Moog Proxy - FY2022 - Host - Flipbook - Page 23
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. 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. For the fiscal 2022 grant, the performance measures used for PSUs were total sales
and operating margin targets. The Company does not publicly disclose the specific performance target levels as they constitute
highly confidential information that would result in competitive harm. The targets approved by the Executive Compensation
Committee and the Board are rigorous and challenging and were set sufficiently high enough to be difficult, but not unattainable
to achieve.
A TVA award 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 TVAs vest and settle and whether the TVAs will be settled in the form of
cash or a number of Class B shares, determined using the current stock price upon settlement. For TVAs settled in Class B
shares, the fair market value realized upon settlement of vested TVAs is defined in the same manner as described above for
SARs and PSUs.
TVAs 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, TVAs do not vest earlier than the first anniversary of the date of grant. Each vested fixed dollar tranche of
a TVA will settle in Class B shares using the fair market value, as defined in the 2014 LTI Plan, of the Class B shares on the date
of vesting of such tranche. While it is intended that TVAs will be settled in Class B shares, the Company reserves the right, at its
discretion, to settle vested amounts in cash rather than issue shares.
The Executive Compensation Committee, in collaboration with the CEO, selected a pattern of award distributions where all
officers except the CEO, CFO and COO were awarded the same number of SARs, PSUs and TVAs. Korn Ferry analysis
indicates that the value of the Company’s awards in SARs, PSUs and TVAs 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 2022 year-end, the shares related to the Company’s outstanding awards
were less than 1% of the total outstanding shares.
Risk Review
In formulating and evaluating the Company’s executive compensation program, the Executive Compensation Committee
considers whether the program promotes excessive risk-taking. The Executive Compensation Committee believes the
components of the Company’s executive compensation program:
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Provide an appropriate mix of fixed and variable pay;
Balance short-term operational performance with long-term increases in shareholder value;
Reinforce a performance-oriented environment; and
Encourage recruitment and retention of key executives.
The Executive Compensation Committee of the Board has followed substantially consistent practices over the years and the
members of the Executive Compensation Committee have not seen any evidence that our compensation programs create risks
that are reasonably likely to have a material adverse effect on our Company. The Executive Compensation Committee believes
the leadership of the Company is not provided with incentives which would result in leadership taking unreasonable risks in order
to achieve short-term results at the expense of the long-term health and welfare of the shareholders’ investment. Additional
policies are in place to further reduce the likelihood of excessive risk-taking, such as the Insider Trading Policy, which prohibits
key insiders, including officers, from engaging in short sales or hedging transactions involving the Company’s securities.
Tax and Accounting Implications of Compensation
Section 162(m) of the Internal Revenue Code limits the deductibility of compensation to $1 million per year for certain executive
officers. While the Executive Compensation Committee considers tax and accounting implications as factors when considering
executive compensation, they are not the only factors considered. Other important considerations may outweigh tax and
accounting considerations. As such, the Executive Compensation Committee reserves the right to establish compensation
arrangements that may not be fully tax deductible by the Company under applicable tax laws. For fiscal 2022, the compensation
of Mr. Scannell and Mr. Roche each exceeded the limitation under Section 162(m) of the Internal Revenue Code.
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