Aar Corp DEF 14A, filed Aug 6, 2024

Aar Corp (AIR)

DEF 14A 2024-08-06 For: 2024-09-17

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Added on June 12, 2026

About this DEF 14A

Aar Corp filed this DEF 14A on August 6, 2024.

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☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☑		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material under §240.14a-12

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☑		No fee required
☐		Fee paid previously with preliminary materials
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

Items of business		Board recommendation		Page
1	Elect three director nominees included in our annual proxy statement		FOR each director nominee	15
2	Vote on an advisory proposal to approve our Fiscal 2024 executive compensation		FOR	38
3	Ratify the appointment of KPMG LLP as our independent registered public accounting firm for Fiscal 2025		FOR	74


www.proxyvote.com		www.virtualshareholdermeeting.com/ AIR2024		1-800-690-6903		Complete and return the proxy card or voting information card

Message from our chairman, president and chief executive officer		1
Notice of 2024 annual meeting of stockholders		2
Proxy statement summary		4
AAR – Who we are and what we do		4
Our strategy		6
Financial highlights		7
Our culture		8
Environmental, social, and governance focus		9
Proposals to be voted on at the annual meeting		10
Board of Directors highlights		11
Corporate governance highlights		12
Stockholder engagement		12
Executive compensation highlights		13
Proposal 1 – Election of director nominees		15
Proposal summary		15
Director skills & qualifications		15
Information about our director nominees and our continuing directors		17
The Board’s role and responsibilities		26
Board structure		33
Board practices and policies		34
Director compensation		36
Proposal 2 – Executive compensation		38
Proposal summary		38
Stockholder engagement		40
Executive compensation program for Fiscal 2024		40
Human Capital and Compensation Committee Fiscal 2024 report		40

Compensation discussion and analysis		41
Executive summary		41
Financial highlights		41
Stockholder engagement		42
Response to stockholder feedback		43
Executive compensation highlights		44
Our executive compensation goals and philosophy		44
Principal elements of our Fiscal 2024 executive compensation program		46
Our Human Capital and Compensation Committee’s decision-making process for Fiscal 2024		47
Fiscal 2024 executive compensation		47
Key executive compensation policies and practices		55
Executive compensation tables		58
CEO pay ratio		70
Pay versus performance		71
Proposal 3 – Ratification of our independent registered public accounting firm		74
Proposal summary		74
Independent registered public accounting firm fees and services		75
Audit Committee Fiscal 2024 report		75
Stock ownership information		76
Security ownership of our board and management		76
Security ownership of certain beneficial owners		77
Equity compensation plan information		78
Stockholder proposals for our 2025 annual meeting		79
Other business		80
Appendix A – Questions and answers about our 2024 annual meeting		A-1
Appendix B – Non-GAAP financial measure		B-1

	Parts Supply			Repair & Engineering			Integrated Solutions			Expeditionary Services
●Used Serviceable Material (“USM”) ●Distribution of original equipment manufacturer (“OEM”) factory-new parts ●Airframe and engine parts sale, exchange, loan, and lease ●Engine solutions, management, sales, leasing, and exchange ●Aircraft sales and leasing ●Online PAARTS^SMstore ●Worldwide 24/7 aircraft on-ground (“AOG”) service			●Airframe Maintenance, Repair and Overhaul (“MRO”) ●Component Services ●Landing Gear Overhaul ●Wheels and Brakes ●Engineering Services ●Development of proprietary parts manufacturer approval (“PMA”) parts			●Government aircraft maintenance, logistics, and operations support programs ●Commercial flight-hour-based aircraft component support ●Consumable and expendable parts ●Trax^SMsoftware solutions			●Mobility systems: rapid deployment sustainment solutions for governments, militaries, and nonprofit organizations ●Specialized pallets ●Containers for customized air-mobile shipping and storage of equipment ●Rapidly deployable mobile tactical shelter systems

	Continued execution and expansion in commercial and government markets

	●Our consolidated sales to commercial customers in Fiscal 2024 increased $309.1 million, or 23.3%, over the prior year primarily due to strong demand and volume growth in our Parts Supply segment across both new parts distribution and USM. ●We were successful in winning new long-term agreements in both our commercial and government markets. ●We broke ground on facility expansions in Miami, Florida and Oklahoma City, Oklahoma to increase our MRO network capacity, supported by extended and expanded commitments from United Airlines and Alaska Airlines. ●We were awarded three sustainment contracts supporting the U.S. Air Force’s new aerial tanker, the KC-46, for which we will provide significant logistics support over the next 10 years. ●We announced a new multi-year distribution agreement with Ontic, providing AAR rights to supply selected military products to the U.S. government.

	Acquired Triumph’s Product Support business to drive growth

	●In March 2024, we acquired the product support business of Triumph Group, Inc. (the “Product Support business”), a leading global provider of specialized MRO capabilities for critical aircraft components in the commercial and defense markets. ●The acquisition meaningfully scales AAR’s proprietary repair capabilities and is highly complementary with our existing portfolio. We anticipate potential benefits of integrating AAR’s existing parts / trading / integrated solutions volumes with the Product Support business’s facilities and proprietary capabilities. Further, the acquired Thailand facility enables our expansion of operations and capabilities in the APAC region. ●The Product Support business is expected to be accretive to margins with an attractive overall financial profile and strong combined free cash flow.

●	Execute through focus on customer satisfaction and cost leadership;
●	Pursue connected businesses that reinforce collective growth prospects;
●	Leverage data and digital to deliver better customer-focused offerings;
●	Expand margins through intellectual property;
●	Increase our global footprint into emerging markets;
●	Leverage our independence to provide unbiased solutions; and
●	Attract, empower and deploy exceptional, entrepreneurial talent.

(dollars in millions except per share data) For the fiscal year ended May 31	2024 ($)	2023 ($)	2022 ($)
Sales	2,318.9	1,990.5	1,820.0
Operating income	129.2	133.9	106.9
Diluted earnings per share from continuing operations	1.29	2.52	2.16
Cash provided by operations – continuing operations	43.8	23.8	89.8

As of May 31
Working capital	922.7	746.4	659.0
Total assets	2,770.0	1,833.1	1,573.9
Total debt	997.0	272.0	100.0
Equity	1,189.8	1,099.1	1,034.5

Purpose		Mission
Empowering people to build innovative aerospace solutions today so you can safely reach your destination tomorrow.		Go above and beyond to provide value-driven aerospace aftermarket solutions to meet the evolving needs of our customers worldwide.

●	*Environmental:* We are committed to carefully monitoring environmental impacts and instituting safeguards for preserving the natural environment, reducing climate-related risks, and creating opportunities for the prevention, reduction, and recycling of waste and other materials used in our business processes, wherever possible. Key impact areas include energy, materials, waste, and greenhouse gas emissions.
●	*Social:* We are committed to managing our relationships with all stakeholders, including our employees, customers, supply chain partners, and communities, in an inclusive, fair, and respectful manner. Key impact areas include aviation safety, employment, employee health, safety, and well-being, diversity and inclusion, nondiscrimination, training & education, occupational health & safety, and local communities.
●	*Governance:* We are committed to establishing, implementing, and maintaining an effective governance structure that is agile and responsive to business needs and evolving best practices, and sets high ethical standards. Key impact areas include information security, risk identification / mitigation, anti-corruption, and ethics and compliance.

Board Committee	Overview	Enhancements
Nominating and Governance Committee	Oversees our governance policies and practices	Reviews various components of our ESG framework, including our ESG oversight structure, overall ESG strategy, and material disclosures regarding the oversight process and our ESG initiatives
Human Capital and Compensation Committee	Oversees our executive compensation program	Oversees activities with respect to our human capital function, including succession planning, talent development, diversity and inclusion, pay equity, and culture, as well as the oversight of ESG goals
Audit Committee	Oversees financial reporting, compliance and ethics, cybersecurity, and enterprise risk management	Oversees the internal and external review of quantitative environmental data and related disclosures included in our ESG reports, and oversees the enterprise risk management process, including environmental (such as climate) risks
Aviation Safety and Training Committee	Oversees all aspects of aviation safety, including our culture of safety compliance	No change

	Michael R. Boyce Independent Director		Billy J. Nolen Independent Director		Jennifer L. Vogel Independent Director

Since 2018, Chairman, Chief Executive Officer and Managing Director of Peak Investments, LLC, an operating and acquisition company. Retired Chairman of the Board of PQ Corporation, a specialty chemicals and catalyst company, where he served from 2017 to 2019. From 2005 to 2017, Chairman and Chief Executive Officer of PQ Corporation.		Billy Nolen has served as Chief Regulatory Affairs Officer of Archer Aviation Inc., an aerospace company, since June 2023. Prior to this position, Mr. Nolen served as the acting administrator at the Federal Aviation Administration (“FAA”), the government agency that regulates civil aviation activities in the U.S., from April 2022 to June 2023, where he led certification reform and new safety management systems for airports.		From 2012 to 2020, co-founder and owner of InVista Advisors, an advisory firm focused on legal department effectiveness, leadership, compliance, crisis readiness and risk management. From 2003 to 2010, Senior Vice President, General Counsel, Secretary and Chief Compliance Officer of Continental Airlines, Inc.

Sales		Adjusted diluted EPS from continuing operations*

		Director Since	Class and Term Expiration	Committees
		Director Since	Class and Term Expiration	NGC	HCCC	AC	ASTC	EC
Director Nominees
	Michael R. Boyce Chairman, Chief Executive Officer, and Managing Director, Peak Investments, LLC	2005	Class I 2024
	Billy J. Nolen Chief Regulatory Affairs Officer, Archer Aviation Inc.	2023	Class I 2024
	Jennifer L. Vogel Former Senior Vice President, General Counsel, Secretary, and Chief Compliance Officer, Continental Airlines, Inc.	2016	Class I 2024
Continuing Directors*
	Jeffrey N. Edwards Partner and Vice Chairman, New Vernon Capital	2024	Class II 2025
	John M. Holmes Chairman, President, and Chief Executive Officer, AAR CORP.	2017	Class II 2025
	Ellen M. Lord Former Under Secretary of Defense for Acquisition and Sustainment; Former President and Chief Executive Officer, Textron Systems	2021	Class II 2025
	Marc J. Walfish Lead Independent Director Founding Partner, Merit Capital Partners	2003	Class II 2025
	John W. Dietrich Executive Vice President and Chief Financial Officer, FedEx Corporation	2023	Class III 2026
	Robert F. Leduc Former President, Pratt & Whitney	2020	Class III 2026
	Duncan J. McNabb General, U.S. Air Force (Ret.); Co-Founder and Managing Partner, Ares Mobility Solutions, Inc.	2017	Class III 2026
	Peter Pace General, U.S. Marine Corps (Ret.); Former Chairman of the Joint Chiefs of Staff	2011	Class III 2026

	Committee Chair	NGC - Nominating and Governance Committee	AC - Audit Committee	EC - Executive Committee
	Committee Member	HCCC - Human Capital and Compensation Committee	ASTC - Aviation Safety and Training Committee

11	10	66	8 years
directors	independent directors	Average age of directors	Average tenure of directors

●	Annual cash bonuses are linked to two key performance metrics critical to the success of our business strategy: adjusted diluted earnings per share from continuing operations (80%) and adjusted net working capital turns (20%).
●	The Fiscal 2024 long-term incentive program is 100% equity based, consisting of performance-based restricted stock (60%), stock options (20%) and time-based restricted stock (20%).
●	Performance-based restricted stock for Fiscal 2024 is linked to three key performance metrics: adjusted income from continuing operations (70%), return on invested capital (20%) and relative total stockholder return (10%).
●	AAR targets total pay opportunities for its executive officers, individually and as a group, within a competitive range around the median of the market.
●	AAR’s compensation mix – cash versus equity, fixed versus variable, and annual versus longer-term – is consistent with competitive best practices.

Strategic goal	Compensation measure
Drive profitability and deliver value to stockholders	80	^%	Adjusted diluted earnings per share from continuing operations
Make efficient use of stockholder capital in support of Company sales	20	^%	Adjusted net working capital turns

Strategic goal	Compensation measure
Increase profitability and deliver value to stockholders	70	^%	Adjusted income from continuing operations
Enhance efficiency in allocating capital to generate higher returns	20	^%	Average return on invested capital
Outperform peer group* companies in generating stockholder value	10	^%	Relative total stockholder return

What We Do			What We Do Not Do

Annual say-on-pay stockholder vote Emphasis on performance-based or at-risk compensation Multi-year vesting periods for stock awards Limited perquisites “Double trigger” change-in-control provisions* Meaningful stock ownership and retention guidelines for directors and executive officers Prohibition on short sales, pledging and hedging transactions Claw-backs of incentive compensation in the event of certain financial restatements Annual assessment of incentive compensation plans			No tax gross-ups No repricing of stock options No dividends or dividend equivalents paid on stock or stock unit awards unless vesting conditions are met

Proposal 1 Election of three director nominees named in this proxy statement
Board recommendation
	Our Board unanimously recommends that you vote FOR each director nominee.

●	Audit Committee Charter
●	Human Capital and Compensation Committee Charter
●	Nominating and Governance Committee Charter
●	Aviation Safety and Training Committee Charter
●	Executive Committee Charter
●	Corporate Governance Guidelines
●	Categorical Standards for Determining Director Independence
●	Code of Conduct

Solicitation of director candidate recommendations The Nominating and Governance Committee solicits director candidate recommendations from management, other directors, business and community leaders and stockholders. The Nominating and Governance Committee also may retain the services of a search firm to assist in identifying director candidates. Mr. Nolen and Mr. Edwards were recommended to the Nominating and Governance Committee after an extensive search and interviews with several candidates.


Candidate considerations The Nominating and Governance Committee considers all director candidates in the same manner, regardless of whether recommendations come from the Board, stockholders or other sources. In its evaluation of director candidates, the Nominating and Governance Committee considers the factors specified in the Company’s Corporate Governance Guidelines, including: ●A high level of integrity and professional and personal ethics and values consistent with those of the Company; ●Professional background and relevant business and industry experience; ●Current employment, leadership experience and other board service; ●Demonstrated business acumen or special technical skills or expertise (e.g., auditing, financial, law and aviation/aerospace); ●A commitment to enhancing stockholder value and serving the interests of all stockholders; ●Independence (including within the meaning of the applicable SEC rules and applied to all NYSE rules) and freedom from any conflicts of interest that may interfere with a director’s ability to discharge his/her fiduciary duties; ●Willingness and ability to make the commitment of time and attention necessary for effective Board service; ●A balance of business, financial and other experience, expertise, capabilities and perspectives among sitting directors in the context of the current composition of the Board, operating requirements of the Company and long-term interests of stockholders; and ●Other factors the Nominating and Governance Committee deems appropriate.



Consideration of diversity The Nominating and Governance Committee considers the racial, ethnic and gender diversity of the Board and director candidates, as well as the diversity of their knowledge, skills, experience, background and perspective, to maintain a diverse, balanced and effective Board. When the Nominating and Governance Committee seeks new candidates for director roles, it seeks individuals with qualifications that will complement the experience, skills and perspectives of the other members of the Board. In order to help facilitate the evaluation of diverse candidates, our Corporate Governance Guidelines mandate that one or more candidates who are women or minority persons be included in any director search.



Recommendation Following its evaluation of director candidates, the Nominating and Governance Committee recommends its director nominees to the full Board. Based on its review and consideration of the Committee’s recommendation, the Board makes the final determination of the director nominees to be presented for election by the Company’s stockholders.

Board The Board is elected by our stockholders and represents their interests in overseeing our management, strategic direction and financial success. Effective risk management is an important Board priority. The risk oversight function at the Board begins with a fundamental understanding of the Company’s culture, business and strategy. The Board exercises its oversight responsibilities directly and through its committees.


Committees The Board delegates significant aspects of its risk management oversight responsibilities to its committees, as detailed below:



Management The Board works with management in managing risk through internal processes, an effective internal control environment and an enterprise risk management program. Our enterprise risk management program is designed to identify, assess and prioritize our risk exposures across various timeframes, from the short term to the long term. Further, the enterprise risk management program and our disclosure controls and procedures are designed to appropriately escalate key risks to the Audit Committee as well as analyze potential risks for disclosure.

	John M. Holmes Chairman, President and Chief Executive Officer			Marc J. Walfish Lead Independent Director
Key responsibilities ●Chairs Board meetings and annual meetings of stockholders ●Has the authority to call Board meetings ●Collaborates on Board meeting agendas, meeting schedules and information sent to the Board ●Chairs the Executive Committee of the Board ●Manages our day-to-day operations ●Develops and implements our business strategy and capital allocation strategy ●Serves as our principal spokesperson ●Represents the Company to customers, suppliers and industry partners			Key responsibilities ●Presides at all Board meetings when the Chairman is not present ●Has the authority to call Board meetings and meetings of the independent directors ●Chairs executive sessions of the independent directors ●Consults with and serves as a liaison between the Chairman, President and Chief Executive Officer and the independent directors ●Facilitates the Board and Board Committee self-evaluation process and participates in the Chief Executive Officer evaluation process

Compensation element		Fiscal 2024 non-employee director compensation program
Board chair additional annual retainer		None*
Non-employee director annual retainer		$95,000
Lead director additional annual retainer		$30,000
Audit Committee chair annual retainer		$20,000
All other Committee chair additional annual retainer		$15,000
Annual restricted stock award		Shares of common stock with a total grant date dollar value of $125,000 (vesting after one year)**

*	Our current Chairman, John M. Holmes, does not receive any director-related compensation because he is an employee of the Company.
**	The amount shown was the total grant date dollar value of the annual restricted stock award granted on June 1, 2023, which was the beginning of Fiscal 2024. This amount was increased to $135,000 for the award granted on June 1, 2024, which is the beginning of Fiscal 2025.

Name¹	Fees earned or paid in cash ($)²	Stock awards ($)³	Option awards ($)⁴	All other compensation ($)⁵	Total ($)
Anthony K. Anderson	120,469	125,000	—	12,055	257,524
Michael R. Boyce	95,000	125,000	—	7,513	227,513
John W. Dietrich	95,000	125,000	—	1,865	221,865
Jeffrey N. Edwards	18,587	31,045	—	—	49,632
Robert F. Leduc	95,000	125,000	—	3,842	223,842
Ellen M. Lord	95,000	125,000	—	15,406	235,406
Duncan J. McNabb	121,250	125,000	—	6,700	252,950
Billy J. Nolen	61,071	95,000	—	1,088	157,159
Peter Pace	95,000	125,000	—	1,865	221,865
Jennifer L. Vogel	118,949	125,000	—	—	243,949
Marc J. Walfish	160,000	125,000	—	1,865	286,865

Name	Annual retainer ($)	Committee chair retainer fees⁶ ($)	Lead director fee ($)	Total ($)
Anthony K. Anderson	95,000	25,469	—	120,469
Michael R. Boyce	95,000	—	—	95,000
John W. Dietrich	95,000	—	—	95,000
Jeffrey N. Edwards	18,587	—	—	18,587
Robert F. Leduc	95,000	—	—	95,000
Ellen M. Lord	95,000	—	—	95,000
Duncan J. McNabb	95,000	26,250	—	121,250
Billy J. Nolen	61,071	—	—	61,071
Peter Pace	95,000	—	—	95,000
Jennifer L. Vogel	95,000	23,949	—	118,949
Marc J. Walfish	95,000	35,000	30,000	160,000

³	The amounts in this column reflect the aggregate grant date fair value of the Fiscal 2024 stock award of 2,426 shares of time-based restricted stock granted on June 1, 2023 to each non-employee director computed in accordance with FASB ASC Topic 718. These shares subsequently vested on June 1, 2024. General McNabb elected to defer his entire stock award. Mr. Edwards received 492 shares of time-based restricted stock and Mr. Nolen received 1,562 shares of time-based restricted stock. These shares subsequently vested on June 1, 2024.
⁴	No stock options were granted to non-employee directors in Fiscal 2024. No current non-employee director held any stock options as of May 31, 2024.
⁵	This column includes the cost of the annual physical program, reimbursements for travel, lodging and hotel expenses in connection with the annual physical program, and the cost of term life insurance coverage.
⁶	The amounts in this column reflect fees paid within Fiscal 2024, which include (1) fees attributed to service between September 1, 2022, and August 31, 2023, and (2) fees attributed to service between September 1, 2023, and May 31, 2024. Committee chair compensation structure prior to September 1, 2023, reflected that chairs were paid annually in arrears at the end of the first quarter of the following fiscal year. The Committee chair compensation structure changed effective as of September 1, 2023, from which time chairs are paid quarterly in arrears. Mr. Anderson and Ms. Vogel received prorated chair retainer payments in August 2023 because Mr. Anderson became chair of the Nominating and Governance Committee on September 20, 2022, and Ms. Vogel became chair of the Human Capital and Compensation Committee on October 27, 2022.