W. Nicholas Howley

About W. Nicholas Howley

W. Nicholas Howley is the co-founder of TransDigm (1993), serving as Chairman of the Board since 2003; he was Executive Chair from 2018 to August 2021 and previously President/CEO of TransDigm from 2003 to 2018 and TransDigm Inc. from 1998 to 2018. Age 72, director since 1993, with extensive strategic and operating credentials grounded in TDG’s value-creation playbook; the Board determined he is independent under NYSE rules given employment ended in August 2021 and he does not serve on NYSE-required committees . He currently chairs the Executive Committee .

Past Roles

External Roles

Board Governance

• Independence: The Board determined all directors other than Messrs. Stein and Valladares are independent; Mr. Howley is independent under NYSE rules and does not serve on NYSE-required committees .
• Committee assignments: Executive Committee (Chair); not on Audit, Compensation, or Nominating & Corporate Governance .
• Meetings and attendance: Board met 4 times in FY2024; non-executive and independent directors met in executive session after each regular meeting; each Board member attended at least 75% of combined Board and committee meetings they served on .
• Lead Independent Director: Robert J. Small serves as LID with defined responsibilities including executive sessions and agenda approval .
• Policies: Prohibitions on hedging, pledging, and short sales apply to all directors; overboarding policy limits non-NEO directors to three public boards inclusive of TDG; retirement policy at age 75, subject to waiver .

Fixed Compensation (Director Program; Howley specifics)

• Dividend Equivalent Plans: Payments related to pre-2022 special dividends ceased after FY2024; for FY2024, “All Other Compensation” entries reflect DEPs for vested options (not applicable to Howley given no FY2024 compensation) .

Performance Compensation (Structure and Metrics)

• Director equity grants: Independent directors (other than Howley) receive annual stock options valued at ~$250,000 on Black-Scholes fair value; options are subject to the same rigorous performance-based vesting criteria used for NEOs .
• Vesting mechanics: Vesting is tied to Annual Operating Performance (AOP) per diluted share growth; minimum vesting threshold at 10% cumulative AOP growth, full vesting at 17.5% CAGR; no discretion applied to vesting .
• AOP calculation: AOP = (Pro Forma EBITDA As Defined × acquisition-weighted market multiple − net debt) / diluted shares; adjusted for special dividends and share repurchases .

Other Directorships & Interlocks

• Overboarding compliance: TDG policy limits non-NEO directors to three public boards inclusive of TDG; Howley’s current public board count (TDG + Perimeter Solutions) is within policy .

Expertise & Qualifications

• Core credentials: Co-founder with decades of aerospace and industrial operating experience; integral in establishing and implementing TDG’s core strategy and rapid growth .
• Governance qualifications: Experience driving accountability as Chairman; separation of Chairman/CEO structure; LID role complements independent oversight .

Equity Ownership

• Footnotes: Includes 8,262 shares held as trustee of a charitable foundation and 21,547.513 shares held as trustee for family; options to purchase 691,017 shares held as trustee for family; none of the shares held by directors or NEOs are pledged .
• Vested, unexercised options as of Sep 30, 2024: 707,433 (director table) .
• Ownership guidelines: Non-employee directors must maintain equity ≥$250,000; Howley must maintain equity of $6,000,000, at least half in stock; all non-employee directors are in compliance .
• Hedging/pledging: Prohibited for all directors; no pledged shares reported .

Governance Assessment

• Independence and committee structure: The Board affirmed Howley’s independence and intentionally excludes him from NYSE-required committees, mitigating concerns stemming from prior executive status; he chairs the Executive Committee, which exercises Board powers between meetings, though it held no formal meetings in FY2024 .
• Alignment: Howley receives no director cash or equity compensation in FY2024, but holds significant vested options and equity, and is subject to stringent ownership requirements ($6 million, half in stock) and anti-hedging/pledging policies—strong alignment with long-term value creation .
• Performance-linked incentives: Director options (excluding Howley in FY2024) are performance-based and tied to robust AOP thresholds comparable to top private equity performance, reducing pay-risk misalignment .
• Shareholder signals: Say-on-Pay support improved to ~69% in 2024 following compensation program refinements and expanded outreach, indicating guarded but improving investor confidence in TDG’s pay governance .
• Related-party and interlocks: Board documented process for related-party transactions and concluded no material interests for directors in FY2024; Compensation Committee reports no interlocks, reducing conflict risk .
• RED FLAGS and mitigants:
  • Concentration of influence: Long-tenured Chairman and co-founder implies significant influence; mitigated by LID role, independent committees, and prohibitions on hedging/pledging .
  • Executive Committee authority: Holds interim Board powers; however, no formal meetings in FY2024, reducing near-term concern .
  • Large option holdings: Aligns incentives but may amplify focus on AOP-linked outcomes; ownership guidelines and independent oversight provide guardrails .

Board Governance (Additional Program Details)

• Committee compositions and meetings:
  • Audit: Hennessy (Chair), Cronin, Santana; 8 meetings; all independent; multiple financial experts .
  • Compensation: Barr (Chair), McCullough, Small; 5 meetings; all independent; no interlocks .
  • Nominating & Corporate Governance: McCullough (Chair), Cronin, Graff, Santana; 4 meetings; all independent .
  • Executive: Howley (Chair), Graff, Small; no formal meetings FY2024 .

Related Policies and Practices

• Clawback policy (executives): Effective Oct 2, 2023; applies to excess incentive-based compensation after restatements; multiple recoupment methods; aligns with NYSE/SEC standards .
• No tax gross-ups; no option repricing without shareholder approval; double-trigger change-in-control for options starting FY2024 (executives) .

Overall, Howley’s independence determination, absence of FY2024 director pay, stringent ownership requirements, and prohibitions on pledging/hedging support alignment, while his long tenure and Executive Committee chair role underscore the importance of continued robust independent oversight via the LID and independent committees .