12 23 2021 Moog Proxy - FY2021 - FINAL - Flipbook - Page 19
Short Term Incentive (STI)
The Company’s senior managers and executives consist of approximately 400 individuals. This entire group, including the NEOs,
participates in the STI plan in which cash and stock bonus payouts each year are a function of the year-over-year percentage
growth in the Company’s EPS and FCF conversion. Any payout depends entirely on these two elements. The two elements
operate independently of each other and there are no individual performance incentives in the formula. The STI bonus is typically
paid in a ratio of 2:1 cash bonus to stock bonus award in the form of Class B shares.
The Company uses these two metrics to underscore the importance of collaboration at all levels of leadership. The Company
supplies products to a diverse array of customers in a variety of global markets. The common thread is that the technology used
in our high-performance precision control and fluid flow systems and our other key technical resources are transferable from one
segment to another in response to fluctuating customer demands. Having our senior leadership focus on “what’s good for the
Company” has been an important factor in the Company’s performance. For a detailed explanation of the STI calculation
method, refer to the Short Term Incentive (STI) section under The Process Used to Determine Compensation, beginning on page
19.
Long Term Incentive (LTI)
Moog Inc. 2014 Long Term Incentive Plan
In January 2015, the 2014 LTI Plan was approved by shareholders, providing for the grant of awards covering 2,000,000 Class A
or Class B shares of stock. The 2014 LTI Plan was implemented to provide a more flexible framework that permits the
development and implementation of a variety of stock-based incentives, which enable the Company to base awards on key
performance metrics, as well as to further align our LTI compensation with our peers and shareholder interests.
The LTI awards granted in fiscal 2021 continued to consist of SARs, aligning awards to share price increases over the medium to
long term, along with PSUs to provide an equity compensation element that is linked to key performance indicators. The number
of PSUs that will vest depends on growth and profitability performance, which will be measured at the end of a three-year
performance period. Beginning in fiscal 2021, the LTI awards granted also included TVAs to introduce some balance to the
Company's LTI mix. The TVA grant is a cash-denominated time-vested award that may be settled in cash or a number of shares
of stock based upon the current stock price at vesting. It is intended that TVAs will be settled to Class B shares upon vesting.
All SARs and PSUs granted in fiscal 2021 were issued in underlying Class B shares.
The number of annual SARs, PSUs and TVAs awarded was determined utilizing Korn Ferry peer company survey data as part of
the analysis. Individual performance is not used to determine the number of awards.
Moog Inc. 2008 Stock Appreciation Rights Plan (2008 SAR Plan)
Issuances of new awards under the 2008 SAR Plan terminated on January 7, 2015 following shareholder approval of the 2014
LTI Plan. The 2008 SAR Plan covers outstanding SARs, which confer a benefit based on appreciation in value of Class A shares
and are settled in the form of Class A shares.
Other Benefits and Perquisites
Retirement Programs
The Company believes retirement plans are a key element in attracting and retaining employees at all levels of the organization.
The Company maintains both defined benefit and defined contribution plans directly in the U.S. and via various subsidiaries
outside the U.S. Employees hired in the U.S. after January 1, 2008 are covered under a defined contribution plan. Each NEO,
excluding Mr. Roche, participates in the U.S. defined benefit retirement plan and all participate in either a defined benefit or
defined contribution supplemental plan. Mr. Roche also participates in an Irish defined benefit plan. These plans are described in
more detail along with officers’ other pension benefits in the sections under Pension Benefits beginning on page 31. The value of
pension benefits for each NEO can be found in the 2021 Pension Benefits Table on page 33.
Medical Coverage
The NEOs participate in the same health insurance programs available to all employees. In addition, our executive officers have
coverage under an enhanced medical insurance policy that generally covers all unpaid healthcare expenses deductible under
IRS guidelines in the U.S. or receive equivalent expense reimbursements outside the U.S.. This supplemental coverage plan
was established in accordance with industry practice for senior executives. We believe that conforming in this way to industry
standards aids in executive retention.
16