Robert Small

About Robert J. Small

Lead Independent Director of TransDigm (TDG); age 58; director since 2010. He has been a Managing Director at Berkshire Partners since 2000 (joined 1992) and Managing Director of Stockbridge (Berkshire’s public equity unit) since 2007, bringing 30+ years in private and public equity, M&A, and capital markets to the board . He was appointed TransDigm’s first Lead Independent Director (LID) in late 2023 and engages directly with major shareholders on governance and compensation topics .

Past Roles

External Roles

Board Governance

• Independence: Board determined all directors except the CEO and Mr. Valladares are independent; Mr. Howley also deemed independent though not on NYSE-required committees. Mr. Small is an independent director and LID .
• LID responsibilities: Sets/agrees agendas, presides over executive sessions, liaises with management and shareholders, leads evaluations, and advises on board/committee composition .
• Committee assignments (FY2024): Compensation Committee member; Executive Committee member. Not on Audit or Nominating/Corporate Governance .
• Attendance and engagement: Board met 4 times in FY2024; each director attended at least 75% of board and committee meetings for which they served; independent directors held executive sessions after each regular board meeting .
• Committee activity: Audit (8 meetings), Compensation (5), Nominating & Corporate Governance (4), Executive Committee (no formal meetings in FY2024) .

Fixed Compensation (Director)

Policy and FY2024 amounts:

• Structure: Annual retainer $75,000; LID additional $40,000; committee chair retainers (Audit/Comp $20,000; Nominating $10,000); annual option grant (~$250,000 Black-Scholes value). Directors may elect cash or stock for retainers; director options use the same performance-vesting criteria as NEOs .
• Special dividend treatment: For dividends declared from 2022 onward, directors (including CEO) receive a strike-price reduction on options; DEPs only applied to pre‑2022 dividends and ceased after FY2024 .

Footnote: Several directors (including Mr. Small) elected to receive semi‑annual board retainers in TDG shares; no fractional shares issued, leaving a cash remainder, with share values based on 3/15/24 $1,172.20 and 9/13/24 $1,367.76 closing prices .

Performance Compensation (Director Options)

• Instrument: Performance‑based stock options (no full‑value awards); long-term, multi‑year vesting .
• Vesting metric: Annual Operating Performance per diluted share (AOP). Threshold 10% cumulative AOP growth yields 25% vesting; full vesting at 17.5% compound annual AOP growth; linear interpolation between; limited carry‑forward/back of AOP over/underachievement (+/− $100 per year for options granted after 2020) to emphasize long‑term results .
• AOP calculation: (Pro Forma EBITDA As Defined × acquisition‑weighted market multiple − Net Debt) ÷ diluted shares, adjusted for special dividends and buybacks .
• CIC treatment: FY2024+ NEO grants moved to double‑trigger; directors’ options follow plan mechanics, with directors receiving strike price adjustments in lieu of DEPs for 2022+ special dividends .

Other Directorships & Interlocks

• Related-party transactions: Board concluded no director or executive officer had a direct or indirect material interest in any relationships during FY2024 through proxy date .

Expertise & Qualifications

• Private equity and public equity investor with 30+ years’ experience; extensive M&A and capital markets expertise .
• Aerospace exposure via prior Hexcel directorship; breadth of portfolio company board service .
• Governance leadership as LID, including agenda setting, executive sessions, evaluations, and shareholder outreach .

Equity Ownership

• Director ownership guideline: Non‑employee directors must maintain ≥$250,000 in TDG equity; all are in compliance; median non‑employee director ownership value is 29× the requirement .
• Anti‑pledging/hedging: Company prohibits short sales, derivatives, hedging, and pledging of TDG securities by directors, officers, and employees .

Governance Assessment

• Strengths

  • Independent LID with clearly defined authorities; active engagement with shareholders; helps align board agendas, evaluations, and governance with investor expectations .
  • Significant ownership alignment: 1.35% beneficial stake (direct, trustee, and Berkshire‑related holdings), unpledged; elected to take retainers in stock, reinforcing alignment .
  • Robust governance policies: prohibition on hedging/pledging; proxy access; overboarding limits (non‑NEO directors capped at three public boards including TDG); annual board elections .
  • Compensation oversight: Member of Compensation Committee; committee embraces performance‑based design, double‑trigger CIC for FY2024+ NEO grants, a formal clawback, and limited discretion, reflecting shareholder feedback and improved Say‑on‑Pay support (68.8% in 2024) .

• Watch items / potential conflicts

  • Berkshire Partners’ related entities hold a large TDG stake (668,285 shares); Small disclaims beneficial ownership beyond pecuniary interest. Board reports no related‑party transactions in FY2024, but the affiliation warrants continued monitoring for potential perceived conflicts and interlocks in portfolio companies interacting with TDG’s ecosystem .
  • Historical use of dividend equivalent payments (DEPs) on vested options has drawn investor scrutiny; for directors, DEPs tied to pre‑2022 dividends cease after FY2024 and 2022+ dividends instead reduce option strike price, partially mitigating concerns .

• Attendance/engagement signal

  • All directors met the 75% attendance threshold; independent directors held executive sessions after each regular meeting; as LID, Small presides over these sessions, supporting board independence and effective oversight .