Moog Proxy and Notice and Access Letter- FY2019 Filed 12 30 2019 - Page 18



COMPENSATION DISCUSSION AND ANALYSIS
INTRODUCTION
This CD&A provides detailed information about the compensation arrangements for the Company’s NEOs:





John R. Scannell — Chief Executive Officer; Chairman of the Board; and Director
Donald R. Fishback — Vice President; Chief Financial Officer; and Director
R. Eric Burghardt — Vice President *
Mark J. Trabert — Vice President; President, Aircraft Controls
Maureen M. Athoe — Vice President; President, Space and Defense
*
Mr. Burghardt served as President, Aircraft Controls through April 2019.
This CD&A includes the Executive Compensation Committee’s compensation philosophy, the objectives of our compensation
program and a discussion of each element of compensation paid to the NEOs for our most recent fiscal year.
EXECUTIVE SUMMARY
The objective of the Company’s executive compensation program is to provide a compensation package that will attract, retain,
motivate and reward superior executives who must operate in a highly competitive and technologically challenging environment.
2019 Performance
Fiscal 2019 was a record year for our Company in terms of sales and earnings per share. Sales were up 7% with the increase
shared evenly by Aircraft Controls and Space and Defense Controls. Earnings per share of $5.11 were up compared with last
year’s $2.68 per share that included $1.89 of negative effects associated with tax reform and the decision to exit from the wind
pitch controls business. Cash flows from operating activities in fiscal 2019 of $181 million were negatively affected by a significant
increase in unbilled receivables and inventories which is correlated with top line growth and associated with the Company’s focus
on strengthening operating performance, particularly in the Aircraft segment. Capital deployment in fiscal 2019 included paying
quarterly dividends totaling $35 million and repurchasing approximately 302,000 shares of Company stock for an aggregate purchase
price of $23 million.
2019 Executive Compensation Assessment
The Executive Compensation Committee uses data provided by Korn Ferry, our compensation consultant, to establish
competitive salaries for each of the NEOs. Information regarding the compensation consultant and this analysis is provided in
greater detail throughout the CD&A.
In our total direct compensation programs (detailed on page 19), each of the three major elements, base salary, short term
incentive (“STI”), and long term incentive (“LTI”), are considered independently. However, the Executive Compensation Committee
also considers how our total compensation compares with the total compensation of comparable executives in peer organizations.
In summary, the key aspects of the Company’s compensation for the NEOs are as follows:

Total Direct Compensation for all NEOs between 46% and 83% of peer group medians, with an average of 61%;

Base salaries between 91% and 124% of the peer-group medians, with an average of 105%;

Base salary increases tied to market benchmarks, time in position and individual job performance;

STI, paid in cash and stock, based upon increases in earnings per share (“EPS”) and free cash flow (“FCF”) conversion;

Value of LTI (SAR and PSU awards) between 33% and 72% of peer group median LTIs, with an average of 45%;

SAR and PSU awards link NEO compensation to long-term shareholder interests;

Shares related to outstanding unexercised stock options and SARs are approximately 0.7% of total outstanding shares;

Shares related to outstanding PSU awards are approximately 0.2% of total outstanding shares;

Company policy prevents re-pricing option grants and SAR awards;

Change in control agreements are double triggered.
16

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