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Section 1: PRE 14A (PRE 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.     )
Filed by the Registrant  ý                              Filed by a Party other than the Registrant  _
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Preliminary Proxy Statement
 
 
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
 
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Definitive Proxy Statement
 
 
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Definitive Additional Materials
 
 
_
 
Soliciting Material Pursuant to §240.14a-12
BWX TECHNOLOGIES, INC.
(Name of registrant as specified in its charter) 
(Name of person(s) filing proxy statement, if other than the registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 
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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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397136523_image6.jpg
800 Main Street, 4th Floor
Lynchburg, Virginia 24504
March [•], 2019
Dear Stockholder:
You are cordially invited to attend the 2019 Annual Meeting of Stockholders of BWX Technologies, Inc. (the "Annual Meeting"), which will be held on Tuesday, May 14, 2019, at The Virginian Hotel, Eleanor Rose Room, 712 Church Street, Lynchburg, Virginia 24504, commencing at 9:30 a.m. Eastern Time. The Notice of Annual Meeting and Proxy Statement following this letter describe the matters to be acted on at the meeting.
As a demonstration of our commitment to transparency and good corporate governance practices, we have continued our practice of engaging directly with our stockholders over the past year to discuss matters of interest. We value the feedback we received from our stockholders in recent years, and it has informed our decisions on executive compensation.
We are utilizing the Securities and Exchange Commission’s Notice and Access proxy rule, which allows us to furnish proxy materials to you via the Internet as an alternative to the traditional approach of mailing a printed set to each stockholder. In accordance with these rules, we have sent a Notice of Internet Availability of Proxy Materials (the "Notice") to all stockholders who have not previously elected to receive a printed set of proxy materials. The Notice contains instructions on how to access our 2019 Proxy Statement and 2018 Annual Report, as well as how to vote either online, by telephone or in person for the Annual Meeting.
It is very important that your shares are represented and voted at the Annual Meeting. Please vote your shares by Internet or telephone, or, if you received a printed set of materials by mail, by returning the accompanying proxy card, as soon as possible to ensure that your shares are voted at the meeting. Further instructions on how to vote your shares can be found in our Proxy Statement.
Thank you for your support of our company.

Sincerely yours,
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Rex D. Geveden
President & Chief Executive Officer








YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend the Annual Meeting, please take a few minutes now to vote your shares.




Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on May 14, 2019.

The proxy statement and annual report are available on the Internet at www.proxyvote.com.
The following information applicable to the Annual Meeting may be found in the proxy statement and the Notice or proxy card, as applicable:
the date, time and location of the meeting;
a list of the matters intended to be acted on and our recommendations regarding those matters;
any control/identification numbers that you need to access your proxy card and submit your proxy; and
information about attending the meeting and voting in person.




BWX TECHNOLOGIES, INC.
800 Main Street, 4th Floor
Lynchburg, Virginia 24504
____________________________________________________ 
Notice of 2019 Annual Meeting of Stockholders
____________________________________________________ 
The 2019 Annual Meeting of Stockholders of BWX Technologies, Inc. (the "Annual Meeting"), will be held at The Virginian Hotel, Eleanor Rose Room, 712 Church Street, Lynchburg, Virginia 24504, on Tuesday, May 14, 2019, at 9:30 a.m. Eastern Time, in order to:
(1)
elect John A. Fees and Robb A. LeMasters as Class III directors of our Board of Directors;
(2)
amend the BWX Technologies, Inc. Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors;
(3)
hold an advisory vote on the compensation of our named executive officers;
(4)
ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2019; and
(5)
transact such other business as may properly come before the Annual Meeting or any adjournment thereof.
If you were a stockholder of record as of the close of business on March 20, 2019, you are entitled to vote at the Annual Meeting and at any adjournment thereof.
Instead of mailing a printed copy of our proxy materials, including our 2018 Annual Report, to each stockholder of record, we are providing access to these materials via the Internet. This reduces the amount of paper necessary to produce these materials, as well as the costs associated with mailing these materials to all stockholders. Accordingly, on March [•], 2019, we mailed the Notice of Internet Availability of Proxy Materials (the “Notice”), or our proxy statement if you previously elected to receive a printed copy of the materials, to all stockholders of record as of March 20, 2019 and posted our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all stockholders may choose to access our proxy materials on the website referred to in the Notice or may request a printed set of our proxy materials. The Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
If you previously elected to receive a printed copy of the materials, we have enclosed a copy of our 2018 Annual Report to Stockholders with this notice and proxy statement.
Your vote is important. Please submit your proxy promptly so your shares can be represented and voted at the Annual Meeting, even if you plan to attend the Annual Meeting. You can submit a proxy by Internet, by telephone or by requesting a printed copy of the proxy materials and using the enclosed proxy card. You can also vote in person at the Annual Meeting.
By Order of the Board of Directors,
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Thomas E. McCabe
Senior Vice President, General Counsel,
Chief Compliance Officer and Secretary
March [•], 2019



 
 




TABLE OF CONTENTS
 
Page
i
 
 
 
 
 
 
 
 
 
 
PROPOSAL 2: AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO DECLASSIFY BOARD OF DIRECTORS AND PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Table of Contents
2019 PROXY STATEMENT SUMMARY
 

2019 PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this 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 STOCKHOLDERS 
Time and Date
  
May 14, 2019, 9:30 a.m. Eastern Time
 
 
Place
  
The Virginian Hotel
Eleanor Rose Room
712 Church Street
Lynchburg, Virginia 24504
 
 
Record Date
  
March 20, 2019
 
 
Voting
  
Stockholders as of the record date are entitled to vote. Each share of our common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.
 
 
Attendance
  
All stockholders as of the record date and their duly appointed proxies may attend the meeting.
CORPORATE GOVERNANCE
Supermajority of Independent Directors (9 of 11 directors)
82
%
10 Year Director Tenure Limit
Yes

Annual Election of Directors
No*

Majority Voting of Directors
Yes

Separate Chairman and CEO
Yes

Lead Independent Director
Yes

Aggregate Number of Board and Committee Meetings in 2018
28

Executive Sessions of Independent Directors
Yes

Committees Comprised Solely of Independent Directors
Yes

Committees Authorized to Engage Independent Advisors
Yes

Shareholder Rights Plan (“Poison Pill”)
No

Employment Agreements with Named Executive Officers
No

Change in Control Tax Gross Ups
No

Clawback Policy
Yes

Stock Ownership Guidelines
Yes

No Hedging or Pledging Policy
Yes

*
See Declassified Board below.
Declassified Board. Our Board of Directors approved the submission of an amendment of the Company's Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors. Subject to the approval of stockholders at the Annual Meeting, the Company will begin electing directors for one-year terms at the annual meeting of stockholders for 2020, and all directors annually by the annual meeting of stockholders for 2022. See Proposal 2 for additional information.
Majority Vote for Director Elections. In March 2019, our Board of Directors amended the Company's Amended and Restated Bylaws to provide for majority voting for uncontested director elections. This change provides for submission of conditional resignation letters by directors nominated for election to the Board of Directors in the event that they do not receive a majority of the votes cast for his or her election. See Vote Required — Proposal 1: Election of Directors.

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Table of Contents
 
2019 PROXY STATEMENT SUMMARY


2018 HIGHLIGHTS
Consolidated revenue was up 6.6% to $1.8 billion compared to the prior year.
GAAP and Non-GAAP operating income increased 4.4% and 7.1%, respectively, compared to the prior year.
GAAP and Non-GAAP earnings per share were $2.27 and $2.39, an increase of 54.4% and 16.6%, respectively, compared to the prior year.
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* Please refer to Appendix A, "Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results," for a reconciliation of adjusted results, including adjusted operating income and adjusted earnings per share, to reported results for 2017 and 2018.
In July 2018, we completed the acquisition of the Nordion medical radioisotope business, a leading global manufacturer and supplier of critical medical radioisotopes and radiopharmaceuticals for research, diagnostic and therapeutic use. This business will be the platform from which we plan to launch our Molybdenum-99 product line, as well as future radioisotope-based imaging and therapeutic products.
In August 2018, we appointed Gerhard F. Burbach to the Board of Directors. Mr. Burbach has significant medical industry experience to provide guidance as we develop our radioisotope business.
In 2018, we returned $279 million to stockholders through $64 million of dividends and $215 million of share repurchases.
TOTAL STOCKHOLDER RETURN
The following graph depicts the cumulative total stockholder return of BWXT for the three and five years ended December 31, 2018 relative to those of the S&P 500 Index, the S&P Aerospace and Defense Select Index ("S&P A&D Select") and our custom compensation peer group for 2018. See Section 4: Other Benefits and Practices in Compensation Discussion and Analysis for information on our peer group.
Three-Year and Five-Year Total Shareholder Return as of December 31, 2018(1) 
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(1)
Measured by dividing (i) the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the applicable share price at the end and the beginning of the measurement period by (ii) the share price at the beginning of the measurement period. Results for the compensation peer group do not include Orbital ATK, Inc. and KLX Inc., which were acquired in June 2018 and October 2018, respectively.

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Table of Contents
2019 PROXY STATEMENT SUMMARY
 

ANNUAL MEETING AGENDA 
Proposal
Board  Vote
Recommendation
Page  Reference
1
Election of two Class III directors
FOR   EACH NOMINEE
2
Amendment of the Company's Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors
FOR

3
Advisory vote on the compensation of our named executive officers
FOR
4
Ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019
FOR
VOTING MATTERS
Your vote is important. Please submit your proxy promptly so your shares can be represented and voted, even if you plan to attend the 2019 Annual Meeting of Stockholders (the "Annual Meeting"). You may submit a proxy to have your shares voted via the Internet at www.proxyvote.com or via telephone at 1-800-690-6903; by requesting a printed copy of the proxy materials and using the enclosed proxy card; or by voting your shares in person at the Annual Meeting.
 
PROPOSAL 1: ELECTION OF DIRECTOR NOMINEES
The Board of Directors has nominated two Class III directors to serve a three-year term expiring in 2022. The following table provides summary information about each director nominee. 
Director Nominee
 
Age
 
Director
Since
 
Principal Occupation
 
Committee(s)
John A. Fees
 
61
 
2010
 
•  Non-Executive Chairman since May 2018 (and from July 2010 to June 2015)
•  Former Executive Chairman from July 2015 to May 2018
•  Former Chief Executive Officer of McDermott, our former parent company
 
•  None
Robb A. LeMasters
 
41
 
2015
 
•  Managing Director, Blue Harbour, L.P.
•  Former Founding Partner, Theleme Partners
•  Former Partner, The Children's Investment Fund (TCI)
 
•  Audit and Finance
•  Compensation

Our Board of Directors has determined that Mr. LeMasters is independent.
Our Board of Directors has adopted majority voting for director elections. Approval of this proposal requires the affirmative vote of a majority of our shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. In a contested election, director nominees are elected by a plurality of the votes cast by the shares of our common stock entitled to vote in the election of directors.
Our Board recommends that you vote FOR each of the director nominees.

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2019 PROXY STATEMENT SUMMARY


PROPOSAL 2: AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS AND PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS
After careful consideration, the Board has determined that it is in the best interests of the Company and its stockholders to amend our Restated Certificate of Incorporation to provide for the phased-in declassification of the Board and the annual election of all directors. If this proposal is approved, our Restated Certificate of Incorporation would be amended to provide that:
Class I directors stand for election for a one-year term at our 2020 annual meeting;
Class I and Class II directors stand for election for a one-year term at our 2021 annual meeting; and
our entire Board stands for election for a one-year term at our 2022 annual meeting and thereafter.
Approval of this proposal requires the affirmative vote of at least 80% of our shares of common stock outstanding and entitled to vote generally in the election of directors.
Our Board recommends that you vote FOR the amendment of the Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors.

PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
We hold an annual stockholder vote on executive compensation and are asking our stockholders to approve an advisory resolution for 2018 compensation. At the 2018 Annual Meeting of Stockholders, we received the support of our stockholders with over 97% of the votes cast in favor of our executive compensation program. We encourage stockholders to read the Compensation Discussion and Analysis section of this proxy statement, which provides a review of our compensation philosophy and how that philosophy was implemented in 2018. We believe that our executive compensation is reasonable and provides appropriate incentives to our executives to achieve results that we expect to drive stockholder value without encouraging excessive risk taking in business decisions.
Approval of this proposal requires the affirmative vote of a majority of our shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal.
Our Board recommends that you vote FOR the compensation of our Named Executive Officers on an advisory basis.

PROPOSAL 4: RATIFICATION OF AUDITORS
Our Board of Directors has ratified the decision of the Audit and Finance Committee to appoint Deloitte & Touche LLP (“Deloitte”) to serve as the independent registered public accounting firm to audit our financial statements for the year ending December 31, 2019. We are asking our stockholders to ratify this appointment. Below is summary information of Deloitte’s fees for fiscal years 2018 and 2017 services.
Service
 
2018
 
 
2017
 
Audit
 
$
2,699,000

 
 
$
2,636,000

 
Audit-Related
 
80,000

 
 

 
Tax
 
75,000

 
 
40,400

 
All Other
 
2,695

 
 
2,695

 
Total
 
$
2,856,695

 
 
$
2,679,095

 
Approval of this proposal requires the affirmative vote of a majority of the votes cast on this proposal.
Our Board recommends that you vote FOR the ratification of Deloitte as our independent registered public accounting firm for the year ending December 31, 2019.



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Table of Contents
GENERAL INFORMATION

 

BWX TECHNOLOGIES, INC.
800 Main Street, 4th Floor
Lynchburg, Virginia 24504
Proxy Statement for the 2019 Annual Meeting of Stockholders
to be held on May 14, 2019

GENERAL INFORMATION
The Board of Directors (the "Board") of BWX Technologies, Inc. ("BWXT," the "Company," "we" or "us") has made these materials available to you over the Internet or, upon your request, has mailed you a printed version of these materials in connection with our 2019 Annual Meeting of Stockholders (the "Annual Meeting"), which will take place on May 14, 2019. We mailed the Notice of the Annual Meeting (or Proxy Statement if you requested a hard copy) to our stockholders on or about March [•], 2019, and our proxy materials were posted on the website referenced in the Notice on that same date.
We have sent or provided access to the materials to you because our Board is soliciting your proxy to vote your shares at our Annual Meeting. We will bear all expenses incurred in connection with this proxy solicitation. We have engaged Alliance Advisors to assist in the solicitation for a fee of $24,500. In addition, our officers and employees may solicit your proxy by telephone, facsimile transmission, electronic mail or in person, and they will not be separately compensated for such services. We solicit proxies to give all stockholders an opportunity to vote on matters that will be presented at the Annual Meeting. In this proxy statement, you will find information on these matters, which is provided to assist you in voting your shares. If your shares are held through a broker or other nominee (i.e., in "street name") and you have requested printed versions of these materials, we have requested that your broker or nominee forward this proxy statement to you and obtain your voting instructions, for which we will reimburse them for reasonable out-of-pocket expenses. If your shares are held through the Thrift Plan for Employees of BWXT and Participating Subsidiary and Affiliated Companies (our "Thrift Plan”) and you have requested printed versions of these materials, the trustee of that plan has sent you this proxy statement and you should instruct the trustee on how to vote your Thrift Plan shares.
VOTING INFORMATION
RECORD DATE AND WHO MAY VOTE
Our Board selected March 20, 2019 as the record date for determining stockholders of record entitled to vote at the Annual Meeting. This means that if you were a registered stockholder with our transfer agent and registrar, Computershare Trust Company, N.A., on the record date, you may vote your shares on the matters to be considered at the Annual Meeting. If your shares were held in street name on that date, you should refer to the instructions provided by your broker or nominee for further information. They are seeking your instructions on how you want your shares voted. Brokers holding shares in street name can vote those shares on routine matters if the beneficial owner has not provided voting instructions at least 10 days before the Annual Meeting. Under the rules of the New York Stock Exchange, the election of Class III directors, the amendment of the Company's Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors, and the advisory vote on compensation of our named executive officers are not considered routine matters, which means that brokers may not vote your shares for such matters if you have not given your broker specific instructions as to how to vote and your shares will not be represented in those matters. Please be sure to give specific voting instructions to your broker.
On the record date, [•] shares of our common stock were outstanding. Each outstanding share of common stock entitles its holder to one vote on each matter to be acted on at the meeting.
HOW TO VOTE
Most stockholders can vote by proxy in three ways:
by Internet at www.proxyvote.com;
by telephone; or
by mail.

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Table of Contents
VOTING INFORMATION
 

Stockholder of Record
If you are a stockholder of record, you can vote your shares by voting by Internet, telephone, mailing in your proxy or in person at the Annual Meeting. You may give us your proxy by following the instructions included in the Notice or, if you received a printed version of these proxy materials, in the enclosed proxy card. If you want to vote by mail but have not received a printed version of these proxy materials, you may request a full packet of proxy materials through the instructions in the Notice. If you vote using either telephone or the Internet, you will save us mailing expense.
By giving us your proxy, you will be directing us how to vote your shares at the Annual Meeting. Even if you plan to attend the Annual Meeting, we urge you to vote now by giving us your proxy. This will ensure that your vote is represented at the Annual Meeting. If you do attend the Annual Meeting, you can change your vote at that time, if you then desire to do so.
Beneficial Owner
If you are the beneficial owner of shares held in street name, the methods by which you can access the proxy materials and give the voting instructions to the broker or nominee may vary. Accordingly, beneficial owners should follow the instructions provided by their brokers or nominees to vote by Internet, telephone or mail. If you want to vote by mail but have not received a printed version of these proxy materials, you may request a full packet of proxy materials as instructed by the Notice. If you want to vote your shares in person at the Annual Meeting, you must obtain a valid proxy from your broker or nominee. You should contact your broker or nominee or refer to the instructions provided by your broker or nominee for further information. Additionally, the availability of Internet or telephone voting depends on the voting process used by the broker or nominee that holds your shares.
You may receive more than one Notice or proxy statement and proxy card or voting instruction form if your shares are held through more than one account (e.g., through different brokers or nominees). Each proxy card or voting instruction form only covers those shares held in the applicable account. If you hold shares in more than one account, you will have to provide voting instructions for all of your accounts to vote all your shares.
HOW TO CHANGE YOUR VOTE OR REVOKE YOUR PROXY
Stockholders of Record
For stockholders of record, you may change your vote or revoke your proxy by written notice to our Corporate Secretary at our corporate headquarters, 800 Main Street, 4th Floor, Lynchburg, Virginia 24504, granting a new later dated proxy, submitting a later dated proxy by telephone or on the Internet, or by voting in person at the Annual Meeting. Unless you attend the Annual Meeting and vote your shares in person, you should change your vote using the same method (by Internet, telephone or mail) that you first used to vote your shares. This will help the inspector of election for the Annual Meeting verify your latest vote.
Beneficial Owners
For beneficial owners of shares held in street name, you should follow the instructions in the information provided by your broker or nominee to change your vote or revoke your proxy. If you want to change your vote as to shares held in street name by voting in person at the Annual Meeting, you must obtain a valid proxy from the broker or nominee that holds those shares for you.
QUORUM
The Annual Meeting will be held only if a quorum exists. The presence at the Annual Meeting, in person or by proxy, of holders of a majority of our outstanding shares of common stock as of the record date will constitute a quorum. If you attend the Annual Meeting or vote your shares by Internet, telephone or mail, your shares will be counted toward a quorum, even if you abstain from voting on a particular matter. Shares held by brokers and other nominees as to which they have not received voting instructions from the beneficial owners and lack the discretionary authority to vote on a particular matter are called “broker non-votes” and will count for quorum purposes.

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VOTING INFORMATION


PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
We are asking you to vote on the following proposals:
Proposal
Description
Board's Voting Recommendation
1
Election of John A. Fees and Robb A. LeMasters as Class III directors
FOR EACH NOMINEE
2
Amendment of the Company's Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors
FOR
3
Advisory vote on the compensation of our named executive officers (“Named Executives”)
FOR
4
Ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019
FOR

VOTE REQUIRED
Proposal 1: Election of Directors
For the proposal on the election of directors, director nominees are elected by a majority of the votes cast "FOR" the nominee at the Annual Meeting. You may vote “FOR” or "AGAINST" each director nominee or abstain from voting for one or more nominees. Abstentions and broker non-votes with respect to the election of directors will have no effect on the outcome and do not count as votes cast. Under our Bylaws, in the event of a contested election, the director nominees will be elected by the affirmative vote of a plurality of the votes cast by the shares of our common stock entitled to vote in the election of directors at the Annual Meeting.
Proposal 2: Amendment of Certificate of Incorporation to Declassify Board
For the proposal on the amendment of the Company's Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors, you may vote “FOR” or “AGAINST” or abstain from voting. This proposal requires the affirmative vote of at least 80% of our shares of common stock outstanding and entitled to vote generally in the election of directors. Abstentions, broker non-votes and the failure to vote will have the effect of an “AGAINST” vote.
Proposal 3: Advisory Vote on Executive Compensation
For the proposal on executive compensation, you may vote “FOR” or “AGAINST” or abstain from voting. This proposal requires the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter in order to be adopted. Abstentions are counted for purposes of determining a quorum and are considered present and entitled to vote on this proposal. As a result, abstentions have the effect of an “AGAINST” vote. Broker non-votes will not be considered as entitled to vote on this proposal, even though they are considered present for purposes of determining a quorum and may be entitled to vote on other matters. As a result, broker non-votes will not have any effect on this proposal.
Proposal 4: Ratification of Independent Registered Public Accounting Firm
For the proposal to ratify the appointment of Deloitte as our independent registered public accounting firm, you may vote “FOR” or “AGAINST” or abstain from voting. This proposal requires the affirmative vote of a majority of the votes cast on the matter. Abstentions will not be considered as cast and, as a result, will not have any effect on the proposal.
HOW VOTES ARE COUNTED
Stockholders of Record
For stockholders of record, all shares represented by the proxies will be voted at the Annual Meeting in accordance with instructions given by the stockholders. Where a stockholder returns their proxy and no instructions are given with respect to a given matter, the shares will be voted: (1) “FOR” the election of the Class III directors; (2) “FOR” the amendment of our Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors; (3) “FOR” the approval of the compensation of our Named Executives on an advisory basis; (4) “FOR” the ratification of the appointment of Deloitte as our independent registered public accounting firm; and (5) in the discretion of the proxy holders upon such other business as may properly come before the Annual

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VOTING INFORMATION
 

Meeting. If you are a stockholder of record and you do not return your proxy, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.
Beneficial Owners
For beneficial owners of shares held in street name, the brokers, banks, or nominees holding shares for beneficial owners must vote those shares as instructed. Absent instructions from you, brokers, banks and nominees may vote your shares only as they decide as to matters for which they have discretionary authority under the applicable New York Stock Exchange rules. A broker, bank or nominee does not have discretion to vote on the election of Class III directors, amendment of the Restated Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors, or approval of the compensation of our Named Executives. If you do not instruct your broker, bank or nominee how to vote on those matters, no votes will be cast on your behalf on the election of Class III directors, amendment of the Certificate of Incorporation to declassify the Board of Directors and provide for the annual election of directors, or the advisory vote on executive compensation. Your broker will be entitled to vote your shares in its discretion, absent instructions from you, on the ratification of the appointment of Deloitte as our independent registered public accounting firm. Any shares of our common stock held in the Thrift Plan that are not voted or for which Vanguard, as trustee of the Thrift Plan, does not receive timely voting instructions, will be voted in the same proportion as the shares for which Vanguard receives timely voting instructions from other participants in the Thrift Plan.
Other Matters
We are not aware of any other matters that may be presented or acted on at the Annual Meeting. If you vote by signing and returning the enclosed proxy card or using the Internet or telephone voting procedures, the individuals named as proxies on the card may vote your shares, in their discretion, on any other matter requiring a stockholder vote that comes before the Annual Meeting.
CONFIDENTIAL VOTING
All voted proxies and ballots will be handled to protect your voting privacy as a stockholder. Your vote will not be disclosed except:
to meet any legal requirements;
in limited circumstances such as a proxy contest in opposition to our Board;
to permit independent inspectors of election to tabulate and certify your vote; or
to adequately respond to your written comments on your proxy card.
 
 

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PROPOSAL 1: ELECTION OF DIRECTORS

PROPOSAL 1: ELECTION OF CLASS III DIRECTORS
Our Board of Directors is currently comprised of the eleven members identified in the table below. Our Restated Certificate of Incorporation provides for the classification of our Board into three classes, with the term of one class expiring each year. Please see Proposal 2 (below) for a discussion of the proposed declassification of our Board of Directors to provide for the annual election of directors. Effective July 1, 2015, our Board adopted a 10-year director tenure policy that provides that no director may serve on the Board for more than 10 years from the effective date, which was the date of the spin-off of our former Power Generation business. See "10-Year Director Tenure Limit" under Corporate Governance — Governance Committee below.
Director Name
Class
Year  Term Expires
John A. Fees
Class III
2019
Robb A. LeMasters
Class III
2019
Richard W. Mies(1)
Class III
2019
Rex D. Geveden
Class I
2020
Robert L. Nardelli
Class I
2020
Barbara A. Niland
Class I
2020
Charles W. Pryor, Jr.
Class I
2020
Jan A. Bertsch
Class II
2021
Gerhard F. Burbach
Class II
2021
James M. Jaska
Class II
2021
Kenneth J. Krieg

Class II
2021
(1) Admiral Mies is not standing for re-election.
Director Qualifications
The table below highlights the qualifications, competency and experience of each nominee for election to our Board that contributed to the Board’s determination that each individual is uniquely qualified to serve on the Board. This high-level summary is not intended to be an exhaustive list of each director’s skills or contributions.
Competency / Experience
Bertsch
Burbach
Fees
Geveden
Jaska
Krieg
LeMasters
Mies
Nardelli
Niland
Pryor
Executive / Operating
Government, Nuclear or Manufacturing Industry
Financial / Strategic / M&A
Technology / Scientific
 
 
Risk Management
 
Healthcare / FDA Regulatory
 
 
 
 
 
 
 
 
Safety and Environmental
 
 
 
 
 
Security and Information Technology
 
Governance
International
Other Current Public Company Boards
1
1
1
1
0
0
0
1
0
0
1
= Competency; = Experience
 
The current term of office of our Class III directors will expire at the Annual Meeting. The incumbent Class III directors are John A. Fees, Robb A. LeMasters and Richard W. Mies, who have served on our Board since their appointments in 2010, 2015 and 2010, respectively. Admiral Mies is not standing for re-election. On the nomination of our Board following the recommendation of the Governance Committee, Messrs. Fees and LeMasters will each stand for election as a Class III director for a term of three years at the Annual Meeting. Each nominee has consented to serve as a director if elected. Unless otherwise directed, the persons named as proxies on the enclosed proxy card intend to vote “FOR” the election of each of the director nominees. If any nominee should become unavailable for election, the shares will be voted for such substitute nominee as may be proposed by our Board. We are not aware of any circumstances that would prevent any of the nominees from serving.


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PROPOSAL 1: ELECTION OF DIRECTORS
 

Set forth below is certain information for each Class III director nominee and each director of our Company who is not up for election at this year’s Annual Meeting. (Ages are as of the Annual Meeting.)

NOMINEES FOR ELECTION AT THE ANNUAL MEETING
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Qualifications, Attributes and Skills
Mr. Fees has critical expertise in government businesses, management of international businesses, development of technology, and nuclear technology. He served as the Chief Executive Officer and director of McDermott International, Inc. ("McDermott"), our former parent company, and maintains key relationships important to our business. He has led initiatives to acquire key assets for the Company, divest under-performing businesses, and create significant shareholder value in the BWXT operating businesses. All of these attributes make him well qualified to serve as Non-Executive Chairman of the Board of BWXT.

 
Professional Highlights
Mr. Fees has served as the Non-Executive Chairman of our Board of Directors since May 2018. Prior to that he served as our Executive Chairman since the June 2015 spin-off of our Power Generation business. 
Previously, he served as our Non-Executive Chairman from July 2010 to May 2015.
From October 2008 to July 2010, he was Chief Executive Officer and a director of our former parent company, McDermott, where he led the company and McDermott’s board through the separation of the company into two publicly
 

traded companies by the spin-off of BWXT to McDermott’s shareholders.
Prior to becoming McDermott’s Chief Executive Officer in 2008, Mr. Fees led a distinguished career at BWXT for over 31 years. During his time with BWXT, Mr. Fees held numerous management and executive positions within BWXT when it was a McDermott subsidiary.
Mr. Fees serves on the board of directors of Brookfield Infrastructure Partners.
JOHN A. FEES
Age 61
Non-Executive Chairman
 
 
 
Director since 2010
 
 
 
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Qualifications, Attributes and Skills
Mr. LeMasters’ extensive experience in capital markets, financial analysis and mergers and acquisitions allows him to provide valuable resources and perspectives to our Board.
 
Professional Highlights
Mr. LeMasters is a Managing Director at Blue Harbour, L.P., a multi-billion dollar investment firm, a position he has held since 2011.
Prior to joining Blue Harbour Group, he was a Founding Partner of Theleme Partners from 2009 to September 2011.
Mr. LeMasters has also served as a Partner at The Children’s Investment Fund (TCI) from 2008 to 2009 and a Vice President in the Relative Value/Event-Driven Group at Highbridge Capital Management from 2005 to 2008.
 

Mr. LeMasters began his career as an analyst at Morgan Stanley & Co. in the Mergers and Acquisitions Group and subsequently joined Forstmann Little & Co. as an analyst.
Mr. LeMasters earned his B.S. from the University of Pennsylvania in 1999 and his M.B.A. from the Harvard Business School in 2005.
ROBB A. LEMASTERS
Age 41
Independent Director
 
 
 
Director since 2015
 
 
 
Committees:
Audit and Finance
Compensation
 

Our Board recommends that stockholders vote “FOR” the nominees named above.

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PROPOSAL 1: ELECTION OF DIRECTORS

OTHER DIRECTORS (not up for election at the Annual Meeting)
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Qualifications, Attributes and Skills
Ms. Bertsch has held numerous advisory roles in the academic, technological, and major manufacturing industries. With 40 years of experience, Ms. Bertsch brings extensive corporate finance, strategic planning, restructuring and international experience to our Board. The depth and breadth of her professional career in the life science, automotive and manufacturing industries, with a keen focus on operational enhancements, cost reduction strategies and revenue generation for Fortune 500 and Fortune 1000 companies, make her a valuable addition to the Board.
 
Professional Highlights
Ms. Bertsch has served as Chief Financial Officer of Owens-Illinois, Inc., a Fortune 500 manufacturer of glass and packaging products, since November 2015.
Previously, Ms. Bertsch served as the Executive Vice President and Chief Financial Officer of Sigma-Aldrich Corporation, a leading life science and high technology company, from March 2012 to November 2015.
Before joining Sigma-Aldrich, Ms. Bertsch served as Vice President, Controller and Principal
 

Accounting Officer of Borg Warner, Inc., from August 2011 to February 2012 and as Vice President and Treasurer from December 2009 to July 2011.
Prior to that, Ms. Bertsch spent several years as Senior Vice President, Treasurer and Chief Information Officer for Chrysler Group, LLC, and Chrysler LLC, where she worked proactively with a number of constituents to determine a solution to Chrysler’s long-term viability.
Ms. Bertsch has served as a member of the Board of Directors of Meritor, Inc. since September 2016.
 
JAN A. BERTSCH
Age 62
Independent Director
 
 
 
Director since 2013
 
 
 
Committees:
Audit and Finance — Chair
Compensation
 
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Qualifications, Attributes and Skills
Mr. Burbach's leadership background with medical device companies provides our Board with a key external perspective and insight into our medical isotope business, including strategy, development, operations, customers and other stakeholders.
 
Professional Highlights
From 2006 to 2014, Mr. Burbach was President, Chief Executive Officer and director of Thoratec Corporation, a company that develops, manufactures and markets proprietary medical devices used for circulatory support.
Prior to that, he held executive leadership positions at Digirad Corporation, Philips Medical Systems, ADAC Laboratories, McKinsey & Company and CitiCorp.
Mr. Burbach received a bachelor’s degree in industrial engineering from Stanford University and a master’s of business administration from Harvard Business School.

 

Mr. Burbach serves on the board of directors of Fluidigm Corporation, a public company manufacturing and marketing innovative technologies for life sciences research, and is chairman of the board of directors of both Autonomic Technologies, Inc., a private medical device company developing neurostimulation based therapies, and Procyrion Inc., a private medical device company focused on the treatment of chronic heart failure. He also serves on the board of Vascular Dynamics, Inc., a private medical device company developing an innovative solution for hypertension.

 
GERHARD F. BURBACH
Age 57
Independent Director
 
 
 
Director since 2018
 
 
 
Committees:
Governance
Safety and Security

 
 
 
 
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Qualifications, Attributes and Skills
Mr. Geveden has extensive leadership and technical experience overseeing commercial manufacturing operations for publicly traded companies and high-consequence technology programs for the U.S. government. This experience, combined with his strategic vision, make him a valuable contributor to our Board of Directors.
 
Professional Highlights
Mr. Geveden has served as President and Chief Executive Officer since January 1, 2017, and served as our Chief Operating Officer from October 2015 until December 2016.
Previously, Mr. Geveden was Executive Vice President at Teledyne Technologies Incorporated ("Teledyne"), a provider of electronic subsystems and instrumentation for aerospace, defense and other uses. There he led two of Teledyne's four operating segments since 2013, and concurrently served as President of Teledyne DALSA, Inc., a Teledyne subsidiary, since 2014. Mr. Geveden also served as President and Chief Executive Officer of Teledyne Scientific and Imaging, LLC (2011 to 2013) and President of both Teledyne Brown Engineering, Inc. and Teledyne's Engineered Systems Segment (2007 to 2011).
 

Mr. Geveden is a former Associate Administrator of the National Aeronautics and Space Administration ("NASA"), where he was responsible for all technical operations within the agency's $16 billion portfolio and served in various other positions with NASA in a career spanning 17 years.
Mr. Geveden serves on the board of directors of TTM Technologies, Inc.
REX D. GEVEDEN
Age 58
President, Chief Executive
Officer and Director
 
 
 
Director since 2017
 
 
 
 
 

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Qualifications, Attributes and Skills
Mr. Jaska's leadership background with large technology and government services operations provides our Board with a key external perspective on our operations, customers and other stakeholders relevant to our businesses.
 
Professional Highlights
Mr. Jaska currently serves as President of Valiant Integrated Services LLC, a position he has held since January 2016.
Previously, Mr. Jaska served in a variety of roles of increasing responsibility with AECOM (formerly AECOM Technology Corporation) over a 10-year period, including President, Government (2013-2014), President of Americas & Government (2011-2013), Division Executive Vice President (2009-2011), Group Chief Executive, Government Group (2005-2009) and Consultant (2004-2005).
Mr. Jaska also held several positions with Tetra Tech, Inc., a global provider of professional technical services in engineering, applied sciences, resource management and infrastructure, including President and Director (2003-2004), President, Chief Financial Officer
 

and Treasurer (2001-2003), Executive Vice President, Chief Financial Officer and Treasurer (2000-2001) and as Vice President, Chief Financial Officer and Treasurer (1994-2000).
Mr. Jaska has also held leadership roles with Alliant Techsystems, Inc., Honeywell, Inc. and Ecolab.
He holds a master's degree and a bachelor's degree from Western Illinois University.
JAMES M. JASKA
Age 68
Independent Director
 
 
 
Director since 2016
 
 
 
Committees:
Governance  Chair
Safety and Security
 
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Qualifications, Attributes and Skills
Mr. Krieg has significant experience overseeing major research, development and procurement programs for the U.S. Department of Defense. His background provides our Board of Directors with valuable insight into acquisition priorities and considerations of the U.S. Government, our single largest customer.
 
Professional Highlights
Mr. Krieg has served as the founder and Principal of Samford Global Strategies, a consulting practice focused on helping clients lead and manage through periods of strategic change, since 2007.
Previously, Mr. Krieg served as the Under Secretary of Defense for Acquisition, Technology and Logistics from June 2005 to July 2007, in which role he was responsible for advising the Secretary of Defense on all matters relating to the Department of Defense acquisition system, research and development, advanced technology, developmental test and evaluation, production, logistics, installation management, military construction, procurement, environmental security, nuclear, chemical and biological matters.

 

Mr. Krieg has also served in a variety of U.S. Department of Defense roles, including as Special Assistant to the Secretary and Director for Program Analysis & Evaluation and Executive Secretary of the Senior Executive Council, and served as Vice President and General Manager of International Paper Realty Inc.
Mr. Krieg also worked in a number of defense and foreign policy assignments in Washington, DC, including positions at the White House, on the National Security Council Staff, and in the Office of the Secretary of Defense.
He served on the Board of Directors of Tempus Applied Solutions Holdings, Inc. from April 2014 to November 2016, and on the Board of Directors of API Technologies, Inc. from August 2011 to April 2016.
KENNETH J. KRIEG
Age 58
Independent Director
 
 
 
Director since 2016
 
 
 
Committees:
Compensation
Governance
 
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Qualifications, Attributes and Skills
Admiral Mies’ distinguished leadership as the senior operational commander of the U.S. Submarine Force and Commander in Chief of U.S. Strategic Command, his extensive business experience at a company providing scientific and engineering applications for national security, energy, and environment, as well as his service on advisory boards to the Department of Defense and Department of Energy, provide an extensive and unique understanding of the U.S. government, our single largest customer.
 
Professional Highlights
Admiral Mies completed a distinguished 35-year career in the U.S. Navy in 2002. A nuclear submariner, he commanded U.S. Strategic Command for four years prior to his retirement.
He subsequently served as a Senior Vice President and Deputy Group President of Science Applications International Corporation (SAIC) from 2002 until 2007 and also served as the President and Chief Executive Officer of Hicks and Associates, a wholly owned subsidiary of SAIC.
He served as the Chairman of the Department of Defense Threat Reduction Advisory Committee from 2004 to 2010, Chairman of the Navy Mutual Aid Association from 2003 to 2011, Chairman of the Naval Submarine League from 2007 to 2016 (moved to emeritus status), member of the board of governors of Los Alamos National Laboratory from 2004 to 2018, and member of the board of directors of McDermott from 2008 to 2010.
 

Since 2007, he has served as the CEO and President of The Mies Group, Ltd., a consulting firm that provides strategic planning and risk assessment advice and assistance to clients on international security, energy, defense, and maritime issues.
He presently serves as the Chairman of the Strategic Advisory Group for U.S. Strategic Command, Vice-Chair of the Secretary of Energy Advisory Board, member of the Committee on International Security and Arms Control of the National Academy of Sciences, member of the board of governors of Lawrence Livermore National Laboratory, and a member of the U.S. Naval Academy Foundation and the U.S. Naval Institute.
He has also been a member of the board of directors of Exelon Corporation since 2009.
RICHARD W. MIES
Age 74
Independent Director
 
 
 
Director since 2010*
 
 
 
Committees:
Governance
Safety and Security — Chair
 
* Admiral Mies is not standing for re-election, and his current term will expire at the Annual Meeting.
 
 

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Qualifications, Attributes and Skills
Mr. Nardelli has over 40 years of global operating and financial experience, including with large publicly traded manufacturing companies. This experience combined with his past service on the boards of directors of several other publicly traded companies provides a meaningful perspective to our Board.
 
Professional Highlights
Mr. Nardelli is the Founder and CEO of XLR-8, LLC, an investment and consulting company, which he formed in 2012.
He has also served as a Senior Advisor at Emigrant Savings Bank since August 2015, and formerly served as Senior Advisor to the founder of Cerberus Capital Management, L.P. (“Cerberus”), a private equity firm, and held several senior positions with Cerberus and Cerberus Operations and Advisory Company, LLC from 2007 to August 2015.
 

Mr. Nardelli served as Chairman and CEO of Chrysler LLC from 2007 until 2009 and served as Chairman, President and CEO of The Home Depot, Inc. from 2000 to 2007.
Previously, Mr. Nardelli held several senior executive positions with General Electric Company.
Mr. Nardelli has served on the boards of directors of The Home Depot (2000-2007), The Coca-Cola Company (2002-2005), Chrysler LLC (2007-2009) and Pep Boys – Manny, Moe and Jack (March 2015 – February 2016).
 
ROBERT L. NARDELLI
Age 70
Independent Director
 
 
 
Director since 2014
 
 
 
Committees:
Audit and Finance
Safety and Security
 
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Qualifications, Attributes and Skills
Ms. Niland has over 30 years of financial and operations experience with ship building and manufacturing operations for the U.S. Navy. Her tenure in senior financial leadership roles with one of our publicly traded peer companies provides our Board with valuable perspectives on our industry.
 
Professional Highlights
Ms. Niland most recently served as Corporate Vice President and Chief Financial Officer of Huntington Ingalls Industries, Inc. (March 2011 to March 2016), a Fortune 500 shipbuilding company for the U.S. Navy and Coast Guard that was spun off from Northrop Grumman Corporation in 2011.
Previously at Northrop Grumman, Ms. Niland served in a variety of roles of increasing responsibility over a career spanning over 30 years, including as President and Chief Financial Officer, Shipbuilding; Division Vice President and Chief Financial Officer and Division Vice President - Finance.
 

Ms. Niland holds a master's degree from the University of Maryland University College and a bachelor's degree from Towson University.
 
BARBARA A. NILAND
Age 60
Independent Director
 
 
 
Director since 2016
 
 
 
Committees:
Audit and Finance
Compensation — Chair
 
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Qualifications, Attributes and Skills
Mr. Pryor is an engineer with extensive leadership experience with nuclear manufacturing, public utilities and international operations. Through his former service as Chairman and CEO of Westinghouse Electric Company, as well as on the boards of directors of Urenco USA, DTE Energy and Progress Energy, Inc., among other leadership roles, he is able to bring valuable industry perspectives to our Board.
 
Professional Highlights
Mr. Pryor is the former Chairman of Urenco USA, a division of Urenco Ltd. based in Stoke, England, where he served on the board of directors from January 2003 until December 2014.
He served on the boards of directors of DTE Energy Company until 2018 and Progress Energy, Inc. until 2012.
Mr. Pryor is the former Chairman and CEO of Westinghouse Electric Company. While at Westinghouse, he led the company’s growth to over $2 billion in annual revenue with employment of over 10,000 people.
 

Previously, he spent 25 years with BWXT, including serving as President of the Company’s Nuclear Power Division and CEO of B&W Nuclear Technologies until retiring in1995 and starting his own management consulting business.
In 1993, Mr. Pryor was named the State of Virginia’s “Outstanding Industrialist.” Additionally, French President Francois Mitterand presented Mr. Pryor with the very distinguished Chevalier de ‘Ordre Nationale de Merit for developing business relationships between the United States and France.
 
CHARLES W. PRYOR, JR.
Age 74
Lead Independent Director
 
 
 
Director since 2015
 
 
 
Committees:
Ex officio member of each
Board Committee
 


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PROPOSAL 2: DECLASSIFICATION AMENDMENT


PROPOSAL 2: AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS AND PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS

After careful consideration, the Board has determined that it is in the best interests of the Company and its stockholders to amend our Restated Certificate of Incorporation to provide for the phased-in declassification of the Board and the annual election of all directors. The full text of the proposed amendment to the Restated Certificate of Incorporation (the “Proposed Amendment”) is attached as Appendix B to this Proxy Statement.
Our Restated Certificate of Incorporation currently provides for a classified Board divided into three classes, with each class of directors serving a staggered three-year term. Under our current Restated Certificate of Incorporation, each class of directors stands for re-election at the third annual meeting of stockholders following election to office, and not more than one class of directors is elected at any annual meeting. Declassification of the Board would allow our stockholders to vote on the election of all directors each year rather than on a staggered basis by class beginning in 2022.
In determining whether to recommend declassification, the Board considered the advantages and disadvantages of the classified board structure. The Board recognizes that a classified structure may offer advantages, such as promoting board continuity and stability in pursuing our strategies, enhancing Board independence, encouraging directors to focus on the long-term productivity of the Company and ensuring that a majority of the directors will always have prior experience with the Company. Additionally, classified boards provide effective protection against unwanted takeovers and proxy contests, as they make it difficult for a substantial stockholder to gain control of the Board in one year without the cooperation or approval of incumbent directors.
However, the Board also recognizes that a classified structure may appear to reduce director accountability to stockholders, since such a structure does not enable stockholders to express a view on each director’s performance by means of an annual vote. Moreover, many investors believe that the election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for implementing those policies.
After carefully weighing the relevant considerations, the Board determined that declassification of the Board would be in the best interests of the Company and our stockholders, and the Board recommends that our stockholders vote to amend our Restated Certificate of Incorporation to eliminate the classified structure of the Company’s Board and provide for the annual election of all directors.
If approved, the Proposed Amendment would not shorten the existing terms of the directors. Directors who have been elected to three-year terms prior to the effectiveness of the amendment, including the Class III directors elected at the Annual Meeting, would complete those three-year terms.
If the Proposed Amendment is approved, our Restated Certificate of Incorporation would be amended after the Annual Meeting to provide for the phased elimination of the classified structure of the Board through the annual election of directors whose terms expire thereafter. Specifically, our Restated Certificate of Incorporation would be amended to provide that:
Class I directors stand for election for a one-year term at our 2020 annual meeting;
Class I and Class II directors stand for election for a one-year term at our 2021 annual meeting; and
our entire Board stands for election for a one-year term at our 2022 annual meeting and thereafter.
The Proposed Amendment provides that prior to the termination of the division of directors into three classes, any director of any class elected to fill a vacancy resulting from an increase in the number of directors of that class would hold office until the next annual meeting of stockholders. Until the Board is completely declassified, any director appointed to the Board to fill a vacancy not resulting from an increase in the number of directors would hold office until the next election of the class for which such director is appointed.
In addition, because the Board is currently classified, the Company’s Restated Certificate of Incorporation provides that our directors may be removed only for cause and then only by the affirmative vote of 80% or more of our outstanding shares of common stock. If this proposal is approved, a member of our Board may be removed with or without cause after the 2022 Annual Meeting of Stockholders by the affirmative vote of 50% of the outstanding shares of common stock. If the Company’s stockholders do not approve this proposal, the Board will remain classified, directors will be elected for three-year terms and directors will continue to be removable only for cause.
The above description is qualified in its entirety by reference to the full text of the Proposed Amendment to our Restated Certificate of Incorporation, which is attached hereto as Appendix B.

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PROPOSAL 2: DECLASSIFICATION AMENDMENT


If the Proposed Amendment is adopted and becomes effective, the Board will adopt conforming amendments to our Amended and Restated Bylaws (the "Bylaws"). If the Proposed Amendment to our Restated Certificate of Incorporation is approved by our stockholders, it would become effective when the Company files a certificate of amendment to the Restated Certificate of Incorporation with the Delaware Secretary of State. However, the Board retains discretion under Delaware law not to implement the amendment. If the Board exercises this discretion, it will publicly disclose that fact and the reason for its determination.

RECOMMENDATION AND VOTE REQUIRED

Our Board recommends that stockholders vote “FOR” the amendment of the Company’s Restated Certificate of Incorporation to declassify the Board and provide for the annual election of directors. The proxy holders will vote all proxies received FOR approval of this proposal unless instructed otherwise. Approval of this proposal requires the affirmative vote of at least 80% of our shares of common stock outstanding and entitled to vote generally at the election of directors. Abstentions, broker non-votes and the failure to vote will have the effect of an "AGAINST" vote.

CORPORATE GOVERNANCE
We maintain a corporate governance section on our website, which contains copies of our principal governance documents. The corporate governance section may be found at www.bwxt.com at “Investors — Corporate Governance.” The corporate governance section includes the following documents:
Amended and Restated Bylaws
Corporate Governance Principles
Code of Business Conduct
Code of Ethics for Chief Executive Officer and Senior Financial Officers
Board of Directors Conflict of Interest Policies and Procedures
Audit and Finance Committee Charter
Compensation Committee Charter
Governance Committee Charter
Safety and Security Committee Charter
DIRECTOR INDEPENDENCE
The Board has established categorical standards, which conform to the independence requirements in the New York Stock Exchange (“NYSE”) listing standards, to assist it in determining director independence. These standards are contained in the Corporate Governance Principles found on our website at www.bwxt.com under “Investor Relations — Corporate Governance.”
Based on these independence standards, our Board has determined that the following directors are independent and meet our categorical standards:
Jan A. Bertsch
  
Kenneth J. Krieg
 
Robert L. Nardelli
Gerhard F. Burbach
 
Robb A. LeMasters
 
Barbara A. Niland
James M. Jaska
 
Richard W. Mies
 
Charles W. Pryor, Jr.
In determining the independence of the directors, our Board considered ordinary course transactions between us and other entities with which the directors are associated. None were determined to constitute a material relationship with us.
The Board also determined that Messrs. Fees and Geveden, who serve, or served in the past three years, as an executive of the Company, are not independent directors. Accordingly, we currently have a supermajority of independent directors (nine of eleven, or 82%) in compliance with our Corporate Governance Guidelines which require a majority of independent directors.

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CORPORATE GOVERNANCE
 

BOARD FUNCTION, LEADERSHIP STRUCTURE AND EXECUTIVE SESSIONS
The mission of our Board is to promote the best interests of the Company’s stockholders through oversight of the management of the Company’s business and affairs. The Board believes that its corporate governance policies and practices provide independent oversight and accountability of management. The Company’s Corporate Governance Principles and Committee charters provide for a number of processes and practices, including the appointment of a Lead Independent Director; executive sessions of the independent directors without management at each regular Board meeting; a majority of independent directors; and an Audit and Finance Committee, Compensation Committee, Governance Committee and Safety and Security Committee, each comprised exclusively of independent directors.
Lead Independent Director
The independent directors of our Board have appointed a Lead Independent Director, who has the following responsibilities:
presides over all Board meetings at which the Chairman is not present and all executive sessions attended only by independent directors;
serves as liaison between the independent directors, on the one hand, and the Chief Executive Officer and the Chairman, on the other;
reviews and approves the Board meeting agendas and meeting schedules to assure that there is sufficient time for discussion of all agenda items; 
advises the Chairman regarding the quality, quantity and timeliness of information sent by management to the directors;
has the authority to call meetings of the independent directors; and
if requested by major stockholders, ensures that he is available for consultation and direct communication.
In 2018, the independent directors of our Board selected Charles W. Pryor, Jr. to serve as the Lead Independent Director. The Lead Independent Director oversees the regular meetings of our independent directors in executive session without management.
Chairman and Chief Executive Officer Roles
Our Board does not have a policy requiring that the positions of Chairman and Chief Executive Officer be separate or be occupied by the same individual. Our Board believes that this is properly addressed as part of the succession planning process and that it is in the best interests of the Company for the Board to make a determination on these matters when it elects a new Chief Executive Officer, appoints a new Chairman of the Board or at other times. Currently, the roles are separate, with Mr. Fees serving as our Non-Executive Chairman and Mr. Geveden as our Chief Executive Officer. In May 2018, Mr. Fees transitioned from Executive Chairman to Non-Executive Chairman. Our Board believes that this leadership structure is appropriate for us at this time because it allows Mr. Fees and Mr. Geveden to share responsibility for setting our strategic direction, while also allowing Mr. Geveden to focus on our day-to-day operations and communicating with our stockholders and other stakeholders. This leadership structure also allows Mr. Fees, who has over 30 years of experience with the Company and prior public company board service, to set the Board’s agenda, in coordination with Mr. Pryor, our Lead Independent Director, and lead the Board in its oversight of management.
THE ROLE OF THE BOARD IN SUCCESSION PLANNING
The Board believes effective succession planning, particularly for the Chief Executive Officer, is important to the continued success of the Company. As a result, the Board regularly reviews and discusses succession planning during executive sessions of Board meetings. The Governance Committee assists the Board in the area of succession planning, in particular, with respect to succession planning for the Chief Executive Officer. From time to time, the Board also retains an executive search firm as part of its normal succession planning function.
THE ROLE OF THE BOARD IN RISK OVERSIGHT
As part of its oversight function, the Board monitors various risks that we face. We maintain an enterprise risk management program administered by our Risk Management group. The program facilitates the process of reviewing key external, strategic, operational and financial risks as well as monitoring the effectiveness of risk mitigation. Information on the enterprise risk management program is presented to senior management and the Board on a regular basis. The Audit and Finance Committee assists the Board in fulfilling its oversight responsibility in the areas of financial reporting and by meeting periodically with management to review financial risk exposures

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CORPORATE GOVERNANCE

and discuss BWXT’s policies and guidelines concerning risk assessment and risk management. The Compensation Committee also assists the Board with this function by assessing risks associated with our compensation programs in consultation with management and the Committee's outside compensation consultant. The Safety and Security Committee assists the Board by assessing risks associated with various operational risks, including safety, security, environmental and cybersecurity risks. The Chief Information Officer provides regular updates to the Safety and Security Committee regarding cybersecurity risks. The Governance Committee assists the Board by assessing risks associated with corporate governance. The following diagram provides a summary of the risk allocation among the Board and its Committees.
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STOCKHOLDER ENGAGEMENT
We make it a priority to engage with our stockholders and have continued our stockholder engagement activities in 2018. Since the 2018 Annual Meeting of Stockholders, we conducted a stockholder engagement program and solicited stockholders holding approximately 72% of our outstanding shares to discuss, among other topics, environmental, social, governance and compensation matters. As a result of this outreach, we were able to have conversations with and seek feedback from stockholders representing over 21% of our outstanding shares. The feedback received from our shareholder outreach program is reported to the Governance Committee and other committees, as appropriate, and informs Board decisions on governance and compensation matters.
COMMUNICATION WITH THE BOARD
Stockholders or other interested persons may send written communications to the independent members of our Board, addressed to Board of Directors (independent members), c/o BWX Technologies, Inc., Corporate Secretary’s Office, 800 Main Street, 4th Floor, Lynchburg, Virginia 24504. All such communications shall be forwarded to the independent directors for their review, except for communications that (1) are unrelated to the Company’s business, (2) contain improper commercial solicitations, (3) contain material that is not appropriate for review by the Board based upon the Company’s Bylaws and the established practice and procedure of the Board, or (4) contain other improper or immaterial information. Information regarding this process is posted on our website at www.bwxt.com under “Investors — Corporate Governance.” 
BOARD MEETINGS AND COMMITTEES
Director Attendance
Our Board met nine times during 2018. All directors attended at least 75% of the meetings of the Board and of the committees on which they served during the time they served on the Board in 2018. In addition, as reflected in our Corporate Governance Principles, we have adopted a policy that each member of our Board must make reasonable efforts to attend our Annual Meeting. All of our current directors, who were directors at the time, attended the 2018 Annual Meeting of Stockholders, except for Mr. Burbach who joined the Board after such annual meeting.

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Committees of the Board
Our Board appoints the members of the Audit and Finance, Compensation, Governance, and Safety and Security Committees of the Board.  Each of these standing committees has a written charter approved by the Board and available on our website at www.bwxt.com under “Investors — Corporate Governance.”
The current members of the committees are identified below. NYSE listing standards require that all members of our Audit and Finance, Compensation, and Governance Committees be independent. Our Board has affirmatively determined that each member of such committees is independent in accordance with the NYSE listing standards. In addition, the members of the Safety and Security Committee are independent directors. 
Audit and Finance Committee
  
 
Our Audit and Finance Committee’s role is financial and risk oversight. Our management is responsible for preparing financial statements, and our independent registered public accounting firm is responsible for auditing those financial statements. The Audit and Finance Committee is not providing any expert or special assurance as to our financial statements or any professional certification as to the independent registered public accounting firm’s work.
 
The Audit and Finance Committee is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The committee, among other things, also reviews and discusses our audited financial statements with management and the independent registered public accounting firm. The committee provides oversight of (1) our compliance with legal and regulatory financial requirements; (2) our guidelines, policies and processes to assess and manage the company’s exposure to risks in general, including financial risks; and (3) our financial strategies and structure. In addition, the Audit and Finance Committee exercises general oversight of BWXT’s ethics and compliance program.
 
The Audit and Finance Committee also reviews and oversees financial policies and financial strategies, mergers, acquisitions, financings, liabilities, investment performance of our pension plans and the capital structures of BWXT and its subsidiaries. Generally, the Audit and Finance Committee has responsibility over many activities involving up to $25 million. For activities involving amounts over $25 million, the Audit and Finance Committee will review the activity and make a recommendation to the Board.
 
Our Board has determined that Mses. Bertsch and Niland and Messrs. LeMasters and Nardelli are each "financially literate" as defined by the NYSE and each qualify as an “audit committee financial expert” within the definition established by the Securities and Exchange Commission (“SEC”). For more information on the backgrounds of these directors, see their biographical information under “Proposal 1: Election of Directors” above. For more information on the Audit and Finance Committee, see "Audit and Finance Committee Report" and "Proposal 4: Ratification of Auditors" below.
 
  
 
6 MEETINGS IN 2018
 
  
 
COMMITTEE MEMBERS:
Ms. Bertsch, Chair
Mr. LeMasters
Mr. Nardelli
Ms. Niland
 
 
ALL MEMBERS INDEPENDENT




















 
 


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CORPORATE GOVERNANCE

Compensation Committee
  
 
 
The Compensation Committee has overall responsibility for our executive and non-employee director compensation plans, policies and programs. The Compensation Committee also oversees the annual evaluation of our Chief Executive Officer, in conjunction with the Governance Committee, and makes compensation recommendations to the independent directors of the Board.
 
The Compensation Committee regularly reviews the design of our significant compensation programs with the assistance of its compensation consultant. We believe our compensation programs work to retain and to motivate our employees at appropriate levels of business risk, which risks are generally mitigated through some of the following features:
 
Reasonable and Balanced Compensation Programs — Using the elements of total direct compensation, the Compensation Committee seeks to provide compensation opportunities for employees targeted at or near the median compensation of comparable positions in our market. As a result, we believe the total direct compensation of employees provides reasonable compensation opportunities with an appropriate mix of cash and equity, annual and longer-term incentives, and performance metrics.
 
Emphasis on Long-Term Incentive Over Annual Incentive Compensation — Long-term incentive compensation, to the extent awarded, typically makes up a larger percentage of an employee’s target total direct compensation than annual incentive compensation. Incentive compensation helps drive performance and align the interests of employees with those of stockholders. By tying a significant portion of total direct compensation to long-term incentives, typically over a three-year period, we promote longer-term perspectives regarding company performance.
 
Long-Term Incentive Compensation Subject to Forfeiture for Bad Acts — The Compensation Committee may terminate any outstanding stock award if the recipient (1) is convicted of a misdemeanor involving fraud, dishonesty or moral turpitude or a felony, or (2) engages in conduct that adversely affects or may reasonably be expected to adversely affect the business reputation or economic interests of the Company.
 
Most Annual and Long-Term Incentive Compensation Subject to Clawbacks — Since 2011, incentive compensation awards include provisions allowing us to recover excess amounts paid to individuals who knowingly engaged in a fraud resulting in a restatement.

Linear and Capped Incentive Compensation Payouts — The Compensation Committee establishes financial performance goals that are used to plot a linear payout formula for annual and long-term incentive compensation to avoid an over-emphasis on short-term decision making. The maximum payout for both the annual and long-term incentive compensation is capped at 200% percent of target.
 
Use of Multiple and Appropriate Performance Measures — We use multiple performance measures to avoid having compensation opportunities overly weighted toward the performance result of a single measure. In general, our incentive programs are based on a mix of financial, safety and individual performance.
  
 
5 MEETINGS IN 2018
 
  
 
COMMITTEE MEMBERS:*
Ms. Niland, Chair
Ms. Bertsch
Mr. Krieg
Mr. LeMasters
 
 
ALL MEMBERS INDEPENDENT 
 
 
  

 

 
 * Effective March 2, 2018, (i) Messrs. Pryor and Nardelli transitioned off the Committee, (ii) Ms. Bertsch and Mr. Krieg were appointed to the Committee and (iii) Ms. Niland was appointed Chair of the Committee.  

 

 



 

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Compensation Committee (continued)
  
 
 
•  Stock Ownership Guidelines — Our executive officers and directors are subject to stock ownership guidelines that help to promote longer-term perspectives and align the interests of our executive officers and directors with those of our stockholders.
 
The Compensation Committee administers our Executive Incentive Compensation Plan (the “EICP”), under which it awards annual cash-based incentive compensation to our officers based on the attainment of annual performance goals. Our Compensation Committee approves, among other things, the target EICP compensation, as well as the financial and safety goals for each officer. The Committee recommends to the independent members of the Board individual goals for EICP compensation for our Chief Executive Officer. Our Chief Executive Officer establishes EICP individual goals for the Presidents of principal operating groups and other executive officers. The Compensation Committee also administers our 2010 Long-Term Incentive Plan (as amended, the “2010 LTIP”), and may delegate some of its duties (other than awards to directors under the 2010 LTIP) to our Chief Executive Officer or other senior officers. The Compensation Committee evaluates the Chief Executive Officer's performance under the EICP and 2010 LTIP and recommends payouts under such plans and other compensation changes to the independent members of the Board.

The Board has determined that each member of the Compensation Committee is (1) independent, as independence for compensation committee members is defined by the NYSE, (2) a "non-employee director" for purposes of Section 16b-3 of the Exchange Act, and (3) an "outside director" for purposes of 162(m) of the Internal Revenue Code.
 
EXECUTIVE COMPENSATION CONSULTANT
 
The Compensation Committee has the authority to retain, terminate, compensate and oversee any compensation consultant ("Compensation Consultant") or other advisors to assist the committee in the discharge of its responsibilities. Since November 2010, the Compensation Committee engaged Korn Ferry Hay Group (“Hay Group”) as its outside Compensation Consultant. For 2018, Hay Group assisted the Compensation Committee with:
 
•  advice and analysis on the design, structure and level of executive and director compensation;
 
•  review of market survey and proxy compensation data for benchmarking;
 
•  advice on external market factors and evolving compensation trends; and
 
•  assistance with regulatory compliance and changes regarding compensation matters.
 
Hay Group attends the Compensation Committee meetings, including executive sessions. Although Hay Group works with our management on various matters for which the Compensation Committee is responsible, our management does not direct or oversee the retention or activities of Hay Group. In 2018, we engaged Hay Group, in particular Korn Ferry, for director and executive searches in addition to the executive and director compensation services provided by Hay Group. The aggregate amount paid to Korn Ferry for rendering these additional services in 2018 was $486,360 and the amount paid to Hay Group as the Compensation Committee’s Compensation Consultant in 2018 was $75,621. Following a review of the independence of Hay Group, the Compensation Committee concluded that no conflict of interest exists with respect to the work of Hay Group.
 
Rotation of Compensation Consultant.  In 2018, the Compensation Committee considered rotation of the Compensation Consultant and conducted a search for a new Compensation Consultant. As a result of this process, the Compensation Committee retained Exequity LLP as its Compensation Consultant for executive and director compensation matters for 2019.
  
 
 

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CORPORATE GOVERNANCE

Compensation Committee (continued)
  
 
See the “Compensation Discussion and Analysis” and “Compensation of Executive Officers” sections of this proxy statement for information about our 2018 executive officer compensation, including a discussion of the role of the Compensation Consultant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
No director who served as a member of the Compensation Committee during the year ended December 31, 2018 (Mses. Bertsch and Niland and Messrs. Krieg, LeMasters, Nardelli and Pryor) (1) was during such year, or had previously been, an officer or employee of BWXT or any of our subsidiaries, except for Mr. Pryor, who retired from the Company in 1995, or (2) had any material interest in a transaction of BWXT or a business relationship with, or any indebtedness to, BWXT. None of our executive officers have served as members of a compensation committee (or if no committee performs that function, the board of directors) of any other entity that has an executive officer serving as a member of our Board.
  
 
Governance Committee
  
 
 
The Governance Committee, in addition to other matters, has overall responsibility to (1) establish and assess director qualifications; (2) recommend nominees for election to our Board; and (3) oversee the annual evaluation of our Board and management, including the Chief Executive Officer, in conjunction with our Compensation Committee. This committee will consider individuals recommended by stockholders for nomination as directors in accordance with the procedures described under “Stockholders’ Proposals.” This committee also assists our Board with management succession planning and director and officer insurance coverage.
 
DIRECTOR NOMINATION PROCESS
 
Our Governance Committee is responsible for assessing the qualifications, skills and characteristics of candidates for election to the Board. In making this assessment, the Governance Committee generally considers a number of factors, including each candidate’s: 
professional and personal experiences and expertise in relation to (1) our businesses and industries and (2) the experiences and expertise of other Board members; 
integrity and ethics in his/her personal and professional life;
•  professional accomplishments in his/her field;
•  personal, financial or professional interests in any competitor, customer or supplier of ours;
•  preparedness to participate fully in Board activities, including active membership on at least one Board committee and attendance at, and active participation in, meetings of the Board and the committee(s) of which he or she is a member, and any other personal or professional commitments that would, in the Governance Committee’s sole judgment, interfere with or limit his or her ability to do so;
•  willingness to apply for and ability to obtain and retain an appropriate Department of Defense or Department of Energy security clearance; and
•  ability to contribute positively to the Board and any of its committees.
  
 
4 MEETINGS IN 2018
 
  
 
COMMITTEE MEMBERS:*
Mr. Jaska, Chair
Mr. Burbach
Mr. Krieg
Admiral Mies
 

ALL MEMBERS INDEPENDENT
 
 
 
 


 * Effective August 9, 2018, Mr. Burbach was appointed to the Committee.  

 
 

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CORPORATE GOVERNANCE
 

Governance Committee (continued)
  
 
 
The Board recognizes the benefits of a diversified board and believes that any search for potential director candidates should consider diversity as to gender, ethnic background, education, viewpoint and personal and professional experiences.
 
The Governance Committee solicits ideas for possible candidates from a number of sources — including members of the Board, our Chief Executive Officer and other senior level executive officers, individuals personally known to the members of the Board and independent director candidate search firms.
 
In addition, any stockholder may nominate one or more persons for election as one of our directors at an annual meeting of stockholders if the stockholder complies with the notice, information and consent provisions contained in our Bylaws. See “Stockholders’ Proposals” in this proxy statement and our Bylaws, which may be found on our website at www.bwxt.com at “Investors — Corporate Governance.”
 
The Governance Committee will evaluate properly identified candidates, including nominees recommended by stockholders. The Governance Committee also takes into account the contributions of incumbent directors as Board members and the benefits to us arising from the experience of incumbent directors on the Board. Although the Governance Committee will consider candidates identified by stockholders, the Governance Committee has sole discretion whether to recommend those candidates to the Board.
 
10-YEAR DIRECTOR TENURE LIMIT
In 2015, our Board approved amendments to our Bylaws in connection with the spin-off of our former Power Generation business to provide that (1) a person shall not be nominated for election or reelection to our Board if such person will have served as a director for 10 years prior to the date of election or re-election (as measured from the date of the Bylaw amendment, July 1, 2015) and (2) any director who attains 10 years of service during his or her term shall be deemed to have resigned and retired at the first annual meeting following his or her attainment of 10 years of service as a director.

  
 
  
Safety and Security Committee
  
 
Our Board established this Committee effective January 1, 2017. This committee has general oversight responsibility regarding the safety and security of our business operations with specific focus on safety, security, cybersecurity, regulatory and environmental matters. In the performance of its responsibilities, the Committee reviews reports and information from management and others. In addition, the Safety and Security Committee is responsible for overseeing and assessing the risks associated with the Company's cybersecurity program and receives regular updates from the Chief Information Officer. The Safety and Security Committee has the authority to engage outside consultants or other advisers to assist it in the discharge of its responsibilities.

 

  
 
4 MEETINGS IN 2018
 
  
 
COMMITTEE MEMBERS:*
Admiral Mies, Chair
Mr. Burbach
Mr. Jaska
Mr. Nardelli

ALL INDEPENDENT MEMBERS

* Effective August 9, 2018, Mr. Burbach was appointed to the Committee.




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COMPENSATION OF DIRECTORS

COMPENSATION OF DIRECTORS
The table below summarizes the compensation earned by or paid to our non-employee directors only for services as a member of our Board for the year ending December 31, 2018. The Compensation Committee of our Board, in coordination with its Compensation Consultant, conducts an annual benchmarking analysis of our Board's non-employee director compensation utilizing the custom peer group selected as our secondary benchmark for executive compensation purposes. Following this analysis in 2018, our Board, upon the recommendation of the Compensation Committee, determined to leave the 2018 compensation for non-employee directors unchanged after giving consideration to director refreshment and recruitment factors, except for the addition of an annual retainer for the Non-Executive Chairman of the Board, effective following the annual meeting of stockholders for 2018. See "Fees Earned or Paid in Cash" below.
Directors who are also our employees do not receive any compensation for their service as directors. For information regarding the compensation of Chief Executive Officer, our only employee director, see “Compensation of Executive Officers” on the following pages.
DIRECTOR COMPENSATION TABLE FOR 2018
Name of Non-Employee Director
Fees Earned or
Paid in Cash (1)
Stock
Awards (2)
All Other
Compensation (3)
Total
 Jan A. Bertsch
 
$
110,000

 
 
$
119,941

 
 
$
11,706

 
 
$
241,647

 
Gerhard F. Burbach(4)
 
45,000

 
 
89,969

 
 

 
 
134,969

 
 John A. Fees(5)
 
142,500

 
 
119,941

 
 
10,168

 
 
272,609

 
 James A. Jaska
 
105,000

 
 
119,941

 
 
9,595

 
 
234,536

 
Kenneth J. Krieg
 
90,000

 
 
119,941

 
 
8,163

 
 
218,104

 
Robb A. LeMasters
 
90,000

 
 
119,941

 
 
9,068

 
 
219,009

 
Richard W. Mies
 
105,000

 
 
119,941

 
 
10,585

 
 
235,526

 
Robert L. Nardelli
 
90,000

 
 
119,941

 
 
3,653

 
 
213,594

 
Barbara A. Niland
 
105,000

 
 
119,941

 
 
6,522

 
 
231,463

 
Charles W. Pryor, Jr.
 
115,000

 
 
119,941

 
 
8,387

 
 
243,328

 
(1)
See “Fees Earned or Paid in Cash” below for a discussion of the amounts reported in this column.
(2)
See “Stock Awards” below for a discussion of the amounts reported in this column.
(3)
See “All Other Compensation” below for a discussion of the amounts reported in this column.
(4)
Mr. Burbach was appointed to the Board on August 9, 2018.
(5)
Mr. Fees served as an executive officer of the Company and received no separate director fees prior to May 4, 2018. On that date, Mr. Fees transitioned to Non-Executive Chairman, resigned as an employee and received non-employee director compensation thereafter. See "Transition of Executive Chairman" in Compensation Discussion and Analysis below for additional information.
During 2018, non-employee director compensation generally consisted of cash and equity. The compensation of our non-employee directors under our current non-employee director compensation program is described in more detail below.
Annual Director Compensation (All amounts in cash, except stock award)
Amount
Retainer for Non-Employee Directors
$
90,000

Stock Award
120,000

Non-Executive Chairman
100,000

Lead Independent Director
25,000

Chair of the Audit and Finance Committee
20,000

Chairs of the Compensation Committee, Governance Committee and Safety and Security Committee
15,000

Fees Earned or Paid in Cash.  Under our current director compensation program, non-employee directors are eligible to receive the above annual retainer amounts, paid in quarterly installments (pro-rated for partial terms). Under our Supplemental Executive Retirement Plan (as amended and restated, “SERP”), directors may elect to defer the payment of up to 100% of their annual retainer and fees. Amounts elected to be deferred are credited as a bookkeeping entry into a notional account, which we refer to as a deferral account. The balance of a director’s deferral account consists of deferral contributions made by the director and hypothetical credited gains or losses

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COMPENSATION OF DIRECTORS
 

attributable to investments elected by the director, or by our Compensation Committee if the director fails to make investment elections. Directors are 100% vested in their deferral accounts at all times. Ms. Bertsch, Admiral Mies and Messrs. Krieg, LeMasters and Nardelli elected to defer 100% of their cash retainer in 2018. No other directors made a deferral election with respect to their cash retainer in 2018. Amounts reported in the Director Compensation Table include amounts deferred in 2018.
Stock Awards.  In addition to the cash payments provided to our directors, each non-employee director was entitled to receive a number of restricted stock units equal to $120,000 (prorated by quarter for partial terms) divided by the closing price of our common stock on the grant date, rounded down to the nearest whole share. The awards of restricted stock units were granted under our 2010 LTIP and vested immediately on the date of grant. As a result, all of our non-employee directors own equity in the Company.
The amounts reported in the “Stock Awards” column represent the grant date fair value computed in accordance with FASB ASC Topic 718. Grant date fair values are determined using the closing price of our common stock on the date of grant. Each non-employee director, except for Mr. Burbach, received an annual equity grant of 1,802 restricted stock units on May 9, 2018 with a grant date fair value of $119,941 based on the closing price of our common stock of $66.56 per share. Mr. Burbach joined the Board on August 9, 2018 and received a prorated annual equity grant of 1,434 restricted stock units on that date with a grant date fair value of $89,969 based on the closing price of our common stock of $62.74 per share. There were no unvested stock awards or unexercised option awards (whether or not exercisable) held by the non-employee directors as of December 31, 2018. No option awards were granted to directors in 2018.
Under our 2010 LTIP, directors may elect to defer payment of all or a portion of their stock awards. Ms. Bertsch, Admiral Mies and Messrs. Fees, Jaska, Krieg, LeMasters, Nardelli and Pryor each elected to defer 100% of their 2018 stock awards. Amounts reported in the Director Compensation Table include amounts deferred in 2018.
 
All Other Compensation. We have a travel and reimbursement policy pursuant to which we reimburse directors for travel and other expenses incurred in connection with business of the Board. The presence of a director’s spouse may be appropriate or necessary at certain meetings, conferences or other business-related functions. In those cases, pursuant to our policy, we pay the travel, meals and other expenses of the director’s spouse incurred while attending such functions. Pursuant to our reimbursement policy, to the extent the expenses of a spouse are imputed to the director as income, we will also reimburse the director for the taxes resulting from any such imputed income. In 2018, the incremental cost to the company to provide reimbursement for spousal travel, meals, activities and other expenses under our policy, together with the value of board gifts, was less than $10,000 per director and the aggregate cost for all non-employee directors as a group was $49,044. The aggregate amount paid to all non-employee directors as a group for reimbursement of taxes on imputed income was $28,802. The amounts reported in this column include tax reimbursements for Mses. Bertsch ($4,331) and Niland ($2,413); Messrs. Fees ($3,762), Jaska ($3,550), Krieg ($3,020) LeMasters ($3,355), Nardelli ($1,352) and Pryor ($3,103); and Admiral Mies ($3,916).


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NAMED EXECUTIVE PROFILES



NAMED EXECUTIVE PROFILES
The following profiles provide summary information regarding the experience of our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers who were employed by BWXT as of December 31, 2018. The Named Executive profiles provide biographical information, including age as of the Annual Meeting.
397136523_image23.jpg
 
Professional Highlights
Mr. Geveden has served as President and Chief Executive Officer since January 1, 2017, and served as our Chief Operating Officer from October 2015 until December 2016.
Previously, Mr. Geveden was Executive Vice President at Teledyne Technologies Incorporated ("Teledyne"), a provider of electronic subsystems and instrumentation for aerospace, defense and other uses. There he led two of Teledyne's four operating segments since 2013, and concurrently served as President of Teledyne DALSA, Inc., a Teledyne subsidiary, since 2014. Mr. Geveden also served as President and Chief Executive Officer of Teledyne Scientific and Imaging, LLC (2011 to 2013) and President of both Teledyne Brown Engineering, Inc. and Teledyne's Engineered Systems Segment (2007 to 2011).
 

Mr. Geveden is a former Associate Administrator of NASA, where he was responsible for all technical operations within the agency's $16 billion portfolio and served in various other positions with NASA in a career spanning 17 years.
Mr. Geveden serves on the board of directors of TTM Technologies, Inc.

REX D. GEVEDEN
Age 58
 
 
 
Tenure with BWXT: 4 years
 
 
 
President, Chief Executive Officer and Director
 
397136523_image24.jpg
 
Professional Highlights
Mr. Black was appointed as Senior Vice President and Chief Financial Officer upon the completion of our spin-off in June 2015 and prior to that served as our Vice President and Chief Accounting Officer since July 2010.
Previously, Mr. Black served as our Vice President and Controller (2007 to 2010) and Vice President and Controller of our Government Group (2003 to 2007).
 

He joined BWXT in 1991 as General Accounting Manager for the Nuclear Environmental Services Division. Other positions he held with BWXT include Financial Services Manager for the ASD Service Center Division, Controller for BWXT Federal Services, Inc., and Controller for BWXT Services, Inc.
DAVID S. BLACK
Age 57
 
 
 

Tenure with BWXT: 28 years
 
 
 

Senior Vice President and Chief Financial Officer
 
397136523_dulingjoelhigh.jpg
 
Professional Highlights
Mr. Duling has served as the President of our subsidiary, BWXT Nuclear Operations Group, Inc. ("BWXT NOG"), overseeing our Nuclear Operations Group segment since June 2018.
Mr. Duling previously served as President of Nuclear Fuel Services, Inc., one of our subsidiaries, from 2014 to 2018.
He has almost 30 years of extensive management experience in manufacturing, program execution and nuclear operations.
 

Mr. Duling served as Vice President of Production at the Y-12 National Security Complex, Director of the Specific Manufacturing Capability project at Idaho National Laboratory and Site Manager of the Naval Reactors Facility decommissioning project, among other roles.



JOEL W. DULING
Age 56
 
 
 
Tenure with BWXT: 13 years
 
 
 
President, BWXT Nuclear Operations Group, Inc.
 

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NAMED EXECUTIVE PROFILES
 

397136523_lovingrickhigh.jpg
 
Professional Highlights
Mr. Loving has served as our Senior Vice President, Human Resources, since July 2016.
Prior to joining BWXT, Mr. Loving served for 8 years with McDermott, most recently as Senior Director, International Human Resources, responsible for the global delivery of human resources programs and services.
Mr. Loving also served as Senior Director, Human Resources for the Middle East, India and Caspian regions for J. Ray McDermott, S.A. Dubai, U.A.E. and as McDermott's Global Director of Human Resources Business Services.
 

Prior to joining McDermott, Mr. Loving held numerous management positions within BWXT for over 29 years when it was a McDermott subsidiary.


RICHARD W. LOVING
Age 63
 
 
 
Tenure with BWXT: 3 years
 
 
 
Senior Vice President, Human Resources
 
397136523_mccabetomhigh.jpg
 
Professional Highlights
Mr. McCabe has served as our Senior Vice President, General Counsel, Chief Compliance Officer and Secretary since July 2018.
Prior to joining BWXT, Mr. McCabe served as Executive Vice President, General Counsel, Chief Compliance Officer and Secretary (or similar roles) of Orbital ATK, Inc. (and its predecessor, Orbital Sciences Corporation) from 2014 to 2018.
He also served as Senior Vice President, General Counsel and Secretary with Alion Science and Technology Corp., an advanced engineering and technology solutions provider, from 2010 to 2014, as well as Executive Vice President and General Counsel, and President of the federal business, of Braintech, Inc., an automated vision systems for industrial and military robots, from 2008 to 2010.
 

Previously, Mr. McCabe held legal roles with XM Satellite Radio, COBIS Corporation and what is now AT&T Government Solutions, and CEO and a member of the board of directors of COBIS Corporation (and its predecessor, MicroBanx).
Prior to that, Mr. McCabe was an attorney in private practice.
Mr. McCabe has a bachelor’s degree from Georgetown University and a juris doctorate and masters of business administration from the University of Notre Dame.


THOMAS E. MCCABE
Age 64
 
 
 
Tenure with BWXT: 1 year
 
 
 
Senior Vice President, General Counsel, Chief Compliance Officer and Secretary
 

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PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION

PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking stockholders to approve an advisory resolution on our executive compensation as reported in this proxy statement. Our Board has adopted a policy to hold annual advisory votes on executive compensation.
It is our belief that our ability to hire, retain and motivate employees is essential to the success of the Company and its stockholders. Therefore, we generally seek to provide reasonable and competitive compensation for our executives with a substantial portion in the form of performance-based compensation.
 
Accordingly, we submit the following resolution to stockholders at the Annual Meeting:
RESOLVED, that the stockholders of BWX Technologies, Inc. approve, on an advisory basis, the compensation of executives, as such compensation is disclosed pursuant to Item 402 of Regulation S-K in this proxy statement under the sections entitled “Compensation Discussion and Analysis” and “Compensation of Executive Officers.”
 
EFFECT OF PROPOSAL
Although the resolution to approve our executive compensation is non-binding, it serves as an opportunity for us, our Board and Compensation Committee to gain valuable stockholder feedback on our executive compensation decisions and practices. Even in years when the resolution is approved, the Board and Compensation Committee retain discretion to change executive compensation from time to time if they conclude that such a change would be in the best interests of the Company and its stockholders. Our Board and its Compensation Committee value the opinions of stockholders on important matters such as executive compensation and will carefully consider the results of this advisory vote when evaluating our executive compensation programs.
 
RECOMMENDATION AND VOTE REQUIRED
Our Board recommends that stockholders vote “FOR” the approval of executive compensation. The proxy holders will vote all proxies received FOR approval of this proposal unless instructed otherwise. Approval of this proposal requires the affirmative vote of a majority of our shares of common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. Because abstentions are counted as present for purposes of the vote on this matter but are not votes “FOR” this proposal, they have the same effect as votes “AGAINST” this proposal. Broker non-votes will not have any effect on this proposal.


COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (the “CD&A”) provides detailed information and analysis regarding the compensation of our Named Executive Officers (our “Named Executives”) as reported in the Summary Compensation Table and other tables located in the “Compensation of Executive Officers” section of this proxy statement.
This CD&A is divided into four sections:
Section 1: Executive Summary. In this section, we highlight our company performance, key compensation decisions and outcomes during 2018.
Section 2: Compensation Structure. In this section, we review our 2018 compensation philosophy, elements and processes.
Section 3: Compensation Analysis and Outcomes. In this section, we review the elements of 2018 total direct compensation, including: annual base salary, annual incentive compensation and long-term incentive compensation.
Section 4: Other Benefits and Practices. In this section, we review perquisites, post-employment arrangements and other compensation-related practices.

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SECTION 1: EXECUTIVE SUMMARY
2018 HIGHLIGHTS
Consolidated revenue was up 6.6% to $1.8 billion compared to the prior year.
GAAP and Non-GAAP operating income increased 4.4% and 7.1%, respectively, compared to the prior year.
GAAP and Non-GAAP earnings per share ("EPS") were $2.27 and $2.39, an increase of 54.4% and 16.6%, respectively, compared to the prior year.
397136523_revopincearningsprinta03.jpg
* Please refer to Appendix A, "Reconciliation of Reported (GAAP) to Adjusted (Non-GAAP) Results," for a reconciliation of adjusted results, including adjusted operating income and adjusted earnings per share, to reported results for 2018 and 2017.

In July 2018, we completed the acquisition of the Nordion medical radioisotope business, a leading global manufacturer and supplier of critical medical radioisotopes and radiopharmaceuticals for research, diagnostic and therapeutic use. This business will be the platform from which we plan to launch our Molybdenum-99 product line, as well as future radioisotope-based imaging and therapeutic products.
In 2018, we returned $279 million to stockholders through $64 million of dividends and $215 million of share repurchases.

TOTAL STOCKHOLDER RETURN
The following graph depicts the cumulative total stockholder return of BWXT for the three and five years ended December 31, 2018 relative to those of the S&P 500 Index, the S&P Aerospace and Defense Select Index ("S&P A&D Select") and our custom compensation peer group for 2018 (see below).
Three-Year and Five-Year Total Shareholder Return as of December 31, 2018(1) 
397136523_shareholderreturnsa09.jpg
(1)
Measured by dividing (i) the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the applicable share price at the end and the beginning of the measurement period by (ii) the share price at the beginning of the measurement period. Results for the compensation peer group do not include Orbital ATK, Inc. and KLX Inc., which were acquired in June 2018 and October 2018, respectively.


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STOCKHOLDER ENGAGEMENT AND 2018 PLAN DESIGN
Our executive compensation plan for 2018 is consistent with our historical pay-for-performance approach that incorporates feedback from our stockholder outreach efforts and metrics designed to drive the performance of BWXT.  Since the spin-off of our former Power Generation business in June 2015 (the "spin-off"), we engaged directly with our stockholders on executive compensation, governance and other topics and have continued this engagement directly with those stockholders who accepted our invitation to discuss these topics, as well as other environmental, social and governance matters.
Based on feedback from our stockholders, our Compensation Committee continued with a market-based, pay-for-performance structure for our executive compensation program and also enhanced the performance-based components of the program following the spin-off. There were no material changes made to the 2018 executive compensation program. Below are some of the key design attributes of BWXT's 2018 plan design.
Executive Compensation Plan Design
Changes following the Spin-Off
  
2018 Design
Re-Instituted Performance RSUs; Eliminated Stock Options
  
Performance RSUs continue to comprise 60% of long-term incentive award opportunity
 
Financial Metrics for Performance-Based Long-Term Incentive Awards
  
Earnings per share and return on invested capital continue to be the preferred metric to align incentives with strategic initiatives to drive growth and promote capital management
 
Earnings per share performance metric continues to exclude the impact of Company share repurchases
Custom Peer Group(1)
  
Custom peer group established based on industry and size parameters of BWXT and regularly reviewed
 
Increased Financial Performance Weighting in Annual Incentive Program
  
Financial, safety and individual performance weighting continue to be 80%, 10% and 10%, respectively, of the total award opportunity
(1)
See the Compensation Discussion and Analysis for additional information on how the Compensation Committee uses the Primary Benchmark and Secondary Benchmark Peer Groups.

The following describes the performance-based components of our 2018 program for our officers:
 
397136523_incentiveawardincentperfa02.jpg
 
Financial Performance Metrics
for Performance-Based RSUs
 
Financial Performance Metrics
for Annual Incentive Awards
 
 
50% Earnings Per Share*
50% Return on Invested Capital
 
55% Operating Income
25% Free Cash Flow
 
 
*Excludes the impact of Company share repurchases
 
 
 



 

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The Compensation Committee set our financial goals to achieve meaningful year-over-year growth in full-year operating income and free cash flow. Threshold performance under the operating income goals (described below) must be met for any payout to be made under the annual incentive plan.
ANNUAL INCENTIVE PLAN FINANCIAL METRICS AND GOALS FOR 2018 PERFORMANCE PERIOD
(80% of Pay-Out)

Metric
(Weight)

Rationale

BWXT
Business
Unit

Threshold Goal
80% Performance
50% Payout

Target Goal
100% Performance
100% Payout

Maximum Goal
120% Performance
200% Payout

Actual
Operating Income
(55%)
Our primary measure of profitability, which we believe is a strong driver of shareholder value
BWXT
Consolidated
 
$251.8 million
 
$314.7 million
 
$377.7 million
 
$311.5 million
 
Free Cash
Flow
(25%)
 
Supports strategic business plan to promote strong cash flow generation
BWXT
Consolidated
 
$56.0 million
 
$70.0 million
 
$84.0 million
 
$74.5 million(1)
 
(1)
This result reflects a downward adjustment applied by the Compensation Committee to offset capital expenditure changes due to the Nordion acquisition.

STRONG COMPENSATION GOVERNANCE PRACTICES
The following are practices we follow to incentivize performance and foster strong corporate governance on our compensation program:
WHAT WE DO:
WHAT WE DON’T DO:
 ü Pay for Performance. Significant emphasis on incentive and performance-based compensation.
ü Compensation program responsive to stockholder feedback. We seek stockholder input and perspective on our compensation program.
ü Benchmarking to Similarly Sized Companies. We avoid benchmarking executive pay to oversized peers by utilizing data that is revenue regressed to account for our Company size. 
ü Clawbacks. We can recover compensation under our annual and long-term incentive plans in various circumstances. 
ü “Double Trigger” cash severance in a change-in-control. 
ü Limited perquisites and tax reimbursements. 
ü Stock Ownership Requirements. We maintain robust requirements for our executives and board members.
ü Independent Compensation Consultant. 
 
 X  No Hedging or Pledging. We do not permit hedging or pledging of our securities by our officers and directors.
X  No Excise Tax Gross-ups. There are no tax gross-ups on change-in-control benefits.
X  No Employment Agreements for our Executive Officers.
X  No Excessive Risk-Taking in Our Incentive Compensation. Our annual and long-term incentive programs use multiple performance metrics and capped pay-outs and other features intended to minimize the incentive to take overly risky actions.
X  No guaranteed minimum pay-out for our annual or long-term performance-based awards.
 

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SECTION 2: COMPENSATION STRUCTURE
PHILOSOPHY AND OBJECTIVES OF EXECUTIVE COMPENSATION
We seek to provide reasonable and competitive compensation to executives through programs structured to:
attract and retain well-qualified executives;
incent and reward short- and long-term financial and other company performance, as well as individual contributions; and
align the interests of our executives with those of our stockholders.
We also subscribe to a “pay-for-performance” philosophy when designing executive compensation. For us that means a substantial portion of an executive’s target compensation should be “at risk” and performance-based, where the value of one or more elements of compensation is tied to the achievement of pre-determined financial and/or other measures we consider important drivers in the creation of stockholder value. Our compensation philosophy requires that a substantial portion of total compensation be designed to appropriately balance short- and long-term performance incentives to align our Named Executives’ interests with those of our stockholders.
ELEMENTS OF EXECUTIVE COMPENSATION
To support our compensation philosophy and objectives, our executive compensation program consists of the key elements identified in the graphs below. In addition to the elements of Total Direct Compensation, we also offer other benefits and practices to promote retention. See “Section 3: Other Benefits and Practices” on the following pages of this CD&A for additional information on these benefits and practices.
The Compensation Committee does not set a specific target allocation among the elements of total direct compensation; however, long-term incentive compensation typically represents the largest single element of target total direct compensation, and performance-based compensation constitutes the substantial majority of a Named Executive’s target total direct compensation, as demonstrated in the chart below.
The following table and chart reflect the key elements and proportion of each Named Executive’s target total direct compensation for 2018, the rationale for each element, and the financial performance metrics selected for our 2018 annual incentive awards. We typically use the term “Total Direct Compensation” to refer to an executive’s annual base salary, the dollar value of the executive’s target annual incentive award and the dollar value of the executive’s long-term incentive opportunity.
2018 TOTAL DIRECT COMPENSATION ELEMENTS
Element
Description
Primary Design Objectives
Base Salary
Annual fixed cash compensation
Attract and retain leadership talent
Annual
Incentive
Pay-out based on 80% financial performance goals, 10% safety goals and 10% individual goals
Financial performance metrics (% of overall pay-out):
operating income (55%) and
free cash flow (25%)
Financial results determine payout multiplier
No pay-out unless at least threshold operating income goal is achieved
See below for discussion of financial performance metrics
Emphasize operating results by heavily weighting financial performance
Select financial performance metrics that align with strategic priorities
Align compensation with safety, which we view as a key component for the success of our business
Retain individual performance component to allow the exercise of discretion to differentiate among Named Executive performance
Long-Term
Incentive
Long-term incentive value allocated among the following mix of equity award types:
40% 3-year ratable vesting restricted stock units
60% 3-year cliff vesting performance restricted stock units
Align interest of executives with our stockholders
Promote executive focus on long-term company performance
Utilize performance metrics that management can impact and are meaningful drivers of long-term value creation

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 2018 TOTAL DIRECT COMPENSATION
397136523_charttotaldircomp2017prina02.jpg
DETERMINING NAMED EXECUTIVE COMPENSATION
The following is a summary of responsibilities and data sources used by our Compensation Committee to determine our executive compensation program.
How Compensation Decisions Are Made
Compensation Committee
The Compensation Committee establishes the target total direct compensation of our executives and administers other benefit programs.
The committee reviews the design of the program and establishes the performance metrics and goals under the incentive programs.
The committee evaluates Company and individual performance outcomes and ensures the appropriate balance of performance metrics is used.
Compensation Planning Process
Members of the Compensation Committee and our management team evaluate the advisory vote on executive compensation and stockholder feedback regarding our compensation programs and governance practices.
We engage with and solicit stockholder feedback regarding compensation, environmental, social and governance matters, which are reported to the Board and committees; our Compensation Committee discusses plan design alternatives and considerations with the executive compensation consultant; and existing plan performance results are monitored.
Annual and long-term compensation plan design and performance metrics and targets are approved.
How Our Compensation Committee Sets Annual and Long-Term Incentive Performance Goals
Determining
Financial Goals
Our Compensation Committee strives to set financial performance goals that are rigorous enough to motivate our executives and our businesses to achieve meaningful increases over prior year results, but within reasonably obtainable parameters to discourage pursuit of excessively risky business strategies.
For our annual incentive plan, the committee set financial performance goals as follows:
Operating Income (55%):  The committee set a target goal representing a 9.7% year-over-year increase following a bottoms-up operations and management review.
Free Cash Flow (25%): The committee set the target goal based on the Company's 2018 free cash flow forecast.
The committee set our 2018 long-term incentive plan financial performance goals as follows:
3-Year Cumulative Earnings Per Share (50%): The target goal was set to align with the Company's strategic plan and to drive towards mid to high range of external analyst guidance.
Return on Invested Capital (50%):  The target goal was established to be higher than the average return on invested capital of our compensation peer group and historical internal target performance.


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Determining Safety Goals
To promote rigor and continuous improvement in our safety goals, the committee set our primary safety goals, Total Recordable Incident Rate ("TRIR") and Days Away, Restricted or Transferred ("DART"), to achieve a 5% improvement on the average of the prior three years' results, while still incentivizing continuous improvement by capping safety performance payout at target if performance does not meet or exceed prior year's results.
Resources and Advisers to Our Compensation Committee
Independent
Outside Consultant
Provides the Compensation Committee with information and advice on the design, structure and level of executive and director compensation.
Attends Compensation Committee meetings, including executive sessions.
Engaged and directed by the Compensation Committee.
Works directly with our Compensation Committee on executive compensation, including our Chief Executive Officer’s compensation.
Korn Ferry Hay Group served as executive compensation consultant to the Compensation Committee for 2018.
In 2018, the Compensation Committee considered rotation of the executive compensation consultant and conducted a search for a new consultant. As a result of this process, Compensation Committee retained Exequity LLP as its executive compensation consultant for executive and director compensation matters for 2019.
Management
Our Human Resources department, in consultation with the Compensation Committee chair and Hay Group, prepares information for the Compensation Committee, including market data provided by Hay Group and recommendations of our Chief Executive Officer regarding compensation of other executives.
Our Chief Executive Officer and senior Human Resources personnel attend committee meetings and, as requested by the Compensation Committee, participate in deliberations on executive compensation (except in respect to their own compensation) and select executive sessions.
Stockholder
Outreach and
Stockholder Vote
on Executive
Compensation
We provide our stockholders with the opportunity to cast an annual advisory vote on the compensation of our Named Executives.
Over 97% of the votes cast at our 2018 Annual Meeting of Stockholders on the executive compensation proposal were voted in favor of our executive compensation.
Although our stockholders expressed strong support for our executive compensation proposals in the past three years, members of our management team have conducted and plan to continue to conduct outreach programs with our stockholders, to discuss executive compensation, corporate governance, environmental, social and other matters. See Stockholder Outreach under Corporate Governance above for more information.
Our Compensation Committee considers stockholder feedback when selecting financial performance metrics and the mix of equity award vehicles. Our stockholder engagement efforts have informed our committee’s prior decisions to eliminate stock options and to select return on invested capital as a long-term performance metric.

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How We Set Target Compensation
Target +/-15% of
Median Compensation
We believe compensation is competitive at or near the median compensation paid for comparable positions.
We generally seek to set target compensation for each element of total direct compensation and in the aggregate at approximately +/-15% of the median compensation determined through benchmarking (referred to as “median” or “median range” in this CD&A).
The Compensation Committee may adjust a Named Executive’s target compensation, including setting it outside the median range, for a variety of reasons, including:
performance;
tenure;
experience;
succession planning;
internal equity; and
other factors or situations that are not typically captured by looking at standard market data.
Compensation actually earned by a Named Executive may be outside the median range targeted, depending on the achievement of performance goals, fluctuations in our stock price and/or satisfaction of vesting conditions.
How We Benchmark Total Direct Compensation
Primary Benchmark:
Revenue-Regressed
Hay Group Survey
Data
Hay Group’s Industrial Executive Compensation Survey served as the Compensation Committee’s primary benchmark for setting the amount of executive compensation in 2018. References to “median range” are references to this survey data.
Hay Group applies revenue regression to the survey data to account for our Company size relative to the organizations comprising the survey.
On an annual basis, Hay Group provides the Compensation Committee with an analysis comparing prior year executive target compensation to compensation for comparable positions at the 25th, 50th (median) and 75th percentiles using Hay Group survey data and, as applicable, data from public company proxy statements.
This survey represented Hay Group’s proprietary annual compensation survey tracking 2017 executive compensation from over 300 general industry organizations.
The component companies comprising the 2017 Hay Group survey are determined by Hay Group without input from the Compensation Committee.
Secondary
Benchmark:
Custom Peer Group
Proxy Data
Proxy data from our custom peer group serves as a secondary, supplemental benchmark to the Hay Group Survey Data.
For our committee’s 2018 executive compensation review, this group consisted of 16 companies with whom we compete for executive talent from the aerospace and defense industry. The companies comprising our custom peer group for 2018 are listed at the end of this CD&A.
Compensation information from this group represented the actual, non-regressed 2016 compensation reported in 2017 publicly available SEC filings.
Because we compete with the custom peer companies for executive talent, the Compensation Committee reviewed the applicable proxy data when setting target compensation for our Named Executives, but it was not weighted in the determination of median compensation, except to the extent any of the Company’s custom peer companies were also a component company in Hay Group’s Industrial Executive Compensation Survey.
The committee also utilizes the custom peer group to benchmark the design of our incentive compensation.

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SECTION 3: COMPENSATION ANALYSIS AND OUTCOMES
2018 TARGET TOTAL DIRECT COMPENSATION OVERVIEW
The chart below shows the 2018 target total direct compensation for each Named Executive. The 2018 target total direct compensation for each of our Named Executives was within +/-15% of the survey range applicable to the executive.  
 
2018 TARGET TOTAL DIRECT COMPENSATION
Named Executive
 
Annual
Base Salary
($)
 
Annual
Incentive
($)
 
Long-Term
Incentive
($)
 
Target Total Direct
Compensation
($)
Rex D. Geveden
 
900,000
 
900,000
 
2,700,000
 
4,500,000
David S. Black
 
480,000
 
312,000
 
650,000
 
1,442,000
Joseph W. Duling(1)
 
450,000
 
293,000
 
500,000
 
1,243,000
Richard W. Loving
 
390,000
 
195,000
 
450,000
 
1,035,000
Thomas E. McCabe(2)
 
525,000
 
341,000
 
300,000
 
1,166,000
James D. Canafax(3)
 
525,000
 
341,000
 
750,000
 
1,616,000
Joseph G. Henry(4)
 
500,000
 
325,000
 
550,000
 
1,375,000
(1) On May 1, 2018, Mr. Duling received a salary increase in connection with his promotion to President, BWXT NOG.
(2) Mr. McCabe joined the Company on July 23, 2018, and his long-term incentive annual grant was prorated for 2018.
(3) Mr. Canafax resigned from the Company on May 8, 2018.
(4) Mr. Henry retired from the Company on June 22, 2018.
ANNUAL BASE SALARY
Our Compensation Committee generally reviews base salaries of our Named Executives on an annual basis with any adjustments to base salary effective April 1 of each year, with occasional reviews during the year to reflect promotions, increases in responsibilities or other compensation-related events. Set forth below are the base salaries for each of our Named Executives, as determined by the Compensation Committee based on its review of comparative market data for each Named Executive. 
2018 ANNUAL BASE SALARY BENCHMARKING DATA 
Named Executive
 
January 2018 Salary ($)
 
April 2018 Salary ($)
 
% Variance from Median (Survey) 
 
% Variance from
Median (Proxy)
Mr. Geveden
 
700,000
 
900,000
 
-4
 %
 
 
3
 %
 
Mr. Black
 
450,000
 
480,000
 
14
 %
 
 
-3
 %
 
Mr. Duling(1)
 
301,000
 
450,000
 
18
 %
 
 
N/A

 
Mr. Loving
 
350,000
 
390,000
 
4
 %
 
 
8
 %
 
Mr. McCabe(2)
 
N/A
 
525,000
 
22
 %
 
 
24
 %
 
Mr. Canafax(3)
 
510,000
 
525,000
 
22
 %
 
 
24
 %
 
Mr. Henry(4)
 
470,000
 
500,000
 
6
 %
 
 
16
 %
 
(1) 
On May 1, 2018, Mr. Duling received a salary increase in connection with his promotion to President, BWXT NOG, and his April 2018 salary is reflected as of that date.
(2) Mr. McCabe joined the Company on July 23, 2018, and his April 2018 salary is reflected as of that date.
(3) Mr. Canafax resigned from the Company on May 8, 2018.
(4) Mr. Henry retired from the Company on June 22, 2018.
ANNUAL INCENTIVE COMPENSATION
Overview and Design. We pay annual incentives to drive the achievement of key business results and to recognize individuals based on their contributions to those results. The Compensation Committee administers cash-based annual incentive compensation for our Named Executives through our Executive Incentive Compensation Plan (“EICP”), which was previously approved by our stockholders. The following provides details on the performance measures selected by our Compensation Committee for our 2018 annual incentive plan.

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2018 EICP Performance Measures
Financial (80%)
 
•  Operating Income (55%)
 
•  Free Cash Flow (25%)
Rationale:  Operating Income is our primary measure of profitability, which we believe is a strong driver of shareholder value; Free Cash Flow promotes management focus on strong cash flow generation to support our balanced capital deployment strategy between dividends, mergers and acquisitions and share repurchases.
 
Key Features:  No pay-out unless at least threshold BWXT consolidated operating income performance goal is achieved; financial performance determines the maximum amount a Named Executive can earn.
 
Pay-Out Calculation: Ranges from 0% - 200% based on achievement of goals; result is referred to as the “Financial Multiplier.”
Safety (10%)
 
•  TRIR (5%)
•  DART (5%)
Rationale:  Key component for the success of our business; TRIR and DART focus attention on day-to-day operational safety by measuring, respectively, (1) the rate of recordable workplace injuries, and (2) the severity of injuries.
 
Key Features:  Safety “circuit breaker” limits safety result pay-out to 1X if TRIR and DART results met or exceeded target goals but did not improve on prior year results; target performance for TRIR and DART set at a 5% improvement over the average score of the prior three year period.
 
Pay-Out Calculation:  Ranges from 0% - 100%, multiplied by the “Financial Multiplier;” referred to as the “Safety Performance Result.”
Individual (10%)
Rationale and Key Feature:  Allows our CEO (or the Compensation Committee, in the case of Mr. Geveden) to differentiate incentive pay-outs among our Named Executives by exercising discretion on the target amount of each Named Executive’s individual performance component, based on the assessment of each Named Executive’s individual performance during 2018.
 
Pay-Out Calculation:  Ranges from 0 - 100%, multiplied by the “Financial Multiplier;” referred to as the “Individual Performance Result.”
 
The Compensation Committee established the following financial performance goals for 2018.
 
2018 EICP Financial Goals
Metric
(Weight)
BWXT
Business
Unit
Threshold Goal
80% of Target
50% Payout
Target Goal
100% of Target
100% Payout
Maximum Goal
120% of Target
200% Payout
Actual
Operating Income (55%)
BWXT
Consolidated
$251.8 million 
$314.7 million 
$377.7 million
$311.5 million
Free Cash Flow (25%)
BWXT
Consolidated
$56.0 million
$70.0 million
$84.0 million
$74.5 million(1) 
(1) This result reflects a downward adjustment applied by the Compensation Committee to offset capital expenditure changes due to the Nordion acquisition.
Regardless of the level of performance achieved, the Compensation Committee retains the right to adjust the amount of annual incentive compensation payable in its discretion.
Summary of EICP Payments. The total payout percentage represents the combined results of applicable financial, individual and safety performance for each Named Executive, except Mr. Henry who did not receive an individual performance component following his retirement in June 2018. The amount paid under the EICP for 2018 can be illustrated by the following formula:
Total Cash Award = Earnings from Salary  x  Target  %  x  Total Payout  % (0 – 200%)
The Total Payout % is the sum of the Financial Multiplier, Safety Performance Result and Individual Performance Result.
The following table indicates the amount earned under the EICP by our Named Executives based for the 2018 performance period (January 1 - December 31, 2018). For each Named Executive, the financial performance result

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(the Weighted Financial Performance Percentage) established the maximum eligible amount of EICP for 2018 (the Eligible Amount).
ANALYSIS OF 2018 EICP PAYOUT (1) 
 
Mr. Geveden
Mr. Black
Mr. Duling
Mr. Loving
Mr. McCabe
Mr. Henry
Earnings from Salary
$
850,000

$
472,500

$
401,583

$
380,000

$
231,510

$
242,500

Target Percentage
100
%
65
%
58
%
50
%
65
%
65
%
Weighted Financial Performance Percentage(2)
107.9
%
107.9
%
103.1
%
107.9
%
107.9
%
103.1
%
Eligible Amount(3)
$
917,150

$
331,388

$
240,139

$
205,010

$
162,370

$
162,511

Total 2018 EICP Pay-Out(4)
$
853,315

$
314,926

$
235,682

$
194,826

$
154,304

$
138,079

Total 2018 Pay-Out Multiplier
100.4
%
102.5
%
101.2
%
102.5
%
102.5
%
87.6
%
(1)
Mr. Duling's target percentage is a blended rate of his 45% target prior to his promotion and 65% target thereafter. Mr. Canafax was not eligible for a 2018 EICP payout following his resignation on May 8, 2018. Mr. Henry was eligible for a prorated EICP payout for 2018.
(2)
The financial performance for all Named Executives is based on BWXT consolidated financial results, except for Messrs. Duling and Henry, for whom operating income is measured on the results for the Nuclear Operations Group.
(3)
Amounts may not foot due to rounding.
(4)
Amount is based upon financial, safety and individual performance results.
Analysis of Target Percentage.  The Compensation Committee set target percentages indicated in the table during its annual review of executive compensation in March 2018. The following table shows the 2018 target annual incentive compensation for each Named Executive based on the executive’s target percentage and projected 2018 earnings from salary, relative to his benchmark. The target percentages were not changed for the Named Executives in 2018.
2018 TARGET ANNUAL INCENTIVE COMPENSATION
Named Executive
 
EICP
Target %(1)
 
% Variance
from Median
(Survey Data)
 
% Variance
from Median
(Proxy Data)
Mr. Geveden
 
100%
 
-3
 %
 
 
-10
 %
 
Mr. Black
 
65%
 
-6
 %
 
 
-10
 %
 
Mr. Duling
 
58%
 
-19
 %
 
 
N/A

 
Mr. Loving
 
50%
 
-14
 %
 
 
-10
 %
 
Mr. McCabe
 
65%
 
0
 %
 
 
-5
 %
 
Mr. Canafax
 
65%
 
0
 %
 
 
-5
 %
 
Mr. Henry
 
65%
 
-19
 %
 
 
-15
 %
 
(1)
Each Named Executive’s EICP target compensation was calculated by multiplying the applicable EICP Target % by the applicable projected earnings from salary during 2018. See “Executive Compensation – Summary Compensation Table” for each Named Executives’ earnings from salary during 2018.
At the time the Compensation Committee established the 2018 financial goals, it designed the 2018 annual incentive plan to exclude from actual operating income results the effect of certain pre-established items that it believed would not reflect operating performance, including (1) expenses associated with restructuring activity or asset acquisitions or dispositions, (2) pension accounting mark-to-market losses, (3) losses in respect of legal proceedings, divestitures, and impairment to assets, (4) acquisition related amortization and (5) certain other unusual or non-recurring items.

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Analysis of 2018 EICP Performance Results.  The following table summarizes the level of attainment of the financial and safety results relative to the target goals.
2018 ANNUAL INCENTIVE PERFORMANCE RESULTS(1) 
397136523_chart-d7c50c048d58ab93031a02.jpg
(1) For purposes of calculating Messrs. Duling's and Henry's EICP payout, operating income results for the Nuclear Operations Group were 93.4% of target.

Analysis of Financial Performance.  The adjusted financial performance results for the 2018 Performance Period achieved a 107.9% pay-out for each of our Named Executives (103.1% for Messrs. Duling and Henry) before taking into account safety and individual performance. These results included mandatory, pre-established adjustments from our GAAP operating income results for the items discussed on the previous page.
Analysis of Safety and Individual Performance.  The following table sets forth the threshold and target goals applicable to each safety metric and the level of achievement in 2018:
2018 Safety Goals and Actual Results
Safety Metric
 
Threshold
 
Target
 
Actual Result
TRIR
 
0.95
 
0.82
 
0.69
DART
 
0.30
 
0.26
 
0.34
Total Safety Multiplier
 
4%
 
10%
 
5%
Our Named Executives are also evaluated on pre-established individual performance goals. For Mr. Geveden, the Compensation Committee evaluates his individual performance based on the following criteria: (1) leadership; (2) strategic planning; (3) financial results; (4) succession planning; (5) communications; and (6) Board relations. Our other Named Executives are evaluated on performance goals specific to their respective roles and responsibilities. 
LONG-TERM INCENTIVE COMPENSATION
Analysis of 2018 Target Long-Term Incentive Awards.  In determining the type and mix of stock granted to our Named Executives, the Compensation Committee seeks to maintain a strong correlation between pay and performance while promoting retention of key employees. The Compensation Committee allocated 2018 long-term incentive compensation as follows:
2018 Long-Term Incentive Vehicles
397136523_image32.jpg

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COMPENSATION DISCUSSION AND ANALYSIS

In 2016, the Compensation Committee made the following enhancements to our long-term incentive award mix:
returned performance-based stock awards to long-term incentive mix after suspending their use for one year due to the unique challenges of using performance awards during the year of the spin-off of our former Power Generation business;
increased the proportion of the performance-based stock award vehicle to 60% of the total long-term incentive mix; and
eliminated the use of stock options as an award vehicle.
We continued these design elements in the 2017 and 2018 long-term incentive plans.
PERFORMANCE RESTRICTED STOCK UNITS
Attributes
Rationale
Vest between 0% and 200% of the amount of initial shares granted depending on cumulative diluted EPS performance (50% weighting) and average return on invested capital ("ROIC") performance (50% weighting) attained during performance period.
Performance period runs from January 1, 2018 through December 31, 2020.
For each performance measure, results at the threshold, target and maximum goals produce vesting at 50%, 100% and 200%, respectively, of the initial performance restricted stock units granted.
Vesting for performance results between threshold and target or target and maximum is determined by linear interpolation. No amount will vest with respect to any performance measure unless threshold results are attained.
We believe that over the long-term, there is a high degree of correlation between earnings per share and stock price.
Accordingly, we use earnings per share in long-term stock-based compensation to more closely align our goals with stockholder interests.
We believe using different performance measures than in the annual incentive compensation program reduces the focus on a single metric at the expense of others, helping to mitigate risk related to incentive compensation.
Including ROIC helps promote management focus on asset utilization.

The Compensation Committee sets target and maximum goals based on the sum of earnings per share estimates for each year of the Performance Period. To complement financial results under our annual incentive compensation program, we derived the estimates from the operating income target goal used in 2018 annual incentive compensation and assumed earnings per share growth rates of 11% and 16% for target and maximum goals, respectively, excluding the impact of share repurchases.

We set the threshold goal at 80% of the cumulative earnings per share target goal, consistent with the structure of annual incentive compensation. Earnings per share results exclude the effect of share repurchases conducted during the performance period. We set threshold, target and maximum goals for average ROIC at 14%, 17% and 20%, which the Compensation Committee determined to be appropriate based on management’s projections of the Company’s financial results during the Performance Period and include 250 basis point increase to each goal compared to 2017 goals for tax reform.
For more information regarding the 2018 restricted stock units, see the Grants of Plan-Based Awards table under “Compensation of Executive Officers” below and disclosures under “Compensation of Executive Officers – Estimated Future Payouts Under Equity Incentive Plan Awards.”
2016 PERFORMANCE RESTRICTED STOCK UNITS
In 2016, the Committee established the following financial performance goals for the performance restricted stock units over the January 1, 2016 to December 31, 2018 performance period.
 
2016 Performance Restricted Stock Unit Goals
Metric
(Weight)
Threshold Goal
80% of Target
50% Payout
Target Goal
100% of Target
100% Payout
Maximum Goal
120% of Target
200% Payout
Actual
Three-Year Cumulative Earnings per Share (50%)
$3.81
 
$4.77
 
$5.01
 
$5.74(1)
 
Return on Invested Capital (50%)
11.5%
 
14.5%
 
17.5%
 
17.5%
 
(1) This result excludes share repurchases during the measurement period.

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Regardless of the level of performance achieved, the Compensation Committee retains the right to decrease the amount of long-term incentive compensation payable in its discretion.
Based on the exceeding the three-year cumulative earnings per share and return on invested capital goals, the Compensation Committee determined the number of shares earned under the 2016 Performance Restricted Stock Unit Award in February 2019. The following table indicates the shares earned under the LTIP by our Named Executives, except for Mr. Canafax whose shares were forfeited upon his resignation on May 8, 2018, for the 2016 to 2018 performance period (January 1, 2016 - December 31, 2018). 
ANALYSIS OF 2016 PERFORMANCE RESTRICTED STOCK UNIT PAYOUT
 
Mr. Geveden
Mr. Black
Mr. Duling
Mr. Loving
Mr. McCabe(2)
Mr. Henry(3)
Target Award (in Shares)
23,705

10,639

4,355

2,692


4,355

Weighted Financial Performance Percentage(1)
200.0
%
200.0
%
200.0
%
200.0
%

200.0
%
Total Earned Shares
47,410

21,278

8,710

5,384


4,355

Total 2018 Pay-Out Multiplier
200.0
%
200.0
%
200.0
%
200.0
%

100.0
%
(1)
The weighted financial performance is based on BWXT consolidated financial results 50% for three-year cumulative earnings per share and 50% for return on invested capital over the measurement period.
(2)
Mr. McCabe joined the Company in July 2018 and did not participate in the 2016 Performance Restricted Stock Unit award.
(3)
Mr. Henry retired in June 2018 and, pursuant to the terms of the award agreement, received 50% of 2016 Performance Restricted Stock Unit Award based on the Company's performance during the measurement period.
 
Value of 2018 Target Long-Term Incentive Compensation.  The following table shows the 2018 target long-term incentive compensation for each Named Executive relative to his benchmark.
2018 TARGET LONG-TERM INCENTIVE COMPENSATION
Named
Executive
 
Target
Value
 
% Variance from Median
(Survey Data)
 
% Variance from Median
(Proxy Data)
Mr. Geveden
 
 
$
2,700,000

 
 
-4
 %
 
 
-5
 %
 
Mr. Black
 
 
650,000

 
 
15
 %
 
 
-25
 %
 
Mr. Duling(1)
 
 
500,000

 
 
-14
 %
 
 
-2
 %
 
Mr. Loving
 
 
450,000

 
 
-5
 %
 
 
-10
 %
 
Mr. McCabe(2)
 
 
300,000

 
 
-45
 %
 
 
-63
 %
 
Mr. Canafax(3)
 
 
750,000

 
 
37
 %
 
 
-7
 %
 
Mr. Henry(4)
 
 
550,000

 
 
-5
 %
 
 
7
 %
 
(1)
Mr. Duling received a supplemental long-term incentive award in May 2018 in connection with his promotion to President, BWXT NOG.
(2)
Mr. McCabe joined the Company in July 2018 and received a prorated equity award of restricted stock units and performance restricted stock units at that time, which does not reflect the annual target value for his future long-term incentive compensation.
(3)
Mr. Canafax's 2018 LTIP award was forfeited upon his resignation on May 8, 2018.
(4)
Mr. Henry's 2018 LTIP award was forfeited upon his retirement on June 22, 2018.
Sizing Long-Term Incentive Compensation.  When granting stock, the Compensation Committee targets a dollar value rather than a number of shares, units or options. The number of restricted stock units granted can be expressed through the following formula:
Number of RSUs Granted = Target Value ($)  / Stock Valuation ($)
The target value was set by the Compensation Committee as previously discussed. The stock valuation was determined by Hay Group based on the closing price of our common stock on the NYSE on the date of grant. For restricted stock units, Hay Group adjusted the closing price to reflect the conditions of the stock grants, such as the vesting conditions and transfer restrictions. To ensure that restricted stock units vest in equal installments during the three-year vest term, the number of shares calculated was rounded to the nearest multiple of three. Because FASB ASC 718 does not calculate grant date fair values for financial reporting purposes using the same valuation, the target values of long-term incentive compensation may differ from the grant date fair values reported on the Summary Compensation Table and Grants of Plan Based Awards table.
 

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SECTION 4: OTHER BENEFITS AND PRACTICES
TRANSITION OF EXECUTIVE CHAIRMAN
On May 4, 2018, Mr. Fees, our Executive Chairman, transitioned to the role of Non-Executive Chairman of the Board as part of the Board's organization development and succession planning process. In connection with Mr. Fees’ transition to Non-Executive Chairman, he and the Company entered into a Transition Agreement, dated December 14, 2017 (the “Transition Agreement”). The Transition Agreement provided for the following compensation and benefits (in addition to certain other accrued benefits) for Mr. Fees through May 4, 2018 (the "Resignation Date"):
continued base salary of $50,000 per month (paid in two installments per month);
continued eligibility for the full 2017 annual incentive bonus under the Company’s EICP, subject to satisfaction of the applicable performance conditions;
eligibility for a 2018 incentive bonus under the EICP at the same target as established for 2017, subject to prorated payout at target through the Resignation Date; and
continued participation in certain of our employee benefit plans (subject to the terms and conditions of such plans), but not the Company’s executive severance plan.
Mr. Fees did not receive an executive long-term incentive award in 2018. The Transition Agreement amended Mr. Fees’ equity awards that remained outstanding on the Resignation Date to allow for (i) awards of time-vested restricted stock units to vest immediately upon the Resignation Date, and (ii) awards of performance restricted stock units to continue to vest on the vesting dates set forth in the applicable award agreements based on achievement of the performance goals. The treatment of Mr. Fees’ equity awards and certain other benefits as described above were conditioned upon his execution of a release and waiver of claims against the Company. In addition, the Transition Agreement also terminated Mr. Fees’ previously disclosed Change in Control Agreement as of the Resignation Date, and contains restrictions on Mr. Fees’ ability to compete with the Company and its affiliates, or solicit our employees, for three years following the Resignation Date.
OTHER BENEFITS AND PERQUISITES
Subject to applicable eligibility rules, our Named Executives receive all of the benefits offered to other BWXT employees generally, including medical and other health and welfare benefits and participation in our qualified defined plans. We offer these benefits to our Named Executives and other employees to promote retention. Our Named Executives receive additional limited perquisites, which we provide to attract and retain key personnel.
We provide the following perquisites to our Named Executives: relocation and temporary housing assistance, annual physicals, tax and financial planning services, reimbursement of limited expenses in connection with a spouse accompanying them on business travel and other miscellaneous items. We believe the personal benefits offered to our Named Executives are reasonable and appropriate. We also provide our Named Executives with limited tax assistance with respect to relocation and the reimbursement of limited spousal expenses discussed above. For relocation, the Company provides tax assistance to Named Executives on the same basis provided to other employees receiving relocation assistance.
For a description of the values and valuation methodology associated with perquisites provided in 2018, see the notes and narratives to the Summary Compensation Table under “Compensation of Executive Officers” below.
RETIREMENT BENEFITS
Overview.  We provide retirement benefits through a combination of (1) qualified and non-qualified defined benefit pension plans (our “Pension Plans”), (2) qualified and non-qualified defined contribution retirement plans (our “Thrift Plans”), and (3) a supplemental non-qualified defined contribution executive retirement plan. Due to the volatility, cost and complexity associated with defined benefit plans and evolving employee preferences, we have taken steps over the past several years to shift away from traditional defined benefit plans toward defined contribution plans by closing our pension plans to new and unvested salaried employees and freezing benefit accruals for existing salaried participants with less than five years of credited service. In 2012, we announced that all benefit accruals for salaried employees still accruing benefits under the Pension Plans would be frozen following a transition period. Those benefit accruals were frozen effective December 31, 2015. In lieu of future defined benefit plan accruals under those plans, we provide additional cash contributions to eligible employees’ Thrift Plan account, discussed below.


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Pension Plans.  As a result of the recent changes in eligibility requirements, none of our Named Executives other than Mr. Black participate in our Pension Plans, which are comprised of qualified and non-qualified excess retirement plans. The excess plan covers a small group of highly compensated employees whose ultimate benefits under the qualified Pension Plans are reduced by Internal Revenue Code (“IRC”) limits on the amount of benefits that may be provided, and on the amount of compensation that may be taken into account in computing benefits. Benefits under the non-qualified excess plan in which our Named Executives participate are paid from the general assets of the Company. See the “Pension Benefits” table under “Compensation of Executive Officers” below for more information regarding the Pension Plans.
Thrift Plans.  We maintain two primary defined contribution retirement plans: (1) a broad-based, qualified 401(k) plan (our “401(k) Plan”) and (2) a non-qualified restoration plan (our “Restoration Plan”). All of our Named Executives participated in the 401(k) Plan in 2018. Our Compensation Committee established the Restoration Plan to (1) more closely align our executive retirement plans with general and industrial market practices as indicated by Hay Group benefit data, (2) ensure the competitiveness of retirement benefits for our executives who are not eligible to participate in our Pension Plans, and (3) mirror the dual qualified and non-qualified plan design of our Pension Plans. Our Restoration Plan seeks to restore benefits provided by our 401(k) Plan that are precluded by IRC limits on eligible compensation and total contributions. The Restoration Plan contains the same principal components as our 401(k) Plan. All of our Named Executives, except for Mr. McCabe, participated in our Restoration Plan in 2018. Our obligations under the Restoration Plan are unfunded and plan benefits are payable from the general assets of the Company.    
Supplemental Plans.  We also maintain a supplemental executive retirement plan (our “SERP”). The SERP provides participants with additional opportunities to defer the payment of certain compensation earned from us. In 2016, we discontinued Company contributions to participants’ SERP accounts, but participants may still make individual contributions to their notional accounts.
See the “Nonqualified Deferred Compensation” table and accompanying narrative under “Compensation of Executive Officers” below for more information about the Restoration Plan and SERP.
SEVERANCE ARRANGEMENTS
BWXT Severance Plan.  Prior to 2012, we maintained a broad-based severance plan to provide a measure of financial assistance to eligible employees who are involuntarily terminated in connection with a permanent reduction in force. In 2012, in consultation with Hay Group, the Compensation Committee approved the replacement of our broad-based plan with a new modified plan and approved a new executive severance plan. The BWX Technologies, Inc. Executive Severance Plan was amended and restated as of July 1, 2015.
Change-in-Control Agreements.  The Compensation Committee has offered change-in-control agreements to executives, including Named Executives, since 2010. We believe change-in-control agreements protect stockholders’ interests by serving to:
attract and retain top-quality executive management;
assure both present and future continuity of executive management in the event of a threatened or actual change in control; and
ensure the objective focus of executive management in the evaluation of any change in control opportunities.
Our change-in-control agreements contain what is commonly referred to as a “double trigger,” that is, they provide benefits only upon a qualified termination of the executive within 30-months following a change in control. Stock awards, however, are subject to the terms of the award agreements and vest outstanding stock immediately on the occurrence of a change in control, regardless of whether there is a subsequent termination of employment. Additionally, the change-in-control agreements do not provide any tax gross-up on the benefits following a qualified termination. Instead, the change-in-control agreements contain a “modified cutback” provision, which acts to reduce the benefits payable to an executive to the extent necessary so that no excise tax would be imposed on the benefits paid, but only if doing so would result in the executive retaining a larger after-tax amount. The provision was included with the intent of benefiting the Company by seeking to preserve the tax deductibility of the benefits paid under the agreement, without compromising the objectives for which the agreement was approved.
See the “Potential Payments Upon Termination or Change in Control” tables under “Compensation of Executive Officers” below and the accompanying disclosures for more information regarding the change in control agreements with our Named Executives, events considered to be change in control events and other plans and arrangements that have different trigger mechanisms relating to a change in control.

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COMPENSATION DISCUSSION AND ANALYSIS

OTHER COMPENSATION POLICIES AND PRACTICES
Stock Ownership Guidelines.  We maintain stock ownership guidelines for our executives and non-management directors. These guidelines establish minimum stock ownership levels of two to five times annual base salary for our executives, and five times annual base retainer for non-management directors. Below are the minimum ownership levels for our non-management directors and executives, including our Named Executives:
Non-management Directors – Five times (5x) annual base retainer
Chief Executive Officer – Five times (5x) annual base salary 
Other Named Executives – Three times (3x) annual base salary
Directors and executives have five years to achieve their respective minimum ownership levels. The Governance Committee annually reviews the compliance with these guidelines and has discretion to waive or modify the stock ownership guidelines for directors and executives. No executive or director is authorized to sell any shares of our common stock (other than to satisfy applicable withholding tax obligations resulting from a transaction involving such stock or to cover the exercise price of stock options) unless they have met their respective guideline. All of our directors and Named Executives are either in compliance with the stock ownership guidelines or are positioned to achieve compliance within the required time period.
Timing of Stock Awards.  To avoid timing stock awards ahead of the release of material nonpublic information, the Compensation Committee generally approves our annual stock-based awards effective as of the third day following the filing of our annual report on Form 10-K or quarterly report on Form 10-Q with the Securities and Exchange Commission. We have followed this practice for all long-term incentive compensation grants to Named Executives since 2005, subject to certain limited exceptions.
Hedging, Pledging and Short Sale Policies.  We maintain a policy that prohibits all directors, officers and employees from trading in puts, calls or other options on Company securities and otherwise engaging in hedging or monetization transactions, such as zero-cost collars and forward-sale contracts, that are designed to hedge or offset any decrease in the market value of Company securities. Our policy also prohibits directors, officers and employees from holding Company securities in margin accounts, pledging Company securities and engaging in short sales of company securities. This policy applies to all Company securities, including common stock, preferred stock, restricted stock, stock options, bonds and notes, held by directors, officers and employees whether granted by the Company or held directly or indirectly by the individual.
Clawbacks.  Incentive compensation awards include provisions allowing us to recover excess amounts paid to individuals who knowingly engaged in a fraud resulting in a restatement.
Proxy Data Custom Peer Group for 2018 Compensation. Set forth below are the peer companies we have selected as our secondary benchmark for 2018 compensation purposes.
AAR Corp
Esterline Technologies Corporation(2)
KLX Inc.(3)
Aerojet Rocketdyne Holdings, Inc.
Harris Corporation
Moog Inc.
Astronics Corporation
HEICO Corp.
Orbital ATK, Inc.(4)
Cubic Corporation
Hexcel Corporation
Teledyne Technologies Incorporated
Curtiss-Wright Corporation
Huntington Ingalls Industries, Inc.
TransDigm Group Incorporated
Engility Holdings Inc.(1)
 
 
____________
(1) Engility Holdings Inc. was acquired by Science Applications International Corporation in January 2019.
(2) Eesterline Technologies Corporation was acquired by Transdigm Group Incorporated in March 2019.
(3) KLX Inc. was acquired by The Boeing Company in October 2018.
(4) Orbital ATK, Inc. was acquired by Northrop Grumman Corporation in June 2018.
Deductibility of Executive Compensation.  In accordance with Section 162(m) of the Code and the recent passage of H.R. 1, the Tax Cuts and Jobs Act, on December 22, 2017, the deductibility for federal corporate income tax purposes of compensation paid to certain of our executive officers in excess of $1 million in any year is now generally restricted. Under the version of Section 162(m) of the Code in effect prior to January 1, 2018, certain performance-based compensation in excess of $1 million in a year was deductible by the Company if certain requirements were met and certain executive officers were excluded from the coverage of Section 162(m) of the Code. Although the Compensation Committee considers and evaluates the impact of Section 162(m), it believes that the tax deduction is only one of several relevant considerations in setting compensation. Accordingly, where it is deemed necessary and in the best interests of the Company to attract and retain the best possible executive talent to compete successfully and to motivate such executives to achieve the goals inherent in our business strategy, the Compensation Committee has in the past approved and in the future may approve compensation to

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executive officers which exceeds the deductibility limits or otherwise may not qualify for deductibility. In this regard, certain portions of compensation paid to the Named Executives may not be deductible for federal corporate income tax purposes under Section 162(m) of the Code.

COMPENSATION COMMITTEE REPORT
The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that BWXT specifically incorporates it by reference into such filing.
We have reviewed and discussed the Compensation Discussion and Analysis with BWXT’s management and, based on our review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
 
THE COMPENSATION COMMITTEE
 
Barbara A. Niland, Chair
 
Jan A. Bertsch
 
Kenneth J. Krieg
 
Robb A. LeMasters



 
 

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COMPENSATION OF EXECUTIVE OFFICERS


COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes prior compensation of our Named Executives for the time periods in which each was a Named Executive.
SUMMARY COMPENSATION TABLE
Name and Principal Position
Year
Salary(1)
Bonus(2)
Stock
Awards(3)
Option
Awards(3)
Non-Equity
Incentive Plan
Compensa-tion(4)
Change in
Pension
Value and
Nonqual-ified
Deferred
Compen-sation
Earnings(5)
All Other
Compensation(6)
Total
 
 
 
 
 
 
 
 
 
 
Rex D. Geveden
President and Chief Executive Officer
2018
$
850,000

$

$
2,852,049

$

$
853,315

$

$
168,062

$
4,723,426

2017
693,750

212,500

2,442,569


939,284


117,549

4,405,652

2016
525,000

212,500

1,277,467


611,394


153,301

2,779,662

David S. Black
Senior Vice President and Chief Financial Officer
2018
472,500


686,548


314,926


106,298

1,580,272

2017
435,000


637,103


392,648

73,478

115,839

1,654,068

2016
386,250


573,371


337,358


99,584

1,396,563

Joel W. Duling
President, BWXT Nuclear Operations Group, Inc.
2018
401,583


528,032


235,682


149,224

1,314,521

 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 


Richard W. Loving
Senior Vice President,
Human Resources
2018
380,000


475,342


194,826


56,311

1,106,479

 
 


 
 
 
 
 


 
 
 
 
 
 
 
 
 
Thomas E. McCabe
Senior Vice President,
General Counsel, Chief Compliance Officer and Secretary
2018
231,510


316,837


154,304


22,452

725,103

James D. Canafax(7)
Former Senior Vice President, General Counsel, Chief Compliance Officer and Secretary

2018
193,125


792,278




62,922

1,048,325

2017
507,500


796,510


458,090


124,979

1,887,079

2016
497,500


826,274


434,526


119,252

1,877,552

Joseph G. Henry(8)
Former President, BWXT Nuclear Operations Group, Inc.
2018
242,500


580,881


138,079


48,244

1,009,704

2017
467,500


531,022


406,388


66,706

1,471,616

 
 
 
 
 
 
 
 
 
(1)
See “Salary” below for a discussion of the amounts reported in this column.
(2)
See "Bonus" below for a discussion of the amounts reported in this column.
(3)
See “Stock and Option Awards” below for a discussion of the amounts included in this column.
(4)
See “Non-Equity Incentive Plan Compensation” below for a discussion of the amounts included in this column.
(5)
See “Change in Pension Value and Nonqualified Deferred Compensation Earnings” below for a discussion of the amounts included in this column.
(6)
See “All Other Compensation” below for a discussion of the 2018 amounts included in this column.
(7)
Mr. Canafax resigned on May 8, 2018, at which time his 2018 stock awards were forfeited.
(8)
Mr. Henry retired on June 30, 2018, at which time his 2018 stock awards were forfeited.
Salary.  Amounts reported in the “Salary” column above include amounts that have been deferred under our qualified and non-qualified deferred compensation plans.
Bonus.  The amounts reported in this column for Mr. Geveden represent a one-time bonus he received in two 50% installments in 2016 and 2017 stemming from joining the Company as our Chief Operating Officer in October 2015. The bonus represents reimbursement for cash he forfeited from his previous employer and was subject to 100% reimbursement to the Company if Mr. Geveden voluntarily left the Company on or prior to the first anniversary of such payment.
Stock and Option Awards.  The amounts reported in the “Stock Awards” and “Option Awards” columns for each Named Executive represent the aggregate grant date fair value of all stock and option awards granted to Named Executives in 2018 computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, excluding the effect of estimated forfeitures.

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The amounts reported in the "Stock Awards" column include the grant date fair values of restricted stock units and performance restricted stock units granted to our Named Executives in 2018. The values for performance restricted stock units are based on our Named Executives attaining target performance levels, which we determined was the probable outcome at the time of grant. Assuming maximum performance levels were probable, the grant date fair value of each Named Executive's performance restricted stock unit awards would be as follows: $3,342,186 for Mr. Geveden; $804,522 for Mr. Black; $618,827 for Mr. Duling; $556,967 for Mr. Loving and $371,295 for Mr. McCabe.
For a discussion of the valuation assumptions used in determining the grant date fair value, see Note 9 to our consolidated financial statements  included in our annual report on Form 10-K for the year ended December 31, 2018.
See the “Grants of Plan-Based Awards” table for more information regarding the stock awards granted to our Named Executives in 2018.
Non-Equity Incentive Plan Compensation.  The amounts reported in the “Non-Equity Incentive Plan Compensation” column are attributable to the annual incentive awards earned under our EICP. See the “Grants of Plan-Based Awards” table for more information regarding the annual incentive awards earned in 2018.
Change in Pension Value and Nonqualified Deferred Compensation Earnings.  The amounts reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column represent the changes in actuarial present values of the accumulated benefits under defined benefit plans, determined by comparing the prior completed fiscal year end amount to the covered fiscal year end amount. The discount rates applicable to our pension plans are 4.36% and 4.26% for the Qualified Plan and Excess Plan, respectively, at December 31, 2018. The discount rate applicable to our qualified pension plans at December 31, 2017 and December 31, 2016 was 3.71% and 4.12%, respectively. Mr. Black is the only Named Executive who is a participant in these plans, and the change in his actuarial present value was -$184,076 in 2018.
All Other Compensation.    The amounts reported for 2018 in the “All Other Compensation” column are attributable to the following:
ALL OTHER COMPENSATION
 
Thrift Plan
Contributions
Restoration
Plan
Contributions
Dividend
Equivalents
Vacation Payout
Tax Reimbursement
Perquisites
Total
Mr. Geveden
$
16,250

$
34,500

$
98,947

$

$

$