UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
þ Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
American Axle & Manufacturing Holdings, Inc.
Payment of Filing Fee (Check the appropriate box):
þ No fee required. | |
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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2) Form, Schedule or Registration Statement No.: |
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4) Date Filed: |
SEC 1913 (02-02) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
Time and Date | 3:00 p.m., local time, on Thursday, April 24, 2008 | |
Place | AAM World Headquarters Auditorium, One Dauch Drive, Detroit, Michigan | |
Items of Business |
(1) Elect three members of the Board of Directors to serve
until the Annual Meeting of Stockholders in 2011;
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(2) Approve adoption of the American Axle &
Manufacturing 2008 Long-Term Incentive Plan;
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(3) Ratify the appointment of Deloitte & Touche
LLP as AAMs independent registered public accounting firm
for the year ending December 31, 2008; and
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(4) Attend to other business properly presented at the
meeting.
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Record Date | You may vote if you were an AAM stockholder (NYSE: AXL) at the close of business on February 29, 2008. | |
Meeting Admission | Admission may be limited to AAM stockholders as of the record date and holders of valid proxies. Please be prepared to present identification for admittance. Stockholders holding stock in brokerage accounts will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date. Cameras and recording devices will not be permitted. | |
Voting | Your vote is very important. To be sure that your shares are properly represented at the meeting, please vote by using the telephone, the Internet, or by signing, dating and returning the enclosed proxy card in the pre-addressed envelope provided. See Questions and Answers about Voting and the Annual Meeting in the proxy statement and the proxy card for further information. |
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A-1 |
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By | Internet. Use the website of AAMs transfer agent, Computershare Trust Company, N.A., at the website address shown on the enclosed proxy card. |
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| revoking it by written notice to AAMs Secretary at the address on the cover of this proxy statement; | |
| voting in person at the annual meeting; or | |
| delivering a later-dated proxy vote by mail, telephone or the Internet. |
Proposal 1 | FOR the election of all three nominees with terms expiring at the 2011 annual meeting of stockholders. |
Proposal 2 | FOR approval of the American Axle & Manufacturing 2008 Long-Term Incentive Plan |
Proposal 3 | FOR ratification of the appointment of Deloitte & Touche LLP as the Companys independent registered public accounting firm for the year ending December 31, 2008. |
Proposal 1 | You may vote for or withhold your vote on one or more of the nominees. |
Proposal 2 | You may vote for or against the proposal, or you may abstain from voting your shares. |
Proposal 3 | You may vote for or against the proposal, or you may abstain from voting your shares. |
Proposal 1 | Requires a plurality of the votes cast to elect a director (i.e., the three nominees receiving the greatest number of shares voted in person or by proxy will be elected). |
Proposal 2 | Requires the affirmative vote of a majority of the shares voted in person or by proxy |
Proposal 3 | Requires the affirmative vote of a majority of the shares voted in person or by proxy. |
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RICHARD E. DAUCH Age 65 Richard E. Dauch is Co-Founder, Chairman of the Board & Chief Executive Officer of AAM, and is also Chairman of the Executive Committee of the Board. He has been Chief Executive Officer and a member of the Board since AAM began operations in March 1994. In October 1997, he was named Chairman of the Board of Directors. He was also President of AAM from March 1994 through December 2000. Prior to March 1994, he spent 12 years at Chrysler Corporation, where he established the just-in-time materials management system and the three-shift manufacturing vehicle assembly process. He is a retired officer from the Chrysler Corporation. Mr. Dauchs last position at Chrysler, in 1991, was Executive Vice President of Worldwide Manufacturing. Mr. Dauch also served as Group Vice President of Volkswagen of America, where he established the manufacturing facilities and organization for the successful launch of the first major automotive transplant in the United States. Mr. Dauch has more than 43 years of experience in the automotive industry. Mr. Dauch was the 2006 recipient of the Shien-Ming Wu Foundation Manufacturing Leadership Award. In 2005, he received the CEO Legend Award from Automation Alley. In 2003, he received the Harvard Business School of Michigan Business Statesman Award, the Ernst & Young Entrepreneur of the Year Award, and the Northwood University Outstanding Business Leader Award. In 1999, he was named the Michiganian of the Year by The Detroit News and he was named the 1997 Manufacturer of the Year by the Michigan Manufacturers Association. In 1996, he was named Worldwide Automotive Industry Leader of the Year by the Automotive Hall of Fame. Mr. Dauch currently serves on the board of directors of the National Association of Manufacturers (N.A.M.), where he previously served as Chairman. He has lectured extensively on the subject of manufacturing and authored the book, Passion for Manufacturing, which is distributed in colleges and universities globally and in several languages. |
Director since 1994 |
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WILLIAM P. MILLER II Age 52 Mr. Miller has served as the Senior Investment Officer, Fund Management for the Ohio Public Employees Retirement System since August 2005. Previously he served as Senior Risk Manager for the Abu Dhabi Investment Authority from April 2003. Mr. Miller was a risk management advisor for the Rockefeller Foundation, a non-profit foundation, and an advisor to Africa Global from June 2002 to April 2003. From September 1996 to May 2002, he served as Senior Vice President and Independent Risk Oversight Officer for Commonfund Group, an investment management firm for educational institutions. Mr. Miller previously served as Director, Trading Operations and Asset Mix Management with General Motors Investment Management Corp. and as a Financial Analyst with the U.S. Department of Transportation. |
Director since 2005 | |||
Mr. Miller is a director of the Chicago Mercantile Exchange and a director of the BTOP50 Managed Futures family of funds. He is a member of the Public Company Accounting Oversight Boards Standing Advisory Group, a member of the advisory board for the Kent State University Master of Science in Financial Engineering program and the Investment Risk Committee of the International Association of Financial Engineers. Previously, Mr. Miller was a member of the Financial Accounting Standards Boards User Advisory Council and a director of the Dubai International Financial Exchange. Mr. Miller is a Chartered Financial Analyst and member of the Institute of Chartered Financial Analysts. | ||||
LARRY K. SWITZER Age 64 Larry K. Switzer retired as Chief Executive Officer of DANKA PLC, London, England, a global independent distributor of office equipment, in 2000. From 1994 to 1998, Mr. Switzer was Senior Executive Vice President and Chief Financial Officer of Fruit of the Loom, Inc. Previously, he served as Executive Vice President and Chief Financial Officer for Alco Standard Corporation and, from 1989 to 1992, Senior Vice President and Chief Financial Officer for S.C. Johnson & Son, Inc. Mr. Switzer has also held senior executive positions at Bendix Corp., White Motor Corp. and Gencorp. |
Director since 2005 |
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FOREST J. FARMER Age 67 Forest J. Farmer has served as Chairman of the Board, Chief Executive Officer & President of The Farmer Group, a holding company for four technology and manufacturing corporations, since 1998. Mr. Farmer is the President of Trillium Teamologies, an IT solutions provider located in Royal Oak, Michigan, and is Chairman of the Board & Chief Executive Officer of Enerflex Solutions LLC. Enerflex is a joint venture between The Farmer Group and the Woodbridge Corporation of Woodbridge, Ontario, Canada. In 1994, he retired from Chrysler Corporation after 26 years of service, which included six years as President of its Acustar automotive parts subsidiary. Mr. Farmer serves on the Boards of Directors of a number of corporations and organizations, including The Lubrizol Corporation, St. Johns Hospital System and Saturn Electronics Corporation. |
Director since 1999 | |||
RICHARD C. LAPPIN Age 63 Richard C. Lappin has served as Chairman of the Board & Chief Executive Officer of Clear Sky Power, an alternative energy company, since January 2007. He retired in 2004 as Chairman of the Board of Haynes International, Inc. Previously, Mr. Lappin served as Senior Managing Director of The Blackstone Group L.P., where he was a member of the Private Equity Group from 1998 to 2002. He also helped monitor the operations of Blackstone Capital Partners portfolio companies and evaluated business strategy options. From 1989 to 1998, Mr. Lappin served as President of Farley Industries, which included West Point-Pepperell, Inc., Acme Boot Company, Inc., Tool and Engineering, Inc., Magnus Metals, Inc. and Fruit of the Loom, Inc. He also served as President and Chief Executive Officer of Doehler-Jarvis and Southern Fastening Systems, and he has held senior executive positions with Champion Spark Plug Company and RTE Corporation. |
Director since 1999 | |||
THOMAS K. WALKER Age 67 Thomas K. Walker is Chairman of the Board & Chief Executive Officer of Lackawanna Acquisition Corporation and is the former President of Amcast Automotive, where from 1995 to 1999 he directed all activities for the $300 million automotive group. Previously, he held senior executive positions with ITT Automotive and Allied-Signal Automotive Catalyst Co. He also served in various manufacturing and engineering leadership positions with Volkswagen of America and with General Motors Corporation, where he began his 40-year career in the automotive industry. Mr. Walker serves on the National Advisory Board for Michigan Technological University. |
Director since 1999 |
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JOHN A. CASESA Age 45 John A. Casesa has served as Managing Partner of the Casesa Shapiro Group LLC since 2006. The Group makes actively-managed investments in targeted segments of the automotive industry and provides advisory services to corporate clients. Mr. Casesa served as Global Coordinator for Automotive Research and Managing Director at Merrill Lynch & Co. from 1999 to 2006. Previously, Mr. Casesa was a Managing Director and a member of the Investment Committee at the investment bank Wertheim Schroder & Co. He also served on the Marketing and Product Planning staff of General Motors. As one of Wall Streets leading automotive analysts, Mr. Casesa has addressed numerous automotive industry conferences including the University of Michigans Management Briefing Seminars, the SAE Global Product Development Conference and the Automotive News World Congress. He is a past member of the Financial Accounting Standards Board User Advisor Council, the New York Stock Exchange Research Analyst Qualification Exam Committee and is a past president of the Automotive Analysts of New York. |
Director since 2007 | |||
ELIZABETH A. CHAPPELL Age 50 Elizabeth A. (Beth) Chappell has served as President and Chief Executive Officer of the Detroit Economic Club since 2002. Previously, she served as Executive Vice President, Corporate Communications & Investor Relations for Compuware Corporation. From 1995 to 2000, Ms. Chappell was President and Chief Executive Officer of a consulting firm she founded, The Chappell Group, Inc. For 16 years, Ms. Chappell held executive positions at AT&T. Since 1999, Ms. Chappell has served on the Board of Directors of the Handleman Company. She also serves on a number of civic boards, including Brother Rice High School, Citizens Research Council, Detroit Regional Chamber, Airport Authority-Citizens Review Council, United Way Tocqueville Committee and Michigan Economic Development Corporation. Ms. Chappell is a former board member of the Karmanos Cancer Institute, Michigan Economic Growth Authority and Hospice of Michigan. |
Director since 2004 |
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DR. HENRY T. YANG Age 67 Dr. Henry T. Yang is the Chancellor at the University of California, Santa Barbara, where he also serves as professor of mechanical engineering. Formerly the Dean of Engineering and Neil Armstrong Distinguished Professor in Aerospace Engineering at Purdue University, Dr. Yang is a nationally recognized expert in automotive and aerospace engineering. He holds a Ph.D. degree in engineering from Cornell University as well as four honorary doctorates. He is a member of the National Academy of Engineering. He is an active member of the Executive Committee of the American Association of Universities, the Steering Committee of the Association of Pacific Rim Universities and the Board of Trustees of University Research Association. |
Director since 2004 |
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| AAM is or is expected to be a participant; | |
| the amount involved exceeds $100,000; and | |
| a related person has or will have a direct or indirect material interest. |
| is available to all employees generally; | |
| involves less than $5,000 when aggregated with all similar transactions; or | |
| involves compensation of an executive officer that is approved by the Compensation Committee. |
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| the Companys business reasons for entering into the transaction; | |
| the alternatives to entering into a related person transaction; | |
| the potential for the transaction to lead to an actual or apparent conflict of interest and any safeguards imposed to prevent such actual or apparent conflict; | |
| the extent of the related persons interest in the transaction; and | |
| the transaction is in the best interests of AAM. |
Nominating/ |
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Corporate |
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Audit |
Compensation |
Governance |
Executive |
Technology |
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Name of Director | Committee | Committee | Committee | Committee | Committee | ||||||||||
Richard E. Dauch
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Chairman | ||||||||||||||
John A. Casesa
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X | ||||||||||||||
Elizabeth A. Chappell
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X | ||||||||||||||
Forest J. Farmer
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Chairman | X | X | ||||||||||||
Richard C. Lappin
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X | X | |||||||||||||
William P. Miller II
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Chairman | X | |||||||||||||
Larry K. Switzer
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X | ||||||||||||||
Thomas K. Walker
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X | X | Chairman | X | X | ||||||||||
Dr. Henry T. Yang
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Chairman | ||||||||||||||
Number of Meetings in 2007
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4 | 6 | 4 | 0 | 4 | ||||||||||
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| Establishing and reviewing AAMs compensation philosophy and programs with respect to our executive officers; | |
| Approving executive officer compensation with a view to support AAMs business strategies and objectives; | |
| Approving corporate goals and objectives relevant to executive officer compensation and evaluating executive officer performance in light of these criteria, in consultation with the CEO (in the case of our other executive officers) and with input from other independent directors (in the case of the CEO); | |
| Recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans and certain other compensation matters; | |
| Overseeing the preparation of the Compensation Discussion and Analysis for inclusion in our annual proxy statement or in our annual report filed on Form 10-K; and | |
| Producing the Compensation Committee Report for inclusion in our annual proxy statement or in our annual report filed on Form 10-K in accordance with applicable regulations. |
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| Identify qualified individuals to serve on the Board and committees; | |
| Review our Corporate Governance Guidelines and Code of Business Conduct and recommend changes as appropriate; and | |
| Oversee and approve the process for succession planning for the CEO and other executive officers. |
| High ethical character and shared values with AAM; | |
| Loyalty to AAM and concern for its success and welfare; | |
| High-level leadership experience and achievement at a policy-making level in business or in educational or professional activities; |
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| Knowledge of issues affecting AAM; | |
| The ability to contribute special competencies to Board activities, such as financial, technical, international business or other expertise, or industry knowledge; | |
| Willingness to apply sound, independent business judgment; | |
| Awareness of a directors vital role in AAMs good corporate citizenship and corporate image; and | |
| Sufficient time and availability to effectively carry out a directors duties. |
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Administration | In general, the Compensation Committee will administer the LTIP. The Compensation Committee will determine who will be granted awards, the terms and conditions of awards and the number of shares subject to or the amount payable under an award. The Compensation Committee will have full authority to construe and interpret the plan and to make all other determinations necessary to implement the plan. | |
Eligible Individuals | The officers, executives and other key employees, directors and non-employee directors of AAM or any parent or subsidiary of AAM will be eligible to be granted awards under the LTIP. At March 18, 2008, there were approximately 500 individuals who were eligible to receive LTIP awards. | |
Number of Shares Available for Issuance |
The maximum aggregate number of shares of AAM common stock that may be issued under the LTIP is 5,000,000, plus any shares that are available for issuance under the Prior Plan, or that become available for issuance upon cancellation or expiration of awards granted under the Prior Plan that have not been exercised or settled. Shares issued under the LTIP may be authorized and unissued shares or may be issued shares that have been reacquired by AAM. | |
Shares covered by awards granted under the LTIP that are forfeited or cancelled or otherwise expire without having been exercised or settled generally will become available for issuance pursuant to a new award. In addition, if an award is settled through the payment of cash or other non-share consideration, the shares subject to the award will become available for issuance pursuant to a new award. Shares that are tendered or withheld to pay the exercise price of an award will also be available for issuance pursuant to a new award. | ||
Types of Awards; Limits |
The Compensation Committee may grant the following types of awards under the LTIP: options; restricted stock; restricted stock units; stock appreciation rights; performance stock; performance stock units; performance awards; and other awards based on, or related to, shares of AAM common stock. However, the LTIP contains various limits with respect to the types of awards, as follows: | |
the maximum number of shares that may be issued
pursuant to options and stock appreciation rights granted to any
eligible individual in any calendar year is
1,500,000 shares; and
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the maximum amount of other awards (other than
options and stock appreciation rights) that may be awarded to
any eligible individual in any calendar year is $5,000,000
measured as of the date of grant (with respect to awards
denominated in cash) and 500,000 shares measured as of the
date of grant (with respect to awards denominated in shares).
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Stock Options. A stock option is the right to acquire shares of AAM common stock at a fixed exercise price for a fixed period of time. The exercise price is set by the Compensation Committee but cannot be less than 100% of the fair market value of AAM common stock on the date of grant. The only exception is for options granted in substitution for options held by employees of companies that AAM acquires. In that case, the exercise price generally preserves the economic value of the |
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options granted to the acquired employee by the acquired company. The term of a stock option may not exceed ten years. | ||
The Compensation Committee may grant either incentive stock options or nonqualified stock options. As described in detail below, incentive stock options entitle the participant, but not AAM, to preferential tax treatment. The Compensation Committee determines the rules and procedures for exercising options. The exercise price may be paid in cash, shares, a combination of cash and shares, through net settlement (meaning AAM withholds shares otherwise issuable upon exercise to pay the exercise price), or by any other means authorized by the Compensation Committee, including cashless exercise, a procedure whereby vested shares covered by the option are sold by a broker and a portion of the sale proceeds are delivered to AAM to pay the exercise price. | ||
Stock Appreciation Rights. Stock appreciation rights are awards that entitle the participant to receive an amount equal to the excess, if any, of the fair market value on the exercise date of the number of shares for which the stock appreciation right is exercised over the grant price. The grant price is set by the Compensation Committee, but cannot be less than 100% of the fair market value of AAM common stock on the date of grant. The only exception is for stock appreciation rights granted in substitution for stock appreciation rights held by employees of companies that AAM acquires. In that case, the exercise price generally preserves the economic value of the stock appreciation rights granted to the acquired employee by the acquired company. | ||
Payment to the participant on exercise may be made in cash or shares, as determined by the Compensation Committee. If the Compensation Committee determines at the time of grant that a stock appreciation right may be settled only in shares, the term may not exceed ten years. The Compensation Committee may grant stock appreciation rights in tandem with an option. If stock appreciation rights are granted in tandem with an option, the stock appreciation rights and the option will have the same exercise price and the same term and will cover the same number of shares. The employee may exercise either the option or the tandem stock appreciation rights, except that the number of shares exercised under one award will be cancelled under the other award. | ||
Restricted Stock. Restricted stock awards are shares of AAM common stock that are subject to cancellation, restrictions, and vesting conditions, as determined by the Compensation Committee. The shares may be either granted or sold to the participant. | ||
Restricted Stock Units. Restricted stock units entitle a participant to receive one or more shares of AAM common stock in the future upon satisfaction of vesting conditions determined by the Compensation Committee. The Compensation Committee determines whether restricted stock units will be settled through the delivery of shares, cash of equivalent value, or a combination of shares and cash. | ||
Performance Stock, Performance Stock Units and Performance Awards. Performance stock and performance stock units entitle a participant to a target number of shares if specified performance targets are achieved during a specified performance period. Likewise, performance awards entitle a participant to receive a cash target payment if |
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specified performance targets are achieved during a specified performance period. The Compensation Committee sets the performance targets and performance period at the date of grant. Performance stock and performance units are settled through the delivery of shares of AAM common stock, cash of equivalent value, or a combination of shares and cash. Performance awards are paid in cash. | ||
Other Awards. The Compensation Committee also may grant other forms of awards that generally are based on the value of shares of AAM common stock. These other awards may provide for cash payments based in whole or in part on the value or future value of shares, may provide for the future delivery of shares to the participant, or may provide for a combination of cash payments and future delivery of shares. | ||
Section 162(m) Performance-Based Awards. The Compensation Committee may determine whether any award is a performance-based award for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code). Any awards designated to be performance-based compensation will be conditioned on the achievement of one or more specified performance goals established by the Compensation Committee at the date of grant. The performance goals will be comprised of specified levels of one or more of the following performance criteria, as the Compensation Committee deems appropriate: consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); net income or net income as a percentage of sales; operating income; earnings per share; book value per share; return on shareholders equity; total shareholder return; expense management; asset turns, inventory turns or fixed asset turns; return on assets; return on capital or return on invested capital; improvements in capital structure; profitability of an identifiable business unit or product; maintenance or improvement of profit margins; stock price; market share; revenues or sales; costs; cash flow or free cash flow or operating cash flow; and working capital. The criteria will be determined in accordance with generally accepted accounting principles, or derived from financial statements prepared in accordance with generally accepted accounting principles, consistently applied on a business unit, subsidiary or consolidated basis. | ||
The performance goals may be described in terms of objectives that are related to the individual participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit. Performance goals may be measured on an absolute or cumulative basis, or on the basis of percentage of improvement over time. Performance goals may also be measured in terms of Company performance (or performance of the applicable subsidiary, division, department, region, function or business unit), or relative to selected peer companies or a market index. | ||
Performance goals for an award will generally be established by the Compensation Committee within 90 days following the commencement of the performance period and the Compensation Committee will certify the attainment of the performance goals at the end of the performance period. Unless otherwise provided in an award agreement, the Compensation Committee may reduce the amount payable under a performance-based award even if the performance objectives are satisfied. |
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However, the payment amount may not be increased and it may not exceed the award limits described above. | ||
Amendment and Termination; Term | Generally, the Board may terminate, amend, modify, or suspend the LTIP at any time. AAM must obtain stockholder approval of any termination, amendment, modification, or suspension if required by applicable law or NYSE rule. Subject to limited exceptions, no termination, amendment, modification, or suspension may materially impair the rights of a participant with respect to an outstanding award without the participants consent. Unless terminated earlier, the LTIP will expire in 2018, on the tenth anniversary of the effective date, and no additional awards may be granted after this date. | |
Change in Control | In the event of a change of control of AAM, the Compensation Committee may take steps it considers appropriate, including accelerating vesting, modifying an award to reflect the change of control, or providing that outstanding awards will be assumed, or substituted for, by the surviving corporation or permitting or requiring participants to surrender options and stock appreciation rights in exchange for a cash payout equal to the difference between the highest price paid in the change of control and the exercise price. Generally, unless the Compensation Committee determines otherwise at the time of grant, the treatment of awards on a change of control is as follows: | |
options and stock appreciation rights immediately
vest in full and remain exercisable until the fifth anniversary
of the participants termination of employment (or, if
earlier, the expiration of the term of the award);
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restrictions imposed on restricted stock and
restricted stock units immediately lapse;
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the performance goals with respect to performance
stock, performance stock units, and performance awards, or other
awards that vest upon satisfaction of performance objectives are
deemed attained at target levels; and
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the vesting of all other awards that are denominated
in shares is accelerated.
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Under this definition in the LTIP, the following events generally result in a change of control: | ||
individual or entity acquires at least 20% of the
voting power of AAM;
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a majority of AAM directors are replaced by
directors not approved by the Board;
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there is a merger or consolidation of AAM that
results in new stockholders having at least 49% of the voting
power of AAM;
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there is a sale of 51% or more of AAMs assets;
or
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there is a liquidation or dissolution of AAM.
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Under the Prior Plan, a change in control would require that one individual or entity acquire more than 50% of the voting power of AAM. | ||
Other Provisions | Dividends and Dividend Equivalents. The Compensation Committee may provide participants with the right to receive dividends or payments equivalent to dividends or interest with respect to an outstanding award. The dividends or interest may be paid currently or may be deemed to |
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have been reinvested in shares. No dividends or dividend equivalents may be paid with respect to options or stock appreciation rights. | ||
Deferrals. The Compensation Committee may permit participants to defer the payment or settlement of an award to one or more dates selected by the participant. | ||
Repricing of Options and Stock Appreciation Rights. Options and stock appreciation rights may not be repriced. For these purposes, to reprice an award means (i) to reduce the exercise or grant price, or (ii) to grant a new award with a lower exercise or grant price in exchange for the cancellation of the original award. | ||
Adjustments or Changes in Capitalization. In the event of a stock split, reverse stock split, stock dividend, extraordinary cash dividends, recapitalization, liquidation, merger or other corporate event affecting the shares of AAM common stock, the aggregate number of shares available for issuance under the LTIP, the various LTIP limits, and the number of shares subject to, and the exercise or grant price of, outstanding awards will be appropriately adjusted by the Compensation Committee. | ||
Limited Transferability. Generally, an award may only be transferred upon the participants death to a designated beneficiary or in accordance with the participants will or the laws of descent or distribution, and, except for incentive stock options, pursuant to a domestic relations order. The Compensation Committee also may permit limited transferability, generally to a participants family member, a trust for the benefit of a family member, or a charitable organization. |
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Performance |
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Accelerated |
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Stock Options | Restricted Stock | Restricted Stock Units | ||||||||||||||||||||||||||||
Exercise |
Shares |
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Price |
Underlying |
Dollar |
Dollar |
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per Share |
Stock Options |
Value(1) |
Shares |
Value(2) |
Units |
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Name and Position | ($) | (#) | ($) | (#) | ($) | (#) | ||||||||||||||||||||||||
Richard E. Dauch
Co-Founder, Chairman & Chief Executive Officer |
26.02 | 150,000 | 1,389,962 | 53,419 | 926,624 | 35,612 | ||||||||||||||||||||||||
Michael K. Simonte
Group Vice President Finance & Chief Financial Officer |
26.02 | 10,000 | 93,672 | 3,600 | 62,448 | 2,400 | ||||||||||||||||||||||||
Yogendra N. Rahangdale
Vice Chairman & Chief Technology Officer |
26.02 | 40,000 | 374,688 | 14,400 | 249,792 | 9,600 | ||||||||||||||||||||||||
David C. Dauch
Executive Vice President & Chief Operating Officer |
26.02 | 13,000 | 117,090 | 4,500 | 78,060 | 3,000 | ||||||||||||||||||||||||
Patrick S. Lancaster
Vice President, Chief Administrative Officer & Secretary |
26.02 | 9,500 | 85,866 | 3,300 | 57,244 | 2,200 | ||||||||||||||||||||||||
Executive officers
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26.02 | 296,000 | 3,206,158 | 123,219 | 1,826,916 | 70,212 | ||||||||||||||||||||||||
Directors (other than executive officers)
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| | | | 501,072 | 17,600 | ||||||||||||||||||||||||
Employees (other than executive
officers)(3)
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26.02 | 39,500 | 17,205,725 | 661,250 | 239,384 | 9,200 | ||||||||||||||||||||||||
(1) | Based on the closing market price of our common stock on March 14, 2007 of $26.02 per share. | |
(2) | For executive officers, based on the closing market price of our common stock on March 14, 2007 of $26.02 per share. For directors, based on the closing market price of our common stock on April 26, 2007 of $28.47 per share. | |
(3) | Includes awards of stock options, restricted stock units and performance accelerated restricted stock made to individuals who were executive officers on the grant date. |
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(a) | (b) | (c) | |||||||||||||
Number of |
Number of securities |
||||||||||||||
securities to be |
remaining available |
||||||||||||||
issued upon |
for future issuance |
||||||||||||||
exercise of |
Weighted-average |
under equity |
|||||||||||||
outstanding |
exercise price of |
compensation plans |
|||||||||||||
options, warrants |
outstanding options, |
(excluding securities |
|||||||||||||
Plan Category | and rights | warrants and rights | reflected in column (a)) | ||||||||||||
Equity compensation plans approved by security holders
|
6,077,708 | $ | 24.16 | 2,543,800 | |||||||||||
Equity compensation plans not approved by security holders
|
| | | ||||||||||||
Total
|
6,077,708 | $ | 24.16 | 2,543,800 | |||||||||||
25
| Compensation and benefit programs offered by AAM should appropriately reflect the size and financial resources of our Company in order to maintain long-term viability. These programs should be increasingly market-based (rather than legacy) and competitive, without limiting our ability to adequately invest in our business. This approach supports our efforts to maintain a viable, profitable and sustainable enterprise for the future as we develop and expand our global footprint. | |
| Compensation should reward Company and individual performance. Our programs should strive to deliver competitive compensation for exceptional Company and individual performance as compared to companies in our competitor peer group and others with whom we compete for executive talent. As associates progress to higher levels in the Company and assume key leadership positions, a greater portion of their compensation should be linked to Company performance and stockholder returns. As discussed below, Company performance is measured against financial and operational objectives and stockholder return. |
26
| Compensation should foster the long-term focus required for success in the global automotive industry. We believe that long-term incentive compensation will motivate executive officers to deliver long-term value to our stockholders. Executives at higher levels in our Company should have a greater proportion of their compensation tied to longer-term performance because they are in a better position to influence longer-term results. This approach supports strategic decision-making and actions that will serve the long-term interest of AAM and aligns the interests of executive officers and stockholders. | |
| Executive officers should be AAM stockholders. Stock ownership aligns our executive officers interests with those of our stockholders. They should be required to maintain ownership of AAM stock at a level appropriate for their position in the Company. AAMs long-term equity-based compensation program should facilitate stock ownership and link a portion of compensation to stock price appreciation. | |
| The objectives of rewarding performance and retention should be balanced. In periods of temporary downturns in Company performance, particularly when driven by unanticipated industry events or customer decisions, our compensation programs should continue to ensure that high-achieving, marketable executives remain motivated and committed to AAM. This principle is essential to our effort to encourage our strongest leaders to remain with AAM for long and productive careers. | |
| Compensation and benefit programs for executive officers should be fair in consideration of each executives level of responsibility and contribution to AAM. While individual pay levels and benefit packages will reflect differences in job responsibilities, geography and marketplace considerations, the overall structure of compensation and benefit programs should be broadly similar across the Company. |
A.O. Smith Corp. ArvinMeritor, Inc. Ball Corp. Brady Corp. Cameron International Corp. Cooper Tire & Rubber Co. Donaldson Company, Inc. Dresser-Rand Group Inc. Fleetwood Enterprises, Inc. Flowserve Corp. Harley-Davidson, Inc. Harsco Corp. |
Hayes Lemmerz International, Inc. HNI Corp. IDEX Corp. Johnson Controls, Inc. Kennametal Inc. Lear Corp. MeadWestvaco Corp. Monaco Coach Corp. MSC Industrial Direct Co., Inc. Navistar International Corp. Owens-Illinois, Inc. Rockwell Automation, Inc. |
Sonoco Products Co. Steelcase Inc. Thomas & Betts Corp. The Timken Company The Toro Company Trinity Industries, Inc. USG Corp. Valmont Industries, Inc. Visteon Corp. W.W. Grainger, Inc. Whirlpool Corp. |
27
ArvinMeritor, Inc. Autoliv, Inc. BorgWarner, Inc. Dana Corporation |
Delphi Corporation Dura Automotive Systems, Inc. Lear Corporation |
Magna International, Inc. Tenneco Automotive, Inc. Visteon Corporation |
| base salary; | |
| annual cash incentive; | |
| long-term equity-based incentives; and | |
| benefits and perquisites. |
28
29
Net Operating |
||||||||||||||||||||||||
Net Income as a Percentage of Sales | ROIC | Cash Flow | ||||||||||||||||||||||
Performance | Payout | Performance | Payout | Performance | Payout | |||||||||||||||||||
Threshold | 1% | 30% | 4% | 30% | $ | 76 million | 50% | |||||||||||||||||
Target | 3% | 100% | 9% | 100% | $ | 152 million | 100% | |||||||||||||||||
Maximum | >3% | >100% | >9% | >100% | $ | 182 million | 120% |
30
| Buffalo Separation Program. We recorded a special charge of $56.2 million for the postemployment costs related to a voluntary separation program offered to the hourly associates at our Buffalo Gear, Axle & Linkage facility in Buffalo, New York. | |
| Asset impairments. We recorded an asset impairment charge of $11.6 million. The charge includes a $5.9 million reduction of the net book value of certain assets at our Buffalo Gear, Axle & Linkage facility in Buffalo, New York, which was production idled in the fourth quarter of 2007. This charge also includes a $5.7 million write-off of assets previously classified as held for sale. | |
| Debt refinancing and redemption costs. We expensed $5.5 million of unamortized debt issuance costs and prepayment premiums related to the voluntary prepayment of our Term Loan due 2010. |
| align executive officer and stockholder interests; | |
| facilitate stock ownership among executive officers; | |
| reward achievement of long-term performance goals; and | |
| provide incentives for executive retention. |
31
Total |
Target |
|||||||
Shareholder Return
|
Level Payout
|
|||||||
Threshold | 35th percentile | 50 | % | |||||
Target | 50th percentile | 100 | % | |||||
Maximum | 75th percentile | 200 | % |
32
33
Multiple of |
||||
Position | Base Salary | |||
Co-Founder, Chairman & CEO
|
5 | |||
President; Vice Chairman
|
3 | |||
Executive Vice President; Group Vice President
|
2 | |||
Vice President
|
1 |
34
35
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Net income (loss)
|
$ | 37.0 | $ | (222.5) | ||||
Add: After-tax net interest
expense(1)
|
48.0 | 24.5 | ||||||
After-tax return
|
85.0 | (198.0) | ||||||
Net
debt(2)
|
514.5 | 658.7 | ||||||
Add: Stockholders equity
|
890.7 | 813.7 | ||||||
Invested capital
|
||||||||
End of year
|
1,405.2 | 1,472.4 | ||||||
Beginning of year
|
1,472.4 | 1,480.3 | ||||||
Average invested
capital(3)
|
1,438.8 | 1,476.4 | ||||||
After-tax
ROIC(4)
|
5.9% | (13.4%) | ||||||
(1) | After-tax net interest expense is equal to tax effecting net interest expense by the applicable effective income tax rate (excluding one-time items). | |
(2) | Net debt is equal to total debt less cash and cash equivalents as reconciled as follows: |
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Total debt
|
$ | 858.1 | $ | 672.2 | ||||
Less: Cash and cash equivalents
|
343.6 | 13.5 | ||||||
Net debt
|
$ | 514.5 | $ | 658.7 | ||||
(3) | Average invested capital is equal to the average of beginning and ending invested capital. | |
(4) | After-tax ROIC is equal to after-tax return divided by average invested capital. |
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Net cash provided by operating activities
|
$ | 367.9 | $ | 185.7 | ||||
Less: Purchases of property, plant and equipment
|
186.5 | 286.6 | ||||||
Net operating cash flow
|
$ | 181.4 | $ | (100.9 | ) | |||
36
37
Change in |
||||||||||||||||||||||||||||||||||||||||
Pension Value |
||||||||||||||||||||||||||||||||||||||||
and |
||||||||||||||||||||||||||||||||||||||||
Nonqualified |
||||||||||||||||||||||||||||||||||||||||
Deferred |
All Other |
|||||||||||||||||||||||||||||||||||||||
Stock |
Option |
Compensation |
Compen- |
|||||||||||||||||||||||||||||||||||||
Name and |
Salary |
Bonus(1) |
Awards(2) |
Awards(3) |
Earnings(5) |
sation(6) |
Total |
|||||||||||||||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||||||||||||||
Richard E. Dauch
|
||||||||||||||||||||||||||||||||||||||||
Co-Founder, Chairman
|
2007 | 1,473,336 | | 5,597,764 | (4) | 2,401,038 | (4) | 608,372 | 94,684 | 10,175,194 | ||||||||||||||||||||||||||||||
& Chief Executive
|
2006 | 1,344,164 | 3,900,000 | 2,566,059 | 210,979 | 1,209,400 | 85,640 | 9,316,242 | ||||||||||||||||||||||||||||||||
Officer
|
||||||||||||||||||||||||||||||||||||||||
Michael K. Simonte
Group Vice President Finance & Chief Financial Officer |
2007 2006 |
242,862 230,000 |
125,000 |
93,069 70,609 |
47,138 14,065 |
88,404 14,280 |
39,768 25,028 |
511,241 478,982 |
||||||||||||||||||||||||||||||||
Yogendra N. Rahangdale
Vice Chairman & Chief Technology Officer |
2007 2006 |
327,687 313,101 |
165,000 |
315,015 167,862 |
192,103 59,074 |
213,563 116,917 |
14,966 13,742 |
1,063,334 835,696 |
||||||||||||||||||||||||||||||||
David C. Dauch
Executive Vice President & Chief Operating Officer |
2007 2006 |
292,047 277,749 |
150,000 |
119,653 91,499 |
64,832 21,098 |
195,198 14,444 |
80,797 40,187 |
752,527 594,977 |
||||||||||||||||||||||||||||||||
Patrick S. Lancaster
Vice President, Chief Administrative Officer & Secretary |
2007 | 258,600 | | 95,698 | 47,446 | 222,013 | 31,874 | 655,631 | ||||||||||||||||||||||||||||||||
(1) | The bonuses reported for 2006 for named executive officers other than Mr. R.E. Dauch, reflects the amounts of the discretionary cash incentive awards paid March 15, 2007 under the Incentive Compensation Plan for Executive Officers. The bonus reported for 2006 for Mr. R.E. Dauch reflects the annual cash bonus paid under the terms of his employment agreement. The amounts of the bonuses for 2007 are not calculable as of the date of this proxy statement and it is not possible to estimate the date that they are expected to be determined at this time. | |
(2) | Reflects the amounts recognized in accordance with Statement of Financial Accounting Standards No. 123 (restated December 2004), Share-Based Payment (SFAS 123R), disregarding estimated forfeitures, for the fiscal years ended December 31, 2007 and December 31, 2006 for PARS and RSUs granted in and prior to 2007 and 2006, respectively. For PARS, the amounts recognized are based on the grant date fair value, calculated using the closing market price of AAM common stock on the date of grant. For RSUs, the amounts recognized are based on the fair value, calculated using the closing market price of AAM common stock, on December 31, 2007 and December 31, 2006, respectively. | |
(3) | Reflects the amounts recognized in accordance with SFAS 123R, disregarding estimated forfeitures, for the fiscal years ended December 31, 2007 and December 31, 2006 for stock options granted in and prior to 2007 and in 2006, respectively. The amounts recognized are based on the grant date fair value, calculated using the Black-Scholes option pricing model. Assumptions used in the calculation of these amounts are shown in Note 7, Stock-Based Compensation, to our audited consolidated financial statements included in our 2007 Annual Report on Form 10-K filed with the SEC on February 21, 2008. No compensation is reported for stock options granted in 2004 and 2005, the vesting of which was accelerated, effective December 31, 2005, to avoid |
38
recognition in our financial statements of compensation expense associated with out-of-the- money stock options upon our adoption of SFAS 123R. | ||
(4) | Includes $3,627,945 for PARS and RSU awards and $1,989,538 for stock option awards recognized on Mr. R.E. Dauchs attaining normal retirement age, in accordance with SFAS 123R, due to retirement vesting provisions of the awards. | |
(5) | Reflects, for 2007, the annualized increase in pension value under the Salaried Retirement Program and SERP from September 30, 2006 to December 31, 2007. AAM changed its measurement date used for financial statement reporting purposes from September 30 to December 31 effective January 1, 2007. There are no above-market or preferential earnings on compensation deferred under our Executive Deferred Compensation Plan. | |
(6) | Includes, for 2007, employer contributions under the Salaried Savings Plan, our tax-qualified defined contribution retirement plan; executive life insurance premiums; and personal umbrella liability insurance premiums. Also includes meals provided during business hours and personal use of Company-provided vehicles for Mr. R.E. Dauch, Mr. Simonte and Mr. Lancaster, and executive physical examinations for Mr. R.E. Dauch and Mr. Lancaster. Employer contributions under the Salaried Savings Plan consisted of matching contributions of $10,313 for Mr. R.E. Dauch, Mr. Rahangdale, Mr. D.C. Dauch and Mr. Lancaster, and $10,544 for Mr. Simonte; retirement contributions of $10,941 for Mr. D.C. Dauch and $9,000 for Mr. Simonte; and a one-time, corrective contribution of $57,404 for Mr. D.C. Dauch. The corrective contribution amount was based on employee contributions elected by Mr. D.C. Dauch, employer matching contributions and interest for prior years. The total for Mr. R.E. Dauch includes $58,048 for executive life insurance premiums. |
39
All Other |
All Other |
Grant |
|||||||||||||||||||||||
Stock |
Option |
Date |
|||||||||||||||||||||||
Awards: |
Awards: |
Fair Value |
|||||||||||||||||||||||
Number |
Number of |
Exercise or |
of Stock |
||||||||||||||||||||||
of Shares |
Securities |
Base Price |
and |
||||||||||||||||||||||
of Stock |
Underlying |
of Option |
Option |
||||||||||||||||||||||
or Units |
Options |
Awards(1) |
Awards(2) |
||||||||||||||||||||||
Name | Grant Date | (#) | (#) | ($/Sh) | ($) | ||||||||||||||||||||
Richard E. Dauch
|
3/14/2007 | 89,031 | 150,000 | 26.02 | 3,986,087 | ||||||||||||||||||||
Michael K. Simonte
|
3/14/2007 | 6,000 | 10,000 | 26.02 | 267,420 | ||||||||||||||||||||
Yogendra N. Rahangdale
|
3/14/2007 | 24,000 | 40,000 | 26.02 | 1,069,680 | ||||||||||||||||||||
David C. Dauch
|
3/14/2007 | 7,500 | 13,000 | 26.02 | 339,840 | ||||||||||||||||||||
Patrick S. Lancaster
|
3/14/2007 | 5,500 | 9,500 | 26.02 | 248,845 | ||||||||||||||||||||
(1) | Equal to the closing market price of AAM common stock on March 14, 2007, the date of grant. | |
(2) | Grant date fair value is calculated in accordance with SFAS 123R and is generally the amount we would expense in our consolidated financial statements over the life of the award. The grant date fair value of option awards was $11.13 per share of common stock covered by the award, calculated using the Black-Scholes option pricing model. In determining the Black-Scholes value, the exercise price of $26.02 was used. The grant date fair value of stock awards was $26.02 per share of common stock covered by the award, the closing market price of AAM common stock on the date of grant. For additional information on the valuation assumptions, refer to Note 7, Stock-Based Compensation, to our audited consolidated financial statements included in our 2007 Annual Report on Form 10-K filed with the SEC on February 21, 2008. |
| Annual base salary (currently $1,496,000), subject to annual adjustment by the Compensation Committee; | |
| Annual cash bonus in an amount determined by the Compensation Committee based on our financial performance, relative to our competitor peer group: |
| equal to 3 times annual base salary if we continue to outperform our competitor peer group; | |
| greater than 3 times annual base salary if we outperform our competitor peer group by greater than the historical amount; or | |
| up to the amount of Mr. R.E. Dauchs base salary if we do not outperform competitor peer group; |
| Annual equity awards consisting of options to purchase 150,000 shares each year and restricted stock having an equivalent value, determined based on AAMs standard valuation methodology for annual grant to the options granted for that year; | |
| Reimbursement of premiums under a $5 million life insurance policy purchased by Mr. R.E. Dauch; | |
| Annual executive physical examination and health and disability coverage as provided to other senior executives; and |
40
| Use and maintenance of two Company-provided automobiles and the perquisites and other benefits provided to our senior executives. |
41
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Market |
||||||||||||||||||||||||||||||
Number of |
Value of |
|||||||||||||||||||||||||||||
Shares |
Shares |
|||||||||||||||||||||||||||||
Number of |
Number of |
or Units |
or Units |
|||||||||||||||||||||||||||
Securities |
Securities |
of Stock |
of Stock |
|||||||||||||||||||||||||||
Underlying |
Underlying |
That |
That |
|||||||||||||||||||||||||||
Unexercised |
Unexercised |
Option |
Have |
Have |
||||||||||||||||||||||||||
Options |
Options |
Exercise |
Option |
Not |
Not |
|||||||||||||||||||||||||
Exercisable |
Unexercisable |
Price |
Expiration |
Vested |
Vested(11) |
|||||||||||||||||||||||||
Name | (#) | (#) | ($) | Date | (#) | ($) | ||||||||||||||||||||||||
Richard E. Dauch
|
215,000 | 15.32 | 5/19/2010 | 180,000 | (4) | 3,351,600 | ||||||||||||||||||||||||
240,000 | 8.85 | 4/2/2011 | 120,000 | (5) | 2,234,400 | |||||||||||||||||||||||||
300,000 | 24.15 | 1/23/2012 | ||||||||||||||||||||||||||||
300,000 | 23.73 | 1/22/2013 | ||||||||||||||||||||||||||||
300,000 | 38.70 | 2/2/2014 | ||||||||||||||||||||||||||||
150,000 | (1) | 26.65 | 3/15/2015 | |||||||||||||||||||||||||||
49,500 | 100,500 | (2) | 15.58 | 3/15/2016 | ||||||||||||||||||||||||||
150,000 | (3) | 26.02 | 3/14/2017 | |||||||||||||||||||||||||||
Michael K. Simonte
|
39,664 | 15.56 | 2/2/2011 | 3,300 | (6)(8) | 61,446 | ||||||||||||||||||||||||
7,500 | 15.32 | 5/19/2010 | 2,200 | (7)(8) | 40,964 | |||||||||||||||||||||||||
10,000 | 8.85 | 4/2/2011 | 3,600 | (6)(9) | 67,032 | |||||||||||||||||||||||||
9,500 | 24.15 | 1/23/2012 | 2,400 | (7)(9) | 44,688 | |||||||||||||||||||||||||
10,000 | 23.73 | 1/22/2013 | 3,600 | (6)(10) | 67,032 | |||||||||||||||||||||||||
8,500 | 38.70 | 2/2/2014 | 2,400 | (7)(10) | 44,688 | |||||||||||||||||||||||||
9,000 | (1) | 26.65 | 3/15/2015 | |||||||||||||||||||||||||||
3,300 | 6,700 | (2) | 15.58 | 3/15/2016 | ||||||||||||||||||||||||||
10,000 | (3) | 26.02 | 3/14/2017 | |||||||||||||||||||||||||||
Yogendra N. Rahangdale
|
40,000 | 24.15 | 1/23/2012 | 4,200 | (6)(8) | 78,204 | ||||||||||||||||||||||||
39,000 | 23.73 | 1/22/2013 | 2,800 | (7)(8) | 52,136 | |||||||||||||||||||||||||
45,000 | 38.70 | 2/2/2014 | 15,000 | (6)(9) | 279,300 | |||||||||||||||||||||||||
12,000 | (1) | 26.65 | 3/15/2015 | 10,000 | (7)(9) | 186,200 | ||||||||||||||||||||||||
13,860 | 28,140 | (2) | 15.58 | 3/15/2016 | 14,400 | (6)(10) | 268,128 | |||||||||||||||||||||||
40,000 | (3) | 26.02 | 3/14/2017 | 9,600 | (7)(10) | 178,752 | ||||||||||||||||||||||||
David C. Dauch
|
7,260 | 8.85 | 4/2/2011 | 4,200 | (6)(8) | 78,204 | ||||||||||||||||||||||||
16,750 | 24.15 | 1/23/2012 | 2,800 | (7)(8) | 52,136 | |||||||||||||||||||||||||
28,000 | 23.73 | 1/22/2013 | 4,800 | (6)(9) | 89,376 | |||||||||||||||||||||||||
28,000 | 38.70 | 2/2/2014 | 3,200 | (7)(9) | 59,584 | |||||||||||||||||||||||||
12,000 | (1) | 26.65 | 3/15/2015 | 4,500 | (6)(10) | 83,790 | ||||||||||||||||||||||||
4,950 | 10,050 | (2) | 15.58 | 3/15/2016 | 3,000 | (7)(10) | 55,860 | |||||||||||||||||||||||
13,000 | (3) | 26.02 | 3/14/2017 | |||||||||||||||||||||||||||
Patrick S. Lancaster
|
124,856 | 4.26 | 10/28/2009 | 3,600 | (6)(8) | 67,032 | ||||||||||||||||||||||||
18,000 | 15.32 | 5/19/2010 | 2,400 | (7)(8) | 44,688 | |||||||||||||||||||||||||
35,000 | 8.85 | 4/2/2011 | 3,900 | (6)(9) | 72,618 | |||||||||||||||||||||||||
40,000 | 24.15 | 1/23/2012 | 2,600 | (7)(9) | 48,412 | |||||||||||||||||||||||||
30,000 | 23.73 | 1/22/2013 | 3,300 | (6)(10) | 61,446 | |||||||||||||||||||||||||
25,000 | 38.70 | 2/2/2014 | 2,200 | (7)(10) | 40,964 | |||||||||||||||||||||||||
9,000 | (1) | 26.65 | 3/15/2015 | |||||||||||||||||||||||||||
3,630 | 7,370 | (2) | 15.58 | 3/15/2016 | ||||||||||||||||||||||||||
9,500 | (3) | 26.02 | 3/14/2017 | |||||||||||||||||||||||||||
42
(1) | Vesting was accelerated, effective December 31, 2005, to avoid recognition in our financial statements of compensation expense associated with out-of-the-money stock option awards upon our adoption of SFAS 123R. | |
(2) | Granted under the Stock Incentive Plan on March 15, 2006. Approximately one-half of the shares vest on each of March 15, 2008 and March 15, 2009. | |
(3) | Granted under the Stock Incentive Plan on March 14, 2007. Approximately one-third of the shares vest on each of March 14, 2008, March 14, 2009 and March 14, 2010. | |
(4) | Reflects restricted stock awarded in connection with Mr. R.E. Dauchs employment agreement extension in 2005. The restricted stock vests on December 31, 2009, contingent upon Mr. R.E. Dauch serving the extended term of his employment agreement. | |
(5) | Reflects restricted stock units awarded in connection with Mr. R.E. Dauchs employment agreement extension in 2005. The restricted stock units vest on December 31, 2009, contingent upon Mr. R.E. Dauch serving the extended term of his employment agreement. | |
(6) | Reflects PARS granted under the Stock Incentive Plan. PARS vest on the fifth anniversary of the grant date, unless vesting is accelerated at the end of the third or fourth years after the grant date. Accelerated vesting is contingent upon our achievement of predetermined performance goals, measured by our total stockholder return relative to our competitor peer group. Vesting will not be accelerated unless stockholder return is positive. | |
(7) | Reflects RSUs granted under the Stock Incentive Plan. RSUs vest on the fifth anniversary of the grant date, unless vesting is accelerated at the end of the third or fourth years after the grant date. Accelerated vesting is contingent upon our achievement of predetermined performance goals, measured by our total stockholder return relative to our competitor peer group. Vesting will not be accelerated unless stockholder return is positive. | |
(8) | Granted on March 15, 2005. The PARS and RSUs vest on March 15, 2010, unless vesting is accelerated on March 15, 2008 or March 15, 2009. Vesting of these awards did not accelerate on March 15, 2008. | |
(9) | Granted on March 15, 2006. The PARS and RSUs vest on March 15, 2011, unless vesting is accelerated on March 15, 2009 or March 15, 2010. | |
(10) | Granted on March 14, 2007. The PARS and RSUs vest on March 14, 2012, unless vesting is accelerated on March 14, 2010 or March 14, 2011. | |
(11) | Reflects the closing market value on December 31, 2007 ($18.62), of the number of shares of AAM common stock covered by outstanding PARS, RSUs, restricted stock and restricted stock unit awards on December 31, 2007. |
43
Option Awards | Stock Awards | |||||||||||||||||||
Number of |
Number of |
|||||||||||||||||||
Shares |
Value |
Shares |
Value |
|||||||||||||||||
Acquired on |
Realized on |
Acquired on |
Realized on |
|||||||||||||||||
Exercise |
Exercise(1) |
Vesting(2) |
Vesting(3) |
|||||||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||||||
Richard E. Dauch
|
| | 267,093 | 7,670,911 | ||||||||||||||||
Michael K. Simonte
|
| | | | ||||||||||||||||
Yogendra N. Rahangdale
|
35,000 | 535,500 | | | ||||||||||||||||
David C. Dauch
|
| | | | ||||||||||||||||
Patrick S. Lancaster
|
| | | | ||||||||||||||||
(1) | For Mr. Rahangdale, reflects the number of shares received upon exercise of stock options multiplied by the difference between the sale price and the exercise price for such options. | |
(2) | Reflects the removal of the transfer and forfeiture restrictions under awards of PARS granted to Mr. R.E. Dauch in March 2005, 2006 and 2007, and the acceleration of tandem RSUs. The restrictions were removed in connection with Mr. R.E. Dauch attaining normal retirement age under the Salaried Retirement Program in order to align the vesting of these awards with the recognition of taxable income under the Internal Revenue Code. | |
(3) | Reflects the number of PARS received and RSUs accelerated upon Mr. R.E. Dauch attaining normal retirement age, multiplied by the closing market price of AAM common stock on the vesting date. |
Number of |
Present |
||||||||||||
Years |
Value of |
||||||||||||
Credited |
Accumulated |
||||||||||||
Service |
Benefit |
||||||||||||
Name | Plan Name | (#) | ($) | ||||||||||
Richard E. Dauch(1) |
AAM Retirement Program for Salaried Employees AAM Supplemental Executive Retirement Program |
13.8333 13.8333 |
(2) |
628,727 10,228,924 |
|||||||||
Michael K. Simonte | AAM Retirement Program for Salaried Employees | 8.0833 | (3) | 79,465 | |||||||||
AAM Supplemental Executive Retirement Program | 9.0833 | 111,265 | |||||||||||
Yogendra N. Rahangdale(4) |
AAM Retirement Program for Salaried Employees AAM Supplemental Executive Retirement Program |
12.4167 12.4167 |
406,143 411,595 |
||||||||||
David C. Dauch | AAM Retirement Program for Salaried Employees | 11.5000 | (3) | 119,298 | |||||||||
AAM Supplemental Executive Retirement Program | 12.5000 | 245,684 | |||||||||||
Patrick S. Lancaster(5) |
AAM Retirement Program for Salaried Employees AAM Supplemental Executive Retirement Program |
13.5833 13.5833 |
555,979 256,274 |
||||||||||
44
(1) | Mr. R.E. Dauch was eligible to retire on December 31, 2007 with full benefits under the Salaried Retirement Program and the SERP. | |
(2) | We agreed to credit Mr. R.E. Dauch with 20 years of service under the SERP, effective December 31, 2009, provided he serves the extended term of his employment agreement extension dated November 3, 2005. | |
(3) | Benefits were frozen, effective December 31, 2006, under the Salaried Retirement Program for Mr. Simonte and Mr. D.C. Dauch. | |
(4) | Mr. Rahangdale was eligible to retire on December 31, 2007 under both the Salaried Retirement Program and the SERP, as he is over 55 years of age and has more than 10 years of credited service. He qualifies for a reduced benefit of approximately 64% of the unreduced benefit under the Salaried Retirement Program and qualifies for the basic form of benefit under the SERP. | |
(5) | Mr. Lancaster was eligible to retire on December 31, 2007 under both the Salaried Retirement Program and the SERP, as he is over 55 years of age and has more than 10 years of credited service. He qualifies for a reduced benefit of approximately 89% of the unreduced benefit under the Salaried Retirement Program and qualifies for the basic form of benefit under the SERP. |
| Two percent of the executives average monthly salary (as determined for the Salaried Retirement Program), multiplied by the executives years of credited service; less |
45
| The benefit payable to the executive under the Salaried Retirement Program (without reduction for survivor benefits), plus two percent of the maximum monthly social security benefit payable at age 65 multiplied by the executives years of credited service. |
| 1.5 percent of the executives average monthly salary (as determined for the Salaried Retirement Program) and average monthly incentive compensation (determined as the average of the highest five of the executives last 10 annual cash incentive awards, divided by 12) multiplied by the executives years of credited service; less | |
| The benefit payable to the executive under the Salaried Retirement Program (without reduction for survivor benefits), plus the maximum monthly social security benefit payable at age 65. |
Aggregate |
Aggregate |
Aggregate |
Aggregate |
|||||||||||||||||
Contributions |
Earnings |
Withdrawals/ |
Balance at |
|||||||||||||||||
in Last
FY(1) |
In Last
FY(2) |
Distributions(3) |
Last FYE |
|||||||||||||||||
Name | ($) | ($) | ($) | ($) | ||||||||||||||||
Richard E. Dauch
|
| 330,875 | | 4,495,053 | ||||||||||||||||
Michael K. Simonte
|
| | | | ||||||||||||||||
Yogendra N. Rahangdale
|
49,500 | 84,489 | | 1,149,542 | ||||||||||||||||
David C. Dauch
|
| 25,232 | | 242,990 | ||||||||||||||||
Patrick S. Lancaster
|
| 25,315 | 160,991 | 395,981 | ||||||||||||||||
(1) | For Mr. Rahangdale, reflects a portion of his 2006 incentive compensation award paid March 15, 2007 and is included in the bonus column of the Summary Compensation Table for 2006. | |
(2) | Reflects hypothetical accrued earnings during 2007 on notional investments designed to track the performance of funds similar to those available to participants in the Salaried Savings Plan. None |
46
of the earnings shown in this column are reported as compensation in the Summary Compensation Table. | ||
(3) | For Mr. Lancaster, reflects a lump-sum interim distribution from his deferral of a portion of his 2000 base salary and bonus. |
Rate of |
Rate of |
||||||||||
Name of Fund | Return | Name of Fund | Return | ||||||||
Fidelity Retirement Money Market Portfolio
|
5.12% | Fidelity Freedom Income Fund | 4.83% | ||||||||
PIMCO Total Return Fund
|
9.07% | Fidelity Freedom 2000 Fund | 5.32% | ||||||||
PIMCO High Yield Fund
|
3.73% | Fidelity Freedom 2005 Fund(1 | ) | 7.27% | |||||||
Fifth Third Disciplined Large Cap Value
Fund(1)
|
1.58% | Fidelity Freedom 2010 Fund | 7.43% | ||||||||
Domini Social Equity Fund
|
1.87% | Fidelity Freedom 2015 Fund(1 | ) | 7.82% | |||||||
Spartan U.S. Equity Index Fund
|
5.43% | Fidelity Freedom 2020 Fund | 8.54% | ||||||||
American Funds Growth Fund of
America(1)
|
11.26% | Fidelity Freedom 2025 Fund(1 | ) | 8.64% | |||||||
Fidelity Growth Company Fund
|
19.89% | Fidelity Freedom 2030 Fund | 9.27% | ||||||||
Fidelity Low-Priced Stock Fund
|
3.16% | Fidelity Freedom 2035 Fund(1 | ) | 9.27% | |||||||
First American Mid Cap Growth
Opportunities(1)
|
17.06% | Fidelity Freedom 2040 Fund | 9.31% | ||||||||
American Beacon Small Cap Value Fund
|
(6.44)% | Fidelity Freedom 2045 Fund(1 | ) | 9.50% | |||||||
Munder Small Cap Value Fund
|
(8.65)% | Fidelity Freedom 2050 Fund(1 | ) | 9.77% | |||||||
Fidelity Diversified International Fund
|
16.03% | ||||||||||
(1) | Reflects investment fund options added to the Executive Deferred Compensation Plan in the first quarter of 2007. |
47
| a lump-sum severance payment equal to 3.5 times his (1) annual base salary plus (2) the highest of his average annual bonus for the three years preceding the year of termination or the three years preceding the year of the change in control, or his target bonus for the year of termination or the change in control; | |
| a prorated portion of his annual cash bonus for the year of termination and any unpaid portion of the bonuses earned for prior years; | |
| accelerated vesting of outstanding equity awards; | |
| a lump-sum payment of $3 million for each annual grant of equity awards that he would have received had he remained employed through December 31, 2009; | |
| continuation of medical, dental, vision, disability and life insurance coverage for 3.5 years; | |
| continuation of the perquisites under his employment agreement (including a Company-paid annual executive physical examination and reimbursement of premiums for his purchase of a $5 million executive life insurance policy for 3.5 years); | |
| 3.5 years of additional age and service credit under our nonqualified employee pension and welfare benefit plans for purposes of benefit accrual, matching contributions, vesting and retirement eligibility; | |
| continued use of two Company-provided vehicles for 3.5 years; | |
| outplacement services of up to 10 percent of annual base salary or, if greater, $40,000; and | |
| reasonable legal fees in connection with enforcement of the continuity agreement if he prevails in a dispute. |
| an acquisition of 20 percent or more of AAM stock by an unrelated third party; | |
| a merger, business combination, sale, liquidation or dissolution, where preexisting shareholders do not own at least 51 percent of the surviving entity; or | |
| a change in the majority of our incumbent Board within any 24-month period. |
48
| is convicted of a felony involving an intentional act; | |
| engages in dishonesty or fraud; or | |
| breaches any of his material obligations to AAM, including willful neglect or misconduct of his duties or willful and material breach of any of the terms and conditions of his employment agreement. |
| reduces his base salary or bonus opportunity; | |
| substantially reduces his duties, responsibilities or reporting responsibilities; or | |
| relocates him outside of the Detroit-metropolitan area. |
| severance payments equal to two years of his annual base salary; | |
| continuation of his health care benefits for two years; | |
| bonus payments accrued as of the termination date; and | |
| reimbursement of premiums for his purchase of a $5 million executive life insurance policy for two years. |
| a non-disclosure and confidentiality provision which extends for the term of the agreement and for two years following termination or expiration of the agreement; | |
| a non-competition covenant, which prohibits him, throughout the term of the employment agreement and for two years following the termination or expiration of the agreement, from directly or indirectly engaging in any business competitive with AAM and our products and business plans; and | |
| a covenant prohibiting solicitation of our employees and customers for two years following the termination or expiration of the agreement. |
49
| a lump sum severance payment equal to 2.5 times his (1) annual base salary plus (2) the highest of his average annual bonus for the three years preceding the year of termination or the three years preceding the year of the change in control, or his target bonus for the year of termination or the change in control; | |
| a prorated portion of his incentive compensation award for the year of termination and any unpaid portion of the awards earned for prior years; | |
| acceleration of vesting of outstanding equity awards; | |
| continuation of medical, dental, vision, disability and life insurance coverage for 2.5 years; | |
| 2.5 years of additional age and service credit under our nonqualified employee pension and welfare benefit plans for purposes of benefit accrual, matching contributions, vesting, and retirement eligibility; | |
| continued use of a Company-provided vehicle for six months; | |
| outplacement services of up to 10 percent of annual base salary or, if greater, $40,000; and | |
| reasonable legal fees in connection with enforcement of the continuity agreement if the named executive prevails in a dispute. |
| willful and continued failure to perform substantially all of his duties for 10 days following written demand from the Board; | |
| conviction or no-contest plea with respect to a felony or a misdemeanor involving moral turpitude; or | |
| willful inaction or misconduct in connection with his duties, or any act or omission which is injurious to the financial condition or business reputation of AAM or our affiliates. |
| any material and adverse diminution in the named executives duties, title or responsibilities from those in effect immediately prior to the change in control; | |
| any reduction in annual base salary or annual cash bonus percentage target from those in effect immediately prior to the change in control; | |
| any requirement that the named executive be based at a location more that 50 miles from the location at which he was based immediately prior to the change in control; and | |
| any failure by the Company to obtain from any successor to the Company an agreement reasonably satisfactory to the named executive to assume and perform the continuity agreement. |
| directly or indirectly engaging in any business or activity that is in competition with AAM and its products for one year following termination; |
50
| recruiting, soliciting or inducing (or attempting to recruit, solicit or induce) any of our employees to leave AAM, or offer employment to our employees or otherwise interfere with our relationship with our employees, agents or consultants; and | |
| using, exploiting, disclosing or communicating our confidential information to any third party without our prior written consent. |
Not for |
Involuntary/ |
||||||||||||||||||||||||
Cause/By |
Good Reason |
||||||||||||||||||||||||
Employee for |
Termination |
||||||||||||||||||||||||
For Cause |
Good Reason |
Disability |
(Change in |
||||||||||||||||||||||
Termination |
Termination |
Retirement(1) |
Retirement |
Control) |
|||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Bonus(2)
|
| 3,199,998 | 3,199,998 | 3,199,998 | 3,199,998 | ||||||||||||||||||||
Severance(3)
|
| 2,992,000 | | | 16,435,993 | ||||||||||||||||||||
Retirement Plans:
|
|||||||||||||||||||||||||
Defined Benefit
|
|||||||||||||||||||||||||
Retirement
Program(4)
|
| | 628,727 | 628,727 | 628,727 | ||||||||||||||||||||
SERP(5)
|
| | 10,228,924 | 10,228,924 | 13,682,598 | ||||||||||||||||||||
Welfare
Benefit(6)
|
| | 747,197 | 747,197 | 747,197 | ||||||||||||||||||||
Equity:
|
|||||||||||||||||||||||||
Stock
Options(7)
|
| | 305,520 | 305,520 | 6,305,520 | ||||||||||||||||||||
11/3/2005
Awards(8)
|
| 5,586,000 | 5,586,000 | | 5,586,000 | ||||||||||||||||||||
Other Benefits:
|
|||||||||||||||||||||||||
Deferred
Compensation(9)
|
4,495,053 | 4,495,053 | 4,495,053 | 4,495,053 | 4,495,053 | ||||||||||||||||||||
Health
care(10)
|
| 23,242 | | | 2,905 | ||||||||||||||||||||
Life
Insurance(11)
|
| 47,780 | 47,780 | 47,780 | 83,615 | ||||||||||||||||||||
Use of
Vehicles(12)
|
| | | | 145,584 | ||||||||||||||||||||
Other(13)
|
| | | | 149,600 | ||||||||||||||||||||
280G Tax
Gross-Up
|
| | | | | ||||||||||||||||||||
Total
|
4,495,053 | 16,344,073 | 25,239,199 | 19,653,199 | 51,462,790 | ||||||||||||||||||||
(1) | Assumes retirement due to total and permanent disability on December 31, 2007. | |
(2) | Reflects a cash bonus earned in 2007 using the average of the last three cash bonuses paid for the years ended December 31, 2006, 2005 and 2004. | |
(3) | Upon termination without cause or for good reason (defined in employment agreement), Mr. R.E. Dauch would receive severance equal to two years annual base salary payable semimonthly. Upon termination under a change in control, Mr. R.E. Dauch would receive a lump-sum severance payment. | |
(4) | Reflects the present value of a joint and survivor annuity benefit payable monthly. |
51
(5) | The present value calculated under the alternative form assuming a joint and survivor annuity benefit payable monthly. The present value calculated with an additional 3.5 years of credited service under the alternative form assuming a joint and survivor annuity benefit payable monthly under a change in control. | |
(6) | Reflects benefits for Mr. R.E. Dauch and his spouse assuming retirement on December 31, 2007 as set forth in his employment agreement. | |
(7) | Generally, stock option awards vest upon termination of employment due to death, disability, retirement or upon a change in control. The value of stock options reflects the excess of the fair market value of the underlying shares over the exercise or base price of unvested options. Upon a change in control, Mr. R.E. Dauch would receive $3 million in a lump sum for each grant of equity awards he would have received annually had he remained employed through December 31, 2009. | |
(8) | The November 3, 2005 awards vest on December 31, 2009, contingent upon Mr. R.E. Dauch serving the extended term of his employment agreement. Vesting is accelerated upon termination of employment without cause, disability or upon a change in control. The value of these grants reflects the fair market value of the unvested awards. | |
(9) | Assumed payable in a lump sum upon occurrence of termination event. | |
(10) | Upon termination without cause or for good reason (defined in his employment agreement), Mr. R.E. Dauch would receive two years of health care benefits. Upon termination under a change in control, benefits for annual executive physical examination continue for 3.5 years. | |
(11) | Represents reimbursement for the premiums associated with Mr. R.E. Dauchs purchase of a $5 million executive life insurance policy for two years under all scenarios except upon a change in control. Upon termination under a change in control, reimbursement continues for 3.5 years. | |
(12) | Reflects lease payments and administrative fees for the use of two Company-provided vehicles for 3.5 years. | |
(13) | Reflects professional outplacement services equal to 10% of base salary. |
52
Not for |
Involuntary/ |
||||||||||||||||||||||||
Cause/By |
Good Reason |
||||||||||||||||||||||||
Employee for |
Termination |
||||||||||||||||||||||||
For Cause |
Good Reason |
Disability |
(Change in |
||||||||||||||||||||||
Resignation |
Termination |
Termination |
Retirement(1) |
Control) |
|||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Bonus(2)
|
| | | 270,000 | 270,000 | ||||||||||||||||||||
Severance(3)
|
| | | | 1,350,000 | ||||||||||||||||||||
Equity:
|
|||||||||||||||||||||||||
Stock
Options(4)
|
| | | 20,368 | 20,368 | ||||||||||||||||||||
PARS and
RSUs(5)
|
| | | 325,850 | 325,850 | ||||||||||||||||||||
Other Benefits:
|
|||||||||||||||||||||||||
Health
care(6)
|
| | | 181,359 | 21,487 | ||||||||||||||||||||
Disability(7)
|
| | | 2,265,070 | | ||||||||||||||||||||
Life
Insurance(8)
|
| | | 37,014 | 2,784 | ||||||||||||||||||||
Use of
Vehicles(9)
|
| | | | 7,300 | ||||||||||||||||||||
Other(10)
|
| | | | 40,000 | ||||||||||||||||||||
280G Tax
Gross-Up
|
| | | | 690,374 | ||||||||||||||||||||
Total
|
| | | 3,099,661 | 2,728,163 | ||||||||||||||||||||
(1) | Assumes total and permanent disability on December 31, 2007. Assumes Mr. Simonte remains on leave as an employee until retirement. | |
(2) | Reflects a cash bonus earned at target in 2007. | |
(3) | Reflects a lump-sum severance payment upon termination under a change in control. | |
(4) | Generally, stock option awards vest upon termination of employment due to death, disability, retirement or upon a change in control. The value of stock options reflects the excess of the fair market value of the underlying shares over the exercise or base price of unvested options. | |
(5) | PARS and RSU awards vest upon termination of employment due to death, disability or upon a change in control. The value for PARS and RSUs reflects the fair market value of unvested awards. | |
(6) | Under the disability scenario, reflects health care benefits to retirement. Upon termination under a change in control, health care benefits continue for 2.5 years. | |
(7) | Reflects benefits equal to 100% of base salary for year one and 662/3% of base salary to retirement. | |
(8) | Under the disability scenario, reflects basic and supplemental life insurance benefits to retirement. Upon termination under a change in control, basic and supplemental life insurance benefits continue for 2.5 years. |
53
(9) | Reflects lease payments and administrative fees for the use of a Company-provided vehicle for six months. | |
(10) | Reflects professional outplacement services. |
Not for |
Involuntary/ |
||||||||||||||||||||||||
Cause/By |
Good Reason |
||||||||||||||||||||||||
Employee for |
Termination |
||||||||||||||||||||||||
For Cause |
Good Reason |
Disability |
(Change in |
||||||||||||||||||||||
Termination |
Termination |
Retirement(1) |
Retirement |
Control) |
|||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Bonus(2)
|
| | 360,000 | 360,000 | 360,000 | ||||||||||||||||||||
Severance(3)
|
| | | | 1,800,000 | ||||||||||||||||||||
Retirement Plans:
|
|||||||||||||||||||||||||
Defined Benefit
|
|||||||||||||||||||||||||
Retirement
Program(4)
|
| | 617,422 | 383,638 | 383,638 | ||||||||||||||||||||
SERP(5)
|
| | 176,298 | 411,595 | 990,677 | ||||||||||||||||||||
Welfare
Benefit(6)
|
| | 124,096 | 124,096 | 124,096 | ||||||||||||||||||||
Equity:
|
|||||||||||||||||||||||||
Stock
Options(7)
|
| | 85,546 | 85,546 | 85,546 | ||||||||||||||||||||
PARS and
RSUs(8)
|
| | 1,042,720 | | 1,042,720 | ||||||||||||||||||||
Other Benefits:
|
|||||||||||||||||||||||||
Deferred
Compensation(9)
|
1,149,542 | 1,149,542 | 1,149,542 | 1,149,542 | 1,149,542 | ||||||||||||||||||||
Use of
Vehicles(10)
|
| | | | 12,025 | ||||||||||||||||||||
Other(11)
|
| | | | 40,000 | ||||||||||||||||||||
280G Tax
Gross-Up
|
| | | | 1,265,306 | ||||||||||||||||||||
Total
|
1,149,542 | 1,149,542 | 3,555,624 | 2,514,417 | 7,253,550 | ||||||||||||||||||||
(1) | Assumes retirement due to total and permanent disability on December 31, 2007. | |
(2) | Reflects a cash bonus earned at target in 2007. | |
(3) | Reflects a lump-sum severance payment upon termination under a change in control. | |
(4) | Reflects the present value of a joint and survivor annuity benefit payable monthly. Under the retirement and change in control scenarios, reflects a reduced benefit of approximately 64% of the unreduced benefit. | |
(5) | The present value calculated under the basic form assuming a joint and survivor annuity benefit payable monthly under the disability and retirement scenarios. The present value calculated with an additional 2.5 years of credited service under the alternative form assuming a joint and survivor annuity benefit payable monthly under a change in control. |
54
(6) | Reflects benefits for Mr. Rahangdale and his spouse assuming retirement on December 31, 2007 under the welfare plan effective January 1, 2007. | |
(7) | Generally, stock option awards vest upon termination of employment due to death, disability, retirement or upon a change in control. The value of stock options reflects the excess of the fair market value of the underlying shares over the exercise or base price of unvested options. | |
(8) | PARS and RSU awards vest upon termination of employment due to death, disability or upon a change in control. The value for PARS and RSUs reflects the fair market value of unvested awards. | |
(9) | Assumed payable in a lump sum upon occurrence of termination event. | |
(10) | Reflects lease payments and administrative fees for the use of a Company-provided vehicle for six months. | |
(11) | Reflects professional outplacement services. |
Involuntary/ |
|||||||||||||||||||||||||
Not for Cause/By |
Good Reason |
||||||||||||||||||||||||
Employee for |
Termination |
||||||||||||||||||||||||
For Cause |
Good Reason |
Disability |
(Change in |
||||||||||||||||||||||
Resignation |
Termination |
Termination |
Retirement(1) |
Control) |
|||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Bonus(2)
|
| | | 330,000 | 330,000 | ||||||||||||||||||||
Severance(3)
|
| | | | 1,650,000 | ||||||||||||||||||||
Equity:
|
|||||||||||||||||||||||||
Stock
Options(4)
|
| | | 30,552 | 30,552 | ||||||||||||||||||||
PARS and
RSUs(5)
|
| | | 418,950 | 418,950 | ||||||||||||||||||||
Other Benefits:
|
|||||||||||||||||||||||||
Deferred
Compensation(6)
|
242,990 | 242,990 | 242,990 | 242,990 | 242,990 | ||||||||||||||||||||
Health
care(7)
|
| | | 183,863 | 21,487 | ||||||||||||||||||||
Disability(8)
|
| | | 2,542,558 | | ||||||||||||||||||||
Life
Insurance(9)
|
| | | 46,257 | 3,403 | ||||||||||||||||||||
Use of
Vehicles(10)
|
| | | | 10,050 | ||||||||||||||||||||
Other(11)
|
| | | | 40,000 | ||||||||||||||||||||
280G Tax
Gross-Up
|
| | | | | ||||||||||||||||||||
Total
|
242,990 | 242,990 | 242,990 | 3,795,170 | 2,747,432 | ||||||||||||||||||||
(1) | Assumes total and permanent disability on December 31, 2007. Because Mr. D.C. Dauch has more than 10 years of service, he is eligible to retire due to total and permanent disability and receive pension benefits. Amounts assume Mr. D.C. Dauch remains on leave as an employee until retirement. | |
(2) | Reflects a cash bonus earned at target in 2007. |
55
(3) | Reflects a lump-sum severance payment upon termination under a change in control. | |
(4) | Generally, stock option awards vest upon termination of employment due to death, disability or retirement or upon a change in control. The value of stock options reflects the excess of the fair market value of the underlying shares over the exercise or base price of unvested options. | |
(5) | PARS and RSU awards vest upon termination of employment due to death, disability or upon a change in control. The value for PARS and RSUs reflects the fair market value of unvested awards. | |
(6) | Assumed payable in a lump sum upon occurrence of termination event. | |
(7) | Under the disability scenario, reflects health care benefits to retirement. Upon termination under a change in control, health care benefits continue for 2.5 years. | |
(8) | Reflects benefits equal to 100% of base salary for year one and 60% of base salary to retirement. | |
(9) | Under the disability scenario, reflects basic and supplemental life insurance benefits to retirement. Upon termination under a change in control, basic and supplemental life insurance benefits continue for 2.5 years. | |
(10) | Reflects lease payments and administrative fees for the use of a Company-provided vehicle for six months. | |
(11) | Reflects professional outplacement services. |
56
Not for |
Involuntary/ |
||||||||||||||||||||||||
Cause/By |
Good Reason |
||||||||||||||||||||||||
Employee for |
Termination |
||||||||||||||||||||||||
For Cause |
Good Reason |
Disability |
(Change in |
||||||||||||||||||||||
Termination |
Termination |
Retirement(1) |
Retirement |
Control) |
|||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Compensation:
|
|||||||||||||||||||||||||
Bonus(2)
|
| | 258,600 | 258,600 | 258,600 | ||||||||||||||||||||
Severance(3)
|
| | | | 1,293,000 | ||||||||||||||||||||
Retirement Plans:
|
|||||||||||||||||||||||||
Defined Benefit
|
|||||||||||||||||||||||||
Retirement
Program(4)
|
| | 646,245 | 561,441 | 561,441 | ||||||||||||||||||||
SERP(5)
|
| | 67,424 | 149,846 | 628,299 | ||||||||||||||||||||
Welfare
Benefit(6)
|
| | 100,648 | 100,648 | 100,648 | ||||||||||||||||||||
Equity:
|
|||||||||||||||||||||||||
Stock
Options(7)
|
| | 22,405 | 22,405 | 22,405 | ||||||||||||||||||||
PARS and
RSUs(8)
|
| | 335,160 | | 335,160 | ||||||||||||||||||||
Other Benefits:
|
|||||||||||||||||||||||||
Deferred
Compensation(9)
|
395,981 | 395,981 | 395,981 | 395,981 | 395,981 | ||||||||||||||||||||
Use of
Vehicles(10)
|
| | | | 8,199 | ||||||||||||||||||||
Other(11)
|
| | | | 40,000 | ||||||||||||||||||||
280G Tax
Gross-Up
|
| | | | 782,509 | ||||||||||||||||||||
Total
|
395,981 | 395,981 | 1,826,463 | 1,488,921 | 4,426,242 | ||||||||||||||||||||
(1) | Assumes retirement due to total and permanent disability on December 31, 2007. | |
(2) | Reflects a cash bonus earned at target in 2007. | |
(3) | Reflects a lump-sum severance payment upon termination under a change in control. | |
(4) | Reflects the present value of a joint and survivor annuity benefit payable monthly. Under the retirement and change in control scenarios, reflects a reduced benefit of approximately 89% of the unreduced benefit. | |
(5) | The present value calculated under the basic form assuming a joint and survivor annuity benefit payable monthly under the disability and retirement scenarios. The present value calculated with an additional 2.5 years of credited service under the alternative form assuming a joint and survivor annuity benefit payable monthly under a change in control. | |
(6) | Reflects benefits for Mr. Lancaster and his spouse assuming retirement on December 31, 2007 under the welfare benefit plan effective January 1, 2007. | |
(7) | Generally, stock option awards vest upon termination of employment due to death, disability, retirement or upon a change in control. The value of stock options reflects the excess of the fair market value of the underlying shares over the exercise or base price of unvested options. |
57
(8) | PARS and RSU awards vest upon termination of employment due to death, disability or upon a change in control. The value for PARS and RSUs reflects the fair market value of unvested awards. | |
(9) | Assumed payable in a lump sum upon occurrence of termination event. | |
(10) | Reflects lease payments and administrative fees for the use of a Company-provided vehicle for six months. | |
(11) | Reflects professional outplacement services. |
| annual retainer and meeting attendance fees; and | |
| annual award of restricted stock units (upon election to the Board and annually thereafter during each directors service on the Board). |
Annual retainer
|
$ | 40,000 | ||
Board meeting attendance fee
|
1,500 | |||
Committee meeting attendance fee
|
||||
Committee chairman
|
3,000 | |||
Other committee members
|
2,000 | |||
Committee chairman attendance at meetings at the Company for
committee-related business
|
1,000 |
58
59
Fees Earned or |
||||||||||||||||||||
Paid in Cash |
Stock
Awards(1) |
Option
Awards(2) |
Total |
|||||||||||||||||
Name | ($) | ($) | ($) | ($) | ||||||||||||||||
John A. Casesa
|
36,500 | 13,919 | | 50,419 | ||||||||||||||||
Elizabeth A. Chappell
|
59,500 | 29,951 | 8,750 | 98,201 | ||||||||||||||||
Forest J. Farmer
|
73,500 | 29,951 | | 103,451 | ||||||||||||||||
Richard C. Lappin
|
66,500 | 29,951 | | 96,451 | ||||||||||||||||
William P. Miller II
|
66,500 | 29,951 | 26,250 | 122,701 | ||||||||||||||||
Larry K. Switzer
|
55,500 | 29,951 | 26,250 | 111,701 | ||||||||||||||||
Thomas K. Walker
|
89,500 | 29,951 | | 119,451 | ||||||||||||||||
Dr. Henry T. Yang
|
59,500 | 29,951 | 16,525 | 105,976 | ||||||||||||||||
(1) | Reflects the amounts recognized in accordance with SFAS 123R for the fiscal year ended December 31, 2007 for restricted stock units granted in 2007 and earlier. Grant date fair value is calculated using the closing market price of AAM common stock on the date of grant. The grant date fair value of awards granted in 2007 was $28.47 per share. As of December 31, 2007, each non-employee director had 4,600 outstanding restricted stock units except for John A. Casesa who had 2,200 outstanding restricted stock units. | |
(2) | Reflects the amounts recognized in accordance with SFAS 123R for the fiscal year ended December 31, 2007 for stock options granted prior to 2007. Grant date fair value is calculated using the Black-Scholes option pricing model. Grants of stock options to non-employee directors ceased after 2005. As of December 31, 2007, each non-employee director had the following number of stock options outstanding: Mr. Casesa -0-; Ms. Chappell 5,000; Mr. Farmer 13,500; Mr. Lappin 7,500; Mr. Miller 7,500; Mr. Switzer 7,500; Mr. Walker 7,500; and Dr. Yang 7,500. |
60
| each person known to us who beneficially owns more than 5% of AAM common stock; | |
| each of our non-employee directors; | |
| our Co-Founder, Chairman of the Board & Chief Executive Officer and the other named executive officers; and | |
| all directors and executive officers (as of February 29, 2008) as a group. |
Shares of |
||||||||
Common Stock |
Percent of |
|||||||
Beneficially |
Shares |
|||||||
Name and Address
|
Owned | Outstanding | ||||||
Barrow, Hanley, Mewhinney & Strauss, Inc.(1) | 2,799,600 | 5.23 | ||||||
2200 Ross Avenue, 31st Floor Dallas, TX 75201 |
||||||||
Dimensional Fund Advisors LP(2) | 4,084,642 | 7.63 | ||||||
1299 Ocean Avenue Santa Monica, CA 90401 |
||||||||
FMR LLC(3) | 7,904,296 | 14.77 | ||||||
82 Devonshire Street Boston, MA 02109 |
||||||||
Sandra J. Dauch Gift Trust dated May 25,1998(4) | 6,260,702 | 11.70 | ||||||
One Dauch Drive Detroit, MI 48211 |
(1) | Based on the Schedule 13G filed by Barrow, Hanley, Mewhinney & Strauss, Inc., reporting shared voting power over 1,606,600 shares, sole voting power over 1,193,000 shares, and sole investment power over 2,799,600 shares. | |
(2) | Based on the Schedule 13G/A filed by Dimensional Fund Advisors LP, reporting sole voting and investment power over 4,084,642 shares. | |
(3) | Based on the Schedule 13G/A filed jointly by FMR LLC and Edward C. Johnson 3d, reporting sole voting power over 45,300 shares and sole investment power over 7,904,296 shares. | |
(4) | Based on the Schedule 13G filed by the Sandra J. Dauch Gift Trust, indicating sole voting and investment power over 6,260,702 shares. The trustee is Richard E. Dauchs spouse. |
61
Shares |
||||||||||||
Beneficially |
Options |
|||||||||||
Owned |
Exercisable |
Percent |
||||||||||
Excluding |
Within 60 |
of |
||||||||||
Options | Days | Class | ||||||||||
Directors(1)
|
||||||||||||
John A. Casesa
|
4,733 | | * | |||||||||
Elizabeth A. Chappell
|
8,333 | 5,000 | * | |||||||||
Forest J. Farmer
|
16,833 | 13,500 | * | |||||||||
Richard C. Lappin
|
16,433 | 7,500 | * | |||||||||
William P. Miller II
|
10,833 | 7,500 | * | |||||||||
Larry K. Switzer
|
10,833 | 7,500 | * | |||||||||
Thomas K. Walker
|
10,833 |