Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant                      Filed by a Party other than the Registrant 

Check the appropriate box:

 

  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 Pursuant to §240.14a-12

Aptiv PLC

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

  No fee required.
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  (3)  

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  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Table of Contents

 

2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

 

LOGO

 

To our Shareholders:

I am pleased to invite you to Aptiv PLC’s Annual General Meeting of Shareholders to be held on Friday, April 30, 2021, at 8:00 a.m. Eastern Time, virtually via the internet at www.virtualshareholdermeeting.com/APTV2021. I hope that the convenience of a virtual meeting will allow you to easily join and participate.

The following Notice of Annual General Meeting of Shareholders and Proxy Statement describes the business that will be conducted at the Annual Meeting. You can find financial and other information about Aptiv in the accompanying Form 10-K for the fiscal year ended December 31, 2020. These materials are also available on our website, aptiv.com.

Aptiv is a global technology company that develops safer, greener and more connected solutions enabling the future of mobility. We envision a future with zero vehicle-related injuries or fatalities, and have developed active safety technologies to meet customers’ needs and that have the potential to meaningfully save lives. We also see increasing development and adoption of vehicle electrification to enable a sustainable future for our planet, and have industry-leading high-voltage solutions that reduce CO2 emissions and enable our customers’ electrified vehicle designs. Our software enables seamless connectivity between vehicles, their passengers and the environments in which they operate. In short, Aptiv’s success emanates from a strong, sustainable business that makes the world a better place, a business that is Sustainable by Design.

Despite the unprecedented events of 2020, our commitment to our mission and values has allowed our employees to come together as One Team to keep each other safe while continuing to exceed our customers’ expectations. These efforts have created tremendous value for all of our stakeholders.

Your vote is very important to us. I encourage you to sign and return your proxy card or use telephone or Internet voting so that your shares will be represented and voted at the meeting.

Thank you for your continued support. We look forward to seeing you on April 30, 2021.

Sincerely,

 

 

 

LOGO

Kevin P. Clark

President and Chief Executive Officer


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

Notice of Annual General Meeting of Shareholders

 

 

Friday, April 30, 2021

8:00 a.m. Eastern Time

  

 

Place

Meeting live via the Internet – please visit www.virtualshareholdermeeting.com/APTV2021

 

  

 

Record Date

The close of business

March 2, 2021

 

 

Meeting Agenda

Presenting the Company’s accounts and auditors’ reports for the fiscal year ended December 31, 2020 to the shareholders, passing the following resolutions, and transacting such other business as may properly come before the Annual Meeting:

 

 

Ordinary Resolutions

Election of Directors

 

    

THAT the following directors be elected as directors of the Company:

 

    1)

Kevin P. Clark

    2)

Richard L. Clemmer

    3)

Nancy E. Cooper

    4)

Nicholas M. Donofrio

    5)

Rajiv L. Gupta

    6)

Joseph L. Hooley

    7)

Merit E. Janow

    8)

Sean O. Mahoney

    9)

Paul M. Meister

  10)

Robert K. Ortberg

  11)

Colin J. Parris

  12)

Ana G. Pinczuk

Auditors

 

  13)

THAT Ernst & Young LLP be re-appointed as the auditors of the Company until the Annual Meeting of the Company to be held in 2022, that the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm is ratified and that directors are authorized to determine the fees to be paid to the auditors.

 

 

Advisory, Non-Binding Resolution

Executive Compensation

 

  14)

THAT the Company’s shareholders approve, on an advisory, non-binding basis, the Company’s executive compensation.

Resolutions 1 to 13 will be proposed as ordinary resolutions, and Resolution 14 will be proposed as an advisory, non-binding resolution.

 

 

Record Date

You are entitled to vote only if you were a shareholder of Aptiv PLC at the close of business on March 2, 2021. Holders of ordinary shares of Aptiv are entitled to one vote for each share held of record on the record date.

 

APTIV PLC    1


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

Notice of Annual General Meeting of Shareholders (continued)

 

 

 

Attendance at the Virtual Annual Meeting

Due to the public health impact of the COVID-19 pandemic and out of an abundance of caution to support the health and well-being of our employees, shareholders and other stakeholders, the Board of Directors has determined to hold a virtual annual meeting in order to facilitate shareholder attendance and participation by enabling shareholders to participate from any location and at no cost. We are committed to ensuring that shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting. You will be able to attend the meeting online, vote your shares electronically and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/APTV2021.

To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/APTV2021 you must enter the 16-digit control number found on your proxy card, voting instruction form or notice you last received. You may vote and will be able to ask questions and hear responses to questions during the Annual Meeting by following the instructions available on the meeting website during the meeting. We hope you will be able to attend the Annual Meeting. If you expect to attend, please check the appropriate box on the proxy card when you return your proxy or follow the instructions on your proxy card to vote and confirm your attendance by telephone or Internet.

 

 

Where to Find More Information about the Resolutions and Proxies

Additional information regarding the business to be conducted and the resolutions is set out in the proxy statement (the “Proxy Statement”) and other proxy materials, which can be accessed by following the instructions on the Notice of Internet Availability of Proxy Materials that accompanies this Notice of Annual Meeting of Shareholders.

You are entitled to appoint one or more proxies to attend the Annual Meeting and vote on your behalf. Your proxy does not need to be a shareholder of the Company. Instructions on how to appoint a proxy are set out in the Proxy Statement and on the proxy card.

BY ORDER OF THE BOARD OF DIRECTORS

 

 

PLEASE NOTE THAT YOU WILL NEED PROOF THAT YOU OWN APTIV SHARES AS OF THE RECORD DATE TO BE ADMITTED TO THE ANNUAL MEETING.

This Notice of Annual Meeting of Shareholders and the Proxy Statement are being distributed or made available on or about March 15, 2021.

 

2    APTIV PLC


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

Table of Contents

 

2021 PROXY STATEMENT — SUMMARY

 

   

 

6

 

 

 

2020 Aptiv at a Glance

 

   

 

7

 

 

 

OUR BOARD’S ENGAGEMENT     10  
ELECTION OF DIRECTORS (RESOLUTIONS 1 TO 12)     11  

BOARD PRACTICES

 

   

 

18

 

 

 

Size of the Board

 

   

 

18

 

 

 

Leadership Structure

 

   

 

18

 

 

 

Director Independence

 

   

 

18

 

 

 

Audit Committee Financial Experts

 

   

 

18

 

 

 

Evaluation of Board Performance

 

   

 

18

 

 

 

Director Qualifications, Nominations and Diversity

 

   

 

19

 

 

 

Diversity, Skills and Experience of Our Director Nominees

 

   

 

20

 

 

 

Director Retirement

 

   

 

21

 

 

 

Board Refreshment

 

   

 

21

 

 

 

Executive Sessions

 

   

 

21

 

 

 

Board’s Role in Risk Oversight

 

   

 

21

 

 

 

Board’s Role in Sustainability

 

   

 

22

 

 

 

Stock Ownership Guidelines

 

   

 

22

 

 

 

Governance Principles

 

   

 

22

 

 

 

Code of Ethical Business Conduct

 

   

 

22

 

 

 

Communications with the Board of Directors

 

   

 

22

 

 

 

BOARD AND COMMITTEE MEETINGS     23  
BOARD COMMITTEES     23  

DIRECTOR COMPENSATION

 

   

 

25

 

 

 

Board Compensation

 

   

 

25

 

 

 

2020 Director Compensation

 

   

 

25

 

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

26

 

 

 

A Note from the Chair of the Compensation Committee

 

   

 

26

 

 

 

Executive Summary

 

   

 

27

 

 

 

2020 Year in Review

 

   

 

29

 

 

 

Compensation Governance and Alignment with Shareholders

 

   

 

32

 

 

 

2020 Compensation Program Overview

 

   

 

33

 

 

 

Metric Definitions

 

   

 

38

 

 

 

2020 Annual Compensation Determination

 

   

 

38

 

 

 

2020 Long-Term Compensation

 

   

 

41

 

 

 

Adjustments and Payouts from Long-Term Compensation Granted in 2018

 

   

 

43

 

 

 

Supplemental Compensation Information and Reconciliation

 

   

 

44

 

 

 

Other Compensation

 

   

 

44

 

 

 

Compensation Governance Practices

 

   

 

45

 

 

 

 

APTIV PLC    3


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

Table of Contents (continued)

 

 

COMPENSATION COMMITTEE REPORT     47  
2020 SUMMARY COMPENSATION TABLE     48  
2020 GRANTS OF PLAN-BASED AWARDS     50  

 

2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END     52  
2020 OPTION EXERCISES AND STOCK VESTED TABLE     53  
2020 PENSION BENEFITS     54  

Eligibility

 

   

 

54

 

 

 

Valuation Method and Assumptions

 

   

 

54

 

 

 

2020 Pension Benefits

 

   

 

54

 

 

 

2020 NON-QUALIFIED DEFERRED COMPENSATION     55  

Plan Benefits

 

   

 

55

 

 

 

Investment Options

 

   

 

55

 

 

 

Deferral Election Process

 

   

 

55

 

 

 

Distributions

 

   

 

55

 

 

 

Vesting

 

   

 

55

 

 

 

2020 Non-Qualified Deferred Compensation Table

 

   

 

55

 

 

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL     56  

Employment Arrangements

 

   

 

56

 

 

 

Annual Incentive Plan

 

   

 

56

 

 

 

Long-Term Incentive Plan

 

   

 

56

 

 

 

Change in Control Plan

 

   

 

57

 

 

 

Severance Plan

 

   

 

57

 

 

 

Potential Payments upon Termination or Change in Control Table

 

   

 

58

 

 

 

CEO Pay Ratio

 

   

 

59

 

 

 

REPORT OF THE AUDIT COMMITTEE     60  
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES     61  
APPOINTMENT OF AND PAYMENT TO AUDITORS (RESOLUTION 13)     62  
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (RESOLUTION 14)     62  
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS     63  
SECURITY OWNERSHIP OF MANAGEMENT     64  
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS     65  

 

4    APTIV PLC


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

Table of Contents (continued)

 

 

OTHER INFORMATION

 

   

 

66

 

 

 

Presentation of Accounts

 

   

 

66

 

 

 

Other Business

 

   

 

66

 

 

 

Shareholder Proposals for the 2022 Annual Meeting

 

   

 

66

 

 

 

Householding

 

   

 

66

 

 

 

Record Date

 

   

 

66

 

 

 

Voting prior to the Annual Meeting

 

   

 

66

 

 

 

Changing Your Vote before the Annual Meeting

 

   

 

66

 

 

 

Voting at the Annual Meeting

 

   

 

67

 

 

 

Quorum for the Annual Meeting

 

   

 

67

 

 

 

Voting Tabulation

 

   

 

67

 

 

 

Broker Non-Votes

 

   

 

67

 

 

 

Attending the Annual Meeting

 

   

 

67

 

 

 

Accessing Proxy Materials on the Internet

 

   

 

67

 

 

 

Notice and Access

 

   

 

67

 

 

 

Proxy Solicitation

 

   

 

67

 

 

 

Corporate Governance Information

 

   

 

68

 

 

 

Voting Results for the Annual Meeting

 

   

 

68

 

 

 

Requests for Copies of Annual Report

 

   

 

68

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on April 30, 2021

 

   

 

68

 

 

 

APPENDIX A     A-1  

 

APTIV PLC    5


Table of Contents

 

2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

LOGO

2021 Proxy Statement — Summary

 

This summary highlights information contained elsewhere in the Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

 

 

 

 ANNUAL MEETING OF SHAREHOLDERS

 

 

 Date: April 30, 2021

 Time: 8:00 a.m. Eastern Time

 Location: Meeting live via the Internet — please visit www.virtualshareholdermeeting.com/APTV2021

 Record Date: March 2, 2021

 

 

 

 GENERAL INFORMATION

 

 

 Stock Symbol: APTV

 Exchange: NYSE

 Ordinary Shares Outstanding (as of the record date): 270,462,749 shares

 Registrar & Transfer Agent: Computershare Investor Services

 Corporate Website: aptiv.com

 Investor Relations Website: ir.aptiv.com

 

 

 

 SHAREHOLDER VOTING MATTERS

 

 

 

  Proposal   Board’s Voting
          Recommendation          

 

Election of Directors

 

 

FOR EACH
NOMINEE

 

Ratification of Appointment of Independent Registered Public Accounting Firm

 

 

FOR

 

 

Advisory Vote to Approve Named Executive Officer Compensation

 

 

FOR

 

 

 

 

 

 BOARD MEETING INFORMATION

 

 

 Board Meetings in 2020: 11

 Standing Board Committee Meetings in 2020:

 Audit (5), Compensation and Human Resources (8), Finance (10), Innovation and Technology (5), Nominating and Governance (7)

 

 

 

 

 

 DIRECTOR NOMINEES

 

 

Name  

    Director    

Since

      Independent    

Kevin P. Clark

 

2015

 

Richard L. Clemmer

 

2020

 

X

Nancy E. Cooper

 

2018

 

X

Nicholas M. Donofrio

 

2009

 

X

Rajiv L. Gupta

 

2009

 

X

Joseph L. Hooley

 

2020

 

X

Merit E. Janow

 

—    

 

X

Sean O. Mahoney

 

2009

 

X

Paul M. Meister

 

2019

 

X

Robert K. Ortberg

 

2018

 

X

Colin J. Parris

 

2017

 

X

Ana G. Pinczuk

 

2016

 

X

 

 

 

 

NAMED EXECUTIVE OFFICERS

 

 
    Kevin P. Clark - President and Chief Executive Officer  
    Joseph R. Massaro - Chief Financial Officer and Senior Vice President, Business Operations  
    David Paja - Senior Vice President and President, Advanced Safety and User Experience Segment  
    David M. Sherbin - Senior Vice President, General Counsel, Chief Compliance Officer and Secretary (retiring effective April 1, 2021)  
    Mariya K. Trickett - Senior Vice President and Chief Human Resources Officer  

 

 

 

   COMPENSATION BEST PRACTICES

 

 

 

     

Robust Stock Ownership Guidelines

     

Clawback Policy

     

Restrictive Covenants for Executives

     

No Excise Tax Gross-Ups

     

No Hedging/No Pledging

 

 

 

    APTIV PLC       6


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

2020 Aptiv at a Glance

 

 

Delivering sustainable mobility solutions

 

          
      

 

OUR MISSION

Aptiv innovates at the intersection of
disruptive trends in the mobility industry. As a global technology leader, our growing portfolio of solutions makes vehicles safer, greener and more connected, enabling the future of mobility and a more sustainable world.

      

 

LOGO

 

  

 

SAFE

A society with zero road fatalities, zero
injuries and zero accidents

 
    

 

LOGO

 

  

 

GREEN

Zero emissions, minimizing vehicles’ total
lifecycle environmental impact

 

 
    

 

LOGO

 

  

 

CONNECTED

Seamless integration between the vehicle,
its passengers and the world around it

 

 

 

 

 

APTIV BY THE NUMBERS

 

         
 

 

$18B

 

2020 Business
bookings

          

 

$13.1B

 

2020 Revenue

          

 

10%

 

2020 Growth over

Market

          

 

$1.94

 

2020 Earnings
per share

 

Adjusted for restructuring and other special items

          

 

$1.3B

 

2020 Investment

in engineering

 
 

 

18,200

 

Scientists and
engineers

   

 

180,000+

 

People

   

 

124

 

Manufacturing

facilities

   

 

12

 

Major technical

centers

 

   

 

44

 

Countries

 
                   

 

 

  OUR BUSINESS SEGMENTS
 

 

Uniquely positioned as the only provider of both the vehicle’s brain and nervous system

We build the intelligence that brings to life the software-defined vehicle of the future and the technologies that connect every part of the vehicle, enable it to sense the world around it and allow it to communicate.

      

 

LOGO

 

 

Advanced Safety & User Experience

  

 

LOGO

 

 

Signal & Power Solutions

 

 

Encompasses our deep expertise in software-enabled solutions that improve the safety, comfort and convenience of the vehicle, supported by core capabilities in advanced computing, connectivity, data management and analytics.

  

 

Leverages our heritage as a global architecture provider and systems integrator to deliver the high-speed data and high-power electrical systems required for feature-rich, highly automated vehicles.

 

 

The democratization of the technologies in these business segments has the potential to save lives, save the industry billions in costly vehicle repairs, and reduce carbon emissions.

 

7       APTIV PLC    


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

2020 Aptiv at a Glance (continued)

 

 

LOGO

 

  LOGO   SAFE       LOGO   GREEN       LOGO   CONNECTED  
 

 

SOCIETAL CHALLENGES

               
                                 
                     
   
 

94%

Of all accidents are caused

by human error

NHTSA

 

1.35 million

Road traffic deaths annually

World Health Organization

 

OUR SOLUTIONS

     

4.6

Metric tons of CO2 emitted from a

typical passenger vehicle per year

EFA

 

#1

Air pollution is the top environmental

cause of death in the European Union

European Environmental Agency

     

125 billion

Connected loT devices worldwide

by 2030

IHS Markit

 

50%

Average annual increase of global

data transmissions over the next

15 years

IHS Markit

 
                                 
                     
   
 

  Perception systems, tracking and sensor fusion

 

  Active safety, hands-free HMI and interior sensing software

 

  ADAS domain controllers and ECUs

 

  High-fidelity, high-reliability
interconnects and signal
distribution

 

  Integration, validation and testing of safety-critical systems

     

  High voltage wiring and electrical centers

 

  High voltage connectors, plug-in chargers and cord sets

 

  Aluminum wire harnesses for light-weighting

 

  Sensing and compute platforms optimized for power management and consumption

 

  Architecture optimization for mass and weight reduction

     

  Secure connected gateways (cellular, satellite, DSRC, GPS)

 

  Wireless (Wi-Fi, Bluetooth), media modules and consumer ports

 

  V2X solutions: vehicle-to-vehicle / infrastructure / grid

 

  Over-the-air (OTA) updates for software and firmware

 

  Edge processing, cloud analytics and cybersecurity

 

  Ruggedized electronic and automotive-grade connection systems

 

 

    APTIV PLC       8


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

2020 Aptiv at a Glance (continued)

 

 

LOGO

 

 

LOGO

 

   

LOGO

 

   

LOGO

 

 
      

Ethisphere Institute: 2021 World’s

Most Ethical Companies® for the ninth year in a row.

 

   

Included in the FTSE4Good Index Series, demonstrating strong environmental, social and governance practices measured against globally recognized standards.

 

   

EcoVadis: 68/100, Gold rating.

This result places Aptiv among the top 5% of companies assessed by EcoVadis.

 
 

LOGO

 

        

LOGO

 

        

LOGO

 

      
 

Carbon Disclosure Project: Volunteer respondent to climate investor carbon and water reporting since 2012.

CDP Climate Change Score: B.

 

   

Included in the Dow Jones Sustainability Indices (DJSI); DJSI tracks the stock performance of the world’s leading companies in terms of economic, environmental and social criteria.

 

   

Sustainalytics: Low Risk ESG Risk Rating. Ranked No. 5 in the Auto Parts industry category.

 
 

LOGO

 

   

LOGO

 

   

LOGO

 

 
 

Ranked No. 4 in the Autos & Parts industry category and included in the

JUST U.S. Large Cap Equity ETF.

 

   

In 2020, Aptiv received a rating of AA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment*.

 

   

Named to Fast Company’s prestigious annual list of the World’s Most Innovative Companies for 2020.

 

 

* The use by Aptiv of any MSCI ESG research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of Aptiv by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI.

 

9       APTIV PLC    


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

Our Board’s Engagement

 

Throughout 2020, our Board of Directors and our Board committees maintained their regular schedule of meetings, quickly transitioning to virtual meetings as COVID-19 emerged. The Board’s work to provide oversight, review, and counsel related to strategy, risks, and opportunities, provided a strong foundation for management and the Board to build upon in responding quickly and appropriately to COVID-19. The risk landscape associated with the COVID-19 pandemic has been, and continues to be, discussed with the Board as well as each of the Board Committees, as appropriate. Over the course of 2020, management regularly updated our directors on COVID-19’s impacts to our business and the strategic, operational and financial risks associated with the pandemic. Discussions with the Board and the Board committees have included, among other topics, financial and operational matters, employee health and safety, plant and facility closures and implementation of Aptiv’s safe operations protocols to reopen sites, findings from outside medical experts and their evaluation of our protocols, and supply chain issues.

 

    APTIV PLC       10


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

 

 

Election of Directors

(Resolutions 1 to 12)

 

All of our current directors, other than Lawrence A. Zimmerman, who is retiring as of the Annual Meeting, are nominated for one-year terms to serve until the 2021 annual meeting, or until such director’s earlier resignation, retirement or other termination of service. The Board extends its appreciation to Mr. Zimmerman for his years of service, his many contributions and his thoughtful insight and advice.

The Board believes that the combination of the various qualifications, skills, and breadth and depth of experiences of the director nominees contributes to an effective and well-functioning Board. The Board and the Nominating and Governance Committee believe that, individually and as a whole, the directors possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management. Included in each director nominee’s biography below is an assessment of their specific qualifications, attributes, skills and experience. Committee memberships listed below are as of the date of this Proxy Statement.

The Board has been informed that each nominee is willing to continue to serve as a director. If a director does not receive a majority of the vote for his or her election, then that director will not be elected to the Board, and the Board may fill the vacancy with a different person, or the Board may reduce the number of directors to eliminate the vacancy. Messrs. Donofrio, Gupta, and Mahoney were each a member of the Board prior to the Company’s initial public offering in 2011, and information included in this Proxy Statement as to each member’s tenure on our Board reflects that service.

 

   

Kevin P. Clark

 

 

LOGO

 

In March 2015, Mr. Clark became Aptiv’s President and Chief Executive Officer. In 2014, Mr. Clark was appointed Chief Operating Officer responsible for Aptiv’s business divisions, as well as the Global Supply Management function. Mr. Clark joined Aptiv in 2010 as Chief Financial Officer, responsible for all financial activities including strategic planning, corporate development, financial planning and analysis, treasury, accounting, and tax. Before coming to Aptiv, he was a founding partner of Liberty Lane Partners, LLC, a private equity investment firm focused on investing in and building and improving middle-market companies. Mr. Clark served as Chief Financial Officer of Fisher-Scientific International Inc., a manufacturer, distributor and service provider to the global healthcare market, from the company’s initial public offering in 2001 through the completion of its merger with Thermo Electron Corporation in 2006. He also held a number of senior management positions at Fisher-Scientific. Mr. Clark began his career in the financial organization of Chrysler Corporation. He has both a bachelor’s degree in financial administration and a master’s degree in finance from Michigan State University.

 

 

Non-Independent Director

 

Director since: March 2015

 

Committee Membership: None

 

Qualifications: Mr. Clark is a proven leader with demonstrated success in creating and implementing Aptiv’s business strategy. As our CEO and former COO and CFO, Mr. Clark provides the Board significant strategic, financial and industry expertise.

 

Other Public Boards: None

Age: 58

 

 

11       APTIV PLC    


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2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

Election of Directors (continued)

 

 

   

Richard L. Clemmer

 

 

LOGO

 

Mr. Clemmer is a global technology CEO, most recently leading the turnaround of NXP Semiconductors as Chief Executive Officer and President, a position he held from 2009 to May 2020. He continues to serve NXP as a Strategic Advisor. Prior to NXP, he was a senior advisor to Kohlberg Kravis Roberts & Co., a private equity firm, from 2007 to 2008. He also served as President and Chief Executive Officer of Agere Systems Inc. (“Agere Systems”), an integrated circuits components company from 2005 to 2007. Prior to joining Agere Systems, Mr. Clemmer held a number of executive leadership positions at Texas Instruments and Quantum Corporation. He holds a bachelor’s degree in business administration from Texas Tech University and a master of business administration from Southern Methodist University.

 

Independent Director

 

Director since: July 2020

 

Committee Membership: Finance Committee and Innovation and Technology Committee

 

Qualifications: Mr. Clemmer brings to the Board significant leadership experience in the high tech industry, including experience with semiconductor and software companies, and brings valuable experience leading organizations through strategic transactions.

 

Other Current Public Boards: HP Inc.

 

Former Public Boards: NCR Corporation (2008-2020), NXP Semiconductors N.V. (2009-2020)

Age: 69

 
   

Nancy E. Cooper

 

 

LOGO

 

Ms. Cooper is the former Executive Vice President and Chief Financial Officer of CA Technologies (“CA”), an IT management software provider, a position she held from August 2006 until she retired in May 2011. Prior to joining CA, Ms. Cooper served as the Chief Financial Officer of IMS Health, Inc. from 2001 to 2006 and, prior to that, as Chief Financial Officer for Reciprocal, Inc. from 2000 to 2001. Ms. Cooper began her career at IBM Corporation in 1976 where she held positions of increasing responsibilities over a 22-year period that focused on technology strategy and financial management. Ms. Cooper received a bachelor of arts degree in both economics and political science from Bucknell University and a master of business administration from the Harvard Graduate School of Business.

 

Independent Director

 

Director since: February 2018

 

Committee Membership: Audit Committee (Chair) and Innovation and Technology Committee

 

Qualifications: Ms. Cooper brings to the Board significant experience leading a global public finance organization, and contributes financial, risk management, technology and strategy expertise.

 

Other Current Public Boards: Brunswick Corporation and The Mosaic Company

 

Former Public Boards: Teradata Corporation (2009-2017)

Age: 67

 

 

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Election of Directors (continued)

 

 

   

Nicholas M. Donofrio

 

LOGO

 

Mr. Donofrio retired as Executive Vice President, Innovation & Technology at IBM in 2008. He began his career at IBM in 1964, and worked there for more than 40 years in various positions of increasing responsibility, including Division Director; President for Advanced Workstations Division; General Manager, Large Scale Computing Division; and Senior Vice President, Technology & Manufacturing. Mr. Donofrio earned a bachelor of science degree from Rensselaer Polytechnic Institute and holds a master’s degree from Syracuse University.

 

Independent Director

 

Director since: December 2009

 

Committee Membership: Innovation and Technology Committee (Chair) and Nominating and Governance Committee

 

Qualifications: Mr. Donofrio brings to the Board significant technology expertise, providing us with valuable insight regarding technology and innovation strategies.

 

Former Public Boards: Advanced Micro Devices, Inc. (2009-2018) and Bank of New York Mellon Corporation (1999-2017)

Age: 75

 
   

Rajiv L. Gupta

 

LOGO

 

Mr. Gupta is former Chairman and CEO of Rohm and Haas Company, a worldwide producer of specialty materials, a position he held from 1999 to 2009. Mr. Gupta began his career at Rohm and Haas in 1971 and served in a broad range of global operations and financial leadership roles. Mr. Gupta received a bachelor of science degree in Mechanical Engineering from the Indian Institute of Technology, a master of science degree in Operations Research from Cornell University and a master’s degree in business administration with a concentration in Finance from Drexel University.

 

Independent Director and Chairman of the Board

 

Director since: November 2009

 

Committee Membership: Compensation and Human Resources Committee (Chair) and Nominating and Governance Committee (Chair)

 

Qualifications: Mr. Gupta’s professional experience, including as Chairman and CEO of a global public company and many other board assignments, enable him to contribute his expertise in corporate leadership, public company governance, strategic analysis, operations and executive compensation matters.

 

Other Current Public Boards: Avantor, Inc., DuPont de Nemours, Inc.

 

Former Public Boards: Howmet Aerospace Inc. (formerly Arconic Inc.) (2016-2020), HP Inc. (formerly Hewlett Packard) (2009-2017), The Vanguard Group, Inc. (2001-2017) and Tyco International plc (2005-2016)

Age: 75

 

 

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Election of Directors (continued)

 

 

   

Joseph L. Hooley

 

LOGO

 

Mr. Hooley is the former Chairman of the Board and Chief Executive Officer of State Street Corporation, one of the world’s leading providers of financial services to institutional investors. He retired as the non-executive Chairman of the Board of State Street, effective December 31, 2019, and as its Chief Executive Officer on December 31, 2018. He served as State Street’s Chairman from 2011 to 2019 and as Chief Executive Officer from 2010 to 2018 and President and Chief Operating Officer from 2008 to 2014. From 2002 to 2008, Mr. Hooley served as Executive Vice President and head of the Investor Services Division of State Street and, in 2006, was appointed Vice Chairman and Global Head of Investment Servicing and Investment Research and Trading of State Street. Mr. Hooley holds a bachelor of science degree from Boston College.

 

 

Independent Director

 

Director since: January 2020

 

Committee Membership: Audit Committee and Compensation and Human Resources Committee

 

Qualifications: Mr. Hooley’s long tenure as a public company executive leading a global financial services organization provides the Board significant expertise in management, strategic planning, corporate governance and a global business perspective.

 

Other Current Public Boards: Exxon Mobil Corporation

 

Former Public Boards: State Street Corporation (2009-2019)

Age: 63

 
   

Merit E. Janow

 

 

LOGO

 

Professor Janow is the Dean, School of International and Public Affairs (SIPA) at Columbia University, a position she has held since 2013. She also serves, since 1994, as a Professor of Professional Practice, International Economic Law and International Affairs at Columbia University. Previously, she directed the program in international finance and economic policy. Professor Janow regularly teaches advanced courses in frontier topics in international trade law and policy, World Trade Organization (WTO) law, at Columbia Law School, and international economic policy and China in the Global Economy at SIPA. She has published numerous articles and several books on international trade and economic matters. Professor Janow served as one of seven members of the WTO’s Appellate Body from 2003 to 2007, as the Executive Director, the International Competition Policy Advisory Committee of the U.S. Department of Justice, Antitrust Division from 1997 to 2000, and Deputy Assistant U.S. Trade Representative for Japan and China from 1990 to 1993. Professor Janow served on the board of directors and then as chair of the Nasdaq Stock Markets LLC of the Nasdaq OMX Group from 2005 to 2016. She holds a bachelor of arts degree from the University of Michigan and a juris doctorate from Columbia Law School at Columbia University.

 

 

Director Nominee

 

Qualifications: Professor Janow is qualified to serve as director of the Company based on her extensive knowledge and experience in international trade, economics, policy and regulatory matters which provide valuable insight to the Company given the global nature of its business.

 

Other Current Public Boards: Mastercard Inc., Trimble Inc.

Age: 62

 

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Election of Directors (continued)

 

 

   

Sean O. Mahoney

 

LOGO

 

Mr. Mahoney is a private investor with over two decades of experience in investment banking and finance. Mr. Mahoney spent 17 years in investment banking at Goldman, Sachs & Co., where he was a partner and head of the Financial Sponsors Group, followed by four years at Deutsche Bank Securities, where he served as Vice Chairman, Global Banking. During his banking career, Mr. Mahoney acted as an advisor to companies across a broad range of industries and product areas. He earned his undergraduate degree from the University of Chicago and his graduate degree from Oxford University, where he was a Rhodes Scholar.

 

Independent Director

 

Director since: November 2009

 

Committee Membership: Finance Committee and Nominating and Governance Committee

 

Qualifications: Through his experience in investment banking and finance, Mr. Mahoney provides the Board with expertise in financial and business strategy, capital markets, financing, and mergers and acquisitions.

 

Other Current Public Boards: iHeartMedia, Inc.

 

Former Public Boards: Alcoa Inc. (2016), Cooper-Standard Holdings, Inc. (2015-2018) and Howmet Aerospace Inc. (formerly Arconic Inc.) (2016-2020)

Age: 58

 
   

Paul M. Meister

 

LOGO

 

Mr. Meister is co-founder, and since 2008, Chief Executive Officer of Liberty Lane Partners, LLC, a private investment company with investment holdings in healthcare, technology and distribution-related industries. He was President of MacAndrews & Forbes Incorporated (“M&F”) from 2014 to 2018, a private company that owns or controls a diverse set of businesses, including: Revlon, Scientific Games, Harlan Clarke Holdings Corp., vTv Therapeutics LLC, SIGA Technologies, and AM General. During 2018, Mr. Meister also served, on an interim basis, as Executive Vice Chairman of Revlon, Inc. a leading beauty products company, and acted as Revlon’s principal executive officer. Mr. Meister served from 2010 to 2014 as Chairman and CEO of inVentiv Health (now Syneos Health), a leading provider of commercial, consulting and clinical research services to the pharmaceutical and biotech industries. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment and supplies company, from November 2006 to April 2007. He was previously Vice Chairman of Fisher Scientific International, Inc., a predecessor of Thermo Fisher Scientific, Inc., from 2001 to 2006, and Chief Financial Officer of Fisher Scientific International, Inc. from 1991 to 2001. Earlier in his career, Mr. Meister served in a number of executive leadership positions at Wheelabrator Technologies Inc., The Henley Group Inc., and AlliedSignal Inc. (now Honeywell International, Inc.). He began his career with Ford Motor Company. Mr. Meister holds a bachelor of arts degree from the University of Michigan and a master of business administration from Northwestern University.

 

Independent Director

 

Director since: July 2019

 

Committee Membership: Compensation and Human Resources Committee and Finance Committee

 

Qualifications: Mr. Meister’s extensive public company experience, as both an executive and a board member, provides the Board significant expertise in management, strategy, finance and capital markets, operations and mergers and acquisitions.

 

Other Current Public Boards: Amneal Pharmaceuticals, Inc., Oaktree Acquisition Corp. II, Quanterix Corporation

 

Other Public Boards: LKQ Corporation (1999-2018), Revlon, Inc. (2016-2018), Scientific Games Corporation (2012-2020) and vTv Therapeutics Inc. (2015-2018)

Age: 68

 

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Election of Directors (continued)

 

 

   

Robert K. Ortberg

 

LOGO

 

Mr. Ortberg is the former Chief Executive Officer of Collins Aerospace, a United Technologies company from December 2018 to February 2020. Following his retirement from Collins Aerospace, he served as a Special Advisor to the office of the Chief Executive Officer for Raytheon Technologies Corporation, an aerospace and defense company that provides advanced systems and services for commercial, military and government customers worldwide until March 2021. He previously served as the Chief Executive Officer of Rockwell Collins from 2013 to 2018 and served as President from 2012 to 2018. He served as Rockwell Collins’ Executive Vice President, Chief Operating Officer, Government Systems from 2010 to 2012 and as Executive Vice President, Chief Operating Officer, Commercial Systems from 2006 to 2010. Prior to that time, he held other executive positions at Rockwell Collins, which he joined in 1987. Mr. Ortberg has a bachelor of science degree in mechanical engineering from the University of Iowa.

 

Independent Director

 

Director since: September 2018

 

Committee Membership: Audit Committee and Innovation and Technology Committee

 

Qualifications: Mr. Ortberg brings to the Board a track record of operational and technology leadership, accelerating company growth and creating shareholder value, coupled with a strong background in transformation and innovation.

 

Other Current Public Boards: Raytheon Technologies Corporation

 

Former Public Boards: Rockwell Collins, Inc. (2013-2018)

Age: 60

 
   

Colin J. Parris

 

LOGO

 

Dr. Parris currently serves as the Senior Vice President and Chief Technology Officer at GE Digital. He joined the General Electric Company in 2014 as the Vice President, GE Software Research. Prior to joining GE, he spent two decades at IBM in a variety of executive roles, serving most recently as Vice President, Systems Research in the IBM T.J. Watson Research Division from 2013 to 2014 and General Manager for IBM’s Power Systems business from 2010 to 2013. Dr. Parris received a bachelor’s degree in electrical engineering from Howard University, a master’s degree in management from Stanford University, and master’s degrees in electrical engineering and computer science, and a doctorate in electrical engineering from the University of California, Berkeley.

 

Independent Director

 

Director since: December 2017

 

Committee Membership: Audit Committee and Innovation and Technology Committee

 

Qualifications: Dr. Parris has an extensive technology background with significant experience in software and leading digital transformations. His current focus on data software and artificial intelligence provides valuable knowledge to the Board.

 

Other Public Boards: None

Age: 59

 

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Election of Directors (continued)

 

 

   

Ana G. Pinczuk

 

LOGO

 

Ms. Pinczuk is the Chief Development Officer for Anaplan, Inc., which provides a cloud-based connected planning platform that helps connect organizations and people to make better and faster decisions. She joined Anaplan in February 2019 as the Chief Transformation Officer, following positions as the President of Hewlett Packard Enterprise’s Pointnext technology services organization, the Executive Vice President and Chief Product Officer of Veritas Technologies LLC, a data management provider specializing in information protection, availability, and insight solutions, and Senior Vice President and General Manager, Backup and Recovery for Symantec Corporation, all in the period from 2015 to 2018. From 2000 until 2015, Ms. Pinczuk served in various executive positions with Cisco Systems, Inc., including serving as Senior Vice President, Sales from 2014 to 2015, Senior Vice President, Services Transformation and Chief Operating Officer from 2013 to 2014, and Vice President, Global Technical Services from 2009 until 2013. Prior to joining Cisco, Ms. Pinczuk spent 15 years with AT&T, Inc., in positions of increasing responsibility. Ms. Pinczuk earned both undergraduate and graduate mechanical engineering degrees from Cornell University, an executive master’s degree in technology management from the University of Pennsylvania and a master’s degree in software management from Carnegie Mellon University.

 

Independent Director

 

Director since: November 2016

 

Committee Membership: Audit Committee and Innovation and Technology Committee

 

Qualifications: Ms. Pinczuk’s broad technology background spans mobile, IP networking, software, data storage and security, making her a strong contributor to the Board as Aptiv accelerates its innovation in new mobility technologies.

 

Former Public Boards: KLA–Tencor Corporation (2018-2019)

Age: 57

The Board of Directors recommends a vote “FOR” each of the 12 director nominees named above. If you complete the enclosed proxy card, unless you direct otherwise on that card, the shares represented by that proxy will be voted FOR the election of all 12 nominees.

 

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BOARD PRACTICES

 

Board and Governance Information

 

   
  Size of Board    12            
  Number of Independent Directors    11            
  Mandatory Retirement Age    75            
  Non-Executive Chairman                
  Annual Election of Directors                
  Executive Sessions of Independent Directors at each Board Meeting                
  Annual Board and Committee Evaluations                
  Independent Audit, Compensation and Human Resources and Nominating and Governance Committees                
  Director Stock Ownership Guidelines                
  Code of Ethical Business Conduct Applies to all Directors and Employees                

 

The Nominating and Governance Committee regularly reviews the following Board practices and adopts governance practices that serve the interests of our shareholders.

Size of the Board

As of the date of this mailing, the Board consists of 12 directors. Following the Annual Meeting and assuming all nominated directors are elected, the Board will consist of 12 directors. Our Memorandum and Articles of Association provides that our Board must consist of a minimum of two directors. The exact number of directors will be determined from time to time by our full Board.

Leadership Structure

The Board believes its current leadership structure, which splits the Chairman and CEO roles, best serves the objectives of the Board, including its oversight of management, its ability to fulfill its responsibilities to the Company’s shareholders, and its overall corporate governance. The Board also believes that the separation of the Chairman and CEO roles allows our CEO to focus on operating and managing the Company, while leveraging our Chairman’s extensive board governance experience. Rajiv L. Gupta was elected to the role of Non-Executive Chairman on March 1, 2015, and the Board periodically reviews its leadership structure to determine whether it continues to serve the best interests of Aptiv and its shareholders.

Director Independence

The Board believes that a substantial majority of its members should be independent, non-employee directors. Mr. Clark, our President and Chief Executive Officer, is the only non-independent director. The current non-employee

directors of the Company are Richard L. Clemmer, Nancy E. Cooper, Nicholas M. Donofrio, Rajiv L. Gupta, Joseph L. Hooley, Sean O. Mahoney, Paul M. Meister, Robert K. Ortberg, Colin J. Parris, Ana G. Pinczuk and Lawrence A. Zimmerman. The Board has determined that all of its non-employee directors meet the requirements for independence under the New York Stock Exchange (“NYSE”) listing standards. Furthermore, the Board limits membership on the Audit, Compensation and Human Resources, and Nominating and Governance Committees to independent directors.

Audit Committee Financial Experts

The Board has determined that all of the members of the Audit Committee are financially literate and meet the independence rules required for Audit Committee members by the Securities and Exchange Commission (“SEC”). Ms. Cooper, Mr. Hooley and Mr. Ortberg meet the qualifications of audit committee financial experts, as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Evaluation of Board Performance

The Nominating and Governance Committee coordinates the Board’s ongoing and annual assessments of its effectiveness, including the effectiveness of its committees and each director. All directors complete an evaluation of the Board and each committee on which they serve. Evaluation topics include number and length of meetings, topics covered and materials provided, committee structure and activities, Board composition and expertise, succession planning, director participation and interaction with management, and promotion of the Company’s values and ethical behavior. Our Board considers the results when making decisions on the structure

 

 

    APTIV PLC       18


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Board Practices (continued)

 

 

of our Board and its committees, agendas and meeting schedules for our Board and its committees, and changes in the performance or functioning of our Board.

The Board also conducts individual director and peer assessments. The Chairman conducts individual interviews with each director to obtain his or her assessment of director performance, Board dynamics and the effectiveness of the Board and its committees. These discussions are designed to help assess the competencies and skills each director is expected to bring to the Board. These evaluations have consistently found that the Board and its committees are operating effectively, while identifying opportunities to improve the way the Board and its committees operate. As a result of the evaluations, the Board takes concrete steps to further Board and committee effectiveness.

Director Qualifications, Nominations and Diversity

The Nominating and Governance Committee recommends individuals for membership on the Board. The Nominating and Governance Committee considers a candidate’s character and expertise, performance, personal characteristics, diversity

(inclusive of gender, race, ethnicity and age) and professional responsibilities, and also reviews the composition of the Board relative to the long-term business strategy and the challenges and needs of the Board at that time. The Board is committed to searching for the best available candidates to fill vacancies and fully appreciates the value of diversity, viewed in its broadest sense, including gender, race, ethnicity, experience, leadership qualities, education when evaluating prospective candidates. The Nominating and Governance Committee uses the same selection process and criteria for evaluating all nominees.

Ensuring the Board is composed of Directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, professional experience and backgrounds, and effectively represent the long-term interests of shareowners, is a top priority of the Board and the Nominating and Governance Committee. The Board is strong in its collective knowledge and diversity of accounting and finance, management and leadership, vision and strategy, business operations, business judgment, technology, crisis management, risk assessment, industry knowledge, corporate governance and global markets.

 

 

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Board Practices (continued)

 

 

Diversity, Skills and Experience of Our Director Nominees

The table below summarizes some of the experience, qualifications, attributes and skills of our director nominees. This high-level summary is not intended to be an exhaustive list of each of our director nominee’s skills or contributions to the Board; we look to directors to be knowledgeable in these areas as it relates to Aptiv. We have identified below the areas where each director has specific expertise or prominence that he or she brings to the Board. Further information on each director nominee, including some of their specific experience, qualifications, attributes or skills is set forth in the biographies in “Election of Directors” above.

 

 

LOGO

 

 

LOGO   LOGO   LOGO

 

    APTIV PLC       20


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Board Practices (continued)

 

 

The Nominating and Governance Committee retains the services of independent executive search firms to help identify director prospects, perform candidate outreach, assist in reference and background checks, and provide other related services. In addition to using search firms, the Nominating and Governance Committee also receives candidate recommendations from members of the Board. The recruiting process typically involves contacting a prospect to gauge his or her interest and availability after which a candidate meets with several members of the Nominating and Governance Committee. References for the candidate are contacted and a background check is completed before a final recommendation is made to the Board to appoint a candidate to the Board.

The Board’s culture enables it to operate quickly and effectively in making key decisions. Board meetings are conducted in a collegial environment of trust, confidentiality, open dialogue, constructive commentary and mutual respect.

In accordance with the procedures in our Memorandum and Articles of Association, shareholders holding at least ten percent of the ordinary shares outstanding and who have the right to vote at general meetings of the Company may propose, and the Nominating and Governance Committee will consider, nominees for election to the Board at the next annual meeting by giving timely written notice to the Corporate Secretary, which must be received at our principal executive offices no later than the close of business on March 10, 2022, and no earlier than November 30, 2021. The notice periods may change in accordance with the procedures set out in our Memorandum and Articles of Association. Any such notice must include the name of the nominee, a biographical sketch and resume, contact information and such other background materials as the Nominating and Governance Committee may request.

Director Retirement

Our Corporate Governance Guidelines provide that the retirement age for directors is 75, unless waived by the Board. No director who is or would be over 75 at the expiration of his or her current term may be nominated to a new term, unless the Board waives the retirement age for the director. Once granted, such waiver must be renewed annually. The Board carefully considered the application of this policy with respect to Mr. Donofrio and Mr. Gupta, both of whom are 75. Based upon the leadership value and strategic expertise that both Mr. Donofrio and Mr. Gupta provide, the Board authorized a waiver of the retirement age to allow them to serve one additional year.

Our Corporate Governance Guidelines also provide that non-employee directors who significantly change their primary employment during their tenure as Board members must offer

to tender their resignation to the Nominating and Governance Committee. The Nominating and Governance Committee will evaluate the continued appropriateness of Board membership under the new circumstances and make a recommendation to the Board as to any action to be taken with respect to such offer.

Board Refreshment

We believe that Board refreshment is critical as the mobility industry changes and the Company’s business strategy evolves. In the last four years, we have added seven new independent directors, including four directors with extensive technology backgrounds. At the same time, we believe that we benefit from having several seasoned directors on our Board who are well-versed in the Company’s business and help facilitate the transfer of institutional knowledge. We believe the average tenure for our independent directors of approximately five years reflects the balance the Board seeks between different perspectives brought by long-serving and new directors.

Executive Sessions

Independent directors meet in executive session each Board meeting, without the CEO or any other employees in attendance. The Chairman presides over each executive session of the Board. Each Committee meeting also includes an executive session at which Committee members meet without the CEO or any other employees in attendance.

Board’s Role in Risk Oversight

At Aptiv, we always strive to do the right thing, the right way. Our long-term success depends on ensuring that we demonstrate the highest ethical standards in everything we do, everywhere we operate. We believe an effective risk oversight and compliance program is critical to a company’s long-term success and future growth. The Board takes an active role in risk oversight related to the Company, both as a full Board and through its Committees, each of which has primary risk oversight responsibility with respect to all matters within the scope of its duties as described in its charter. While the Company’s management is responsible for day-to-day management of the various risks facing the Company, the Board is responsible for monitoring management’s actions and decisions.

Our Audit Committee receives regular updates from management on risk-related matters and reports on these updates to our Board. In addition, our Board and Audit Committee regularly receive risk assessment reports from management that address and provide updates on key and emerging risks facing the Company. For example, our Board of Directors regularly reviews relevant information technology and cybersecurity matters and receives regular updates from information technology and cybersecurity subject matter experts as part of its risk assess-

 

 

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Board Practices (continued)

 

 

ment procedures, including analysis of existing and emerging risks, as well as plans and strategies to address those risks. The Board, with input from the Audit Committee, determines that appropriate risk management and mitigation procedures are in place and that senior management takes the appropriate steps to manage all significant risks.

Board’s Role in Sustainability

As a global company, we understand how interconnected the world is, and how our commitment to environmental and social responsibility — and our commitment to always do the right thing the right way — is directly connected to our success.

Sustainability at Aptiv is driven from the top by our Board and CEO and is embedded at every level of Aptiv. The full Board oversees certain sustainability matters directly as part of its strategic review of growth, products and innovation. The Board also regularly reviews personnel talent and development matters.

Several Board committees also oversee discrete sustainability matters from a strategic and risk management perspective. The Compensation Committee discusses people, diversity and inclusion and culture regularly. The Audit Committee discusses ethics and compliance and receives regular reporting regarding business risks. The Nominating and Governance Committee oversees our environmental, health and safety practices and our stewardship outreach to investors, and our Innovation and Technology Committee oversees the development of safe, green and connected products.

Stock Ownership Guidelines

The Board believes that each director should hold a meaningful equity position in the Company, and it has established equity holding requirements for our non-employee directors. The holding requirement for each non-employee director is $500,000 in Aptiv shares. Each new director has up to five years from his or her date of appointment to fulfill this holding requirement. As of the 2020 measurement of ownership, all non-employee directors, except for Mr. Clemmer and Mr. Hooley, both of whom joined the Aptiv Board in 2020, were at or above the ownership requirement.

Governance Principles

The Board has adopted Corporate Governance Guidelines, which set forth the corporate governance practices for Aptiv. The Corporate Governance Guidelines are available on our website at aptiv.com by clicking on the tab “Investors”, then the heading “Governance” and then the caption “Governance Documents”.

Code of Ethical Business Conduct

The Company has adopted a Code of Ethical Business Conduct, which applies to all employees and directors, including the principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. The Code of Ethical Business Conduct is available on our website at aptiv.com by clicking on the tab “Investors”, then the heading “Governance” and then the caption “Code of Conduct”.

Copies of our Code of Ethical Business Conduct are also available to any shareholder who submits a request to the Corporate Secretary at Aptiv PLC, 5 Hanover Quay, Grand Canal Dock, Dublin 2, Ireland D02 VY79 or by email at corporatesecretary@aptiv.com. We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K by posting on our website any amendments to, or waivers from, a provision of our Code of Ethical Business Conduct that applies to our directors or officers.

Communications with the Board of Directors

Anyone who wishes to communicate with the Board or any individual member of the Board (or independent directors as a group) may do so by sending an email to corporatesecretary@aptiv.com or a letter addressed to the director or directors in care of the Corporate Secretary at Aptiv PLC, 5 Hanover Quay, Grand Canal Dock, Dublin 2, Ireland D02 VY79. All correspondence, other than items such as junk mail that are unrelated to a director’s duties and responsibilities, will be forwarded to the appropriate director or directors.

 

 

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BOARD AND COMMITTEE MEETINGS

 

During 2020, the Board held 11 in-person or virtual meetings. All of our directors attended at least 75% of the Board and Committee meetings on which they serve. In addition, all directors are expected to attend the Annual Meeting of Shareholders, and in 2020, all directors virtually attended the Annual Meeting.

In addition to the formal meetings held, which increased in number due to COVID-19, the Board and its Committees were regularly virtually briefed by management on the Company’s response to COVID-19.

BOARD COMMITTEES

Our Board has the following five committees: Audit; Compensation and Human Resources (CHRC); Finance; Innovation and Technology (ITC); and Nominating and Governance (Nom Gov). Committee charters are available on our website at aptiv.com by clicking on the tab “Investors”, then the heading “Governance” and then the caption “Governance Documents”. Committee membership for 2020 is set forth below:

 

     Board Committees
  Name    Audit    CHRC    Finance    ITC       Nom Gov    

Kevin P. Clark

    

 

 

 

    

 

 

 

    

 

 

 

    

 

 

 

   

 

 

 

Richard L. Clemmer

    

 

 

 

    

 

 

 

       X        X    

 

 

 

Nancy E. Cooper

       C     

 

 

 

    

 

 

 

       X    

 

 

 

Nicholas M. Donofrio

    

 

 

 

    

 

 

 

    

 

 

 

       C       X

Rajiv L. Gupta

    

 

 

 

       C     

 

 

 

    

 

 

 

      C

Joseph L. Hooley

       X        X     

 

 

 

    

 

 

 

   

 

 

 

Sean O. Mahoney

    

 

 

 

    

 

 

 

       X     

 

 

 

      X

Paul M. Meister

    

 

 

 

       X        X     

 

 

 

   

 

 

 

Robert K. Ortberg

       X     

 

 

 

    

 

 

 

       X    

 

 

 

Colin J. Parris

       X     

 

 

 

    

 

 

 

       X    

 

 

 

Ana G. Pinczuk

       X     

 

 

 

    

 

 

 

       X    

 

 

 

Lawrence A. Zimmerman

      

 

 

 

 

 

       X        C       

 

 

 

 

 

     

 

 

 

 

 

 

“C” = Chair of Committee

“X” = Member of Committee

During 2020, Mr. Clemmer was appointed to the Finance Committee and the Innovation and Technology Committee, Mr. Hooley was appointed to the Audit Committee and the Compensation and Human Resources Committee, and Mr. Ortberg joined the Audit Committee and stepped down from the Compensation and Human Resources Committee. In 2021, in anticipation of Mr. Zimmerman’s retirement, Mr. Meister was appointed Chair of the Finance Committee.

 

23       APTIV PLC    


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Board Committees (continued)

 

 

  Committee       Primary Responsibilities    Number of Meetings in 2020

  Audit

    
 

Responsible for the engagement of the registered independent public accounting firm and the review of the scope of the audit to be undertaken by the registered independent public accounting firm. Responsible for oversight of the adequacy of our internal accounting and financial controls and the accounting principles and auditing practices and procedures to be employed in preparation and review of our financial statements. Responsible for oversight of risk-related matters broadly, including the Company’s enterprise risk management program, compliance program and cybersecurity.

 

  

5

 

  Compensation and Human Resources

    
 

Responsible for the oversight of the Company’s compensation philosophy and reviews and approves compensation for executive officers (including cash compensation, equity incentives and benefits). Responsible for oversight of management development and succession planning.

 

  

7

 

  Finance

    
 

Responsible for oversight of corporate finance matters, including capital structure, financing transactions, acquisitions and divestitures, minority investments, share repurchase and dividend programs, employee retirement plans, interest rate policies, commodity and currency hedging and the annual business plan, including review of capital expenditures and restructurings.

 

  

10

 

  Innovation and Technology

    
 

Responsible for oversight of the Company’s technology roadmaps and the technology landscape, product cybersecurity and assessing the overall skill set of the engineering organization.

 

  

5

 

  Nominating and Governance

    
 

Responsible for reviewing and recommending policies and procedures relating to director and board committee nominations and corporate governance policies, conducting director searches and overseeing aspects of the Company’s environmental, social and governance programs, including providing input to management on the Company’s risks, policies, strategies and programs generally related to matters of sustainability, corporate social responsibility, corporate governance and environment, health and safety management programs.

 

  

7

 

 

    APTIV PLC       24


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DIRECTOR COMPENSATION

 

Board Compensation

Our directors (other than Mr. Clark, who does not receive additional compensation for services as a member of the Board) received the following annual compensation for service in 2020, which is paid in cash and time-based restricted stock units (“RSUs”). Each director may elect, on an annual basis, to receive 60%, 80% or 100% of his or her compensation in RSUs, with the remainder paid in cash. In April 2020, as a commitment to the Company’s efforts to conserve cash in the wake of the COVID-19 crisis, each director elected to receive the balance of their 2020 compensation in the form of RSUs. The Chairman of the Board receives $500,000 annually, and all other directors receive $265,000 annually. In 2020, Chairs of our Board committees received the following additional annual compensation:

 

   Committee  

Additional

Annual

Compensation

  Audit

   

$

25,000

  Compensation and Human Resources

   

 

20,000

  Finance

   

 

15,000

  Innovation and Technology

   

 

15,000

  Nominating and Governance(1)

   

 

15,000

 

(1)

The Chairman of the Nominating and Governance Committee is also the Chairman of the Board; he does not receive an additional fee for his service as the Nominating and Governance Committee Chairman. He does, however, receive payment for his services as Chairman of the Compensation and Human Resources Committee.

An annual grant of RSUs is made on the day of the Annual Meeting, which vests on the day before the next annual meeting. Cash compensation is paid quarterly at the end of each fiscal quarter. Any director who joins the Board, other than in connection with the Annual Meeting, will receive prorated cash compensation and a prorated grant of RSUs, based on the date the director joins the Board. These RSUs vest on the day before the next annual meeting.

The table below shows cash and equity compensation paid to each member of the Board in 2020:

2020 Director Compensation

 

   Name  

Fees Earned or

Paid in Cash($)(2)

 

Stock

Awards($)(3)

  Total($)     

  Richard L. Clemmer

   

$

   

$

220,905

   

$

220,905

   

  Nancy E. Cooper

   

 

29,000

   

 

290,046

   

 

319,046

   

  Frank J. Dellaquila(1)

   

 

13,250

   

 

   

 

13,250

   

  Nicholas M. Donofrio

   

 

28,000

   

 

280,026

   

 

308,026

   

  Rajiv L. Gupta

   

 

26,000

   

 

520,031

   

 

546,031

   

  Joseph L. Hooley

   

 

26,500

   

 

265,026

   

 

291,526

   

  Sean O. Mahoney

   

 

26,500

   

 

265,026

   

 

291,526

   

  Paul M. Meister

   

 

   

 

265,026

   

 

265,026

   

  Robert K. Ortberg

   

 

26,500

   

 

265,026

   

 

291,526

   

  Colin J. Parris

   

 

26,500

   

 

265,026

   

 

291,526

   

  Ana G. Pinczuk

   

 

26,500

   

 

265,026

   

 

291,526

   

  Lawrence A. Zimmerman

   

 

28,000

   

 

280,026

   

 

308,026

         

 

(1)

Mr. Dellaquila did not receive a stock award in 2020, as he retired from the Board in April 2020.

(2)

Amounts reflected in this column were related to 2019 compensation elections paid in 2020.

(3)

Reflects the grant date fair value of the equity awards granted to directors on April 23, 2020, which was the date of grant for all directors, other than Mr. Clemmer. The grant date for Mr. Clemmer was July 1, 2020, in connection with his appointment to the Board. The values set forth in the table were determined in accordance with FASB ASC Topic 718. For assumptions used in determining the fair value of the awards, see Note 21. Share-Based Compensation to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. As of December 31, 2020, all outstanding Aptiv RSU awards held by our directors were unvested; they vest in full on April 29, 2021. The year-end RSU balances for our directors are:

 

   Name   

Unvested

RSUs

12/31/2020

  Richard L. Clemmer

    

 

2,929

  Nancy E. Cooper

    

 

4,776

  Nicholas M. Donofrio

    

 

4,611

  Rajiv L. Gupta

    

 

8,563

  Joseph L. Hooley

    

 

4,364

  Sean O. Mahoney

    

 

4,364

  Paul M. Meister

    

 

4,364

  Robert K. Ortberg

    

 

4,364

  Colin J. Parris

    

 

4,364

  Ana G. Pinczuk

    

 

4,364

  Lawrence A. Zimmerman

    

 

4,611

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

A Note from the Chair of the Compensation Committee    LOGO

Dear Shareholders,

Balancing pay-for-performance with shareholder alignment is a hallmark of our executive compensation program at Aptiv. Our leadership team relentlessly focuses on the key short and long-term metrics that are critical to executing our business strategy, delivering sustainable growth, and driving shareholder value. Ever since our first say-on-pay vote in 2012, our shareholders have overwhelmingly supported our executive compensation programs. We appreciate your support and are committed to achieving the continued alignment of executive pay with shareholder interests.

Our compensation programs continue to be primarily performance-based, with a significant portion of executive pay at-risk. We consistently set performance targets that are rigorous and reflective of the business plan we communicate to investors.

As we reflect on 2020, the year proved to be much more challenging than anticipated, and certainly less predictable than any planning scenario could have foreseen. Aptiv was faced with a multitude of challenges, both operational and financial, throughout the year as the COVID-19 pandemic emerged and evolved during 2020. Our management team demonstrated exceptional performance throughout this unprecedented year by taking early and decisive actions to put the safety and welfare of our employees first, while preserving and enhancing the Company’s financial flexibility. These early actions positioned us to safely restart our global operations, ensuring flawless operational execution with zero customer disruptions, and enabling Aptiv to achieve strong financial results during the second-half of the year.

The Company’s ability to persevere during this unprecedented time and capitalize on the opportunities that emerged following the onset of the COVID-19 pandemic have driven our share price to all-time highs in the fourth quarter. Our 3-year total shareholder return (“TSR”), a metric on which we evaluate shareholder return, was at the 89th percentile of our TSR peer group.

However, the COVID-19 pandemic dramatically affected Aptiv’s financial performance throughout the year, including with respect to the financial metrics underlying our performance-based compensation programs. In light of this unprecedented year and the extraordinary performance by the management team, the Compensation Committee thoughtfully reviewed and assessed performance against the original performance objectives. Additionally, as part of our ongoing investor engagement, we solicited input from top shareholders to ensure our approach to adjustments, as detailed throughout this Proxy Statement, was consistent with our historic pay-for-performance track record and is aligned with shareholder interests. As a result, the Committee exercised its discretion and made certain adjustments in order to achieve the desired goals of our compensation plans to appropriately compensate management for their actual achievement on behalf of all stakeholders during the year.

As we position Aptiv for continued success, we strive to ensure our compensation programs strengthen and reinforce our strategy, attract and retain top talent, and continue to drive long-term shareholder value.

Thank you again for your continued support and investment in Aptiv.

 

 

LOGO

Raj Gupta

Chair of the Compensation Committee

 

    APTIV PLC       26


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Compensation Discussion and Analysis (continued)

 

 

Executive Summary

 

  Our executive pay program aligns with long-term shareholder value creation. A significant portion of executive pay is performance-based, and subject to rigorous performance targets that are important to our shareholders.

 

  Initial decisions on our 2020 compensation plan were made prior to the COVID-19 pandemic. The compensation plan design and targets were established in January 2020, prior to the global emergence of the COVID-19 pandemic and the production shutdowns that ensued. The 2020 compensation plan design included certain changes in order to better align our compensation programs with shareholder interests, including increasing the weighting of relative TSR in our 2020-2022 long-term incentive program from 25% to 33%. In our annual incentive plan metrics, we replaced New Business Bookings with revenue Growth Over Market (“GOM”), a measure of relative revenue growth versus underlying global vehicle production. These changes strengthened alignment of our compensation programs to our strategic objectives, competitive market practices, and shareholder interests.

 

  All of our NEOs voluntarily reduced their base salary for the period from April 2020 through August 2020 in response to the financial pressures brought about by the COVID-19 pandemic. All NEOs also deferred their approved base salary increases until September 1, 2020.

 

  COVID-19 had a significant impact on achievement against both our short- and long-term original financial objectives. The impact of COVID-19, including global shutdowns, periods of reduced automotive demand, and the increased costs of keeping our employees safe rendered the previously established financial targets for our annual incentive plan and performance-based restricted stock units (“RSUs”) unachievable. In light of the Company’s strong operating and financial performance, including in response to COVID-19 and the unprecedented challenges it presented, and the extraordinary efforts of our employees and leaders around the world to enable the success of the Company following the onset of the COVID-19 pandemic, the Compensation Committee determined this outcome did not reflect our pay-for-performance philosophy.

 

  The Compensation Committee recognized the need to re-align the compensation programs in light of COVID-19. In response to management’s decisive actions to successfully respond to and generate strong results in light of the COVID-19 pandemic, the Compensation Committee evaluated changes to compensation programs. The key principles underlying the Compensation Committee’s consideration of compensation program changes were to:

 

 

LOGO   Consider the welfare of our employees first

 

LOGO    Preserve value for our shareholders

 

LOGO   Compensate and reward performance and value creation

 

LOGO   Reduce pay opportunity in conjunction with adjusted goals

 

LOGO   Cap long-term payouts at target if we do not outperform our peers

 

  In July 2020, the Compensation Committee prudently reset the goals and reduced payout opportunities in the Annual Incentive Plan. As the industry emerged from global shutdowns and the Company successfully restarted operations, the Compensation Committee approved the Updated Incentive Plan (as defined below) to motivate participating employees, including executives, and to encourage sustained focus on enterprise-wide goals. The Updated Incentive Plan provided reduced target and maximum incentive opportunities at 50% and 65% of original target payout, respectively.

   

 

3-YEAR TSR

 

49.6%

89TH

PERCENTILE OF OUR TSR

PEER GROUP

 

 

BELOW TARGET

INCENTIVE PAYOUT

 

65%

ANNUAL INCENTIVE

 

95%

2018-2020 LONG-TERM

INCENTIVE

 

 

CEO BASE SALARY

REDUCTION

 

50%

BASE SALARY REDUCTION

FROM APRIL-AUGUST

2020

 

 

3 YEAR AVERAGE

SAY-ON-PAY

96%

 

 

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Compensation Discussion and Analysis (continued)

 

 

In December 2020, the Compensation Committee took thoughtful action to adjust long-term compensation programs in response to COVID-19. Due to the emergence of the COVID-19 pandemic and resultant impacts on the Company’s industry and operations in 2020, the Compensation Committee determined that it was reasonable and appropriate to truncate the performance period for the 2018-2020 performance cycle to measure achievement of the financial results based on actual and estimated financial performance as of December 31, 2019. In addition, adjustments were made to restore our 2019 and 2020 compensation programs’ intended effectiveness. Ensuring alignment of pay-for-performance with shareholder value creation remains a key focus and ensures that the management team is accountable for strategic and operational execution. The Compensation Committee made the following changes:

 

   

Adjusted the original 3-year financial performance objectives for the 2019 and 2020 performance-based RSU grants, while maintaining the overall plan design. The revised targets were established at levels that the Compensation Committee deemed rigorous and challenging, while acknowledging the current operating environment;

 

   

Reduced the maximum payouts for 2019 and 2020 performance-based RSU grants from 200% to 150%; with payouts capped at 100% if relative TSR is below median; and

 

   

Did not grant any new incremental awards.

 

Our 3-year TSR was 49.6% – at the 89th percentile of our TSR peer group, reflecting operational performance well above industry peers. Despite COVID-19 disruptions, our Company delivered strong shareholder returns in 2020, driven by its operating and financial performance to which our management team contributed significantly.

 

Even following these adjustments, our executives were awarded below-target short- and long-term payouts. Although the Company and its leadership exceeded expectations in navigating the unprecedented environment throughout 2020, the Compensation Committee acknowledged that the original targets were not achieved. Following the compensation program adjustments described above, our CEO earned 65% of his annual incentive target for 2020, and 95% of his target shares for the 2018-2020 long-term incentive award. In determining these levels, the Committee applied negative discretion to further align compensation earned by our executives with the austerity measures taken in 2020, including cost reduction and cash conservation actions, while recognizing the overall impact on our employees.

 

  Plan    Before Adjustments    After Adjustments    After Application
of Negative
Discretion
  Annual Incentive Plan    10% payout (GOM)    65% payout    65% payout
  2018-2020 performance-based RSUs    49% payout    106% payout    95% payout

 

Accounting guidelines distort the compensation reported in our 2020 Summary Compensation Table. The approved adjustments to 2019-2021 and 2020-2022 long-term incentive grants, while maintaining the value and intent of the original grants, require disclosure in the “Stock Awards” column of the “2020 Summary Compensation Table” as additional stock awards granted in 2020 due to the accounting impact of the program adjustments. For example, the amount disclosed in the “Stock Awards” column for our CEO of approximately $28.5 million reflects his original 2020 performance-based RSU grant as well as including the accounting impact of the adjustments approved in December 2020 to the 2019 and 2020 grants. What would typically be disclosed for this amount is approximately $10.7 million, which reflects the grant date fair value of the 2020 annual grant at the time it was made. Refer to the “Supplemental Compensation Information and Reconciliation” section below, which is provided in order to illustrate the implicit value of awards for our CEO after these adjustments.

 

    APTIV PLC       28


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Compensation Discussion and Analysis (continued)

 

 

2020 Year in Review

2020 Company Financial and Business Performance Highlights. COVID-19 affected nearly every facet of our operations. In spite of these impacts, our 2020 performance reflects our team’s dedication and efforts to ensure the health and safety of our employees first, while positioning the Company for flawless execution for our customers as operations resumed. Management’s actions preserved and enhanced Aptiv’s financial strength during the COVID-19 pandemic and generated strong returns following the restart of our global operations.

Our financial and business achievements in 2020 include the following:

 

 

Strengthening our balance sheet and liquidity position in order to continue to invest in value-enhancing opportunities, despite COVID-19

 

   

Leveraging opportunistic market pricing dynamics and strong market demand by issuing $1.15 billion of ordinary shares and $1.15 billion of 5.50% preferred shares; and

 

   

Extending the maturity of substantially all of our existing revolving credit facility to August 2022.

 

 

Acting decisively in response to the global COVID-19 pandemic

 

   

Taking early and decisive actions to preserve our financial strength, including temporarily reducing executive pay, reducing capital expenditures, and suspending share repurchases and ordinary share dividends; and

 

   

Designing and successfully implementing our safe operations protocols, which enabled our facilities to restart safely and operate with zero production disruptions following the restart.

 

 

Generating strong results despite the COVID-19 pandemic

 

   

Delivering sustained outperformance, with 10% sales growth over market, attributable to our portfolio of leading technologies aligned with secular growth drivers;

 

   

Generating $1.621 billion of Adjusted EBITDA and cash flow before financing of $836 million, despite the COVID-19 pandemic’s negative impact on automotive production; and

 

   

Achieving 49.6% TSR over the period 2018 through 2020, illustrating our investors’ belief in our long-term strategy and current financial performance.

 

 

Continuing our relentless focus on cost structure and operational optimization

 

   

Maximizing our operational flexibility and profitability at all points in the normal automotive business cycle, by having approximately 97% of our hourly workforce based in best cost countries, and approximately 20% of our hourly workforce composed of contract and temporary employees; and

 

   

Recruiting and retaining top talent from various industries, including technology.

 

 

Continuing to execute on our long-term Safe, Green and Connected strategy to enable a more sustainable future

 

   

Furthering our leadership position in automated driving through the formation of the Motional autonomous driving joint venture with Hyundai, which is focused on the design, development and commercialization of autonomous driving technologies;

 

   

Expanding our market relevant portfolio to address the industry’s top challenges, including high voltage electrification and active safety technologies; and

 

   

Significantly enhancing our commitment to corporate sustainability.

Appendix A contains a reconciliation of non-GAAP financial measures used in this disclosure to U.S. GAAP financial measures.

2020 Shareholder Engagement. Aptiv is committed to proactive engagement, communication, and transparency with shareholders. During 2020, we engaged institutional shareholders with respect to a variety of topics related to employee and board culture, board recruitment and refreshment, safety performance and sustainability efforts, and executive compensation. Raj Gupta, the Chairman of the Board and Chairman of the Compensation Committee, as well as members of management,

 

29       APTIV PLC    


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Compensation Discussion and Analysis (continued)

 

 

participated, as appropriate. In these meetings, we solicited feedback and provided information to our shareholders. We also specifically solicited insight regarding shareholder sentiment about potential adjustments to executive compensation programs.

In addition, members of management met with our investors throughout the year to discuss our businesses, technologies, end markets, financial results, operational execution and our sustainability efforts at numerous conferences and roadshows, in addition to Company-hosted events and quarterly conference calls. We also shared financial and ESG information relevant to our shareholders through our Sustainability Report, our Investor Relations website, our Annual Report and this Proxy Statement.

2020 Say-on-Pay. At our 2020 Annual Meeting of Shareholders, we received support from approximately 96% of votes cast as to our named executive officers’ compensation. Management and the Compensation Committee reviewed our shareholders’ 2020 Say-on-Pay vote and believe it to be a strong indication of continuing support for the Company’s executive compensation program and pay-for-performance philosophy. Therefore, the Compensation Committee maintained its overall pay-for-performance philosophy, compensation objectives and governing principles it has used in recent years when making decisions or adopting policies regarding executive compensation for 2020 and subsequent years. However, given the significant disruptions caused by COVID-19 after the establishment of 2020 executive compensation goals, the Compensation Committee and management believed it was important to solicit additional shareholder insight related to executive compensation practices related to COVID-19, as described above.

COVID-19 Impacts on Shareholders, Employees, and Executives. Our Board and management team took immediate and decisive actions in response to COVID-19 to protect the interests of many stakeholder groups, including employees, shareholders, customers, suppliers, and our communities.

For those actions that related to or impacted compensation, our Compensation Committee’s philosophy was simple:

 

 

Ensure our shareholders’ value is preserved and our non-executive employees’ compensation is addressed first, with our executives’ compensation adjusted afterward;

 

 

Reasonably adjust executive compensation for the impacts of COVID-19 on our outstanding compensation programs in order to preserve our pay-for-performance philosophy, and design these adjustments to be more resilient to potential future COVID-19 impacts;

 

 

Reduce pay opportunities in light of the updated metrics and targets following the impacts of COVID-19; and

 

 

Transparently report the compensation program adjustments.

 

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Compensation Discussion and Analysis (continued)

 

 

We believe we have been successful in following those principles. The table below sets forth the short-term impacts of the COVID-19 pandemic on our shareholders, our employees and our executives, and the status of these effects at the end of 2020.

 

          SHORT-TERM IMPACTS        END-OF-YEAR IMPACTS

 

  INCREASING

  SHAREHOLDER

  VALUE

 

 

LOGO     

  

 

LOGO

  

 

Temporary stock price decline

  

 

LOGO

 

 

Stock price reached all-time highs in Q4 2020

 

  

 

LOGO

  

Stock price on March 18th closed at $33.55, down 64% from the December 31, 2019 close

 

  

 

LOGO

 

At December 31, 2020, stock closed at
$130.29, resulting in a 2018-2020 TSR of 49.6%

 

  

 

LOGO

  

Dividend suspended in March 2020


 

  

 

LOGO

 

On a relative basis, our TSR performed at the 89th percentile within our TSR peer group

 

  CARING FOR

  OUR

  EMPLOYEES

 

 

LOGO     

  

 

LOGO

  

Temporary lay-offs for workers in production facilities aligned with customer and government-mandated shutdowns

  

 

LOGO

 

Approved a program to provide financial recognition to approximately 15,000 employees (excluding NEOs and other officers)

 

  

 

LOGO

   Furloughs for salaried non-plant roles   

 

LOGO

 

Implemented previously-approved salary increases for salaried employees, effective September 1, 2020

 

  

 

LOGO

   Suspension of annual salary increases   

 

LOGO

 

Reinstated Aptiv’s retirement plan contributions for US, Ireland, and Mexico employees, effective January 1, 2021

 

  

 

LOGO

   Suspension of retirement plan contributions in the US, Ireland and Mexico   

 

LOGO

 

Shared Aptiv’s safety protocols with governments for adoption

 

  

 

LOGO

 

  

Implemented SAFE start protocols and contact tracing systems to keep our employees safe

 

  

 

LOGO

 

 

 

Provided PPE to our communities

 

 

         LOGO         

 

 

Following mitigation of impacts of COVID-19 on shareholders and employees, the

Compensation Committee adjusted incentive programs to restore their motivational impact

and preserve our pay-for-performance philosophy

 

 

 

         LOGO         

                     

 

  RETAINING AND   MOTIVATING OUR   EXECUTIVES

 

 

LOGO     

  

 

LOGO

  

Voluntary base salary reduction of 50% by the CEO and 10% by our senior officers

  

 

LOGO

  

 

Adjusted incentive awards to restore intended motivational and retentive value and preserve our pay-for-performance philosophy

 

  

 

LOGO

  

Short- and long-term performance compensation programs decreased significantly in retentive and motivational value across all three outstanding long-term performance cycles

 

  

 

LOGO

  

Reduced upside potential in the 2020 short-term incentive award cycle and in the 2019 and 2020 long-term incentive award cycles

 

     

 

LOGO

  

Capped payouts at target if relative TSR is below median for the 2019 and 2020 long-term incentive cycles

 

 

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Compensation Discussion and Analysis (continued)

 

 

Compensation Governance and Alignment with Shareholders

Aptiv’s executive compensation program is designed to attract, retain and motivate the leaders who drive the successful execution of our business strategies, which seek to balance achievement of targeted near-term results with building long-term shareholder value through sustained execution. Our focus on pay-for-performance and corporate governance aims to help ensure alignment with the interests of our shareholders, as highlighted below:

 

     

Pay for Performance

 

 

  More information  
on page

 

 

LOGO

  

90% of 2020 total target annual compensation for the CEO is at risk and 75% is granted in equity, while, on average, 81% of 2020 target annual compensation for the other NEOs is at risk and 63% is granted in equity.

 

 

 

33

 

LOGO

 

  

 

We target executive compensation to approximate a competitive range around the market median (50th percentile) and deliver compensation above or below this level as determined by performance.

 

 

 

34

 

LOGO

 

 

  

 

We use a structured goal-setting process for performance incentives, with multiple levels of review.

 

 

39

 

LOGO

 

 

  

 

NEOs’ annual incentives in typical years are based on achievement of Corporate, Segment and individual performance goals.

 

 

 

39

 

 

LOGO

 

 

  

 

75% of the NEOs’ long-term incentive compensation consists of performance-based RSUs, which deliver value based on achievement of financial and relative TSR goals. The value of the remaining 25% of the NEOs’ long-term incentive compensation is awarded in the form of time-based RSUs and fluctuates with Aptiv’s share price.

 

 

 

41

 

 

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We review and analyze our pay-for-performance alignment on an annual basis.

 

 

 

     

Compensation Governance

 

 

    More information    
on page

 

 

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We actively engage with our shareholders by conducting regular meetings with our major shareholders to discuss governance and executive compensation matters.

 

 

 

29

 

 

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We disclose our performance metrics.

 

 

 

37

 

 

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We maintain a reasonable severance practice with market appropriate post-employment provisions.

 

 

 

44

 

 

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We maintain stock ownership guidelines for our NEOs and directors.

 

 

 

45

 

 

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We maintain clawback, anti-hedging and anti-pledging policies.

 

 

 

45

 

 

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We offer no excise tax gross-ups or tax assistance unique to our NEOs.

 

 

 

46

 

 

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Our Compensation Committee utilizes an independent compensation consultant.

 

 

 

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Our compensation programs are designed to discourage imprudent risk.

 

 

 

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We devote focused time to leadership development and succession planning efforts.

 

 

 

 

 

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Our equity grant practices, including burn rate and dilution, are prudent.

 

 

 

 

 

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The Compensation Committee is provided tally sheets to assess total compensation for our NEOs.

 

 

 

 

 

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Compensation Discussion and Analysis (continued)

 

 

2020 Compensation Program Overview

Our Named Executive Officers

 

For fiscal year 2020, the NEOs were:

 

 

  Kevin P. Clark

 

 

President and Chief Executive Officer (“CEO”)

 

  Joseph R. Massaro

 

 

Chief Financial Officer (“CFO”) and Senior Vice President, Business Operations

 

  David Paja

 

 

Senior Vice President and President, Advanced Safety and User Experience Segment

 

  David M. Sherbin

 

 

Senior Vice President, General Counsel, Chief Compliance Officer and Secretary (Mr. Sherbin is retiring from Aptiv effective April 1, 2021.)

 

  Mariya K. Trickett

 

 

 

Senior Vice President and Chief Human Resources Officer

 

 

In September 2020, Mr. Massaro’s role expanded to include responsibility for global manufacturing and supply chain operations, and his title was updated in acknowledgement of this added role.

2020 Target Annual Total Direct Compensation Mix. Base salary and annual and long-term incentive award opportunities (all as more fully described below) are the elements of our NEOs’ total direct compensation. A majority of each NEO’s total direct compensation opportunity is comprised of performance-based pay, in line with the Committee’s compensation philosophy. Our annual incentive awards and the performance-based component of our long-term incentive

awards are considered performance-based pay, as the payout of these awards is dependent on the achievement of specified performance goals. The time-based portion of our RSU awards is retentive while also aligning with Company performance, as the final value realized is based on the Company’s share price.

The significant proportion of performance-based pay aligns the compensation interests of our NEO’s with those of Aptiv’s shareholders. The mix of compensation for our CEO and other NEOs on average in 2020, prior to the adjustments made to our executive compensation program in light of COVID-19 as described above, is shown below:

 

 

 

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Compensation Discussion and Analysis (continued)

 

 

2020 Target Compensation Structure. The following table depicts the initial 2020 target annual direct compensation opportunities for the NEOs. The amounts reflected in this table were determined by the Compensation Committee in January 2020, prior to the global spread of the COVID-19 pandemic and subsequent production shutdowns in China, North America and Europe during the first half of 2020. This table does not reflect the base salary reductions, deferrals of base salary increases, and reductions of target annual incentive plan awards that subsequently occurred during 2020 in light of COVID-19 and the resultant impacts on the Company. It also does not reflect the grant date fair value of the annual 2020 long-term incentive awards granted in February 2020, or the incremental accounting impact associated with adjustments made to the outstanding performance-based equity awards during 2020, each of which are discussed in further detail below in the “Supplemental Compensation Information and Reconciliation” section. Further, this table does not include information regarding changes in pension value and non-qualified deferred compensation earnings, or information regarding all other compensation, each of which are presented in the “2020 Summary Compensation Table.” As such, this table should not be viewed as a substitute for the “2020 Summary Compensation Table.”

 

  Name   

Base

Salary ($)(1)

     Annual Incentive
Target Award ($)
     Long-Term
Incentive Plan
Target Annual
Award ($)
     Total ($)  

 

  Kevin P. Clark

  

 

$

 

1,462,272

 

 

  

 

 

 

$2,193,408

 

 

  

 

$

 

11,000,000

 

 

  

 

$

 

14,655,680

 

 

  President and Chief Executive Officer            

 

  Joseph R. Massaro

  

 

 

 

935,000

 

 

  

 

 

 

935,000

 

 

  

 

 

 

3,700,000

 

 

  

 

 

 

5,570,000

 

 

  Chief Financial Officer and Senior Vice President, Business   Operations            

 

  David Paja(2)

  

 

 

 

649,666

 

 

  

 

 

 

552,216

 

 

  

 

 

 

2,200,000

 

 

  

 

 

 

3,401,882

 

 

  Senior Vice President and President, Advanced Safety and
  User Experience Segment
           

 

  David M. Sherbin

  

 

 

 

621,500

 

 

  

 

 

 

559,350

 

 

  

 

 

 

1,550,000

 

 

  

 

 

 

2,730,850

 

 

  Senior Vice President, General Counsel, Chief Compliance   Officer and Secretary            

 

  Mariya K. Trickett

  

 

 

 

550,000

 

 

  

 

 

 

467,500

 

 

  

 

 

 

1,500,000

 

 

  

 

 

 

2,517,500

 

 

  Senior Vice President and Chief Human Resources Officer                                    

 

(1)

Reflects base salary rates as of September 1, 2020, which were originally to be effective April 1, 2020. As described below, base salaries for the NEOs were reduced from April 2020 through August 2020 prior to the implementation of these base salary rates.

(2)

Mr. Paja is a German employee and his salary and bonus are paid in Euros. U.S. Dollar amounts in this Proxy Statement with respect to Mr. Paja have been converted from Euros at a rate of 1.14 Dollars to one Euro. The exchange rate used was calculated by averaging exchange rates for each calendar month in 2020.

 

General Philosophy in Establishing and Making Pay Decisions. Our executive compensation programs reflect our pay-for-performance philosophy and encourage executives to make sound decisions that drive short- and long-term shareholder value creation. The Compensation Committee utilizes a combination of fixed and variable pay elements in order to achieve the following objectives:

 

  Emphasize a pay-for-performance culture by linking incentive compensation to defined short- and long-term performance goals;
  Attract, retain and motivate key executives by providing competitive total compensation opportunities; and
  Align executive and investor interests by establishing market- and investor-relevant metrics that drive shareholder value creation.

Given the transformation of our Company, we seek talent across a broad range of industries, including technology, and

our goal for target total direct compensation (base salary, annual and long-term incentives) for our officers, including the NEOs, is to approximate a competitive range around the market median (50th percentile). Compensation for individual roles may be positioned higher or lower than the market median where we believe it is appropriate, considering multiple factors such as each executive’s role and responsibilities, labor market dynamics, the individual’s performance over time, and the experience and critical skills the individual may bring to his or her role with Aptiv.

2020 Peer Group Analysis. We use a group of peer companies to compare NEO compensation to market. The Compensation Committee reviews and determines the composition of our peer group on an annual basis, considering input from its independent compensation consultant and management.

 

 

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Compensation Discussion and Analysis (continued)

 

 

Aptiv’s 2020 peer group consisted of the following companies, whose aggregate profile was comparable to Aptiv in terms of size, industry, operating characteristics and competition for executive talent.

 

Amphenol Corporation

  

Illinois Tool Works, Inc.

Corning Incorporated

  

Johnson Controls International plc

Cummins Inc.

  

Lear Corporation

Eaton Corporation plc

  

Rockwell Automation, Inc.

Emerson Electric Co.

  

TE Connectivity Ltd.

Fortive Corporation

  

Textron Inc.

Honeywell International Inc.

  

Trane Technologies PLC

No changes were made to the 2019 peer group for 2020; however, Ingersoll-Rand plc was renamed Trane Technologies PLC.

In 2020, target total direct compensation among our NEOs, on average, was positioned within a competitive range of the peer group median identified above. We adjust compensation when we believe that there is a market or individual performance issue that should be addressed to preserve the best interests of the shareholders.

Elements of Executive Compensation. In line with our executive compensation philosophy, for 2020 we provided the following primary elements of compensation to our officers, including the NEOs:

 

  Base salary;
  Annual incentive award;
  Long-term incentive award; and
  Other compensation, such as participation by the NEOs in defined contribution retirement plans and benefits that are the same as those in which similarly situated non-officer employees may participate.

Additional, non-primary elements of executive compensation, such as payments related to life insurance, tax preparation, expatriate assignments or relocation, may be provided to NEOs from time to time. Any of these elements that were provided to NEOs in 2020 are reflected in the “All Other Compensation” column of the “2020 Summary Compensation Table”.

We regularly undertake a comprehensive review of our business plan to identify strategic initiatives that should be linked to executive compensation. We also assess and review the level of risk in our Company-wide compensation programs to ensure that they do not encourage imprudent risk-taking.

 

 

The following table outlines the primary elements of executive compensation for the NEOs for 2020 and indicates how these elements relate to our key strategic objectives:

 

  Element    Key Features    Relationship to Strategic Objectives

  Total Direct Compensation

 

  Annual Base Salary

  

 

•   Commensurate with job responsibilities, experience, and qualitative and quantitative company or individual performance factors

•   Reviewed on a periodic basis for competitiveness and individual performance

•   Targeted within competitive range of peer group

 

  

 

•   Attract and retain key executives by providing market-competitive fixed compensation

 

  Annual Incentive Plan

  Awards

  

 

•   Compensation Committee approves a target incentive pool for each performance period based on selected financial and/or operational metrics

•   Each executive is granted a target award opportunity based on level of responsibility and market competitiveness

•   Payouts in a typical year can range from 0% to 200% of target and are determined by achievement of financial goals based on pre-established objectives (at both the Corporate and, where applicable, Segment level), then may be adjusted to reflect individual performance achievement

 

  

 

•   Pay-for-performance

•   Align executive and shareholder interests

•   Motivate the pursuit of specific business goals that drive long-term value creation

•   SRM reflects ESG metrics related to talent, culture and diversity outcomes, and quality

•   Attract, retain and motivate key executives with market-competitive compensation opportunities

 

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Compensation Discussion and Analysis (continued)

 

 

  Element    Key Features    Relationship to Strategic Objectives
  

•   Strategic Results Modifier (“SRM”) provides for an adjustment to individual payout levels based on an assessment of performance against strategic qualitative factors reviewed and approved by the Compensation Committee at the beginning of each year

•   For information on how the 2020 program was modified from our typical design, see “Executive Summary” above

 

  

 

  Long-Term Incentive Plan

  Awards

  

 

•   Target award granted commensurate with job responsibilities, market competitiveness, experience, and qualitative and quantitative Company and individual performance factors

•   Grant RSU awards, 75% of which are earned based on Company performance metrics, including relative TSR, and 25% of which are time-based, which means that the value is determined by Aptiv’s share price

•   For information on how the 2018, 2019 and 2020 programs were modified from our typical design, see “Executive Summary” above

 

  

 

•   Pay-for-performance

•   Aligns executive and shareholder interests

•   Attract, retain and motivate key executives with market-competitive compensation opportunities

•   Utilizes multi-year vesting period and metrics aligned to long-term shareholder value creation including stock price performance

  Other Compensation

 

  Retirement Programs

  

 

•   Qualified defined contribution plan available to all U.S. salaried employees, including NEOs

•   Non-qualified defined contribution plan available to eligible U.S. employees, including NEOs, who exceed statutory limits under our qualified defined contribution plan

•   Non-qualified defined benefit plan that was frozen in 2008

•   For information on certain changes in effect during 2020 regarding these programs, see “COVID-19 Impacts on Shareholders, Employees, and Executives” above

 

  

 

•   Attract and retain key executives with market-competitive compensation opportunities

 

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Compensation Discussion and Analysis (continued)

 

 

Alignment of Incentive Plans. We have aligned our 2020 performance-based annual and long-term incentive plans for executives with metrics on which the Company and its shareholders evaluate performance. The impact of COVID-19 on the Company’s 2020 performance is illustrated in the below financial metrics. Although the COVID-19 pandemic and the resultant impacts on the Company’s industry led to overall declines in most financial metrics as compared to prior years, the Company was able to take decisive actions as the

COVID-19 pandemic emerged that positioned us to generate positive financial returns following the resumption of global vehicle production. The Company’s successful response to the COVID-19 pandemic was reflected in the total shareholder returns delivered over the past 3 years. We have considered adjustments to our 2020 performance-based annual and long-term incentive programs for executives based on these metrics:

 

 

 

Adjusted Net Income

(In Millions)

 

  

Cash Flow Before Financing

(In Millions)

 

LOGO    LOGO

 

 

Adjusted EBITDA

(In Millions)

 

  

Growth over Market

 

LOGO    LOGO

 

Total Shareholder Return

(2018 through 2020)

 

  

Return on Net Assets

 

LOGO         LOGO

 

*

The increase in return on net assets in 2020 is attributable to the $1.4 billion gain recognized on the formation of the Motional autonomous driving joint venture. Excluding the gain on the Motional joint venture, return on net assets was 14.0% in 2020, reflecting continued investments for revenue growth and profitability, as well as the impacts of the COVID-19 pandemic on the Company’s industry and operations.

 

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Compensation Discussion and Analysis (continued)

 

 

Metric Definitions

Adjusted EBITDA represents net income before depreciation and amortization (including asset impairments), interest expense, other income (expense), net, income tax (expense) benefit, equity income (loss), net of tax, restructuring and other special items.

Return on Net Assets is defined as tax-affected operating income [net income before interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, divided by average net working capital plus average net property, plant and equipment, measured each calendar year; not adjusted for restructuring expenses that are expected to provide future benefit to the Company.

Total Shareholder Return is measured by comparing the average closing price per share of the Company’s ordinary shares for all available trading days in December of the final year of the performance period to the average closing price per share of the Company’s ordinary shares for all available trading days in December of the year prior to the beginning of the performance period, including the reinvestment of dividends, relative to the companies in the Russell 3000 Auto Parts Index.

Adjusted Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon.

Cash Flow Before Financing represents cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, net of cash acquired.

Growth over Market represents the year-over-year change in net sales, excluding the impact on net sales from currency exchange, commodity movements and divestitures and other transactions, as compared to the year-over-year change in

global vehicle production weighted to the geographic regions in which the Company generates its revenue.

Appendix A contains a reconciliation of these numbers to U.S. GAAP financial measures.

2020 Annual Compensation Determination

Individual base salaries and annual incentive targets for the NEOs are established based on the scope of each NEO’s responsibilities, individual performance, experience and market pay data. At the beginning of each year, we also define key strategic objectives each NEO is expected to achieve during that year, which are then considered by the Compensation Committee when making final compensation determinations.

2020 Base Salaries. Base salary is intended to be commensurate with each NEO’s responsibilities, individual performance and experience. Our practice is to make periodic adjustments to base salary, although we review compensation competitiveness annually. In January 2020, the Compensation Committee approved NEO base salary adjustments of between 2.4% to 7%, dependent on the individual, which were originally to be effective April 1, 2020. Generally, these adjustments were intended to increase the competitiveness of salary and to reflect the Company’s and the individual’s performance. As part of the Company’s response to COVID-19, the CEO took a voluntary 50% reduction in base salary and the remaining NEOs took 10% voluntary reductions in base salary, effective April 1, 2020, and the previously-approved base salary increases were deferred. Subsequently, in response to the success of the Company’s efforts to mitigate the impacts of COVID-19, including putting the safety and welfare of its employees first as it restarted operations safely and effectively as well as ensuring zero customer disruptions, the Company reinstated the approved base salary increases for all affected employees, including NEOs, effective September 1, 2020. The following table summarizes the adjustments:

 

 

  Name    January 1,
2020 Base
Salary ($)
     Approved
Increase in
January
2020
(%)
    Approved
Base Salary-
Deferred to
September 1,
2020 ($)
    

Voluntary Salary
Reduction %

Effective April 1,
2020-August 31,
2020

  Actual 2020
Salary Paid
($)
 
  Kevin P. Clark    $ 1,428,000        2.4   $ 1,462,272      50%   $ 1,141,924  
  Joseph R. Massaro      874,000        7.0       935,000      10     857,917  
  David Paja      610,738        6.4       649,666      10     618,624  
  David M. Sherbin      607,000        2.4       621,500      10     586,542  
  Mariya K. Trickett      520,000        5.8       550,000      10     508,333  

 

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Compensation Discussion and Analysis (continued)

 

 

2020 Annual Incentive Plan Awards. Our Annual Incentive Plan is designed to motivate our NEOs to drive earnings, cash flow and profitable growth by measuring the NEOs’ performance against our goals at the Corporate and relevant Segment levels.

The Compensation Committee establishes the individual annual incentive target for each NEO at approximately the median of our peer group, but such target can be adjusted based on the NEO’s position, individual performance, and the size and scope of his or her responsibilities. As originally designed, final payouts based on the financial metrics described below can range from 0% to 200% of each NEO’s annual incentive target.

The Compensation Committee, working with management and its independent compensation consultant, sets the performance metrics and objectives for the preliminary annual incentive plan payout levels based on Aptiv’s annual business objectives. For 2020, each NEO’s award payout was originally designed to be determined as follows:

 

  Corporate performance metrics were to be weighted 100% for Messrs. Clark, Massaro and Sherbin and Ms. Trickett. For Mr. Paja, who is a Segment President, Corporate and Segment performance metrics were to be weighted 50% each;
  Individual performance was to be considered for adjustments to the final annual incentive payouts, based on individual performance and achievements; and
  Individual performance was also to be considered with respect to the Strategic Results Modifiers, as further discussed below.

For 2020, both Corporate and Segment performance objectives were initially based on the following metrics which were aligned with our business strategy:

 

  Net Income (“NI” — Corporate) and Operating Income (“OI” — Segment), which we believe are appropriate measurements of our underlying earnings and a representative indication of our overall financial performance;
  Cash Flow Before Financing (“CFBF” — Corporate) and Simplified Operating Cash Flow (“SOCF” — Segment), which are metrics for measuring cash generation; and
  Growth over Market (“GOM”), which measures the Company’s sales growth relative to the markets in which it operates.

The Compensation Committee initially selected the following weightings in 2020 for both Corporate and Segment performance metrics:

 

    Clark, Massaro,
Sherbin and Trickett
  Paja

  Weighting (%)

  Performance Metrics

  100%
Corporate
  50%
Segment
  50%
Corporate

NI (Corporate) or OI (Segment)(1)

  50%   50%   50%

CFBF (Corporate) and SOCF (Segment)(2)

  40       40       40

GOM

  10       10       10
In addition, discretionary adjustments could be applied based on qualitative factors and considerations(3)

 

(1)

Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon.

(2)

CFBF is cash flow before financing, which is defined as cash provided by (used in) operating activities plus cash provided by (used in) investing activities, adjusted for the purchase price of business acquisitions and other transactions, net of cash acquired. SOCF is defined, on a Segment basis, as earnings before interest, tax, depreciation and amortization (“EBITDA”), plus or minus changes in accounts receivable, inventory and accounts payable, less capital expenditures net of proceeds from asset dispositions, plus restructuring expense, less cash expenditures for restructuring.

(3)

May be applied, based on any of the Strategic Results Modifier factors (further described below), CEO discretion with Compensation Committee approval (approved by the full Board of Directors for the CEO), and/or consideration of individual performance goals/criteria established at the beginning of the year.

The NI / OI and CFBF / SOCF goals and the award payout levels related to the achievement of those goals were to be measured on a performance scale set by the Compensation Committee. Performance below the minimum threshold for a metric would result in no payout for that metric, and performance above the maximum level for a metric would be capped at a maximum total payout of 200% of the target with respect to that metric. For the NI / OI and CFBF / SOCF metrics the threshold, target and maximum payout levels were originally established at 50%, 100% and 200%, respectively. GOM was designed to be treated differently than the NI / OI and CFBF /SOCF metrics. If the GOM targets were achieved, the target payout for that metric was to be paid. If the GOM targets were not achieved, no amount was to be paid for the GOM portion of the award.

 

 

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Compensation Discussion and Analysis (continued)

 

 

The original 2020 performance goals by metric were:

 

  Category    NI / OI
($ in millions)
    

CFBF /

SOCF
($ in millions)

     GOM  

Corporate Metrics:

   $ 1,251      $ 955        5

Segment Metrics:

        

Advanced Safety and User Experience (Paja)

     450        263        6  

Strategic Results Modifier. As part of our focus on strategic priorities, the Strategic Results Modifier (“SRM”) is approved by the Compensation Committee at the beginning of each year as part of the Annual Incentive Plan design. The SRM can range, in the aggregate, from plus or minus 10% of the total Annual Incentive Plan target opportunity. The SRM allows the Compensation Committee to consider progress on or achievement of strategic priorities in addition to the financial metrics under the Annual Incentive Plan. The SRM is determined based on a qualitative performance assessment and recommendation by the CEO as to each other NEO’s achievement of SRM objectives, with final approval by the Compensation Committee. For 2020, the focus areas of the SRM were:

 

   Focus Areas    Corporate
Participants
   Segment
Participants

  Talent, culture and diversity

  outcomes

  

 

LOGO

  

 

LOGO

  Quality   

 

LOGO

  

 

LOGO

Outcomes of the SRM are discussed in the following section.

COVID-19 Related Adjustments to 2020 Annual Incentive Plan. In light of the global COVID-19 pandemic and the resulting impact on the Company’s industry and operations, in July 2020 the Compensation Committee revised certain components of the annual incentive plan to maintain focus on Aptiv’s performance through the remainder of the year (the “Updated Incentive Plan”). The Updated Incentive Plan revised the underlying metrics and reduced the annual incentive plan target opportunity. This plan, which moved from separate corporate- and segment-based metrics to one set of enterprise-wide goals, reflects Aptiv’s revised business objectives and corporate values in response to the COVID-19 pandemic.

The Compensation Committee approved the following adjustments as part of the Updated Incentive Plan:

 

  Set rigorous yet achievable performance goals in light of COVID-19 pandemic;
  Require funding of program to compensate salaried workforce first prior to any payout to executives under the Updated Incentive Plan;
  Establish Adjusted EBITDA and CFBF as the sole financial performance metrics, each equally weighted; and
  Reduce target opportunity to 50% of the participant’s original Annual Incentive Plan target (down from 100%), and reduce maximum opportunity to 65% of the participant’s original Annual Incentive Plan target (down from 200%).

As a prerequisite to funding payments under the Updated Incentive Plan, the Compensation Committee approved a program to provide financial recognition awards to salaried employees that were required to take unpaid time-off and participate in other cost reduction measures in early 2020, specifically excluding NEOs and other officers. This pre-requisite represented a non-financial performance goal for the Updated Incentive Plan.

The Updated Incentive Plan annual performance goals by metric for 2020 were:

 

   Performance Threshold   

Adjusted EBITDA

($ in millions)

    

CFBF

($ in millions)

 
  Threshold    $ 1,066      $ 36  
  Target      1,184        155  
  Maximum      1,303        273  

The original Annual Incentive Plan target goals were established to reflect our focus on growth over prior year actual outcomes and above market growth in the performance period. The Updated Incentive Plan target goals were established to reflect the Company’s financial performance in light of the global industry impacts that resulted from the COVID-19 pandemic.

Actual performance on both the Adjusted EBITDA goal and CFBF goal exceeded the maximum. Following a strong recovery in the second half of the year, and as reflected in the Company’s 2020 TSR, the Company achieved strong Adjusted EBITDA and CFBF results, leading to a maximum payout on both metrics. Due to the limits put in place in the Updated Incentive Plan, 2020 overall performance produced a calculated payout of 65% of the original award opportunity.

The SRM continued in effect for the Updated Incentive Plan. The Compensation Committee believed that in light of the events of 2020, a continued focus on talent, culture and diversity outcomes, as well as product quality, remained critically important for the success of our business. The Compen-

 

 

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sation Committee’s final determination was that, although the NEOs performed very strongly individually and as a group on the SRM metrics, in light of the impacts of the COVID-19 pandemic, they would not use the SRM to modify payouts under the Updated Incentive Plan.

In determining the final individual payouts, the Compensation Committee, in consultation with the CEO (except related to his own performance and payout), evaluated each eligible NEO’s qualitative performance in relation to the Company’s performance. Each NEO was also evaluated based on his or her individual achievements. In the evaluation, the Compensation Committee recognized the exceptional performance of our NEOs throughout this unprecedented year. The Compensation Committee elected not to make any SRM-related adjustments to payouts. For NEOs other than Mr. Paja, the Compensation Committee did not exercise discretion, and the financial performance under the Updated Incentive Plan determined final payouts. The Committee exercised downward discretion, from 65% of target to 55% of target, for Mr. Paja in relation to certain operational challenges of the Company’s Advanced Safety & User Experience segment. As a result of the considerations described above, the Compensation Committee approved the following 2020 annual incentive award payments for the NEOs:

 

   Name  

Annual
Incentive

Target
Award ($)

   

Annual
Incentive

Plan Actual
Payment for
2020 ($)(1)

   

Percent of
Target

Incentive (%)

 
  Kevin P. Clark   $ 2,193,408     $ 1,425,715       65
  Joseph R. Massaro     935,000       607,750       65  
  David Paja     552,216       303,940       55  
  David M. Sherbin     559,350       363,578       65  
  Mariya K. Trickett     467,500       303,875       65  

 

(1)

These award amounts are reported in the “Non-Equity Incentive Plan Compensation” column of the “2020 Summary Compensation Table”.

2020 Long-Term Compensation

Performance Metrics. Aptiv’s Long-Term Incentive Plan is designed to reward performance on long-term strategic metrics and to attract, retain and motivate participants. Aptiv’s incentive plans are aggressively performance-based, with 75% of the NEOs’ award consisting of performance-based RSUs, which deliver value if financial and relative TSR goals are met. The targets are aligned with Aptiv’s pay-for-performance culture, which align executive and investor interests. The remaining 25% are time-based RSUs and fluctuate with Aptiv’s share price.

The performance-based RSUs are settled after the results of a three-year performance period are determined. The time-based RSUs generally vest ratably over three years, beginning on the first anniversary of the grant date. The 2020

performance-based RSU grant vests at the end of 2022 and will be settled in early 2023 after the outcomes of the performance period are determined and approved. Under the original design of the performance-based RSU awards, each NEO could receive from 0% to 200% of his or her target performance-based RSU award, as determined by Aptiv’s performance against certain company-wide performance metrics. The metrics used in the 2020 performance-based RSU awards are similar to those used in recent years, however the weighting has been adjusted in an effort to increase alignment with shareholder interests. Specifically, the metrics are evenly weighted in the 2020 awards, whereas in previous years the Average RONA metric had been weighted at 50%. The metrics and weights used in the 2020 awards are:

 

  Metric    Weighting (%)

 

  Average Return on Net Assets (RONA)(1)

    

 

 

 

33.3

 

%

 

  Cumulative Net Income (NI)(2)

    

 

 

 

33.3

 

 

  Relative Total Shareholder Return (TSR)(3)

    

 

 

 

33.3

 

 

(1)

Average RONA is tax-affected operating income divided by average net working capital plus average net property, plant and equipment for each calendar year, as adjusted for incentive plan calculation purposes.

(2)

Cumulative Net Income represents net income attributable to Aptiv before restructuring and other special items, including the tax impact thereon.

(3)

Relative TSR is measured by comparing the average closing price per share of the Company’s ordinary shares for all available trading days in December of 2022 to the average closing price per share of the Company’s ordinary shares for all available trading days in December of 2019, including the reinvestment of dividends, relative to the companies in the Russell 3000 Auto Parts Index.

The Long-Term Incentive Plan allows for dividend equivalents to accrue on unvested RSUs; however, the dividend equivalents vest and pay out only if and to the extent that the underlying RSUs vest and pay out. As part of the Company’s response to COVID-19, dividends were suspended in March 2020; therefore, no dividend equivalents accrued after that date.

2020 Grants. The Compensation Committee established the following 2020 target long-term incentive awards for our NEOs (consisting of time-based RSUs and performance-based RSUs, as described above), in early 2020 prior to the adverse impacts of the COVID-19 pandemic, including production shutdowns in China, North America and Europe throughout the first half of 2020. These awards take into account scope of responsibilities, individual performance, retention considerations and market compensation data:

 

  Name    Long-Term
Incentive Plan
Target Annual
Award ($)
 
  Kevin P. Clark    $ 11,000,000  
  Joseph R. Massaro      3,700,000  
  David Paja      2,200,000  
  David M. Sherbin      1,550,000  
  Mariya K. Trickett      1,500,000  
 

 

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Compensation Discussion and Analysis (continued)

 

 

Adjustments to Performance-Based RSUs Granted in 2019 and 2020 Due to COVID-19 Impacts. In February 2019 and February 2020, the Compensation Committee granted long-term incentive awards to NEOs based on the Company’s business plans at each respective grant date.

Subsequent to the February 2020 grant, the COVID-19 pandemic severely impacted the global economy, our industry, and the Company’s financial results. As described in the “Executive Summary” section above, in response to these impacts and in consideration of the Company’s decisive and successful response to COVID-19, in December 2020, the Compensation Committee approved adjustments to the RONA and NI performance targets that were previously established for the performance awards granted in 2019 and 2020. These adjustments were made in order to take into consideration the impacts of the COVID-19 pandemic on the Company’s industry and operating environment, which impacts were deemed to be outside the control and influence of the management team.

In determining that such action was appropriate with respect to the Company’s outstanding long-term incentive award cycles, the Compensation Committee considered the following:

 

  Aptiv is committed to pay for performance, as reflected by the challenging year over year goals we set for ourselves;

 

  Aptiv’s long-term incentive program design for these awards is strongly weighted towards performance (with a 75% performance-based / 25% time-based mix, as compared to market practice where a 50% / 50% mix is typical);

 

  Our long-term incentive programs measure 3-year cumulative performance — as a result, the unforeseen and unprecedented COVID-19 impact on our business resulted in unachievable financial goals under all three active long-term incentive cycles;

 

  Over the past several years, Aptiv hired significant talent outside of the automotive industry to support our strategy to become a leading industrial technology company;

 

  The negative effect of significant reductions in long-term incentive opportunities for the next three years creates a significant pay competitiveness issue, which is not reflective of Aptiv’s relative performance;

 

  Company performance (operational and TSR) was strong as compared to the Company’s industry — 2018-2020 TSR performance of 49.6% was at the 89th percentile of our TSR peer group; and

 

  Despite significant near-term disruption in industry volumes, the Company delivered on its consistent high-single
 

digit growth over market target, resulting in three-year average growth over market of approximately 10%.

The Compensation Committee believes Aptiv’s long-term incentive programs are well designed with a strong emphasis on performance, and as such the Compensation Committee determined that an adjustment for the impact of COVID-19 to the 2019-2021 and 2020-2022 targets to reflect new market realities was appropriate and permitted by the terms of Aptiv’s Long-Term Incentive Plan. The Compensation Committee believes this change further serves to motivate, retain and incentivize our dedicated leaders whose collective efforts in 2020 positioned Aptiv to not only weather the storm, but emerge as a stronger company.

The Compensation Committee closely monitored the impact of COVID-19 throughout the year on the Company’s three outstanding long-term incentive award cycles. The Committee evaluated several alternatives and decided to exercise discretion under the Long-Term Incentive Plan on each of the three in-progress awards, as further described below. This determination was based on the Committee’s assessment that Aptiv’s incentive programs are well-aligned to our strategic and financial objectives, shareholder interests, and that the financial goals under these award cycles became unachievable due to the impacts of COVID-19. The adjustments made by the Compensation Committee were made based on the original intent at the time these awards were granted, while taking into consideration the unprecedented challenges and impacts of COVID-19.

Changes to the 2019 and 2020 performance-based RSU awards consist of:

 

  Reducing maximum payout opportunity—Lowering the maximum upside for these awards to 150% from 200%;

 

  Requiring “at or above market for above target”—Capping the 2019 and 2020 LTI payout at target unless Aptiv’s relative TSR is at or above the 50th percentile of the TSR peer group; and

 

  Adjusting goals on the financial metrics only—The financial targets were adjusted in consideration of the global impact of COVID-19 on the overall market, our industry, and Aptiv. The 2020, 2021, and 2022 financial goals have been adjusted to reflect new market conditions while remaining rigorous and challenging. The payout percentages and the range of performance versus target have not been changed. Also, the above added restrictions serve to mitigate the potential for windfall opportunities within the program.
 

 

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Compensation Discussion and Analysis (continued)

 

 

Adjustments and Payouts from Long-Term Compensation Granted in 2018

2018-2020 Performance-Based RSUs. The Compensation Committee also carefully assessed the performance awards granted in February 2018 for which vesting was originally based on achievement of 3-year cumulative financial results through December 31, 2020. Due to the same reasons described above related to the emergence of the COVID-19 pandemic and resultant impacts on the Company’s industry and operations in 2020, the Compensation Committee also made adjustments to the 2018 performance awards. In December 2020, the Compensation Committee determined that it was reasonable and appropriate to truncate the performance period for the 2018-2020 performance cycle to measure achievement of the financial results based on actual and estimated financial performance as of December 31,

2019. The goals for the truncated period for each of the Average Return on Net Assets (RONA) and Cumulative Net Income (NI) metrics were unchanged from those established at the time of the original grant. The relative TSR metric goals and performance period were also unchanged from the original grant.

In February 2021, we paid out the performance-based RSUs for the performance period. The following tables set forth: (1) the threshold, target and maximum levels, as well as the performance level achieved during the adjusted performance period; and (2) for each NEO, the target total number of performance-based RSUs and actual number of performance-based RSUs earned. Based on the achievement of the performance goals during the truncated period the earned award was 106% of the target opportunity.

 

 

  Metric

 

  

Weighting (%)

 

 

Threshold

 

 

Target

 

 

Maximum

 

 

Achievement

 

  Average Return on Net Assets (RONA)(1)(2)

    

 

50

%

   

 

27.9

%

   

 

31.2

%

   

 

34.5

%

   

 

30.1

%

  Cumulative NI(2)

    

 

25

   

$

3,826

   

$

4,276

   

$

4,726

   

$

3,911

  Relative Total Shareholder Return (TSR)

       25       30th%ile         50th%ile         90th%ile         89th%ile  

 

(1)

Average RONA is tax-affected adjusted operating income divided by average net working capital plus average net property, plant and equipment for each calendar year, as adjusted for incentive plan calculation purposes.

(2)

Achievement reflects actual performance achieved through December 31, 2019 as well as estimated performance for 2020 as of December 31, 2019.

Further, the Compensation Committee is permitted under the Company’s Long-Term Incentive Plan to make discretionary adjustments to payouts as the Compensation Committee deems appropriate. For the 2018-2020

performance period, the Compensation Committee considered the following factors when determining if and how discretion should be exercised:

 

 

  Positive Factors    Adverse Factors

Peer-leading 2018-2020 TSR performance of 49.6%, placing Aptiv at the 89th percentile of our TSR peer group

 

  

Financial performance fell short of original goals for 2018-2020 performance period

 

Strong executive team leadership and performance

 

  

Stakeholder impacts of cost reduction and cash conservation actions

 

Stakeholder care during COVID-19 pandemic

 

  

The impact of furloughs on employees

 

Commitment to Diversity, Talent and Culture, and Quality

 

    

 

Despite strong Company and leadership team performance and achieving a cumulative three-year TSR of 49.6% across the three-year cycle, the Compensation Committee decided to exercise additional negative discretion to reduce the payout

earned on the 2018-2020 long-term incentive awards to 95% of target.

As a result, the Compensation Committee approved the following 2018-2020 performance-based RSU award payouts.

 

 

     Performance-based RSUs
  Name(1)    Target Total Number of
Units Granted (#)
 

    Actual Total Number of    

Units Earned (#)(1)(2)

  Kevin P. Clark

       82,590       78,461

  Joseph R. Massaro

       20,648       19,616

  David Paja

       12,389       11,770

  David M. Sherbin

       11,976       11,378

  Mariya K. Trickett

       11,257       10,694

 

(1)

Includes accrued dividend equivalents. Dividends were suspended in March 2020 and no further dividend equivalents were accrued thereafter.

(2)

Absent the adjustments approved by the Compensation Committee, the total number of units earned would have been 49% of the target total number of units granted.

 

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Compensation Discussion and Analysis (continued)

 

 

Supplemental Compensation Information and Reconciliation

Required Disclosure regarding Accounting Impacts Significantly Inflates the Value of Stock Awards. As discussed above, in December 2020, the Compensation Committee approved adjustments to the RONA and NI performance targets that were previously established for the 2019-2021 and 2020-2022 long-term incentive awards. Although no additional incremental awards were granted as a result of these adjustments, in accordance with disclosure rules, the full modification date incremental value of the December 2020 adjustments is required to be disclosed and added in the 2020 Summary Compensation Table. This is in addition to disclosure of the full grant date fair value of the long-term incentive award granted in February 2020 as part of our typical annual compensation practice. In a typical year, only the grant date fair value of the 2020-2022 long-term incentive award would be reported in the 2020 Summary Compensation

Table. The impact of required disclosure of the modification date incremental value results in the presentation of an increase in year-over-year reported compensation for our executives. However, as stated above, no additional incremental awards were granted in 2020, and the modification date incremental value of the awards reflects only an approximation of the originally granted value for each of the respective grant years.

The following supplemental table demonstrates the value of stock awards, using the modification date fair value for the December 2020 adjustments made to the stock grants in 2020 and 2019, for our CEO. Absent the value of the modification on the stock awards, the value of the stock awards granted to Mr. Clark would have been $10,695,886, resulting in total compensation reported in the Summary Compensation Table of $13,460,707. With the modifications, the reported value of the stock awards was $28,502,508, resulting in reported total compensation of $31,267,329.

 

 

STOCK AWARD ACCOUNTING RECONCILIATION

 

      Original Grant Date
Fair Value of 2020
Grant(1)
     Accounting Impact of
December
Modification to
Original 2020 Grant
($130.79/share on
12/30)(2)
     Accounting Impact of
December Modification
to Original 2019 Grant
($130.79/share on
12/30)(3)
     Total “Stock Awards”
Reported in 2020
Summary
Compensation Table(4)
 
Kevin P. Clark    $ 10,695,886      $ 8,336,380      $ 9,470,242      $ 28,502,508  

 

(1)

Represents the grant date fair value of the February 2020 long-term incentive award that had a target value of $11 million.

(2)

Represents the incremental accounting impact on the 2020 long-term incentive award of the adjustments approved by the Compensation Committee in December 2020.

(3)

Represents the incremental accounting impact on the 2019 long-term incentive award of the adjustments approved by the Compensation Committee in December 2020.

(4)

Represents the total accounting impact of the 2020 grant, the 2020 grant adjustment and the 2019 grant adjustment. No additional awards were granted to Mr. Clark in 2020.

 

Other Compensation

Additional compensation and benefit programs available to our NEOs are described below. Only those benefits and policies offered to the other salaried employee populations are available to our NEOs.

Salaried Retirement Savings Program (“SRSP”). Along with other eligible U.S. Aptiv salaried employees and executives, our eligible NEOs participate in our broad-based and tax-qualified defined contribution plan, the SRSP, which is a qualified plan under Section 401(k) of the Internal Revenue Code (the “Code”). All contributions are subject to any contribution limits imposed by the Code. All Company contributions to the SRSP were suspended as of April 1, 2020 in response to COVID-19 and were restarted on January 1, 2021.

Salaried Retirement Equalization Savings Program (“SRESP”). Under the SRESP, eligible U.S. employees receive Aptiv contributions in excess of the limits imposed upon the SRSP by the Code. No guaranteed or above-market

rates are earned; the investment options available are a subset of those available to all employees under the SRSP. Additional details regarding benefits and payouts under this plan are provided in the “Non-Qualified Deferred Compensation” section. All Company contributions to the SRESP were suspended as of April 1, 2020 in response to COVID-19 and were restarted on January 1, 2021.

Supplemental Executive Retirement Program (“SERP”). The SERP was frozen (for purposes of credited service and compensation calculations) in 2008, as described further under the “Pension Benefits” section. Only Mr. Sherbin is eligible for the SERP.

Severance Plans. In 2017, we adopted the Aptiv PLC Executive Severance Plan (the “Severance Plan”) and the Aptiv PLC Executive Change in Control Severance Plan (the “Change in Control Plan”). The plans were adopted to provide severance protections to certain executives who are designated by the Compensation Committee as eligible to participate in each plan, including certain of the NEOs.

 

 

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Compensation Discussion and Analysis (continued)

 

 

For the eligible NEOs, the Severance Plan generally provides for severance benefits in the event of a “qualifying separation” (as defined in the Severance Plan to include a termination without “cause” or a resignation for “good reason”) of the NEO’s employment. Pursuant to the Severance Plan, an NEO who incurs a qualifying separation would be entitled to receive generally severance payments equal in the aggregate to a multiple of annual base salary (1.5X for officers with at least two years of service, and 1X for all other officers), unless and until the NEO is employed by another employer. The Severance Plan also provides a COBRA subsidy for a period of up to 18 months following a qualifying separation.

The Change in Control Plan generally provides for severance benefits in connection with a “qualifying separation” (as defined in the Change in Control Plan to include a termination without “cause” or a resignation for “good reason”) that occurs in connection with or within two years after a Change in Control (as defined in the Change in Control Plan). Pursuant to the Change in Control Plan, an NEO who incurs a qualifying separation would be entitled to receive generally a lump sum cash payment in an amount equal to the sum of (1) three times base salary in the case of the CEO and two times base salary in the case of an NEO other than the CEO, and (2) in the case of the CEO, three times the higher of the CEO’s target annual cash incentive award opportunity for the year in which the separation occurs or in effect immediately prior to the Change in Control (or in the case of an NEO other than the CEO, two times the higher of the NEO’s target annual cash incentive award opportunity for the year in which the separation occurs or in effect immediately prior to the Change in Control). In addition, an NEO who incurs a qualifying separation is also entitled to receive a lump sum payment representing the sum of 36 monthly COBRA premiums for the CEO and 24 monthly COBRA premiums for NEOs other than the CEO.

Benefits under the Severance Plan and the Change in Control Plan are generally subject to execution by the NEO of a general waiver and release of claims in favor of Aptiv.

Other Benefits. We provide additional benefits, such as relocation and expatriate benefits to our NEOs, when applicable, and in general, these benefits are the same as those provided to similarly situated non-officer employees. The primary expatriate benefits include housing allowance, transportation allowance and tax equalization in home and host country. Additional details are covered in the “2020 Summary Compensation Table”.

Compensation Governance Practices

Stock Ownership Guidelines. To support better alignment of our executives’ interests with those of our shareholders, Aptiv’s Board believes that our officers should maintain an appropriate level of equity interest in Aptiv. To that end, our Board has adopted the following stock ownership guidelines:

 

  Role    Guideline  

 

CEO

  

 

 

 

6x base salary

 

 

 

Most senior elected officers (generally, our other Section 16 officers, including all of our NEOs)

  

 

 

 

3x base salary

 

 

 

Elected Corporate staff officers

  

 

 

 

1x base salary

 

 

Our officers, including the NEOs, are expected to fulfill the ownership requirement within five years from the time they are appointed to their position. Until such time as the required holding is met, officers may not sell stock, subject to limited exceptions. Once the ownership requirement has been met, an officer may sell stock, provided, however, that the minimum ownership requirement must continue to be met. The Compensation Committee reviews the ownership level for covered executives each year. As of the 2020 measurement of ownership, all of our NEOs were at or above the applicable ownership requirement or on track to meet the applicable ownership requirement within five years of their start date.

Clawback. As a matter of policy, if our financial statements are materially misstated or in material noncompliance with any financial reporting requirement under securities laws, then the Compensation Committee will review the circumstances and determine if any participants should forfeit certain future awards or repay prior payouts. If the misstatement is due to fraud, then the participants responsible for the fraud will forfeit their rights to future awards and must repay any amounts they received from prior awards due to the fraudulent behavior. The Compensation Committee expects to update our clawback policy, as appropriate, to comply with the requirements for clawbacks under the final provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as implemented by the Securities and Exchange Commission and the New York Stock Exchange.

Restrictive Covenants. All executives, including the NEOs, are required to sign confidentiality and non-interference agreements in order to participate in the Long-Term Incentive Plan. The non-interference agreements include non-compete and non-solicitation covenants, which generally prohibit executives from:

 

  Working for a competitor or otherwise directly or indirectly engaging in competition with us for 12 months after leaving Aptiv;
 

 

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  Soliciting or hiring employees for 24 months after leaving Aptiv; and

 

  Soliciting customers for 24 months after leaving Aptiv.

If the terms of the confidentiality and non-interference agreements are violated, Aptiv has the right to cancel or rescind any final Long-Term Incentive Plan award, consistent with applicable law.

No Excise Tax Gross-Ups. We do not provide any excise tax gross-ups specific to our officer population. Certain expatriate policy and relocation provisions, applicable to all salaried employees, allow for tax gross-ups as reimbursement for additional taxes or expenses incurred due to expatriate status or relocation expenses.

No Hedging/No Pledging. The Company’s Insider Trading Policy prohibits its directors and employees from entering into transactions that “hedge” the value of Aptiv stock and from pledging Aptiv securities as collateral for a loan. The Company interprets this prohibition on hedging to extend to engaging in short-term or speculative transactions and from engaging in short sales or the use of prepaid variable forward contracts, equity swaps, collars and exchange funds. In addition, the Company’s Insider Trading Policy prohibits its directors and employees from trading in options (such as put and call options) on Aptiv stock and purchasing Aptiv securities on margin or holding Aptiv securities in a margin account. Further, directors and employees are encouraged to avoid frequent trading or speculating in Aptiv stock. The Company’s Insider Trading Policy is available on aptiv.com by clicking on the tab “Investors” and then the caption “Governance Documents” under the heading “Governance.”

Independent Compensation Consultant. The Compensation Committee retained Compensation Advisory Partners LLC (“CAP”) as its independent compensation consultant from 2012-mid 2020. In 2020, the Compensation Committee decided to review the executive compensation consultant services arrangement. After a competitive assessment and selection process, the Compensation Committee retained Semler Brossy Consulting Group (“Semler Brossy”) as its independent compensation consultant going forward. The scope of the work done by both CAP and Semler Brossy during 2020 for the Compensation Committee included the following:

 

  Providing analyses and recommendations that inform the Compensation Committee’s decisions;

 

  Preparing and evaluating market pay data and competitive position benchmarking;

 

  Assisting in the design and development of Aptiv’s executive compensation programs;

 

  Providing updates on market compensation trends and the
   

regulatory environment as they relate to executive compensation;

 

  Reviewing various management proposals presented to the Compensation Committee related to executive compensation; and

 

  Working with the Compensation Committee to validate and strengthen the pay-for-performance relationship and alignment with shareholders.

The Compensation Committee has assessed the independence of Semler Brossy (and, prior to Semler Brossy’s engagement, CAP) pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Semler Brossy or CAP from independently representing the Compensation Committee. Semler Brossy does not perform (and CAP did not perform) other services for the Company, and Semler Brossy will not do so without the prior consent of the Chair of the Compensation Committee. Semler Brossy meets (and CAP met) with the Compensation Committee Chair and the Compensation Committee outside the presence of management. In addition, Semler Brossy participates (and CAP previously participated) in all of the Compensation Committee’s meetings and, when requested by the Compensation Committee Chair, in the preparatory meetings and the executive sessions.

Compensation Risk Assessment. The Aptiv Executive Compensation team, with input from global HR team members, conducted a risk assessment of our compensation programs in January 2021 and concluded that our compensation policies, practices and programs do not create risks that are reasonably likely to have a material adverse effect on Aptiv. The compensation risk assessment included a review of our pay and incentive plan structures, pay practices and policies, and governance process, including the Compensation Committee’s oversight of such programs (supported by an independent consultant).

The Compensation Committee and Semler Brossy reviewed the 2021 assessment and discussed the report with management. The Compensation Committee agreed that our compensation policies, practices and programs do not create risks that are reasonably likely to have a material adverse effect on Aptiv. In doing so, the Compensation Committee also reaffirmed the following key risk mitigating factors with respect to our NEOs:

 

  Mix of fixed versus variable, cash versus equity-based and short- versus long-term compensation with an emphasis on equity-based pay;

 

 

Incentive award opportunities, with performance-based awards capped at approximately two times the target amount, that span both annual and overlapping, multi-year

 

 

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Compensation Discussion and Analysis (continued)

 

 

   

time periods and incorporate a broad range of financial metrics and TSR;

 

  Existence of a clawback policy; and
  Stock ownership guidelines, with retention requirements until the guideline is achieved, and the prohibition on hedging and pledging of Company stock.
 

 

COMPENSATION COMMITTEE REPORT

We, the undersigned members of the Compensation Committee, have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2020.

Respectfully submitted,

Rajiv L. Gupta, Chairman

Joseph L. Hooley

Paul M. Meister

Lawrence A. Zimmerman

 

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2020 SUMMARY COMPENSATION TABLE

 

The table below sets forth specified information regarding the compensation of the individuals who served for 2020 as President and Chief Executive Officer (Kevin P. Clark) and Chief Financial Officer and Senior Vice President, Business Operations (Joseph R. Massaro), and the next three most highly compensated executive officers who were serving as of December 31, 2020 (David Paja, David M. Sherbin and Mariya K. Trickett).

 

Name and Principal Position

 

 

Year

 

   

Salary

($)(1)(2)

 

   

Bonus

($)

 

   

Stock Awards
($)(3)

 

   

Non-Equity
Incentive  Plan
Compensation
($)(2)(4)

 

   

Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)(5)

 

   

All Other
Compensation
($)(6)

 

   

Total

($)

 

 
Kevin P. Clark     2020     $ 1,141,924     $     $ 28,502,508     $ 1,425,715     $     $ 197,182     $ 31,267,329  
President and Chief     2019       1,421,000             11,504,627       1,970,640             268,266       15,164,533  
Executive Officer     2018       1,375,000             10,643,793       1,827,000             277,310       14,123,103  
Joseph R. Massaro     2020       857,917             9,107,543       607,750         100,080       10,673,290  
Chief Financial Officer and     2019       865,625             3,287,098       917,780         116,654       5,187,157  
Senior Vice President,     2018       790,500             3,055,017       797,260             64,334       4,707,111  
Business Operations                
David Paja     2020       618,624             5,294,782       303,940             343,937       6,561,283  
Senior Vice President and     2019       594,217             1,807,948       444,351             289,611       3,136,127  
President, Advanced     2018       603,275             1,596,632       488,171             307,773       2,995,851  
Safety and User                
Experience Segment                
David M. Sherbin     2020       586,542             4,034,723       363,578       11,562       50,987       5,047,392  
Senior Vice President,     2019       604,000             1,643,591       502,596       7,266       87,020       2,844,473  
General Counsel, Chief     2018       595,000             1,740,428       465,885             96,766       2,898,079  
Compliance Officer and                
Secretary                
Mariya K. Trickett     2020       508,333             3,704,902       303,875             189,151       4,706,261  
Senior Vice President and     2019       515,000             1,780,353       408,300             274,933       2,978,586  
Chief Human Resources                
Officer                                                                

As noted in “2020 Annual Incentive Plan Awards” and “2020 Long-Term Compensation”, the Compensation Committee approved adjustments to the financial performance targets for the 2020 annual cash incentive awards and the performance-based RSU awards granted in 2019 and 2020 in order to mitigate the impacts of the COVID-19 pandemic that were deemed to be outside the control and influence of the management team. The amount shown in the “Stock Awards” column reflects the original grant date fair value, as well as the incremental accounting expense related to the adjustments to the outstanding performance-based RSU awards. See “Supplemental Compensation Information and Reconciliation” for more explanation of the nature and scope of the accounting impacts on our CEO’s compensation.

 

(1)

All of our NEOs voluntarily reduced their base salary for the period from April 2020 through August 2020. All NEOs deferred their approved base salary increases until September 1, 2020. See “2020 Annual Compensation Determination, 2020 Base Salaries.” Mr. Paja is a German employee. His salary, bonus and other non-equity compensation items are paid in Euros. U.S. Dollar amounts in this Proxy Statement with respect to Mr. Paja’s non-equity compensation have been converted from Euros at a rate of 1.14 Dollars to one Euro. The exchange rate used was calculated by averaging exchange rates for each calendar month in 2020.

(2)

Base salary and annual incentive awards are eligible for deferral under the SRESP. All of the NEOs, other than Mr. Paja, participated in the SRESP in 2020. Total base salaries and annual incentive awards, including the deferred portions, are presented in this 2020 Summary Compensation Table. Contributions to the SRESP are displayed in the “2020 Non-Qualified Deferred Compensation” section.

(3)

The award values reflected in the “Stock Awards” column are the grant date fair values of the NEOs’ respective long-term incentive awards determined in accordance with FASB ASC Topic 718. The 2020 grant date for accounting purposes for the annual award was set at February 28, 2020, as approved by the Board of Directors and the Compensation Committee. In addition, the Compensation Committee approved modifications to the 2019 and 2020 performance-based RSU grants on December 30, 2020. The incremental fair values associated with such modifications, as required under FASB ASC 718, are also included in the “Stock Awards” value for 2020. For assumptions used in determining the fair value of

 

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2020 Summary Compensation Table (continued)

 

 

  these awards, see Note 21. Share-Based Compensation to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The award values include the grant date fair value of 2020 performance-based RSUs based on target performance. Assuming maximum performance achievement under the terms of the original grant and based on grant date share price, for the NEOs’ performance-based RSUs granted in 2020, the values for such awards in the “Stock Awards” column would be $17,425,247 for Mr. Clark; $5,861,218 for Mr. Massaro; $3,485,112 for Mr. Paja; $2,455,388 for Mr. Sherbin; and $2,376,262 for Ms. Trickett.
(4)

The “Non-Equity Incentive Plan Compensation” column reflects payments made under our Annual Incentive Plan.

(5)

Mr. Sherbin was eligible to receive benefits under the SERP during 2020. No amount in this column represents above-market or preferential earnings on non-qualified deferred compensation. Although the SERP is a frozen program (see “2020 Pension Benefits” section) with fixed measurement parameters, the year-over-year balances change because his age and the interest rates used to estimate the pension liability change each year.

(6)

Amounts reported in the “All Other Compensation” column for 2020 reflect the following:

 

  Name

 

  

Aptiv

Contributions(a)

 

    

Life

Insurance(b)

 

    

Expatriate

Assignment(c)

 

    

Other(d)

 

    

Total

 

 
  Kevin P. Clark    $ 179,973      $ 2,988      $      $ 14,221      $ 197,182  
  Joseph R. Massaro      85,221        913               13,946        100,080  
  David Paja                    343,937               343,937  
  David M. Sherbin      49,076        1,911                      50,987  
  Mariya K. Trickett      38,947        243               149,961        189,151  

 

(a)

For NEOs other than Mr. Paja, this column reflects Aptiv’s contributions to both the qualified SRSP and the non-qualified SRESP. For all participants in the SRSP, Aptiv provides a contribution of 4% of base salary and annual incentive award payment. We also provide a matching contribution equal to 50% of the participant’s contributions to the program, up to a maximum of 7% of the participant’s base salary and annual incentive award. Aptiv contributions to the SRSP and SRESP were suspended as of April 1, 2020 in response to COVID-19. Additional details regarding the SRESP are provided in the “2020 Non-Qualified Deferred Compensation” section.

(b)

This column reflects the dollar value of the insurance premiums paid for each NEO for premium payments made regarding his or her life insurance policy.

(c)

Mr. Paja receives certain expatriate benefits. The payment represented in this column for Mr. Paja includes: housing of $64,980, healthcare of $23,346, Company-provided automobile of $40,144, education and language of $71,068 and tax equalization payments totaling $144,399 to tax authorities in Germany on Mr. Paja’s behalf, in connection with his expatriate benefits.

(d)

For Mr. Clark and Mr. Massaro, these amounts represent tax preparation expenses in connection with working in Ireland; and for Ms. Trickett, this amount represents relocation expenses of $149,961.

 

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2020 GRANTS OF PLAN-BASED AWARDS

 

The table below sets forth the threshold, target and maximum award payout opportunities (or full award opportunity, as applicable) for plan-based awards that were granted to our NEOs in 2020.

 

         

 

Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1)

   

 

Estimated Future Payouts Under
Equity Incentive Plan  Awards(2)

   

All Other
Stock
Awards:
Number of
Shares of
Stock or Units
(#)(3)

 

   

Grant Date
Fair Value of
Stock and
Option
Awards
($)(5)

 

 

  Name

 

 

Grant Date

 

   

Threshold
($)

 

   

Target

($)

 

   

Maximum

($)

 

   

Threshold
(#)

 

   

Target
(#)

 

   

Maximum
(#)

 

 

 

Kevin P. Clark

         

 

$

 

877,363

 

 

 

 

$

 

1,096,704

 

 

 

 

$

 

1,425,715

 

 

                                       
    2/28/2020                   31,870     $ 2,489,366  
    2/28/2020             66,926       95,608       191,216         8,206,520  
    12/30/2020 (4)            80,821       136,147       204,220         17,806,623  

 

Joseph R. Massaro

   

 

 

 

374,000

 

 

 

 

 

 

467,500

 

 

 

 

 

 

607,750

 

 

         
    2/28/2020                   10,720       837,339  
    2/28/2020             22,511       32,159       64,318         2,760,370  
    12/30/2020 (4)            25,352       42,127       63,191         5,509,834  

 

David Paja

   

 

 

 

220,886

 

 

 

 

 

 

276,108

 

 

 

 

 

 

358,940

 

 

         
    2/28/2020                   6,374       497,873  
    2/28/2020             13,385       19,122       38,244         1,641,338  
    12/30/2020 (4)            14,613       24,127       36,191         3,155,570  

 

David M. Sherbin

   

 

 

 

223,740

 

 

 

 

 

 

279,675

 

 

 

 

 

 

363,578

 

 

         
    2/28/2020                   4,491       350,792  
    2/28/2020             9,430       13,472       26,944         1,156,370  
    12/30/2020 (4)            11,459       19,325       28,988         2,527,560  

 

Mariya K. Trickett

   

 

 

 

187,000

 

 

 

 

 

 

233,750

 

 

 

 

 

 

303,875

 

 

         
    2/28/2020                   4,346       339,466  
    2/28/2020             9,127       13,038       26,076         1,119,118  
     

 

12/30/2020

 

(4)  

 

                           

 

10,326

 

 

 

   

 

17,175

 

 

 

   

 

25,763

 

 

 

           

 

2,246,318

 

 

 

As noted in “2020 Annual Incentive Plan Awards” and “2020 Long-Term Compensation”, the Compensation Committee approved adjustments to the financial performance targets for the 2020 annual cash incentive awards and the performance-based RSU awards granted in 2019 and 2020 in order to mitigate the impacts of the COVID-19 pandemic on the Company’s operating environment that were deemed to be outside the control and influence of the management team. The amount shown in the “Grant Date Fair Value of Stock and Option Awards” column for the awards dated 12/30/2020 reflect the incremental accounting expense related to the adjustments to performance-based RSU awards.

 

(1)

These columns show the threshold, target and maximum awards payable to our NEOs under the 2020 Updated Incentive Plan. The final award is determined by Corporate performance, as well as individual performance achievements, as determined by the Compensation Committee. The “target” and “maximum” amounts reflect the reduction to such opportunities in connection with the adjustment of 2020 annual incentive awards in July 2020.

(2)

These columns show the threshold, target and maximum number of RSUs possible under the performance-based RSUs granted in 2020 pursuant to our Long-Term Incentive Plan. The actual payouts will be based on three performance metrics (Average Return on Net Assets, Cumulative Net Income and relative TSR) during the performance period from January 1, 2020 through December 31, 2022. The “maximum” amounts shown for the original February 28, 2020 performance grant reflect the original maximum opportunities under these awards. However, in connection with the adjustment of such awards in December 2020, the maximum possible payout for each award was reduced to 150% of target.

(3)

This column shows the number of time-based RSUs granted to our NEOs in 2020 pursuant to our Long-Term Incentive Plan excluding dividend equivalents. These time-based RSUs generally vest ratably over three years on the first, second and third anniversary dates of the date of grant.

(4)

This award represents a modification to the existing 2019 and 2020 performance-based RSU awards. The total realizable opportunity has not increased for the 2019 or 2020 grants, and the maximum attainable number of shares has been reduced to 150% of the target shares.

(5)

This column reflects the original grant date fair value of each 2020 equity award, as well as the incremental fair value associated with the modifications to the 2019 and 2020 performance-based RSU awards approved in December 2020, in each case determined in accordance with FASB ASC Topic 718, For the original grant date fair values of performance-based RSU awards granted in 2020, the amount reflects the target outcome of the performance conditions, excluding the effect of estimated forfeitures. Except for the performance-based RSUs based on relative TSR (33.3%of the annual performance-based RSUs), the original grant date value for the 2020 equity awards was determined based on the grant date closing price of our stock on the New York Stock Exchange. If the grant is issued on a non-trading day, the grant date closing price was deemed to be the closing price of our stock on the last preceding date on which any reported sale occurred. The closing price of Aptiv shares on February 28, 2020 was $78.11. The grant date fair value for the relative TSR performance-based RSUs granted in 2020 was determined using a Monte Carlo simulation and was based on a price of $101.29 per share. The incremental fair value associated with the modification of the 2019 and 2020 performance-based RSU awards was determined as of the December 30, 2020 modification date. The closing price of Aptiv shares on December 30, 2020 was $130.79.

 

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2020 Grants of Plan-Based Awards (continued)

 

 

Our NEOs are parties to offer letters or employment agreements with Aptiv that generally describe the compensation and benefits initially provided to them upon employment. For more information about these arrangements, refer to “Potential Payments Upon Termination or Change in Control”. For more information about the NEOs’ relative mix of salary and other compensation elements in proportion to total compensation, refer to “2020 Compensation Program Overview — 2020 Target Annual Total Direct Compensation Mix”.

 

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2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

The values displayed in the table below reflect each Aptiv NEO’s outstanding long-term incentive awards as of December 31, 2020. The market values are calculated using a share price of $130.29, the December 31, 2020 closing price of our stock. The performance-based RSUs granted in 2019 and 2020, labeled with performance periods 1/1/2019-12/31/2021 and 1/1/2020-12/31/2022, are presented at the maximum level of performance.

 

     Stock Awards  

  Name

 

  

Restricted Stock Unit
Grant Date or
Performance Period(1)

 

 

Number of
Shares or Units
of Stock That
Have Not Vested
(#)(2)

 

    

Market Value of
Shares or
Units of
Stock That
Have Not Vested
($)(3)

 

    

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have
Not Vested
(#)(4),(5)

 

    

Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units
or Other Rights
That Have
Not Vested
($)(3)

 

 

 

Kevin P. Clark

  

 

2/28/2018

 

 

 

 

9,178

 

 

  

 

$

 

1,195,802

 

 

     
   2/28/2019     21,685        2,825,339        
   2/28/2020     31,870        4,152,342        
   1/1/2019-12/31/2021           146,370      $ 19,070,547  
  

 

1/1/2020-12/31/2022

       

 

 

 

143,412

 

 

  

 

 

 

18,685,149

 

 

 

Joseph R. Massaro

  

 

2/28/2018

 

 

 

 

2,295

 

 

  

 

 

 

299,016

 

 

     
   2/28/2019     6,197        807,407        
   2/28/2020     10,720        1,396,709        
   1/1/2019-12/31/2021           41,821        5,448,858  
  

 

1/1/2020-12/31/2022

       

 

 

 

48,239

 

 

  

 

 

 

6,285,059

 

 

 

David Paja

  

 

2/28/2018

 

 

 

 

1,378

 

 

  

 

 

 

179,450

 

 

     
   2/28/2019     3,409        444,159        
   2/28/2020     6,374        830,468        
   1/1/2019-12/31/2021           23,001        2,996,800  
   1/1/2020-12/31/2022           28,683        3,737,108  

 

David M. Sherbin

   2/28/2018     1,331        173,416        
   2/28/2019     3,100        403,899        
   2/28/2020     4,491        585,132        
   1/1/2019-12/31/2021           20,911        2,724,494  
  

 

1/1/2020-12/31/2022

       

 

 

 

20,208

 

 

  

 

 

 

2,632,900

 

 

 

Mariya K. Trickett

   10/15/2018     3,169        412,889        
   2/28/2019(6)     5,261        685,456        
   2/28/2019     2,542        331,197        
   2/28/2020     4,346        566,240        
   1/1/2019-12/31/2021           17,148        2,234,213  
     1/1/2020-12/31/2022                       19,557        2,548,082  

As noted in “2020 Long-Term Compensation”, the Compensation Committee approved adjustments to the financial performance targets for the performance-based RSU awards granted in 2019 and 2020 in order to mitigate the impacts of the COVID-19 pandemic that were deemed to be outside the control and influence of the management team.

 

(1)

To better understand the information in this table we included the time-based RSU award grant dates and the performance periods of our performance-based RSU awards. All unit amounts include dividend equivalents.

(2)

This column shows the unvested time-based RSU awards as of December 31, 2020, which generally vest ratably on each of the first, second and third anniversaries of the grant date.

(3)

The amount shown represents the market value of awards using a per share price of $130.29, the closing price of our stock on December 31, 2020.

(4)

Performance-based RSUs presented at maximum performance levels. Pursuant to adjustments approved by the Compensation Committee for the 2019-2021 and 2020-2022 performance period, maximum performance is capped at 150% of target.

(5)

Of the awards reflected in this column, the 2019-2021 performance-based RSUs will be settled in early 2022 after the results for the three-year performance period are determined and the 2020-2022 performance-based RSUs will be settled in early 2023 after the results for the three-year performance period are determined.

(6)

These RSUs vest in full on the second anniversary of the date of grant.

 

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2020 OPTION EXERCISES AND STOCK VESTED TABLE

 

The following table sets forth information regarding vested stock awards during 2020 for our NEOs. The value realized on vesting is based on the market price of the underlying shares on the date of vest.

 

     Stock Awards  
  Name   

Number of Shares

Acquired on Vesting

(#)(1)

      

Value Realized

on Vesting

($)(1)

 

 

  Kevin P. Clark

 

  

 

 

 

 

111,097

 

 

 

 

    

 

$

 

 

12,771,882

 

 

 

 

 

  Joseph R. Massaro

 

  

 

 

 

 

27,533

 

 

 

 

    

 

 

 

 

3,174,166

 

 

 

 

  David Paja

 

  

 

 

 

 

26,875

 

 

 

 

    

 

 

 

 

2,713,365

 

 

 

 

 

  David M. Sherbin

 

  

 

 

 

 

16,118

 

 

 

 

    

 

 

 

 

1,852,681

 

 

 

 

 

  Mariya K. Trickett

 

  

 

 

 

 

15,130

 

 

 

 

    

 

 

 

 

1,739,817

 

 

 

 

 

(1)

The shares and values listed in these columns include time-based RSUs that vested on February 28, 2020 and performance-based RSUs that were earned as of December 31, 2020, and settled on February 28, 2021.

 

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2020 PENSION BENEFITS

 

Mr. Sherbin is the only NEO eligible to receive benefits under the SERP.

The SERP is a supplemental executive defined benefit plan, which was frozen on September 30, 2008. As a result of the freeze, no new benefits have accrued and no new participants have been allowed to join the plan. This plan is a non-qualified and unfunded defined benefit plan that supplemented the benefits of an underlying qualified defined benefit pension plan assumed by the Pension Benefit Guaranty Corporation (the “PBGC”) in July 2009.

Eligibility

To qualify for participation in the SERP, eligible executives must meet both of the following requirements:

 

  The executive was appointed to an executive position at the former Delphi Corporation, as of September 30, 2008; and
  The executive was employed by Aptiv on October 6, 2009, upon the formation of Delphi Automotive LLP.

To receive benefits under the SERP:

 

  The executive must remain continuously employed by Aptiv until the earlier of separation, death or disability; and
  At the time of termination of employment, death or disability, the executive must have at least 10 years of service and be at least 55 years of age (unless the executive is involuntarily separated other than for cause or dies, in which event the eligible executive or the surviving spouse will begin receiving payment of benefits when the executive attains or would have attained age 55).

Service is credited as of December 31, 2006. The benefit will be paid out in the form of a five-year annuity.

Valuation Method and Assumptions

The actuarial present value of accumulated benefits for the SERP shown in the 2020 Pension Benefits table is based on benefits accrued as of September 30, 2008, the last day on which benefits were accumulated under the former Delphi Corporation’s qualified plan. The amounts reflect the method and assumptions used in calculating our pension liability under U.S. GAAP as of that date, except that each participant is assumed to remain actively employed until age 62.

The present value figures shown are estimates only; actual benefit amounts will be based on the age, interest rates, mortality rates and other circumstances in effect upon the actual termination of employment or death of the participant.

The following table sets forth information regarding benefits provided to and years of service credited to eligible NEOs under the SERP.

2020 Pension Benefits

 

Name(1)  

Plan

Name

   

Number of

Years

Credited

Service(#)(2)

   

Present

Value of

Accumulated

Benefit ($)

   

Payments

During Last

Fiscal Year

($)

 
Kevin P. Clark               $     $  
Joseph R. Massaro                        
David Paja                        
David M. Sherbin     SERP       1.3       52,085        
Mariya K. Trickett                        

 

(1)

Messrs. Clark, Massaro and Paja and Ms. Trickett joined Aptiv after the SERP was closed and frozen, and are therefore ineligible for benefits under the program.

(2)

Number of years of credited service is as of December 31, 2006 and includes service with the former Delphi Corporation. Mr. Sherbin had 15 actual years of service with Aptiv as of December 31, 2020. Mr. Sherbin was also subject to a two-year employment requirement, commencing in October 2009, which has been met.

 

 

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2020 NON-QUALIFIED DEFERRED COMPENSATION

 

The SRESP is a non-qualified deferred compensation program available to a limited number of employees, including the NEOs. Under the SRESP, participants receive Aptiv contributions in excess of the limits imposed upon the SRSP, our 401(k) plan, by the Internal Revenue Code.

Plan Benefits

Employees who were eligible for SRESP deferrals in 2020, including the NEOs other than Mr. Paja, were permitted to defer additional income above $285,000, which is the maximum income deferral level imposed upon the SRSP by the Internal Revenue Code in 2020, into a SRESP deferral account. They also received the following benefits through March 31, 2020, after which Aptiv contributions were suspended in response to COVID-19:

 

  All SRESP-eligible employees receive an Aptiv contribution of 4% of their base salary and annual incentive award. This contribution occurs even if the individual does not elect to make deferrals into the SRESP; and
  Eligible employees who made deferral contributions under the SRESP received an additional Aptiv matching contribution of 50% on the individual’s voluntary deferrals up to 7% of the base salary and annual incentive award over the qualified plan limit, which constitutes a maximum contribution by Aptiv of 3.5% of each eligible employee’s base salary.

Investment Options

Participants in the SRESP may select investment options for their deferred amounts. The investment options consist of

a small selection of index mutual funds and do not offer any guaranteed or above-market returns.

Deferral Election Process

The SRESP deferral election process is conducted prior to the year in which eligible income is earned. For the 2020 plan, deferral elections were required to be made by December 2019. During this process, eligible employees were allowed to make deferral elections related to their 2020 base salary and any annual incentive award based on 2020 performance that would be scheduled to be paid in 2021 (but no later than March 15, 2021).

Distributions

Eligible employees must also elect a distribution date for their deferred amounts. A base salary deferral must remain deferred for a minimum of one year, and any annual incentive deferral must remain deferred for a minimum of two years.

Vesting

All employee deferrals and Aptiv contributions are immediately vested.

The values displayed in the table below include contributions to the NEOs’ SRESP accounts by the NEOs and by Aptiv in 2020, as well as the aggregate balances of these accounts at the end of 2020.

 

 

2020 Non-Qualified Deferred Compensation Table

 

   Name     

Executive

Contributions

in Last FY ($)(1)

      

Registrant

Contributions

in

Last FY ($)(2)

      

Aggregate

Earnings in

Last FY ($)(3)

      

Aggregate

Withdrawals /
Distributions ($)(4)

      

Aggregate

Balance at

Last FYE ($)

 
  Kevin P. Clark        $202,969          $158,598        $ 370,527          $724,316        $ 2,613,767  
  Joseph R. Massaro        104,349          63,846          105,192          115,560          509,657  
  David Paja                                             
  David M. Sherbin        68,932          27,701          27,115          150,081          100,261  
  Mariya K. Trickett        44,214          18,998          8,141                   145,523  

 

(1)

All of our NEOs, except Mr. Paja who is not an eligible SRESP participant, elected to defer a portion of their salary and annual incentive awards as permitted under the SRESP. Each NEO’s total salary and annual incentive award, including these deferred amounts, is reported in the “2020 Summary Compensation Table”.

(2)

Our contributions to the NEOs’ SRESP accounts, along with contributions to the qualified SRSP, are disclosed in the “All Other Compensation” column in the “2020 Summary Compensation Table”.

(3)

Aggregate earnings represent change (including losses) in market value less any fee paid by the NEO, but none of these amounts are disclosed in the “2020 Summary Compensation Table”.

(4)

The withdrawals of our NEOs were made in accordance with the deferral election process described in this section.

 

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POTENTIAL PAYMENTS UPON

TERMINATION OR CHANGE IN CONTROL

 

Employment Arrangements

We have offer letters in place with all Aptiv NEOs. These offer letters describe our standard terms and conditions of employment and compensation and benefits provided to the individual. Mr. Clark’s offer letter also includes severance provisions, which provide for 18 months of base pay plus an amount equal to 1.5 times his annual incentive at target in the event he is terminated by the Company without cause.

Each executive who participates in the annual Long-Term Incentive Plan equity grant must sign a grant agreement, as well as a non-interference and confidentiality agreement, described above in the “Compensation Discussion and Analysis” section. The non-interference agreement includes both non-compete and non-solicitation covenants.

Annual Incentive Plan

In the event of a change in control, each executive’s annual incentive target award will be prorated for the time period between the plan start date and the effective change in control date. A payment will also be calculated for that time period based on actual performance and compared to the prorated target, with the executive receiving the larger of the two values. Payment of the award will be made by March 15 of the calendar year following the year in which a change in control occurs.

A change in control under the annual incentive plan occurs if any of the following events occur:

 

  A change in ownership or control of Aptiv resulting in any person or group other than Aptiv or a Aptiv employee benefit plan acquiring securities of Aptiv possessing more than 50% of the total combined voting power of Aptiv’s equity securities outstanding after such acquisition;
  The majority of the board as of the date of the initial public offering is replaced by persons whose election was not approved by a majority of the incumbent board; or
  The sale of all or substantially all of the assets of Aptiv, in one or a series of related transactions, to any person or group other than Aptiv.

If involuntarily terminated without “Cause” as defined below, each executive, including the NEOs, will also be eligible for a prorated portion of his or her annual incentive award, based on actual performance for the full performance period. The period used to determine the prorated award will be the beginning of the performance period to the individual’s termination date.

Long-Term Incentive Plan

An equity award must be outstanding for one year in order to receive any benefit at termination. Awards outstanding for less than one year will be forfeited upon termination. Upon a voluntary resignation from Aptiv (other than for good reason), including retirement, except as described below for Mr. Clark, any time-based RSUs that have not vested will be canceled. Upon a termination without cause, for good reason or due to death or disability, the time-based RSUs will be prorated over the period between the grant date and termination date. Any unvested pro-rata awards will be delivered at the next scheduled vesting date.

Upon a termination without cause, for good reason or due to retirement, death or disability, any outstanding performance-based RSUs will be prorated over the period between the grant date and termination date. The final performance payout will be determined based on actual performance at the end of the performance period and shares will be distributed at the time of the general distribution.

If an executive voluntarily departs (with the exception of the retirement and good reason provisions discussed above) or is terminated for cause, or in the event of any termination prior to the first anniversary of the grant date, all outstanding unvested equity awards will be canceled.

“Cause” is defined in the Long-Term Incentive Plan as:

 

  Indictment for a felony or for any other crime that has or could be reasonably expected to have an adverse impact on performance of duties to Aptiv or on the business or reputation of Aptiv;
  The NEO being the subject of any order regarding a fraudulent violation of securities laws;
  Conduct in connection with employment or service that is not taken in good faith and has resulted or could reasonably be expected to result in material injury to the business or reputation of Aptiv;
  Willful violation of Aptiv’s Code of Ethical Business Conduct or other material policies;
  Willful neglect in the performance of duties for Aptiv, or willful or repeated failure or refusal to perform these duties; or
  Material breach of any applicable employment agreement.

“Good Reason” is defined in the Long-Term Incentive Plan as:

 

  A material diminution in base salary;
 

 

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Table of Contents

 

2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

Potential Payments Upon Termination or Change in Control (continued)

 

 

  A material diminution in authority, duties or responsibilities from those in effect immediately prior to the change in control;
  Relocation of the NEO’s principal place of employment more than 50 miles from the location immediately prior to the change in control; or
  Any other action or inaction that is a material breach by Aptiv of the agreement under which the NEO provides services to us.

Upon a qualifying termination within two years after a change in control, or upon a change in control if a replacement award is not provided, outstanding unvested equity awards will vest as follows:

 

  Time-based RSUs will vest in full; and
  After a determination by the Compensation Committee of the Company’s performance at the time of the change in control, the number of performance-based RSUs that will vest will be equal to the greater of (a) the performance-based RSUs earned through the change in control date, or (b) 100% of the performance-based RSUs granted.

A replacement award is an award with respect to the stock of Aptiv or its successor that is at least equal in value to the outstanding award, is a publicly traded security and has no less favorable terms than the outstanding award. A qualifying termination after a change in control includes any termination by Aptiv without cause, or by the NEO for good reason, or due to death or disability.

Change in Control Plan

The Change in Control Plan generally provides for severance benefits in connection with a “qualifying separation” (as defined in the Change in Control Plan to include a termination without “cause” or a resignation for “good reason”) that

occurs in connection with or within two years after a Change in Control (as defined in the Change in Control Plan). Pursuant to the Change in Control Plan, an NEO who incurs a qualifying separation would be entitled to receive generally a lump sum cash payment in an amount equal to the sum of (1) three times base salary in the case of the CEO and two times base salary in the case of an NEO other than the CEO, and (2) in the case of the CEO, three times the higher of the CEO’s target annual cash incentive award opportunity for the year in which the separation occurs or in effect immediately prior to the Change in Control (or in the case of an NEO other than the CEO, two times the higher of the NEO’s target annual cash incentive award opportunity for the year in which the separation occurs or in effect immediately prior to the Change in Control). In addition, an NEO who incurs a qualifying separation is also entitled to receive a lump sum payment representing the sum of 36 monthly COBRA premiums for the CEO and 24 monthly COBRA premiums for NEOs other than the CEO.

Severance Plan

For the eligible NEOs, the Severance Plan generally provides for severance benefits in the event of a “qualifying separation” (as defined in the Severance Plan to include a termination without “cause” or a resignation for “good reason”) of the NEO’s employment. Pursuant to the Severance Plan, an NEO who incurs a qualifying separation would be entitled to receive generally severance payments equal in the aggregate to a multiple of annual base salary (1.5X for officers with at least two years of service, and 1X for all other officers), unless and until the NEO is employed by another employer. The Severance Plan also provides to eligible U.S. employees a COBRA subsidy for a period of up to 18 months following a qualifying separation.

 

 

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Table of Contents

 

2021 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT   

 

Potential Payments Upon Termination or Change in Control (continued)

 

 

Potential Payments upon Termination or Change in Control Table

 

         Termination Scenario  
  Name    Component   Voluntary
Resignation /
Retirement
(If Eligible)(5)(6)
    Involuntary
(Not For
Cause) or For
Good Reason
    Involuntary
(For
Cause)
   

Change in
Control

and Termination

    Death/Disability  

 

  Kevin P. Clark

  

 

Cash Severance(1)

 

 

$

 

 

 

 

 

$

 

5,483,520

 

 

 

 

$

 

 

 

 

 

$

 

10,967,040

 

 

 

 

$

 

 

 

   Annual Incentive Plan(2)     1,425,715       1,425,715             1,425,715       1,425,715  
   Long-Term Incentives — Time-Based Restricted Stock Units(3)(4)           2,173,889             8,173,483       2,173,889  
   Long-Term Incentives — Performance- Based Restricted Stock Units(3)(4)     18,987,162       18,987,162             35,931,116       18,987,162  
   Benefits Continuation           22,940             57,687        
  

Total

 

   

 

20,412,877

 

 

 

   

 

28,093,226

 

 

 

   

 

 

 

 

   

 

56,555,041

 

 

 

   

 

22,586,766

 

 

 

 

  Joseph R. Massaro

  

 

Cash Severance(1)