Dauch Corp DEF 14A, filed Mar 21, 2024

Dauch Corp (DCH)

DEF 14A 2024-03-21 For: 2023-12-31

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Added on June 12, 2026

About this DEF 14A

Dauch Corp filed this DEF 14A on March 21, 2024.

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Annual Meeting Agenda / Items of Business

1. Election of four members of the Board of Directors to serve until the annual meeting of stockholders in 2027

2. Advisory vote on named executive officer compensation

3. Ratification of the appointment of Deloitte & Touche LLP as independent public accounting firm for 2024

4. Other business properly presented at the meeting



Sales			Adjusted EBITDA*
$6.1B			$693M
			11.4% of Sales

Cash Provided by Operating Activities			Reduced Senior Debt by More Than
$396M			$140M


Strategic Business Objective	Alignment	Incentive Metric

Drive productivity and financial performance		EBITDA Margin –2023 Annual Incentive Program (40%)

Continue to strengthen the balance sheet; provide funding for organic growth, research & development, and other capital priorities; reduce leverage		Operational Cash Flow –2023 Annual Incentive Program (40% metric)

Develop innovative technology, including electrification, and reinvest in research and development		Free Cash Flow –2023 LTI Performance Awards (100% metric of performance-based LTI)

Secure future replacement business and achieve profitable growth while retaining flexibility to address market changes		Strategic Goals –2023 Annual Incentive Program (10%)

Achieve progress on ESG priorities, including DEI initiatives and environmental goals		ESG/Sustainability Goals –2023 Annual Incentive Program (10%)

Create sustainable value for shareholders and align with our shareholders' experience		Relative TSR –2023 LTI Performance Awards (modifier -15% or +15%)


Foundational Compensation Practices Align with Shareholders' Interests

Incentive metrics linked to our strategic business objectives			Robust shareholder engagement program
TSR metric included in our long-term incentive program			Stock ownership requirements
No discretionary incentive payments			Clawback policies


2018	2020	2022	2023
–Redesigned annual proxy statement and enhanced disclosures for better understanding and transparency –Reduced executive retirement benefits by freezing legacy retirement plan and adopted a plan more aligned with market practices	–Allocated 20% of annual incentive program to the achievement of strategic priorities, including ESG/sustainability initiatives –Salary reductions of 30% for executive officers and a 40% reduction in fees for non-employee directors in response to COVID-19	–Increased the emphasis on ESG/sustainability objectives by specifically allocating 10% of our annual incentive program to the achievement of ESG/sustainability objectives	–Increased performance-based portion of LTI awards to 60% from 50% in 2022 –Eliminated unvested performance shares from counting toward stock ownership requirements


SEC 1913 (02-02)						Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


			David C. Dauch Chairman of the Board and Chief Executive Officer


Important Notice Regarding the Availability of Proxy Materials for the May 2, 2024 Stockholder Meeting: Our 2024 proxy statement and 2023 annual report and Form 10-K are available free of charge at www.envisionreports.com/axl.


Shareholder Say-on-Pay Support
2018	2019	2020	2021	2022	2023
97%	96%	94%	93%	92%	77%


Compensation Program Shareholder Feedback			Response
Our incentive compensation program metrics are aligned with our business strategy in particular the use of free cash flow as an incentive metric.			Free cash flow is a critical driver to reduce leverage and convert value to shareholders. Due to its impact on the achievement of this key strategic objective, we have continued to select free cash flow as the sole financial metric for our long-term performance-based awards.
			In 2024 we increased weighting of the performance-based cash flow metric of the annual incentive program by 10% to emphasize the importance of strong cash flow performance.

Shareholders would prefer more performance-based pay.			We increased the portion of long-term performance-based incentive awards to 60% to further align pay with performance.
			In 2024 we increased weighting of the performance-based cash flow metric of the annual incentive program by 10% to emphasize the importance of strong cash flow performance.

Shareholders would prefer more alignment between pay and performance, including Total Shareholder Return (TSR).			In 2020, in response to prior feedback, we added a TSR modifier to our long-term incentive performance-based awards. The TSR modifier allows for adjustment of compensation awards. This provides continued alignment with shareholders while balancing the importance of short-term and long-term company financial performance, specifically free cash flow performance.

Shareholders view the link between ESG/sustainability with our incentive compensation programs positively.			We will continue to emphasize ESG/sustainability objectives by weighting a portion of the annual incentive program metrics to achieving ESG/sustainability objectives.


Independence						Accountability
–10 of 11 directors are independent –Lead Independent Director –Committees comprised of only independent directors (except Executive Committee) –Independent directors engage in regular executive sessions						–Proactive shareholder engagement program –Proxy access by-laws –Majority vote for directors in uncontested elections –Candid Board and committee evaluation process –Commitment to Board refreshment


Sound Practices						Risk Management
–Board policy requires inclusion of diverse candidates, such as women and minorities, in board candidate pool –Nominating/Corporate Governance Committee oversight of sustainability program and human capital management, including DEI initiatives and succession planning –Stock ownership requirements for directors and executive officers –Hedging or pledging of AAM stock is prohibited –Limitations on other board service						–Active Board oversight of AAM's overall risk management structure –AAM has robust risk management processes throughout the Company –Individual Board committees oversee risks related to their areas of responsibility –The Board and its committees receive regular updates from management on top enterprise risks and related risk mitigation activities


Investor Communication Program			Throughout the year
•Senior management participation in conferences •One-on-one and group meetings •Events held at AAM locations featuring innovations in technology/electrification •Day-to-day interaction with Investor Relations

Annual Shareholder Outreach Program			Semi Annual
•Fall/Winter outreach seeking engagement with shareholders and with proxy advisory firms •Led by CFO and Investor Relations Department •Lead Independent Director/Compensation Committee Chair participates in and is available for outreach meetings

Board Involvement			Routine
•Board considers shareholder feedback and shareholder vote in decision-making •Board reviews disclosure enhancements •Board and management discuss shareholder feedback and the Board's response


We contacted						Representing over

Over 25 of our top shareholders						70% of our outstanding shares


ENVIRONMENTAL POWERING A GREENER FUTURE			SOCIAL POWERING AN INCLUSIVE FUTURE
–Exceeded our 2023 U.S. renewable energy goal –Established a biodiversity partnership with the Wildlife Habitat Council –Achieved ISO 50001 certification at all our manufacturing facilities			–Expanded DEI Steering Committee structure to include regions and countries –Completed 16 labor negotiations globally without disruption to operations –Achieved 22,000+ consolidated days without a recordable safety incident
PRODUCT POWERING A CLEANER FUTURE			SUPPLY CHAIN POWERING A COLLABORATIVE FUTURE
–Recognized as a 2023 Automotive News PACEpilot program finalist –Launched 14 major global product programs –Received 21 quality performance awards			–Released a new Supplier Code of Conduct –Launched a global transportation campaign to reduce emissions –Increased our supplier diversity spend year-over-year by 12%


			James A. McCaslin Lead Independent Director


NOTICE OF ANNUAL MEETING OF STOCKHOLDERS


Table of Contents			Proxy Summary


Your Vote is Important


þ			The Board unanimously recommends a vote FOR each of the nominees.


Audit Committee

2023 Meetings: 4 Members: William P. Miller II (Chair) * James A. McCaslin Herbert K. Parker* Sandra E. Pierce John F. Smith* Samuel Valenti III			–Oversees the independent auditors' qualifications, independence and performance
			–Oversees the quality and integrity of our financial statements
			–Oversees the performance of our internal audit function
			–Discusses with management the Company's risk assessment and risk management framework
			–Approves audit and non-audit services provided by the independent auditors
			–Oversees the Company's hedging and derivatives practices
*Financial Expert			–Oversees the Company's ethics and compliance program
			–Oversees the Company's cyber security risk management program, including the business continuity program, and receives quarterly reports by our Chief Information Officer


Compensation Committee

2023 Meetings: 4 Members: James A. McCaslin (Chair) William L. Kozyra Peter D. Lyons Sandra E. Pierce Samuel Valenti III			–Recommends the CEO's compensation to the Board and determines the compensation of other executive officers
			–Recommends incentive compensation and equity-based plans to the Board
			–Approves executive officer compensation to ensure that it is designed to drive achievement of AAM's strategy and objectives while considering competitive market practices and shareholder interests
			–Recommends non-employee director compensation to the Board
			–Oversees management's risk assessment of the Company's policies and practices regarding compensation of executive officers and other associates
			–Evaluates and approves corporate goals and objectives for executive officer compensation and evaluates performance in light of these criteria
			–Oversees the preparation of the Compensation Discussion and Analysis (CD&A) and produces a Committee report for inclusion in our annual proxy statement


Nominating/Corporate Governance Committee

2023 Meetings: 4 Members: Elizabeth A. Chappell (Chair) William L. Kozyra Peter D. Lyons James A. McCaslin Herbert K. Parker Samuel Valenti III			–Identifies qualified individuals to serve on the Board and committees
			–Reviews our Corporate Governance Guidelines and Code of Business Conduct and recommends changes as appropriate
			–Oversees succession planning for executive officers and other key executive positions and supports the Board's succession/contingency planning process for the CEO
			–Oversees evaluation of the Board and its committees
			–Reviews committee charters and recommends any changes to the Board
			–Oversees Sustainability Program policies, strategies and performance and reviews ESG topics, including climate-related matters, with management
			– Oversees human capital management, including diversity, equity and inclusion initiatives and succession planning


Technology Committee

2023 Meetings: 4 Members: John F. Smith (Chair) Elizabeth A. Chappell William L. Kozyra James A. McCaslin William P. Miller II			–Advises the Board and management on the Company's strategy for innovation and technology
			–Maintains awareness of market demands for technology advancements relative to product, processes and systems
			–Oversees and advises management regarding product, process and systems technologies
			–Reviews technology opportunities as potential ways to increase productivity, efficiency, quality and warranty performance and to support the Company's goals and objectives
			–Conducts strategy discussions with the full Board
			–All Board members regularly attend Technology Committee meetings


Executive Committee

2023 Meetings: 2 Members: David C. Dauch (Chair) James A. McCaslin John F. Smith			–Acts on matters requiring Board action between meetings of the full Board
			–Has authority to act on certain significant matters, limited by our by-laws
			–All members other than Mr. Dauch are independent


Responsible Party						Primary Areas of Risk Oversight

Full Board						Oversees overall risk management function and strategic risks. Receives regular reports from the chairs of individual Board committees on risk-related matters falling within each committee's oversight responsibilities. Also receives reports from management on particular risks facing the Company, including through the review of AAM's strategic plan.

Audit Committee						Monitors financial, operational, and compliance risks by regularly reviewing reports by management, Internal Audit, Company advisors and the independent auditors. Regularly reviews risk management and risk assessment practices and related policies and evaluates potential risks related to internal controls over financial reporting. Oversees the Company's cyber security and other information technology risks, controls, procedures and programs, including mitigation processes. Receives quarterly reports from the Chief Information Officer on cyber security, data protection and business continuity programs, including AAM's monitoring, auditing, implementation and communication processes, controls and procedures. Monitors financial risks, including capital structure and liquidity risks, and reviews the policies and strategies for managing financial exposure and contingent liabilities.

Compensation Committee						Monitors potential risks related to the design and administration of our compensation plans, policies and programs, including our performance-based compensation programs, to promote appropriate incentives that do not encourage executive officers to take unnecessary and/or excessive risks.

Nominating / Corporate Governance Committee						Monitors potential risks related to our governance practices by, among other things, reviewing succession plans and performance evaluations of the Board and CEO and monitoring legal developments and trends regarding corporate governance practices. Oversees potential risks associated with our Sustainability Program, including DEI, human capital management, and climate-related risks.

Technology Committee						Monitors risks associated with the Company's product portfolio and our innovation and technology plans.


Annual retainer	$	110,000
Committee chair annual retainer:
Audit Committee chair	25,000
Compensation Committee chair	20,000
Other committee chair	15,000
Lead Independent Director annual retainer	35,000


Name	Fees Earned or Paid in Cash(1) ($)	Stock Awards(2) ($)	All Other Compensation(3) ($)	Total ($)
Elizabeth A. Chappell	125,000	135,002	600	260,602
William L. Kozyra	110,000	135,002	1,000	246,002
Peter D. Lyons	110,000	135,002	3,300	248,302
James A. McCaslin	165,000	135,002	700	300,702
William P. Miller II	135,000	135,002	500	270,502
Herbert K. Parker	110,000	135,002	600	245,602
Sandra E. Pierce	110,000	135,002	600	245,602
John F. Smith	125,000	135,002	1,100	261,102
Samuel Valenti III	110,000	135,002	1,600	246,602


Name			Restricted Stock Units Outstanding (#)
Elizabeth A. Chappell			107,993
William L. Kozyra			113,560
Peter D. Lyons			117,572
James A. McCaslin			130,333
William P. Miller II			121,491
Herbert K. Parker			20,030
Sandra E. Pierce			89,987
John F. Smith			139,044
Samuel Valenti III			51,933


	Shares Beneficially Owned	Percent of Shares Outstanding
Greater Than 5% Owners
BlackRock, Inc.(1)	19,117,494	16.30
50 Hudson Yards, New York, NY 10001
The Vanguard Group(2)	14,146,031	12.08
100 Vanguard Blvd., Malvern, PA 19355
Dimensional Fund Advisors LP(3)	7,669,092	6.60
6300 Bee Cave Road, Building One, Austin, TX 78746
Barrow Hanley Global Investors(4)	5,853,190	5.00
2200 Ross Avenue, 31st Floor, Dallas, TX 75201

Non-Employee Directors (5)
Elizabeth A. Chappell	156,120	*
William L. Kozyra	117,572	*
Peter D. Lyons	122,572	*
James A. McCaslin	157,544	*
William P. Miller II	164,594	*
Herbert K. Parker	119,987	*
Sandra E. Pierce	89,987	*
John F. Smith	150,544	*
Samuel Valenti III	51,933	*

Named Executive Officers
David C. Dauch(6)	1,910,801	1.6
Christopher J. May	337,824	*
Michael J. Lynch(6)	163,015	*
Terri M. Kemp	126,735	*
Tolga I. Oal	—	*
All Directors and Executive Officers as a Group (15 persons)	3,669,228	3.1


Named Executive Officers

David C. Dauch Chairman & Chief Executive Officer

Christopher J. May Executive Vice President & Chief Financial Officer

Michael J. Lynch President & Chief Operating Officer

Terri M. Kemp Senior Vice President Human Resources & Sustainability

Tolga I. Oal President Driveline


þ	Received significant award from Stellantis to supply e-Beam axles featuring our 3-in-1 e-Drive technology for a future Stellantis EV program	þ	Won a program from Mahindra to supply e-Beam axles for a future 2.5T light electric truck program launching in 2025

þ	Announced new win with FAW Group to supply independent front drive axles for multiple plug-in hybrid vehicle models beginning in 2025	þ	Announced new win with Jetour to supply power transfer units and rear drive modules for multiple all-wheel drive sport utility vehicle programs beginning in 2024

þ	Named a 2023 PACEpilot award finalist for our innovative electric beam axle	þ	Recognized by General Motors as an Overdrive Award winner for sustainability

þ	Achieved an A- on the CDP Climate Change survey as published in our 2022 Sustainability Report	þ	Launched significant new axle program to support General Motors' next-generation Colorado and Canyon pickup trucks

þ	Named by Forbes as one of America's Best Employers for Diversity in 2023	þ	Continued solid free cash flow generation and debt reduction


Shareholder Say-on- Pay Support
2018	2019	2020	2021	2022	2023
97%	96%	94%	93%	92%	77%


Base Salaries as of December 31,	2023	2022	% Change
David C. Dauch	$1,250,000	$1,250,000	—%
Christopher J. May	$ 675,000	$ 615,000	10%
Michael J. Lynch	$ 675,000	$ 675,000	—%
Terri M. Kemp	$ 525,000	$ 455,000	15%
Tolga I. Oal	$ 600,000	$ 600,000	—%


Adjusting to meet market challenges						Managing what we can control

AAM's 2023 Operational Performance

Advancing electrification across our product portfolio						Moving forward ESG objectives


	Weighting	Threshold (Payout 0%)	Target (Payout 100%)	Maximum (Payout 200%)	2023 Actual Performance(1)	% of Target Earned	2023 Actual Payout(2)
EBITDA Margin	40%	10.0%	12.0%	13.75%	11.66%	83%	33%
Operational Cash Flow	40%	$400 million	$525 million	$625 million	$527 million	102%	41%


	EBITDA Margin	Operational Cash Flow	Strategic Measures	ESG/Sustainability Measures	Total Payout
2023 Actual Payout %	33%	41%	20%	20%	114%


	2023	2022
	Target Opportunity (as a % of base salary)	Target Opportunity (as a % of base salary)
David C. Dauch	150%	150%
Christopher J. May	100%	80%
Michael J. Lynch	100%	100%
Terri M. Kemp	80%	80%
Tolga I. Oal	80%	80%


	Form of Award
	Performance Awards	RSUs
LTI Mix	60%	40%
Performance Measure	Free Cash Flow	Continued service with AAM
Competitor Peer Group for Relative TSR	Adient plc Autoliv Inc. BorgWarner Inc. Cooper-Standard Holdings, Inc.* Dana Incorporated Garrett Motion, Inc.* Lear Corporation Magna International Inc. *Added in 2023 to replace two companies removed in 2022 due to acquisition	Not applicable
Award Payout Modifier of -15% or +15%	Relative TSR	Not applicable
Performance / Vesting Period	Subject to achievement of performance measures over a 3-year period	Cliff vest on the 3rd anniversary of grant
Settlement	Performance Shares (30%) - Common stock Performance Units (30%) - Cash	Common stock