SEC Filings

DEF 14A
AECOM filed this Form DEF 14A on 01/23/2019
Entire Document
 

Table of Contents

Free Cash Flow per Share

For fiscal year 2018, the Compensation Committee set the free cash flow per share targets at 90% of its adjusted earnings per share target. The target exceeds the median cash flow conversion rates of the E&C industry (81%) and appropriately challenges and rewards industry leading performance without disincentivizing prudent investments necessary to long-term earnings growth.

Relative TSR

For fiscal year 2018, the Compensation Committee set the relative TSR metric target at the median of its Compensation Peer Group. The Compensation Committee noted that the Compensation Peer Group includes companies heavily weighted in the defense industry, which has significantly outperformed the S&P500 in recent years. This metric is projected to pay out at zero for PEPs granted in fiscal year 2017 and 2018. Below are the goals established for these PEPs:

   
Threshold


Target

Maximum  
Percentile Rank %     25 %   50 %   75 %
Payout Scale %     0 %   100 %   200 %

2019 New Metric and Increased Rigor of Goals

In response to last year's Say-on-Pay results and feedback from investors, the Compensation Committee selected ROIC as a new performance metric with the profitability goals of the ROIC target aligned with the growth forecasts supporting the Company's five-year financial plan, which requires an improvement in ROIC from the prior three years and most-recently completed fiscal year.

Return on Invested Capital

For PEP19, the ROIC target was based on a holistic approach considering multiple factors. Key factors included (1) the Company's 2019 financial plan and financial guidance presented to investors including forecasts for EBITDA and EBITDA growth rates; (2) the expected stock price performance and market cap creation if we achieved our goals; (3) improvement over the current trailing 3-year average ROIC performance; (4) continued improvement over the life of the plan; (5) returns measured against a reasonable estimate of our weighted average cost of capital; and (6) the performance and goals of our peers, where publicly available.


 

 

Return on Invested Capital ("ROIC")

 

=

 

Average Annual NOPAT(1) over 3 Years
Average Quarterly Invested Capital(2) over 3 Years


 

(1)
NOPAT (Net Operating Profit After Tax) = Adjusted Net Income + Interest Expense Net of Interest Income (tax effected at the reported adjusted effective tax rate)
(2)
Average Invested Capital = Attributable Stockholders Equity + Total Debt – Cash and Cash Equivalents (13 quarters of the performance periods calculated through fiscal years 2019, 2020, and 2021)

Increased Rigor of Free Cash Flow per Share Goals

For PEP19, the Compensation Committee increased the rigor of the free cash flow per share target by setting target performance at 100% (as opposed to 90%) of its adjusted earnings per share target. Target performance at 100% conversion exceeds the three-year median performance of the E&C industry (81%). The Compensation Committee's expects to continuously challenge management to surpass its peers on a consistent basis.

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