Patrick Shanahan
Spirit AeroSystems HoldingsAbout Patrick Shanahan
Patrick M. Shanahan (age 62) is President and CEO of Spirit AeroSystems (since September 2023) and has served on Spirit’s Board since 2021 . He previously served as Acting U.S. Secretary of Defense (2019) and Deputy Secretary of Defense (2017–2018), and spent over three decades at Boeing in senior operating roles, giving him deep defense, operations, and customer perspective . Shanahan holds a B.S. in Mechanical Engineering (University of Washington), an M.S. in Mechanical Engineering (MIT), and an MBA (MIT Sloan) . Compensation outcomes in 2024 emphasized time-based RSUs (no CEO annual cash bonus eligibility), while company-wide ACI metrics focused 60% on quality and 40% on financial progress; 2022 performance-based TSR awards for the broader NEO group paid 0% (3.3rd percentile), signaling challenging relative TSR performance over that cycle .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| U.S. Department of Defense | Acting Secretary of Defense | 2019 | Led modernization initiatives in cybersecurity and other critical areas . |
| U.S. Department of Defense | Deputy Secretary of Defense (33rd) | 2017–2018 | Policy, defense, cybersecurity, and operations leadership . |
| Boeing | SVP, Supply Chain & Operations | 2016–2017 | Senior operating leadership with valuable customer perspective . |
| Boeing | SVP & GM, Commercial Airplane Programs | 2008–2016 | Broad execution across major commercial programs . |
| Boeing | Various leadership roles | 1986–2007 | Three decades in operations and program leadership . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Leidos Holdings, Inc. | Director | 2022–present | Current public company directorship . |
| CAE, Inc. | Director | 2022–present | Current public company directorship . |
Board Governance and Service
- Spirit Board service: Director since 2021; currently a non-independent director as an executive officer .
- Committee history: Ceased Audit and Risk Committee roles upon appointment as CEO on Sept 30, 2023 .
- Board structure: CEO and Chair roles are separated; Robert D. Johnson serves as independent Board Chair; no Lead Independent Director while roles are separate .
- Meetings/attendance: 39 Board meetings in 2024; all directors attended ≥75% of meetings of Board/committees served .
- Director compensation: As an employee, Shanahan does not receive non-employee director compensation .
Fixed Compensation
| Year | Base Salary ($) | Target Bonus % | Actual Annual Bonus ($) | Notes |
|---|---|---|---|---|
| 2024 | 2,000,000 | Not eligible | N/A | CEO not in ACI program . |
| 2023 | 504,110 | Not eligible | N/A | Partial year as CEO beginning Sept 30, 2023 . |
Performance Compensation
Equity Grants and Vesting (CEO-specific)
| Grant Type | Grant Date | Shares/Units (#) | Grant-Date Fair Value ($) | Vesting / Performance | Notes |
|---|---|---|---|---|---|
| RSU (CEO Retention) | 6/30/2024 | 272,573 | 8,959,475 | Vests at earlier of 1-year anniversary or merger completion; accelerated Dec 4, 2024 for 280G mitigation; subject to clawback . | Granted in connection with Boeing merger; single-trigger vest on earlier date; clawback if separation before original vest timing . |
| RSU (Sign-on) | 9/30/2023 | 317,621 | — | 3 tranches: 9/30/2024 (vested), 9/30/2025, 9/30/2026; retirement-eligible (accelerates upon departure) . | Time-based RSUs; no options granted in 2024 . |
Realized 2024 vesting value (for reference): $14,932,572 across multiple RSU vests including the CEO Retention RSU (Dec 4, 2024) and sign-on RSUs .
Company 2024 Annual Cash Incentive (context; CEO not eligible)
| Metric | Weight (Corporate) | Threshold | Target | Maximum | Actual | Assessment/Payout |
|---|---|---|---|---|---|---|
| US (ex-Kinston) Indirect Incurred Cost ($mm) | 16% | 635 | 600 | 565 | 617 | Below Target; Weighted score 0.51 . |
| Non-US (plus Kinston) Indirect Incurred Cost ($mm) | 4% | 270 | 255 | 240 | 266 | Below Target; Weighted score 0.27 . |
| US (ex-Kinston) Inventory ($bn) | 16% | 1.750 | 1.620 | 1.490 | 1.578 | Above Target; Weighted score 1.33 . |
| Non-US (plus Kinston) Inventory ($bn) | 4% | 0.950 | 0.880 | 0.810 | 0.852 | Above Target; Weighted score 1.39 . |
| Boeing Segment Quality (Index) | 30% | 0.5 | 1.0 | 2.0 | 0.899 | Below Target; Weighted score 0.96 (positive discretion) . |
| Airbus Segment Quality (Index) | 15% | 0.5 | 1.0 | 2.0 | 0.850 | Below Target; score adjusted downward (discretion) . |
| Defense Segment Quality (Index) | 10% | 0.5 | 1.0 | 2.0 | 1.000 | Target; negative discretion applied . |
| Aftermarket Segment Quality (Index) | 5% | 0.5 | 1.0 | 2.0 | 1.000 | Target; negative discretion applied . |
| Total Company Score | — | — | — | — | — | 0.9081 . |
2024 LTI design (for NEOs): 50% time-based RSUs; 50% performance-based RSUs with Relative TSR metric (threshold 25th percentile, target 50th, max 75th; capped at 100% if negative TSR) . CEO and CFO received 100% time-based RSUs in 2024 given interim/transition nature .
Equity Ownership & Alignment
| As-of Date | Common Stock Beneficially Owned | Unvested RSUs | Total (Common + Unvested RSUs) | Notes |
|---|---|---|---|---|
| Record Date (Apr 8, 2025) | 264,681 | 317,621 | 582,302 | Directors/execs individually/aggregate each <1% outstanding . |
Additional alignment policies and guidelines:
- Executive stock ownership requirements: CEO 5x base salary; 5-year accumulation window; compliance reviewed annually .
- Anti-hedging and anti-pledging: Short-selling, hedging, and pledging of Spirit stock are prohibited; no margin accounts allowed .
- Equity grant practices: No stock options granted in 2024; grants typically on third trading day after earnings release; no spring-loading/timing gaming .
Potential selling pressure indicators:
- Accelerated vesting of 272,573 RSUs on Dec 4, 2024 (tax mitigation) could lead to near-term sales for tax withholding or diversification; however, clawback applies if separation occurs before original vesting date per 280G mitigation acknowledgments .
- Remaining time-based RSUs vest on 9/30/2025 and 9/30/2026 (sign-on grant), implying future vesting events that may influence trading windows .
Employment Terms
| Term | Detail |
|---|---|
| Employment start (CEO) | Sept 30, 2023 (Employment Agreement; appointed interim CEO; now President & CEO) . |
| Base salary | $2,000,000 per year . |
| Annual cash incentive | Not eligible for ACI/STIP . |
| One-time equity | RSUs with target grant-date value equal to 400% of base salary (sign-on RSUs granted within 30 days of start) . |
| Severance (CIC Qualifying Termination) | 1x base salary lump sum within 60 days; if CIC termination before first anniversary of Sept 30, 2023, additional lump sum equal to remaining base salary to reach one full year . |
| RSU vesting on termination | If terminated without cause or resigns for good reason, 100% vesting of time-based LTIP awards granted under the agreement (subject to release and covenants) . |
| Non-compete / Non-solicit | 1 year post-termination if without cause or for good reason; 2 years post-termination for other reasons . |
| Clawback | Awards subject to OIP clawback and company recoupment policy compliant with SEC/NYSE rules . |
| Perquisites | Personal aircraft use (authorized 70 personal hours, excluding commuting; 2024 incremental cost $417,052), corporate apartment housing ($34,264), club fees ($10,176), and tax gross-up of $2,834 for aircraft-related taxes; total “All Other Compensation” $498,048 in 2024 . |
Change-in-control treatment (Boeing merger agreement context):
- RSUs convert to Boeing stock-based RSUs at Effective Time, maintaining vesting terms; PSUs convert based on actual performance to RSUs (no ongoing performance conditions); certain “Specified Awards” are cashed out per per-share merger consideration .
Performance & Track Record
- 2024 ACI outcomes (company-wide): Overall weighted score 0.9081 with mixed cost/inventory performance and quality score discretion (positive for Boeing segment, negative for others) .
- Relative TSR awards (prior cycle): 2022 PB-TSR for NEOs certified at 3.3rd percentile (0% payout), evidencing weak relative TSR over the 2022–2024 measurement period .
Compensation Structure Analysis
- Cash vs equity mix: CEO pay is predominantly equity (time-based RSUs), with no annual cash incentive eligibility—reducing annual performance leverage but increasing retention emphasis .
- Shift toward RSUs: 2024 long-term incentive for CEO/CFO entirely time-based RSUs given interim/transition context; broader NEOs retain 50% performance-based RSUs (TSR) .
- Tax mitigation actions: December 2024 acceleration of 272,573 CEO RSUs (and partial ACI accelerations for others) to mitigate 280G/4999 exposure; subject to clawback if separation precedes original vesting .
- Clawbacks/hedging/pledging: Strong governance reduces misalignment risk; prohibits hedging/pledging and enforces recoupment on restatements/misconduct .
- Say-on-pay support: >95% approval at 2024 meeting—signals investor tolerance for design choices amid merger and quality-focus year .
Equity Ownership & Alignment (Detailed)
| Item | Status |
|---|---|
| Beneficial common shares | 264,681 shares as of Apr 8, 2025 . |
| Unvested RSUs | 317,621 as of Apr 8, 2025 . |
| Ownership guideline | CEO 5x salary; 5-year window to comply; compliance monitored annually . |
| Hedging/pledging | Prohibited (no margin/pledge; no derivatives) . |
Employment Contracts, Severance, and Change-of-Control Economics
- CEO Employment Agreement (Sept 30, 2023) defines “Cause/Good Reason,” at-will status, and mediation/arbitration framework; sets severance only for CIC qualifying termination (1x base, with additional make-whole if within first year) .
- Time-based RSUs under the agreement vest at 100% upon termination without cause or for good reason, subject to release and covenants .
- Non-compete/non-solicit: 1 year post-termination (without cause/for good reason) or 2 years otherwise .
- Change-in-control equity treatment under merger agreement: RSUs convert to Boeing RSUs (terms preserved), PSUs convert to Boeing RSUs at actual performance, certain vested/board awards cashed out .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay approval exceeded 95%; investor feedback emphasized quality; 2024 ACI increased quality weighting to 60% .
Investment Implications
- Alignment and risk: Heavy reliance on time-based RSUs (no CEO cash bonus) prioritizes retention over annual performance leverage; anti-hedging/pledging and robust clawback enhance alignment quality .
- Near-term trading dynamics: December 2024 acceleration of 272,573 RSUs and ongoing time-based vesting (2025/2026) create identifiable vest windows that could correlate with liquidity events, though company tax withholding and policy constraints apply .
- CIC exposure under Boeing merger: If consummated, CEO equity largely converts to Boeing RSUs, preserving vest schedules and continuity; severance cash limited to 1x base only upon CIC qualifying termination (plus first-year make-whole) .
- Execution focus: 2024 incentive framework (quality/cash metrics) and committee discretion signal intense operational remediation; 2022 TSR forfeiture highlights prior underperformance baseline for relative returns .