DEF: Dana Incorporated Seeks Shareholder Approval for Director Elections, Executive Pay, and Incentive Plan Amendment at 2025 Annual Meeting

Dana Incorporated's proxy statement outlines proposals for the 2025 Annual Meeting, including director elections, executive compensation, and an amendment to the 2021 Omnibus Incentive Plan.

Summary

• Dana Incorporated has released its proxy statement for the 2025 Annual Meeting of Shareholders, scheduled to be held virtually on April 24, 2025.
• Shareholders will vote on several key proposals, including the election of nine directors, an advisory vote on executive compensation, and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
• A significant proposal involves the approval of an amendment to the Dana Incorporated 2021 Omnibus Incentive Plan, seeking to increase the number of shares available for issuance by 1,900,000.
• The proxy statement also includes information on corporate governance, executive compensation, and other matters to be considered at the meeting.
• The Board of Directors recommends voting for the election of the director nominees, the advisory vote on executive compensation, and the ratification of the appointment of the independent registered public accounting firm.
• The Board of Directors recommends voting for the amendment to the Dana Incorporated 2021 Omnibus Incentive Plan.
• A shareholder proposal requests that the Board of Directors adopt an enduring policy, and amend the governing documents as necessary in order that 2 separate people hold the office of the Chairman and the office of the CEO.
• The Board of Directors recommends voting against the shareholder proposal for an independent board chairman.

Sentiment

Score: 7

Explanation: The document presents a balanced view, highlighting both positive strategic initiatives and challenges. The focus on cost reduction and efficiency improvements suggests a proactive approach to addressing market pressures. The change in CEO and strategic direction introduces some uncertainty, but the company's commitment to specific financial targets provides a degree of confidence.

Positives

• The Board is actively engaged in succession planning, with regular reviews of leadership talent at all organizational levels.
• Dana maintains a robust risk management program overseen by the Executive Leadership Team and various Board committees.
• The company has a clawback policy in place to recoup incentive compensation in the event of a restatement of financial results.
• Dana's executive compensation program features best practices such as objective incentive measures, stock ownership guidelines, and double-trigger vesting of severance payments upon a change in control.
• The company was recognized as a Global Top Employer 2025 by the Top Employers Institute for its human resources programs.

Negatives

• A shareholder proposal suggests a lack of independent oversight due to the combined Chairman and CEO role, though the Board argues that the Lead Independent Director provides sufficient balance.
• The company's stock price has seen a significant drop from $32 in 2017 to $8 in late 2024, which the shareholder proposal attributes to the current board leadership structure.

Risks

• The proxy statement highlights the importance of retaining and attracting talent, suggesting a risk of losing key personnel if compensation and incentives are not competitive.
• The company faces risks related to its financial performance, as evidenced by the performance metrics used in the annual incentive plan, such as Adjusted EBITDA and Adjusted Free Cash Flow.
• The company is undergoing a significant corporate transformation, which could present challenges and uncertainties.
• The company is currently searching for a permanent CEO, which could create instability and uncertainty.

Future Outlook

Dana's 2025 outlook reinforces the impact of strategic actions to solidify its leadership position in the automotive industry and capitalize on the strength of its traditional and EV on-highway businesses, with a commitment to delivering Adjusted EBITDA margins, excluding Off-Highway, of 9.5% to 10.5% in 2026.

Management Comments

• The executive leadership team, in close collaboration with the Board, announced a change in strategy to focus on core on-highway markets, accelerate value creation by significantly improving the Company's cost structure, delivering profitable growth through disciplined investment and refining the Company's electrification strategy.
• The Company has committed to delivering Adjusted EBITDA margins, excluding Off-Highway, of 9.5% to 10.5% in 2026.

Industry Context

Dana's strategic shift towards core on-highway markets and electrification aligns with broader industry trends, as automotive manufacturers increasingly focus on electric vehicles and advanced technologies. The company's emphasis on cost reduction and operational efficiency reflects the competitive pressures within the automotive parts and equipment sector.

Comparison to Industry Standards

• The compensation peer group includes companies such as Adient plc, Illinois Tool Works Inc., Allison Transmission Holdings, Inc., and Eaton Corporation plc, which are in similar industries where Dana competes for talent, customers, and capital.
• The peer group companies are of similar size (as measured by annual revenue), with a range of approximately 1/3rd to 3x Dana's revenue that results in a median revenue close to Dana's.
• The peer group companies are of similar complexity to Dana (e.g., multi-country and multi-segment with an emphasis on technology).

Management Changes

Corporate Governance

Related Party Transactions

• In January 2022, Dana entered into a director appointment and nomination agreement, dated January 7, 2022 (the Icahn Agreement), with Mr. Carl C. Icahn and the entities listed therein, pursuant to which Dana agreed to, among other things, on or prior to January 7, 2022 (i) increase the size of the Board of Directors to twelve (12) directors; and (ii) appoint Gary Hu and Brett M. Icahn, (collectively, the Initial Icahn Designees) to the Board of Directors to fill the resulting vacancies, with such appointments effective on January 7, 2022.
• In January 2025, Dana entered into an amendment, dated January 23, 2025, to the Icahn Agreement (the Icahn Amendment), with Mr. Carl C. Icahn and the entities listed therein, (collectively, the Icahn Group), pursuant to which Dana agreed to certain amendments to the Icahn Agreement, including the appointment of Brett Icahn and Christian Garcia (collectively, the New Icahn Designees and together with any replacement designees, the Icahn Designees) to the Board of Directors to fill the vacancies created by the resignations of Gary Hu and Steven Miller.

Stakeholder Impact

• Shareholders are directly impacted by the proposals being voted on, including director elections, executive compensation, and the incentive plan amendment.
• Employees are affected by the executive compensation policies and the terms of the incentive plan.
• Customers and suppliers may be indirectly impacted by the company's strategic direction and operational efficiency initiatives.

Next Steps

• Shareholders are urged to vote on the proposals outlined in the proxy statement.
• The company will continue its search for a permanent CEO.
• Dana will proceed with the planned divestiture of its Off-Highway business.
• The company will implement its comprehensive company-wide restructuring program to achieve $300 million in annualized cost savings.

Key Dates