Michael Lynch
AMERICAN AXLE & MANUFACTURING HOLDINGSAbout Michael Lynch
Michael J. Lynch, age 60, is President & Chief Operating Officer of American Axle & Manufacturing (AAM), serving as COO since December 2022 and President & COO since March 25, 2023; he joined AAM in 1996 and progressed through multiple finance and operating leadership roles . During his tenure as President & COO, AAM delivered sales of $6.1B and Adjusted EBITDA of $693M in 2023 and $6.1B and Adjusted EBITDA of $749M in 2024; operating cash flow was $396M in 2023 and $455M in 2024 . Annual incentives emphasize EBITDA margin and operational cash flow (plus sustainability), and long-term incentives (LTIs) are tied 100% to multi‑year free cash flow with a relative TSR +/-15% modifier, aligning pay with deleveraging and cash generation priorities .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| AAM | President & Chief Operating Officer | Mar 2023 – Present | Expanded scope as part of executive leadership succession and organizational development |
| AAM | Chief Operating Officer | Dec 2022 – Mar 2023 | Executive leadership role over operations |
| AAM | President – Driveline | Nov 2021 – Dec 2022 | Business unit leadership |
| AAM | VP – Finance & Controller | Feb 2017 – Nov 2021 | Enterprise finance leadership |
| AAM | VP – Driveline Business Performance & Cost Mgmt | May 2015 – Feb 2017 | Cost management and performance oversight |
| AAM | VP – Finance & Controller / Executive Director & Controller | Sep 2012 – May 2015 / Oct 2008 – Sep 2012 | Corporate controllership |
| AAM | Various finance leadership roles | 1998 – 2008 | Driveline/operations finance leadership |
| AAM | Financial Analyst (joined AAM) | Sep 1996 | Early finance role |
Fixed Compensation
Multi-year summary compensation (as reported in DEF 14A):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 560,417 | 675,000 | 675,000 |
| Stock Awards ($) | 846,690 | 1,211,750 | 1,205,976 |
| Non-Equity Incentive Plan Comp ($) | 967,549 | 1,109,899 | 1,095,000 |
| Change in Pension Value ($) | — | 20,645 | 37,996 |
| All Other Compensation ($) | 370,988 | 320,861 | 190,024 |
| Total ($) | 2,745,644 | 3,338,155 | 3,203,996 |
Additional pay actions and structure:
- Base salary as of Dec 31, 2024: $675,000; effective Aug 16, 2025, the Compensation Committee increased Lynch’s base salary to $725,000 and raised his target LTI opportunity to 300% of base salary (annual bonus target unchanged) .
- 2024 “All Other Compensation” components for Lynch: $17,250 401(k) match, $127,250 retirement contributions, $19,594 life insurance premiums, $24,438 company-provided vehicle, and $1,492 other; total $190,024 .
Performance Compensation
Annual Incentive Design and Outcomes
| Category | 2023 | 2024 |
|---|---|---|
| Target bonus opportunity (% of base salary) | 100% | 100% |
| Financial metrics and weight | Not explicitly disclosed by weight; program included EBITDA margin, operational cash flow, strategic and ESG components | EBITDA margin 40%, operational cash flow 50%; sustainability objectives 10% |
| Actual payout vs target | 114% of target total; component contributions: EBITDA margin 33%, operational cash flow 41%, strategic 20%, ESG 20% | 117% of target total; component contributions: EBITDA margin 45%, operational cash flow 52%, sustainability 20% |
Notes (2024 metrics and vesting mechanics): financial performance levels were set to exceed prior-year EBITDA margin and operational cash flow, with emphasis on cash generation to reduce leverage; sustainability component focused on climate actions, disclosures, DEI, and supplier diversity .
Long-Term Incentive (LTI) Structure and Grants
Program design (2024):
- LTI mix: 60% performance awards (50% performance shares in stock, 50% performance units in cash), 40% time-based RSUs; performance measure is free cash flow over 3 years with a relative TSR ±15% payout modifier; RSUs cliff-vest on the 3rd anniversary .
Grants of plan-based awards (Michael J. Lynch):
| Grant Year | Grant/Approval Date | Instrument | Threshold | Target | Maximum | Shares/Units | Grant-date FV ($) |
|---|---|---|---|---|---|---|---|
| 2023 | 2/28/2023 / 2/6/2023 | Annual Incentive (cash) | — | 675,000 | 1,350,000 | — | — |
| 2023 | 2/28/2023 / 2/6/2023 | Performance Units (cash, FCF 2023–2025) | 215,156 | 506,250 | 1,164,375 | — | — |
| 2023 | 2/28/2023 / 2/6/2023 | Performance Shares (stock, FCF 2023–2025) | — | 57,529 sh | 132,317 sh | 57,529 | 536,746 |
| 2023 | 2/28/2023 / 2/6/2023 | RSUs (time-based) | — | — | — | 76,705 sh | 675,004 |
| 2024 | 3/4/2024 / 2/7/2024 | Annual Incentive (cash) | — | 675,000 | 1,350,000 | — | — |
| 2024 | 3/4/2024 / 2/7/2024 | Performance Units (cash, FCF 2024–2026) | — | 506,250 | 1,164,375 | — | — |
| 2024 | 3/4/2024 / 2/7/2024 | Performance Shares (stock, FCF 2024–2026) | — | 74,890 sh | 172,247 sh | 74,890 | 530,970 |
| 2024 | 3/4/2024 / 2/7/2024 | RSUs (time-based) | — | — | — | 99,853 sh | 675,006 |
Payout detail (non-equity incentive realized):
- 2024 non-equity incentive earned by Lynch: $1,095,000 (split between annual ICP $789,750 and 2018 Plan performance unit payout $305,250) .
- 2023 non-equity incentive earned by Lynch: $1,109,899 (annual ICP $769,500; 2018 Plan PUs $340,399) .
Stock vested:
- Shares acquired on vesting in 2022: 93,386; value realized $732,292 (RSUs and earned performance shares) .
Equity Ownership & Alignment
Beneficial Ownership
| As-of Date | Shares Beneficially Owned | % of Shares Outstanding |
|---|---|---|
| Mar 7, 2024 | 163,015 (includes 1,000 shares in spouse’s trust) | <1% |
| Mar 6, 2025 | 213,346 (includes 1,000 shares in spouse’s trust) | <1% |
Stock ownership guidelines and trading policies:
- Executive officer ownership requirements: CEO 6x salary; CFO/President/COO 3x; others 2x. Only directly owned shares and unvested RSUs count. As of 2023, NEOs met or were on track to meet requirements; in Feb 2023, unvested performance shares at target were excluded from counting, and Lynch’s guideline increased from 2x to 3x with his COO appointment .
- Anti-hedging and anti-pledging: Hedging or pledging of AAM stock is prohibited under governance policies and insider trading policy .
Outstanding equity awards at December 31, 2023 (selected Lynch positions and vesting):
| Type | Grant Date | Unvested Quantity | Vesting/Performance Terms | Reference Value (if provided) |
|---|---|---|---|---|
| RSUs | 3/1/2021 | 38,393 | Cliff vest Mar 1, 2024 | $338,242 at $8.81 |
| RSUs | 2/28/2022 | 59,396 | 3-year vest from grant | $523,279 at $8.81 |
| RSUs | 2/28/2023 | 76,705 | 3-year vest from grant | $675,771 at $8.81 |
| Performance Shares (2022 grant) | 2/28/2022 | 59,396 target-based | FCF 2022–2024; shown at maximum based on FCF through 12/31/23; TSR mod 0% | $523,279 at $8.81 |
| Performance Shares (2023 grant) | 2/28/2023 | 57,529 target-based | FCF 2023–2025; shown at target based on FCF through 12/31/23; TSR mod 0% | $506,830 at $8.81 |
Deferred compensation and retirement savings:
| Plan | 2023 Registrant Contributions ($) | 2023 Aggregate Earnings ($) | 2023 Aggregate Balance at FYE ($) |
|---|---|---|---|
| ERSP (Executive Retirement Savings Plan) – Lynch | 245,200 | 88,789 | 1,084,233 |
Employment Terms
Severance frameworks and governance:
- AAM Executive Officer Severance Plan and Change in Control (CIC) Plan provide severance based on multiples of base salary and target bonus, with health benefits continuation; CIC benefits are double‑trigger and the company does not provide excise tax gross‑ups; benefits require release and compliance with restrictive covenants .
Potential payments upon termination or CIC (as of 12/31/2024, Michael J. Lynch):
| Component | Good Reason Resignation ($) | Without Cause Termination ($) | Disability Retirement ($) | Retirement ($) | CIC Termination ($) |
|---|---|---|---|---|---|
| Severance | 1,012,500 | 1,012,500 | — | — | 1,350,000 |
| Annual Incentive | 1,802,250 | 1,802,250 | 789,750 | 789,750 | 2,139,750 |
| RSUs | — | — | 1,375,612 | 784,071 | 1,375,612 |
| 2023 Performance Shares | — | 223,596 | 223,596 | 223,596 | 335,394 |
| 2023 Performance Units | — | 337,500 | 337,500 | 337,500 | 506,250 |
| 2024 Performance Shares | — | 145,536 | 145,536 | 145,536 | 436,609 |
| 2024 Performance Units | — | 168,750 | 168,750 | 168,750 | 506,250 |
| Retirement Plans | 225,322 | 225,322 | 219,410 | 224,720 | 225,322 |
| SERP | 1,453,977 | 1,453,977 | 1,453,977 | 1,453,977 | 1,453,977 |
| ERSP | 1,216,459 | 1,216,459 | 1,216,459 | 1,216,459 | 1,216,459 |
| Health Care | 43,442 | 43,442 | — | — | 57,922 |
| Outplacement | 20,000 | 20,000 | — | — | 30,000 |
| Total | 5,773,950 | 6,649,332 | 6,230,924 | 5,549,616 | 9,633,545 |
Notes: In August 2025, the Committee approved a base salary increase to $725,000 and increased LTI target to 300% of salary; annual bonus target percentage was unchanged (100%), improving equity-based alignment while maintaining significant at-risk cash components .
Compensation Structure Analysis
- Pay-for-performance structure: Annual bonus metrics center on EBITDA margin and operational cash flow (90% weight in 2024) plus sustainability (10%), translating to 117% of target in 2024 and 114% in 2023; LTIs are majority performance-based and tied entirely to multi-year free cash flow with a TSR modifier, emphasizing deleveraging and cash generation .
- Shift in mix toward equity: As of Aug 2025, Lynch’s target LTI increased from 250% to 300% of salary, with base salary increased to $725,000; annual bonus target percentage unchanged—raising long-term, equity-linked exposure and retention hooks .
- Clawbacks and risk controls: Dodd‑Frank compliant clawback and a discretionary clawback apply to incentive compensation; anti‑hedging/anti‑pledging policies reduce misalignment risk .
Equity Ownership & Governance Context
- Stock ownership policy: President/COO requirement is 3x salary; NEOs met or were on track as of year-end 2023; unvested performance shares no longer count toward guidelines (effective Feb 2023) .
- Beneficial ownership trend: Lynch’s reported beneficial ownership increased from 163,015 shares as of March 7, 2024 to 213,346 as of March 6, 2025 (each <1% of outstanding shares) .
Compensation Peer Group (Benchmarking)
- 2023 comparative peer group includes Adient, Aptiv, BorgWarner, Cooper‑Standard, Dana, Flowserve, Garrett Motion, Goodyear, LCI Industries, Lear, Oshkosh, Parker‑Hannifin, Rockwell Automation, Terex, The Timken Company, Trinity Industries, Visteon; Meritor and Tenneco removed due to acquisitions .
- 2024 comparative peer group refreshed with Hyster‑Yale and Patrick Industries added, replacing acquired peers; AAM revenues slightly above the median of the 2024 peer group .
Investment Implications
- Alignment: High proportion of performance-contingent pay (annual and multi-year), explicit free cash flow focus with TSR modifier, and increased 2025 LTI target (300% of salary) point to strong alignment with deleveraging and cash generation goals—potentially supportive for equity holders if multi‑year FCF targets are met .
- Retention and overhang: Double‑trigger CIC, meaningful severance economics (~$9.6M for Lynch under CIC scenario at 12/31/24) and rising LTI opportunities strengthen retention but also increase potential dilution/cash outlays; governance mitigants include no excise tax gross‑ups and clawbacks .
- Selling pressure: Anti‑hedging and anti‑pledging policies and stock ownership requirements (3x salary for President/COO) reduce misalignment and opportunistic selling risk; beneficial ownership increased year over year, though still <1% of outstanding shares .