Michael Graff
TransDigm GroupAbout Michael Graff
Independent director since 2003; age 73. Background spans aerospace operations and private equity: Senior Advisor at Warburg Pincus since 2020 (Managing Director 2003–2020), former President and COO of Bombardier Aerospace, with prior management consulting experience at McKinsey & Company. TDG biography credits him with guiding TransDigm through its IPO, the financial crisis, and COVID-19, highlighting strategic planning and analytical expertise . TDG’s Board determined he is independent under NYSE rules .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Warburg Pincus LLC | Senior Advisor (prev. Managing Director) | Senior Advisor since 2020; Managing Director 2003–2020 | Private equity transaction expertise applied to TDG; instrumental across IPO, crisis periods |
| Bombardier Aerospace | President & COO | Formerly (dates not specified) | Aerospace operating leadership; acquisition and capital markets experience |
| McKinsey & Company | Management Consultant | Formerly (dates not specified) | Strategic planning and analysis skillset |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Warburg Pincus LLC | Senior Advisor | Since 2020 | Ongoing private equity advisory role |
| Public company boards | — | — | No other current public company directorships disclosed for Graff |
Board Governance
- Committees: Nominating & Corporate Governance Committee (member) and Executive Committee (member) .
- Independence: Board determined all directors other than Messrs. Stein and Valladares are independent; Howley also deemed independent. Graff is independent .
- Attendance: Board met 4 times in FY 2024; every director serving in FY 2024 attended 75%+ of aggregate Board and applicable committee meetings. Independent directors held executive sessions after each regularly scheduled Board meeting .
- Executive Committee activity: “Power of the Board during intervals between Board meetings”; held no formal meetings in FY 2024 .
- Overboarding policy: Non-NEO directors limited to serving on three public company boards inclusive of TDG (NEO directors limited to one external board). Adopted in FY 2024 .
Fixed Compensation
| Component | FY 2024 Amount | Detail |
|---|---|---|
| Fees Earned or Paid in Cash | $1,732 | Elected to receive all semi-annual board retainer fees in TDG shares; no fractional shares issued, remainder in cash . |
| Stock Awards | $73,268 | Retainer taken in shares; valuation dates Mar 15, 2024 ($1,172.20 close) and Sep 13, 2024 ($1,367.76 close) . |
| Option Awards (Grant-date fair value) | $253,619 | Annual director option grant valued at ~$250,000 Black-Scholes; subject to same rigorous vesting criteria as NEOs . |
| All Other Compensation | $19,500 | Dividend equivalent payments (DEPs) on pre-2022 options vested in FY 2024 . |
| Total | $348,119 | Sum of FY 2024 director compensation . |
- Director compensation structure: Annual cash retainer $75,000; committee chair retainers ($20,000 for Audit/Comp; $10,000 for N&CGC), LID retainer $40,000; annual option grant ~ $250,000 fair value. Directors may elect cash or shares for retainer .
- Special dividends: For special dividends commencing in 2022, directors (including CEO Stein) receive option strike price reductions rather than cash DEPs .
Performance Compensation
| Metric/Mechanic | Threshold | Target/Range | Maximum | Notes |
|---|---|---|---|---|
| Director Option Vesting—AOP growth requirement | 10% cumulative AOP growth → 25% vesting | Linear vesting between 10% and 17.5% growth | 17.5% compound annual AOP growth → 100% vesting | AOP = (Pro Forma EBITDA As Defined × acquisition-weighted market multiple – net debt) ÷ diluted shares; adjusted for special dividends and buybacks . |
| Capital event treatment | — | Adjustments for special dividends/repurchases maintain IRR targets | — | Directors receive strike price reductions on special dividends since 2022 . |
| Carry-forward/back feature | — | Excess AOP achievement can offset shortfalls in prior/future 2 years, capped at $100 AOP per year for options granted after 2020 | — | Intended to preserve long-term focus . |
- No repricing without shareholder approval; no tax gross-ups; double-trigger change-in-control for options granted starting FY 2024 .
- Clawback policy adopted Oct 2, 2023 per NYSE/SEC standards; recovers excess incentive-based comp after restatements .
Other Directorships & Interlocks
| Entity | Type | Role/Interlock | Notes |
|---|---|---|---|
| Warburg Pincus LLC | Private equity | Senior Advisor | Potential network overlap with TDG’s investor base/deal ecosystem; TDG discloses no material related-party interests in FY 2024 . |
| Public company boards | — | — | None disclosed for Graff . |
Expertise & Qualifications
- Aerospace operations leadership (Bombardier Aerospace) and deep industry knowledge .
- Private equity transaction discipline (Warburg Pincus), capital markets, M&A .
- Strategic planning/analytical acumen (McKinsey) .
- Board contributions include guiding TDG through IPO, the financial crisis, and COVID-19 .
Equity Ownership
| Holder | Shares Owned | Options Exercisable or within 60 days | Total Shares (incl. options) | % of Class | Notes |
|---|---|---|---|---|---|
| Michael Graff | 14,033 | 5,715 | 19,748 | <1% | Includes 4,000 shares held by Graff as trustee of trusts for children and 5,096 shares held by a trustee of a trust created by his wife; none pledged . |
| TDG outstanding shares (reference) | — | — | 56,040,017 | — | Basis for % calculations . |
- Director ownership guideline: Non-employee directors must maintain ≥$250,000 in TDG equity (stock or vested in-the-money options); all are in compliance. Median non-employee director common stock value is 29× this requirement (as of Sep 30, 2024) .
- Prohibitions: Hedging, pledging, short sales banned for directors, officers, employees .
Governance Assessment
- Committee roles: Service on N&CGC aligns with oversight of ESG, governance policies, and succession planning; Executive Committee membership confers authority between Board meetings (no formal meetings in FY 2024) . Implication: governance influence without compensation committee involvement reduces pay-setting conflicts .
- Independence & attendance: Independent under NYSE; met ≥75% attendance requirement; Board held executive sessions of independents after each regular meeting—positive governance signals .
- Ownership alignment: Elected to receive fees in TDG shares; holds meaningful equity and vested options; subject to stringent director ownership requirements—positive alignment .
- Conflicts/related-party: Active role at Warburg Pincus (private equity) presents potential network interlocks; TDG Board concluded no director had a direct or indirect material interest in related-party relationships in FY 2024—mitigates conflict risk .
- Policy safeguards: Robust clawback, anti-hedging/pledging, double-trigger CIC on newer options; overboarding policy limits; executive sessions routine—overall governance quality strong .
- RED FLAGS
- Approaching retirement age threshold: TDG director retirement policy at age 75 (subject to waiver); Graff at 73—board succession planning attention warranted within ~2 years .
- Private equity affiliation (Warburg Pincus) could create perceived conflicts in acquisition or financing contexts; monitor for any disclosed related-party transactions (none in FY 2024) .
Say-on-Pay & Shareholder Feedback (Board context)
- 2024 advisory vote approval: 68.8%; Board/Comp Committee enhanced engagement and reduced discretion in payouts; directors (including LID) participated selectively in shareholder engagements—supports responsiveness .
Director Compensation (Structure recap)
| Item | Policy |
|---|---|
| Annual Cash Retainer | $75,000, paid semi-annually (cash or shares at director’s election) |
| Committee Chair Fees | Audit/Comp: $20,000; N&CGC: $10,000 |
| Lead Independent Director Fee | $40,000 |
| Equity Compensation | Annual performance-based options ~ $250,000 fair value; same vesting rigor as NEOs |
| Special Dividends (Directors) | Strike price reductions (vs DEPs) on options for dividends commencing in 2022 |
Employment & Contracts
- Director retirement policy: Mandatory retirement at age 75, subject to waiver; overseen by N&CGC .
- Insider trading controls: Advance approvals, open window trading; directors covered by TDG’s policy .
Performance & Track Record
- TDG FY 2024 outcomes: Net sales $7,940M (+21% YoY), net income $1,715M (+32%), GAAP EPS $25.62 (+16%), EBITDA As Defined $4,173M (+23%), EBITDA margin 52.6%; TSR ~73% including $35 special dividend—board oversight backdrop for Graff’s tenure .
Compensation Committee Analysis (Board context)
- Independent committee (Barr, McCullough, Small); no interlocks; uses independent consultant (Exequity engaged FY 2023) and refreshed peer group in FY 2024 .
Summary Implications for Investors
- Governance quality: Strong independence, ownership alignment, formal safeguards (clawback, anti-hedging), and measured director equity design point to board effectiveness .
- Succession signal: Graff’s nearing retirement age suggests potential near-term board refresh; monitor nominations and committee composition changes .
- Conflict monitoring: Continue to track disclosures for any Warburg Pincus or related-party linkages (none in FY 2024) and Executive Committee activity between meetings .