2)
Gen. McPeak will retire from the Board in 2019 and is not a nominee.



3




PROPOSAL 1: ELECTION OF DIRECTORS
The Company’s Second Amended and Restated Bylaws (the “Bylaws”) provide that the entire Board of Directors (the “Board”) of Aerojet Rocketdyne Holdings, Inc., a Delaware corporation (“Aerojet Rocketdyne” or the “Company”) 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 Company’s directors (“Directors”) then in office. The Board has fixed the number of Directors to serve on the Board at seven.
The Board has proposed the following nominees for election as Directors at the Annual Meeting: Kevin P. Chilton; Thomas A. Corcoran; Eileen P. Drake; James R. Henderson; Warren G. Lichtenstein; Lance W. Lord 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.
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 17.
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, 2018.


















4




GENERAL KEVIN P. CHILTON
USAF (Ret.)
Age: 64
Director since 2018
 
 
Gen. Chilton has served as president of Chilton & Associates LLC, an aerospace, cyber and nuclear consulting company, since 2011, when he retired from the U.S. Air Force after over 34 years of service completing his career as the Commander, U.S. Strategic Command, where he was responsible for the plans and operations for all U.S. forces conducting strategic nuclear deterrence, space and cyberspace operations. From 2006 to 2007, Gen. Chilton served as Commander of Air Force Space Command, where he was responsible for all Air Force space and nuclear ICBM programs. From 1998 to 2006, Gen. Chilton held a number of positions in the Department of Defense including: Commander of the 9th Reconnaissance Wing; Commander of the 8th Air Force; Deputy Director of Politico-Military Affairs, Asia-Pacific and Middle East; Deputy Director of Programs; and acting Assistant Vice Chief of Staff of the Air Force. From 1987 to 1998, he served as a National Aeronautics and Space Administration (“NASA”) Astronaut, participating in three space shuttle flights and as Deputy Program Manager for Operations for the International Space Station Program. Gen. Chilton is also a distinguished graduate of the U.S. Air Force Academy, with a Bachelor of Science degree in Engineering Science; a Columbia University Guggenheim Fellow with a Master of Science degree in Mechanical Engineering; and a distinguished graduate of the U.S. Air Force pilot training and test pilot schools. Gen. Chilton also was awarded an honorary Doctor of Laws degree from Creighton University.

Current and Former Public Company Directorships
CenturyLink, Inc. - Audit Committee, Risk & Security Committee (Chair)
Anadarko Petroleum Corporation - Audit Committee until 2017
Level 3 Communications, Inc. - Audit Committee, Classified Business and Security Committee (Chair) until 2017
Orbital ATK, Inc. - Audit Committee, Markets & Technology Committee until 2017
Orbital Sciences Corporation - Audit Committee, Markets & Technology until 2015
Other Service
Air Force Academy Falcon Foundation, Trustee
Pikes Peak or Bust Rodeo Foundation, Trustee
Cobham Advanced Electronic Solutions, Director - Compensation Committee (Chair)
Lawrence Livermore National Laboratories Board of Governors, Member
Sandia National Laboratory Board of Managers, Member
Air Force Academy Association of Graduates, Former Director
The Aerospace Corporation, Former Director
Shafer Corporation, Former Director
Attributes, Skills and Qualifications
Extensive career as a senior military officer with the United States Air Force and as a NASA Astronaut
Significant public company board experience
 

5




THOMAS A. CORCORAN
Age: 74
Director since 2008
Committee Memberships:
Organization & Compensation Committee
Corporate Governance & Nominating Committee
 
 
Mr. Corcoran has been President of Corcoran Enterprises, LLC, a management consulting company, since 2001. He also served as Senior Advisor of The Carlyle Group, a private investment firm, from 2001 to 2017. Mr. Corcoran has held a number of senior executive positions, including President and Chief Executive Officer (“CEO”) of Gemini Air Cargo, Inc. from 2001 to 2004; President and CEO of Allegheny Teledyne Incorporated from 1999 to 2000; and President and Chief Operating Officer (“COO”) of Lockheed Martin Corporation’s Electronic Systems and Space & Strategic Missiles sectors from 1993 to 1999. Mr. Corcoran was also 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 in 1990, after beginning his career with General Electric Company in 1967. Mr. Corcoran has been a director of numerous private and public companies.

Current and Former Company Directorships
L3 Technologies, Inc. - Audit & Ethics Committee, Compensation Committee
ARINC, Inc. until 2013
Other Service
American Ireland Fund, Director
Stevens Institute of Technology, Board of Trustees
Worcester Polytechnic Institute, Trustee Emeritus
Attributes, Skills and Qualifications
Considerable industry knowledge gained from extensive experience as a senior executive in the aerospace industry
Significant public company board experience, including service as a director of a Fortune 500 company
 

6




EILEEN P. DRAKE
Age: 52
Director since 2015
 
 
Ms. Drake has served as CEO and President of the Company since June 2015. Immediately prior to these roles, she served as the Company’s COO from March 2015 to June 2015. Before joining the Company, Ms. Drake held several senior positions with United Technologies Corporation (“UTC”), a multinational manufacturing conglomerate, from 2003 to 2015, including President of Pratt & Whitney AeroPower’s auxiliary power unit and small turbojet propulsion business from 2012 to 2015. From 1996 to 2003, 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. Ms. Drake also 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 and 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 licenses in both fixed-wing and rotary-wing aircraft.

Current and Former Public Company Directorships
Woodward, Inc.
Other Service
Aerospace Industries Association, Board of Governors - Executive Committee & Finance Committee
Attributes, Skills and Qualifications
Considerable aerospace and defense industry knowledge and operational expertise
Public company board experience
 





7




JAMES R. HENDERSON
Age: 61
Director since 2008
Committee Memberships:
Corporate Governance & Nominating Committee (Chairman)
Audit Committee (Chairman)
 
 
Mr. Henderson has served as CEO of Armor Express, a private designer and manufacturer of body armor solutions, since 2018. From 2016 to 2018, Mr. Henderson served as CEO of Steel Connect, Inc. (formerly known as ModusLink Global Solutions, Inc.) (“Steel Connect”), a private supply-chain management company. From 2013 to 2014, Mr. Henderson served as Acting CEO of School Specialty, Inc., a company that provides education-related products, programs and services. Prior to these positions, Mr. Henderson served a number of roles with Steel Partners LLC, a subsidiary of Steel Partners Holdings L.P. (“SPLP”), and its affiliates from 1999 until 2011. Mr. Henderson’s positions included Managing Director and operating partner of Steel Partners LLC, and CEO, President and COO, and VP of Operations of SPLP’s predecessor entity, WebFinancial Corporation. From 2011 to 2012, Mr. Henderson served as CEO of Point Blank Enterprises, Inc., the successor business to Point Blank Solutions, Inc. (“Point Blank”), where he had previously served as CEO. On April 14, 2010, Point Blank and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. 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.

Current and Former Public Company Directorships
School Specialty, Inc., until 2018
Aviat Networks Inc., until 2016
RELM Wireless Corporation (n/k/a BK Technologies, Inc.), until 2015 (Chairman)
DGT Holdings Corp., until 2011
Point Blank Solutions, Inc. until 2011 (Chairman)
SL Industries, Inc., until 2010
Other Service
Armor Express, Director
Easton Development Company, LLC (Company subsidiary), Manager of the Board of Managers
Attributes, Skills and Qualifications
Extensive business experience advising and managing public companies
Significant public company board experience
 

8




WARREN G. LICHTENSTEIN
Age: 53
Director since 2008
 
 
Mr. Lichtenstein has served as the Company’s Executive Chairman since 2016, and previously served as the Chairman of the Board from 2013 to 2016. He has served on the boards of more than twenty public companies in his career and held a number of chairman or executive chairman titles. Mr. Lichtenstein has served as the interim CEO of Steel Connect (formerly known as ModusLink Global Solutions, Inc.) since December 2018 and previously from March 2016 until June 2016. Mr. Lichtenstein also served as Chairman of the Board of Steel Connect from March 2013 until June 2016, at which time he was appointed Executive Chairman. Mr. Lichtenstein served as Chairman and CEO of Steel Partners Holdings GP Inc., the general partner of SPLP, from 2009 to 2013, and has served as its Executive Chairman since February 2013. Mr. Lichtenstein is the founder of Steel Partners and has been associated with SPLP and its predecessors and affiliates since 1990.

Current and Former Public Company Directorships
Steel Connect, Inc., Executive Chairman and Interim CEO
Steel Partners Holdings GP Inc., Executive Chairman
Steel Excel Inc. (a subsidiary of SPLP), Chairman (went private in 2017)
Handy & Harman Ltd. (a subsidiary of SPLP) (went private in 2017)
SL Industries, Inc., Director (acquired by SPLP in 2016)
Other Service
Steel Partners Foundation, Director
Federal Law Enforcement Foundation, Director
Attributes, Skills and Qualifications
Extensive business experience in corporate finance, managing private investment funds and advising a diverse group of public companies
Significant public company board experience
Significant operation experience in manufacturing, space, defense, banking and steel business systems
 






9




GENERAL LANCE W. LORD
USAF (Ret.)
Age: 72
Director since 2015
Committee Memberships:
Audit Committee
Organization & Compensation Committee
 
 
Since retiring from the U.S. Air Force in 2006 after 37 years of military service, Gen. Lord has been a Senior Associate of The Four Star Group, LLC, a private aerospace and defense advisory and consulting group, since 2008, and a Senior Associate of HF GlobalNET, LLC, a private communication network company, since 2014. In 2010, Gen. Lord founded L2 Aerospace, LLC, an innovative company to shape and influence the business competition in the dynamic and emerging commercial, civil and defense aerospace markets. While in the military, Gen. Lord held a number of significant posts, including Commander, Air Force Space Command, from 2002 to 2006, during which time he was responsible for the development, acquisition and operation of Air Force space and missile weapon systems. In that position, he led more than 39,700 personnel who provided space and intercontinental ballistic missile combat capabilities to the North American Aerospace Defense Command and U.S. Strategic Command. Gen. Lord also received several prestigious military decorations in his career, including the Distinguished Service Medal and Legion of Merit. He is also the 2014 recipient of the American Astronautical Society’s Military Astronautics Award.

Current and Former Public Company Directorships
Frequency Electronics Corporation - Audit Committee, Compensation Committee
Other Service
L2 Aerospace, LLC, Executive Chairman
Association of Air Force Missileers, President
Von’s Vision, Executive Board Member
Iridium Corporation, Government Advisory Board Member
Challenger Learning Center, Emeritus Member of Board of Advisors
Falcon Foundation, Trustee
Sletten Construction Company, Director
Marotta Controls Corporation, Director
Boneal Company, Director
Measured Risk, LLC, Director
USO Colorado Springs, Board of Advisors Former Chairman
Attributes, Skills and Qualifications
Extensive career as a senior military officer with the United States Air Force
Significant public company board experience
 





10




MARTIN TURCHIN
Age: 77
Director since 2008
Committee Memberships:
Audit Committee
Corporate Governance & Nominating Committee
 
 
Mr. Turchin has been a non-executive Vice Chairman of CBRE Group, Inc. (“CBRE”), the world’s largest real estate services company, since 2003. Prior to this role, Mr. Turchin held senior positions with numerous real estate firms, serving as a Vice Chairman of a subsidiary of Insignia Financial Group from 1996 to 2003; a principal and Vice Chairman of Edward S. Gordon Company from 1985 to 1996, and in 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 holds a Bachelor of Science degree from City College of the University of New York and a Juris Doctor degree from St. John’s Law School.

Current and Former Public Company Directorships
Boston Properties, Inc. - Audit Committee
Other Service
Eastern Development Company, LLC (a Company subsidiary), Manager of the Board of Managers
Turchin Family Charitable Foundation, Trustee
Attributes, Skills and Qualifications
Extensive experience and expertise in the real estate industry
Significant public company board experience
 
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.

11




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 the Company’s common stock (“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.
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.
Meetings of the Board
The Board held seven meetings during 2018. All of the Directors who served during 2018 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 2018. 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 2018 annual meeting of stockholders were present at such meeting.
Meetings of Non-Employee Directors
Non-employee Directors (consisting 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.

12




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 confirm 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, supporting the CEO and President in implementing and executing Company strategy.
All of the Company’s other 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 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 reviews and discusses with management the Company’s guidelines and policies with respect to the process by which the Company undertakes risk assessment and risk management including discussion of the Company’s major financial and compliance risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee also reviews and assists the Board in overseeing 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.

13




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, 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 New York Stock Exchange (“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 current Directors and 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. In addition, during his term of service, former Director James H. Perry was determined to be “independent” by the NYSE listing standards.

14




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. Pacific Coast Highway, Suite 500, El Segundo, California 90245. In addition, non-standing committees of the Board include the Authorization Committee (which was disbanded December 12, 2018) and the Benefits Management Committee.
The following table provides the membership of each standing committee of the Board in 2018:
Name
Audit
Corporate
Governance &
Nominating
Organization &
Compensation
Kevin P. Chilton
 
 
 
Thomas A. Corcoran
 
M
M
James R. Henderson
M
C
 
Lance W. Lord
M
 
M
Merrill A. McPeak(1)
 
M
C
James H. Perry(2)
C
 
M
Martin Turchin
M
M
 
M = Committee Member C = Committee Chairman
(1)
Gen. McPeak is not standing for re-election at the Annual Meeting.
(2)
Mr. Perry resigned from the Board effective November 16, 2018. Mr. Henderson was appointed Chairman of the Audit Committee following Mr. Perry’s departure effective December 12, 2018.

15




Following are the descriptions of each of the three standing committees and the number of meetings held by each in 2018:
Audit Committee
Number of meetings in 2018: 6
Roles and Responsibilities
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;
reviews the Company’s disclosure of the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and annual audited and quarterly financial statements with management and with the Company’s independent auditors and recommends to the Board to include the financial statements in the Company’s Annual Reports on Form 10-K or the Company’s Quarterly Reports on Form 10-Q, as applicable;
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 and terminates the independent auditors 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 with management and independent auditors their judgment about the Company’s selection or application of accounting principles, practices and financial reporting;
receives periodic reports from management, legal counsel, the Company’s corporate Ethics and Compliance Office and third parties as determined by the Committee; 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 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. Henderson is an “audit committee financial expert” under the applicable rules promulgated pursuant to the Exchange Act.
Corporate Governance & Nominating Committee
Number of meetings in 2018: 4
Roles and Responsibilities
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;
assists in identifying, screening 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;
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.

16




Organization & Compensation Committee
Number of meetings in 2018: 9
Roles and Responsibilities
reviews and approves the total compensation of the CEO and President and the Executive Chairman;
administers the Company’s deferred compensation plan, the Aerojet Rocketdyne 2018 Equity and Performance Incentive Plan (the “2018 Incentive Plan”) and the Aerojet Rocketdyne Amended and Restated 2009 Equity and Performance Incentive Plan (the “2009 Incentive Plan”);
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 reviews 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 proposed major changes, as appropriate;
annually reviews changes in the Company’s employee benefit, savings and retirement plans and reports thereon to the Board;
approves, and in some cases recommends to the Board for approval, the compensation of executive officers of the Company, although 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; and
periodically 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 the Securities and Exchange Commission (the “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. Pacific Coast Highway, 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 9, 2020, nor earlier than the close of business on January 10, 2020.

17




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 (90th) day or earlier than the one hundred twentieth (120th) 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 (90th) day prior to such annual meeting or the tenth (10th) 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 (120th) day; and (ii) not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) 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. Pacific Coast Highway, 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, 2018, the members of the Organization & Compensation Committee included Merrill A. McPeak (Chairman), Thomas A. Corcoran and Lance W. Lord. Mr. Perry was a member of the Organization & Compensation Committee before his retirement from the Board on November 16, 2018. 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.


18




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 was updated by the Company in November 2017 after evaluation of the recommendations by Korn Ferry (formerly “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. Specifically, the Organization & Compensation Committee requested that Korn Ferry 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 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 is more fully described below.
Director Compensation Components
Annual Retainer Fees and Stock Awards
Annual fees and awards under our Director compensation program for non-employee Directors are summarized below:
Component
Annual Amount ($)
Annual retainer
$
70,000

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

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

Members of the Audit Committee
10,000

Chairman of the Audit Committee*
15,000

Members of a long-term special committee
5,000

Members of a limited purpose special committee
3,250

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

Annual award of restricted stock
100,000

* 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 and the 2018 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.

19




In May 2018, each non-employee Director received $100,000 worth of equity compensation pursuant to the 2018 Incentive Plan. This grant consisted of 3,588 restricted shares of Common Stock for each non-employee Director. These awards vest in 50% increments on the six-month and twelve-month anniversaries of the grant date. In October 2018, Gen. Chilton received $50,000 worth of equity compensation upon election to the Board. This grant consisted of 1,652 restricted shares of Common Stock which vest in 50% increments on the six-month and twelve-month anniversaries 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.
Non-employee Directors also receive 500 shares of restricted stock upon their initial election to the Board.
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 are 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.
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 $275,000. On February 28, 2019, the equity ownership guidelines were revised to require non-employee Directors to own equity in the Company in an amount equal to five times their annual retainer. 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 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, 2018, most of the non-employee Directors held equity in the Company equal in market value to the guidelines in place at the time and those that do not meet the requirements 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 following table shows the current status of equity ownership for each non-employee Director as of December 31, 2018.
Name
Value of Equity
Ownership*
Date of Election
Years as a 
Director
Kevin P. Chilton
$
101,498

10/30/2018
0.2

 
Thomas A. Corcoran
4,097,283

09/24/2008
10.3

 
James R. Henderson
3,967,849

03/05/2008
10.8

 
Lance W. Lord
970,727

02/02/2015
3.9

 
Merrill A. McPeak
2,390,460

03/27/2013
5.8

 
Martin Turchin
4,880,958

03/05/2008
10.8

 
* Value is based on the stock price on December 31, 2018, of $35.23.
Compensation of Executive Chairman
Mr. Lichtenstein was appointed as our Executive Chairman on June 24, 2016. Mr. Lichtenstein received no compensation or equity grants in 2017 or 2018. Further, he does not participate in the compensation programs that are provided to our other executive officers. On August 19, 2016, the Board upon the recommendation of the Advisory and the Organization & Compensation Committees, approved a compensation package for Mr. Lichtenstein to cover his compensation as Executive Chairman for a period of two years. The components and

20




details of Mr. Lichtenstein’s compensation are as provided in the Company’s 2018 Proxy Statement filed with the SEC on March 29, 2018.
On February 28, 2019, the Board upon the recommendation of the Advisory and Organization & Compensation Committees, approved the following grants pursuant to the Company’s 2018 Incentive Plan to Mr. Lichtenstein:    
(i)
49,158 shares of time-based restricted stock vesting in 1/3 increments on February 28, 2020, February 28, 2021 and February 28, 2022 (subject to continued service through each such date), having an aggregate grant date fair value of approximately $1.8 million;
(ii)
200,000 stock appreciation rights with a grant price of $37.25 exercisable on February 28, 2022 (subject to continued service through such date) and expiring on February 28, 2026 having an aggregate grant date fair value of approximately $2.6 million; and
(iii)
an option to purchase 91,229 shares of the Company’s Common Stock with a grant price of $37.25 exercisable on February 28, 2022 (subject to continued service through such date) and expiring on February 28, 2026 having an aggregate grant date fair value of approximately $1.2 million.
The aforementioned grants were determined reasonable compensation for Mr. Lichtenstein’s continued service as our Executive Chairman based on his skills and experience and are intended to cover Mr. Lichtenstein’s compensation, in lieu of salary, for the period from August 2018 until December 2018 during which he did not receive any compensation, and for his continued service through the end of 2019.
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 41 for an explanation of how equity ownership is calculated for the Executive Chairman. Mr. Lichtenstein’s value of equity ownership as of December 31, 2018 was $24,589,685.
2018 DIRECTOR COMPENSATION TABLE
The following table sets forth information regarding compensation earned or paid to each non-employee Director who served on the Board in 2018. Employee Directors are not compensated for services as a Director.
Name
Fees Earned
or Paid
($)(1)
Stock Awards
($)(2)(3)
Option
Awards
($)(2)(3)
All Other
Compensation
($)
Total
($)
Kevin P. Chilton
$
17,472

$
73,856

$

$

$
91,328

Thomas A. Corcoran
89,924

144,928


2,000

236,852

James R. Henderson
117,432

158,695



276,127

Lance W. Lord
87,425

121,772



209,197

Merrill A. McPeak
94,913

147,436



242,349

James H. Perry
107,427

167,062



274,489

Martin Turchin
102,438

151,198



253,636


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(1)
The amounts reported in this column for each non-employee Director reflect the dollar amount of the Board and Committee fees paid in 2018. 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 2018.
Name
Grant
Date
Fully Vested Stock
Awards
(#)
Grant Date
Fair Value
($)
Kevin P. Chilton
11/15/2018
486

$
17,472

 
Total
486

17,472

Thomas A. Corcoran
02/15/2018
634

17,492


05/15/2018
1,345

37,485

 
08/15/2018
483

17,475


11/15/2018
486

17,472

 
Total
2,948

89,924

James R. Henderson
02/15/2018
634

17,492

 
05/15/2018
2,332

64,993


08/15/2018
483

17,475

 
11/15/2018
486

17,472

 
Total
3,935

117,432

Lance W. Lord
02/15/2018
317

8,746

 
05/15/2018
627

17,474

 
08/15/2018
241

8,719

 
11/15/2018
243

8,736

 
Total
1,428

43,675

Merrill A. McPeak
02/15/2018
634

17,492

 
05/15/2018
1,524

42,474

 
08/15/2018
483

17,475

 
11/15/2018
486

17,472

 
Total
3,127

94,913

James H. Perry
02/15/2018
634

17,492

 
05/15/2018
1,973

54,988

 
08/15/2018
483

17,475

 
11/15/2018
486

17,472

 
Total
3,576

107,427

Martin Turchin
02/15/2018
634

17,492

 
05/15/2018
1,794

49,999

 
08/15/2018
483

17,475

 
11/15/2018
486

17,472

 
Total
3,397

102,438









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(2)
The amounts reported in these columns for each non-employee Director reflect the grant date fair value of stock awards in 2018. A description of these awards can be found under the section entitled Long-Term Equity Incentive Awards on page 36. 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 2018 Annual Report. The following table shows each grant of restricted shares of Common Stock granted during 2018 to each non-employee Director who served as a Director in 2018, and the aggregate grant date fair value for each award.
Name
Grant        
Date
    Stock Awards    
(#)
Grant Date    
Fair Value
($)
 
Kevin P. Chilton
10/30/2018
500

(A) 
$
15,130

 
 
10/30/2018
1,652

(C) 
49,990

 
 
11/15/2018
243

(B) 
8,736

 
 
Total
2,395

 
73,856

 
Thomas A. Corcoran
02/15/2018
317

(B) 
8,746

 
 
05/15/2018
3,588

(C) 
99,998

 
 
05/15/2018
672

(B) 
18,729

 
 
08/15/2018
241

(B) 
8,719

 
 
11/15/2018
243

(B) 
8,736

 
 
Total
5,061

 
144,928

 
James R. Henderson
02/15/2018
317

(B) 
8,746

 
 
05/15/2018
3,588

(C) 
99,998

 
 
05/15/2018
1,166

(B) 
32,496

 
 
08/15/2018
241

(B) 
8,719

 
 
11/15/2018
243

(B) 
8,736

 
 
Total
5,555

 
158,695

 
Lance W. Lord
02/15/2018
158

(B) 
4,359

 
 
05/15/2018
3,588

(C) 
99,998

 
 
05/15/2018
313

(B) 
8,723

 
 
08/15/2018
120

(B) 
4,342

 
 
11/15/2018
121

(B) 
4,350

 
 
Total
4,300

 
121,772

 
Merrill A. McPeak
02/15/2018
317

(B) 
8,746

 
 
05/15/2018
3,588

(C) 
99,998

 
 
05/15/2018
762

(B) 
21,237

 
 
08/15/2018
241

(B) 
8,719

 
 
11/15/2018
243

(B) 
8,736

 
 
Total
5,151

 
147,436

 
James H. Perry
02/15/2018
317

(B) 
8,746

 
 
05/15/2018
3,588

(C) 
113,381

(D) 
 
05/15/2018
986

(B) 
27,480

 
 
08/15/2018
241

(B) 
8,719

 
 
11/15/2018
243

(B) 
8,736

 
 
Total
5,375

 
167,062

 
Martin Turchin
02/15/2018
317

(B) 
8,746

 
 
05/15/2018
3,588

(C) 
99,998

 
 
05/15/2018
897

(B) 
24,999

 
 
08/15/2018
241

(B) 
8,719

 
 
11/15/2018
243

(B) 
8,736

 
 
Total
5,286

 
151,198

 
(A)
This award vests three years from the grant date on October 30, 2021.
(B)
These shares vest on the earlier of the Director’s retirement from the Board or the one year anniversaries of the grant date.
(C)
These equity awards vest in 50% increments on the six-month and twelve-month anniversary of the grant date.
(D)
The grant date fair value presented here includes the incremental fair value of a modification to accelerate the vesting of 50% of the award to November 16, 2018. The original vesting date was May 15, 2019.

23




(3)
The following table shows the amount of unvested stock awards and outstanding and unexercised SARs awards as of December 31, 2018, for each non-employee Director who served as a Director in 2018 and the Executive Chairman.
Name
Unvested Stock 
Awards
Outstanding and
Unexercised SARs and Stock Options
Kevin P. Chilton
2,395


Thomas A. Corcoran
3,267

7,355

James R. Henderson
3,761


Warren G. Lichtenstein
60,000

272,482

Lance W. Lord
2,506


Merrill A. McPeak
3,357

7,355

James H. Perry


Martin Turchin
3,492

46,201


 

24




VOTING SECURITIES AND PRINCIPAL HOLDERS
Security Ownership of Certain Beneficial Owners
The following table presents beneficial owners of more than 5% of the 78,667,616 shares of the Common Stock outstanding as of March 13, 2019, based on reports on Schedule 13D and Schedule 13G filed with the SEC on or prior to March 13, 2019.
Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent
of Class
BlackRock, Inc.
55 East 52nd Street, New York, NY 10055
12,408,504

(1) 
15.8%
GAMCO Investors, Inc.
One Corporate Center, Rye, NY 10580
8,035,196

(2) 
10.2%
The Vanguard Group
100 Vanguard Blvd., Malvern, PA 19355
8,031,900

(3) 
10.2%
T. Rowe Price Associates, Inc.
100 E. Pratt Street, Baltimore, MD 21202
7,194,037

(4) 
9.1%
Steel Partners Holdings L.P.
590 Madison Avenue, 32nd Floor, New York, NY 10022
4,180,997

(5) 
5.3%
(1)
BlackRock, Inc. reported sole voting power with respect to 12,266,517 shares and sole dispositive power with respect to the 12,408,504 shares. The foregoing information is according to Amendment No. 9 to a Schedule 13G dated January 24, 2019, and filed with the SEC on January 24, 2019.
(2)
Includes shares beneficially owned by Mario J. Gabelli and various affiliated entities, including Gabelli Funds, LLC, GAMCO Asset Management Inc., Teton Advisors, Inc., Gabelli Securities, Inc., GGCP, Inc., GAMCO Investors, Inc. and Associated Capital Group, Inc. Gabelli Funds, LLC reported sole voting power and sole dispositive power with respect to 2,844,349 shares. GAMCO Asset Management Inc. reported sole voting power with respect to 3,758,632 shares and sole dispositive power with respect to 4,053,332 shares. Gabelli & Company Investment Advisors, Inc. reported sole voting power and sole dispositive power with respect to 1,000 shares. Teton Advisors, Inc. reported sole voting power and sole dispositive power with respect to 1,128,515 shares. GGCP, Inc. reported sole voting power and sole dispositive power with respect to 8,000 shares. GAMCO Investors, Inc. and Associated Capital Group, Inc. each reported sole voting power and sole dispositive power with respect to 0 shares. All of the foregoing information is according to Amendment No. 54 to a Schedule 13D dated October 30, 2018, and filed with the SEC on November 1, 2018 and is inclusive of an aggregate amount of 163,436 shares issuable upon the conversion of the Company’s 2.25% Senior Convertible Notes held by the reporting entities.
(3)
The Vanguard Group reported sole voting power with respect to 149,208 shares, shared voting power with respect to 9,787 shares, sole dispositive power with respect to 7,879,140 shares, and shared dispositive power with respect to 152,760. The foregoing information is according to Amendment No. 1 to a Schedule 13G dated February 11, 2019, and filed with the SEC on February 11, 2019.
(4)
T. Rowe Price Associates, Inc. reported sole voting power with respect to 1,385,347 shares and sole dispositive power with respect to the 7,194,037 shares. The foregoing information is according to a Schedule 13G dated February 14, 2019, and filed with the SEC on February 14, 2019.
(5)
Consists of shares owned directly by Steel Excel. SPH Group Holdings LLC (“SPHG Holdings”) owns 100% of the outstanding shares of common stock of Steel Excel. SPLP owns 99% of the membership interests of SPH Group LLC (“SPHG”). SPHG is the sole member of SPHG Holdings. Steel Partners Holdings GP Inc. (“Steel Partners GP”) is the general partner of SPLP, the managing member of SPHG and the manager of SPHG Holdings. By virtue of these relationships, each of SPLP, SPHG and Steel Holdings GP may be deemed to beneficially own the shares owned directly by Steel Excel. Each of the foregoing may be deemed to have shared voting and dispositive power with respect to such shares. All of the foregoing information is according to Amendment No. 24 to a Schedule 13D dated December 26, 2017, and filed with the SEC on December 26, 2017.



25




Security Ownership of Officers and Directors
The following table lists share ownership of Common Stock by the Company’s current Directors, nominees and 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 13, 2019.
Beneficial Owner
Amount and Nature of
Beneficial  Ownership(1)(2)
Percent of Class
Non-Employee Directors and the Executive Chairman
 
 
 
Kevin P. Chilton(3)
3,533

 
*
Thomas A. Corcoran(4)
112,360

 
*
James R. Henderson(5)
113,513

 
*
Warren G. Lichtenstein(6)
848,329

 
1.1%
Lance W. Lord(7)
27,879

 
*
Merrill A. McPeak(8)
63,912

 
*
Martin Turchin(9)
118,029

 
*
Executive Officers
 
 
 
Eileen P. Drake(10)
569,676

 
*
Mark A. Tucker
174,400

 
*
Paul R. Lundstrom
143,812

 
*
John D. Schumacher(11)
117,238

 
*
Arjun L. Kampani
99,271

 
*
All Current Directors and Executive Officers as a group (12 persons)
2,391,952

 
3.0%
* Less than 1.0%
(1)
Includes restricted shares granted under the 1999 Equity and Performance Incentive Plan, the 2009 Incentive Plan, the 2018 Incentive Plan and shares owned outright.
(2)
Includes shares issuable upon the exercise of stock options that may be exercised within 60 days after March 13, 2019, 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)
These shares are held in the name of the Rabbi Trust.
(4)
Includes 108,441 shares held in the Thomas A. Corcoran TTEE U/A DTD 07/16/2001.
(5)
Includes 65,406 shares held in the name of the Rabbi Trust.
(6)
Includes 515,089 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.
(7)
These shares are held in the name of the Rabbi Trust.
(8)
These shares are held in the name of the Rabbi Trust.
(9)
Includes 19,879 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.
(10)
Includes 113,534 shares held in the EPD 2018 Trust dated August 7, 2018.
(11)
The number of shares beneficially owned includes shares credited in the Aerojet Rocketdyne Retirement Savings Plan as of March 13, 2019.

26




Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s Directors and certain officers and persons who own more than 10% of the outstanding Common Stock to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and the NYSE. The SEC also requires such persons to furnish the Company with copies of the Forms 3, 4 and 5 they file. Based solely on our review of the copies of such forms that the Company has received, the Company believes that all of its Directors, executive officers and greater than 10% beneficial owners complied with all filing requirements applicable to them with respect to transactions during 2018.
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 at www.AerojetRocketdyne.com/corporate-governance (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. Pacific Coast Highway, Suite 500, El Segundo, California 90245).
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”). The Company received services of $0.6 million in both 2018 and 2017 from SPLP and SPL, which primarily included administrative services and the use of an aircraft for business travel. As of December 31, 2018 and 2017, the Company had liabilities due to such entities of $0.4 million and $0.2 million, respectively.
Lucas-Milhaupt, Inc., an indirect wholly-owned subsidiary of SPLP, sold $0.3 million and $0.2 million in raw materials to the Company for the manufacture of its products in 2018 and 2017, respectively.
GAMCO Investors, Inc. (“GAMCO”) owned 10% and 12% of the Company’s Common Stock at December 31, 2018 and 2017, respectively. The Company received services of $1.7 million and $1.1 million in 2018 and 2017, respectively from GAMCO for investment management fees of the Company’s defined benefit pension plan assets.
Martin Turchin, a member of the Board, is also a non-executive Vice Chairman of CBRE. The Company received services of $0.4 million from CBRE for lease commissions in 2018.
BlackRock, Inc. (“BlackRock”) owned 16% and 15% of the Company’s Common Stock at December 31, 2018 and 2017, respectively. The Company invests in money market funds managed by BlackRock.
The Vanguard Group, Inc. (“Vanguard”) owned 10% of the Company’s Common Stock at December 31, 2018 and 2017. Certain of the investment alternatives offered through the Company’s 401(k) savings plan include funds managed by Vanguard.

27




AUDIT COMMITTEE REPORT
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 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 LLP (“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 six times during 2018.
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 2018

28




Annual Report for filing with the SEC. The Audit Committee appointed PwC as the Company’s independent registered public accounting firm for 2019.
Submitted by the Audit Committee,
James R. Henderson, Chairman
Lance W. Lord
Martin Turchin
February 19, 2019



29




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 2018 Annual Report. The Board has approved that recommendation.
The Organization & Compensation Committee met nine times during 2018.
Submitted by the Organization & Compensation Committee,
Merrill A. McPeak, Chairman
Thomas A. Corcoran
Lance W. Lord
February 28, 2019


30




PROPOSAL 2: ADVISORY VOTE TO APPROVE AEROJET ROCKETDYNE’S EXECUTIVE COMPENSATION
As we do each year, pursuant to Section 14A of the Exchange Act, which was added under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the Company is providing its stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of the NEOs as disclosed in this Proxy Statement in accordance with the SEC’s rules. Unless the Company modifies its policy on the frequency of advisory votes to approve executive compensation, it is expected that the next such vote will occur at the 2020 Annual Meeting of Stockholders.
As described in the Compensation Discussion and Analysis, the Company’s executive compensation program is designed to support our business goals and promote both short-term and long-term growth and directly link pay to performance. The compensation program for executive officers has historically consisted of the following principal elements: short-term compensation, including base salaries and annual cash incentive awards; long-term equity incentive awards, including restricted stock, stock options and cash-settled SARs; and in-service and post-retirement/employment benefits.
We are asking stockholders to indicate their support for the compensation of the executive officers named in the “Summary Compensation Table” included in this Proxy Statement (referred to as the “named executive officers” or “NEOs”). This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on the NEOs’ compensation. Accordingly, we will ask stockholders to vote “FOR” the following resolution at the Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the NEOs, as disclosed in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 2018 Summary Compensation Table and the other related tables and disclosure.”
The say-on-pay vote is advisory, and therefore not binding on the Company, the Organization & Compensation Committee or our Board. The Board and the Organization & Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Organization & Compensation Committee will evaluate whether any actions are necessary to address those concerns.
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 is necessary to approve this proposal. Broker non-votes will not be counted as votes cast and will have no effect on the outcome of the vote. Abstentions will have the same effect as a vote against this proposal. While this vote is required by law, it will neither be binding on the Company or the Board, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, the Company or the Board.
The Board unanimously recommends a vote FOR the advisory approval of Aerojet Rocketdyne’s executive compensation.



31




EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
2018 Named Executive Officers
Eileen P. Drake
Chief Executive Officer and President
Mark A. Tucker
Chief Operating Officer
Paul R. Lundstrom
Vice President, Chief Financial Officer
John D. Schumacher
Senior Vice President, Washington Operations
Arjun L. Kampani
Vice President, General Counsel and Secretary
Executive Summary
Our compensation program is designed to support our business goals and promote both short-term 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:
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
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
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 NEOs, where over a period of time, each NEO is expected to own shares of our Common Stock equal in total market value to a designated multiple of such NEO’s annual salary
In this section of the Proxy Statement, we explain how our compensation program is designed and operates with respect to our NEOs, including how their pay is reflected in the Company’s performance on relevant financial measures. The following NEOs 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 executive 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 NEOs to attract and retain highly qualified executive officers and to directly link pay to performance. In 2018 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 NEOs within our 2018 annual incentive plan:
Adjusted earnings before interest, taxes, depreciation, amortization and pension expense (“EBITDAP”);
Cash flow from operations;

32




Aerojet Rocketdyne bookings; and
Certain other goals that include individual performance and accomplishments of each NEO.
The Organization & Compensation Committee also granted NEOs 2018 equity, in the same form as was granted in 2017, 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 three metrics for the three-year performance period ending December 31, 2020: revenue; adjusted EBITDAP; and return on invested capital (“ROIC”).
On February 19, 2019, we reported our financial results for 2018 which included the following highlights (non-GAAP financial measures are identified with asterisks):
Net sales for 2018 totaled $1,895.9 million compared with $1,877.2 million for 2017.
Net income for 2018 was $137.3 million, or $1.75 diluted earnings per share ("EPS"), compared with net loss of $(9.2) million, or $(0.13) diluted EPS for 2017.
Adjusted Net Income* for 2018 was $151.5 million, or $1.93 Adjusted EPS*, compared with $76.0 million, or $1.02 Adjusted EPS* for 2017.
Adjusted EBITDAP* for 2018 was $304.9 million, compared with $222.9 million for 2017.
Cash provided by operating activities in 2018 totaled $252.7 million compared with $212.8 million in 2017.
Free cash flow* in 2018 totaled $209.5 million compared with $183.4 million in 2017.
Effective January 1, 2018, we adopted the new revenue recognition guidance. Consistent with the standard, net assets increased by $37.6 million and $578.0 million of net sales were recognized in the cumulative effect at January 1, 2018, with a corresponding reduction to backlog.
Total backlog as of December 31, 2018, was $4.1 billion compared with $4.6 billion as of December 31, 2017.
* These are non-GAAP financial measures. For more information, see Appendix A - Use of Non-GAAP Financial Measures.
A full discussion of our executive compensation program is described in the remainder of this section.
Our Compensation Best Practices
Directly link pay and performance
Stock ownership guidelines for all executive officers
Hold annual shareholder “say on pay” vote
Clawback policy that applies to the annual incentive plan and the 2018 Incentive Plan
No short-sales or speculative transactions of the Company’s securities
Compensation Elements for the Named Executive Officers
The compensation program for executive officers has historically consisted of the following principal elements:
Base salaries;
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
Other benefits such as in-service and post-retirement/employment benefits - pension and 401(k) savings plans; however, defined benefit pension benefits were frozen effective 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-term and long-term

33




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 NEOs 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 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 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 2018, the Organization & Compensation Committee approved an increase in base salary for certain of the Company’s NEOs based on several factors, including each individual’s performance, sustained levels of contribution to the Company, the wage increase during the previous year, a review of the executive and senior management total compensation study conducted by Korn Ferry in 2018 on the Company’s behalf. The table below shows the base salaries of the NEOs for 2018 compared with 2017.
Name
2018 Base Salary
2017 Base Salary
% Increase
Eileen P. Drake
$
825,000

$
728,000

13.3%
Mark A. Tucker
472,443

454,272

4.0%
Paul R. Lundstrom
460,616

442,900

4.0%
John D. Schumacher
372,909

351,801

6.0%
Arjun L. Kampani
361,660

338,000

7.0%
Short-term Annual Cash Incentive Awards
The primary objective of our annual cash incentive program is to drive current 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. The Organization & Compensation Committee has discretion to increase, reduce or eliminate payments under the cash incentive program.
2018 performance targets consisted of adjusted EBITDAP, cash flow from operations, 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; our VP Human Resources Business Partners and Labor Relations (“HRBP”); and our VP, Chief Human Resources Officer (“CHRO”), the Organization & Compensation Committee:
sets the overall Company and individual performance objectives and corresponding performance and payout ranges for the year;
establishes a threshold, target and maximum incentive opportunity for each executive officer; and
measures performance and determines awards for the prior year.
Annual cash incentives are paid at the beginning of each year for the prior 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 the VP, CHRO) assessment of actual performance (individually and Company-wide)

34




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 2018, our current NEOs 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 - 75%;
Paul R. Lundstrom, VP, CFO - 75%;
John D. Schumacher, Senior VP, Washington Operations - 65%; and
Arjun L. Kampani, VP, General Counsel and Secretary - 65%.
The Corporate criteria for the annual cash incentives used for 2018 performance applicable to all of the NEOs were the following (non-GAAP financial measures are identified with asterisks):
Executive Targets
Threshold
Opportunity
Target
Opportunity
Maximum
Opportunity
  Actual  Performance
Actual  Achievement
(Dollars in Millions)
Adjusted EBITDAP*
15.0%
30.0%
60.0
%
 
$
308.8

60.0%
Ÿ Threshold — $206.7
 
 
 
 
 
 
Ÿ Target — $229.7
 
 
 
 
 
 
Ÿ Maximum — $275.6
 
 
 

 
 
 
Cash Flow from Operations
15.0%
30.0%
60.0
%
 
$
252.7

60.0%
Ÿ Threshold — $ 130.0
 
 
 
 
 
 
Ÿ Target — $ 144.4
 
 
 
 
 
 
Ÿ Maximum — $ 173.3
 
 
 

 
 
 
Aerojet Rocketdyne Bookings
15.0%
30.0%
60.0
%
 
$
2,201.1

52.7%
Ÿ Threshold — $ 1,721.1
 
 
 
 
 
 
Ÿ Target — $ 1,912.3
 
 
 
 
 
 
Ÿ Maximum — $ 2,294.8
 
 
 

 
 
 
Personal Factors
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
%
 
 
192.7%
* These are non-GAAP financial measures. For more information, see Appendix A - Use of Non-GAAP Financial Measures.
Adjusted EBITDAP: earnings before interest, taxes, depreciation, amortization and retirement benefit expense net of amounts that are recoverable under the Company’s U.S. government contracts adjusted for unusual items and Board approved modifications.
Cash Flow from Operations: the Company’s cash provided by operating activities per GAAP.
Aerojet Rocketdyne Bookings: 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.
Personal Factors: based upon the assessment of performance related to Company goals and objectives, and individual and leadership competencies.
Under the terms of the Company’s annual incentive plan, the NEOs had the opportunity to earn up to 2x the following payout levels as a percent of base salary: 100% for Ms. Drake; 75% for Messrs. Tucker and Lundstrom; and 65% for Messrs. Schumacher and Kampani.

35




The calculations for the final payment of the annual cash incentive award for each NEO for 2018 performance were as follows, which are also reported in the “Non-Equity Incentive Plan Compensation” column of the 2018 Summary Compensation Table, which follows this Compensation Discussion and Analysis:
Name
Target Payout Level
Base Salary
Award at
100%
Target
Performance
Award at
200%
Maximum
Performance
Actual
Performance
Achievement
Percentage
Actual
Payout at
Achievement
Percentage
Eileen P. Drake
100%
$
825,000

$
825,000

$
1,650,000

192.7%
$
1,589,775

Mark A. Tucker
75%
472,443

354,332

708,665

192.7%
682,798

Paul R. Lundstrom
75%
460,616

345,462

690,924

192.7%
665,705

John D. Schumacher
65%
372,909

242,391

484,782

192.7%
467,087

Arjun L. Kampani
65%
361,660

235,079

470,158

192.7%
452,997

On February 28, 2019, the Organization & Compensation Committee met and approved 2018 annual cash incentive awards, which are reported above and in the “Non-Equity Incentive Plan Compensation” column of the 2018 Summary Compensation Table, which follows this Compensation Discussion and Analysis.
Long-Term Equity Incentive Awards
The Company, upon the recommendation and approval of the Organization & Compensation Committee, established the performance objectives and other terms of the Company’s 2018 Long-Term Incentive Program (the “2018 LTIP”) for executive officers and other eligible employees of the Company. The 2018 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 NEOs’ 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 health and performance of the Company.
The amount of equity-based awards granted to executives has been determined by subtracting each 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 year and in part by his or her ability to increase the value of the Company going forward.
Our equity-based compensation in 2018 for the NEOs 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 after three years from the date of grant. All SARs have a seven-year contractual life from the date of grant. 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, and attract and retain executives by

36




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 2018 LTIP, a 75% weighting was given on performance-based awards and a 25% weighting was put on service-based awards for the NEOs. 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 2018 LTIP were made in February of 2018. The performance-based grants vest on or about February 28, 2021, based on meeting performance targets for the three-year performance period ending December 31, 2020, and subject to approval by the Organization & Compensation Committee in early 2021. The service-based grants vest in February of 2021.
The performance metrics for the performance-based grant are: revenue, adjusted EBITDAP and ROIC 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.
Our equity-based compensation in 2018 for the NEOs includes two additional components of awards under the 2009 Incentive Plan and the 2018 Incentive Plan consisting of service-based restricted stock and stock price 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 (stock price performance-based) - A grant of stock 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 and assuming continued employment. Stock 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.
The service-based restricted stock grants vest in one-third increments on February 27th of each year becoming fully vested in 2021. The stock price performance-based restricted stock vests as follows: one-third upon the achievement of a $34 stock price no later than December 31, 2020; one-third upon the achievement of a $38 stock price no later than December 31, 2021; and one-third upon the achievement of a $42 stock price no later than December 31, 2022. For this purpose, stock prices are determined on the basis of the 20-day volume-weighted average price.
All of the NEOs were participants in the performance-based and stock price performance-based restricted stock grants and the service-based SAR and restricted stock grants made in February of 2018. See the 2018 Grants of Plan-Based Awards table for share amounts and grant date fair value of these grants specific to the NEOs.
On February 28, 2019, performance-based grants from the 2016 Long-Term Incentive Program (“2016 LTIP”) vested at 174.6% resulting in 114,724 shares vesting for Ms. Drake, 44,742 shares vesting for Mr. Tucker, 27,720 shares vesting for Mr. Schumacher and 27,090 shares vesting for Mr. Kampani. The performance metrics were Revenue, adjusted EBITDAP, ROIC, cumulative Competitive Improvement Plan (“CIP”) investment and cumulative

37




CIP savings for the performance period ended December 31, 2018. The 2016 LTIP performance-based awards were granted on April 5, 2016, with a three-year performance period.
Other Benefits
Pension Plans
The Company’s defined benefit pension and benefits restoration plans include the Aerojet Rocketdyne (GenCorp) Consolidated Pension Plan (the “Qualified Pension Plan”), a tax-qualified defined benefit plan; and the 2009 Benefits Restoration Plan for the Aerojet Rocketdyne Pension Plan (the “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 NEOs and collective bargaining-unit employees respectively, were discontinued. No employees lost their previously earned pension benefits. Mr. Schumacher is the only NEO that has an accrued balance in the Qualified Pension Plan and the Pension BRP Plan. 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 NEOs do not participate in the Qualified Pension Plan or the Pension BRP 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 2018 Pension Benefits on page 51.
401(k) Savings Plan
The NEOs are eligible to participate in the Aerojet Rocketdyne Retirement Savings Plan, (“Savings Plan”) a 401(k) tax-qualified defined contribution savings plan which is available to all Company employees. Employees may contribute up to 50% of their eligible pay in any combination of before-tax, regular after-tax, or after-tax Roth contributions subject to the Employee Retirement Income Security Act of 1974 (“ERISA”) limits. The Company matches 100% of the first 3% of employee contributions, and 50% of the next 3% of employee contributions for all participating employees.
401(k) Benefits Restoration Plan
The NEOs are eligible to participate in the 2009 Benefits Restoration Plan for the Aerojet Rocketdyne 401(k) Plan (“401(k) BRP Plan”), a non-qualified, unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. The Company may match 401(k) BRP employee contributions to the extent that after the end of any plan year, any additional Company matching contributions that would have been made on the participant’s behalf under the Savings Plan during the plan year if: (i) the compensation deferral percentage elected under the 401(k) BRP Plan for the plan year had been applied under the Savings Plan; and (ii) the participant’s contributions under the Savings Plan were not limited by the Internal Revenue Code of 1986 (the “Code”) limitations applicable to the Savings Plan. Details about the 401(k) BRP Plan are presented in the section entitled 2018 Non-Qualified Deferred Compensation on page 52.
Employee Stock Purchase Plan
The NEOs are eligible to participate in the Aerojet Rocketdyne Holdings, Inc. Employee Stock Purchase Plan (the “ESPP”). However, no employee may participate in the ESPP if immediately after an option is granted the employee owns shares of Common Stock, including shares which the employee may purchase by conversion of convertible securities or under outstanding options granted by the Company, possessing 5% or more of the total combined voting power or value of all classes of Common Stock of the Company. The Board may impose restrictions on eligibility and participation of employees who are officers and Directors to facilitate compliance with federal or state securities laws or foreign laws. The ESPP allows employees to purchase up to 1,000 shares of Common Stock per year (500 per semi-annual offering period) at 85% of the fair market value of the Common Stock on the purchase date on which the stock is purchased.
Severance Benefits
The Company does not have a severance plan in place for the current NEOs with the exception of Ms. Drake. The Company has a policy for a reduction in force, pursuant to which Messrs. Tucker, Lundstrom, Schumacher and Kampani, as well as all other employees of the Company are eligible to participate. The policy provides for employees to continue participating in health, welfare and retirement benefit plans for a period of two months per the terms of the applicable plans and subject to all conditions thereof. Upon execution of a release, the NEO is

38




eligible to receive separation pay of five weeks’ pay plus one additional week’s pay for each full or partial year of service, with the maximum amount of separation pay being 30 weeks’ pay. In addition, with an executed release, the NEO is eligible to continue participation in certain health and welfare benefits for a total period of six months from the date of reduction in force. Overlapping benefits under both the standard and enhanced benefits provisions will be inclusive in this six-month period.
The Company does have an executive change in control severance policy (the “CIC Policy”). The CIC Policy provides certain executive officers of the Company who have been designated in writing by the Board, including all of the NEOs other than Ms. Drake, with compensation and benefits upon a termination of their employment by the Company without “cause” or by the executive for “good reason” (including due to an executive’s death or disability) within the six-month period preceding a “change in control” through the 18-month period following a “change in control” (each as defined in the CIC Policy).
In the event of an applicable termination of employment, the executive shall be entitled to the following:
lump sum payment equal to executive’s annual base salary;
prorated portion of incentive compensation under the Company’s Short-Term Incentive Plan (“STIP”) to the “termination date” (as defined in the CIC Policy) and full STIP payment for the prior year if unpaid as of the termination date, each based upon actual performance;
lump sum payment equal to the target incentive compensation executive could have received under the STIP for the entire year in which the termination date occurs;
payment of Consolidated Omnibus Budget Reconciliation Act (“COBRA”) benefit premiums until the earlier of the 12-month anniversary of the termination date or when eligible for health insurance coverage through another employer;
to the extent unvested, immediate full vesting of all of the executive’s equity awards; and
outplacement services for a period of 12 months starting no later than 90 days from date of termination with a maximum value of $15,000.
Receipt of compensation and benefits under the CIC Policy is contingent on the executive’s timely execution of a release in a form prescribed by the Company.
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 are matched dollar for dollar up to $1,000 per calendar year per donor.
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 NEOs. Our CEO and President; our Executive Chairman; our VP, CFO; our VP, HRBP; and our VP, CHRO provided input to the Organization & Compensation Committee with respect to the 2018 compensation program. The Organization & Compensation Committee reviews and approves the total compensation for the CEO and President and the other NEOs.
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 NEOs. Since 2010, the Company has retained Korn Ferry (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 aligned with external market practices. In performing its duties, Korn Ferry 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 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 and input from our CEO and President; our Executive Chairman; our VP, CFO; our VP, HRBP; and our VP, CHRO, the

39




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 NEOs.
Independent Executive Compensation Consultant’s Role
Both management and the Organization & Compensation Committee retain Korn Ferry 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 served as the independent executive compensation consultant to management and to the Organization & Compensation Committee during 2018. The executive compensation consultant reports to the Chairman of the Organization & Compensation Committee and the VP, CHRO (and formerly our VP, HRBP), and has direct access to the other members of the Organization & Compensation Committee as well as senior management. The fees incurred in 2018 for compensation services provided by Korn Ferry to management and the Organization & Compensation Committee related to executive and Director compensation totaled $144,615. These fees were driven by Korn Ferry’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 senior executive searches totaling $846,057. The total fees incurred for the services provided by Korn Ferry to the Company in 2018 were $990,672.
The Organization & Compensation Committee believes Korn Ferry’s work for the Company, consisting of senior executive searches, did not raise a conflict of interest and did not impair Korn Ferry’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 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.
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 in early 2018 to determine pay for 2018. The Organization & Compensation Committee set base salaries, target annual cash incentive levels and target annual long-term incentive award values for the NEOs generally at or below the 50th 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 in early 2018 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’s Executive Compensation Survey. In addition, Korn Ferry 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 and actual compensation levels of the Company’s NEOs to the NEOs of the comparator group. Minor changes were made to the 2018 comparator group from the group used for compensation benchmarking in 2017.

40




The table below shows information for the comparator group used for benchmarking for 2018 compensation:
 
(Dollars in millions)
 
Fiscal 2017
Sales
Fiscal 2017 Net Income (Loss)
Market Capitalization on 12/31/2017
Company
Aerojet Rocketdyne Holdings, Inc.
$
1,877

$
(9
)
$
2,296

 
 
 
 
AAR Corp.
1,591

57

1,365

Barnes Group Inc.
1,436

59

3,392

Crane Co.
2,786

173

5,293

Cubic Corp.
1,108

(11
)
1,599

Curtiss Wright Corp.
2,271

215

5,377

Esterline Technologies Corp.
2,000

112

2,240

Heico Corp.
1,525

208

7,964

Hexcel Corp.
1,973

284

5,554

Kaman Corp.
1,806

50

1,638

MOOG Inc.
2,498

140

3,108

Orbital ATK Inc.
4,688

313

7,586

Teledyne Technologies Incorporated.
2,604

227

6,419

Triumph Group Inc.
3,533

(43
)
1,350

Woodward Inc.
2,099

201

4,672

Policies
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, 2018, all of the NEOs held equity in the Company equal in market value to the guidelines in place at that time. 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 NEO as of December 31, 2018.

41




Name
Value of Equity    
Ownership*    
Date of Election
Years as an Officer
Eileen P. Drake
$
15,005,918

03/02/2015
3.8
Mark A. Tucker
5,589,047

10/07/2013
5.2
Paul R. Lundstrom
3,348,202

11/07/2016
2.2
John D. Schumacher
3,790,028

04/29/2013
5.7
Arjun L. Kampani
3,066,091

04/11/2016
2.7
*
Value is based on the stock price on December 31, 2018, of $35.23.
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.
Clawbacks
Both the 2018 annual incentive program, under which annual cash incentives are paid, and the 2018 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.
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 confirm 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 NEOs 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. 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.

42




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.
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 NEOs. At the Annual Meeting of Stockholders of Aerojet Rocketdyne Holdings, Inc. held on May 8, 2018, 99% 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.
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 and the 2018 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

43




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. 
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 and the 2018 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.
Mark A. Tucker Retention Agreement
On December 6, 2018, the Company entered into a retention agreement (the “Retention Agreement”) with Mr. Tucker, the Company’s COO. The Retention Agreement provides that Mr. Tucker will receive certain consideration if he continues to be employed until March 31, 2020, including (i) continued receipt of his base salary at the level in effect on December 6, 2018; (ii) continued participation in the Company’s STIP in 2019 and 2020 (pro-rated based on full months of service) with an individual target percentage of 75% of base salary; (iii) continued participation in the Company’s Long-Term Incentive Program but at a reduced level for the three-year performance period commencing in 2019 to reflect his planned departure in March 2020.
If Mr. Tucker stays employed until March 31, 2020 and (a) has successfully performed the duties specified in the Retention Agreement and (b) executes a general release of claims against the Company, any unvested equity awards will be vested.
If Mr. Tucker’s employment with the Company ends prior to March 31, 2020 due to his death or disability or because of involuntary termination other than for cause, (i) base salary for the period from his termination date until March 31, 2020 will be paid to him in a lump sum; (ii) a prorata STIP award will be paid at the same time STIP payments are made to other employees; and (iii) vesting of unvested equity awards will be accelerated (on a prorata basis if termination of employment is due to death or disability).



44




EXECUTIVE COMPENSATION TABLES
2018 SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation for each of the NEOs for years 2018, 2017 and 2016.
Name and Principal Position
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
2018
$
805,788

$

 
$
2,714,218

(5) 
$
412,494

 
$
1,589,775

$
12,375

$
5,534,650

Chief Executive Officer and President
2017
721,538


 
1,091,999

 
501,131

 
1,222,312

24,224

3,561,204

2016
702,692


 
1,049,998

 
501,060

 
951,673

40,229

3,245,652

 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Tucker
2018
470,067


 
1,129,627

(6) 
177,159

 
682,798

12,375

2,472,026

Chief Operating Officer
2017
450,240


 
459,963

 
211,072

 
495,770

11,532

1,628,577

2016
434,538


 
409,503

 
195,415

 
421,589

11,925

1,472,970

 
 
 
 
 
 
 
 
 
 
 
 
Paul R. Lundstrom(7)
2018
458,299


 
748,207

(8) 
172,731

 
665,705

12,375

2,057,317

Vice President, Chief Financial Officer
2017
439,923


 
448,453

 
205,790

 
483,359

29,520

1,607,045

2016
66,154

100,000

 
656,400

 

 
59,762

359,599

1,241,915

 
 
 
 
 
 
 
 
 
 
 
 
John D. Schumacher
2018
369,472


 
344,664

(9) 
93,219

 
467,087

30,782

1,305,224

Senior Vice President, Washington Operations
2017
348,678


 
263,864

 
121,087

 
324,870

14,750

1,073,249

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arjun L. Kampani(10)
2018
357,591


 
336,216

(11) 
90,414

 
452,997

12,375

1,249,593

Vice President, General Counsel and Secretary
2017
335,000


 
253,516

 
116,333

 
312,126

12,150

1,029,125

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 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. The grant date fair value for service-based and performance-based stock awards is equal to the closing price of our stock on the date of grant times the number of shares awarded adjusted for the probable outcome of achieving performance metrics for performance-based awards. The grant date fair value of stock price performance-based stock awards was estimated using a Monte Carlo simulation given that these awards contain market-based vesting conditions. 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 2018 Annual Report. A description of these awards can be found under the section entitled Long-Term Equity Incentive Awards on page 36.
(3)
The amount reported in this column reflects annual cash incentive compensation, which is based on performance in each listed period. This annual incentive compensation is discussed further under the section entitled Short-term Annual Cash Incentive Awards on page 34.
(4)
The amount reported in this column includes the following for 2018:
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
Total
Eileen P. Drake
$
12,375

$

$

$

$
12,375

Mark A. Tucker
12,375




12,375

Paul R. Lundstrom
12,375




12,375

John D. Schumacher
12,375

17,407

1,000


30,782

Arjun L. Kampani
12,375




12,375


45




(5)
Ms. Drake’s stock awards compensation consists of $299,995 for a service-based restricted stock grant, $900,146 for a stock price performance-based restricted stock grant, $276,600 incremental fair value for a performance-based restricted stock grant that was modified and $1,237,477 for a performance-based restricted stock grant. The grant date fair value of the performance-based restricted stock grant at the maximum vesting of 200% would be $2,474,954.
(6)
Mr. Tucker’s stock awards compensation consists of $172,523 for a stock price performance-based restricted stock grant. Also included is $62,532 for a service-based restricted stock grant and $894,572 for a performance-based restricted stock grant which was modified due to the Retention Agreement discussed on page 44. The Retention Agreement essentially modifies the performance-based award to a service-based award as the agreement guarantees the vesting of two-thirds of the grant regardless of what performance metrics are met.
(7)
Mr. Lundstrom commenced his employment with the Company on November 7, 2016.
(8)
Mr. Lundstrom’s stock awards compensation consists of $57,498 for a service-based restricted stock grant, $172,523 for a stock price performance-based restricted stock grant and $518,186 for a performance-based restricted stock grant. The grant date fair value of the performance-based restricted stock grant at the maximum vesting of 200% would be $1,036,372.
(9)
Mr. Schumacher’s stock awards compensation consists of $16,241 for a service-based restricted stock grant, $48,756 for a stock price performance-based restricted stock grant and $279,667 for a performance-based restricted stock grant. The grant date fair value of the performance-based restricted stock grant at the maximum vesting of 200% would be $559,334.
(10)
Mr. Kampani commenced his employment with the Company on April 11, 2016.
(11)
Mr. Kampani’s stock awards compensation consists of $16,241 for a service-based restricted stock grant, $48,756 for a stock price performance-based restricted stock grant and $271,219 for a performance-based restricted stock grant. The grant date fair value of the performance-based restricted stock grant at the maximum vesting of 200% would be $542,439.




46




2018 GRANTS OF PLAN-BASED AWARDS
The following table provides information for each of the NEOs for 2018 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
 
$

$
825,000

$
1,650,000

 
 
 
 
 
 
 
 
Restricted Stock
02/27/2018
 
 
 
22,706

45,412

90,824

 
 
 
$
1,237,477

(3) 
Restricted Stock
02/27/2018
 
 
 
 
48,205

 
 
 
 
900,146

(4) 
Restricted Stock
02/27/2018
 
 
 
 
 
 
11,009

 
 
299,995

 
Restricted Stock Modification
10/27/2018
 
 
 
 
 
 
 
 
 
276,600

 
SARs
02/27/2018
 
 
 
 
 
 
 
46,768

$
27.25

412,494

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mark A. Tucker
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

307,088

614,176

 
 
 
 
 
 
 
 
Restricted Stock
02/27/2018
 
 
 
9,752

19,504

39,008


 
 
531,484

(6) 
Restricted Stock Modification
12/06/2018
 
 
 
 
 
 
 
 
 
363,088

(6) 
Restricted Stock
02/27/2018
 
 
 
 
9,239

 
 
 
 
172,523

(4) 
Restricted Stock
02/27/2018
 
 
 
 
 
 
2,110

 
 
62,532

 
SARs
02/27/2018
 
 
 
 
 
 
 
20,086

27.25

177,159

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
 
Paul R. Lundstrom
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

299,400

598,801

 
 
 
 
 
 
 
 
Restricted Stock
02/27/2018
 
 
 
9,508

19,016

38,032

 
 
 
518,186

(3) 
Restricted Stock
02/27/2018
 
 
 
 
9,239

 
 
 
 
172,523

(4) 
Restricted Stock
02/27/2018
 
 
 
 
 
 
2,110

 
 
57,498

 
SARs
02/27/2018
 
 
 
 
 
 
 
19,584

27.25

172,731

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
 
John D. Schumacher
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

242,391

484,782

 
 
 
 
 
 
 
 
Restricted Stock
02/27/2018
 
 
 
5,132

10,263

20,526

 
 
 
279,667

(3) 
Restricted Stock
02/27/2018
 
 
 
 
2,611

 
 
 
 
48,756

(4) 
Restricted Stock
02/27/2018
 
 
 
 
 
 
596

 
 
16,241

 
SARs
02/27/2018
 
 
 
 
 
 
 
10,569

27.25

93,219

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arjun L. Kampani
 
 
 
 
 
 
 
 
 
 
 
 
Annual Incentive Award
 

235,079

470,158

 
 
 
 
 
 
 
 
Restricted Stock
02/27/2018
 
 
 
4,977

9,953

19,906

 
 
 
271,219

(3) 
Restricted Stock
02/27/2018
 
 
 
 
2,611

 
 
 
 
48,756

(4) 
Restricted Stock
02/27/2018
 
 
 
 
 
 
596

 
 
16,241

 
SARs
02/27/2018
 
 
 
 
 
 
 
10,251

27.25

90,414

(5) 
(1)
Reflects the possible payout amounts of non-equity incentive plan awards that could have been earned in 2018. See the 2018 Summary Compensation Table on page 45 for the amounts actually earned in 2018 and paid out in the first quarter of 2019.
(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 revenue, adjusted EBITDAP, and ROIC performance metrics for a three-year performance period ending on the last day of 2020. The grant date fair value at the maximum of 200% vesting would be $2,474,954 for Ms. Drake, $1,036,372 for Mr. Lundstrom, $559,334 for Mr. Schumacher and $542,439 for Mr. Kampani.
(4)
Vesting of this stock price performance-based restricted stock grant is as follows: 1/3 upon attainment of a share price of $34 no later than December 31, 2020; an additional 1/3 upon attainment of a share price of $38 no later than December 31, 2021; and the final 1/3 upon the attainment of a share price of $42 no later than December 31, 2022.

47




(5)
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 - five years; volatility - 31.32%; risk-free interest rate - 2.67%; dividend yield - not applicable.
(6)
This award was originally granted as a performance-based award with a maximum of 39,008 shares. The Retention Agreement discussed on page 44 essentially modifies this award to a service-based award as the agreement guarantees the vesting of two-thirds of the grant on March 31, 2020, regardless of what performance metrics are met.

48




OUTSTANDING EQUITY AWARDS AT 2018 YEAR END
The following table provides information for each of the NEOs regarding outstanding stock options, SARs and stock awards held by the officers as of December 31, 2018.
Name
Option/SARs Awards
 
Stock Awards
Number of
Securities
Underlying
Unexercised
Options/SARs
(#)
Exercisable
    Number of
    Securities
    Underlying
    Unexercised
    Options/SARs
    (#)
    Unexercisable
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  
 
 
 
 
 
 

 
$

90,824

(2) 
$
3,199,730

Restricted Stock  
 
 
 
 
 
 

 

32,137

(3) 
1,132,187

Restricted Stock  
 
 
 
 
 
 

 

97,718

(4) 
3,442,605

Restricted Stock  
 
 
 
 
 
 

 

131,414

(5) 
4,629,715

Restricted Stock  
 
 
 
 
 
 

 

20,000

(6) 
704,600

Restricted Stock  
 
 
 
 
 
 
11,009

(7) 
387,847


 

SARs

46,768

(8) 
$
27.25

2025
 
 
 
 
 
 
 
SARs