Marc J. Walfish

About Marc J. Walfish

Lead Independent Director of AAR CORP. (AIR); age 73; director since 2003. Walfish is Audit Committee Chair and serves on the Nominating & Governance and Executive Committees. He is a founding partner of Merit Capital Partners (since 1991) and previously held senior roles at Prudential Capital Corporation, bringing finance, M&A, and risk management expertise to AIR’s board .

Past Roles

External Roles

Board Governance

• Independence and leadership:
  • Lead Independent Director, elected annually by independent directors; presides over executive sessions, can call meetings of independent directors, and facilitates board and committee self-evaluations and CEO evaluation participation .
  • Identified as an independent director; Audit Committee composed entirely of independent directors; Walfish and all Audit Committee members designated “audit committee financial experts” .
• Committee assignments (FY 2025):
  • Audit Committee – Chair (4 meetings held FY 2025) .
  • Nominating & Governance Committee – Member (4 meetings held FY 2025) .
  • Executive Committee – Member (did not meet in FY 2025) .
• Attendance and engagement:
  • Board held 7 meetings in FY 2025; all current directors attended at least 75% of board and committee meetings; all directors attended the 2024 annual meeting of stockholders .
  • Independent directors met in executive session 10 times in FY 2025; Walfish presided as Lead Independent Director .

Fixed Compensation

• Director pay structure (FY 2025 program):

  • Cash retainers: $95,000 (board); +$30,000 (Lead Independent Director); +$20,000 (Audit Chair); other committee chairs +$15,000; paid quarterly .
  • Equity: annual time-based restricted stock grant with $135,000 grant-date value (June 1, 2024 grant; vests after one year on June 1, 2025) .
  • Compensation cap: non-employee director total compensation capped at $500,000 per fiscal year under the stock plan .
  • Deferred compensation: directors may defer retainers/stock into stock units or a cash account credited at the 10-year U.S. Treasury rate; distributions at or after board service end (or elected dates) .

• Walfish director compensation (YoY): | Metric | FY 2024 | FY 2025 | |---|---:|---:| | Fees earned or paid in cash ($) | 160,000 | 145,000 (includes $95,000 retainer; $20,000 Audit Chair; $30,000 Lead Independent Director) | | Stock awards ($) | 125,000 | 134,952 (1,901 RS shares granted 6/1/2024) | | Option awards ($) | — | —; no options outstanding for directors as of 5/31/2025 | | All other compensation ($) | 1,865 | 1,865 | | Total ($) | 286,865 | 281,817 | | Deferral election | Elected to defer retainers (noted for directors) | Walfish elected to defer retainers ; program features described |

Implications: Slight mix shift toward equity (higher stock grant value) and lower cash YoY, maintaining alignment with shareholders via annual RS grants .

Performance Compensation

• Director equity awards are time-based RS (no performance metrics); FY 2025 award granted June 1, 2024; vests June 1, 2025 .

Other Directorships & Interlocks

• Current public boards: None disclosed for Walfish .
• Committee interlocks: Not a member of the Human Capital & Compensation Committee; HCCC comprised entirely of independent directors with no executive interlocks disclosed .

Expertise & Qualifications

• Skills: Finance, Accounting, Sales & Marketing, M&A, Risk management .
• Career credentials: Founding partner of Merit Capital Partners; prior senior executive at Prudential Capital Corporation; deep capital markets and portfolio management experience .

Equity Ownership

• Ownership and alignment policies:
  • Stock ownership guidelines: Non-employee directors must hold stock valued at 5x annual cash retainer ($475,000) within five years; all directors and NEOs were in compliance as of May 31, 2025 .
  • Hedging/pledging: Company prohibits short sales, options, margining and hedging, and pledging/hypothecation of Company stock (except in limited cashless option exercise circumstances) .
  • No director stock options outstanding as of May 31, 2025 .

Say-on-Pay and Shareholder Feedback (context for board responsiveness)

• Signals: 2022 failure is a historical red flag; subsequent strong approvals in 2024 and 2025 suggest the board (where Walfish is Lead Independent Director and Audit Chair) responded to investor feedback and adjusted executive pay practices .

Related-Party Transactions and Conflicts

• Policy: Related Person Transaction Policy requires board/NGC review and approval for transactions >$120,000 involving directors, officers, 5% holders, or their immediate family; considers arm’s-length terms and independence impacts .
• Disclosures: Only related-person item disclosed for FY 2025 was a consulting agreement with former CEO/Chair David Storch; no related-party transactions involving Walfish were disclosed .
• Anti-hedging/pledging policy further mitigates alignment risks .

Governance Assessment

• Strengths:

  • Long-standing independent oversight as Lead Independent Director with specific responsibilities that enhance independent board function (executive session leadership, agenda input, evaluation processes) .
  • Audit Chair and SEC-designated “financial expert” status underpin robust financial reporting oversight; Audit Committee is fully independent and met regularly (4x in FY 2025) .
  • Strong ownership alignment: meaningful beneficial holdings and substantial deferred stock units; all directors in compliance with stringent 5x retainer ownership guidelines; anti-hedging/pledging policy in force .
  • Director compensation structure primarily cash retainer plus annual RS; modest YoY shift toward equity; capped under plan to prevent excess .

• Watch items / RED FLAGS (historical and structural):

  • 2022 say-on-pay failed (board-level red flag); improved approvals in 2024 and 2025 mitigate concern but continued vigilance warranted .
  • Tenure: Walfish has served since 2003 (over two decades). While continuity benefits board knowledge, some investors scrutinize very long tenure for potential independence erosion; the board cites active refreshment and average independent director tenure of ~8 years .

Overall, Walfish’s finance-heavy background and leadership as Lead Independent Director and Audit Chair support board effectiveness and investor confidence, with no Walfish-specific conflicts disclosed and strong alignment policies in place .