Aptiv is providing the following supplemental information regarding the Compensation Discussion and
Analysis provided in the Companys proxy materials for the 2023 Annual General Meeting of Shareholders to be held on April 26, 2023. In light of the rationale described in our proxy statement, and the additional information set forth in
this supplement, Aptiv reiterates its recommendation to vote FOR approval of the compensation of Aptivs named executive officers (NEOs).
Background and Philosophy
The Compensation and Human
Resources Committee of the Board of Directors (the Compensation Committee) carefully deliberated and after considering and weighing all of the facts, exercised its judgment and made its decisions regarding 2022 executive compensation
that it believed were in the best interests of Aptiv and its shareholders. As discussed in more detail below, Aptiv is in the midst of a transformation. The Compensation Committee has complete confidence in managements ability to achieve its
transformative strategy, as the senior members of the team have successfully executed an equally robust transformation previously. The Compensation Committee knows, however, that Aptiv can only be successful if we both retain the existing executive
team and attract and incentivize new executive leadership and technical talent; and that is what the 2022 compensation program was intended to do.
The
transition to the fully-electrified software-defined vehicle represents the next major opportunity for profitable growth for the mobility industry and has resulted in significant competition for attracting and retaining software development,
artificial intelligence and machine learning, and systems engineering talent. In order to successfully transform our business to capitalize on the opportunity, and thereby increase shareholder value, we must ensure we have the right talent capable
of rapidly driving the changes necessary to position Aptiv as the only full-systems solution provider for the electrified, software-defined vehicle.
Balancing pay-for-performance with shareholder alignment is a hallmark of our
executive compensation program. Our leadership team relentlessly focuses on the key short- and long-term metrics that are critical to executing our business strategy, creating a more sustainable business, and driving shareholder value.
CEO Compensation Is Predominantly At-Risk and Performance-Based
The Compensation Committee approved the CEO target compensation in January 2022, considering individual performance and the Companys strong operational
and financial performance, as well as the shareholder returns achieved in the prior year. The Compensation Committee increased the CEOs 2022 long-term incentive opportunity by $1 million to maintain competitiveness of our executive
compensation program and to foster closer alignment with the interests of our shareholders. The CEOs base salary and the target annual incentive opportunity for 2022 were not increased.
Consistent with the Companys pay for performance mindset, 91% of the CEOs 2022 total target annual compensation (and 82% of other NEOs) was
at risk and 60% of the equity incentives were delivered in the form of performance-based RSUs with vesting tied to our performance against Average Return on Net Assets, Cumulative Net Income and Relative TSR targets.
2022 Annual Incentive Plan Payouts Aligned with Shareholders
We consistently set performance targets that are rigorous and aligned with the priorities of our transformation strategy. In January 2022, the Compensation
Committee established performance goals for the annual incentive plan that reflected our focus on increased performance over prior year actual outcomes and sustained above-market revenue growth in the performance period.
As previously reported, Aptiv delivered numerous business achievements in 2022, including record new business bookings, strong revenue growth and
profitability, despite the adverse impacts of unplanned external macroeconomic and geopolitical events, the completion of two transformational acquisitions and the overall achievement of ESG targets. Accordingly, the Compensation
Committee determined that it was reasonable and appropriate to make select adjustments allowed under the Annual Incentive Plan to account for the impacts of extraordinary factors that the Compensation Committee was certain were outside of
managements control. The Compensation Committee determined that this approach would more accurately recognize managements actual performance achievements for the year, and accordingly, allow Aptiv to retain and appropriately incentivize
its executives.
1