SEC Filings

AECOM filed this Form DEF 14A on 01/23/2019
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Significant Recent Executive Compensation Design Improvements

Senior management and directors of the Company frequently engage directly with stockholders to help inform our continuous evaluation of our compensation plans. Engagement is focused on strengthening the link between pay and performance, and aligning management and stockholder interests.

In response to this engagement and direct stockholder feedback, the Compensation/Organization Committee ("Compensation Committee") made significant design improvements to fiscal year 2019 compensation plans to best align our incentive programs with our long-term strategy and the feedback gathered from stockholder engagement. Furthermore, when setting goals and reviewing performance, the Compensation Committee considered numerous factors including how best to align pay with achieving our long-term strategic objectives and five-year financial plan that includes specific revenue, EBITDA, earnings per share ("EPS") and free cash flow objectives, as well as a continued emphasis on incentivizing industry-leading cash flow performance.

Below highlights the key changes adopted by the Compensation Committee that will be implemented in fiscal year 2019 in response to stockholder feedback and ongoing plan design evaluation:

Added ROIC as a performance metric to our long-term incentive performance equity awards

The Compensation Committee selected Return on Invested Capital ("ROIC") as a performance metric to incentivize management to deliver long-term profitability consistent with the Company's five-year financial plan, and because of existing evidence that ROIC is recognized as highly correlated with long-term stock price performance.

All performance metrics for our long-term incentive performance equity awards are now measured
on three-year cumulative performance

The Compensation Committee believes that Named Executive Officers ("NEOs") should be incentivized to create sustained long-term value, and that cumulative metrics best measure long-term performance. Commencing with fiscal year 2019 awards, all long-term equity incentive award metrics are measured based on three-year cumulative performance. The Compensation Committee replaced the prior design that included three, annual performance periods with one, three-year performance period in response to stockholder feedback that metrics measured on a cumulative basis best align compensation with our stockholders interests for long-term value creation.

Eliminated duplicative metrics between the short- and long-term incentive plans

The Compensation Committee eliminated duplicative metrics by removing the adjusted EPS metric in long-term performance equity awards. As a result, our incentive plans no longer contain any duplicative metrics.

Increased the rigor of the cash flow goals to continue to reward industry-leading cash flow
conversion performance

As part of our objective to continue to deliver industry-leading cash flow performance, the Compensation Committee reviewed cash flow conversion rates (i.e., the rate at which adjusted earnings convert to free cash flow), and subsequently increased the rigor of our NEOs cash flow goal beginning in fiscal year 2019. The Compensation Committee believes rewarding industry-leading cash flow conversion is critical to long-term stockholder value creation. Incentivizing the conversion of earnings to cash flow places a strong emphasis on risk management and underlying project execution, which are of particularly greater importance in the Engineering and Construction ("E&C") industry. Target performance now requires 100% conversion of adjusted net income to free cash flow, versus 90% in fiscal year 2018, and exceeds the three-year median performance of the E&C industry (81%).