TransDigm Group INC
For the period ended Sep 30, 2025. Filed Jan 23, 2026.
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Sep 30, 2025 · Filed Jan 23, 2026
Use the contents to explore the available documents and sections.
Contents
Compensation Program Modifications
Executive Compensation
2025 Compensation Program Modifications
We did not have any changes to our compensation program in 2025. As further discussed in our stockholder outreach section, we obtained feedback regarding our compensation program from 19 investors representing 65% of our outstanding common stock. Stockholders were generally pleased with the changes we have made over the past couple years.
We believe that obtaining this feedback is important. In 2025, largely in response to changes that we had made in response to stockholder feedback, 94.4% of our stockholders who voted supported our annual advisory Say-on-Pay proposal to approve the compensation of our NEOs. We have made several notable changes over the past several years, described below, that were directly responsive to our stockholders’ feedback. We believe that implementing these enhancements, while maintaining our unique performance-driven compensation program, will further align management’s interests with those of our stockholders.
| No DiscretionaryEquity Awards | In the past we heard feedback from our stockholders criticizing the use of discretionary option awards. We did not issue any discretionary equity awards in FY 2025, as further described below in Compensation Discussion and Analysis – 2025 NEO Compensation – 2025 Equity Based Incentives. | |
| No Upward Discretion Usedin Annual Cash Incentive | In the past our stockholders provided feedback that they would prefer for positive payout discretion not to be used on the Annual Cash Incentive for our NEOs. We did not utilize any positive payout discretion on these Annual Cash Incentives in response to this feedback in 2025. | |
|---|---|---|
| Continued Investor Outreach | We continue our formal year-round stockholder engagement program. | |
| Enhanced Compensation Program Disclosure | We have continued the enhanced disclosure of our executive compensation program, including how our option compensation creates strong alignment between our NEOs and stockholders and additional details regarding the mechanics of our option grants. | |
| Use of Refreshed Peer Group | We continue to use the peer group adopted in 2024 which we believe is more reflective of our business. |
| 34 2026 Proxy Statement | TransDigm Group Incorporated |
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Executive Compensation
Compensation Program Overview
Our compensation program is designed to drive exceptional performance and align the interests of management with our stockholders. This goal is accomplished by heavily weighting compensation towards long-term performance-based options. Initial NEO awards generally vest over a five-year period based on performance, which incentivizes long-term performance and aids in retention.
More than 94% of the CEO’s compensation is comprised of performance-based compensation. In excess of 97% of the remaining NEOs’ compensation, on average, is based on performance-based compensation. Options, which make up the majority of NEO’s compensation, are subject to stringent vesting criteria, which are more fully described in the “2025 Equity Based Incentives” discussion that starts on page 41. Cash compensation generally constitutes less than 20% of our NEOs’ total compensation.
| BaseSalary | |
| Fixed element of annual compensation | |
| On average, accounts for 10% or less of NEO total compensation | |
| Modest increases in salary. | |
| TargetAnnualCash Incentive | |
| Short-term cash incentive with variable payout opportunities | |
| On average, accounts for less than 10% of NEO compensation | |
| No upward payout discretion was used for any of the NEOs | |
| Robust and equally weighted targets of 52.7% EBITDA As Defined margin and $4.680B EBITDA As Defined dollars | |
| We exceeded target goals for both EBITDA As Defined margin and EBITDA as Defined dollars | |
| Long-TermEquityAwards | |
|---|---|
| Long-term equity incentives in the form of performance-based stock options with multi-year vesting schedules | |
| Long-term equity awards remain 100% at-risk and performance-based | |
| The Compensation Committee has a policy that it will not use discretion in vesting performance-based options | |
| Full vesting requires 17.5% compound annual growth for AOP, which aligns performance with top performing private equity funds | |
Summary of Key NEO Compensation Decisions and Actions in 2025
| BaseSalary | ||
|---|---|---|
| The salaries of Mr. Stein, Ms. Wynne, Mr. Lisman and Mr. Reiss were each increased by 6%. | ||
| AnnualCashIncentive | ||
| We achieved 116.1% of our EBITDA as Defined margin goal and 105% of our EBITDA as Defined dollars goal for our Annual Cash Incentive. The Annual Cash Incentive paid at 110.6% of the target goal as each of these metrics is equally weighted. The Compensation Committee did not exercise any discretion in the payment of Annual Cash Incentives to NEOs. | ||
| Long-Term Equity Awards | The Compensation Committee did not exercise any discretion in awarding long-term equity compensation to NEOs. Ms. Wynne and Mr. Lisman received extension grants which vest in the fourth and fifth year following the grant. Mr. Reiss received a promotion equity grant which vest equally over a period of five years. The purpose of these awards, and our long-term equity awards generally, is to drive long-term performance and retain our executives. | |
| TransDigm Group Incorporated | 2026 Proxy Statement 35 |
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Executive Compensation
After the fiscal year end, on October 1, 2025, in connection with his promotion to CEO, the Company and Mr. Lisman entered into an amendment and restatement to Mr. Lisman’s employment agreement. In addition to making customary modifications to his employment agreement consistent with his new role as CEO (as more fully described under “Employment Agreements”), the agreement fixes a manner of calculating the magnitude of his annual option award and provides Mr. Lisman with equity compensation in lieu of cash salary and bonus. Mr. Lisman will receive $1,000 per annum to pay for his employee co-premium for health benefits, however his annual salary and incentive, traditionally paid in cash, will be converted to performance-based options. Mr. Lisman expressed willingness and desire to enter into such an arrangement based on his confidence in the Company’s long-term business plan and the increased alignment that would result between himself and TransDigm stockholders. The arrangement was modeled off of a prior arrangement between the Company and Mr. Howley when he was CEO and to which stockholders were favorably disposed.
Executive Compensation Policies and Practices
We are committed to sound executive compensation policies and practices, as highlighted in the following table.
| WhatWe Do | Equity compensation limited to performance-based optionsOur stock option plans do not authorize the issuance of any full value awards, such as stock, restricted stock or other stock-based units. Our option program relies on performance-based options with robust performance criteria; we do not issue time-vested options. | |
|---|---|---|
| Prohibition on hedging, pledging and short salesWe prohibit hedging, pledging, transactions in derivatives, and short sales in TransDigm securities by all employees and directors, including our NEOs. | ||
| Equity ownership guidelinesWe have robust equity ownership guidelines for all of our option holders, including our NEOs. | ||
| Annual compensation risk assessmentThe Compensation Committee conducts an annual risk assessment of our compensation program. | ||
| Independent compensation consultantThe Compensation Committee directly retains an independent compensation consultant. | ||
| Double-trigger change in controlStarting with our FY 2024 options grants, we have incorporated double-trigger change in control provisions. | ||
| What WeDon’t Do | No repricingWe do not allow repricing of stock options without stockholder approval. | |
| No tax gross-upsWe do not provide for gross-ups of taxes, including in the event of a change in control or under Section 409A. | ||
| No evergreen employment contractsExecutive employment agreements do not contain automatic renewal provisions. |
| 36 2026 Proxy Statement | TransDigm Group Incorporated |
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Executive Compensation
Compensation Committee Judgment and Discretion
The Compensation Committee, consisting entirely of independent directors, reviews and approves the compensation of TransDigm’s NEOs and acts as the administrator for TransDigm’s equity compensation plans.
The Compensation Committee’s executive compensation determinations are subjective and the result of the Compensation Committee’s business judgment, which is informed by the experience of its members and input provided by its independent compensation consultant, other directors, our CEO (other than with respect to his own compensation), other members of management, and investors.
The Compensation Committee regularly evaluates TransDigm’s executive compensation program to determine if changes are appropriate. In so doing, the Compensation Committee may consult with its independent compensation consultant and management; however, the Compensation Committee makes final decisions regarding the compensation paid to our NEOs based on its own judgment. The Compensation Committee may consider factors such as individual performance, TransDigm performance, market conditions, financial goals, retention, and stockholder interests in determining compensation.
The Role of the Compensation Consultant. The Compensation Committee may periodically select and retain the services of an independent compensation consultant. The Compensation Committee did not engage a compensation consultant with respect to FY 2025 compensation. The Compensation Committee did, however, engage Exequity LLP (“Exequity”), an independent compensation consultant, in FY 2023 to review and help establish our FY 2024 peer group and evaluate FY 2024 NEO compensation. The Compensation Committee has assessed the independence of Exequity, as required under NYSE listing rules. The Compensation Committee has also considered and assessed all relevant factors, including but not limited to those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, that could give rise to a potential conflict of interest with respect to Exequity. Based on this review, the Compensation Committee is not aware of any conflict of interest that has been raised by the work performed by Exequity.
The Role of Peer Companies. The Compensation Committee did not engage a compensation consultant with respect to FY 2025 compensation. The following peer group was used to evaluate TransDigm’s FY 2024 NEO compensation:
2024 Peer Group
| Ametek, Inc.Aptiv PLCDover CorporationEaton CorporationEmerson ElectricFortive Corp.General Dynamics | HEICO CorporationHowmet Aerospace Inc.*Illinois Tool WorksIngersoll Rand Inc.*L3Harris Technologies, Inc.Motorola Solutions, Inc.*Northrup Grumman | Parker-Hannifin Corp.RBC Bearings Inc.*Rockwell Automation, Inc.Roper Technologies, Inc.Teledyne Technologies Inc.*Textron Inc. |
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- New to peer group in 2024
This group was selected based on net sales, market capitalization, and enterprise value. We use a size-based peer group because we manage our business based on EBITDA growth and enterprise value. The Compensation Committee deemed that a peer group based solely on net sales is not comparable with TransDigm because TransDigm’s market capitalization and enterprise value far exceeded those of the potential sales-based peers. The Compensation Committee considers the peer group data to inform its decision-making process so it can set total compensation levels that it believes are commensurate with the relative size, scope, and success of TransDigm.
When identifying suitable peer companies, the Compensation Committee considered numerous factors, including:
| Industry fit and business comparabilityFocus on companies serving the Aerospace and Defense industries and/or manufacturers of engineered components. | Comparably-sized companiesFactors considered included net sales, market capitalization, total enterprise value, and EBITDA. |
| TransDigm Group Incorporated | 2026 Proxy Statement 37 |
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Executive Compensation
In establishing the revised peer group, the Compensation Committee sought to position TransDigm within what it believes is a reasonable range of the peer group median net sales, market capitalization, and total enterprise value.
Consistent with prior practices, Exequity excluded DEPs from its compensation analysis for two reasons—first, because DEPs are merely a mechanism for maintaining value already awarded, and second, because including DEPs are unpredictable and not considered when making compensation decisions.
The Role of the CEO and Other Members of Management. TransDigm’s management team assists the Compensation Committee with its work in designing, evaluating, and determining final payouts for NEO compensation. At the Compensation Committee’s request, for FY 2025, TransDigm’s CEO, Mr. Stein, provided input to the Compensation Committee regarding the recent performance and compensation of the other NEOs for FY 2024. This input was based on Mr. Stein’s assessment of general internal pay equity considerations, his knowledge of the other NEOs’ job responsibilities and importance to TransDigm’s overall business strategy, and Mr. Stein’s knowledge of TransDigm’s compensation philosophy. The Compensation Committee considered Mr. Stein’s evaluation and direct knowledge of each NEO’s performance and contributions when making compensation opportunity decisions for the NEOs for FY 2025. Although Mr. Stein’s input was given significant weight, the Compensation Committee retained the potential to use full discretion when determining compensation for the NEOs for FY 2025. Mr. Stein is not present during Compensation Committee voting and deliberations regarding his own compensation. TransDigm’s CFO also reviews proposed NEO compensation before it is submitted to the Compensation Committee to help ensure that it aligns with TransDigm’s financial goals.
The Role of Investors. stockholders are provided the opportunity to cast an annual advisory vote on the compensation of our NEOs. Last year, 94.4% of votes cast were in favor of our annual advisory Say-on-Pay proposal to approve the compensation of our NEOs. As described below in “Stockholder Engagement Summary” starting on page 49, in recent years we have increased our stockholder engagement. The feedback received through these discussions is strongly considered by the Compensation Committee when reviewing our executive compensation program.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.