In a recent Securities and Exchange Commission (SEC) filing, Spirit AeroSystems (NYSE:SPR) Holdings, Inc. disclosed significant changes to executive compensation, tied to its impending merger with The Boeing Company (NYSE:BA). The adjustments, approved on Monday, are designed to mitigate the impact of potential "excess parachute payments" under tax codes, which could affect both the company and its executive officers.
The filing revealed that certain time-based restricted stock units (RSUs) scheduled for vesting in 2025 will now vest in December 2024 for select executives, including President and CEO Patrick M. Shanahan. This move is intended to offset potential duplication of payments upon completion of the merger, where Spirit will become a wholly owned subsidiary of Boeing.
Specifically, Shanahan will receive accelerated vesting for 272,573 RSUs, valued at an estimated $9,540,055, based on a share price of $35.00. The accelerated vesting and settlement of these RSUs will be subject to applicable tax withholdings and are contingent upon the terms of a 280G Acceleration and Clawback Acknowledgement.
Under this Acknowledgement, if an executive's employment is terminated prior to the original vesting date, they must repay the cash value of the shares received. Additionally, if repayment is not made promptly, the executive may be liable for any reasonable fees incurred by Spirit in seeking repayment.
In other recent news, Airbus, the aerospace giant, is grappling with supply chain challenges due to issues with Spirit AeroSystems, a major supplier of fuselage parts and other aerostructures. The issues are affecting the production of key structural components for Airbus' largest and smallest aircraft, the A350 and A220, respectively. The company's commercial aircraft division CEO, Christian Scherer, has acknowledged ongoing challenges with engine supplies from CFM International and production issues at Spirit AeroSystems. Airbus has reportedly sent dozens of its workers to key Spirit factories to aid in stabilizing operations.
Furthermore, Spirit AeroSystems, a major supplier to Boeing, is actively reviewing its furlough plans in light of an ongoing strike by Boeing's U.S. West Coast workforce. The aerospace company is preparing to take this step if the industrial action affecting its largest customer does not resolve.
InvestingPro Insights
As Spirit AeroSystems prepares for its merger with Boeing, InvestingPro data provides additional context to the company's financial situation. Spirit's market capitalization stands at $3.76 billion, with a revenue of $6.45 billion over the last twelve months as of Q2 2024. Despite a 19.53% revenue growth in this period, the company faces significant challenges.
InvestingPro Tips highlight that Spirit AeroSystems operates with a substantial debt burden and may have trouble making interest payments. This financial strain aligns with the company's strategic decisions regarding executive compensation, as outlined in the SEC filing. The accelerated vesting of RSUs for executives like CEO Patrick M. Shanahan could be seen as a measure to retain key leadership during this critical merger period.
Another relevant InvestingPro Tip indicates that Spirit is quickly burning through cash, which may explain the company's efforts to preserve corporate income tax deductions and mitigate potential excise taxes on executives. These financial maneuvers become particularly significant in light of the impending merger with Boeing.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Spirit AeroSystems, providing a deeper understanding of the company's financial health and market position as it approaches this transformative merger.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.