DEF 14A 1 fy19proxystatement.htm DEF 14A Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14-A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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BOOZ ALLEN HAMILTON HOLDING CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of 2019
Annual Meeting
of Stockholders
and Proxy Statement
July 25, 2019












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Booz Allen Hamilton Holding Corporation
8283 Greensboro Drive
McLean, Virginia 22102
 
 
 
 
 
 
 
                                                June 13, 2019
Dear Fellow Stockholder:

I am pleased to invite you to join our Board of Directors, senior leadership, and fellow stockholders at our Annual Meeting of Stockholders to be held at 8:00 a.m. (EDT) on July 25, 2019, at The John C. Newman Auditorium, located in our offices at 8283 Greensboro Drive, McLean, Virginia 22102. Enclosed with this proxy statement are your proxy card and our 2019 annual report to stockholders.
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Items of business to be transacted at our annual meeting are:
1.Election of four directors;
2.Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2020;
3.A non-binding advisory vote on the compensation program for the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis section of the proxy statement;
4.Approval of the adoption of the Fourth Amended and Restated Certificate of Incorporation to eliminate the Company's Class B non-voting common stock, Class C restricted common stock, and Class E special voting common stock, of which there are currently no shares outstanding; and
5.Consideration of any other business that may properly be brought before the annual meeting.
The Board of Directors recommends that you vote FOR Proposals 1, 2, 3, and 4.
Your vote is important. Whether or not you plan to attend the annual meeting, you may access electronic voting via the Internet or the automated telephone voting feature, both of which are described on your enclosed proxy card, or you may sign, date, and return the proxy card in the envelope provided. If you plan to attend the annual meeting, you may vote in person.
Registration and seating will begin at 7:30 a.m. Each stockholder will be asked to sign an admittance log and may be asked to present a valid picture identification. Stockholders holding stock in brokerage accounts must bring a copy of a brokerage statement reflecting their stock ownership as of the June 3, 2019 record date. Cameras and recording devices will not be permitted at the meeting.
On behalf of Booz Allen, I want to thank you for your continued support and investment.
Sincerely,

Horacio D. Rozanski
President and Chief Executive Officer











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NOTICE OF BOOZ ALLEN HAMILTON HOLDING CORPORATION'S 2019 ANNUAL MEETING OF STOCKHOLDERS
 
 
 
 
Time and Date:
 
8:00 a.m. (EDT), July 25, 2019
 
 
Place:
 
The John C. Newman Auditorium, located in our offices at 8283 Greensboro Drive, McLean, Virginia 22102
 
 
Agenda:
 
1. The election of four director nominees named in the proxy statement;
 
 
 
 
2. The ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year 2020;
 
 
 
 
3. A non-binding advisory vote on the compensation program for the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis section of the proxy statement;
 
 
 
 
4. Approval of the adoption of the Fourth Amended and Restated Certificate of Incorporation to eliminate the Company's Class B non-voting common stock, Class C restricted common stock, and Class E special voting common stock, of which there are currently no shares outstanding; and
 
 
 
 
5. The transaction of any other business that may properly be brought before the annual meeting.
 
 
 
 
The Board of Directors recommends that you vote FOR Proposals 1, 2, 3, and 4.
 
 
Record Date:
 
Only holders of record of the Company’s Class A common stock on June 3, 2019 will be entitled to vote at the annual meeting.
 
 
 
Date of Distribution:
 
This proxy statement and the accompanying materials are being mailed to stockholders on or about June 13, 2019.
 
 
 
Proxy Voting:
 
Your vote is important. Whether or not you plan to attend the annual meeting, you may access electronic voting via the Internet or the automated telephone voting feature, both of which are described on your enclosed proxy card, or you may sign, date, and return the proxy card in the envelope provided. If you plan to attend the annual meeting, you may vote in person.
On Behalf of the Board of Directors,

Nancy J. Laben
Secretary

June 13, 2019

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on July 25, 2019: This Notice of Annual Meeting and Proxy Statement and our 2019 Annual Report are available at www.proxyvote.com.










TABLE OF CONTENTS TO PROXY STATEMENT
 
PROXY STATEMENT SUMMARY
 
 
PROPOSAL 1: ELECTION OF DIRECTORS
 
 
Board Structure
 
 
Class III Election
 
 
Class III Nominees
 
 
CONTINUING DIRECTORS
 
 
CORPORATE GOVERNANCE AND GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
 
 
Our Board of Directors
 
 
Corporate Governance Guidelines
 
 
Codes of Conduct and Ethics
 
 
Board Meetings and Attendance
 
 
Board Leadership Structure
 
 
Succession Planning and Talent Reviews
 
 
Risk Oversight
 
 
Annual Board Performance Assessment
 
 
Board Independence
 
 
Selection of Nominees for Election to the Board
 
 
Director Orientation and Continuing Education
 
 
Communications with the Board
 
 
Board Committees
 
 
Director Compensation
 
 
Director Ownership Guidelines
 
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
 
SECURITY OWNERSHIP INFORMATION
 
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
 
Policies and Procedures for Related Person Transactions
 
 
Related Person Transactions
 
 
COMPENSATION DISCUSSION AND ANALYSIS
 
 
Executive Summary
 
 
Benchmarking and Setting Executive Compensation
 
 
Compensation Elements
 
 
Executive Ownership Requirements
 
 
Risk Assessment
 
 
Advisory Vote to Approve Executive Compensation
 
 




Government Limitations on Reimbursement of Compensation Costs
 
 
Compensation Recovery Provisions (Clawbacks) in Incentive Plans
 
 
Certain Change in Control Provisions
 
 
Policies on Timing of Equity Grants
 
 
Effect on Accounting and Tax Treatment on Compensation Decisions
 
 
Compensation Tables and Disclosures
 
 
Pay Ratio
 
 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
 
AUDIT COMMITTEE REPORT
 
 
PRE-APPROVAL OF SERVICES BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
 
 
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
 
 
PROPOSAL 3: ADVISORY VOTE ON COMPANY'S EXECUTIVE COMPENSATION
 
 
PROPOSAL 4: ADOPTION OF FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
 
 
OTHER BUSINESS
 
 
IMPORTANT INFORMATION ABOUT ANNUAL MEETING AND PROXY PROCEDURES
 
 
Appendix A
Appendix B






PROXY STATEMENT SUMMARY
This summary highlights certain information contained elsewhere in this proxy statement. The summary does not contain all of the information that you should consider, and you should review our Annual Report on Form 10-K for the year ended March 31, 2019 and the entire proxy statement carefully before voting.
Unless the context otherwise indicates or requires, as used in this proxy statement, references to: (i) the “Company,” “we,” “us,” “our” or our “company” refer to Booz Allen Hamilton Holding Corporation, its consolidated subsidiaries and predecessors; (ii) “Booz Allen Holding” or "Booz Allen" refers to Booz Allen Hamilton Holding Corporation exclusive of its subsidiaries; (iii) “Booz Allen Hamilton” refer to Booz Allen Hamilton Inc., our primary operating company and a wholly-owned subsidiary of Booz Allen Holding; (iv) “our Board” or “the Board” means the Board of Directors of the Company; (v) “stockholder” means holders of our Class A common stock; (vi) “fiscal,” refers to our fiscal years ended March 31; and (vii) “you,” “your,” “yours,” or other words of similar import in this proxy statement refers to stockholders entitled to vote on the matters to be presented at the annual meeting.
2019 Annual Meeting of Stockholders
Date and Time:  
July 25, 2019 at 8:00 a.m. EDT
Place:  
Booz Allen
The John C. Newman Auditorium
8283 Greensboro Drive, McLean, Virginia 22102
Record date:  
June 3, 2019
Admission:
Annual meeting admission is limited to our registered and beneficial stockholders as of the record date and persons holding valid proxies from stockholders. Admission to our annual meeting requires proof of your stock ownership as of the record date, and valid, government-issued identification. See "Important Information about Annual Meeting and Proxy Procedures" on page 59 for additional information.
Voting Matters and Board Recommendations
 
Stockholders are being asked to vote on the following matters at the 2019 Annual Meeting of Stockholders:
Proposal
Description
Board's Voting Recommendation
Page Reference
No. 1
Election of four director nominees
FOR each nominee
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No. 2
Ratification of appointment of Ernst & Young LLP ("E&Y") as the Company's independent registered accounting firm for fiscal year 2020
FOR
54
No. 3
A non-binding advisory vote on the compensation program for the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis ("CD&A") of the proxy statement
FOR
55
No. 4
Approval of the adoption of the Fourth Amended and Restated Certificate of Incorporation to eliminate the Company's Class B non-voting common stock, Class C restricted common stock, and Class E special voting common stock, of which there are currently no shares outstanding

FOR
56
How to Vote
Stockholders as of the record date may vote in person at the meeting or vote in advance by submitting a proxy by
Internet, telephone, or mail as follows:

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Vote by Internet
Vote by Telephone
Vote by Mail
Vote in Person
Visit proxyvote.com
Call the phone number located on the top of your proxy card.
Complete, sign, date and return your proxy card in envelope provided.
Attend our annual meeting and vote by ballot.
Company Performance and Highlights
During fiscal year 2019, we returned $364.2 million to stockholders in the form of:
$114.2 million in quarterly dividends — three regular dividends of $0.19 per share each; and one regular dividend of $0.23 per share
$250.0 million through the repurchase of 5.3 million shares of Class A common stock
In February of 2019, the Board increased the quarterly dividend by 21%, effective in the fourth quarter of fiscal year 2019.
During fiscal year 2019, our stock price increased by approximately 50% with a total stockholder return of approximately 53%.
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Note: Total shareholder return assumes dividends are reinvested.

Our Board of Directors
Effective as of October 5, 2018, the Board increased the number of directors serving on the Board from 11 to 13 upon the recommendation of the Company’s Nominating and Corporate Governance Committee of the Board. On October 5, 2018, the Board appointed Michèle Flournoy and Ellen Jewett as new members of the Board, effective October 24, 2018 and October 25, 2018, respectively, to fill the two newly-created vacancies on the Board. Ms. Jewett serves as a Class III director for a term expiring at this year's annual meeting of stockholders and Ms. Flournoy serves as a Class I director for a term expiring at the Company’s 2020 annual meeting of stockholders. Effective as of March 31, 2019 and after approximately a decade of service, Philip A. Odeen, formerly a Class I director, retired from the Board. The size of the Board was reduced to 12 members upon Mr. Odeen's retirement.
This year's Board nominees include the four Class III directors—Melody C. Barnes, Ellen Jewett, Arthur E. Johnson and Charles O. Rossotti. Each nominee is listed below along with the continuing directors, and you can find additional information under "Proposal 1: Election of Directors" beginning on page 6.

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Director Independence
 
Tenure
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Age Mix
 
Diversity
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67% of our Directors (8 of 12) are Women, Asian, Hispanic,
and/or African-American


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 Corporate Governance Highlights
Eleven of our 12 directors are independent and the Audit, Compensation, and Nominating and Corporate Governance Committees are 100% independent.
We provide for a majority voting standard in our bylaws for the election of directors in uncontested elections, with the requirement that any incumbent director nominee who does not receive a majority of the votes validly cast in an uncontested election tender his or her resignation, subject to acceptance by the Board of Directors.
Diverse Board of Directors in terms of gender, ethnicity, experience, and skills.
On average, our directors attended approximately 98% of the Board of Directors meetings and 97% of committee meetings.
The Board of Directors holds regular executive sessions of non-management directors.
The Board of Directors conducts an annual discussion on management succession planning.
We prohibit short sales and derivative transactions in our equity and hedging of our stock.
Equity awards include a provision for the recoupment of equity-based compensation in the event of misconduct leading to a financial restatement.
Our investor relations team and management regularly engage with current and potential stockholders.
No poison pill in place.
Executive officer and director stock ownership guidelines.
Annual Board and Committee evaluations and self-assessments.
We place restrictions on the number of other public company boards on which our directors may serve in order to prevent overboarding.

 Executive Compensation Highlights
We continue to utilize a partnership-style compensation model that fosters a culture of collaboration and long-term ownership mindset that encourages our executives to think and act in the best interests of the Company. The spirit of collective ingenuity is paramount to our success and underscores our commitment to inclusion, collaboration, and service.
We are a values-driven organization with a guiding purpose to empower people to change the world. Our executives are committed to bold thinking, holding themselves and those around them accountable to act with integrity, and realizing positive change in all the work we do. Our executive compensation program is intrinsically tied to our purpose and values. We believe our executives are motivated to act in the best interests of the Company with an emphasis on problem solving, passionate service, and collective ingenuity across markets, clients, and opportunities.
Together with our Compensation Committee, we are committed to designing a compensation program that aligns the interests of our executives with the long-term interests of our stockholders. We continuously seek to evolve our approach and stay connected with the views of our stockholders. Our compensation program links our executive rewards packages with the long-term interests of our stockholders and includes a long-term performance-based component to our program, where a portion of our executives’ compensation is tied to the achievement of multi-year performance goals. For more details on our compensation program, please see our discussion in the CD&A beginning with the Executive Summary on page 27.

Corporate Citizenship Highlights
During governmental fiscal year 2018, approximately $915.6 million was subcontracted to various small and small-disadvantaged businesses, representing approximately 67.2% of the total amount subcontracted.
Maintained six active mentor-protégé agreements with small businesses through various federal Mentor-Protégé programs.
Continued as a FIRST® (For Inspiration and Recognition of Science and Technology) Strategic Partner with multifaceted support spanning all FIRST programs, including employees serving as team mentors, event volunteers, and regional/affiliate advisors. FIRST is inspiring and developing future innovators, engineers, scientists, and technologists in grades K-12 in more than 85 countries.
Co-sponsored, with Kaggle and in partnership with the National Cancer Institute, the National Data Science Bowl, which focused on using algorithms and machine intelligence to better detect lung cancer, which strikes

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225,000 Americans every year and accounts for $12 billion in health care costs. Nearly 400 teams participated from around the world to develop detection algorithms for one of the most complex data sets ever used by Kaggle.
Together with Kaggle, presented the National Data Science Bowl, which focused on using algorithms and machine intelligence to automate a critical component of biomedical research, expediting life-saving research in the treatment of many diseases, from rare disorders to the common cold. Nearly 18,000 global participants submitted over 68,000 algorithms, collectively working an estimated 288,000 hours to automate the vital, but time-consuming, process of nuclei detection.
Our largest corporate financial contributions and pro bono consulting projects supported programs related to military families and veterans, STEM initiatives, and health causes. Employees logged more than 88,500 hours of volunteerism for community organizations and we provided more than $686,000 in pro bono consulting through our leadership development program.
Strategic partner to the U.S. Chamber of Commerce’s Hiring Our Heroes program, with primary focus areas in helping veterans explore careers in technical and defense fields and helping military spouses find meaningful employment.
Named in the top 10 Best for Vets by The Military Times 4 years running, and selected as a founding member of the VETS Index on the Nasdaq Composite, based on our military hiring awards and financial health indicators.
Hosted the inaugural Defense Communities Leadership Academy with Blue Star Families (BSF) and American Defense Communities and participated in sessions focused on harnessing data science to improve knowledge of the local military and military family landscape.
Continued a partnership with SEED SPOT, a nonprofit dedicated to helping entrepreneurs develop solutions to problems through incubator programs. Through sponsorship and by providing employees to serve as mentors, the firm focuses on improving veteran healthcare, supporting military families, and promoting women in STEM (science, technology, engineering, and mathematics) through new social impact initiatives.
Continued to disclose our greenhouse gas emissions and approach to carbon management on recognized international reporting platforms. Scored above both the sector average and the average for North America on both carbon disclosure and supplier engagement, the latter measuring a critical element of environmental impact management -- looking beyond our own actions and supporting a responsible supply chain.
Reached new heights in gender diversity at our highest levels of governance with the addition of two highly qualified female members to our Board of Directors, which is now more than 40% female.
Recognized by the Human Rights Campaign as a “Best Place to Work” for LGBTQ equality, receiving a perfect score on the Corporate Equality Index for the ninth year in a row.
Included in Fortune magazine’s “World’s Most Admired Companies” for the eighth consecutive year.
Contributed to disaster relief through matching donations to the Booz Allen Foundation and several leading disaster response organizations, which supported on-the-ground recovery efforts in communities where Booz Allen employees were most affected by hurricanes.
Supported employees serving as first responders through approval of 224 hours of Civic Responsibilities Leave for participation in disaster recovery efforts.

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PROPOSAL 1: ELECTION OF DIRECTORS
Board Structure
The Company currently has twelve directors divided into three classes: four in Class I, four in Class II, and four in Class III. The terms of office of the four Class III directors expire at the 2019 Annual Meeting of Stockholders.
Class III Election
The four nominees for election as Class III directors are listed below. If elected, the nominees for election as Class III directors will serve for a term of three years and until their successors are elected and qualify. Unless you instruct us on the proxy card to vote differently, we will vote signed, returned proxies FOR the election of such nominees. If for any reason any nominee cannot or will not serve as a director, we may vote such proxies for the election of a substitute nominee designated by the Board.
Class III Nominees
To be elected in an uncontested election, a nominee must receive a majority of the votes validly cast with respect to that nominee’s election at the annual meeting represented either in person or by proxy at the annual meeting. To be elected in a contested election, a nominee must receive the vote of a plurality of the votes validly cast at the annual meeting represented either in person or by proxy at the annual meeting. Any nominee who is an incumbent director and does not receive a majority of the votes cast in an election that is not a contested election must promptly tender his or her resignation contingent on the acceptance of that resignation by the Board to the chair of the Board following certification of the election results. The Nominating and Corporate Governance Committee and the Board believe that each Class III Nominee brings a strong and diverse set of skills and experiences to the Company, including significant government, public company, financial, and strategic experience, that will strengthen our Board's independent leadership and effectiveness with respect to our business and long-term strategy. The Class III Nominees are as follows:
Director
 
Principal Occupation, Business
Experience and Other Directorships Held

 
 
 
Melody C. Barnes
(Class III)
 
Ms. Barnes is the Co-Director for Policy and Public Affairs of the Democracy Initiative at the University of Virginia; she also serves as a professor of practice at the Miller Center of Public Affairs and a distinguished fellow in the School of Law. She is the Co-Founder of MB Squared Solutions, LLC and serves as a director of Ventas Inc., a real investment trust. From January 2009 to January 2012, Ms. Barnes served in the White House as Director of the Domestic Policy Council. In this role, she provided policy and strategic advice to President Obama and coordinated the domestic policy-making process for his administration. Before joining the White House, she served as the senior domestic policy advisor for then-Senator Obama’s 2008 presidential campaign. Ms. Barnes was the Executive Vice President for Policy at the Center for American Progress from 2005 to 2008 and Senior Fellow there from 2003 to 2005, and prior to that she was a principal in the Raben Group LLC. She also served as Chief Counsel to Senator Edward M. Kennedy on the Senate Judiciary Committee from 1998 to 2003 and General Counsel for him from 1995 to 1998.

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Age: 55
Director since: 2015
Independent


Committees:
 • Compensation
 • Nominating and Corporate Governance

Specific qualifications, experience, skills, and expertise include:
• Significant government experience and strong skills in public policy;
• Public company directorship; and
• Core business skills, including financial and strategic planning as well as leading not-for-profit organizations.




6



Ellen Jewett
(Class III)
 
Ms. Jewett has served as managing partner at Canoe Point Capital LLC, an investment firm focusing on early stage social ventures, since 2015. Prior to that position, she served as managing director and head of U.S. Government and Infrastructure for BMO Capital Markets covering airports and infrastructure banking from 2010 to 2015. Prior to that, Ms. Jewett spent more than 20 years at Goldman Sachs specializing in airport infrastructure financing, most recently serving as head of the public sector transportation group, and previously as head of the airport finance group. Ms. Jewett has served on the board of JetBlue since 2011 where she chairs the Governance and Nominating Committee and Fundamental Credit Opportunities (FCO) U.S. and Offshore Feeder Funds since 2016. She currently serves as emerita trustee of Wesleyan University and the Brearley School, having previously served in leadership positions on the board of trustees of both academic institutions.

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Age: 60
Director since: 2018
Independent


Committee:
 • Audit
Specific qualifications, experience, skills, and expertise include:

• Public company directorship and committee experience;
• Experience in domestic and international finance and talent management; and
• Core business skills, including financial and strategic planning.


Arthur E. Johnson
(Class III)
 
Mr. Johnson retired as Senior Vice President, Corporate Strategic Development of Lockheed Martin Corp. in 2009, a position he held since 1999. Mr. Johnson has over 20 years of senior leadership experience in the information technology and defense businesses. Mr. Johnson brings extensive IT management experience to the Board, having held senior positions at IBM, Loral Corporation, and Lockheed Martin. He serves on the board of directors of Eaton Corporation, plc since 2009, and as an independent trustee of the Fixed Income and Asset Allocation funds of Fidelity Investments since 2008. Mr. Johnson served as a director of Delta Airlines from 2005 to 2007, IKON Office Solutions Corporation from 1999 to 2008, and AGL Resources from 2002 to 2016.
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Age: 72
Director since: 2011
Independent


Committee:
 • Audit
Specific qualifications, experience, skills, and expertise include:

• Public company directorship and audit committee experience;
• Operating and management experience;
• Understanding of government contracting; and
• Core business skills, including financial and strategic planning.


7



Charles O. Rossotti
(Class III)
 
Mr. Rossotti has served as a Senior Advisor to Carlyle since June 2003. Prior to this position, Mr. Rossotti served as the Commissioner of the Internal Revenue Service from 1997 to 2002. Mr. Rossotti co-founded American Management Systems, Inc., an international business and information technology consulting firm in 1970, where he served at various times as President, Chief Executive Officer and Chairman of the Board until 1997. Mr. Rossotti served as a director for the AES Corporation since 2003 and as its Chairman until April 2018, Coalfire Systems Inc. since September 2015, Novetta Solutions LLC since March 2016 and Accelerated Learning Inc. since December 2018. Mr. Rossotti formerly served as a director of Merrill Lynch & Co., Inc., from 2004 to 2008, Bank of America Corporation from 2009 to 2013, Compusearch Software Systems from 2005 to 2010, Wall Street Institute from 2005 to 2010, Apollo Global from 2006 to 2012, Quorum Management Solutions from 2010 to 2014, Primatics Financial from 2011 to 2015, and Eci Software Solutions from 2014 to 2017.
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Age: 78
Director since: 2008
Independent


Committee:
 • Audit

 
Specific qualifications, experience, skills, and expertise include:

• Public company directorship and audit committee experience;
• Operating and management experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning; and
• Expertise in finance, financial reporting, compliance and controls, and global businesses.


The Board of Directors recommends a vote FOR
each of the Class III nominees.



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CONTINUING DIRECTORS
The eight directors whose terms will continue after the annual meeting and will expire at the 2020 annual meeting (Class I) or the 2021 annual meeting (Class II) are listed below.

Director
 
Principal Occupation, Business
Experience and Other Directorships Held
 
 
 
Ralph W. Shrader
(Class I)

 
Dr. Shrader is our Chair and has served in this position since 2008. He previously served as our Chief Executive Officer from 2008 to December 31, 2014 and as our President from 2008 to December 31, 2013. He has also served as Chair of Booz Allen since 1999 and as Chief Executive Officer of Booz Allen from 1999 to December 31, 2014. Dr. Shrader has been an employee of our Company since 1974. He is the seventh chair since our Company's founding in 1914 and has led our Company through a significant period of growth and strategic realignment. Dr. Shrader is active in professional and charitable organizations and was previously Chairman of the Armed Forces Communications and Electronics Association.
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Age: 74
Director since: 2008
Chair


Committee:
• Executive (Chair)
 
Specific qualifications, experience, skills, and expertise include:

• Operating and management experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning; and
• Deep understanding of our Company, its history, and culture.


Joan Lordi C. Amble
(Class I)
 
Ms. Amble was the Executive Vice President, Finance for the American Express Company from May 2011 to December 2011, and also served as its Executive Vice President and Corporate Comptroller from December 2003 until May 2011. Prior to joining American Express, Ms. Amble served as Chief Operating Officer and Chief Financial Officer of GE Capital Markets, a service business within GE Capital Services, Inc., overseeing securitizations, debt placement, and syndication, as well as structured equity transactions. From 1994 to March 2003, Ms. Amble served as vice president and controller for GE Capital and GE Financial Services. Ms. Amble is the President of JCA Consulting, LLC, and serves on the boards of directors of Zurich Insurance Group since April 2015, XM Radio Inc. since 2006, and the merged Sirius XM Holdings Inc. since 2008. In addition, she serves as an independent advisor to the Control and Risk Committee of the Executive Committee of the U.S. affiliate of Société Général, S.A. since October 2016 and has been a member of the Standing Advisory Group for the Public Company Accounting Oversight Board since 2014. Ms. Amble also served as a director at Brown-Forman Corporation from 2011 to 2016 and Broadcom Corporation from 2009 to 2011.
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Age: 66
Director since: 2012
Independent


Committee:
 • Audit

 
Specific qualifications, experience, skills, and expertise include:

• Public company directorship and audit committee experience;
• Operating and management experience;
• Core business skills, including financial and strategic planning; and
• Expertise in finance, financial reporting, compliance and controls, and global businesses.



9



Peter Clare
(Class I)
 
Mr. Clare is a Managing Director and Co-Chief Investment Officer of The Carlyle Group ("Carlyle"), a private equity firm, as well as Co-Head of its U.S. Buyout Group. Mr. Clare has been with Carlyle since 1992. Mr. Clare served as a director of Wesco Aircraft Holdings, Inc. from 2006 to 2012, ARINC Incorporated from 2007 to 2013, Pharmaceutical Product Development, LLC from 2011 to 2015, CommScope, Inc. from 2011 to 2015, Sequa Corporation from 2007 to 2016, and Signode Industrial from 2014 to 2018. Effective January 1, 2018, Mr. Clare joined the board of Carlyle Group Management LLC, the general partner of Carlyle. Mr. Clare also joined the board as a director of Nouryon in 2018 and Sedgwick and StandardAero in 2019.
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Age: 54
Director since: 2008
Independent


Committees:
• Compensation
• Nominating and Corporate Governance (Chair)

Specific qualifications, experience, skills, and expertise include:

• Operating experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning;
• Public company directorship and committee experience; and
• Expertise in finance, financial reporting, compliance and controls, and global businesses.

Michèle A. Flournoy
(Class I)
 
Ms. Flournoy is co-founder and managing partner of WestExec Advisors, a strategic advisory firm founded in 2017. Prior to her position, she served as the Under Secretary of Defense for Policy from 2009 to 2012. She serves on the board of Amida Technology Solutions and nonprofit boards of the Center for a New American Security (CNAS), a bipartisan think tank which she co-founded in 2007 and served as its Chief Executive Officer from 2014 to 2016, The Mission Continues, CARE, and the United States Naval Academy Foundation. Previously, Ms. Flournoy served on the board of directors of CSRA Inc. from 2015 to 2018, The MITRE Corporation from 2013 to 2017, Rolls Royce North America, Inc. from 2012 to 2015 and was a senior advisor at Boston Consulting Group from 2012 to 2017. Ms. Flournoy previously served as a member of the Defense Policy Board, the President's Intelligence Advisory Board and the CIA Director's External Advisory Board. She remains a member of the Council on Foreign Relations and the Aspen Strategy Group, and is a non-resident Senior Fellow at Harvard University’s Belfer Center for Science and International Affairs.

flournoy-michelea01.jpg
Age: 58
Director since: 2018
Independent


Committees:
 • Compensation





Specific qualifications, experience, skills, and expertise include:

• Significant government experience, particularly in national security and defense policies;
• Public company directorship and committee experience; and
• Core business skills, including financial and strategic planning as well as leading not-for-profit organizations.





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Director
 
Principal Occupation, Business
Experience and Other Directorships Held

 
 
 
Horacio D. Rozanski
(Class II)
 
Mr. Rozanski is our President and Chief Executive Officer and served as our Chief Operating Officer until January 1, 2015. Mr. Rozanski served as Chief Strategy and Talent Officer in 2010 and prior to that, Chief Personnel Officer of our Company from 2002 through 2010. Mr. Rozanski joined our Company in 1992 and became an Executive Vice President in 2009, our President on January 1, 2014, and our Chief Executive Officer on January 1, 2015. He serves on the board of directors of the United States Holocaust Memorial Museum's Committee on Conscience and as Vice Chair of the Corporate Fund for the John F. Kennedy Center for the Performing Arts.






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Age: 51
Director since: 2014


Committee:
 • Executive

 
Specific qualifications, experience, skills, and expertise include:
• Operating and management experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning; and
• Deep understanding of our Company, its history, and culture.



Ian Fujiyama
(Class II)
 
Mr. Fujiyama is a Managing Director of Carlyle as well as a member of the firm's Aerospace, Defense, and Government Services team.  In 1999, Mr. Fujiyama spent two years in Hong Kong and Seoul working with Carlyle's Asia buyout fund, Carlyle Asia Partners. He currently serves as a member of the board of directors of Dynamic Precision Group, Novetta Solutions LLC and NORDAM Group LLC. He served on the board of directors of ARINC Incorporated from 2007 to 2013.

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Age: 46
Director since: 2008
Independent


Committees:
 • Executive
 • Compensation


 
Specific qualifications, experience, skills, and expertise include:

• Operating experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning;
• Experience in mergers and acquisitions; and
• Expertise in finance, financial reporting, compliance and controls, and global businesses.



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Mark E. Gaumond
(Class II)
 
Mr. Gaumond has 35 years of experience working with senior management and audit committees of public and privately-held companies. He held senior positions with E&Y from 2002 to 2010, retiring from the firm as Senior Vice Chair for the Americas, and previously was a partner with a 27-year career at Andersen LLP. Mr. Gaumond has a BA from Georgetown University and an MBA from New York University. He is a member of the American Institute of Certified Public Accountants. He serves as a director of First American Funds since 2016, Rayonier Advanced Materials, Inc. since 2014, the Fishers Island Club since 2017, the Fishers Island Development Corporation since 1992, and the Walsh Park Benevolent Corporation since 1992. Mr. Gaumond formerly served as a director of Cliff's Natural Resources, Inc. from July 2013 to September 2014, Rayonier, Inc. from November 2010 to June 2014, and is a former trustee of The California Academy of Sciences.

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Age: 68
Director since: 2011
Independent


Committees:
• Audit (Chair)
• Executive
 
Specific qualifications, experience, skills, and expertise include:

• Expertise in finance, financial planning, and compliance and controls;
• Core business skills, including financial and strategic planning; and
• Public company audit committee experience.


Gretchen W. McClain
(Class II)
 
Ms. McClain was the founding President and Chief Executive Officer of Xylem, Inc. ("Xylem") from October 2011 to September 2013. She joined Xylem as the founding CEO in 2011 when it was formed and taken public from a spinoff of the water business of ITT Corporation ("ITT"). She joined ITT in 2005 as the President of the company's residential and commercial water business and served as the SVP and President of ITT's commercial businesses from 2008 to 2011. Ms. McClain has served in a number of senior executive positions at Honeywell Aerospace (formerly AlliedSignal), including VP and General Manager of the Business, General Aviation and Helicopters Electronics division, and VP for Engineering and Technology, as well as for Program Management in Honeywell Aerospace's Engines, Systems and Services Division. She also spent nine years with NASA and served as Deputy Associate Administrator for Space Development, where she played a pivotal role in the successful development and launch of the International Space Station Program as Chief Director of the Space Station and Deputy Director for Space Flight. Ms. McClain graduated from the University of Utah with a BS in Mechanical Engineering. She currently serves as a director of Ametek, Inc., Boart Longyear Limited, Hennessy Capital Acquisition Corp. IV, and J.M. Huber Corporation (a family-owned business), and previously served as a director of Xylem, Inc. from 2011 to 2013 and Con-Way Inc. from June 2015 to October 2015.



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Age: 56
Director since: 2014
Independent


Committees:
• Compensation (Chair)
• Nominating and Corporate Governance
Specific qualifications, experience, skills, and expertise include:

• Operating and management experience;
• Core business skills, including financial and strategic planning; and
• Public company directorship and audit committee experience.




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CORPORATE GOVERNANCE AND GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Our Board of Directors
The Board is responsible for providing governance and oversight over the strategy, risk, operations, and management of the Company. The primary focus of the Board is promoting stockholder value by fostering the long-term success of the Company. The Board is responsible for supporting and overseeing management, to which the Board has delegated the responsibility to manage the day-to-day strategy and operations of the Company.
The Board generally holds four regular meetings per year, and special meetings as necessary. The Board meets in executive session during each regular meeting; non-management directors also typically meet in executive sessions during each regular meeting. Consistent with the Company’s Corporate Governance Guidelines, Mr. Clare was appointed by the non-management directors to serve as the Presiding Director on May 23, 2013. The Presiding Director presides over executive sessions at which the Chair is not present. At least annually, independent directors also meet in executive session during a regular Board meeting.
The Board and its committees establish annual calendars of activities to guide the development of their agendas during the year.  All directors are invited to propose agenda topics when the annual calendars are established as well as in advance of each regular Board meeting. In addition, directors are encouraged to raise topics that are not on a meeting agenda or suggest topics for future agendas.  Each director is provided written materials in advance of each meeting, and the Board and its committees provide feedback to and make requests of management at each of their meetings.
Corporate Governance Guidelines
As noted above, the Board has adopted Corporate Governance Guidelines. The Board and the Nominating and Corporate Governance Committee are responsible for reviewing and amending these guidelines as they deem necessary and appropriate. The Nominating and Corporate Governance Committee is responsible for overseeing the system of corporate governance of the Company. The Corporate Governance Guidelines are available without charge on the Investor Relations portion of our website, www.boozallen.com.
Codes of Conduct and Ethics
Our website also includes the Company’s Code of Business Ethics and Conduct, which is applicable to our directors and all employees, and the Company's Code of Ethics for Senior Financial Officers, each of which was adopted by the Board and each of which may be accessed without charge. The Code of Ethics for Senior Financial Officers applies to the Company’s Chief Executive Officer, Chief Financial Officer, Controller and any other persons performing similar functions. We will disclose on the Investor Relations portion of our website any amendments to the Code of Business Ethics and Conduct or Code of Ethics for Senior Financial Officers and any waiver granted to an executive officer or director under these codes. In fiscal year 2019, no such waivers were sought or granted. The information found on the Company's website is not part of this proxy statement nor is it incorporated into any other filings the Company makes with the Securities and Exchange Commission (the "SEC").
Board Meetings and Attendance
Directors are expected to attend each Board meeting, each meeting of the committees on which they serve, and the Annual Meeting of Stockholders. During fiscal year 2019, the Board held four meetings and acted by written consent. Each of our directors who served as a director during fiscal 2019 attended 75% or more of the aggregate total number of meetings of the Board and the Board Committees on which he or she served that were held during the time he or she was a director in fiscal 2019. The average director attendance was approximately 98% and 97%, respectively, for Board and Board committee meetings during fiscal 2019. All directors who served at the time of our 2018 Annual Meeting of Stockholders attended that meeting.


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Board Leadership Structure
As noted in our Corporate Governance Guidelines, the Board has no policy with respect to the separation of the offices of Chair and Chief Executive Officer. The Board believes that it is important to retain its flexibility to allocate the responsibilities of the offices of the Chair and Chief Executive Officer in any way that is in the best interests of the Company at a given point in time. The Board has concluded that it is currently in the best interest of the stockholders for Dr. Shrader to continue his service as Chair, retaining his four decades of experience at the Company with a focus on continuing to build stockholder value, managing risk, and supporting the Company's executive management. In his role as President and Chief Executive Officer, Mr. Rozanski will continue to work closely with the Board in establishing the overall strategy and direction of the Company, and to effectively communicate our strategy to our stockholders, clients, and employees.
Succession Planning and Talent Reviews

The Board believes that executive management succession planning is one of its most important responsibilities. Accordingly, the Board regularly undertakes executive management succession planning and talent reviews. On an annual basis, the Chair leads the Board in an in-depth discussion concerning Chief Executive Officer succession and the Chief Executive Officer leads the Board in a discussion concerning senior management succession. Chief Executive Officer succession is also discussed by the Board in an executive session outside the presence of any management directors. Management also updates the Board on key talent indicators such as recruiting and retention for the overall employee population throughout the year.
Risk Oversight

The Board and its committees play an important role in overseeing the Company's risk management processes, and risk management considerations form a regular element of the Board's dialogue with management. One of the primary tools that facilitates the Board’s oversight of risk (and actions being taken to mitigate it) is the Company’s Enterprise Risk Management Framework, or ERM Framework. Under the leadership of our President and Chief Executive Officer, the ERM Framework is designed to enable effective and efficient identification of risks and facilitate the evaluation of risks as an integral part of decision making. As part of the ERM Framework, the Company:

Identifies and classifies into tiers the top risks facing the business;
Discusses and evaluates the Company’s risk appetite with respect to different types of operational risk; and
Develops action plans to mitigate and monitor risk.

The process for regularly updating the ERM Framework enables effective and efficient identification of risks and facilitates the evaluation of risks as an integral part of decision making. Under the ERM Framework, our President and Chief Executive Officer leads an annual risk identification, analysis, and mitigation discussion with the Board and prepares a quarterly update for the Board of our enterprise risks. In addition to updates provided through the ERM Framework, the Board receives other information and briefings as part of its risk oversight role. During the course of the year, the lead management official with responsibility for each of our major markets provides a comprehensive overview of the market, including risks and challenges. The Board is also regularly updated by other elements of management, including the Chief Financial Officer, Chief Legal Officer and Chief Administrative Officer concerning significant risks facing the Company and processes that have been implemented to mitigate these risks.

In addition to this dialogue between management and the entire Board, the Board's committees have more specific roles concerning elements of the Company's risk management processes.

Audit Committee: The Audit Committee is regularly updated by the Chief Legal Officer, Chief Ethics and Compliance Officer, Director of Internal Audit, Chief Information Officer, and Chief Information Security Officer and receives regular reports concerning the status of the Company's ethics and compliance program, internal controls over financial reporting and other operational compliance areas, and significant communications from the Company's regulators. The Audit Committee also leads the Board's efforts with respect to the oversight of cybersecurity risk.

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Compensation Committee: The Compensation Committee is responsible for overseeing risks related to the Company's executive compensation policies and practices.
Nominating and Corporate Governance Committee: The Nominating and Corporate Governance Committee oversees risks arising from the Company's governance processes.
Annual Board Performance Assessment

The Board and each of the Audit, Compensation, and Nominating and Corporate Governance committees perform an annual assessment of their operations and effectiveness, and set goals for the future. The core of this process involves our Secretary interviewing each director individually. The comments of the directors are compiled and presented, as applicable, to the Chair, the full Board or the appropriate committee. The key matters to be addressed are identified, and these matters become part of future agendas for the Board and its committees.
Board Independence
Eleven of our twelve current directors are independent under our Corporate Governance Guidelines and applicable New York Stock Exchange ("NYSE") listing standards. In order for a director to be considered independent, the Board must determine, after consideration of all relevant facts and circumstances, that he or she has no material relationship with the Company directly or as a partner, stockholder, or officer of an organization that has a relationship with the Company. The independence criteria adopted by the Board are set forth in the Company's Corporate Governance Guidelines.
The Board has determined that Messrs. Clare, Fujiyama, Gaumond, Johnson, Rossotti, and Shrader, and Mses. Amble, Barnes, Flournoy, Jewett, and McClain are independent under the independence criteria for directors established by the NYSE and the independence criteria adopted by the Board. As a result, we currently have a majority of independent directors and satisfy the applicable rule of the NYSE. Mr. Rozanski is an employee of the Company and is not independent under the NYSE listing standards or our Corporate Governance Guidelines, which can be found in the investor relations portion of our website, www.boozallen.com.
Selection of Nominees for Election to the Board
The Nominating and Corporate Governance Committee recommends to the Board appropriate criteria for the selection of new directors based on the strategic needs of the Company and the Board, and periodically reviews the criteria adopted by the Board and, if deemed desirable, recommends to the Board changes to such criteria. The Board seeks members from diverse backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. While the Board does not have a formal policy with respect to diversity, it is a critical factor the Nominating and Corporate Governance Committee considers when recommending director nominees to the Board. The Nominating and Corporate Governance Committee defines diversity in an expansive manner to be reflective of the diversity of the Company and representative of the clients it serves. Exceptional candidates who do not meet all of these criteria may still be considered. The Board seeks director candidates who have experience in positions with a high degree of responsibility and are, or have been, leaders in the companies or institutions with which they are, or have been, affiliated, and are selected based upon the contributions they can make to the Company.
In fiscal 2019, upon the recommendation of the Nominating and Corporate Governance Committee, the Board appointed Michèle A. Flournoy and Ellen Jewett as new members of the Board, effective October 24, 2018 and October 25, 2018, respectively. Mses. Flournoy's and Jewett’s diverse backgrounds in government, technology, and financial services and distinguished expertise in national security and capital markets, respectively, bring new and valuable perspectives on essential issues for our clients, business, and industry. For more information regarding Mses. Flournoy and Jewett, please see descriptions of their backgrounds under "Continuing Directors" on page 9 and "Proposal 1: Election of Directors — Class III Nominees" on page 6, respectively.
Our Commitment to Board Diversity
Consistent with the Company's long-standing commitment in this regard, the Nominating and Corporate Governance Committee is focused on enhancing the diversity of the Board and works actively to achieve this goal, as reflected below:

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Women
Hispanic
African-American
Asian
No. of Directors
5
1
2
1
% of Directors
42%
8%
17%
8%
Board Tenure
We believe that Board tenure diversity is important and directors with many years of service provide the Board with a deep knowledge of our Company, while newer directors lend fresh perspectives. The chart below reflects the Board tenure of our current directors, which on average is approximately seven years.
Board Tenure is Diversified

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Process for Stockholders to Recommend Director Nominees
Stockholders wishing to nominate a candidate for director must provide written notice in care of the Secretary to 8283 Greensboro Drive, McLean, Virginia 22102, not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting. Our bylaws set forth the requirements for direct nomination of an individual by a stockholder for election to the Board.
There is no difference in the manner in which the Nominating and Corporate Governance Committee evaluates a nominee for director designated by our Chief Executive Officer or recommended by a stockholder.
Director Orientation and Continuing Education

New directors are provided a multi-phase orientation generally timed to coincide with our Board meetings as part of our effort to integrate them in their role as directors and familiarize them with the Company. Orientation sessions are led by members of management and are focused on various elements of our business strategy, client service offerings, internal business operations, and corporate governance, among other areas. During the course of the year, representatives of management brief the Board on topics designed to provide directors a deeper understanding of various aspects of our business such as applicable legal developments, ethics and compliance programs, and the evolving regulatory environment. In addition, the Board holds an annual business strategy session with management. Directors are also encouraged to participate in continuing education programs to better understand and execute their duties and responsibilities.
Communications with the Board
Stockholders, or other interested third parties, who wish to contact our Board may send written correspondence, in care of the Secretary, to 8283 Greensboro Drive, McLean, Virginia 22102. Communications may be addressed to an individual director, to the non-management directors as a group, or to the Board as a whole, marked as confidential or otherwise. Communications not submitted confidentially, which are addressed to directors that discuss business or other matters relevant to the activities of our Board, will be preliminarily reviewed by the office of the Secretary and then distributed either in summary form or by delivering a copy of the communication. Communications marked as confidential will be distributed, without review by the office of the Secretary, to the director, or group of directors, to whom they are addressed. With respect to other correspondence received by the Company that is addressed to

16



one or more directors, the Board has requested that the following items not be distributed to directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, service complaints and inquiries, résumés and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations, and advertisements.
Board Committees
Our Board has four standing committees: an Executive Committee, an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. The charter of each committee is available without charge on the Investor Relations portion of our website, www.boozallen.com.
The following chart identifies the members and chair of each standing committee, as well as related information.
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The following is a brief description of our committees.
The Executive Committee
Our Executive Committee is responsible, among its other duties and responsibilities, for assisting our Board in fulfilling its responsibilities. Our Executive Committee is responsible for approving certain corporate actions and transactions, including acquisitions of assets other than in the ordinary course of business. The members of our Executive Committee are Dr. Shrader (Chair) and Messrs. Fujiyama, Gaumond, and Rozanski. The Executive Committee acted by written consent during fiscal year 2019.
The Audit Committee
Our Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications and independence of our independent registered public accounting firm, the effectiveness of our internal control over financial reporting, and the performance of our internal audit function and independent registered public accounting firm. Our Audit Committee reviews and assesses the qualitative aspects of our financial reporting, our processes to manage business and financial risks, and our compliance with significant applicable legal, ethical, and regulatory requirements. Our

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Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm.
The members of our Audit Committee are Messrs. Gaumond (Chair), Johnson, and Rossotti, and Mses. Amble and Jewett, each of whom is an independent director as required by NYSE listing standards and Rule 10A-3 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Board has determined that each member of our Audit Committee is financially literate and that Messrs. Gaumond and Rossotti and Mses. Amble and Jewett are each an “audit committee financial expert” as such term is defined under Item 407(d)(5) of Regulation S-K promulgated under the Securities Act of 1933, as amended, or the Securities Act.
The Audit Committee met four times during fiscal year 2019.
The Compensation Committee
Our Compensation Committee is responsible for, among its other duties and responsibilities, reviewing and approving all forms of compensation to be provided to, and employment letter agreements with, the executives and directors of our Company and its subsidiaries (including the Chief Executive Officer), establishing and reviewing the general compensation philosophy of our Company and its subsidiaries, and reviewing, approving, and overseeing the administration of the employee benefits plans of our Company and its subsidiaries.
The members of our Compensation Committee are Messrs. Clare, and Fujiyama, and Mses. Barnes, Flournoy and McClain (Chair), each of whom is an independent director as required by NYSE listing standards. Upon Mr. Odeen's retirement as Chair from the Compensation Committee on January 31, 2019, Ms. McClain was appointed Chair. The Compensation Committee charter requires that at least two members of the Compensation Committee must satisfy the requirements of “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. Each of the members currently satisfies these requirements.
The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as the Compensation Committee may deem appropriate, provided that the subcommittees are composed entirely of directors satisfying the independence standards then applicable to the Compensation Committee generally.
The Compensation Committee has not engaged a compensation consultant; however, the Compensation Committee is briefed by management, which consults with Korn Ferry Hay Group, or KFHG. The Company engaged KFHG to provide market assessments and recommendations on the Company’s director compensation and assist management with compensation decisions regarding our named executive officers, executive compensation philosophy and strategy, and other matters related to the Company’s long-term performance plan as well as insight related to the Company’s compensation disclosure in the proxy statement. In addition, KFHG provided other consulting services. The aggregate fees paid to KFHG for services related to executive compensation and other consulting services were $435,577 and $1,436,881, respectively, for fiscal year 2019. The Compensation Committee assessed the independence of KFHG and concluded that KFHG's work for the Company did not raise any conflicts of interest.
Each of our executive officers, who collectively comprise our Leadership Team, participates in the discussion and consideration of compensation to be awarded to all executives. See “Compensation Discussion and Analysis—Setting Executive Compensation.”
The Compensation Committee met five times during fiscal year 2019 and also acted by written consent.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is responsible for, among its other duties and responsibilities, identifying and recommending candidates to the Board for election to our Board (including candidates proposed by stockholders), reviewing the composition of the Board and its committees, developing and recommending to the Board corporate governance guidelines that are applicable to us, and overseeing Board and Board committee evaluations.
The members of our Nominating and Corporate Governance Committee are Mr. Clare (Chair), and Mses. Barnes and McClain, each of whom is an independent director as required by NYSE listing standards.

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The Nominating and Corporate Governance Committee met four times during fiscal year 2019 and also acted by written consent.
Director Compensation
Directors who are employed by us do not receive any additional compensation for their services as directors. The Compensation Committee reviews director compensation on an annual basis. In August 2018, with assistance from KFHG, the Committee reviewed director compensation data for the peer group used for benchmarking executive compensation and the general market. Based on that review, the Compensation Committee approved a $10,000 increase in the annual retainer and a $30,000 increase in the annual equity award. The Compensation Committee did not make any changes to the additional retainers for the Audit and Compensation Committee Chairs.
Fiscal Year 2019 Compensation: Director compensation for fiscal year 2019 included the following:
Component
Annual Amount
Annual Board Chair Retainer
$300,000
Annual Board Retainer (non-Chair)
$100,000
Annual Equity Award
$150,000
Audit Committee Chair Additional Retainer
$30,000
Compensation Committee Chair Additional Retainer
$15,000
The annual equity awards are granted in the form of restricted stock under our Second Amended and Restated Equity Incentive Plan, which we refer to as our Equity Incentive Plan.  Half of the annual award vests approximately six months from the date of grant on January 31 of the following year, and the other half vests on July 31 following the first vesting date. Directors may also elect to receive all or a portion of their annual retainer and any additional payments for service as a committee chair in the form of restricted stock.  Our directors do not receive additional fees for attending Board or committee meetings.
Director Compensation Table
 
Name
 
Fees Earned
($)
 
 
Stock
Awards
($)(1)(14)
 
 
Total
($)
Joan Lordi C. Amble
 
100,000(2)
 
 
150,002(2)
 
 
250,002

Melody C. Barnes
 
100,000(3)
 
 
150,037(3)
 
 
250,037

Peter Clare
 
100,000(4)
 
 
150,014(4)
 
 
250,014

Michèle A. Flournoy
 
76,986(5)
 
 
115,488(5)
 
 
192,474

Ian Fujiyama
 
100,000(6)
 
 
150,014(6)
 
 
250,014

Mark E. Gaumond
 
130,000(7)
 
 
180,025(7)
 
 
280,025

Ellen Jewett
 
76,712(8)
 
 
115,103(8)
 
 
191,815

Arthur E. Johnson
 
100,000(9)
 
 
150,037(9)
 
 
250,037

Gretchen W. McClain
 
107,562(10)
 
 
150,037(10)
 
 
257,599

Philip A. Odeen
 
115,000(11)
 
 
150,037(11)
 
 
265,037

Charles O. Rossotti
 
100,000(12)
 
 
150,014(12)
 
 
250,014

Ralph W. Shrader
 
300,000(13)
 
 
150,037(13)
 
 
450,037

 
(1)
This column represents the grant date fair value of the stock awards granted to our directors in fiscal year 2019. Where the stock awards were the result of voluntary elections to receive cash retainers in stock, the value reflected in the Stock Awards column represents only the excess of the fair market value of the stock awards over the cash retainer amount paid if in the form of stock. The aggregate fair value of the awards was computed in accordance with FASB ASC Topic 718 using the valuation methodology and assumptions set forth in Note 19 to our financial statements for the fiscal year ended March 31, 2019, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by the director.
(2)
Ms. Amble elected to receive half of her annual retainer in the form of restricted stock, and was granted a total of 4,215 shares of restricted stock in lieu of the annual retainer and for her annual equity grant. The grant date fair market value of the shares was $200,002, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.

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(3)
Ms. Barnes elected to receive her annual retainer in the form of cash, and was granted a total of 3,162 shares of restricted stock for her annual equity grant. The grant date fair market value of the shares was $150,037, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(4)
Mr. Clare elected to receive his annual retainer in the form of restricted stock, and was granted a total of 5,269 shares of restricted stock in lieu of his annual retainer and for his annual equity grant. The grant date fair market value of the shares was $250,014, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(5)
Ms. Flournoy elected to receive her pro-rated annual retainer in the form of cash, and was granted a total of 2,401 shares of restricted stock for her annual equity grant. The grant date fair market value of the shares was $115,488 based on the $48.10 closing price of our stock on the November 1, 2018 grant date.
(6)
Mr. Fujiyama elected to receive his annual retainer in the form of restricted stock, and was granted a total of 5,269 shares of restricted stock in lieu of his annual retainer and for his annual equity grant. The grant date fair market value of the shares was $250,014, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(7)
Mr. Gaumond elected to receive his annual retainer in the form of cash and his additional payment for service as the chair of the Audit Committee in the form of restricted stock, and was awarded a total of 3,794 shares of restricted stock in lieu of $30,000 for the chair retainer and for his annual equity grant. The grant date fair market value of the shares was $180,025, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(8)
Ms. Jewett elected to receive her pro-rated annual retainer in the form of cash, and was granted a total of 2,393 shares of restricted stock for her annual equity grant. The grant date fair market value of the shares was $115,103 based on the $48.10 closing price of our stock on the November 1, 2018 grant date.
(9)
Mr. Johnson elected to receive his annual retainer in the form of cash, and was awarded 3,162 shares of restricted stock for his annual equity grant. The grant date fair market value of the shares was $150,037, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(10)
Ms. McClain elected to receive her annual retainer in the form of cash and her additional prorated payment for service as the chair of the Compensation Committee following Mr. Odeen's service in cash. She was awarded a total of 3,162 shares of restricted stock in lieu of the annual retainer and for her annual equity grant. The grant date fair market value of the shares was $150,037, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(11)
Mr. Odeen elected to receive his annual retainer and his additional payment for service as the chair of the Compensation Committee in the form of cash. He was awarded a total of 3,162 shares of restricted stock for his annual equity grant. The grant date fair market value of the shares was $150,037, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(12)
Mr. Rossotti elected to receive his annual retainer in the form of restricted stock, and was granted a total of 5,269 shares of restricted stock in lieu of the annual retainer and for his annual equity grant. The grant date fair market value of the shares was $250,014, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(13)
Dr. Shrader elected to receive his annual retainer as Chair in the form of cash, and was awarded 3,162 shares of restricted stock for his annual equity grant. The grant date fair market value of the shares was $150,037, based on the $47.45 closing price of our stock on the August 2, 2018 grant date.
(14)
The following table sets forth the aggregate number of equity awards outstanding at the end of fiscal year 2019.
 
Equity Awards for Service as a Director
 
Name
 
 
Unvested Restricted Stock(a)
Joan Lordi C. Amble
 
 
2,108

Melody C. Barnes
 
 
1,581

Peter Clare
 
 
2,635

Michèle A. Flournoy
 
 
1,201

Ian Fujiyama
 
 
2,635

Mark E. Gaumond
 
 
1,897

Ellen Jewett
 
 
1,197

Arthur E. Johnson
 
 
1,581

Gretchen W. McClain
 
 
1,581

Philip A. Odeen (b)
 
 

Charles O. Rossotti
 
 
2,635

Ralph W. Shrader
 
 
1,581

 
(a)
The shares of restricted stock in this column all vest on July 31, 2019.
(b)
1,581 unvested shares of restricted stock in respect of Mr. Odeen's fiscal year 2019 annual equity grant were forfeited upon his retirement from the Board.


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Director Ownership Guidelines
Equity ownership guidelines for all of our non-employee directors are in place to further align their interests to those of our stockholders. Each of our non-employee directors has five years from the date of commencement of his/her service on the Board to achieve equity ownership with a value equivalent to five times his/her annual retainer. In calculating a director’s ownership, Class A common stock, and vested in-the-money options and vested and unvested restricted stock issued under the Equity Incentive Plan will be considered owned by the non-employee director. Each of our directors who has served on the Board for five years or more has regularly exceeded and currently exceeds the equity ownership guidelines. For a description of the guidelines applicable to executive officers, see our CD&A beginning on page 27.


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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The current members of our Compensation Committee are Messrs. Clare, and Fujiyama, and Mses. Barnes, Flournoy, and McClain. No member of our Compensation Committee serves as a member of the board or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

22




SECURITY OWNERSHIP INFORMATION
Security Ownership of Directors and Executive Officers
The following table indicates information as of May 23, 2019 regarding the beneficial ownership of our Class A common stock by each of our directors, each of the named executive officers, and all of our directors and executive officers as a group. 
The percentages shown are based on 140,030,725 shares of Class A common stock outstanding as of May 23, 2019. In August 2014, we converted all issued and outstanding shares of Class B non-voting common stock and Class C restricted common stock into shares of Class A common stock on a one-for-one basis. Class A common stock is entitled to one vote per share on all matters voted on by our stockholders.
The amounts and percentages owned are reported on the basis of the SEC’s rules governing the determination of beneficial ownership of securities. The SEC’s rules generally attribute beneficial ownership of securities to each person who possesses, either solely or shared with others, the voting power or investment power, which includes the power to dispose of those securities. The rules also treat as outstanding all shares of capital stock that a person would receive upon exercise of stock options or warrants held by that person that are immediately exercisable or exercisable within 60 days. These shares are deemed to be outstanding and to be beneficially owned by the person holding those options for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Under these rules, one or more persons may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities to which such person has no economic interest. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Name
 
Shares Beneficially Owned
 
Percentage of Class
Directors and nominees
 
 
 
 
Joan Lordi C. Amble
 
36,046
 
*
Melody C. Barnes
 
12,596
 
*
Peter Clare
 
25,121
 
*
Michèle A. Flournoy
 
2,401
 
*
Ian Fujiyama
 
30,121
 
*
Mark E. Gaumond
 
46,764
 
*
Ellen Jewett
 
2,393
 
*
Arthur E. Johnson
 
27,683
 
*
Gretchen W. McClain
 
21,272
 
*
Charles O. Rossotti
 
110,287
 
*
Horacio D. Rozanski
 
646,604(1)
 
*
Dr. Ralph W. Shrader
 
1,371,089(2)
 
*
Other named executive officers
 
 
 
 
Karen M. Dahut
 
208,722(3)
 
*
Lloyd W. Howell, Jr.
 
227,015(4)
 
*
Nancy J. Laben
 
50,426(5)
 
*
Susan L. Penfield
 
98,637(6)
 
*
All directors and executive officers as a group (23 persons)(7)
 
3,644,893
 
2.60%
 *
Represents beneficial ownership of less than 1%.

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(1)
Includes 116,504 shares that Mr. Rozanski has the right to acquire through the exercise of options and 6,207 shares issuable upon settlement of restricted stock units.
(2)
Dr. Shrader shares investment power and voting power with his wife, Mrs. Janice W. Shrader, for 1,366,090 shares in the Ralph W. Shrader Revocable Trust.
(3)
Includes 111,104 shares that Ms. Dahut has the right to acquire through the exercise of options and 4,318 shares issuable upon settlement of restricted stock units.
(4)
Includes 21,104 shares that Mr. Howell has the right to acquire through the exercise of options and 4,318 shares issuable upon settlement of restricted stock units.
(5)
Includes 26,702 shares that Ms. Laben has the right to acquire through the exercise of options and 1,727 shares issuable upon settlement of restricted stock units.
(6)
Includes 81,596 shares that Ms. Penfield has the right to acquire through the exercise of options and 3,238 shares issuable upon settlement of restricted stock units.
(7)
Includes 543,593 shares that the directors and executive officers, in aggregate, have the right to acquire through the exercise of options and 35,746 shares issuable upon settlement of restricted stock units.
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to any person known to us to be the beneficial owner of more than 5% of our Class A common stock. 
Name and Address
 
Shares Beneficially Owned
 

Percentage of Class
Blackrock, Inc. (1)
55 East 52nd Street
New York, NY 10055
 
8,572,064
 
6.12%
T. Rowe Price Associates, Inc. (2)
100 E. Pratt Street
Baltimore, Maryland 21202
 
14,816,734
 
10.58%
The Vanguard Group (3)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
 
15,216,765
 
10.87%
(1)
Blackrock, Inc. has filed with the Securities and Exchange Commission a Schedule 13G dated February 7, 2019, which reports the beneficial ownership of 8,572,064 shares of Class A common stock by it as of December 31, 2018. As reported in the Schedule 13G, Blackrock, Inc. had sole voting power with respect to 7,524,502 shares of our Class A common stock and sole dispositive power with respect to 8,572,064 shares of our Class A common stock.
(2)
T. Rowe Price Associates, Inc. has filed with the Securities and Exchange Commission a Schedule 13G/A dated May 10, 2019, which reports the beneficial ownership of 14,816,734 shares of Class A common stock by it as of April 30, 2019. As reported in the Schedule 13G/A, (i) T. Rowe Price Associates, Inc. had sole voting power with respect to 3,059,872 shares of our Class A common stock and T. Rowe Price New Horizons Fund, Inc. had sole voting power with respect to 7,834,645 shares of our Class A common stock and (ii) T. Rowe Price Associates, Inc. had sole dispositive power with respect to 14,816,734 shares of our Class A common stock.
(3)
The Vanguard Group has filed with the Securities and Exchange Commission a Schedule 13G/A dated February 11, 2019, which reports the beneficial ownership of 15,216,765 shares of Class A common stock by it as of December 31, 2018. As reported in the Schedule 13G/A, The Vanguard Group had sole voting power with respect to 77,096 shares of our Class A common stock, sole dispositive power with respect to 15,136,025 shares of our Class A common stock, shared voting power with respect to 17,810 shares of our Class A common stock and shared dispositive power with respect to 80,740 shares of our Class A common stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports filed by the Company’s directors, executive officers, and beneficial holders of 10% or more of our outstanding shares, and upon representations from those persons, the Company believes that all reports required to be filed by the Company’s reporting persons during fiscal year 2019 were filed on or prior to their respective due dates.


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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures for Related Person Transactions
We adopted a written related person transactions policy pursuant to which related persons, namely our executive officers, directors, and principal stockholders, and their immediate family members, are not permitted to enter into certain transactions, or materially modify or amend an ongoing transaction, with us, in which the amount involved exceeds $120,000, without the consent of our Audit Committee or any designated member of the Audit Committee. Any request for us to enter into or materially modify or amend certain such transactions is required to be presented to our Audit Committee for review, consideration, and approval. All of our directors and executive officers are required to report to our Audit Committee any such related person transaction. In approving or rejecting the proposed transaction, our Audit Committee will take into account, among other factors it deems appropriate, whether the proposed related person transaction is on terms at least as favorable as terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the related person’s interest in the transaction and, if applicable, the impact on a director’s independence. Under the policy, if we should discover related person transactions that have not been approved, our Audit Committee will be notified and will determine the appropriate action, including ratification, rescission, or amendment of the transaction.
Related Person Transactions
Indemnification Agreements
We have entered into indemnification agreements with each of our directors and executive officers pursuant to which we have agreed to indemnify such individuals against certain liabilities arising out of service as a director or officer of the Company and its subsidiaries. The indemnification agreements provide our directors and executive officers with contractual rights to the indemnification and expense advancement rights provided under our third amended and restated bylaws, as well as contractual rights to additional indemnification as provided in the indemnification agreements.
The Acquisition
In connection with the acquisition of Booz Allen Hamilton by Carlyle, our current and former executive officers (or their related family trusts) received a combination of current and deferred cash consideration as well as stock and options in Booz Allen Holding. Of the overall cash consideration, $158.0 million was structured as an interest in the deferred payment obligation and $80.0 million was deposited into escrow to fund certain purchase price adjustments, future indemnification claims under the merger agreement and for certain other adjustments. The remainder of the cash consideration was paid on the closing date as part of the acquisition. The current and former executive officers (or their related family trusts) receive their pro rata share of any payments of the deferred payment obligation and any release of funds held in escrow to selling stockholders.
As of March 31, 2019, there was approximately $81.3 million of the deferred payment obligation outstanding, which includes accrued interest of approximately $1.3 million. Remaining potential claims outstanding that may be indemnified under the deferred payment obligation relate to former officers and stockholders’ suits that are still in litigation. The ultimate value of our current and former executive officers’ (or their related family trusts’) interests in the deferred payment obligation will not be known until all such matters are resolved.
Other Relationships

Bryan E. Shrader, a Vice President at the Company, is the son of Dr. Ralph Shrader, our former Chief Executive Officer and current Chair of the Board. He received a base salary of $245,000, a cash bonus of $78,300, and retirement contributions of $14,400 in fiscal year 2019. He also received three grants of restricted stock units in fiscal year 2019. The first grant was for 605 restricted stock units with a grant date fair value of $24,974.40, the second grant was for 195 restricted stock units with a grant date fair value of $8,695.05, and the third grant was for 1,562 restricted stock units with a grant date fair value of $74,960.38. In addition, he received a cash anniversary award of $3,500. Mr. Shrader also participates in the Company’s other benefit programs on the same

25



basis as other employees at the same level. Mr. Shrader continues to be employed by us and received a salary increase to $260,000 at the start of fiscal year 2020.

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Discussion and Analysis (CD&A), together with the compensation tables and related disclosures, provides a narrative of our executive compensation philosophy and programs as reviewed and determined by the Compensation Committee of the Board of Directors.

At Booz Allen, our purpose is to empower people to change the world. Our leadership philosophy and partnership culture are foundational to how we drive transformation and guide our people to solve our client's toughest challenges.

Our executive compensation strategy is uniquely designed to:

Deliver competitive compensation tied to long-term shareholder value creation;
Attract and retain top talent from across the global marketplace who will continue to propel us forward for the future;
Motivate and reward executives with exceptional ability to meet and exceed the demands of our clients;
Infuse an ownership mindset to build sustainable growth and value; and
Reinforce our partnership-style culture which differentiates our ability to come to market as an institution rather than as individuals, foster a culture of collaboration among our leaders, and encourage rapid and efficient deployment of our people across clients and opportunities.

The tenure of our executive team is a testament to the team's long-standing commitment to the Company and its long-term business goals. Our named executive officers for fiscal year 2019 were:
horacio1.jpg
howelllloyd1.jpg
karendahut6.jpg
nancylaben.jpg
penfield-susan.jpg
Horacio D. Rozanski
Lloyd W. Howell, Jr.
Karen M. Dahut
Nancy J. Laben
Susan L. Penfield
President and
Chief Executive Officer
Executive Vice President, Chief Financial Officer and Treasurer
Executive Vice President
Executive Vice President,
Chief Legal Officer and Secretary
Executive Vice President, Chief Innovation Officer
Executive Tenure: 19 years
Total Tenure: 26 years
Executive Tenure: 18 years
Total Tenure: 30 years

Executive Tenure: 14 years
Total Tenure: 16 years

Executive Tenure: 5 years
Total Tenure: 5 years

Executive Tenure: 16 years
Total Tenure: 24 years

(Tenure as executive and total tenure calculated as number of full years completed as of the last day of fiscal year 2019.)

Executive Summary
Company Performance and Highlights
Delivering Significant Returns to Stockholders
In fiscal year 2019, our staff and leaders led the Company to deliver record performance for fiscal year revenue and earnings, increased headcount by nearly six percent, and generated solid backlog growth. This strong performance has resulted in significant returns to our stockholders through appreciation in our stock price, the payment of regular dividends, and share repurchases.

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tscharta04.jpg
Note: Total shareholder return assumes dividends are reinvested.


Our stock price increased by approximately 50% and total stockholder return was approximately 53% during fiscal year 2019.
During fiscal year 2019, we declared and paid $114.2 million in recurring dividends to stockholders—three regular dividends of $0.19 per share each, and one regular dividend of $0.23 per share.
The dividend rate was increased by 21%, effective in the fourth quarter of fiscal year 2019.
We expect to declare and pay regular quarterly cash dividends in the future. However, the actual declaration of any such future dividends and the establishment of the per share amounts, record dates, and payment dates are subject to the discretion of the Board, which will take into consideration future earnings, cash flows, financial requirements, and other factors.
During fiscal year 2019, we repurchased 5.3 million shares for $250.0 million. On May 23, 2019, the Board of Directors approved an additional increase to our share repurchase authorization of $400.0 million to $1,310.0 million. As of May 23, 2019, taking into effect the increase in the share repurchase authorization, the Company had approximately $658.2 million of unused capacity to repurchase shares of common stock under its share repurchase program.
Fiscal Year 2019 Company Performance
netincomea01.jpgebitdaa01.jpg

Fiscal year 2019 marked the fourth consecutive year of top-line revenue growth.
Continued focus on investments in markets, capabilities, and people is positioning Booz Allen to deliver near-term and long-term shareholder value.
Full year revenue increased 9% to $6.7 billion.
Net income increased 39% to $418.5 million.
Adjusted EBITDA increased 15% to $674.6 million.
Diluted EPS increased 43% to $2.91.
Adjusted Diluted EPS increased 39% to $2.76.
Total backlog increased 21% to $19.3 billion.
Net cash provided by operating activities increased 35% to $499.6 million.

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Free cash flow was $404.9 million in fiscal year 2019.
Adjusted EBITDA, Adjusted EBITDA Margin on Revenue, Adjusted Diluted Earnings Per Share, and Free Cash Flow may differ from similarly titled measures presented by other companies in our industry and are not recognized measures under U.S. Generally Accepted Accounting Principles, or GAAP. A reconciliation between these non-GAAP financial measures and the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in Appendix A to this proxy statement.

Compensation Philosophy
We are a values-driven organization where our partnership culture motivates our executives, who we define as our named executive officers, Executive Vice Presidents, and Senior Vice Presidents, to consistently act in the best interests of the Company. Our executive compensation program is intrinsically tied to our purpose and values.
Our Philosophy
What Our Philosophy Achieves

- Guides executives to live the Company's purpose and values in their client work and internal interactions.

- Aligns executives' compensation with Company performance and the creation of long-term sustainable stockholder value.

- Attracts, motivates, and retains executives of exceptional ability to meet and exceed the demands of our clients.

- Creates appropriate rewards and penalties for exceeding or falling short of Company-level performance targets.

- Empowers executives to think and act in the best interests of the Company.

- Focuses on optimizing stockholder value and fostering an ownership culture.

- Engages and incentivizes our executives to effectively execute our business strategy.

- Creates and enables agility within our leadership and the Company overall, allowing us to quickly adjust, align, and advance in an ever-changing global marketplace.

Key Executive Compensation Practices
To ensure strong corporate governance, our compensation program incorporates the following key practices:
At Booz Allen, We:
 
At Booz Allen, We Don't:
ü
Require our executives and directors to satisfy meaningful stock ownership requirements
 
û

Reprice underwater stock options
ü
Include compensation recovery provisions (clawbacks) in our incentive plans
 
û
Offer individual supplemental executive retirement plans
ü
Perform annual review of appropriate peer group to benchmark executive compensation
 
û
Grant stock options below fair market value
ü
Conduct annual risk assessment of incentive-based compensation to identify any issues that could have a material, adverse impact on the Company
 
û
Provide tax gross-ups on golden parachute payments for CEO or other officers following a change in control
ü
Hold regular reviews of executive talent, performance, deployments, and succession
 
û
Allow for change in control agreements for named executive officers
ü
Align executive pay with short- and long-term performance
 
û
Allow employees or directors to engage in hedging transactions (in accordance with our insider trading policy)
 
 
 
û
Allow pledging of our shares without advance approval from the Chief Legal Officer (none of our directors or executive officers currently have pledges outstanding)


Benchmarking and Setting Executive Compensation

For setting fiscal year 2019 compensation, we engaged KFHG to benchmark and evaluate our named executive officers' compensation relative to compensation of peer organizations that are similar in size, industry, and

29



operations. KFHG utilized the same peer group as the one used for setting fiscal year 2018 named executive officer compensation, which was established using specific review criteria, as described below:

Company size: Organizations with revenues approximately 0.5x to 2.0x of our revenue, with peer median revenue approximating Company revenue, with flexibility outside of this range to accommodate organizations that are a good match from a business perspective.
Industry: Includes government services organizations and other "comparables" that our Investor Relations department tracks and other organizations that benchmark to our Company.

As a result, for fiscal year 2019, peer comparisons of the compensation of our named executive officers were performed against ten companies as shown below:

Fiscal Year 2019 Peer Group
- CACI International, Inc.

- CGI Group, Inc.

- CSRA, Inc.

- Engility Holdings, Inc.

- Harris Corporation
- L3 Technologies, Inc.

- Leidos Holdings, Inc.

- ManTech International Corporation

- Rockwell Collins, Inc.

- Science Applications International Corporation
 
The Compensation Committee reviews the peer group regularly and adjusts as necessary due to the changes at the selected company's operations or changes in comparability (e.g., due to bankruptcy, or mergers and acquisitions) to the Company.

In fiscal year 2019, due to various acquisitions and organizational changes in the marketplace, the Compensation Committee instructed KFHG to perform a comprehensive review of the peer organizations used for evaluating our named executive officers' compensation in preparation for fiscal year 2020. KFHG evaluated organizations that are similar in size, industry, and operations, and in consultation with our Compensation Committee, CEO, and Chief People Officer, used specific review criteria, as described below:

Company size: Organizations with revenues approximately 0.33x to 3.00x of our revenue, with peer median revenue approximating Company revenue, with flexibility outside of this range to accommodate organizations that are a good match from a business perspective.
Industry: Includes government services organizations and other "comparables" that our Investor Relations department tracks and other organizations that benchmark to our Company.

As a result, for fiscal year 2020, peer comparisons of the compensation of our named executive officers were performed against eighteen companies.

For setting named executive officer compensation in fiscal year 2019 and subsequently fiscal year 2020, the Compensation Committee used data from the respective fiscal year peer group benchmarking analysis and input from KFHG, along with feedback from the CEO in the case of named executive officers who are direct reports to the CEO, and based on the Committee's collective judgment and discretion, established fiscal year target compensation for the named executive officers. This includes the fiscal year salary amount, target annual equity grant value, and the target annual cash incentive, which is established as a number of points and target value per point. Additional information on each of these items can be found below under "Compensation Elements."

Any form of adjustment to our named executive officers' compensation is not based solely on peer group compensation data. While the Compensation Committee considers peer group benchmarking and market compensation data as critical inputs in its overall assessment of competitiveness of our executive compensation,

30



the Compensation Committee takes into account other factors such as responsibilities, performance, contributions, and experience of each named executive officer in determining target and actual compensation amounts.

KFHG also assisted in the development and adoption of a formal compensation philosophy, the key tenets of which are described above. KFHG was also engaged to:
Provide advice on the Pay Ratio disclosure
Review and provide advice on our Compensation Discussion and Analysis
Conduct a compensation risk assessment

Compensation Elements
The primary components of our executive compensation program include:
Element
Objective
Base Salary
Reflects the value of each executive's role to attract and retain our executive talent
Annual Cash Incentive
Motivates our executives to achieve our annual operational and financial goals
Long-Term Equity Incentives
Reward sustained performance and align executives' interests with our stockholders
Benefits
Provide for the health and welfare of our executives, including retirement benefits to promote long-term commitment of our executives to the Company
For fiscal year 2019, the target annual compensation mix for our CEO was approximately 22.6 percent base pay, 17.0 percent annual incentive, and 60.4 percent long-term equity compensation. The average target annualized compensation mix for all other named executive officers was approximately 34.1 percent base pay, 19.3 percent annual incentive, and 46.6 percent long-term equity compensation.
Base Salary

The base pay for our named executive officers is delivered as an annual salary. The salary earned for each of our named executive officers in fiscal year 2019 is set forth in the “Salary” column of the Summary Compensation Table. No changes were made to the annual salary amounts for our named executive officers in fiscal year 2019, and no changes are anticipated to the annual salary amounts for our named executive officers for fiscal year 2020.
Annual Cash Incentive

The annual cash incentive portion of our executives' compensation is provided through our annual bonus program. The annual incentive payment is determined using a point model where each named executive officer is assigned a quantity of points and each point is associated with a dollar value. As part of the named executive officer benchmarking performed for each fiscal year, the Compensation Committee considers the analysis and recommendation of our executive compensation consultant as well as of the CEO in the case of named executive officers who are direct reports to the CEO, to determine the target annual incentive amount where the target dollar point value is multiplied by the number of points. Effective fiscal year 2019, the Compensation Committee approved an increase to the target annual incentive opportunity for our CEO by approximately $325,000. This increase is based on the Compensation Committee's desire to better align the CEO's total compensation with market benchmarking and specifically focus on elements of compensation that align with the Company's short- and long-term performance. The target annual incentive opportunity in fiscal year 2019 for our other named executive officers did not change from fiscal year 2018.


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At the end of the fiscal year, based on the Company's performance as discussed below, the Compensation Committee approves the final dollar value per point which is used to determine each named executive officer's actual annual incentive payment. Executives who retire, or terminate employment under our transition policy, before the end of the fiscal year are generally eligible to receive a prorated incentive payment.

The annual incentive is based on achievement of the Company's performance against a target Adjusted EBITDA range with upward or downward adjustments for performance in comparison to the range. The performance range is determined at or near the beginning of each fiscal year by the Compensation Committee. Payment of the annual incentive approximating target levels would generally occur when actual Adjusted EBITDA is within the established Adjusted EBITDA range. A portion of any variance between the established range and actual Adjusted EBITDA is reflected as an adjustment to the pool of funds available for the annual incentive payment, or the bonus pool. The amount of the adjustment is determined by the Compensation Committee in its sole discretion. A positive variance between the range and actual Adjusted EBITDA would generally result in an increase in the bonus pool and a negative variance would generally result in a decrease in the bonus pool.

Adjusted EBITDA represents net income before income taxes, net interest and other expense and depreciation and amortization and before certain other items, including transaction costs, fees, losses, and expenses, including fees associated with debt prepayments. We base the annual incentive portion of our executives' compensation on Adjusted EBITDA because we believe it is a direct reflection of the cash flow and operating profitability of our business and represents the element of our performance that executives can most directly impact through their management of the business.

Our Compensation Committee reviews and approves the Adjusted EBITDA result and any adjustments to the plan bonus pool based on year-end operating results. The final bonus pool as approved by our Compensation Committee is distributed to our executives on a consistent per point basis.

 
Adjusted EBITDA
Executive Bonus Pool
FY19 Target
Range: $616 million - $634 million
$20.8 million
FY19 Actual
$674.6 million
$32.4 million

For fiscal year 2019, the Company's performance exceeded the top-end of the fiscal year 2019 target Adjusted EBITDA range by approximately $40.6 million, achieving the highest Adjusted EBITDA since the Company's initial public offering. The Company also exceeded expectations with respect to revenue, Adjusted Diluted EPS, and Adjusted EBITDA Margin on Revenue. Based on these results, the Compensation Committee determined that, as a reflection of exceptional fiscal year performance, bonus payouts should be meaningfully above target to appropriately recognize and reward the Company’s leadership. Accordingly, the Compensation Committee approved a bonus pool equal to approximately 55.8% above the target. The cash payments received by each of our named executive officers for fiscal year 2019 are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table under "Compensation Tables and Disclosures.”

Long-Term Equity Incentives

It is our philosophy that executives should hold meaningful amounts of long-term equity compensation to align the personal financial interests of executives with the interests of long-term stockholders and to encourage a long-term perspective with regard to Company performance and growth. The equity compensation for our executives is delivered in the following manner, which is further described below:

Annual Grants
New Hire / Advancement Grants



32



Annual Grants

Our named executive officers receive an annual equity grant that has two components: time-vested restricted stock units (RSUs) and performance-vested RSUs.
Time RSUs: Settle into shares of Class A common stock in three equal installments over three years.

Performance RSUs: Settle into shares of Class A common stock at the end of a three-year performance period, with the number of units that ultimately settle into shares ranging from 0 to 200 percent based on the Company's cumulative performance over the three-year period against two internal financial metrics — Value Added Revenue (VAR) and Adjusted Diluted Earnings Per Share (ADEPS), as described below:

“Value Added Revenue” or “VAR” is defined as revenue less billable expenses, and may be adjusted (i) to account for material acquisitions or divestitures during the performance period; (ii) to account for the cumulative impact of accounting changes; (iii) to account for the impact of government shutdowns during the performance period; and (iv) to exclude the impact of any unusual or infrequently occurring events as described in the Company’s audited financial statements, notes to financial statements or in management’s discussion and analysis in the Company’s annual report for the applicable year.
 
“Cumulative Value Added Revenue” or “Cumulative VAR” is defined as the cumulative Value Added Revenue for the three full fiscal years in the performance period.

“Adjusted Diluted Earnings Per Share” or “ADEPS” is defined as adjusted net income (as defined in the Company’s Annual Report on Form 10-K for the year ended March 31, 2019) divided by the Company’s fully diluted outstanding shares for the applicable fiscal year, (i) as reported within the Reconciliation of Adjusted Net Income and Adjusted Diluted EPS to Net Income and Diluted Earnings Per Share attributable to the Company (or similarly titled non-GAAP reconciliation table) as presented in the Company’s financial statements, and (ii) may be adjusted (a) to account for material acquisitions or divestitures during the performance period; (b) to account for the cumulative impact of accounting changes; (c) to account for the impact of government shutdowns during the performance period; (d) to account for special or extraordinary cash dividends or distributions; and (e) to exclude the impact of any unusual or infrequently occurring events as described in the Company’s audited financial statements, notes to financial statements or in management’s discussion and analysis in the Company’s annual report for the applicable year.

“Cumulative Adjusted Diluted Earnings Per Share” or “Cumulative ADEPS” is defined as the cumulative Adjusted Diluted Earnings Per Share for the three full fiscal years in the performance period.

These metrics were selected as a representation of organic revenue growth and bottom-line Company performance. The Company believes that the combination and weighting of each metric drive towards the goal of sustainable quality growth, with heavier weighting placed on ADEPS to further emphasize profitability and volume of revenue. The Company, in consultation with KFHG, and ultimately the Compensation Committee, undergoes a rigorous process and socialization effort for setting the threshold, target, and maximum performance goals for the long-term performance incentive plan grants. Summarized below is the framework of our fiscal year 2019 long-term performance incentive plan grants:


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Performance Measures
Weighting
Below Threshold Performance
Threshold to Target Performance 1
Target Performance
Above Target Performance
Cumulative ADEPS
75%
No performance RSUs will settle into shares of Class A common stock
Between 50 percent and 100 percent of performance RSUs will settle into shares of Class A common stock
100 percent of performance RSUs will settle into shares of Class A common stock
Between 100 percent and 200 percent of performance RSUs will settle into shares of Class A common stock
Cumulative VAR
25%
(1)
For the fiscal year 2019 performance RSU grants, threshold payout was set to 50 percent of target. This is an increase from the prior fiscal year 2018 grants which set threshold payout at 25 percent of target. This change was made because the associated threshold performance goal for the fiscal year 2019 performance RSU grants, as a percent of target, was also increased, thereby increasing the difficulty of achieving threshold performance.

For fiscal year 2019, the target annual equity mix for our CEO was approximately 65 percent aligned to performance RSUs and 35 percent aligned to time RSUs. The average target annualized equity mix for all other named executive officers was approximately 56 percent aligned to performance RSUs and approximately 44 percent aligned to time RSUs.
The Compensation Committee, with consideration of guidance from KFHG, peer benchmarking data, and the CEO in the case of named executive officers who are direct reports to the CEO, determined these equity allocations were appropriate to further align the compensation of our named executive officers with long-term Company performance. The CEO has the highest allocation of performance RSUs based on his role as the overall steward of the Company and to tie a significant portion of his compensation to the Company's performance. The performance RSUs allow for additional rewards based on over-achievement against our long-term performance goals, while also penalizing for under-performance. The time RSUs encourage retention and provide for incremental recognition of equity compensation over the vest cycle.
Effective for fiscal year 2019, the Compensation Committee approved an increase of $2.3 million to the target annual equity grant amounts for Mr. Rozanski and $1.0 million for each of Mr. Howell and Ms. Dahut. These changes were made by the Compensation Committee using benchmarking analysis and input from KFHG, feedback from the CEO in the case of Mr. Howell and Ms. Dahut who are direct reports to the CEO, and in consideration of the 2014 Employment Letters that included significant retention equity grants which have since vested in full as of the end of fiscal year 2018. These increases are specifically focused on elements of compensation that will further incentivize both short- and long-term Company performance as well as long-term retention. Effective October 1, 2018, Ms. Laben received an increase of $609,425 to the target annual equity grant amount as approved by the Compensation Committee using benchmarking analysis and input from KFHG, as well as feedback from the CEO as Ms. Laben is a direct report to the CEO. This increase was associated with Ms. Laben's advancement as described below in "New Hire / Advancement Grants."
Name
FY19
Time RSU Grant 1
($)
FY19
Target Performance RSU Grant
($)
Horacio D. Rozanski
1,399,970
2,599,960
Lloyd W. Howell, Jr.
749,975
1,124,967
Karen M. Dahut
749,975
1,124,967
Nancy J. Laben 3
304,602
365,567
Susan L. Penfield
387,495
387,470
(1)
Grant date fair value of equity granted under the fiscal year 2019 executive annual compensation structure - time-vested RSUs
(2)
Grant date fair value of equity granted under the fiscal year 2019 executive annual compensation structure - performance-vested RSUs at target levels
(3)
Ms. Laben received an increase to annual equity effective October 1, 2018 which was prorated for fiscal year 2019.

In fiscal year 2019, the Compensation Committee asserted its intention to adjust the performance that applies to the fiscal year 2018 performance RSU grants for the net positive impact of the Tax Cuts and Jobs Act of 2017 and related tax accounting changes. The intent of an adjustment would be to ensure executives were not unintentionally

34



rewarded for any Company financial benefit resulting from the Tax Cuts and Jobs Act of 2017. Such adjustment would occur at the time of, or prior to, the settlement date of the fiscal year 2018 performance RSU grants.

Effective fiscal year 2020, the Compensation Committee approved an increase to the annual performance RSU grant amount for Mr. Rozanski of approximately $1.0 million. This change was made by the Compensation Committee using benchmarking analysis and input from KFHG and specifically focuses on an element of compensation aligned to long-term Company performance. Additionally, effective fiscal year 2020, the Compensation Committee approved a modest increase to the target annual incentive and target annual equity grant amounts for Ms. Penfield. These changes were made by the Compensation Committee using benchmarking analysis and input from KFHG as well as feedback from the CEO as Ms. Penfield is a direct report to the CEO. These increases are specifically focused an elements of compensation that will further incentivize short- and long-term Company performance and long-term retention.

New Hire / Advancement Grants

In addition to the annual equity grant we provide to our executives, the Company awards new hire equity grants as a mechanism to align our new executives’ interests to that of the stockholders, as well as advancement grants to recognize and reward performance and promotion to the next executive level. Dependent upon the executives' levels, these new hire or advancement grants are delivered in the form of time RSUs that settle ratably over three years based on continued employment, and/or as stock options with ratable vesting over five years based on continued employment. For our named executive officers in fiscal year 2019, Ms. Laben received an advancement grant to recognize her performance, role, and responsibilities. In determining the amount of the advancement award, the Compensation Committee considered our executive compensation program's advancement grant guidelines as well as acknowledging the critical role that Ms. Laben plays in developing risk mitigating strategies on a Company-wide basis. Details regarding this grant are included in the Option Award column in the Summary Compensation Table and the Grants of Plan-Based Awards Table.

 Benefits and Perquisites

Our employees are eligible to participate in a full complement of benefit plans. Our named executive officers also participate in enhanced medical and dental plans, life insurance, accidental death and dismemberment, and personal liability coverage at the Company's expense. During fiscal year 2019, our named executive officers were eligible to receive perquisites, including up to $15,000 per year for financial counseling, up to $7,500 every three years to update an estate plan, up to $3,000 for preparation of estate plans following relocation to a new tax jurisdiction, and a one-time reimbursement of up to $5,000 for retirement financial planning. In addition, to protect our executives from various risks, we maintain an executive protection program that provides our executives with a security assessment for their primary residence and security service for foreign or domestic travel. We believe that our executive benefit and perquisite programs are reasonable and necessary to provide for the well-being of our executives. For more detail on the perquisites that our named executive officers receive, see footnote 7 to the Summary Compensation Table under "Compensation Tables and Disclosures."
Retirement Benefits

We provide retirement benefits to our executives, including our named executive officers, to help them build financial security for retirement, while allowing them to direct the investment of their retirement savings as they choose.

Employees’ Capital Accumulation Plan

All eligible employees, which includes our named executive officers, may participate in the tax-qualified Employees' Capital Accumulation Plan, or ECAP. Under this plan, eligible employees, including our named executive officers, receive an annual matching contribution based on their voluntary contributions up to 6% of their eligible annual income as determined by the Code. Each executive is also eligible to receive a payment that is equivalent to

35



the annual tax-deferred contribution he or she is permitted to make to ECAP under the Code. Executives may elect to have these funds deposited into a pre-tax or Roth 401(k), or the executive may simply receive the funds as a cash payment and be taxed accordingly.

Non-Qualified Deferred Compensation Plan

As part of our redesigned executive compensation program, we offer a non-qualified deferred compensation plan for our executives to encourage employees to save for their retirement. Eligible employees, which include all named executive officers, may elect to contribute up to 100% of their annual cash bonus to this plan. None of our named executive officers enrolled for the fiscal year 2019 deferral.

Additional Retirement Benefits

We provide additional retirement benefits to our executives, including our named executive officers, in order to provide them with additional security in retirement and promote a long-term career with our Company. Our executives participate in the Officers' Retirement Plan, under which the executive may retire with full benefits after a minimum of either (a) age 60 with five years of service as an executive or (b) age 50 with 10 years of service as an executive. An eligible executive who retires and does not receive severance benefits is entitled to receive a single lump-sum retirement payment equal to $10,000 for each year of service as an executive, pro-rated as appropriate, and an annual allowance of $4,000 for financial counseling and tax preparation assistance. Our retirees are also eligible to receive comprehensive coverage for medical, pharmacy, and dental healthcare. The premiums for this healthcare coverage are paid by the Company.

Employment Letters

We are parties to employment letter agreements, or employment letters, with Messrs. Rozanski, and Howell and Ms. Dahut. The employment letters provide for base payments and annual incentives that are consistent with that currently provided to the executives (and described above). Each executive officer is eligible to participate in the employee benefit and executive perquisite programs of the Company on the same terms as similarly situated executive officers of the Company. Payments upon termination of employment will be governed by the Company’s severance, transition, retirement, disability or other policies, as applicable, as in effect from time to time, and subject to the terms and conditions of such policies. The officer is required to provide the Company with not less than 90 days’ notice of termination of employment for any reason other than death or disability (or such longer notice period as is provided in the relevant officer policy). In addition, each executive is bound by perpetual confidentiality provisions as well as non-compete and non-solicit covenants while employed with us and for one year following termination of employment.
Executive Ownership Requirements

Equity ownership requirements are in place for our entire executive population, including our named executive officers, to further align their interests to those of our stockholders. Our ownership requirement extends beyond market expectations. Our named executive officers have regularly exceeded our equity ownership guidelines and demonstrate a commitment to the Company's long-term value by owning equity well above their requirements. Until an executive has satisfied the ownership requirements set forth below, the executive cannot sell any equity granted as equity compensation by the Company. Each executive’s required equity ownership amount is determined as a multiple of his or her base salary. The applicable multiples for our named executive officers for fiscal year 2019 are set forth in the table below as well as a comparison of their actual equity ownership as of the end of the fiscal year:
 

36



Named Executive Officers
Ownership Requirement
Actual Ownership 1
Chief Executive Officer
7x base salary
29x base salary
Other named executive officers
4x base salary
11x base salary

(1) Ownership for the other named executive officers is an average of their equity holdings compared to their respective base pay amounts as of fiscal year end.
 
In calculating an executive's ownership, Class A Common Stock, vested in-the-money stock options, and restricted stock, restricted stock units, and performance stock units at target, issued under the Equity Incentive Plan are considered as owned by the executive. Each of our named executive officers has satisfied his or her individual stock ownership requirement.
Risk Assessment

This year, we engaged KFHG to conduct a risk assessment of our compensation programs in order to receive an external perspective. Based on our approach of compensating our executives to foster the financial success of the Company as a whole and other elements of our compensation system, and the results of KFHG's review, our Company's Leadership Team and the Compensation Committee concluded that our executive compensation program does not encourage undue risk-taking and the risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company.

Advisory Vote to Approve Executive Compensation

At the 2018 Annual Meeting of Stockholders, approximately 97% of the votes cast were in favor of our executive compensation structure. The Board and Compensation Committee viewed this strong support as an indicator of general approval of our approach to executive compensation. In 2017, the Company’s stockholders approved holding the say-on-pay vote annually, and as a result, the say-on-pay vote will again occur at the 2019 Annual Meeting of Stockholders. The next advisory vote for the frequency of holding the say-on-pay vote is scheduled for the Annual Meeting of Stockholders in 2023.
We continue to engage with our stockholders and welcome feedback regarding our executive compensation programs.
Government Limitations on Reimbursement of Compensation Costs

As a government contractor, we are subject to applicable federal statutes and the Federal Acquisition Regulation, or the FAR, which govern the reimbursement of costs by our government clients. Pursuant to the FAR our contracts limit the allowability of reimbursement for compensation to certain, or in some cases, all employees including our named executive officers, to a benchmark compensation cap established for each year by the Office of Management and Budget. When comparing compensation to the benchmark cap, all wages, salary, bonuses, deferred compensation, and employer contributions to defined contribution pension plans, if any, for the year, as recorded in our books and records, must be included. Any amounts over the cap are considered unallowable and are therefore not recoverable under our government contracts. For the 2018 calendar year, the compensation cap established by the OMB, which is applicable to a portion of our contracts, is $525,000. Other contracts have higher caps and/or limit the allowable compensation of fewer employees.
Compensation Recovery Provisions (Clawbacks) in Incentive Plans

We have provisions in our incentive plans that provide us with the ability to impose the forfeiture of bonuses and equity compensation and the recovery of certain bonus amounts and gains from equity compensation awarded under those plans. Such forfeitures and recoveries may occur:

37



in the event of an accounting restatement due to material non-compliance with any financial reporting requirements under the securities laws with respect to individuals who engage in misconduct or gross negligence that results in a restatement of our financial statements,
with respect to individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, and,
to the extent that, based on erroneous data, any award or payment is in excess of what would have been paid under the accounting restatement during the three-year period preceding the date on which a financial restatement is required, current or former executives, or as otherwise required under applicable laws or regulations.

In addition, if an individual engages in certain other misconduct, we have the discretion to suspend vesting of all or a portion of any award and/or require the forfeiture or disgorgement to us of any equity award (including gains on the sale of the stock, if any) that vested, was paid or settled in the 12 months prior to or any time after the individual engaged in such misconduct. Our Equity Incentive Plan and Annual Incentive Plan also permit the Company to subject awards to forfeiture, disgorgement and recoupment under any applicable claw-back policies that may be adopted by the Board or our Compensation Committee.
Certain Change in Control Provisions

In the event of a change in control, unless the plan administrator determines otherwise, all time-vesting awards under the Equity Incentive Plan, including options and time restricted stock units, will fully vest. Unvested performance restricted stock units will remain outstanding at target levels and will vest on the original vesting date, subject to the continued employment or service of the participant by the Company or any subsidiary thereof through such date, but without regard to achievement of any performance goals; however, if the participant’s employment or service is terminated by the Company without cause or for good reason within two years following the effective date of the change in control, such outstanding restricted stock units will vest as of the date of termination. Under the Equity Incentive Plan, “change in control” is generally defined as the acquisition by any person of 50% or more of the combined voting power of our Company's then outstanding voting securities, the merger of our Company if our stockholders immediately prior to the merger do not own more than 50% of the combined voting power of the merged entity, the liquidation or dissolution of our Company (other than in a bankruptcy proceeding or for the purposes of effecting a corporate restructuring or reorganization), or the sale of all or substantially all the assets of our Company to non-affiliates.

In addition, if during the five-year period after a change in control our executives' retiree medical plan is terminated or modified in a manner that is materially adverse to our executives, each of our executives, including our named executive officers, will be guaranteed their existing benefits under the plan through the fifth anniversary of the change in control and receive at the end of the five-year period a cash payment equal to the excess of the actuarial cost of the executive's benefits under the plan that would be accrued on the Company's financial statements on the fifth anniversary of the change in control in the absence of the termination or modification over the amount that is accrued on our financial statements on the fifth anniversary of the change in control giving effect to the termination or modification (but excluding the accrual on the payment itself).
Policies on Timing of Equity Grants

It is our policy not to time the granting of equity awards in relation to the release of material, non-public information. Accordingly, regularly scheduled awards are permitted to be granted at times when there is material non-public information. We generally grant awards to new hires and promoted employees at the next scheduled Compensation Committee or Board meeting following the hire or promotion effective date. Annual awards are typically approved at the Compensation Committee meeting each year in May. It is our policy not to grant equity awards with effect from, or with an exercise price based on market conditions as they existed on, any date prior to the date on which the party in which granting authority is vested (typically our Compensation Committee or our Board) takes formal action to grant them.

38



Effect of Accounting and Tax Treatment on Compensation Decisions

The Compensation Committee has from time to time considered the potential impact of Section 162(m) of the Code on elements of our compensation program. Section 162(m) imposes a limit on the amount of compensation that we may deduct in any one year with respect to certain “covered employees." In prior years, we have sought to structure our short-term non-equity incentive compensation and long-term equity incentive compensation paid to our “covered employees” as performance-based compensation, which generally permitted us to deduct such amounts without being subjected to limits under Section 162(m). The Tax Cuts and Jobs Act of 2017 repealed the performance-based compensation exception and expanded the scope of persons covered by the limitations on deductibility under Section 162(m). The new rules generally apply to taxable years beginning after December 31, 2017 but exempt compensation provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any material respect after that date. Accordingly, compensation paid after March 31, 2018 to our covered employees in excess of $1 million will not be deductible unless it qualifies for this exemption.

While we will continue to monitor our compensation programs in light of Section 162(m), as amended, and we intend to rely on the exemption included in the Tax Cuts and Jobs Act of 2017 to the extent practicable and consistent with our business needs, our Compensation Committee considers it important to retain the flexibility to design compensation programs that are in the best long-term interests of our Company and our stockholders. As a result, our Compensation Committee expects to pay compensation at levels that are not deductible under Section 162(m).

Other provisions of the Code can also affect compensation decisions. Section 409A of the Code, or Section 409A, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a 20% penalty and an interest penalty, on a recipient of deferred compensation that does not comply with Section 409A. Our Compensation Committee takes into account the potential implications of Section 409A in determining the form and timing of compensation awarded to our executives and strives to structure its nonqualified deferred compensation plans to meet these requirements.

Section 280G of the Code, or Section 280G, disallows a company's tax deduction for payments received by certain individuals in connection with a change in control to the extent that the payments exceed an amount approximately three times their average annual compensation and Section 4999 of the Code imposes a 20% excise tax on those payments. As described above, awards under our Equity Incentive Plan have or will contain provisions that accelerate vesting of all or a portion of the awards in connection with a change in control. To the extent that payments upon a change in control are classified as excess parachute payments, our Company's tax deduction would be disallowed under Section 280G.

39



Compensation Tables and Disclosures
 
SUMMARY COMPENSATION TABLE
Name and Principal
Position
Year 1
Salary
Bonus
Stock
Awards 2
Option
Awards 3
Non-Equity
Incentive Plan
Compensation 4
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings 5
All Other
Compensation 7
Total
  
  
($)
($)
($)
($)
($)
($)
($)
($)
Horacio D. Rozanski
President & Chief Executive Officer
2019
1,500,000

3,999,930
1,687,500

10,000
251,099

7,448,529

2018
1,500,000

2,227,798
928,000

17,215
249,344

4,922,357

2017
1,437,500

546,468
846,555

15,964
170,345

3,016,832

Lloyd W. Howell, Jr.
Executive Vice President, Chief Financial Officer & Treasurer
2019
1,025,000

1,874,942
750,000
10,000
160,084

3,820,026

2018
1,025,000

1,242,148
499,991
580,000

10,000
129,847

3,486,986

2017
1,000,000

380,141
587,004

10,644
315,080

2,292,869

Karen M. Dahut
Executive Vice President
2019
1,025,000

 
1,874,942
750,000
10,000
189,872

3,849,814

2018
1,025,000

1,242,148
499,991
580,000

10,000
177,629

3,534,768

2017
1,000,000

380,141
587,004

10,000
145,648

2,122,793

Nancy J. Laben 6
Executive Vice President, Chief Legal Officer & Secretary
2019
650,000

670,169
249,997
712,500

10,605
134,322

2,427,593

Susan L. Penfield 6
Executive Vice President, Chief Innovation Officer
2019
800,000

774,965
637,500

10,000
150,043

2,372,508

2018
800,000

1,050,311
499,991
493,000

10,000
143,745

2,997,047

  
(1)
Each year is a reflection of our fiscal year which runs from April 1 to March 31. For example, 2019 reflects fiscal year 2019 - April 1, 2018 to March 31, 2019.
(2)
This column includes the aggregate grant date value of the annual time and performance restricted stock units granted on May 23, 2018 and May 24, 2018, respectively. As it pertains to Ms. Laben, this value also includes the additional time and performance restricted stock unit grant she received on November 14, 2018 associated with her advancement. See “Compensation Discussion and Analysis -- Compensation Elements - Long-Term Equity Incentives" for details regarding these grants. The aggregate fair value of the awards was computed in accordance with FASB ASC Topic 718 using the valuation methodology and assumptions set forth in Note 19 to our financial statements for the fiscal year ended March 31, 2019, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by the executive. Assuming achievement of the highest performance conditions for the performance restricted stock units granted on May 24, 2018, and regarding Ms. Laben only, on May 24, 2018 and November 14, 2018, the grant date fair value would be: Mr. Rozanski, $5,199,919; Mr. Howell, $2,249,933; Ms. Dahut, $2,249,933; Ms. Laben $731,134; and Ms. Penfield, $774,940.
(3)
This column reflects the aggregate grant date value of options granted on November 14, 2018 to Ms. Laben, as reflected in the Grants of Plan Based Awards table below, upon advancement and increase in scope of role. See “Compensation Discussion and Analysis -- Compensation Elements - Long-Term Equity Incentives.” The aggregate fair value of the awards was computed in accordance with FASB ASC Topic 718 using the valuation methodology and assumptions set forth in Note 19 to our financial statements for the fiscal year ended March 31, 2019, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by the executive.
(4)
This column reflects the fiscal year 2019 annual cash incentive bonus program, which provides awards based on the achievement of corporate performance objectives. The amount reported in the Summary Compensation Table is with respect to the year in which the bonus is earned. See “Compensation Discussion and Analysis - Compensation Elements - Annual Cash Incentive” for additional detail regarding the annual performance bonus program.
(5)
This column reflects the change in value of the cash retirement benefit accrued under the Officers' Retirement Plan for each of our named executive officers.
(6)
Ms. Laben was not a named executive officer in fiscal year 2017 or 2018. Ms. Penfield was not a named executive officer in fiscal year 2017.
(7)
The table below describes the elements included in All Other Compensation.


40



OTHER COMPENSATION TABLE
Name
Financial
Counseling
Qualified
Company
Contributions
to 401(k)
Company Non-
Qualified
Retirement
Contributions
to Employees a
Executive
Medical and Retiree Plan
Contributions
Life
Insurance
Other b
Total
  
($)
($)
($)
($)
($)
($)
($)
Horacio D. Rozanski
15,000
16,500
24,500
51,688
3,216
140,195
251,099

Lloyd W. Howell, Jr.
14,870
16,500
24,500
51,688
3,846
48,680
160,084

Karen M. Dahut
15,000
16,500
24,500
51,688
5,070
77,114
189,872

Nancy J. Laben
12,698
16,500
24,500
51,688
6,426
22,510
134,322

Susan L. Penfield
14,000
16,500
24,500
51,688
6,426
36,929
150,043

 
(a)
Represents retirement plan contributions paid by the Company to the named executive officers as described above under “Compensation Discussion and Analysis — Compensation Elements — Retirement Benefits.”
(b)
Includes: dental, supplemental medical, accident insurance, and personal excess liability coverage. This column also includes milestone anniversary awards for Mr. Howell and Ms. Laben, security services for Mr. Rozanski ($117,395), Mr. Howell, Ms. Dahut ($57,914), and Ms. Penfield, and vehicle parking for Messrs. Rozanski and Howell and Mses. Dahut, Laben, and Penfield.

GRANTS OF PLAN BASED AWARDS TABLE
  
 
 
  Estimated Possible Payouts 
Under Non-Equity Incentive Plan Awards 1
 
Estimated Future and Possible Payouts Under Equity Incentive Plan Awards 2
All Other
Stock
Awards;
Number of
Shares or
Stock
Units 3
All Other
Option
Awards;
Number of
Securities
Underlying
Options
Exercise
or Base
Price of
Option
Awards
 
($/Sh)
Grant Date
Fair Value
of Stock
and Option
Awards
 
($)
Threshold  
Target  
Max  
 
Threshold
Target
Max
Name
Grant
Date
Approval Date
($)
($)
($)
 
(#)
(#)
(#)
Horacio D. Rozanski
5/23/2018
1,125,000
 
 
 
 
 
 
 
 
5/23/2018
 
 
 
 
 
 
 
33,914
 
 
1,399,970

 
5/24/2018
 
 
 
 
31,212
62,424
124,848
 
 
 
2,599,960

Lloyd W. Howell, Jr.
5/23/2018
500,000
 
 
 
 
 
 
 
 
5/23/2018
 
 
 
 

 
 
18,168
 
 
749,975

 
5/24/2018
 
 
 
 
13,505
27,010
54,020
 
 
 
1,124,967

Karen M. Dahut
5/23/2018
500,000
 
 
 
 
 
 
 
 
5/23/2018
 
 
 
 
 
 
 
18,168
 
 
749,975

 
5/24/2018
 
 
 
 
13,505
27,010
54,020
 
 
 
1,124,967

Nancy J. Laben
5/23/2018
475,000
 
 
 
 
 
 
 
 
5/23/2018
 
 
 
 
 
 
 
5,313
 
 
219,321

 
5/24/2018
 
 
 
 
1,755
3,510
7,020
 
 
 
146,192

 
11/14/2018
11/13/2018
 
 
 
 
 
 
 
1,665
 
 
85,281

 
11/14/2018
11/13/2018
 
 
 
 
2,141
4,283
8,566
 
 
 
219,375

 
11/14/2018
11/13/2018
 
 
 
 
 
 
 
 
23,193

51.22
249,997

Susan L. Penfield
5/23/2018
425,000
 
 
 
 
 
 
 
 
5/23/2018
 
 
 
 
 
 
 
9,387
 
 
387,495

 
5/24/2018
 
 
 
 
4,651
9,303
18,606

 
 
 
387,470

 
(1)
Reflects the target bonus for fiscal year 2019 under our annual performance bonus plan, which provides awards based on the achievement of corporate performance objectives, payable in cash. The annual performance bonus plan is described more fully under “Compensation Discussion and Analysis - Compensation Elements - Annual Cash Incentive.” Non-equity incentive plan awards have no minimum threshold or maximum payouts, although our plan does limit the annual amount of bonus an individual can earn to $5,000,000. The actual cash bonuses paid for fiscal year 2019 are reflected in the Summary Compensation Table.
(2)
Reflects the target number of performance restricted stock units granted on May 24, 2018. As it pertains to Ms. Laben, this column also includes the performance restricted stock unit grant she received on November 14, 2018 associated with her advancement. The maximum payout for the performance-vested restricted stock units is equal to 200% of target, and threshold payout is 50% of target. The performance restricted stock units are based on the Company's performance

41



against ADEPS (75% weighting) and VAR (25% weighting) based on cumulative performance over a three year period. See “Compensation Discussion and Analysis -- Compensation Elements - Long-Term Equity Incentives" for details regarding these grants.
(3)
Reflects the time restricted stock units granted on May 23, 2018. As it pertains to Ms. Laben, this column also includes the time restricted stock units she received on November 14, 2018 associated with her advancement. See "Compensation Discussion and Analysis -- Compensation Elements - Long-Term Equity Incentives" for details regarding these grants.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
  
Option Awards
 
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
 
Equity Incentive Plan Awards: Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
 
Option
Exercise 
Price
($)
 
Option
Expiration
Date
 
Number of 
Shares or Units of Stock
That Have Not
Vested
(#) 2
Market Value of
Shares or Units
of Stock That
Have Not Vested
($) 3
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested
(#) 5
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested
($) 6
Horacio D. Rozanski
 
 
 
 
 
 
 
 
 
39,741

2,310,542

186,322

10,832,761

 
71,504

17,876

1 

 
29.08

 
4/1/2025
 
 
 
 
 
 
45,000


 

 
18.35

 
5/23/2023
 
 
 
 
 
Lloyd W. Howell, Jr.
 
 
 
 
 
 
 
 
 
23,436

1,362,569

83,226

4,838,760

 
21,104

31,657

1 

 
35.95

 
5/19/2027
 
 
 
 
 
Karen M. Dahut
 
 
 
 
 
 
 
 
 
23,436

1,362,569

83,226

4,838,760

 
21,104

31,657

1 

 
35.95

 
5/19/2027
 
 
 
 
 
 
45,000


 

 
18.35

 
5/23/2023
 
 
 
 
 
 
45,000


 

 
10.67

4 
4/1/2022
 
 
 
 
 
Nancy J. Laben
 
 
 
 
 
 
 
 
 
9,593

557,737

25,846

1,502,686

 
4,638

18,555

1 

 
51.22

 
11/14/2028
 
 
 
 
 
 
10,724

16,090

1 

 
35.63

 
5/17/2027
 
 
 
 
 
 
11,340

16,205

1 

 
26.41

 
2/8/2026
 
 
 
 
 
Susan L. Penfield
 
 
 
 
 
 
 
 
 
15,910

925,007

40,162

2,335,019

 
21,104

31,657

1 

 
35.95

 
5/19/2027
 
 
 
 
 
 
15,492

3,873

1 

 
29.08

 
4/1/2025
 
 
 
 
 
 
45,000


 

 
10.67

4 
4/1/2022
 
 
 
 
 
 
(1)
The options were granted pursuant to the Equity Incentive Plan and will vest and become exercisable, subject to the continued employment of the named executive officer, on the date set forth in the table below. These options fully vest and become exercisable immediately prior to the effective date of certain change in control events.
Name
Option Exercise Price
March 31, 2020
March 31, 2021
March 31, 2022
March 31, 2023
Total
Horacio D. Rozanski
$29.08
17,876
17,876
Lloyd W. Howell, Jr.
$35.95
10,552
10,552
10,553
31,657
Karen M. Dahut
$35.95
10,552
10,552
10,553
31,657
Nancy J. Laben
$26.41
8,102
8,103
16,205
 
$35.63
5,362
5,362
5,366
16,090
 
$51.22
4,638
4,638
4,638
4,641
18,555
Susan L. Penfield
$29.08
3,873
3,873
 
$35.95
10,552
10,552
10,553
31,657

(2)
The named executive officers’ restricted stock units will vest on the dates set forth in the table below. The restricted stock units become fully vested upon certain change in control events, unless otherwise determined by our Compensation Committee. Includes restricted stock units with respect to which performance goals were satisfied as of fiscal year end.

42



Name
June 30, 2019
March 31, 2020
March 31, 2021
Total
Horacio D. Rozanski
6,207
22,228
11,306
39,741
Lloyd W. Howell, Jr.
4,318
13,062
6,056
23,436
Karen M. Dahut
4,318
13,062
6,056
23,436
Nancy J. Laben
1,727
5,540
2,326
9,593
Susan L. Penfield
3,238
9,543
3,129
15,910

(3)
Market value has been determined based on the fair market value of our common stock on March 29, 2019 of $58.14.
(4)
Exercise price reflects adjustment in connection with a $6.50 special dividend paid in August 2012.
(5)
Column reflects the number of performance units based on maximum performance which is 200% of the target grant amount for the fiscal year 2018 and fiscal year 2019 performance restricted stock units, rounded down to the nearest whole share. The table below reflects the vesting opportunity for the fiscal year 2018 and fiscal year 2019 performance restricted stock unit grants assuming achievement of target performance for the named executive officers. Vesting opportunity ranges from 0-200% based on actual performance during the three-year performance period compared to the three year cumulative ADEPS and VAR performance goals. Upon a change in control, the performance restricted stock units will remain outstanding and will vest on the vesting date at target performance levels, subject to the continued employment or service of the Participant by the Company or any Subsidiary thereof through such date, but without regard to achievement of any Performance Goals; provided, that, if the Participant’s employment or service is terminated by the Company without cause or for good reason within two years following the effective date of the Change in Control, such outstanding restricted stock units will vest as of the date of termination.

Name
March 31, 2020
March 31, 2021
Total
Horacio D. Rozanski
30,737
62,424
93,161
Lloyd W. Howell, Jr.
14,603
27,010
41,613
Karen M. Dahut
14,603
27,010
41,613
Nancy J. Laben
5,130
7,793
12,923
Susan L. Penfield
10,778
9,303
20,081

(6)
Market value has been determined based on maximum performance which is 200% of the target grant amount for the fiscal year 2018 and fiscal year 2019 performance restricted stock units, rounded down to the nearest whole share, using the fair market value of our common stock on March 29, 2019 of $58.14.
Option Exercises and Stock Vested Table
The table below provides information on the named executive officers’ restricted stock unit awards that vested and the stock options that they exercised in fiscal year 2019.
 
OPTION EXERCISES AND STOCK VESTED TABLE
  
Option Awards
 
Stock Awards
Name
Number of Shares
Acquired on
Exercise
(#)
Value Realized on
Exercise
1
($)
 
Number of Shares
Acquired on
Vesting
(#)
Value Realized on
Vesting
2
($)
Horacio D. Rozanski
45,000
1,914,750
 
34,609
1,833,714
Lloyd W. Howell, Jr.
 
 
 
22,233
1,160,458
Karen M. Dahut
 
 
 
22,233
1,160,458
Nancy J. Laben
75,000
2,167,955
 
12,776
684,004
Susan L. Penfield
28,040
1,148,677
 
15,132
799,208
 
(1)
Option Award ($) value realized is calculated based on the fair market value of our common stock less exercise cost at time of exercise.
(2)
Stock Award ($) value realized is calculated based on fair market value on the applicable vesting date of June 29, 2018 and March 29, 2019, respectively.




43



Pension Benefits Table
The Officers’ Retirement Plan is an unfunded defined benefit retirement plan that we maintain for our executives. Under the Officers’ Retirement Plan, if an executive retires of his or her own volition (and is not entitled to severance) after a minimum of either (a) age 60 with five years of service as an executive or (b) age 50 with 10 years of service as an executive, he or she will be entitled to receive a single lump sum retirement payment equal to $10,000 for each year of service as an executive, pro-rated as appropriate. As of fiscal year 2019 end, Messrs. Rozanski and Howell and Mses. Dahut and Penfield are eligible to receive benefits under the Officers’ Retirement Plan upon retirement.
 
PENSION BENEFITS TABLE
Name
Plan Name
Number of Years
Credited Service 
(#)
Present Value of
Accumulated
Benefits
1
($)
Payments During 
Last Fiscal Year
($)
Horacio D. Rozanski
Officers’ Retirement Plan
19.5
195,000

Lloyd W. Howell, Jr.
Officers’ Retirement Plan
18.5
185,000

Karen M. Dahut
Officers’ Retirement Plan
14.5
145,000

Nancy J. Laben
Officers’ Retirement Plan
5.5
49,544
Susan L. Penfield
Officers’ Retirement Plan
16.5
165,000

  
(1)
The present value of accumulated benefits has been calculated in a manner consistent with our reporting of the Retired Officers’ Bonus Plan under FASB ASC 715-30, using the Accumulated Benefit Obligation with the exception of the retirement rate assumptions. The amounts shown above reflect an assumption that each participant collects his or her benefit at the earliest age at which an unreduced benefit is available.
Employment Arrangements and Potential Payments upon Termination or a Change in Control

Historically, we have not entered into employment letters with our executive officers. However, in January 2014, we entered into employment letters, effective April 1, 2014, with certain senior level executives, including Messrs. Rozanski and Howell and Ms. Dahut, due to the leadership changes and the need to align their compensation to the market as described above under "Employment Letters." Pursuant to the employment letters, payments upon termination of employment will be governed by the Company's severance, transition, retirement, disability or other policies, as applicable, as in effect from time to time, and subject to the terms and conditions of such policies. Consistent with our Transition Policy, which deals with departures other than retirement, resignation, death, disability and terminations for cause, each named executive officer is eligible for transition pay equal to four months of base pay, plus one additional month for each year of service as an executive, up to a maximum of 12 months’ base pay. Under the terms of our Transition Policy and Retirement Policy, all departure payments and benefits are contingent upon the executives’ signing of a general release.
Termination Payments
Under our Officers' Retirement Plan, if our named executive officers retire, they will each be entitled to receive a single lump sum retirement payment equal to $10,000 for each year of service as an executive, pro-rated as appropriate, and an annual allowance of $4,000 for financial counseling and tax preparation assistance. They are also eligible for a one-time payment of $5,000 upon entering retirement for financial counseling expenses associated with developing a retirement financial strategy. In addition, each of our named executive officers and their eligible dependents will be entitled to receive the benefit of Company-paid retiree medical and dental coverage for life.
In addition, our award agreements governing the equity awards held by our named executive officers include provisions related to the treatment of the awards upon a termination of employment.

44



Death
In the event of a named executive officer’s termination of employment due to death, (i) unvested options immediately vest and remain outstanding until the first anniversary of the termination date, or if earlier, the option’s expiration date, (ii) unvested time-based restricted stock units and restricted stock immediately vest and (iii) unvested performance restricted stock units immediately vest at target award levels.
Disability
In the event of a named executive officer’s termination of employment due to disability, (i) unvested options continue to vest on the normal schedule, and vested options will remain outstanding until the first anniversary of the termination date (or for options vesting after the termination date, the first anniversary of the vesting date), or if earlier, the option’s expiration date, (ii) unvested time-based restricted stock units and restricted stock continue to vest on the normal schedule and (iii) unvested performance restricted stock units vest on the normal vesting date in a pro rata amount of the units that would have been earned and vested based on the actual achievement of the performance goals as if employment had not terminated (with the amount prorated based on the portion of the performance period that lapsed prior to the termination date).
Company Approved Departure
In the event of a named executive officer’s termination of employment by reason of a “Company approved departure” (as defined in the Equity Incentive Plan or applicable award agreement), (i) unvested options continue to vest on the normal schedule, and vested options remain outstanding until the 60th day following the termination date (or for options vesting after the termination date, the 60th day following the vesting date), or if earlier, the option’s expiration date, (ii) unvested time-based restricted stock units continue to vest on the normal schedule and (iii) unvested performance restricted stock units vest on the normal vesting date in a pro rata amount of the units that would have been earned and vested based on the actual achievement of the performance goals as if employment had not terminated (with the amount prorated based on the portion of the performance period that lapsed prior to the termination date).
For Cause
In the event of a named executive officer’s termination of employment for cause, all vested and unvested options, and all unvested time-based restricted stock units, restricted stock and performance restricted stock units are immediately forfeited and canceled, effective as of the termination date.
Qualified Permanent Retirement
If a named executive officer’s employment is terminated by reason of a qualifying permanent retirement on or after March 31 of the first fiscal year of a performance period, unvested performance restricted stock units will continue to vest on the vesting date based on actual achievement of the performance goals as if employment had not terminated. In the event of a retirement occurring prior to March 31 of the first fiscal year of the performance period, or if at any time if the retirement is not a qualifying permanent retirement, all unvested performance restricted stock units will be immediately forfeited.
Any Other Termination
In the event of a named executive officer’s termination of employment for any reason other than death, disability, a Company approved departure, a qualified permanent retirement after the first fiscal year of a performance period (in the case of the performance restricted stock units) or cause, unvested options are immediately forfeited and canceled, and vested options remain outstanding until the 60th day following the termination date, or if earlier, the option’s expiration date, and unvested time-based restricted stock units and performance restricted stock units are immediately forfeited, in each case unless otherwise determined by our Compensation Committee.
Change in Control Protections
We do not have change in control agreements with any of our employees.

45



Under the Equity Incentive Plan, and unless provided otherwise in an award agreement or determined by our Compensation Committee, if a change in control occurs, outstanding service-vesting options will vest immediately prior to the change in control and time-based restricted stock units will vest upon the change in control. With respect to performance restricted stock units, in the event of a change in control, an amount of restricted stock units equal to the target award will remain outstanding and will vest on the vesting date, subject to the continued employment or service of the participant but without regard to the achievement of any performance goals. If the participant's employment or service is terminated by the Company without cause or for good reason (as defined in the applicable award agreement) within two years following the change in control, the outstanding performance restricted stock units will vest (at target) as of the termination date.
In addition, if during the five year period after a change in control our executives’ retiree medical plan is terminated or modified in a manner that is materially adverse to our executives, our executives, including our named executive officers, will be guaranteed their existing benefits under the plan during such five-year period and will receive a cash payment equal to the excess of the actuarial cost of the executive’s benefits under the plan that would be accrued on the Company’s financial statements on the fifth anniversary of the change in control in the absence of the termination or modification over the amount that is accrued on our financial statements on the fifth anniversary of the change in control after giving effect to the termination or modification (but excluding the accrual on the payment itself).

46



The following table presents potential payments to each named executive officer as if the named executive officer’s employment had been terminated or a change in control had occurred as the last day of fiscal year 2019. If applicable, amounts in the table were calculated using $58.14, the closing fair market value of our common stock on March 29, 2019. The actual amounts that would be paid to any named executive officer can only be determined at the time of an actual termination of employment or change in control and would vary from those listed below. The estimated amounts listed below are in addition to any retirement, welfare and other benefits that are available to our salaried employees generally.
 
Severance
Pay
 1
Equity With
Accelerated 
Vesting 2
 
Retirement
 Plan
Benefits
8
Death and
Disability 
Benefits
 
Continued
Perquisites 
and Benefits
 
Total
Name
($)
($)
 
($)
($)
 
($)
 
($)
Horacio D. Rozanski
 
 
 
 
 
 
 
 
 
Death
8,246,399
 
2,125,000
3 
  
10,371,399

Disability
 
3,011,477
4 
1,550,492
5 
4,561,969

Involuntary Termination
1,500,000
 
  
30,000
6 
1,530,000

Retirement 11
 
195,000
  
1,700,594
7 
1,895,594

Voluntary Resignation
 
  
  
Termination for Cause
 
  
  
Change-In-Control
2,830,018
 
  
1,550,492
9 
4,380,510

Involuntary Termination After Change-In-Control
5,416,381
 
  
 
5,416,381

Lloyd W. Howell, Jr.
 
 
 
 
 
 
 
 
 
Death
4,484,418
 
2,085,417
3 
  
6,569,835

Disability
 
2,876,762
4 
1,448,250
5 
4,325,012

Involuntary Termination
1,025,000
 
  
30,000
6 
1,055,000

Retirement 11
 
185,000
  
1,533,502
7 
1,718,502

Voluntary Resignation
 
  
  
Termination for Cause
 
  
  
Change-In-Control
2,065,038
 
  
1,448,250
9 
3,513,288

Involuntary Termination After Change-In-Control
2,419,380
 
 
 
2,419,380

Karen M. Dahut
 
 
 
 
 
 
 
 
 
Death
4,484,418
 
2,085,417
3 
  
6,569,835

Disability
 
2,597,632
4 
1,188,725
5 
3,786,357

Involuntary Termination
1,025,000
 
  
30,000
6 
1,055,000

Retirement 11
 
145,000
  
1,272,219
7 
1,417,219

Voluntary Resignation
 
  
  
Termination for Cause
 
  
  
Change-In-Control
2,065,038
 
  
1,188,725
9 
3,253,763

Involuntary Termination After Change-In-Control
2,419,380
 
  
 
2,419,380

Nancy J. Laben
 
 
 
 
 
 
 
 
 
Death
2,313,851
 
2,054,167
3 
  
4,368,018

Disability
 
2,268,367
4 
 
2,268,367

Involuntary Termination
487,500
 
 
30,000
6 
517,500

Retirement 10
 
 
 
Voluntary Resignation
 
 
  
Termination for Cause
 
 
  
Change-In-Control
1,562,508
 
 
1,562,508

Involuntary Termination After Change-In-Control
751,343
 
 
751,343

Susan L. Penfield
 
 
 
 
 
 
 
 
 
Death
2,907,535
 
2,066,667
3 
  
4,974,202

Disability
 
2,265,497
4 
1,017,279
5 
3,282,776

Involuntary Termination
800,000
 
  
30,000