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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

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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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

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Soliciting Material under §240.14a-12

 

Triumph Group, Inc.

(Name of Registrant as Specified In Its Charter)

 

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PRELIMINARY PROXY STATEMENT

LOGO  

Triumph Group, Inc.
899 Cassatt Road
Suite 210
Berwyn, Pennsylvania 19312
(610) 251-1000
  
Notice of Annual Meeting of Stockholders
To Be Held on July 18, 2019

   

To the holders of shares of our common stock:

        NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Triumph Group, Inc. ("Triumph" or the "Company") will be held at 899 Cassatt Road, Suite 210, Berwyn, Pennsylvania 19312, on Thursday, July 18, 2019, beginning at 9:00 a.m., local time, for the following purposes:

        Management currently knows of no other business to be presented at the meeting. If any other matters come before the meeting, the persons named in the accompanying proxy will vote with their judgment on those matters.

        On June 7, 2019, we began mailing to certain stockholders a Notice Regarding the Availability of Proxy Materials (the "Notice") for the 2019 Annual Meeting of Stockholders (the "Annual Meeting") to be held on July 18, 2019 containing instructions on how to access this proxy statement and our annual report and how to vote online. By furnishing the Notice instead of a printed copy of the proxy materials, we are lowering printing and mailing costs and reducing the environmental impact of the Annual Meeting. If you received the Notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained in the Notice.

        Only stockholders of record at the close of business on May 17, 2019 are entitled to notice of, and to vote at, the Annual Meeting and any postponement or adjournment thereof. All stockholders are cordially invited to attend the Annual Meeting in person. Any stockholder of record at the close of business on May 17, 2019 attending the Annual Meeting may vote in person even if such stockholder previously signed and returned a proxy. If you do attend the Annual Meeting, you may then withdraw your proxy and vote your shares in person. In any event, you may revoke your proxy prior to its exercise.

    By order of the Board of Directors,

 

 

GRAPHIC

Jennifer H. Allen
Secretary

June 7, 2019
Berwyn, Pennsylvania


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        Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. You may vote in person at the Annual Meeting, by telephone or Internet (instructions are on your proxy card, voter instruction form or the Notice, as applicable) or, if you received your materials by mail, by completing, signing and mailing the enclosed proxy card in the enclosed envelope.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 18, 2019.

        Triumph Group, Inc.'s proxy statement for the 2019 Annual Meeting of Stockholders, the Annual Report on Form 10-K for the fiscal year ended March 31, 2019 and the 2019 Annual Report to Stockholders are available via the Internet at www.proxyvote.com.


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  Page  

GENERAL INFORMATION

    1  

VOTE REQUIRED FOR APPROVAL

   
2
 

SOLICITATION OF PROXIES

   
3
 

PROPOSALS TO STOCKHOLDERS

   
4
 

Proposal No. 1—Election of Directors

   
4
 

Proposal No. 2—Advisory Vote on Compensation Paid to Named Executive Officers for Fiscal Year 2019

   
7
 

Proposal No. 3—Amendment to Amended and Restated Certificate of Incorporation

   
10
 

Proposal No. 4—Approval of Tax Benefits Preservation Plan

   
11
 

Proposal No. 5—Ratification of Selection of Registered Public Accounting Firm

   
15
 

OTHER MATTERS

   
16
 

GOVERNANCE OF TRIUMPH

   
16
 

Board of Directors

   
18
 

AUDIT COMMITTEE REPORT

   
23
 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   
25
 

EXECUTIVE COMPENSATION

   
26
 

Compensation Discussion and Analysis

   
26
 

Other Compensation Matters

   
46
 

Compensation Committee Report

   
47
 

EQUITY COMPENSATION PLAN INFORMATION

   
61
 

DELINQUENT SECTION 16(a) REPORTS

   
65
 

STOCKHOLDER PROPOSALS—2020 ANNUAL MEETING OF STOCKHOLDERS

   
65
 

HOUSEHOLDING OF PROXY MATERIALS

   
65
 

ANNUAL REPORT ON FORM 10-K

   
66
 

APPENDIX A—Certificate of Amendment of Amended and Restated Certificate of Incorporation

   
A-1
 

APPENDIX B—Tax Benefits Preservation Plan

   
B-1
 

APPENDIX C—Reconciliation of GAAP and Non-GAAP Financial Measures and Adjustments Made to Non-GAAP Performance Metrics

   
C-1
 

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LOGO


 



Triumph Group, Inc.
899 Cassatt Road
Suite 210
Berwyn, Pennsylvania 19312
(610) 251-1000
Proxy Statement
For Annual Meeting of Stockholders
To be held on July 18, 2019



 


 


GENERAL INFORMATION

         Triumph Group, Inc. ("Triumph", the "Company", "we", "us" or "our") first made these materials available to stockholders on or about June 7, 2019 on the Internet or, upon your request, has delivered printed proxy materials to you, in connection with the solicitation of proxies by the Board of Directors of the Company for use at our annual meeting of stockholders on Thursday, July 18, 2019 (the "Annual Meeting"), to be held at 9:00 a.m., local time, at our offices at 899 Cassatt Road, Suite 210, Berwyn, Pennsylvania 19312, or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting.

         In accordance with rules adopted by the Securities and Exchange Commission ("SEC"), we may furnish proxy materials, including this proxy statement and our 2019 Annual Report to Stockholders, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice Regarding the Availability of Proxy Materials (the "Notice") for the Annual Meeting which was mailed to most of our stockholders, will instruct you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. You may request printed copies up until one year after the date of the Annual Meeting.

         The Notice provides you with instructions on how to view our proxy materials for the Annual Meeting on the Internet. The website on which you will be able to view our proxy materials will also allow you to choose to receive future proxy materials electronically, which will save the Company the cost of printing and mailing documents to you. If you choose to receive future proxy materials electronically, you will receive an email next year with instructions containing a link to the proxy voting site. Your election to receive proxy materials electronically will remain in effect until you terminate it.

         Sending a signed proxy will not affect your right to attend the Annual Meeting and vote in person because the proxy is revocable. You have the power to revoke your proxy by, among other methods, giving written notice to the Secretary of the Company at any time before your proxy is exercised or by attending the Annual Meeting and voting in person. Directions to the Annual Meeting can be found on our website at http://triumphgroup.com/contact-us/solutions.

         In the absence of contrary instructions, your shares included on the Notice or the proxy card, as the case may be, will be voted:


IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 18, 2019.

         Triumph Group Inc.'s proxy statement for the 2019 Annual Meeting of Stockholders, the Annual Report on Form 10-K for the fiscal year ended March 31, 2019, and the 2019 Annual Report to Stockholders are available via the Internet at www.proxyvote.com.


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VOTE REQUIRED FOR APPROVAL

General

        Holders of record of our common stock as of the close of business on May 17, 2019, the record date, will be entitled to notice of and to vote at the Annual Meeting and at any adjournments. Holders of shares of common stock are entitled to vote on all matters brought before the Annual Meeting.

        As of the record date, there were 49,904,760 shares of common stock outstanding and entitled to vote on the election of directors and all other matters. Holders of common stock will vote on all matters as a class. Each outstanding share of common stock entitles the holder to one vote. All votes will be counted by Computershare, our transfer agent.

        The presence in person or by proxy of the holders of a majority of the outstanding common stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes will be counted for the purpose of determining whether a quorum is present at the Annual Meeting.

Proposal No. 1Election of Directors

        In an uncontested election (which is the case for the election of directors at the Annual Meeting), directors will be elected by a majority of the votes cast by holders of common stock present in person or represented by proxy. A majority of the votes cast means that the number of votes cast "for" a director nominee must exceed the number of votes cast "against" that nominee. Abstentions and broker non-votes are not considered votes cast on this proposal and, therefore, will have no effect on the results of the vote on this proposal. Our Amended and Restated Bylaws (the "Bylaws") contain detailed procedures to be followed in the event that one or more directors do not receive a majority of the votes cast at the Annual Meeting.

Proposal No. 2Approval, by Advisory Vote, of Compensation Paid to our Named Executive Officers for Fiscal Year 2019

        Approval, by advisory vote, of the compensation paid to our named executive officers for fiscal year 2019 will require the favorable vote of holders of a majority of the shares having voting power present in person or represented by proxy. Abstentions are counted toward the tabulation of votes on this proposal and will have the same effect as a negative vote. Broker non-votes will have no effect on the results of the vote on this proposal. The vote on this proposal is advisory in nature and, therefore, not binding on the Company. However, our Board and the Compensation and Management Development Committee (the "Compensation Committee") will consider the outcome of this vote in its future deliberations regarding executive compensation.

Proposal No. 3Approval of the Amendment to the Amended and Restated Certificate of Incorporation

        Approval of the amendment to the Amended and Restated Certificate of Incorporation will require a favorable vote of holders of a majority of the shares having voting power present in person or represented by proxy. Abstentions are counted toward the tabulation of votes on this proposal and will have the same effect as a negative vote. Broker non-votes will have no effect on the results of the vote on this proposal.

Proposal No. 4Approval of the Tax Benefits Preservation Plan

        Approval of the Tax Benefits Preservation Plan will require a favorable vote of holders of a majority of the shares having voting power present in person or represented by proxy. Abstentions are

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counted toward the tabulation of votes on this proposal and will have the same effect as a negative vote. Broker non-votes will have no effect on the results of the vote on this proposal.

Proposal No. 5Ratification of Ernst & Young LLP as Our Independent Registered Public Accounting Firm for the Fiscal Year Ending March 31, 2020

        Ratification of the Audit Committee's selection of our independent registered public accounting firm will require the favorable vote of holders of a majority of the shares having voting power present in person or represented by proxy. Abstentions are counted toward the tabulation of votes on this proposal and will have the same effect as a negative vote. The ratification of the selection of our independent registered public accounting firm is considered a routine matter. Therefore, no broker non-votes are expected with respect to this proposal.


SOLICITATION OF PROXIES

        We will pay for this proxy solicitation. Our officers and other regular employees may solicit proxies by mail, in person, by telephone or by electronic communication. These officers and other regular employees will not receive additional compensation. We are required to pay, upon request, the reasonable expenses incurred by record holders of common stock who are brokers, dealers, banks, voting trustees or other nominees for mailing proxy material and annual stockholder reports to any beneficial owners of common stock they hold of record.

        The Company has engaged the services of Saratoga Proxy Consulting LLC, a third party proxy solicitation firm, to assist in its proxy solicitation efforts. The Company estimates that the fees to be paid to Saratoga Proxy Consulting LLC for this service will be approximately $10,000, plus reimbursement for out of pocket expenses. The Company will bear the cost of this solicitation.

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PROPOSALS TO STOCKHOLDERS

Proposal No. 1—Election of Directors

        The Board of Directors of the Company (the "Board" or the "Board of Directors") currently consists of nine directors: Paul Bourgon, Daniel J. Crowley, Ralph E. Eberhart, Daniel P. Garton, Dawne S. Hickton, William L. Mansfield, Adam J. Palmer, Joseph M. Silvestri and Larry O. Spencer. At the Annual Meeting, eight of the directors are being submitted as nominees for election by the stockholders for a term ending at the next annual meeting of stockholders and when each such director's successor is duly elected and qualified. Joseph M. Silvestri is not standing for reelection. Effective as of the Annual Meeting, the size of the Board will be decreased to eight directors.

        The table below lists the name of each person nominated by the Board to serve as a director for the coming year. All of the nominees are currently members of our Board with terms expiring at the Annual Meeting. Each nominee has consented to be named as a nominee and, to our knowledge, is willing to serve as a director, if elected. Should any of the nominees not remain a nominee at the end of the Annual Meeting (a situation which is not anticipated), solicited proxies will be voted in favor of those who remain as nominees and may be voted for substitute nominees. Unless contrary instructions are given on the proxy, the shares represented by a properly executed proxy will be voted "FOR" the election of Paul Bourgon, Daniel J. Crowley, Ralph E. Eberhart, Daniel P. Garton, Dawne S. Hickton, William L. Mansfield, Adam J. Palmer, and Larry O. Spencer. Proxies cannot be voted for a greater number of persons than the number of nominees named.

Nominees
  Age   Year First Elected
a Director
 

Paul Bourgon

    63     2008  

Daniel J. Crowley

    56     2016  

Ralph E. Eberhart

    73     2010  

Daniel P. Garton

    62     2018  

Dawne S. Hickton

    61     2015  

William L. Mansfield

    71     2012  

Adam J. Palmer

    47     2010  

Larry O. Spencer

    66     2018  

        The principal occupations of each nominee and the experience, qualifications, attributes or skills that led to the conclusion that such nominee should serve as a director for the coming year are as follows:

        Paul Bourgon has been a Director of Triumph since 2008. Mr. Bourgon has served as General Manager—Global Sales and Engineering for SKF Aeroengine since 2006. SKF Group supplies products, solutions and services within rolling bearings, seals, mechatronics, services and lubrication systems and SKF Aeroengine, a division of SKF Group, focuses on providing services in bearing repair and overhaul. Prior to joining SKF Aeroengine, Mr. Bourgon served as Vice President—Marketing of Heroux-Devtex Inc., a company which then supplied the commercial and military sectors with landing gear, airframe structural components, including kits, and aircraft engine components. Mr. Bourgon also serves on the board of directors of Venture Aerobearing LLC. Mr. Bourgon's current experience as a president of a significant aerospace business and his past experience within the aerospace industry enable him to serve as an additional point of reference on trends and developments affecting Triumph's business and its customers, suppliers and competitors. In addition, his background as a Chartered Accountant, member of the Canadian Institute of Chartered Accountants since 1983, articling with Coopers & Lybrand in Montreal in the Auditing and Taxes departments, as well as his ongoing responsibility for the financial statements of the business he manages, enables him to lend additional financial expertise to the deliberations of the Board.

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        Daniel J. Crowley has been a Director of Triumph since 2016. Mr. Crowley has served as Triumph's President and Chief Executive Officer since January 4, 2016. Mr. Crowley served as a corporate vice president and President of Integrated Defense Systems at Raytheon Company from 2013 until 2015, and as President of Network Centric Systems at Raytheon Company from 2010 until 2013. Prior to joining Raytheon Company, Mr. Crowley served as Chief Operating Officer of Lockheed Martin Aeronautics after holding a series of increasingly responsible assignments across its space, electronics, and aeronautics sectors. Mr. Crowley brings to the Board 35 years of industry experience during which he has held key leadership roles in the development, production and deployment of some of the largest and most complex aerospace and defense products. He also provides the Board with detailed information about Triumph's businesses and communicates management's perspective on important matters to the Board.

        Ralph E. Eberhart has been a Director of Triumph since 2010 and its non-executive Chairman since April 2015. Gen. Eberhart served as Commander of the North American Aerospace Defense Command (NORAD) and U.S. Northern Command from October 2002 to January 2005. Since January 2005, he has also been the Chairman and President of the Armed Forces Benefit Association. Gen. Eberhart's active military career spanned 36 years. He is also a member of the board of directors of Jacobs Engineering Group, Inc. and VSE Corporation and is a director of a private company. Gen. Eberhart also served as a director of Rockwell Collins, Inc. from November 2007 until its acquisition by United Technologies Corp. in November 2018. Gen. Eberhart joined the Board as part of an arrangement in connection with the Company's acquisition (the "Vought Acquisition") of Vought Aircraft Industries, Inc. ("Vought") in 2010. Given the significant share of Triumph's business focused on serving the militaries of the United States and other countries, Gen. Eberhart provides the Board with valuable insight into military operations that enables the Company to better serve its military customers. The Company also benefits from his experience as a director of other aerospace and defense companies. Moreover, his senior leadership experience enables him to provide management with valuable advice on governance and management issues.

        Daniel P. Garton has been a director of Triumph since February 2018. Mr. Garton is the former Chief Executive Officer and President of American Eagle Holding Corporation, a wholly owned subsidiary of American Airlines, a position he held from June 2010 until December 2014, at which time he retired. He previously served as Executive Vice President and Chief Marketing Officer for American Airlines, and Senior Vice President and Chief Financial Officer of Continental Airlines. He is currently a member of the Board of Directors of Liberty Property Trust and served as a director of Republic Airways Holdings Inc. from 2014 to 2017. The Company benefits from Mr. Garton's diverse functional leadership experiences during his career of over 30 years in the airline industry in key management and financial positions. In addition, he brings extensive experience working with many of the aerospace OEMs Triumph serves, including Boeing, Airbus, Bombardier and Embraer and with Tier 2 major component and engine suppliers, and aftermarket service providers.

        Dawne S. Hickton has been a Director of Triumph since 2015. On June 3, 2019, Ms. Hickton joined Jacobs Engineering Group, Inc. ("Jacobs") as the Chief Operating Officer and President of its Aerospace, Technology & Nuclear business. Since 2016, Ms. Hickton has been President and founding partner of Cumberland Highstreet Partners. Ms. Hickton is the former Vice Chair, President and Chief Executive Officer of RTI International Metals, Inc. ("RTI"), a New York Stock Exchange listed vertically integrated global supplier of advanced titanium and specialty metals products that meet the requirements of technologically sophisticated applications in commercial aerospace, defense, propulsion, medical device, energy and other markets. Ms. Hickton served as Chief Executive Officer from April 2007 until July 2015, when RTI was acquired by Alcoa Inc. ("Alcoa"), and served as a member of RTI's Board of Directors from 2007 until the acquisition by Alcoa. Prior to becoming RTI's Chief Executive Officer, she was Senior Vice President Administration and Principal Financial Officer. Ms. Hickton has over 30 years of diversified metals experience, including more than 15 years in the titanium industry

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spanning several business cycles. Ms. Hickton is the Chair of the Board of the Federal Reserve Bank of Cleveland. Ms. Hickton has served as a director of Haynes International, Inc. since July 2017 and served as a director of Jacobs from May 2015 until May 2019. She is the immediate past president of the International Titanium Association. In addition, she is a member of the University of Pittsburgh's Board of Trustees, serving on the student affairs and property and facilities committees. She is also a member of the Board of Directors of the Smithsonian National Air and Space Museum, and serves on the Board of Governors of the Wings Club. The Board believes that Ms. Hickton's substantial experience as the Chief Executive Officer of a public company with extensive and diversified manufacturing operations and broad exposure to the aerospace markets contributes significantly to the Board's deliberations on issues of corporate development, leadership and governance.

        William L. Mansfield has been a Director of Triumph since 2012. Mr. Mansfield served as the Chairman of the Board of The Valspar Corporation from August 2007 through June 2012 and served as its Chief Executive Officer from February 2005 to June 2011 and as its President from February 2005 through February 2008. Mr. Mansfield also served as a director of Bemis Company, Inc. until May 2018 and as Non-Executive Chairman of the Board of Axiall Corporation until August 2016. Mr. Mansfield brings to the Board deep management experience as a former chief executive officer of a significant, publicly-traded manufacturing business with diverse operations spread across the globe as well as a track record of enhancing growth through acquisition. Likewise, his service as a director of other public companies is a source of additional insight into developments in corporate management and governance.

        Adam J. Palmer has been a Director of Triumph since 2010. Mr. Palmer is currently a Managing Director and Head of the Global Aerospace, Defense and Government Services Group at The Carlyle Group ("Carlyle"), a global alternative asset management firm. Prior to joining Carlyle in 1996, Mr. Palmer was with Lehman Brothers focusing on mergers, acquisitions and financings for aerospace, defense and information services companies. Mr. Palmer also currently serves on the boards of directors of Sequa Corporation, Wesco Aircraft Holdings, Inc., Global Jet Capital, LLC, Dynamic Precision Group, Inc., Novetta Solutions and StandardAero Holding Corp. Mr. Palmer served as a member of Vought's board of directors from 2000 until the Vought Acquisition and led the negotiations on behalf of Carlyle that culminated in Triumph's acquisition of Vought from equity funds affiliated with Carlyle. Mr. Palmer was a director of Landmark U.S. Holdings, LLC from October 2012 until February 2016. Mr. Palmer joined the Board as part of an arrangement in connection with the Vought Acquisition. The Board benefits from Mr. Palmer's deep familiarity with Vought's business acquired through his years of involvement in developing its business as a Carlyle investment. The Board also benefits from Mr. Palmer's knowledge and understanding of the aerospace and defense industry, acquired through his years of active involvement as an investor, as well as his understanding of management issues derived from his participation on corporate boards.

        Larry O. Spencer has been a Director of Triumph since January 2018. Gen. Spencer served as President of the Air Force Association ("AFA") from April 2015 until March 2019, where he was responsible for the management and operations of AFA, the AFA's Veteran Benefits Association, and the Air Force Memorial Foundation. He also serves on the Board of Directors of Whirlpool Corporation. Gen. Spencer spent 44 years in the United States Air Force ("USAF"), retiring as a four-star general in 2015. He served as Vice Chief of Staff of the USAF and served as a member of the Joint Chiefs of Staff Requirements Oversight Council and Deputy Advisory Working Group. The Company benefits from Gen. Spencer's experiences as a leader of large, complex organizations, his knowledge of global business operations and logistics and his insight into the military and government affairs.

        The Board recommends that stockholders vote "FOR" each of the nominees. The nominees receiving a majority of the votes cast in favor of their election will be elected as directors.

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Proposal No. 2Advisory Vote on Compensation Paid to Named Executive Officers for Fiscal Year 2019

        The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") added Section 14A to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which requires that we provide our stockholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation paid to our named executive officers for fiscal year 2019 as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. Currently we hold this vote annually.

        We seek to closely align the interests of our named executive officers with the interests of our stockholders. Our executive compensation programs are intended to achieve several business objectives, including: (i) recruiting and retaining our executives with the talent required to successfully manage our business; (ii) motivating our executives to achieve our business objectives; (iii) instilling in our executives a long-term commitment to the Company's success by providing elements of compensation that align the executives' interests with those of our stockholders; (iv) providing compensation that recognizes individual contributions as well as overall business results; and (v) avoiding or minimizing the risks of incentivizing management behavior that is inconsistent with the interests of our stockholders. Our Compensation Discussion and Analysis (the "CD&A"), included below, describes in detail the components of our executive compensation program, the process by which our Board of Directors makes executive compensation decisions, and the compensation paid to our named executive officers for fiscal year 2019. Highlights of our executive compensation program include the following:

        The vote on this proposal is advisory, which means that the approval of the compensation paid to our named executive officers is not binding on the Company, the Board of Directors or the Compensation Committee. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers for fiscal year 2019, as described in this proxy statement in accordance with the compensation disclosure rules of the SEC. To the extent there is a significant vote against the compensation paid to our named executive officers as disclosed in this proxy statement, the Compensation Committee will evaluate

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whether any actions are necessary to address our stockholders' concerns. Accordingly, we ask our stockholders to vote on the following resolution at the Annual Meeting:

        The Board recommends that stockholders vote "FOR" the approval of the compensation paid to our named executive officers, as disclosed in this proxy statement.


Background of Tax Benefits Protection Proposals (Proposals No. 3 and 4)

        Following recent divestitures, the Company generated significant tax benefits, including net operating losses, capital losses, research tax credits, foreign tax credits and disallowed business interest expense carryovers. Such tax benefits are corporate assets that generally can be used to offset future taxable income. The Company's ability to use its tax benefits would be substantially limited if the Company experienced an "ownership change" as defined under Section 382 of the Internal Revenue Code (the "Code"). In general, an "ownership change" would occur if the Company's "5-percent stockholders," as defined under Section 382, collectively increase their ownership in the Company by more than 50 percentage points over the lowest ownership percentage within a rolling three-year period. If an "ownership change" occurs, Section 382 would impose an annual limit on the amount of the Company's tax benefits that the Company can use to offset taxable income. A number of complex rules apply to calculating this annual limit.

        If an "ownership change" is deemed to occur, the limitations imposed by Section 382 would significantly limit the Company's ability to use its tax benefits to reduce future income tax liability and could result in a material amount of the Company's tax benefits expiring unused thereby significantly impairing the value of its tax benefits. While the complexity of Section 382's provisions and the limited knowledge any public company has about the ownership of its publicly traded securities make it difficult to determine whether an "ownership change" has occurred, we currently believe that an "ownership change" has not occurred. However, if no action is taken to protect the Company's tax benefits, we believe it is possible that the Company could experience an "ownership change" before its current tax benefits are fully-utilized or expire.

        On March 13, 2019, our Board of Directors, subject to approval by the Company's stockholders, approved an amendment to the Company's Amended and Restated Certificate of Incorporation (the "Amendment"). On March 13, 2019, our Board of Directors also adopted, and the Company entered into, a tax benefits preservation plan (the "Plan") with Computershare Trust Company, N.A., as rights agent (the "Rights Agent"). The Amendment and the Plan are designed to ensure that the Company will be able to utilize its tax benefits.

        The Amendment, which is designed to allow a series of preferred stock to be issued in connection with a tax benefits preservation plan such as the Plan, is described below under Proposal 3. The Amendment, if approved by the stockholders, will allow the Company to utilize fractional shares of preferred stock in lieu of shares of common stock in connection with the Plan, in order to provide the Company with more flexibility to reserve and issue shares of common stock for purposes unrelated to the Plan. The complete text of the form of Certificate of Amendment of the Amended and Restated Certificate of Incorporation reflecting the Amendment is attached as Appendix A to this proxy statement. The Amendment will not be put into effect unless and until it is approved by the stockholders at the Annual Meeting.

        The Plan, which is designed to deter certain transfers of the Company's securities that could result in an "ownership change," is described below under Proposal 4. The complete text of the Plan is

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attached as Appendix B to this proxy statement. The Plan will automatically expire on March 13, 2022, if the Company stockholders approve the Plan at the Annual Meeting (or another stockholder meeting held before March 13, 2020); if the Company stockholders do not approve the Plan, then the Plan will automatically expire on March 13, 2020.

        After careful consideration, the Board of Directors determined that the most effective way to protect the significant potential long-term tax benefits presented by the Company's net operating loss carryforwards and other tax attributes is to both (a) adopt the Amendment and (b) approve the Plan, in order to help avoid an "ownership change" that would impair the Company's ability to utilize its tax benefits. Accordingly, the Board of Directors recommends that stockholders approve both the Amendment and the Plan.

        The Board of Directors urges stockholders to read Proposal 3 and Proposal 4 and the complete text of the Amendment and the Plan, which are attached as Appendix A and Appendix B to this proxy statement, respectively. It is important to note that neither measure, individually or taken together, offers a complete solution and that an "ownership change" may occur even if the Amendment and the Plan are approved by stockholders. The limitations of these measures are described in more detail below.

        Proposal 3 relating to the Amendment and Proposal 4 relating to the Plan are independent voting items. If Proposal 3 fails to receive the required vote, then Proposal 4 may still be passed by the stockholders. Likewise, if Proposal 4 fails to receive the required vote, then Proposal 3 may still be passed by the stockholders.

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Proposal No. 3—Approval of Amendment to the Amended and Restated Certificate of Incorporation

        On March 13, 2019, our Board of Directors, subject to approval by the Company's stockholders, approved the Amendment. The Amendment will not be put into effect unless and until it is approved by the stockholders at the Annual Meeting.

        For the reasons described above under "Background of Tax Benefits Protection Proposals," our Board of Directors believes it is in the Company's and its stockholders' best interests to approve the Amendment. The Board of Directors recommends that the stockholders approve the Amendment, which is intended to allow a series of preferred stock to be issued in connection with a tax benefits preservation plan such as the Plan.

        Proposal 3 relating to the Amendment and Proposal 4 relating to the Plan are independent voting items. If Proposal 4 fails to receive the required vote, then Proposal 3 may still be passed by the stockholders.

Description of Amendment

        The following description of the Amendment is qualified in its entirety by reference to the complete text of the Amendment, which is attached as Appendix A to this proxy statement. Please read the Amendment in its entirety as the following description is only a summary of the material terms of the Amendment.

        Currently, the first paragraph of Section "FOURTH," Subsection "C.1." of the Company's Amended and Restated Certificate of Incorporation provides that the Board of Directors may only provide for the issuance of shares of preferred stock as consideration for the stock or assets of another corporation or in connection with a merger of the Company with or into another corporation or of another corporation with or into the Company.

        The Amendment amends the first paragraph of Section "FOURTH," Subsection "C.1." of the Company's Amended and Restated Certificate of Incorporation to provide that, in addition to issuances of shares of preferred stock as currently permitted, the Board may also provide for the issuance of shares of preferred stock in connection with a plan intended to help avoid the imposition of certain limitations on the Company's ability to fully use certain tax attributes, including, without limitation, the Plan, as may be amended or extended in accordance with its terms.

        The Board recommends that stockholders vote "FOR" the approval of the Amendment designed allow a series of preferred stock to be issued in connection with a tax benefits preservation plan such as the Plan.

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Proposal No. 4—Approval of Tax Benefits Preservation Plan

        On March 13, 2019, our Board of Directors adopted the Plan. The Plan will automatically expire on March 13, 2022, if the Company stockholders approve the Plan at the Annual Meeting (or another stockholder meeting held before March 13, 2020); if the Company stockholders do not approve the Plan, then the Plan will automatically expire on March 13, 2020.

        For the reasons described above under "Background of Tax Benefits Protection Proposals," our Board of Directors believes it is in the Company's and its stockholders' best interests to approve the Plan until March 13, 2022. The Board of Directors recommends that the stockholders approve the Plan, which is intended to prevent an "ownership change" that would impair the Company's ability to utilize its net operating loss carryforwards and other tax attributes.

        Proposal 3 relating to the Amendment and Proposal 4 relating to the Plan are independent voting items. If Proposal 3 fails to receive the required vote, then Proposal 4 may still be passed by the stockholders.

Description of Plan

        The following description of the Plan is qualified in its entirety by reference to the complete text of the Plan, including the form of Certificate of Designations, Preferences and Rights of Series B Junior Participating Preferred Stock, which is attached as Appendix B to this proxy statement. Please read the Plan in its entirety as the following description is only a summary of the material terms of the Plan.

Rights; Rights Certificates; Exercise Period

        The Company declared a dividend distribution of one right (a "Right") for each outstanding share of common stock, par value $0.001 per share, of the Company (the "Common Stock"), to stockholders of record at the close of business on March 25, 2019 (the "Record Date"). Each Right is governed by the terms of the Plan and entitles the registered holder to purchase from the Company a unit consisting of (i) one share of Common Stock, prior to the Stockholder Approval (as hereinafter defined), and (ii) one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $0.01 per share (the "Series B Preferred Stock"), subsequent to the Stockholder Approval, in each case (a "Unit"), at a purchase price of $100.00 per Unit, subject to adjustment (the "Purchase Price").

        "Stockholder Approval" means the date on which the Company obtains the affirmative vote of holders representing a majority of the shares of Common Stock issued and outstanding and entitled to vote, as of the record date for such vote, to amend the Company's Amended and Restated Certificate of Incorporation, in order to permit issuance of shares of Series B Preferred Stock in connection with entering into and implementing the Plan. The Series B Preferred Stock will not be issued unless and until Stockholder Approval is received.

        Initially, the Rights will be attached to all Common Stock certificates representing shares then outstanding, and no separate rights certificates ("Rights Certificates") will be distributed. Subject to certain exceptions specified in the Plan, the Rights will separate from the Common Stock and a distribution date (the "Distribution Date") will occur upon the earlier of (i) ten (10) business days following a public announcement that an Acquiring Person (as defined in the Plan) has become a 5% Shareholder (the "Stock Acquisition Date") and (ii) ten (10) business days (or such later date as the Board shall determine) following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person.

        Until the Distribution Date, (i) the Rights will be evidenced by the Common Stock certificates (or, in the case of book entry shares, by the notations in the book entry accounts) and will be transferred

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with and only with such Common Stock, (ii) new Common Stock certificates issued after the Record Date will contain a notation incorporating the Plan by reference and (iii) the surrender for transfer of any certificates for Common Stock outstanding will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. Pursuant to the Plan, the Company reserves the right to require prior to the occurrence of a Triggering Event (as defined below) that, upon any exercise of Rights, a number of Rights be exercised so that only whole shares of Series B Preferred Stock will be issued subsequent to the Stockholder Approval.

        The definition of "Acquiring Person" contained in the Plan contains several exemptions, including for (i) the Company; (ii) any of the Company's subsidiaries; (iii) any employee benefit plan of the Company, or of any subsidiary of the Company, or any person organized, appointed or established by the Company for or pursuant to the terms of any such plan; (iv) any person that becomes a 5% Shareholder as a result of a reduction in the number of shares of Company securities outstanding due to a repurchase of Company securities by the Company or a stock dividend, stock split, reverse stock split or similar transaction, unless and until such person increases its ownership by more than one (1) percentage point over such person's lowest percentage stock ownership on or after the consummation of the relevant transaction; (v) any person who, together with all affiliates and associates of such person, was a 5% Shareholder on the date of the Plan (as disclosed in public filings with the Securities and Exchange Commission on the date of the Plan), unless and until such person and its affiliates and associates increase their aggregate ownership by more than one (1) percentage point over their lowest percentage stock ownership on or after the date of the Plan, provided that this clause (v) will not apply to any such person who has decreased its ownership below 5%; (vi) any person who, within ten (10) business days of being requested by the Company to do so, certifies to the Company that such person became an Acquiring Person inadvertently or without knowledge of the terms of the Rights and who, together with all affiliates and associates, thereafter within ten (10) business days following such certification disposes of such number of shares of Common Stock so that it, together with all affiliates and associates, ceases to be an Acquiring Person; and (vii) any person that the Board has affirmatively determined in its sole discretion shall not be deemed an Acquiring Person.

        The Rights are not exercisable until the Distribution Date and will expire at the earliest of (i) 5:00 P.M. (New York City time) on March 13, 2020, or 5:00 P.M., New York City time, on March 13, 2022 if the Plan is approved by the stockholders of the Corporation by a vote of the majority of the votes cast by the holders of shares entitled to vote thereon at a meeting of the stockholders of the Company prior to 5:00 P.M., New York City time, on March 13, 2020, (ii) the time at which the Rights are redeemed or exchanged as provided in the Plan, (iii) the time at which the Board determines that the Plan is no longer necessary or desirable for the preservation of tax benefits, and (iv) the close of business on the first day of a taxable year of the Company to which the Board determines that no tax benefits, once realized, as applicable, may be carried forward.

        As soon as practicable after the Distribution Date, Rights Certificates will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and, thereafter, the separate Rights Certificates alone will represent the Rights. After the Distribution Date, the Company generally would issue Rights with respect to shares of Common Stock issued upon the exercise of stock options or pursuant to awards under any employee plan or arrangement, which stock options or awards are outstanding as of the Distribution Date, or upon the exercise, conversion or exchange of securities issued by the Company after the Plan's adoption (except as may otherwise be provided in the instruments governing such securities). In the case of other issuances of shares of Common Stock after the Distribution Date, the Company generally may, if deemed necessary or appropriate by the Board, issue Rights with respect to such shares of Common Stock.

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Preferred Share Provisions

        Each one one-thousandth of a share of Series B Preferred Stock, if issued:

Flip-in Trigger

        In the event that a person or group of affiliated or associated persons becomes an Acquiring Person (unless the event causing such person or group to become an Acquiring Person is a transaction described under "Flip-over Trigger," below), each holder of a Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Right. Notwithstanding the foregoing, following the occurrence of such an event, all Rights that are, or (under certain circumstances specified in the Plan) were, beneficially owned by any Acquiring Person will be null and void. However, Rights are not exercisable following the occurrence of such an event until such time as the Rights are no longer redeemable by the Company as set forth below.

Flip-over Trigger

        In the event that, at any time following the Stock Acquisition Date, (i) the Company engages in a merger or other business combination transaction in which the Company is not the surviving corporation, (ii) the Company engages in a merger or other business combination transaction in which the Company is the surviving corporation and the Common Stock is changed or exchanged, or (iii) more than fifty percent (50%) of the Company's assets, cash flow or earning power is sold or transferred, each holder of a Right (except Rights that have previously been voided as set forth above) shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the exercise price of the Right. The events set forth in this paragraph and in the next preceding paragraph are referred to as the "Triggering Events."

Exchange Feature

        At any time after a person becomes an Acquiring Person and prior to the acquisition by such person or group of fifty percent (50%) or more of the outstanding Common Stock, the Board may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one (1) share of Common Stock, or one one-thousandth of a share of Series B Preferred Stock subsequent to the Stockholder Approval (or of a share of a class or series of the Company's preferred stock having equivalent rights, preferences and privileges), per Right (subject to adjustment).

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Equitable Adjustments

        The Purchase Price payable, and the number of Units of Common Stock, Series B Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Common Stock or the Series B Preferred Stock, (ii) if holders of the Common Stock or the Series B Preferred Stock are granted certain rights or warrants to subscribe for Common Stock or Series B Preferred Stock or convertible securities at less than the current market price of the Common Stock or the Series B Preferred Stock, or (iii) upon the distribution to holders of the Common Stock or the Series B Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).

        With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least one percent (1%) of the Purchase Price. No fractional Units will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Series B Preferred Stock on the last trading day prior to the date of exercise.

Redemption Rights

        At any time until ten (10) business days following the Stock Acquisition Date, the Company may, at its option, redeem the Rights in whole, but not in part, at a price of $0.001 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board). Immediately upon the action of the Board ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.001 redemption price.

Amendment of Rights

        Any of the provisions of the Plan may be amended by the Board prior to the Distribution Date except that the Board may not extend the expiration of the Rights beyond 5:00 P.M. (New York City time) on March 13, 2022 unless such extension is approved by the stockholders of the Company prior to 5:00 P.M. (New York City time) on March 13, 2022. After the Distribution Date, the provisions of the Plan may be amended by the Board in order to cure any ambiguity, to make changes that do not adversely affect the interests of holders of Rights, or to shorten or lengthen any time period under the Plan. The foregoing notwithstanding, no amendment may be made at such time as the Rights are not redeemable, except to cure any ambiguity or correct or supplement any provision contained in the Plan which may be defective or inconsistent with any other provision therein.

Miscellaneous

        Until a Right is exercised, the holder thereof, as such, will have no separate rights as a stockholder of the Company, including the right to vote or to receive dividends in respect of the Rights. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock (or other consideration) of the Company or for common stock of the acquiring company or in the event of the redemption of the Rights as set forth above.

        By voting to approve the Plan, stockholders are voting to keep the Plan in effect until it expires or is terminated in accordance with its terms.

        The Board recommends that stockholders vote "FOR" the approval of the Plan designed to protect the tax benefits of the Company's net operating loss carryforwards and other tax attributes, and the continuation of its terms until March 13, 2022.

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Proposal No. 5—Ratification of Selection of Registered Public Accounting Firm

        The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2020, and the stockholders are asked to ratify this selection. Ernst & Young LLP has served as our independent registered public accounting firm since 1993. All audit and non-audit services provided by Ernst & Young LLP are approved by the Audit Committee. Ernst & Young LLP has advised us that it has no direct or material indirect interest in us or our affiliates. Representatives of Ernst & Young LLP are expected to attend the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Fees to Independent Registered Public Accounting Firm for Fiscal Years 2019 and 2018

Audit Fees

        Ernst & Young LLP's fees associated with the annual audit of financial statements, the audit of internal control of financial reporting, the reviews of the Company's quarterly reports on Form 10-Q, statutory audits, assistance with and review of documents filed with the SEC, issuance of consents and accounting consultations for the fiscal years ended March 31, 2019 and March 31, 2018 were $4.0 million and $4.8 million, respectively. The higher fees in fiscal year 2018 fees were primarily driven by ASC 606 implementation services.

Audit-Related Fees

        Ernst & Young LLP's fees for the fiscal years ended March 31, 2019 and March 31, 2018 for assurance and related services that were reasonably related to the performance of the audits of our financial statements were $1.2 million and $0.5 million, respectively. For the fiscal year ended March 31, 2019 and March 31, 2018, respectively, these audit-related services were primarily related to due diligence services and defined benefit plan audits. The increase in fiscal year 2019 was primarily related to a significant number of divestitures in fiscal year 2019.

Tax Fees

        Ernst & Young LLP's fees for the fiscal years ended March 31, 2019 and March 31, 2018 for tax compliance, tax advice and tax planning were $0.2 million in each year. These services consisted primarily of the review of the Company's U.S. Federal income tax return Form 1120 and consultation regarding transfer pricing.

All Other Fees

        Ernst & Young LLP did not perform any material professional services other than those described above in the fiscal years ended March 31, 2019 and March 31, 2018.

Audit Committee Pre-Approval Policy

        The Audit Committee pre-approved the engagement of Ernst & Young LLP to render all of the audit and the permitted non-audit services described above. The Audit Committee has determined that Ernst & Young LLP's rendering of all other non-audit services is compatible with maintaining auditor independence. The Audit Committee has delegated to its chair or, if she is unavailable, any other member of the Audit Committee, the right to pre-approve all audit services, between regularly scheduled meetings, subject to presentation to the full Audit Committee at its next meeting.

        The Board recommends that stockholders vote "FOR" the ratification of Ernst & Young LLP as independent registered public accounting firm for the fiscal year ending March 31, 2020.

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OTHER MATTERS

        The Board knows of no matter, other than as referred to in this proxy statement, that will be presented at the Annual Meeting. However, if other matters properly come before the Annual Meeting, or any of its adjournments, the person or persons voting the proxies will vote them with their judgment in those matters.


GOVERNANCE OF TRIUMPH

        Pursuant to the Delaware General Corporation Law and the Bylaws, our business is managed under the direction of our Board. Members of the Board are kept informed of our business through reports from and discussions with our President and Chief Executive Officer and other officers, through an annual meeting with our executive officers and senior management from our operating locations, by reviewing materials provided to them and by participating in meetings of the Board and its committees. In addition, to promote open discussion among our non-employee directors, those directors meet in regularly scheduled executive sessions without participation from management. These sessions are presided over by our Chairman, who is one of our independent directors.


Corporate Governance Guidelines

        We have adopted Corporate Governance Guidelines which are posted on our website at www.triumphgroup.com and are available in print to any stockholder upon request.


Code of Business Conduct

        Our Board has adopted a Code of Business Conduct which applies to each of our employees, officers and directors, including, but not limited to, our Chief Executive Officer, Chief Financial Officer and Controller (principal accounting officer). The Code of Business Conduct is reviewed at least annually by the Nominating and Corporate Governance Committee (the "Governance Committee") and amended as the Board deems appropriate upon the recommendation of the Governance Committee. A copy of the Code of Business Conduct is posted on our website at www.triumphgroup.com under "Investor Relations—Corporate Governance" and is available in print to any stockholder upon request.


Proxy Access

        On April 24, 2019, the Board, after review of similarly situated companies, approved amendments to the Company's Bylaws to implement proxy access. A Rule 14a-8 stockholder proposal received by the Company played a key role in the adoption process. The amendment to the Bylaws became effective immediately. Section 14 was added to Article III to permit a stockholder or group of stockholders owning at least 3% of the Company's outstanding common stock continuously for three years or more to nominate and include in the Company's proxy materials for an annual meeting of stockholders director nominees constituting up to 25% of the total number of directors then in office, provided that the nominating stockholder(s) and nominee(s) satisfy the requirements specified in the Bylaws. This right is subject to various requirements, conditions, procedures and limitations set forth in the Bylaws, including the requirement that notice of such a nomination be provided to the Company not less than 120 days nor more than 150 calendar days prior to the one-year anniversary of the date of the Company's proxy statement for the immediately preceding annual meeting of stockholders. Nominations by stockholders under the proxy access bylaw will be available to stockholders

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commencing with the Company's 2020 annual meeting of stockholders. A summary of the proxy access provisions included in the Bylaws is below.

 
  % Ownership
Threshold

   
  Limit on
Proxy Access
Nominees
(Maximum %
of Board)

   
  Group Size
Limit

   
  Loaned
Shares Count
as "Owned"

   
  Requirement /
Express
Intention to
Hold Shares
Beyond
Meeting Date
(1 Year)

   
  Restrictions
on
Renominating
Unsuccessful
Proxy Access
Nominees

   
  Board Power
to Amend
Proxy Access
Bylaws

   
    3%       25%       No limit       Loaned shares count as owned if recallable on 5 business days' notice and stockholder commits to recall and hold shares until next annual meeting if stockholder nominee will be included in Company's proxy       Required to hold shares through the date of the annual meeting       A stockholder's nominee that does not receive at least 25% of the votes cast is ineligible to be a stockholder nominee for the next two annual meetings       Board can amend proxy access bylaw    


Social Responsibility and Environmental Sustainability

        We continually strive to better serve our customers and provide quality jobs for employees and value to our investors. We conduct business ethically and in accordance with the Company's Code of Business Conduct and all applicable laws, regulations, and other compliance obligations. Triumph's Code of Business Conduct is reflective of our culture and contains the business and ethical principles upon which we have built our reputation for integrity. We are committed to sourcing components and materials from companies that share our values around human rights, ethics and environmental responsibility.

        Employees.    We value our employees and their families and therefore, we offer competitive benefits which cover the many facets of health including resources and programs designed to support physical and financial wellness. We also provide tuition reimbursement and other educational and training opportunities to our employees.

        Diversity.    We value the diversity of our workforce and believe that the best business results are achieved when teams are populated with individuals from a diverse array of backgrounds, cultures, genders, and experiences. We track the diversity of our leadership and workforce and review our progress toward our diversity objectives with the Board on a periodic basis.

        Safety.    Our Environment, Safety and Health (ES&H) goals include:

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        Our ES&H team fosters and leads a culture that provides the skills, resources and management to fully engage and empower the workforce to create an incident-free environment. At our manufacturing sites, the ES&H team is leading the Company's efforts to provide a safe workplace for our employees, customers and visitors and to ensure that our operations are conducted in an environmentally responsible manner in accordance with applicable laws and regulations. We continuously invest in educational platforms for our employees, contractors, and visitors to improve their skills and knowledge, as well as provide improved tools, to create an incident-free workplace.

        Environmental.    Our business, operations and facilities are subject to numerous stringent federal, state, local and foreign environmental laws and regulation by government agencies. Among other matters, these regulatory authorities impose requirements that regulate the emission, discharge, generation, management, transportation and disposal of hazardous materials, pollutants and contaminants, govern public and private response actions to hazardous or regulated substances which may be or have been released to the environment, and require us to obtain and maintain licenses and permits in connection with our operations. We continually seek to improve the design and safety of our processes, seek energy efficient options, and minimize waste generation through pollution prevention and sustainability strategies. We partner with contractors, suppliers, and third-party providers who share our commitment to eliminate work-related injuries, incidents, and environmental impacts.

        Community Service and Philanthropy.    Since 2011, we have demonstrated a deep dedication to corporate citizenship through our Wings community outreach program. Through Wings, based on the needs of their communities, our employees around the world create and implement service projects by partnering with local non-profit organizations and engage in meaningful volunteer projects that directly benefit local charities committed to serving the needs of others. In 2018, to commemorate our 25th anniversary, the Company committed to 25,000 hours of volunteerism. Through the Wings program and individual acts of volunteerism, employees at our sites have partnered with organizations including The United Way, The American Red Cross, The Salvation Army, Boys and Girls Club of Middle Tennessee, Ouachita Children's Center, Los Angeles Regional Food Bank, Second Harvest Food Bank and many others. The Company enjoys partnering in local communities and team-based volunteer events help bring our employees together as one team serving its communities.


Anti-Hedging Policy

        We believe that the issuance of incentive and compensatory equity awards to our officers and directors, including non-employee directors, along with our stock ownership guidelines, help to align the interests of such officers and directors with our stockholders. As part of our insider trading policy, we prohibit any officers and directors from engaging in hedging activities with respect to any owned shares or outstanding equity awards. The policy also discourages pledges of any Company stock by officers and directors, and requires Company notice and approval. None of our officers and directors pledged any shares of Company stock during fiscal year 2019.


Board of Directors

        The Board currently consists of nine directors: Paul Bourgon, Daniel J. Crowley, Ralph E. Eberhart, Daniel P. Garton, Dawne S. Hickton, William L. Mansfield, Adam J. Palmer, Joseph M. Silvestri and Larry O. Spencer. Joseph M. Silvestri is not standing for reelection at the Annual Meeting.

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Director Independence

        The Board has determined that Mr. Bourgon, Gen. Eberhart, Mr. Garton, Ms. Hickton, Mr. Mansfield, Mr. Palmer, Mr. Silvestri and Gen. Spencer are all independent, as independence is defined in the listing standards of the New York Stock Exchange and in our Independence Standards for Directors, which are posted on our website at www.triumphgroup.com under "Investor Relations—Corporate Governance."

Meetings and Committees of the Board of Directors

        The Board held seven meetings during our fiscal year ended March 31, 2019 and also acted 19 times by unanimous written consent. Each of our directors attended at least 75% of the meetings of the Board and committees of the Board of which he or she was a member during the fiscal year ended March 31, 2019. We encourage all of our directors to attend the Annual Meeting. For the Annual Meeting, we expect all of our directors standing for reelection will attend. All of the directors attended the 2018 annual meeting of stockholders.

        As a non-executive Chairman and an independent director, Gen. Eberhart chairs the meetings of the Board, generally attends meetings of the Board's committees (without a vote) and provides leadership of the independent directors. Our Chairman is elected annually by the Board upon a recommendation by the Governance Committee. Executive sessions of the independent directors are held at every Board meeting (which sessions are not attended by management, except upon invitation by the Chairman). While the Board believes this leadership structure is appropriate, the Board may decide to change it in the future.

        The standing committees of the Board are the Audit Committee, the Compensation and Management Development Committee (the "Compensation Committee"), the Governance Committee, the Finance Committee and the Executive Committee. All members of the Audit Committee, the Compensation Committee and the Governance Committee are independent, as independence for such committee members is defined in the listing standards of the New York Stock Exchange and in our Independence Standards for Directors, which are posted on our website at www.triumphgroup.com under "Investor Relations—Corporate Governance."

        The Board has adopted a written charter for each of the standing committees, each of which is reviewed at least annually by the relevant committee. A copy of the charter of each standing Board committee is posted on our website at www.triumphgroup.com under "Investor Relations—Corporate Governance" and is available in print to any stockholder upon request.

Audit Committee

        The Audit Committee, currently consisting of Mr. Garton, Ms. Hickton (Chair), and Mr. Mansfield and Mr. Silvestri, met eight times during the last fiscal year. The Audit Committee assists the Board in its oversight of the integrity of our financial statements, the operations and effectiveness of our internal controls, our compliance with legal and regulatory requirements, the independent registered public accounting firm's qualifications and independence, and the performance of our internal audit function and the independent registered public accounting firm. The Audit Committee is also responsible for reviewing and approving all related person transactions in accordance with the Company's policy.

Compensation Committee

        The Compensation Committee, currently consisting of Mr. Bourgon, Mr. Garton, Mr. Mansfield (Chair), Mr. Palmer and Gen. Spencer, met seven times during the last fiscal year. The Compensation Committee periodically reviews and evaluates the compensation of our officers and other members of senior management, administers the incentive plans under which the executive officers receive their

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compensation, establishes guidelines for compensation of other personnel and oversees our management development and succession plans.

        The Compensation Committee determines the compensation of the Chief Executive Officer. The Compensation Committee also reviews and approves the compensation proposed by the Chief Executive Officer to be awarded to Triumph's other executive officers, as well as certain key senior officers of each of Triumph's operating companies and divisions. The Chief Executive Officer generally attends Compensation Committee meetings, but does not attend executive sessions or any discussion of his own compensation. The Compensation Committee also considers the results of the most recent stockholder advisory vote on executive compensation in determining executive compensation. The Compensation Committee may delegate any of its responsibilities to one or more subcommittees consisting solely of one or more members of the Compensation Committee as it may deem appropriate, provided, that the Compensation Committee does not delegate any power or authority required by law, regulation or listing standard to be exercised by the Compensation Committee as a whole.

        As further described in the CD&A, for fiscal year 2019, the Compensation Committee engaged a compensation consultant, Pay Governance, whose selection and fees or charges were recommended and approved by the Compensation Committee, to assist the Compensation Committee and the Chief Executive Officer in modifying the peer group, reviewing select officer pay recommendations, providing recommendations for fiscal year 2020's long-term incentive plan design, and assisting with the preparation of the CD&A included in this proxy statement. Pay Governance provided the Compensation Committee with specific recommendations on the compensation for Mr. Crowley, the Chief Executive Officer, and input on the compensation for the other named executive officers.

Compensation Committee Interlocks and Insider Participation

        None of the members of the Compensation Committee is an officer or employee of us or any of our subsidiaries, nor were any of them an officer or employee of the Company or any of our subsidiaries during the fiscal year ended March 31, 2019. None of our executive officers served as a member of the compensation committee of another entity, one of whose executive officers served as one of our directors.

Governance Committee

        The Governance Committee, currently consisting of Mr. Bourgon, Mr. Garton, Ms. Hickton, Mr. Silvestri and Gen. Spencer (Chair), met four times during the last fiscal year. The Governance Committee assists the Board in identifying individuals qualified to become Board members, recommending the nominees for directors, developing and recommending our Corporate Governance Guidelines and overseeing the evaluation of the Board and management. In addition to these responsibilities, the committee also advises the Board on non-employee director compensation matters.

Finance Committee

        The Finance Committee, currently consisting of Mr. Bourgon, Mr. Mansfield, Mr. Palmer (Chair), Mr. Silvestri and Gen. Spencer, met four times during the last fiscal year. The Finance Committee reviews our capital structure and policies, financial forecasts, operations and capital budgets, pension fund investments and employee savings plans and corporate insurance coverage, as well as other financial matters deemed appropriate by the Board.

Executive Committee

        The Executive Committee, currently consisting of Mr. Crowley, Gen. Eberhart (Chair), Ms. Hickton, Mr. Mansfield, Mr. Palmer, Mr. Silvestri and Gen. Spencer, exercises the powers and duties of our Board of Directors between Board meetings and while our Board is not in session. The

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Executive Committee has the authority to exercise all powers and authority of our Board, except for certain matters such as the review and approval or disapproval of related party transactions, matters which cannot be delegated by the Board of Directors to a committee of the Board pursuant to the Delaware General Corporation Law, the rules and regulations of the New York Stock Exchange, our Certificate of Incorporation or our Bylaws and matters that are reserved for another committee of the Board. The Executive Committee did not meet during the last fiscal year.

Risk Oversight

        The Board of Directors is responsible for consideration and oversight of risks facing Triumph. Acting as a whole and through its standing committees, the Board is responsible for ensuring that material risks are identified and managed appropriately. The Board and its committees regularly review material strategic, operational, financial, compensation and compliance risks with senior management. In addition to such ongoing supervision, the Board has followed a practice of annually assessing the Company's strategic risks and opportunities as part of an extended Board meeting. The Audit Committee performs a central oversight role with respect to financial and compliance risks, receives a report from Internal Audit, on the Company's enterprise risk management assessment at each regular meeting, and meets independently, outside the presence and without the participation of senior management, with Internal Audit and our independent accountants in conjunction with each regularly scheduled Board meeting. The Compensation Committee considers the risks of the Company's compensation programs in connection with the design of our compensation programs for senior corporate and company management. Pay Governance did not participate in the 2019 compensation program risk review. In addition, the Finance Committee is responsible for assessing risks related to our capital structure, significant financial exposures, our risk management and major insurance programs and regularly assesses financial risks associated with such exposures and programs.

Director Nominations

        As previously discussed, the Governance Committee assists the Board in identifying individuals qualified to become Board members and recommends the director nominees for the next annual meeting of stockholders. The Governance Committee will consider nominees for director recommended by stockholders in accordance with the following procedures. As a stockholder, you may recommend any person as a nominee for director for consideration by our Governance Committee by submitting the name(s), completed and signed questionnaire(s) and written representation and agreement(s), supplemented and updated if necessary, for each named person in writing to Jennifer H. Allen, Secretary, Triumph Group, Inc., 899 Cassatt Road, Suite 210, Berwyn, Pennsylvania 19312. Recommendations should be received by no earlier than March 20, 2020 and no later than April 19, 2020 for the 2020 annual meeting of stockholders and, as further described in the Bylaws, should be accompanied by:

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        As set forth in our Corporate Governance Guidelines and the Governance Committee charter, the Governance Committee has not established any specific minimum eligibility requirements for nominees, other than personal and professional integrity, dedication, commitment and, with respect to a majority of the Board, independence, or identified any specific qualities or skills necessary for directors to possess. However, when assessing a candidate's qualifications, the committee considers the candidate's experience, diversity, expertise, education, insight, judgment, skills, character, conflicts of interest and background. Within the limitations of the maximum number of the Board members deemed to be effective for the management of the Company, the committee seeks to ensure diversity among all of these criteria to provide the Board with the greatest practicable breadth of input. The committee seeks to implement these principles through consideration, on at least an annual basis, of the Board's composition and discussion with the Board of any identified criteria that the committee believes should be sought in considering candidates for membership. A consideration of the adequacy of the Board's composition is formally included in the Board's annual self-evaluation, and the adequacy of the process for identifying and recommending Board candidates is examined as part of the annual self-evaluation of the Governance Committee. The committee does not have any specific process for identifying and evaluating nominees. The committee considers candidates proposed by directors, executive officers and stockholders, as well as those identified by third party search firms.

Communications with Directors

        The Board of Directors provides a process for stockholders and interested parties to send communications to the Board. Stockholders and interested parties may communicate with any of our directors, any committee chair, the non-employee directors as a group or the entire Board of Directors by writing to the director, committee chair, non-employee directors or the Board in care of Triumph Group, Inc., Attention: Secretary, 899 Cassatt Road, Suite 210, Berwyn, Pennsylvania 19312. Communications received by the Secretary for any director or group of directors are forwarded directly to the director or group of directors. If the communication is addressed to the Chairman, the Board and no particular director is named, the communication will be forwarded, depending on the subject matter, to the Chairman, the appropriate committee chair, all non-employee directors or all directors.

Director Compensation

        In fiscal year 2019, each of our directors received a cash retainer in the amount of $85,000. In addition, committee chairs received chairperson fees in cash. Each director also received an equity award in the form of restricted stock units. The following table summarizes compensation we paid to

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non-employee directors for their service during fiscal year 2019 under this revised non-employee director compensation program.

Name
  Fees Earned
or Paid in
Cash ($)
  Stock Awards
($)(1)
  Total ($)  

Paul Bourgon

    85,000     140,002   $ 225,002  

Ralph E. Eberhart

    185,000     140,002   $ 325,002  

Daniel P. Garton

    85,000     140,002   $ 225,002  

Dawne S. Hickton

    100,000     140,002   $ 240,002  

William L. Mansfield

    95,000     140,002   $ 235,002  

Adam J. Palmer

    90,000     140,002   $ 230.002  

Joseph M. Silvestri

    85,000     140,002   $ 225,002  

Larry O. Spencer

    92,500     140,002   $ 232,502  

(1)
In July 2018, the non-employee directors received 7,254 restricted stock units, each unit representing the contingent right to receive one share of common stock. Forfeiture restrictions lapse on the restricted stock units on the first anniversary of the date of grant, unless earlier terminated or accelerated in accordance with the Company's 2016 Directors' Plan. Calculations are based on the closing price on the date of grant ($19.30).

Director Stock Ownership Guidelines

        Under the Company's stock ownership guidelines, non-employee directors are expected to hold shares of Triumph common stock, including shares covered by restricted stock units granted under Triumph's 2016 Directors' Plan, with a value equal to five times the amount of the annual cash retainer paid to non-employee directors. Non-employee directors are required to achieve the guideline within five years of joining the Board. In addition, all non-employee directors must hold 50% of vested shares, on an after-tax basis, until the stock ownership guidelines have been achieved. All of the non-employee directors are in compliance with the stock ownership guidelines, except for Mr. Garton and Gen. Spencer who joined the Board of Directors in 2018 and have until 2023 to comply with the guidelines.


AUDIT COMMITTEE REPORT

        The Audit Committee of the Board of Directors consists of four independent directors and operates under a written charter adopted by the Board and reviewed annually by the Audit Committee and the Board. The members of the Audit Committee are not professionally engaged in the practice of auditing or accounting nor are they experts in the fields of auditing or accounting, including in respect of auditor independence. However, all committee members are financially literate. In addition, the Board has determined that each of Mr. Garton, Ms. Hickton and Mr. Mansfield is an "audit committee financial expert" as defined under the rules of the SEC and that each member of the Audit Committee is independent as independence for audit committee members is defined in the listing standards of the New York Stock Exchange.

        Management is responsible for Triumph's internal control and the financial reporting process, including the presentation and integrity of our financial statements. Triumph's independent registered public accounting firm is responsible for, among other things, performing an independent audit of Triumph's financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB") and issuing a report thereon. Triumph's independent registered public accounting firm is responsible for auditing the effectiveness of Triumph's internal control over financial reporting and management's assessment thereof in accordance with standards of the PCAOB, and issuing a report thereon. The Audit Committee's responsibility is to monitor and

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oversee these processes on behalf of the Board of Directors. The Audit Committee also selects and approves the compensation of our independent registered public accounting firm.

        In fiscal year 2019, the Audit Committee met and held private discussions with management, the independent registered public accounting firm and Triumph's internal auditors. In addition, the members of the Audit Committee reviewed (independently or collectively) Triumph's financial statements before such statements were filed with the SEC in Triumph's quarterly reports on Form 10-Q and annual report on Form 10-K and all press releases containing earnings reports. Management represented to the Audit Committee that Triumph's financial statements were prepared in accordance with accounting principles generally accepted in the United States, and the Audit Committee reviewed and discussed the financial statements with management and the independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed under PCAOB standards.

        The Audit Committee has received the written disclosures and the letter from the Company's independent auditor required by applicable requirements of the PCAOB regarding the independent auditor's communications with the Audit Committee concerning independence and has had discussions with Ernst & Young LLP about its independence. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young LLP is compatible with maintaining the independence of such independent auditor. Based on these discussions and disclosures, the Audit Committee concluded that Ernst & Young LLP is independent from Triumph and its management.

        Based on the Audit Committee's discussion with management and the independent registered public accounting firm and its review of the representations of management and the report of the independent registered public accounting firm to the Audit Committee, the Audit Committee recommended that the Board include the audited financial statements in Triumph's Annual Report on Form 10-K for the year ended March 31, 2019, filed with the SEC.

    Audit Committee

 

 

Dawne S. Hickton (Chair)
Daniel P. Garton
William L. Mansfield
Joseph M. Silvestri

        This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or under the Exchange Act, except to the extent that Triumph specifically incorporates this information by reference, shall not otherwise be deemed filed under the Securities Act and the Exchange Act and shall not be deemed soliciting material.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review and Approval of Transactions with Related Persons

        Our policy for the Review, Approval or Ratification of Transactions with Related Persons, which is in writing, requires approval or ratification by our Board of Directors or a committee delegated by the Board for any transaction in which the amount involved exceeds $120,000, Triumph or one of its subsidiaries is a participant and any "related person" (as such term is defined in Item 404 of Regulation S-K of the Securities Act) has a direct or indirect material interest (the "Policy"). The Policy and Triumph's Code of Business Conduct establish procedures for reporting of potential related person transactions under the Policy and potential conflicts of interest. Triumph's legal department determines whether reported transactions constitute a related person transaction requiring pre-approval.

        The Policy provides that the Board may delegate review and approval of a related person transaction to the Audit Committee (or another standing or ad hoc committee). In addition, if it is impractical to wait until the next Board or committee meeting to obtain approval of a related person transaction, the Chair of the Audit Committee may approve the transaction, provided that the chair reports such approval at the next regularly scheduled Board meeting. If the transaction at issue relates to a member of the Board, that Board member may not participate in the review of such transaction. In approving or ratifying any transaction, the Board or the Audit Committee must determine that the transaction is fair and reasonable to the Company.

        If Triumph becomes aware of a related person transaction that was not pre-approved under the Policy, then the Board will review the matter and evaluate its options (including ratification, revision and termination of the transaction at issue).

Related Person Transactions

        Triumph is not aware of any transaction during fiscal year 2019, or any currently proposed transaction, in which Triumph or one of its subsidiaries was or is to be a participant and the amount involved exceeds $120,000, and in which any related person has or will have a direct or indirect material interest.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

        This Compensation Discussion and Analysis ("CD&A") provides detailed information about the compensation program for the Company's named executive officers (the "NEOs"). For our fiscal year 2019, which ended March 31, 2019 ("fiscal year 2019"), our NEOs are listed in the table below.

Named Executive Officer
  Title
Daniel J. Crowley   President and Chief Executive Officer
James F. McCabe   Senior Vice President and Chief Financial Officer
Peter K.A. Wick   Executive Vice President, Aerospace Structures
Daniel J. Ostrosky   Vice President, Supply Chain
Lance R. Turner   Senior Vice President, Chief Human Resources Officer

        The following two executive officers departed the Company on December 31, 2018 and are also NEOs for fiscal year 2019.

Former Executives
  Title
John B. Wright, II   Senior Vice President & General Counsel
Thomas K. Holzthum   Executive Vice President, Integrated Systems

        Mr. Crowley, Mr. McCabe, Mr. Wick, Mr. Ostrosky, and Mr. Turner are referred to herein as our "Current NEOs". For purposes of the CD&A, the term "Committee" refers to the Compensation and Management Development Committee of the Board.

Executive Summary

Company and Performance Overview

Fiscal Year 2019 Imperatives

        In fiscal year 2019, Triumph continued to execute on the transformation strategy it implemented in the prior fiscal year. We set the following five imperatives for fiscal year 2019 to achieve our longer-term objectives of predictable profitability and positive cash flow.

       
    Imperative
    Achievements
 
       
    Achieve organization effectiveness across the enterprise by ensuring that teams are staffed with effective talent to drive operational results.       Staffed three senior leadership executives with diverse and top talent, including new Executive Vice Presidents to lead our Integrated Systems and Product Support business units and a new Senior Vice President, General Counsel and Secretary.    
    Enhance value through portfolio shaping activities, including the divestiture of non-core businesses.       Over the course of fiscal year 2019, Triumph divested 15 machining and fabrication sites, our North American Aircraft Services business, our Repair Product Line in Thailand, the G650 program and the Global 7500 program. These divestitures align with the Company's transformation plan and enable debt reduction and future growth.    

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    Imperative
    Achievements
 
       
    Improve operational, delivery and supplier performance, enhance enterprise culture of quality and improve safety performance.       Launched enterprise quality management system and created a fully integrated quality organization; improved our safety of total case incident rate; reduced a significant number of "high risk" suppliers through supplier development activities.    
    Improve velocity of cash-to-cash conversion through sustainable physical inventory reductions.       Achieved a significant reduction in physical inventory through improved on-time-delivery efforts, increased material management activities, divestitures, and structured site level reviews.    
    Achieve our cost-savings goal.       Exceeded our fiscal year 2019 cost-savings goal and achieved our three-year (fiscal years 2017-2019) cost-savings goal.    

Financial Performance Highlights

        Financially, fiscal year 2019 was another challenging but productive year. Our sales increased from fiscal year 2018 by 5.2% and we had a negative free cash flow of $(222) million. Net loss decreased from a loss of $(425) million to a loss of $(322) million, as shown below. For a detailed description of our operating results for fiscal year 2019, including the factors contributing to such results, see our Annual Report on Form 10-K for the year ended March 31, 2019, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in such report.

 
   
Net Sales (in billions)   Net (Loss) (in millions)

GRAPHIC

 

GRAPHIC

Free Cash Flow Use (in millions)*

 

 

GRAPHIC

 

 

*
Free cash flow use is a non-GAAP financial measure. For a reconciliation of adjusted free cash flow use to cash flow used in operations, the most comparable GAAP measure, for fiscal year 2019, see Appendix C to this proxy statement.

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        The Company believes that its achievements in the past two years to execute on the transformation strategy (e.g., renegotiating contracts with key customers and eliminating non-core businesses) will lead to improved total stockholder return ("TSR") in the long run. In addition, the successes thus far will help better position the Company for fiscal year 2020, which is expected to be an inflection point in the Company's turnaround.

        Throughout fiscal year 2019, the Company continued its efforts to secure competitive wins to support its organic growth, including the following new contracts:

Executive Compensation Overview

Compensation Program Changes in Fiscal Year 2019

        We generally maintained our compensation program structure for fiscal year 2019 except for a modest change to our Annual Incentive Plan ("AIP"). This change is summarized below and was intended to correspond to the Company's evolving focus on operational execution and increased profitability, thereby enhancing long-term stockholder value.

           
    Changed From
    Changed To
    Rationale for Change
 
           
    Annual cash bonus was based 40% on operating income metric       Annual cash bonus was based 40% on earnings before interest, taxes, depreciation, amortization and pension income ("EBITDAP")       Redefined profitability metric as EBITDAP (from operating income) using the same 40% weighting to better align with our internal reporting and focus on growing core earnings before depreciation, amortization, and pension income    

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Other Fiscal Year 2019 Compensation Highlights

       
    Compensation Highlight
    Details
 
       
    Say-on-Pay Advisory Vote      

At the Company's 2018 Annual Meeting of Stockholders in July 2018, compensation of our named executive officers was approved by 92.3% of votes present. Based on this support, the Committee made no further changes to the general structure and philosophy of our executive compensation program for fiscal year 2019 (other than the modest change described above). The Committee continues to evaluate our pay programs and practices to ensure that they are market competitive, equitable, and aligned with the Company's performance.

   
    AIP Payout      

Target performance goals for both EBITDAP and free cash flow reflect our board-approved annual operating plan and were considered to be challenging.

   

 

 

 

 

 

 


Mr. Crowley, Mr. McCabe, Mr. Ostrosky and Mr. Turner: We achieved $230 million in adjusted EBITDAP and ($222) million free cash flow, as adjusted by the Committee in accordance with plan terms. Strategic goals were achieved at 50% above target, resulting in a 102.4% of target annual cash bonus payout for the corporate NEOs. See Appendix C for a reconciliation of GAAP to non-GAAP results and a description of adjustments made to performance metrics.


 

 

 

 

 

 

 

 


Mr. Wick: Fifty percent (50%) of Mr. Wick's bonus was based on the corporate metrics and the achievement goals discussed above, with the remaining 50% based on the achievement of goals by his business unit, Aerospace Structures. During fiscal year 2019, Mr. Wick's business unit achieved $107 million in adjusted EBITDAP and $(173) million in free cash flow, as adjusted for compensation purposes. Strategic goals were achieved at 50% above target, resulting in a 116.9% of target annual cash bonus payout


 

 

 

 

 

 

 

 


Mr. Wright and Mr. Holzthum: Mr. Wright received a prorated fiscal year 2019 cash bonus payout of 102.4% of target pursuant to his separation agreement. Mr. Holzthum was not eligible for and did not receive a fiscal year 2019 award, under the terms of his separation agreement.


 

 
    Long-Term Incentive ("LTI") Awards      

The Performance Share Units ("PSUs") granted for fiscal year 2017—fiscal year 2019 performance period were earned at 41% of target. This was based on achieving 94.5% of the adjusted Return on Net Assets ("RONA") target and failure to achieve the threshold level of adjusted Earnings Per Share ("EPS") target. Per the plan design, RONA and EPS were weighted equally.

Service-based Restricted Stock Units ("RSUs") vested ratably over three years.

   

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Best Practices in Executive Compensation Governance

        The following practices and policies ensure sound corporate governance practices and alignment of interests between stockholders and executives.

What We Do

ü   Pay for performance—For fiscal year 2019, a significant percentage of the total direct compensation package was at-risk and connected to performance objectives (81% of total direct compensation for CEO and 64% on average for other Current NEOs).

ü

 

Establish sound performance goals—Pre-established goals for our performance-based incentive plans are carefully developed and calibrated through a rigorous process that involves the Board.

ü

 

Maintain stock ownership guidelines—We maintained rigorous stock ownership guidelines to further align executives' interests with those of our stockholders. Fiscal year 2019 guidelines were 6 times base salary for the CEO and 1 to 3 times base salary for the other executive officers.

ü

 

Use double-trigger vesting provisions—For equity awards, vesting connected with a change in control requires a qualifying termination of employment ("double-trigger" provision).

ü

 

Designate Non-executive Chairman—Establish effective independent Board leadership and oversight of management.

ü

 

Engage an independent compensation consultant—The Committee engages an independent consultant to advise on executive compensation program design, practices, and related governance. Other than providing non-employee director compensation advice to the Governance Committee, the consultant does not provide any other services to the Company.

What We Don't Do

x   No stock option grants with an exercise price less than the fair market value on the date of grant.

x

 

No excise tax gross ups are provided on a change in control termination.

x

 

No repricing or exchanging of stock options or other equity awards without stockholder approval.

x

 

No hedging of Company securities by directors or executive officers and pledging of Company securities is restricted.

x

 

No excessive perquisites.

Compensation Results: Payouts Reflect Corporate Performance

        The Committee considers a mix of cash and equity awards over both the short-term and long-term as a critical balance in emphasizing Triumph's commitment to performance alignment. This strong pay-for-performance alignment is clearly reflected in amounts actually earned by our NEOs based on the achievement of metrics established by the Committee under the short-term and long-term incentive plans.

        The average annual cash incentive payout over the last three fiscal years for our CEO is 95% of target. Below target performance award payouts have been made under our long-term incentive plan during the same three-year time period (0% of target for fiscal year 2017, 0% of target for fiscal year 2018 and 41% of target for fiscal year 2019).

        The following table illustrates how our performance has affected the payout of our short-term incentives and how the performance of our common stock, RONA, and EPS affects the value of the

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long-term incentives that would be received by our CEO based on our closing stock price of $19.06 on March 29, 2019, the final trading day of our fiscal year. Based on our strong pay-for-performance alignment, realizable compensation for our CEO over the past three fiscal years is 46% of target.


Three-Year (FY17 - FY19) Aggregate CEO Compensation (in millions)

GRAPHIC

        The realizable value of our incentives are as follows:

    Realizable Value as a % of Target
           

 Chief Executive Officer—Mr. Crowley

    FY17     FY18     FY19

Annual Cash Incentive(1)

    75%     109%     102%
           

Annual Restricted Stock Units (RSUs)(2)

    53%     57%     100%
           

Annual Performance Share Units (PSUs)(3)

    22%     0%     0%
           

Initial/Make-Whole Awards (RSUs, Stock Options, and PSUs)(4)

    23%     N/A     N/A
           

(1)
Annual cash incentive indicates the percentage of the target award earned under our AIP.

(2)
Annual RSUs indicates the market value on March 29, 2019 of the shares underlying the RSUs as a percentage of the market value on the grant date. To the extent that the market value has declined, the dollar amount of the value of the RSUs reflected in the Summary Compensation Table also will decline.

(3)
Annual PSUs indicates the percentage of the PSUs that would be paid out based on our TSR (stock price plus dividends) as compared to the TSR of the peer group companies, our absolute TSR versus per-established TSR growth goals, and pre-established goals for RONA and EPS.

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(4)
Initial/make-whole awards are equity grants that pertain to the appointment of Mr. Crowley as our CEO and consist of RSUs, stock options with an exercise price of $30.86, and PSUs based on TSR growth goals ranging from 10% to 14% on a compounded annual basis between fiscal year 2020 and fiscal year 2023.

The Process for Setting Compensation

Objectives of Executive Compensation Program

        Our executive compensation program is intended to achieve several business objectives:

Determining Executive Compensation: Process and Roles

        The following parties are responsible for the development and oversight of our executive compensation program for our NEOs:

Compensation Committee

        The Committee operates under a written charter approved by the Board and reviewed by the Committee annually. The charter provides that the Committee is accountable for: evaluating, adjusting, and approving executive compensation plans, policies and programs; considering matters relating to management evaluation, development and succession; and recommending individuals for appointment as officers.

        In structuring each element of compensation and the executive compensation package as a whole, the Committee strives to create incentives for management to act in accordance with the interests of our stockholders to drive long-term growth in the Company's equity value. For fiscal year 2019, the Committee determined CEO compensation; and the CEO recommended compensation for the other NEOs. The Committee then considered and approved compensation for the CEO and the other NEOs, taking into consideration the compensation factors described in this CD&A.

Independent Compensation Consultant to the Committee

        The Committee has the authority under its charter to retain independent consultants or advisors to assist it in gathering information and making decisions. The Committee has sought the advice of compensation consultants in the past to assist in developing appropriate incentives and in minimizing the risk that incentives will encourage inappropriate executive decisions and actions. In August 2018, the Committee retained Pay Governance LLC ("Pay Governance"), a nationally recognized independent executive compensation consultant, to provide advice on executive compensation matters. Prior to that, Semler Brossy Consulting Group LLC served as the Committee's independent compensation consultant.

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        During fiscal year 2019, Pay Governance (1) reviewed the Company's peer group to provide recommendations to better align the size and business fit of the companies we use as a comparison; (2) analyzed the competitive levels of each element of compensation (i.e., base salary, target annual incentive, and long-term incentive) and total compensation for the NEOs relative to our peer group and industry standards; (3) aided in developing and implementing the fiscal year 2020 annual and long-term incentive plan designs; (4) assisted in the preparation of this CD&A; and (5) provided advice on a number of other executive compensation and related governance matters. In addition, Pay Governance attended and participated in Committee meetings, met with the Committee in executive sessions without our executive officers or other members of management present, met individually with the Committee Chair, and reviewed and commented on management's presentations used to engage in conversations with the Committee.

        The Committee has analyzed whether the work of Pay Governance has raised any conflict of interest and has concluded that its work, including the individuals who provide consulting services to the Committee, has not created any conflict of interest. The Committee also considered and confirmed the independence of legal advisors it retained during fiscal year 2019.

Management

        Management supports the Committee by making recommendations and providing analyses with respect to competitive pay practices and pay ranges, compensation and benefit plans, incentive goal setting, policies and procedures related to equity awards, perquisites, and general compensation and benefits philosophy. Senior human resources and legal executives attend Committee meetings to provide perspective and expertise relevant to the meeting agenda. Members of management do not recommend, determine, or participate in Committee discussions related to their individual compensation arrangements. The CEO provides executive compensation recommendations for his direct reports, including the other NEOs. These recommendations are based on analysis and guidance provided by the compensation consultant on behalf of the Committee and the CEO's assessment of individual specific factors.

Use of Market Data and Competitive Market Positioning

Competitive Assessment

        The Committee reviews the Company's performance and authorizes the salaries, incentive opportunities, and equity grants for the NEOs annually. As context for these decisions, the Committee reviews compensation practices and pay levels for the peer group of comparable companies as well as competitive survey data.

The Comparator Peer Group

        The Committee maintains a group of companies similar in size and industry in order to gauge marketplace compensation levels, program design, and practices. The Committee approved the fiscal year 2019 peer group of companies contained in the table below who have been selected based on the following criteria:

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        The peer group companies are reviewed annually to confirm continued alignment with the selection criteria. The peer group used to determine fiscal year 2019 pay levels include the following 17 companies:

       
    Fiscal Year 2019 Peer Group
   
       
    AAR Corp.   Esterline Technologies Corp.   Spirit AeroSystems Holding, Inc.    
    Aerojet Rocketdyne Holdings   Kaman Corp.   Teledyne Technologies, Inc.  
    AMETEK, Inc.   L-3 Communications Holdings   TransDigm Group, Inc.    
    B/E Aerospace, Inc.   Moog, Inc.   Valmont Industries, Inc.  
    Crane Co.   Orbital ATK, Inc.   Woodward, Inc.    
    Curtiss-Wright Corp.   Rockwell Collins, Inc.    

        In fiscal year 2019, the Committee reviewed the peer group that will be used for fiscal year 2020 compensation decisions and modified the peer group based on recommendations by Pay Governance and input from management. In terms of revenue and assets, Triumph is larger than the fiscal year 2019 peer group median. However, it was determined that there were no other larger companies that fit our specific criteria. Companies were either significantly larger than Triumph or did not have a good business fit.

        Because of acquisition activity in the aerospace industry, the Committee removed a number of companies from the peer group that will be used in fiscal year 2020, including Orbital ATK (acquired by Northrop Grumman Corp.), L3 Technologies, Inc. (acquired by Harris Corp.), Rockwell Collins, Inc. (acquired by United Technologies Corp.) and Esterline Technologies Corp. (acquired by TransDigm Group). The Committee added Alleghany Technologies Incorporated, Carlisle Companies, Inc., Hexcel Corporation, Huntington Ingalls Industries, Inc., ITT Inc., Regal Beloit Corporation and The Timken Company to the fiscal year 2020 peer group.

General Industry Survey Data

        To supplement the peer group data, we also used the Willis Towers Watson General Industry Executive Compensation Survey Report to ensure that the Company's compensation practices reflect broader industry practices and to match positions not available through the peer proxy review analysis. We reviewed specific parts of the database that provided compensation from companies with comparable size and scope to Triumph.

Executive Compensation Program Details

Current Program Overview

        Our compensation strategy is to place a major portion of total executive compensation at risk in the form of annual incentives and long-term, stock-based compensation programs. This principle is

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demonstrated by our performance-oriented AIP and our long-term incentive structure, which is 60% performance-based. The components of our current executive compensation program are:

GRAPHIC

        Each of these components is described separately below.

        In making decisions about compensation, the Committee closely reviews each separate component, as well as the full compensation package provided to each executive officer, including the NEOs.

Pay Mix

        The actual annual incentive payout and payout on PSUs vary year-to-year with the Company's performance. At target, the Committee intends for a large portion of our executives' compensation to be performance-based and specifically, equity-based, to help align the interests of our executives with those of our stockholders.

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        The figures below represent fiscal year 2019 pay mix and include: (1) base salary, (2) target annual incentives, and (3) target long-term incentives.

Mr. Crowley   Other Current NEOs Average

GRAPHIC

 

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Changes in Target Pay Levels

        In fiscal year 2019, the Committee approved targeted increases to compensation in recognition of individual performance of each Current NEO and with the objective of better aligning compensation with market median pay levels. Additionally, at its February 2019 meeting, the Committee approved an additional adjustment for Mr. McCabe for retention purposes and to align his compensation with the market median levels.

        The following table shows the Committee's determinations regarding our Current NEO's fiscal year 2019 target compensation rates as compared to their fiscal year 2018 target compensation rate.

Named Executive Officer
  Fiscal Year   Base Salary   Target Bonus   Target LTI   Target Total Pay  

Daniel J. Crowley

  2019   $ 927,000 * $ 1,019,700   $ 3,012,750   $ 4,959,450  

  2018   $ 900,000   $ 900,000   $ 2,385,000   $ 4,185,000  

James F. McCabe(1)

   
2019
 
$

550,000
 
$

550,000
 
$

825,000
 
$

1,925,000
 

    2019   $ 520,000   $ 390,000   $ 650,000   $ 1,560,000  

    2018   $ 500,000   $ 375,000   $ 625,000   $ 1,500,000  

Peter K.A. Wick

 

2019

 

$

413,000

*

$

309,750

 

$

309,750

 

$

1,032,500
 

  2018   $ 375,000   $ 281,250   $ 281,250   $ 937,500  

Daniel J. Ostrosky

   
2019
 
$

380,000
 
$

228,000
 
$

285,000
 
$

893,000
 

    2018   $ 380,000   $ 228,000   $ 285,000   $ 893,000  

Lance R. Turner

 

2019

 

$

315,000

*

$

236,250

 

$

236,250

 

$

787,500
 

  2018   $ 300,000   $ 180,000   $ 225,000   $ 705,000  

(1)
Committee approved a market adjustment to align with the market median in February 2019

*
Base salary currently below market median

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Base Salaries

        We initially set base salary for an NEO by evaluating the responsibilities of the position and the experience of the individual. In doing so, we consider the competitive marketplace for executive talent. We determine annual salary adjustments by evaluating the performance of Triumph and of each NEO, taking into account changes in responsibilities. For fiscal year 2019, the Committee approved merit increases for the NEO's ranging from 0% to 5% in line with current market rates. Additionally, the Committee approved a 5% market adjustment for Mr. Wick and a 5.8% market adjustment for Mr. McCabe, to more appropriately position their pay closer to the market median.

        Fiscal year 2019 NEO base salaries were set as follows:

Current NEOs
  Fiscal Year 2019
Salary(1)
 

Daniel J. Crowley

  $ 927,000  

James F. McCabe

  $ 550,000  

Peter K.A. Wick

  $ 413,000  

Daniel J. Ostrosky

  $ 380,000  

Lance R. Turner

  $ 315,000  

 

Former Executives
   
 

John Wright

  $ 410,000  

Tom Holzthum

  $ 408,000  

(1)
These salaries reflect the executive's rate and not the actual salary received during the fiscal year as disclosed in the Summary Compensation Table.

Annual Incentive Compensation

        In accordance with the annual cash bonus plan, the Committee establishes target incentive awards as a percentage of salary for each NEO. The incentive opportunities are meant to provide our executives with the potential for a target or maximum level reward only if our pre-established performance objectives are met or exceeded. Each NEO has the opportunity to earn up to 200% of target if challenging maximum goals are achieved and zero payout if minimum threshold goals are not reached.

        Performance goals for fiscal year 2019 were based on EBITDAP, free cash flow, and strategic measures as shown below.

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Fiscal Year 2019 AIP

Mr. Crowley, Mr. McCabe, Mr. Ostrosky and Mr. Turner

GRAPHIC

Mr. Wick

GRAPHIC

        The annual cash bonus award target percentages were established by the Committee for Mr. Crowley. The CEO provides the Committee with recommendations for the other NEOs, and based on the recommendations of the CEO, the Committee considers and approves such officers' compensation. These target bonus amounts consider each executive's compensation level and individual performance results. They are meant to appropriately balance fixed compensation and compensation at risk, taking into consideration the position's significance and the executive's record of performance against Company objectives.

        Similar to base salary increases, the Committee carefully considered the results of the competitive benchmarking in setting target opportunities for fiscal year 2019, which were as follows:

Current NEO
  Fiscal Year 2019
Target Bonus
(as % of Salary)
  Fiscal Year 2019
Target Bonus
($ Value)
 

Daniel J. Crowley

    110 % $ 1,019,700  

James F. McCabe

    100 % $ 550,000  

Peter K.A. Wick

    75 % $ 309,750  

Daniel J. Ostrosky

    60 % $ 228,000  

Lance R. Turner

    75 % $ 236,250  

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Fiscal Year 2019 AIP Payouts for Mr. Crowley, Mr. McCabe, Mr. Ostrosky and Mr. Turner

        For Mr. Crowley, Mr. McCabe, Mr. Ostrosky and Mr. Turner in fiscal year 2019, the Committee established threshold, target, and maximum performance goals for EBITDAP and free cash flow (as depicted below). Fiscal year 2019 goals for EBITDAP and free cash flow were set to align with the operating plan approved by the Board. The performance goal for free cash flow was set above the prior year target and prior year actual performance.

In $M
  Adjusted
EBITDAP
  Free Cash
Flow(1)
 

Achievement

  $ 230   $ (222 )

Threshold

  $ 191   $ (270 )

Target

  $ 239   $ (180 )

Maximum

  $ 286   $ 0  

(1)
Free Cash Flow is linear with interpolation between the Achievement, Threshold, Target and Maximum levels described above.
Fiscal Year 2019 Triumph Consolidated
Adjusted EBITDAP Performance ($MM)
  Fiscal Year 2019 Triumph Free Cash
Flow Performance ($MM)

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        The Company achieved $(105) million in non-GAAP EBITDAP, which was adjusted to $230 million by the Compensation Committee in accordance with plan terms (96% of target). The Company also achieved $(222) million in non-GAAP free cash flow use (72% of target). Both of these outcomes were applied when determining the NEOs' bonus payouts.

        Performance levels for both of these metrics reflect adjustments, consistent with the performance goals determination under the 2018 Executive Cash Incentive Compensation Plan (the "2018 Plan"), including adjustments to EBITDAP that results in a difference to reported operating income under GAAP. The use of non-GAAP metrics, resulting from the four adjustments made, as described below, represent the Committee's determination that the Company made strong progress in fiscal year 2019 to right-size the portfolio and focus the Company on its key areas of expertise, with the intent of generating higher returns for all stakeholders and positioning the Company for long-term success in fiscal year 2020 and beyond.

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        See Appendix C for a reconciliation of GAAP and adjusted, non-GAAP EBITDAP, and a description of the adjustments to non-GAAP free cash flow.

           
    Adjustment
    Details
    Rationale
 
           
    Divestiture of non-core businesses      

Exclude the loss on divestiture impact from EBITDAP

     

The divestiture of the machining and fabrications business and the G650 and Global 7500 program were made to improve the quality of the Company's assets and enable the reinvestment of resources. The divested businesses and programs were not purchased by the current leadership team.

   
    Performance of divested business      

Exclude impact from operating income and free cash flow

     

Excluding the amount of EBITDAP and free cash flow for the periods of the divestiture permits measurement of results based on the core business. These adjustments are aligned with adjustments made in prior years.

   
    Goodwill impairment      

Exclude impact from operating income

     

Goodwill impairments are non-cash charges unrelated to the core business. These adjustments are aligned with adjustments made in prior years.

   

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        In addition to the two financial measures, the strategic goals were achieved at 150% of target. Strategic goals included the following:

               
    Strategic Objective
    Rationale for Strategic Objective
    Results
    Achievement
 
               
    Improve underperforming operational performance of sites and programs (5% weighting)       Drive the Company to improve quality and restore customer confidence, which is crucial for long-term revenue growth       Significant improvement at underperforming sites and on programs       5% (at target)    



 
  Complete consolidations and divestitures (5% weighting)       Focus the Company on its core strengths, reduce debt and enable the reinvestment of resources       Completed all planned divestitures       10% (at maximum)    



 
  Achieve organizational effectiveness (5% weighting)       Improve functional engagement and support; drive higher employee satisfaction, engagement and retention       Upgraded key operations and functional talent in the Integrated Systems business unit; developed, deployed and baselined high performing teams across all business units; developed and launched multiple employee satisfaction initiatives       5% (at target)    



 
  Maintain adequate liquidity (5% weighting)       Improve the quality of the Company's assets and enables the reinvestment of resources to position the Company for long-term success       Divestitures and cost reduction initiatives maintained and enhanced the Company's liquidity       10% (at maximum)    

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        Achievement of these strategic goals, combined with achievement of the two financial metrics, resulted in an annual cash bonus payout potential of 102.4% of target for each of Mr. Crowley, Mr. McCabe, Mr. Ostrosky and Mr. Turner. In the case of Mr. Wick, the strategic goals were weighted less than for the other Current NEOs (see below).

 
  Financial
Results
($MM)
  Annual Cash Bonus Payout  
Corporate NEOs
Performance Measure
  Target   Actual   Achievement
(Payout Factor)
  Metric
Weight
  Weighted
Total
 

Triumph Consolidated Adjusted EBITDAP(1)

  $ 238   $ 230   89.2%   40%   35.7%  

Adjusted Free Cash Flow(1)

  $ (180)   $ (222)     91.8%     40%     36.7%  

Strategic Goals

      150%   20%   30.0%  

TOTAL

                            102.4%  

(1)
Represents a non-GAAP metric. See above and Appendix C for a reconciliation of GAAP and adjusted, non-GAAP EBITDAP, and cash flow used in operations (GAAP) to non-GAAP free cash flow and adjusted free cash flow.

Fiscal Year 2019 AIP Payouts for Mr. Wick

        As a business unit head, 40% of Mr. Wick's bonus payout was determined by adjusted EBITDAP and free cash flow performance of the Aerospace Structures business unit. The EBITDAP and free cash flow threshold, target, and overachievement performance goals were established for Aerospace Structures (as depicted below).

Fiscal Year 2019 Aerospace Structures
Adjusted EBITDAP Performance ($MM)
  Fiscal Year 2019 Aerospace Structures
Free Cash Flow Performance ($MM)

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        In fiscal year 2019, the Aerospace Structures business unit achieved $107 million in adjusted EBITDAP (200% of target) and ($173) million in adjusted free cash flow (53.5% of target), which were

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applied when determining Mr. Wick's bonus payout. Mr. Wick also attained achievement at 150% for his strategic goal, resulting in a total annual cash bonus payout potential of 116.9% of target.

 
  Financial
Results
($MM)
  Annual Cash Bonus Payout  
Mr. Wick
Performance Measure
  Target   Actual   Achievement
(Payout Factor)
  Metric
Weight
  Weighted
Total
 

Triumph Consolidated Adjusted EBITDAP(1)

  $ 238   $ 230   89.2%   20%   17.8%  

Operating Adjusted Free Cash Flow(1)

  $ (180)   $ (222)     91.8%     20%     18.4%  

Aerospace Structures Adjusted EBITDAP(1)

  $ 86   $ 107   200.0%   20%   40.0%  

Aerospace Structures Adjusted Free Cash Flow(1)(2)

  $ (217)   $ (173)     53.5%     20%     10.7%  

Strategic Goals

      150.0%   20%   30.0%  

TOTAL

                            116.9%  

(1)
Represents a non-GAAP metric. See Appendix C for a reconciliation of cash flow from operations (GAAP) to non-GAAP free cash flow and adjusted free cash flow.

(2)
Downward adjustment approved by the Committee based on an assessment of operational performance.

        Based on the achievement of financial and strategic performance metrics (as described above), the corporate component of the 2019 bonuses paid out at 102.4%. The Committee also reviewed the achievement of the various business unit goals, which had a significant impact on the bonus for Mr. Wick. The 102.4% corporate payout, when added to the business unit results and achievement of the strategic goals, resulted in payment of the following bonuses to the Current NEOs.

Named Executive Officer
  Fiscal Year 2019
Incentive Payout Amount
  Fiscal Year 2019
Payout as a % of
Target Bonus
 

Daniel J. Crowley

  $ 1,044,073     102.4%  

James F. McCabe

  $ 563,200     102.4%  

Peter K.A. Wick

  $ 362,097     116.9%  

Daniel J. Ostrosky

  $ 233,472     102.4%  

Lance R. Turner

  $ 241,920     102.4%  

 

Former Executives
  Fiscal Year 2019
Incentive Payout Amount
  Fiscal Year 2019
Payout as a %
Target Bonus
 

John Wright

  $ 188,928     102.4%  

Tom Holzthum

  $ 0     n/a  

        Under the terms of his separation agreement, Mr. Wright received a prorated fiscal year 2019 cash bonus payment of 102.4% of target. Mr. Holzthum was not eligible for a prorated fiscal year 2019 cash bonus payment under the terms of his separation agreement.

Long-Term Incentive Compensation

        LTI compensation represents a significant proportion of executive compensation at Triumph and is designed to align management's interests with that of stockholders. The Committee determines the size of any grant made to our CEO and approves the amounts of the grants made to the other NEOs based upon the CEO's recommendations.

        Annual grants of LTI compensation are typically made in the spring following the Committee's meeting held in conjunction with the first meeting of our Board in the fiscal year. The grant values are

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based on the closing price of the stock on the date of grant and the number of stock units subject to the award.

Fiscal Year 2019 Annual Long-Term Incentive Compensation Awards

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        In fiscal year 2019, all NEOs received 60% of their annual LTI award value in PSUs and 40% of their LTI award value in time-based RSUs. A higher weighting is placed on PSUs to reflect the Company's strong pay for performance philosophy.

        RSUs vest ratably over three years. PSUs may be earned based the attainment of absolute TSR and relative TSR goals during the three-year performance period. Each metric is weighted equally at 50%. PSUs may be earned at a target level (the established performance goals are met at the 100% level), threshold level (the established performance goals are met such that 50% of the target incentive award is earned), and maximum level (the established performance goals are exceeded such that 200% of the target incentive award is earned). Performance between the threshold, target, and maximum performance levels will result in awards adjusted in amount so as to be in linear proportion to the difference between the achieved performance level and the established performance levels. No award will be earned if the threshold is not met during the three-year performance period, and no award shall be earned that exceeds 200% of the target incentive award.

        Absolute TSR goals were established by the Committee based on several inputs including historical peer performance, the TSR goals for Mr. Crowley's new hire awards, and external investor preferences. The goals were set at competitive levels to emphasize the Company's strong pay for performance philosophy.

        Relative TSR goals are depicted below. The Committee set the target goal at above median performance (i.e., 55th percentile) to align with market practice and to reflect the Company's strong pay for performance philosophy.

Performance vs.
Absolute TSR Goal
  Earned
Payout
 

Below Threshold

    0%  

At Threshold

    50%  

At Target

    100%  

At Maximum

    200%  

 

Performance vs.
Relative TSR Goal
  Percentile Rank
Against Fiscal Year
2019 Peer Group
  Earned
Payout
 

Below Threshold

  < 30th Percentile     0%  

At Threshold

  30th Percentile     50%  

At Target

  55th Percentile     100%  

At Maximum

  80th Percentile     200%  

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        Similar to the annual short-term incentive process, the Committee sets the target LTI opportunities for our NEOs as a percentage of base salary. The Committee puts greater weight on the long-term incentive opportunity to focus management towards the overall sustained performance of the Company and approved the following for fiscal year 2019:

Current NEO
  Fiscal Year
2019
Target LTI
(as % of Salary)
  Fiscal Year
2019
Target LTI
($ Value)
  Fiscal Year 2019
Target Number of
Units Granted(1)
 

Daniel J. Crowley(2)

    325 % $ 3,012,750     134,198  

James F. McCabe

    125 % $ 650,000     43,430  

Peter K.A. Wick

    75 % $ 309,750     20,695  

Daniel J. Ostrosky

    75 % $ 285,000     19,042  

Lance R. Turner

    75 % $ 236,250     10,523  

(1)
The target number of units represents the number of PSUs and RSUs that were granted on May 30, 2018.

(2)
Does not include the replacement RSU and PSU grants for Mr. Crowley, which are described in greater detail below and included in the Grants of Plan-Based Awards table on page 60 of this proxy statement.

Deferred Compensation

        We offer all of our executives the opportunity to defer all or any part of their bonus for any year, to be paid out over the following two years. We believe that the deferred compensation is consistent with competitive practices in our industry. In fiscal year 2019, none of our NEOs participated in the Company's deferred compensation arrangements.

Perquisites

        We provide certain of our NEOs with other benefits, reflected in the "All Other Compensation" column in the Summary Compensation Table below. We believe the additional benefits are reasonable, competitive and consistent with Triumph's overall executive compensation program. We believe that these benefits generally allow our executives to work more efficiently and in the case of the tax preparation and counseling services, help them to optimize the value received from the compensation and benefit programs offered. The costs of these benefits constitute only a small percentage of each executive's total compensation. Included among the benefits are personal use of the Company plane (valued based on the incremental cost to Triumph for fuel, landing fees and other variable costs of operating the airplane, but not including fixed costs that do not change based on usage, such as pilots' salaries, depreciation of the purchase cost of the aircraft and the cost of general maintenance), and reimbursement of fees for financial planning services and certain legal fees and relocation expenses for Mr. Crowley. See "All Other Compensation" in the Summary Compensation Table of this proxy statement for a description of the value of the perquisites paid to the NEOs in fiscal year 2019.

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Other Compensation Matters

Employment Agreements

        The Company has entered into an employment agreement with Mr. Crowley and has an employment letter with each of Mr. McCabe, Mr. Wick, Mr. Ostrosky and Mr. Turner. Further information about these agreements can be found below.

Severance Benefits

        Each of the NEOs has potential severance benefits outlined in his respective employment agreement or employment letter. On February 19, 2019, the Compensation Committee approved the Triumph Group, Inc. Executive Change in Control Severance Plan, applicable in the event of a termination of employment without cause or for good reason that occurs within the period beginning six (6) months prior to and ending twenty-four (24) months after a change in control, and the Triumph Group, Inc. General Severance Plan, applicable in the event of a termination of employment without cause or for good reason unrelated to a change in control. Further information about the severance plans and the benefits payable thereunder can be found below.

Management Stock Ownership Guidelines

        In April 2016, the Board of Directors amended the stock ownership guidelines, which prescribe minimum levels of Triumph stock ownership that our senior executives are expected to meet. The ownership target is expressed as a multiple of base salary. As amended, there are four (4) tiers within senior management covered by the guidelines. For the CEO, the multiple is six (6). For the Chief Financial Officer, the multiple is three (3). For other executive officers and members of senior management, the multiple is two (2). For corporate vice presidents and company presidents, the multiple is one (1). An executive is required to achieve the guideline within five years of assuming a position subject to the guidelines, assuming a new position subject to a higher level of ownership or the date of any applicable increase in the guidelines approved by the Board of Directors. In addition, common stock acquired at the time of earning and vesting, and/or lapse of forfeiture restrictions for restricted share and restricted stock unit awards under the Company's equity incentive plans shall be subject to an additional requirement that 50% of such shares, on an after-tax basis, shall be held by the executive for a period of two years after acquisition. Mr. Crowley and Mr. Ostrosky met the guidelines as of March 31, 2019. Mr. McCabe has until 2021, Mr. Wick has until 2022 and Mr. Turner has until 2022 to comply with the guidelines.

Anti-Hedging and Pledging Policy

        We believe that the issuance of incentive and compensatory equity awards to our officers and directors, including non-employee directors, along with our stock ownership guidelines, help to align the interests of such officers and directors with our stockholders. As part of our insider trading policy, we prohibit any officers and directors from engaging in hedging activities with respect to any owned shares or outstanding equity awards. The policy also discourages pledges of any Company securities by officers and directors, and requires Company notice and approval. None of our officers and directors pledged any shares of Company stock during fiscal year 2019.

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Compensation Committee Report

        The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement.


 

 

Compensation Committee

 

 

William L. Mansfield (Chair)
Paul Bourgon
Daniel P. Garton
Adam J. Palmer
Larry O. Spencer

        This report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act or under the Exchange Act, except to the extent that Triumph specifically incorporates this information by reference, shall not otherwise be deemed filed under the Securities Act and the Exchange Act and shall not be deemed soliciting material.

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Executive Compensation Tables

Summary Compensation Table

        The following table summarizes the total compensation paid to our NEOs for each of the last three fiscal years ended March 31, 2019. There is further information about our NEOs in the 2019 Annual Report on Form 10-K enclosed with this proxy statement, and we incorporate that information into this proxy statement by reference.

 
  Name and Principal Position
   
  Fiscal
Year

   
  Salary
($)

   
  Bonus
($)(1)

   
  Stock
Awards
($)(2)

   
  Option
Awards
($)(3)

   
  Non-equity
Incentive Plan
Compensation
($)(4)

   
  All Other
Compensation
($)(5)

   
  Total
($)

   

 

 

Daniel J. Crowley

        2019         924,923                 2,585,189                 1,044,173         34,984         4,589,269    

 

 

    President and Chief

        2018         900,000                 4,410,055                 981,000         51,664         6,342,719    

 

 

    Executive Officer

        2017         900,000                 5,932,229         1,777,500         675,000         111,014         9,395,813    

 

 

James F. McCabe

       
2019
       
521,808
       
       
987,772
       
       
563,200
       
19,597
       
2,092,376
   

 

 

    Senior Vice President

        2018         500,000                 624,977                 408,750         8,778         1,542,505    

 

 

    and Chief Financial
Officer

        2017         310,000                 292,926                 225,502         4,207         832,635    

 

 

Peter K.A. Wick

       
2019
       
410,077
       
136,290
       
470,687
       
       
362,097
       
767
       
1,379,918
   

 

 

    Executive Vice President,
Aerospace Structures(6)

                                                                                   

 

 

Daniel J. Ostrosky

       
2019
       
380,000
       
       
433,092
       
       
233,472
       
9,204
       
1,055,768
   

 

 

    Vice President, Supply
Chain(7)

                                                                                   

 

 

Lance R. Turner

       
2019
       
313,846
       
       
239,335
       
       
241,920
       
162,740
       
957,842
   

 

 

    Senior Vice President and
Chief Human Resources
Officer(8)

                                                                                   

 

 

John B. Wright, II

       
2019
       
309,077
       
       
311,524
       
       
188,928
       
832,526
       
1,642,055
   

 

 

    Former Senior Vice

        2018         410,000                 307,466                 268,140         9,776         995,382    

 

 

    President, General Counsel and Secretary(9)

        2017         400,000                 395,500                 300,000         10,702         1,106,202    

 

 

Thomas K. Holzthum

       
2019
       
306,954
       
       
413,327
       
       
       
359,136
       
1,079,417
   

 

 

    Former Executive Vice President, Integrated Systems(10)

        2018         400,000                 399,955                 315,000         11,478         1,126,433    
(1)
Represents a discretionary retention cash bonus awarded by the Compensation Committee for the applicable fiscal year.

(2)
The "Stock Awards" column reflects, for each fiscal year, the grant date fair value for: (a) all annual RSUs granted to the NEOs under the 2013 Plan in the applicable fiscal year; (b) all annual performance share units, or PSUs, awarded to the NEOs under the 2013 Plan in the applicable fiscal year, represented at target for each fiscal year; and (c) for Mr. Crowley, sign-on awards of restricted stock and performance shares that were granted as new hire inducement awards outside of the 2013 Plan, all on April 1, 2016. These amounts are determined in accordance with Accounting Standards Codification 718 without regard to any estimate of forfeiture for service-based vesting. The assumptions used in calculating the fair market value are set forth in Note 16, "Stock Compensation Plans" contained in the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019. For more information, see the discussion of these awards in the CD&A of this

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Named Executive Officer
  Type of Award   No. of
Underlying
Shares
  Value ($)  

Daniel J. Crowley

  RSUs     53,679     1,205,094  

  PSUs(a)     80,519     1,380,096  

James F. McCabe

 

RSUs

   
17,372
   
390,001
 

  PSUs(a)     26,058     597,771  

Peter K.A. Wick

 

RSUs

   
8,278
   
185,841
 

  PSUs(a)     12,417     284,846  

Daniel J. Ostrosky

 

RSUs

   
7,616
   
170,979
 

  PSUs(a)     11,426     262,112  

Lance R. Turner

 

RSUs

   
4,209
   
94,492
 

  PSUs(a)     6,314     144,843  

John B. Wright, II

 

RSUs

   
5,479
   
123,004
 

  PSUs(a)     8,218     188,521  

Thomas K. Holzthum

 

RSUs

   
7,269
   
163,189
 

  PSUs(a)     10,904     250,138  

(a)
Represents number of performance shares or PSUs at target for the awards made in fiscal year 2019. The PSUs will be earned and paid out only at the end of a three-year performance period upon achievement, if any, of the established performance goals. As of the end of fiscal year 2019, the first year in the three-year performance period, the performance shares or PSUs were tracking below threshold, but such performance is not indicative of the actual performance that may be achieved, if any, at the end of the performance period in fiscal year 2021.
(3)
The "Option Awards" column reflects the grant date fair value of the stock options granted as part of Mr. Crowley's sign-on stock option award determined in accordance with Accounting Standards Codification 718. The assumptions used in calculating the fair market value are set forth in Note 16, "Stock Compensation Plans" contained in the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

(4)
Represents bonuses earned for the fiscal year identified under Triumph's AIP. For a discussion of the fiscal year 2019 AIP payouts, please see the CD&A above.

(5)
For Mr. Wright, All Other Compensation includes payments under his severance, including a prorated fiscal year 2019 cash incentive payment and a cash payment in the amount of performance share units with respect to which he would have received a stock award had he remained employed by the Company through March 31, 2019 (calculated at target performance). All Other Compensation includes (i) Triumph's match for contributions to the 401(k) plan; (ii) income imputed to the NEO under Triumph's group term life insurance policy; (iii) for Mr. Crowley, for the fiscal year 2018, personal use of Triumph's airplane ($20,956); (iv) for Mr. McCabe, for fiscal year 2019, personal use of Triumph's airplane ($7,374); and (v) for Mr. Turner, for fiscal year 2019, personal use of Triumph's airplane ($1,509) and relocation expenses ($151,904). The table below sets forth the Triumph's match for contributions to the 401(k) plan and the income imputed to the NEO under Triumph's group term life insurance policy for each NEO for fiscal year 2019:
Named Executive Officer
  401(k) plan match   Group Term Life  

Daniel J. Crowley

  $ 12,212   $ 1,816  

James F. McCabe

  $ 11,277   $ 946  

Peter K.A. Wick

      $ 767  

Daniel Ostrosky

  $ 8,433   $ 772  

Lance R. Turner

  $ 8,566   $ 761  

John B. Wright, II

  $ 4,235   $ 579  

Thomas K. Holzthum

  $ 5,481   $ 579  
(6)
Mr. Wick became an executive officer on January 1, 2018.

(7)
Mr. Ostrosky became an executive officer in April 20, 2015.

(8)
Mr. Turner became an executive officer on September 25, 2017.

(9)
Mr. Wright resigned effective as of December 31, 2018.

(10)
Mr. Holzthum resigned effective as of December 31, 2018.

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Grants of Plan-Based Awards

        The following table lists, for each of the NEOs, information about plan-based awards granted during fiscal year 2019.

 
   
  Estimated
Possible Payouts Under
Non-Equity Incentive
Plan Awards ($)(1)
  Estimated
Future Payouts Under
Equity Incentive
Plan Awards ($)(2)
   
   
   
 
Name
  Grant Date   Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#)(3)
  All Other
Option Awards:
Number of
Securities
Underlying
Options
(#)
  Grant Date
Fair Value
of Stock and
Option
Awards
($)(4)
 

Daniel J, Crowley

    5/30/2018   $ 509,850   $ 1,019,700   $ 2,039,400                            

    5/30/2018                 40,260     80,519     161,038           $ 1,380,096  

    5/30/2018                             53,679       $ 1,205,094  

James F. McCabe

   
5/30/2018
 
$

275,000
 
$

550,000
 
$

1,100,000
   
   
   
   
   
       

    5/30/2018                 13,029     26,058     52,116           $ 597,771  

    5/30/2018                             17,372       $ 390,001  

Peter K.A. Wick

   
5/30/2018
 
$

154,875
 
$

309,750
 
$

619,500
   
   
   
   
   
       

    5/30/2018                 6,209     12,417     24,834             $ 284,846  

    5/30/2018                             8,278       $ 185,841  

Daniel J. Ostrosky

   
5/30/2018
 
$

114,000
 
$

228,000
 
$

456,000
   
   
   
   
   
       

    5/30/2018                 5,713     11,426     22,852           $ 262,112  

    5/30/2018                             7,616       $ 170,979  

Lance R. Turner

   
5/30/2018
 
$

118,125
 
$

236,250
 
$

472,500
   
   
   
   
   
       

    5/30/2018                 3,157     6,314     12,628           $ 144,843  

    5/30/2018                             4,209       $ 94,492  

John B. Wright, II

   
5/30/2018
 
$

123,000
 
$

246,000
 
$

492,000
   
   
   
   
   
       

    5/30/2018                 4,109     8,218     16,436           $ 188,521  

    5/30/2018                             5,479       $ 123,004  

Thomas K. Holzthum

   
5/30/2018
 
$

153,000
 
$

306,000
 
$

612,000
   
   
   
   
   
       

    5/30/2018                 5452     10,904     21,808           $ 250,138  

    5/30/2018                             7,269       $ 163,189  

(1)
See the CD&A above for a discussion of these AIP payouts.

(2)
Represents PSUs.

(3)
Represents RSUs.

(4)
These amounts are determined in accordance with Accounting Standards Codification 718 without regard to any estimate of forfeiture for service vesting. The assumptions used in calculating the fair market value are set forth in Note 16, "Stock Compensation Plans" contained in the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

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Option Exercises and Stock Vested

        The following table sets forth information concerning stock vested for each of the NEOs during the fiscal year ended March 31, 2019. No stock options were exercised during fiscal year 2019.

 
  Stock Awards  
Name
  Number of
Shares Acquired
on Vesting (#)
  Value Realized
on Vesting
($)(1)
 

Daniel J. Crowley

    28,340   $ 503,186  

James F. McCabe

    3,565   $ 78,189  

Peter K.A. Wick

    1,627   $ 34,371  

Lance R. Turner

    3,249   $ 60,659  

Daniel J. Ostrosky

    3,612   $ 74,296  

John B. Wright, II

    2,347   $ 52,405  

Thomas K. Holzthum

    2,649   $ 58,978  

(1)
Does not include accrued dividends paid to Mr. Crowley ($2,000) upon lapse of forfeiture restrictions on 12,500 shares of restricted stock that vested in January 2019.

Outstanding Equity Awards at Fiscal Year-End

        The following table sets forth information concerning outstanding equity awards for each of the NEOs at March 31, 2019.

Name
  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
  Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(1)
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)(2)
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)(3)
  Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights Not
Vested
($)(2)
 

Daniel J. Crowley

    112,500     37,500     30.86     4/1/2026     131,180   $ 2,500,291     223,656   $ 4,262,902  

James F. McCabe

                    23,452   $ 446,995     45,523   $ 867,668  

Peter K.A. Wick

                    11,223   $ 213,910     20,524   $ 391,187  

Daniel J. Ostrosky

                    14,081   $ 268,384     21,905   $ 417,509  

Lance R. Turner

                    10,707     204,075     10,184   $ 194,107  

John B. Wright, II

                                 

Thomas K. Holzthum

                                 

(1)
For Mr. Crowley represents the remainder of a restricted stock new hire award subject to forfeiture restrictions and RSUs granted in fiscal years 2017, 2018 and 2019, including the replacement award and reflecting the forfeited RSU award. For Mr. McCabe, Mr. Wick and Mr. Ostrosky, represents RSUs granted in fiscal years 2017, 2018 and 2019. For Mr. Turner, represents RSUs granted in fiscal years 2018 and 2019.

(2)
Based on the closing price of the Company's common stock on March 29, 2019 of $19.06 per share.

(3)
For Mr. Crowley represents sign-on equity awards of performance shares and PSUs granted in fiscal years 2017, 2018 and 2019, including the replacement award and reflecting the forfeited PSU award. For Mr. McCabe, Mr. Wick and Mr. Ostrosky, represents PSUs granted in fiscal years 2017, 2018 and 2019. For Mr. Turner, represents PSUs granted in fiscal years 2018 and 2019. The performance share awards and PSUs are subject to three-year performance period and are valued at target. The PSUs that were awarded in fiscal year 2017 were earned at 41% of target.

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Nonqualified Deferred Compensation

        We offer all of our executives the opportunity to defer all or any part of their bonus for any year. During the deferral period, the deferred amounts are credited interest at the 10-year U.S. Treasury rate plus 2%. The amount is payable following at the executive's termination of employment, in one to five-year annual increments, at the executive's election, except that, if the executive dies, the aggregate balance deferred at the time of his or her death is payable to his or her beneficiaries. None of the NEOs participated in the deferral opportunity in fiscal year 2019.

Employment Agreements

        The Company has entered into an employment agreement with Mr. Crowley and has an employment letter with each of Mr. McCabe, Mr. Wick, Mr. Ostrosky and Mr. Turner.

        Mr. Crowley's Employment Agreement.    Effective April 1, 2016, the Company entered into an employment agreement with Daniel J. Crowley, the Company's President and Chief Executive Officer. The employment agreement, which has a four-year term, memorializes the terms of employment approved by the Board on December 28, 2015 in connection with Mr. Crowley's hire. The employment agreement provides for an annual base salary of no less than $900,000, an annual target bonus opportunity of 100% of base salary (with a maximum opportunity of 200% of base salary), an annual long-term incentive award with a target grant date value of 250% of base salary (with a maximum opportunity of 500% of base salary), and relocation benefits, not to exceed $500,000, in connection with Mr. Crowley's relocation to the Philadelphia metropolitan area. The agreement also provided that the Company would reimburse Mr. Crowley for up to $15,000 in fees paid by Mr. Crowley for financial planning services per calendar year during the employment period, and reimburse Mr. Crowley for his legal fees incurred in the negotiation and execution of the employment agreement. Mr. Crowley's base salary, target bonus and long-term incentive target for fiscal year 2019, as approved by the Compensation Committee, are described in the CD&A section of this proxy statement.

        Pursuant to the employment agreement, on April 1, 2016, the Company granted Mr. Crowley a set of initial equity compensation awards consisting of 150,000 stock options and 50,000 shares of time-vesting restricted stock, in each case vesting in four equal annual installments over four years, and 50,000 shares of performance-based restricted stock, vesting in three equal installments on the second, third, and fourth anniversaries of January 4, 2016 (the "Start Date"), which is the date on which Mr. Crowley commenced employment with the Company, subject to achievement of performance goals set forth in the award agreement. Additionally, the Company granted Mr. Crowley "make-whole awards" comprised of a time-vesting restricted stock award and a performance-based restricted stock award, each of 39,567 shares, which are together intended to make Mr. Crowley whole for the loss of the supplemental executive retirement plan benefits he had with his former employer. These awards vest ratably on the fifth, sixth, and seventh anniversaries of the Start Date, subject in the case of the performance-based award to achievement of performance goals set forth in the award agreement.

        The employment agreement also contains various restrictive covenants applicable to Mr. Crowley, including non-competition and employee and customer non-solicitation restrictions that apply for one year following a termination of Mr. Crowley's employment for any reason.

        Mr. McCabe's Employment Letter.    In connection with his appointment as Senior Vice President and Chief Financial Officer, Mr. McCabe entered into an employment letter with the Company dated July 26, 2016. Mr. McCabe is eligible to participate in the Company's annual short-term incentive bonus program, with a target bonus opportunity equal to 100% of base salary and a maximum bonus opportunity equal to 200% of base salary. The actual amount of the annual bonus will be determined by the Compensation Committee on the basis of the achievement of pre-established performance goals relating to corporate and individual performance. Subject to the approval of the Compensation Committee, Mr. McCabe will also be eligible for annual performance based long-term incentive awards

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of 100% of base salary, comprised as follows: 30% of the value in RSUs and 70% of the value in PSUs that are eligible to be earned based on the Company's performance against certain targets established by the Compensation Committee. Mr. McCabe is also eligible to participate in the Company's employee benefit plans that are generally applicable to the Company's senior executives. Mr. McCabe's base salary, target bonus and long-term incentive target for fiscal year 2019, as approved by the Compensation Committee, are described in the CD&A section of this proxy statement.

        The employment letter also contains various restrictive covenants applicable to Mr. McCabe, including non-competition and employee and customer non-solicitation restrictions that apply for one year following a termination of Mr. McCabe's employment for any reason.

        Mr. Wick's Employment Letter.    In connection with his appointment as Executive Vice President, Triumph Aerospace Structures, Mr. Wick entered into an employment letter with the Company dated January 20, 2018. The employment letter provides for an annual base salary of $375,000, subject to deductions for taxes and other withholdings as required by law or the policies of the Company. Mr. Wick was eligible to participate in the Company's annual short-term incentive bonus program, with a target bonus opportunity for fiscal year 2018 equal to 75% of base salary and a maximum bonus opportunity equal to 150% of base salary. The actual amount of the annual bonus will be determined by the Compensation Committee on the basis of plan design and personal achievement of pre-established performance goals. Mr. Wick was eligible for annual PSUs for fiscal year 2019 with a target value of 75% of base salary. The PSU's will cliff vest at the end of the three-year performance period, which runs through fiscal year 2021. The value of PSUs can reach 200% of original grant value if maximum performance. Actual long-term incentive award grants may be more or less than target. Target long-term incentive annual grant values and the relative mix of RSUs and PSUs in future years will also be subject to formal approval by the Compensation Committee and will be based on a variety of factors, including without limitation, market data, individual performance, and scope of job responsibilities. Mr. Wick is also eligible to participate in the Company's employee benefit plans that are generally applicable to the Company's senior executives. Mr. Wick's base salary, target bonus and long-term incentive target for fiscal year 2019, as approved by the Compensation Committee, are described in the CD&A section of this proxy statement.

        The employment letter also contains various restrictive covenants applicable to Mr. Wick, including non-competition and employee and customer non-solicitation restrictions that apply for one year following a termination of Mr. Wick's employment for any reason.

        Mr. Ostrosky's Employment Letter.    In connection with his appointment as Vice President, Supply Chain, Mr. Ostrosky entered into an employment letter with the Company dated March 25, 2015 with an addendum dated April 10, 2015. Pursuant to the employment letter, Mr. Ostrosky received a signing bonus of $100,000 and a grant of 6,000 shares of service-based restricted stock that has since vested. Mr. Ostrosky also received a relocation reimbursement.

        Mr. Ostrosky is eligible to participate in the Company's bonus opportunity, with a target bonus of 60% of base salary and the opportunity to earn a maximum of 120%. Mr. Ostrosky is eligible for a target long-term annual award of 60% of base salary with the opportunity to earn 120%. Mr. Ostrosky is also eligible to participate in the Company's employee benefits program, including participation in the medical, dental, life and accident insurance programs. Mr. Ostrosky's base salary, target bonus and long-term incentive target for fiscal year 2019, as approved by the Compensation Committee, are described in the CD&A section of this proxy statement.

        Mr. Turner's Employment Letter.    In connection with his appointment as Senior Vice President—Human Resources, Mr. Turner entered into an employment letter with the Company dated September 5, 2017. Pursuant to the employment letter, Mr. Turner was provided with a one-time signing bonus of $130,000. Mr. Turner also received an award of $210,000 in RSUs, to offset

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Mr. Turner's loss of awarded but unvested equity at his former employer, which vest in one-third increments on the first, second and third anniversaries of the date of grant, and a relocation package.

        Mr. Turner is eligible to participate in the Company's annual short-term incentive bonus program, with a target bonus of 60% of base salary, with the opportunity to earn a maximum of 120%. The actual amount of Mr. Turner's annual bonus each year will be determined by the Compensation Committee on the basis of the achievement of pre-established performance goals relating to corporate and individual performance. Mr. Turner is eligible for annual long-term incentive program at a level commensurate with his position, but with an equity grant value on the date of grant equal to not less than 75% of base salary, with the opportunity to earn a maximum of 120%. The actual long-term incentive award and performance metrics each year will be determined by the Compensation Committee. Mr. Turner is also eligible to participate in the Company's employee benefit plans generally applicable to the Company's senior corporate executive officers. Mr. Turner's base salary, target bonus and long-term incentive target for fiscal year 2019, as approved by the Compensation Committee, are described in the CD&A section of this proxy statement.

        The employment letter also contains various restrictive covenants applicable to Mr. Turner, including non-competition and employee and customer non-solicitation restrictions that apply for one year following a termination of Mr. Turner's employment for any reason.

        Each of the employment arrangements with the NEOs described above contain severance-related benefits which were superseded by the Severance Plans described below.

Potential Payments upon Termination of Employment or Change of Control

        The information below describes and quantifies compensation that would become payable under existing arrangements in the event of termination of such NEO's employment under several different circumstances. The amounts shown assume that such termination was effective as of March 31, 2019, and thus include amounts earned through such time and are estimates of the amounts that would be paid to the NEOs upon their termination. The actual amounts to be paid can only be determined at the time of such NEO's separation from Triumph.

Severance Plans

        On February 19, 2019, the Compensation Committee approved (i) the Triumph Group, Inc. Executive Change in Control Severance Plan (the "CIC Severance Plan"), applicable in the event of a termination of employment without "cause" or for "good reason" that occurs within the period beginning six (6) months prior to and ending twenty-four (24) months after a "change in control" (each term as defined in the CIC Severance Plan), and (ii) the Triumph Group, Inc. General Severance Plan, applicable in the event of a termination of employment without "cause" or for "good reason" (each term as defined in the General Severance Plan) unrelated to a change in control (the "General Severance Plan" and collectively with the CIC Severance Plan, the "Severance Plans"). The disclosures in this section of the proxy statement related to termination of employment without cause or for good reason, with or without the occurrence of a change in control event, reflect payments that would be made under the Severance Plans if the termination event occurred on March 31, 2019.

        The initial term of each Severance Plan is three years, with automatic one-year extensions thereafter unless terminated at least six months prior to expiration of the then current term. For the CIC Severance Plan, the Company may not provide notice of termination of the CIC Severance Plan if the Company is a party to an agreement which, if consummated, would result in a change in control, as defined in the CIC Severance Plan.

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        The CIC Severance Plan is intended to encourage key management to remain with the Company, and to help avoid distractions and conflicts of interest in the event of a potential or actual change in control of the Company so that executives can focus on a fair and impartial review of the acquisition proposal and the maximization of stockholder value despite the risk of losing their employment.

        For the named executive officers, the change in control severance benefits include the following:

        The change in control benefits do not include any excise tax gross up payments. In addition, the change in control benefits have a "double trigger" such that the payment of a severance benefit may only be made if there is a change in control and the officer's employment with the Company is terminated by the Company without cause or by the officer for good reason in the six months prior to a change in control or in the 24 months immediately following a change in control of the Company, each as defined in the CIC Severance Plan.

        The General Severance Plan is intended to promote stability, and provide consistent and fair treatment to our departing executives in circumstances where their performance does not constitute cause for employment termination.

        For the named executive officers, the general severance benefits include the following:

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        Each NEO would be required to execute a general release of employment claims in order to receive benefits under the Severance Plans. The timing of payments under the Severance Plans would be made in accordance with all applicable law. Each NEO would be required to comply with any non-competition, non-solicitation, assignment of inventions and confidentiality provisions set forth in existing agreements or in the award notice provided to an executive eligible to receive benefits under the Severance Plans.

        A named executive officer who receives general severance benefits shall not be entitled to receive severance benefits under any other plan or agreement of the Company or any of its subsidiaries or affiliates (excluding the CIC Severance Plan). If a named executive officer becomes entitled to severance benefits under the General Severance Plan while receiving severance benefits under any other plan or agreement of the Company or any of its subsidiaries or affiliates, then the severance benefits under such other plan or agreement will cease and the severance benefits due to the named executive officer under the General Severance Plan will be reduced by such other severance benefits previously paid to the executive. If a named executive officer becomes entitled to severance benefits under the CIC Severance Plan while receiving severance benefits under any other plan or agreement of the Company or any of its subsidiaries or affiliates, including the General Severance Plan, then the severance benefits under such other plan or agreement will cease and the severance benefits due to the named executive officer under the CIC Severance Plan will be reduced by such other severance benefits previously paid to the executive.

Termination of Employment upon Death, Disability or Retirement

        The Company's equity incentive plans, the 2013 Cash and Equity Incentive Plan, as amended (the "2013 Plan") and the 2018 Equity Incentive Plan, as amended (the "2018 Plan" and, with the 2013 Plan, the "Equity Plans") provide for the following consequences for outstanding equity awards in the event of termination of employment as a result of death, disability or retirement of a named executive officer or termination of employment as a result of a voluntary severance incentive program, divestiture or work force restructuring program. Under each Equity Plan, the Compensation Committee has the authority to alter the following impact in individual award agreements, but has not done so with respect to any outstanding awards to the named executive officers. The provisions of the Equity Plans with respect to treatment of outstanding equity awards upon a termination of employment without cause or for good reason, with or without a change in control, have been superseded by the more specific benefits set forth in the Severance Plans and described above.

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2013 Plan

Termination Event
  Stock Options   Service-based Stock Awards
and RSUs
  Performance-based Stock
Awards and PSUs

Death

  Outstanding exercisable options are exercisable for the stated term of the options   Outstanding awards are forfeited   Outstanding awards are forfeited

Disability or Retirement

 

Outstanding exercisable options are exercisable for the stated term of the options

 

Awards continue to vest until the end of the restricted period

 

Awards continue to vest until the end of the performance period

Voluntary Severance Incentive Program

 

All outstanding options fully vest and will be exercisable for the stated term of the options

 

All outstanding stock awards and RSUs accelerate and all forfeiture provisions lapse

 

All outstanding stock awards and PSUs accelerate and vest as determined by the Compensation Committee

Divestiture or Workforce Restructuring

 

The Compensation Committee may, in its discretion, vest some or all outstanding options, and such options will be exercisable for the stated term of the options

 

The Compensation Committee may, in its discretion, accelerate the vesting of all or a portion of any outstanding stock award or RSU and provide that all forfeiture provisions lapse

 

All outstanding stock awards and PSUs accelerate and vest as determined by the Compensation Committee

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2018 Plan

Termination Event
  Stock Options *   Service-based Stock Awards
and RSUs *
  Performance-based Stock
Awards and PSUs*

Death

  Outstanding exercisable options are exercisable for one year after death   Outstanding awards are forfeited   Outstanding awards are forfeited

Disability or Retirement

 

Outstanding exercisable options are exercisable for one year after termination of employment

 

Awards that would have vested in one year accelerate and vest on termination of employment

 

Awards with end of performance period within one year of termination of employment will continue to be subject to performance goals and be issued, if earned, at the end of the performance period

Voluntary Severance Incentive Program

 

With respect to no more than 5% of the shares available for awards under the Equity Plan, awards will vest and all outstanding options will be exercisable until the options expire

 

All outstanding stock awards and RSUs accelerate and all forfeiture provisions lapse

 

All outstanding stock awards and PSUs are forfeited

Divestiture or Workforce Restructuring

 

The Compensation Committee may, in its discretion, with respect to no more than 5% of the shares available for awards under the Equity Plan, vest some or all outstanding options, and such options will be exercisable until the options expire

 

The Compensation Committee may, in its discretion, with respect to no more than 5% of the shares available for awards under the Equity Plan, accelerate the vesting of all or a portion of any outstanding stock award or RSU and provide that all forfeiture provisions lapse

 

All outstanding stock awards and PSUs are forfeited


*
All of these acceleration events are subject to the award's compliance with the minimum vesting period of one year.

Accrued Pay and Regular Retirement Benefits

        In addition to the benefits described above, the NEOs are also entitled to certain payments and benefits upon termination of employment that are provided on a non-discriminatory basis to salaried employees generally upon termination of employment. These include accrued salary and vacation pay, life insurance benefits and distribution of plan balances under Triumph's 401(k) plan.

        Other than items described above, payments and benefits provided on a non-discriminatory basis to salaried employees generally and the change of control context, discussed above, the Compensation Committee or the Board may authorize additional severance benefits, although they are not obligated to do so.

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        As described above, certain NEOs are entitled to severance and/or change in control benefits upon termination of employment without cause or for good reason. The table below sets forth the compensation that would become payable assuming that such termination was effective March 31, 2019. None of the NEOs would have received any excise tax gross-up benefits if a change in control had occurred on March 31, 2019. The calculation of equity awards is based on the closing stock price of the Company's common stock on March 29, 2019 of $19.06 per share. In addition to the below amounts, each NEO would be entitled to receive any accrued salary and a portion of the target annual incentive compensation for the year in which a termination occurred, prorated to the date of termination.

 

Executive


  Termination Scenario
  Cash
Severance


  Stock
Options


  Restricted
Stock/Units


  Performance
Stock/Units


  Other
Benefits


  Total
 
                               

 

Crowley, Daniel

    Death     $0     $0     $0     $0     $0       $0  
                               

 

    Retirement / Disability     $0     $0     $1,818,197     $1,894,577     $0       $3,712,774  
                               

 

    Voluntary Severance Program, Workforce Restructuring, or Divestiture     $0     $0     $1,507,881     $822,763     $0       $2,330,644  
                               

 

    Without Cause by Company or for Good Reason by Executive (Absent a Change in Control)     $3,893,400     $0     $1,405,090     $1,718,559     $70,783       $7,087,832  
                               

 

    Without Cause by Company or for Good Reason by Executive upon Change in Control     $3,893,400     $0     $2,500,278     $3,429,269     $127,844       $9,950,791  

                                                               

 

McCabe, James

    Death     $0     $0     $0     $0     $0       $0  
                               

 

    Retirement / Disability     $0     $0     $226,236     $215,607     $0       $441,843  
                               

 

    Voluntary Severance Program, Workforce Restructuring, or Divestiture     $0     $0     $446,976     $215,607     $0       $662,583  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive (Absent a Change in Control)     $1,100,000     $0     $178,325     $309,293     $43,374       $1,630,992  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive upon Change in Control     $1,650,000     $0     $446,976     $712,272     $82,661       $2,891,909  

                                                               

 

Wick, Peter

    Death     $276,710     $0     $0     $0     $0       $276,710  
                               

 

    Retirement / Disability     $276,710     $0     $108,699     $112,854     $0       $498,263  
                               

 

    Voluntary Severance Program, Workforce Restructuring, or Divestiture     $276,710     $0     $213,885     $112,854     $0       $603,449  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive (Absent a Change in Control)     $999,460     $0     $83,623     $154,126     $32,162       $1,269,370  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive upon Change in Control     $1,084,125     $0     $213,885     $349,522     $65,843       $1,713,375  

                                                               

 

Turner, Lance

    Death     $0     $0     $0     $0     $0       $0  
                               

 

    Retirement / Disability     $0     $0     $150,593     $73,762     $0       $224,355  
                               

 

    Voluntary Severance Program, Workforce Restructuring, or Divestiture     $0     $0     $204,075     $73,762     $0       $277,838  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive (Absent a Change in Control)     $551,250     $0     $88,667     $89,290     $31,516       $760,723  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive upon Change in Control     $826,875     $0     $204,075     $194,107     $64,874       $1,289,931  

                                                               

 

Ostrosky, Daniel

    Death     $0     $0     $0     $0     $0       $0  
                               

 

    Retirement / Disability     $0     $0     $171,604     $98,311     $0       $269,915  
                               

 

    Voluntary Severance Program, Workforce Restructuring, or Divestiture     $0     $0     $268,378     $98,311     $0       $366,689  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive (Absent a Change in Control)     $608,000     $0     $117,238     $138,134     $38,022       $901,394  
                               

 

    Termination Without Cause by Company or for Good Reason by Executive upon Change in Control     $912,000     $0     $268,378     $316,091     $74,633       $1,571,102  
(1)
See the CD&A above for a discussion of these AIP payouts.

(2)
Represents PSUs.

(3)
Represents RSUs.

(4)
These amounts are determined in accordance with Accounting Standards Codification 718 without regard to any estimate of forfeiture for service vesting. The assumptions used in calculating the fair market value are set forth in Note 16, "Stock Compensation Plans" contained in the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019.

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CEO Pay Ratio

        The following information about the relationship between the compensation of our employees and the compensation of Mr. Crowley, our President and Chief Executive Officer, is provided in compliance with the requirements of Item 402(u) of Regulation S K of the Securities Exchange Act of 1934.

        In fiscal year 2019, the estimated median of the annual total compensation of our employees, excluding Mr. Crowley, was $50,537. Mr. Crowley's total compensation for fiscal year 2019, as reported in the Summary Compensation Table of this proxy statement was $4,589,269. The resulting estimated ratio of the annual total compensa