Moog Proxy and Notice and Access Letter- FY2019 Filed 12 30 2019 - Page 25



Long Term Incentive (LTI)
The Company believes that stock ownership on the part of executive officers serves to align the leadership of the Company
with the interest of shareholders. The Board of Directors has appointed the Executive Compensation Committee to administer all
components of executive compensation, including equity-based compensation plans. These responsibilities include the authority
to construe and interpret the terms of the plans and awards granted under them, to determine the persons eligible to receive awards,
when each award will be granted and the terms of each award, including the award amounts granted. No awards may be re-priced
in accordance with the terms of the Company’s outstanding plans.
During fiscal 2019, the CEO was awarded 27,949 SARs and 7,483 PSUs. All other officers were awarded 6,988 SARs and
1,871 PSUs. These awards were granted under the 2014 LTI Plan and both SARs and PSUs were awarded using Class B stock.
The PSUs will vest at the end of a three-year performance period and the number of PSUs earned will be determined based upon
the level of performance achieved against two performance criteria. PSUs have the potential to be earned between zero and two
times the number of target units awarded.
The Executive Compensation Committee has not used a formulaic approach, but in years when performance is considered
adequate, the Executive Compensation Committee has invited the CEO to make recommendations for SAR and PSU awards for
all executive officers other than himself. These recommendations were either approved or adjusted by the Executive Compensation
Committee. With regard to the CEO, SAR and PSU awards were determined by the Executive Compensation Committee. A total
of 140,395 SARs and 36,415 PSUs were awarded to all eligible executives in fiscal 2019, resulting in a "burn rate" of less than 1%
based on the diluted weighted-average shares outstanding.
A SAR award contains such terms and conditions as determined by the Executive Compensation Committee, subject to the
terms of the 2014 LTI Plan, including the date on which the SARs become exercisable and the expiration date of the SARs. The
exercise price of a SAR on Class B shares will be equal to the fair market value of one Class B share as defined in the 2014 LTI
Plan.
SARs vest and become exercisable pursuant to the terms and conditions outlined in each participant’s award agreement, as
determined by the Executive Compensation Committee. Except as described in Potential Payments upon Termination or Change
in Control beginning on page 36, SARs do not become exercisable earlier than the first anniversary of the date of grant, and vested
SAR awards will be exercisable by participants only until the tenth anniversary of the date of grant. The total number of shares of
Moog stock subject to options and SARs that may be awarded to any one employee during any fiscal year of the Company may
not exceed 100,000 shares.
A PSU award also contains such terms and conditions as determined by the Executive Compensation Committee, subject to
the terms of the 2014 LTI Plan, including the dates on which the PSUs vest and settle, the performance criteria which the awards
are based on, and the way in which awards will be linked to performance targets. The fair market value realized upon settlement
of earned PSUs is defined in the same manner as described above for SARs.
PSUs vest and settle pursuant to the terms and conditions outlined in each participant’s award agreement, as determined by
the Executive Compensation Committee. Except as described in Potential Payments upon Termination or Change in Control
beginning on page 36, PSUs do not vest earlier than the end of the three year performance period, at which time they vest in
accordance with the level of performance attained upon certification by the Executive Compensation Committee. For the fiscal 2019
grant, the performance measures used for PSUs were sales growth and margin. The total number of shares of Moog stock subject
to PSUs that may be awarded to any one employee during any fiscal year of the Company may not exceed 100,000 shares.
The Executive Compensation Committee, in collaboration with the CEO, selected a pattern of award distributions where all
officers except the CEO were awarded the same number of SARs and PSUs. Korn Ferry analysis indicates that the value of the
Company’s awards in SARs and PSUs is below the median of peer companies.
The Executive Compensation Committee remains mindful of the relationship between the number of stock-based compensation
awards granted and the shares outstanding. As of fiscal 2019 year-end, the shares related to the Company’s outstanding unexercised
option and SAR awards were approximately 0.7% of the total outstanding shares and those related to the Company’s outstanding
unvested PSU awards were approximately 0.2% of the total outstanding shares. It is important to note that while option grants are
equivalent to resulting Company shares, the same is not true for SARs. The shares related to outstanding SAR awards are based
upon the market price on September 27, 2019.
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