Aerojet Rocketdyne Holdings Inc
Aerojet Rocketdyne — Proxy Contest (June 2022)
95 slides from Aerojet Rocketdyne's proxy contest presentation, Jun 9, 2022
Slide 1: The Path to Improved Value Creation at Aerojet Rocketdyne
THE PATH TO IMPROVED VALUE CREATION AT AEROJET ROCKETDYNE INVESTOR PRESENTATION | JUNE 2022 Potential is interesting, but execution is everything.
Slide 2: Disclaimer
DISCLAIMER The materials contained herein (the “Materials”) represent the opinions of Steel Partners Holdings L.P. and the other participants named in this proxy solicitation (collectively, “Steel Partners”) and are based on publicly available information with respect to Aerojet Rocketdyne Holdings,
Slide 3: Table of Contents
TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY II. WHY MS. DRAKE AND HER SLATE SHOULD NOT LEAD THE COMPANY III. WHY MR. LICHTENSTEIN’S SLATE AND CEO CANDIDATE MARK TUCKER SHOULD LEAD THE COMPANY IV. A NEW OPERATING PLAN AND VALUE CREATION STRATEGY V. APPENDICES 3
Slide 4: About Aerojet Rocketdyne
ABOUT AEROJET ROCKETDYNE Business History & Lockheed Transaction Overview Key Financial Metric: Free Cash Flow (“FCF”) ▪ Aerojet Rocketdyne Holdings Inc. (“Aerojet Rocketdyne” or the “Company”) is a technology-focused manufacturer of defense and space products that also has a real estate segment. ▪
Slide 5: About Warren Lichtenstein
ABOUT WARREN LICHTENSTEIN Mr. Lichtenstein, who was appointed Executive Chairman by his fellow directors in 2016 and remains a top three shareholder, is the architect of the high-potential organization that exists today. The Facts Speak for Themselves ▪ 2000 – First invests in Aerojet Rocketdyne. ▪
Slide 6: Why Warren Lichtenstein Is Executive Chairman
WHY WARREN LICHTENSTEIN IS EXECUTIVE CHAIRMAN The Board – including three members of Ms. Drake’s current slate – clearly articulated that it appointed Mr. Lichtenstein Executive Chairman to augment Ms. Drake’s capabilities. The below explanation was included in some form in the 2017, 2018, 2019, 202
Slide 7: About the June 30th Special Meeting: Two Slates of Director Candidates
ABOUT THE JUNE 30TH SPECIAL MEETING: TWO SLATES OF DIRECTOR CANDIDATES THE DRAKE SLATE THE CHAIRMAN’S REFRESHED SLATE INCUMBENT NOMINEES INCUMBENT NOMINEES Eileen Drake Gen. Lance Lord* Thomas Corcoran* Gen. Kevin Chilton* Warren Lichtenstein Martin Turchin NEW AND INDEPENDENT NOMINEES NEW AND INDEP
Slide 8: About the June 30th Special Meeting: Two Distinct Value Propositions
ABOUT THE JUNE 30TH SPECIAL MEETING: TWO DISTINCT VALUE PROPOSITIONS THE DRAKE SLATE, WHICH IS COMMITTED TO THE CHAIRMAN’S REFRESHED SLATE, WHICH MS. DRAKE REMAINING CEO FEATURES NEW CEO CANDIDATE MARK TUCKER The Drake Faction – which failed to engage in adequate The Chairman’s recently refreshed sl
Slide 9: The Importance of the May Trial Over Ms. Drake's Misuse of Corporate Resources
THE IMPORTANCE OF THE MAY TRIAL OVER MS. DRAKE’S MISUSE OF CORPORATE RESOURCES ▪ Beginning in early 2022, the record shows that Ms. Drake and her three boardroom allies used the corporate machinery and Company resources to pursue Board control and prioritize their interests. ▪ The Company’s unauthor
Slide 10: Why There Is a Contest for the Future of Aerojet Rocketdyne
WHY THERE IS A CONTEST FOR THE FUTURE OF AEROJET ROCKETDYNE THE DRAKE FACTION THE DRAKE FACTION THE DRAKE FACTION THE DRAKE FACTION DID NOT PLAN FOR THE ALLOWED BUSINESS WILL NOT ADDRESS KEY LEFT US NO CHOICE BUT MERGER NOT DETERIORATION IN 2021 CHALLENGES TO NOMINATE A SLATE OCCURRING Rather than i
Slide 11: Your Vote Should Be Informed by Three Forward-Looking Questions
YOUR VOTE SHOULD BE INFORMED BY THREE FORWARD-LOOKING QUESTIONS 1 2 3 WHO HAS MORE CREDIBILITY? WHO HAS THE RIGHT CHIEF WHO HAS THE BETTER PLAN EXECUTIVE OFFICER? AND VISION? Our recently refreshed slate is aligned with fellow investors and has a record Our slate has recruited former Aerojet Our sla
Slide 12: A Review of the Past Months: The Company's Deterioration
A REVIEW OF THE PAST 18 MONTHS: THE COMPANY’S DETERIORATION “After dedicating well over a decade working to transform Aerojet Rocketdyne, it was painful to be sidelined over the past 18 months as our financial and operational foundation deteriorated. This avoidable deterioration is evidenced by fact
Slide 13: Following the 2020 Merger Announcement, Regulatory Threats Were Downplayed
FOLLOWING THE 2020 MERGER ANNOUNCEMENT, REGULATORY THREATS WERE DOWNPLAYED Rather than keeping her foot on the gas and preserving the culture of operational excellence established by Mr. Tucker, who departed in late 2020, Ms. Drake ran the business like it was proceeding toward a guaranteed transact
Slide 14: Financial and Operational Foundation Was Allowed to Deteriorate
FOLLOWING THE 2020 MERGER ANNOUNCEMENT, THE COMPANY’S FINANCIAL AND OPERATIONAL FOUNDATION WAS ALLOWED TO DETERIORATE After the departure of Mr. Tucker in late 2020 and the sidelining of Mr. Lichtenstein in early 2021, Aerojet Rocketdyne’s operational foundation began to fall apart – with value-dest
Slide 15: Do Not Be Misled: One-Time Gimmicks and Short-Term TSR
DO NOT BE MISLED: MS. DRAKE, WHO HAS HIGHJACKED THE COMPANY, IS USING ONE-TIME GIMMICKS AND A FOCUS ON SHORT-TERM TSR TO TRY TO MASK MATERIAL VULNERABILITIES Free Cash Flow ($ in millions) $350 $309 $300 $250 $218 $210 $200 $150 CARES Act $100 $100 Money $50 $62 $0 2018 2019 2020 2021 Although the C
Slide 16: Evidence of Deterioration: Unhappy Customers
EVIDENCE OF DETERIORATION: UNHAPPY CUSTOMERS Key customers have expressed frustration with the Company’s inability to meet production timelines and provide on-time delivery. BOEING RAYTHEON UNITED LAUNCH ALLIANCE On the rocket motor side, this impacts The Company suffered a fire in most of the RMD b
Slide 17: Evidence of Deterioration: Disconnect Between Profitability and Cash Burn
EVIDENCE OF DETERIORATION: DISCONNECT BETWEEN “PROFITABILITY” AND CASH BURN While 2021 program revenues and “profit” grew and met or exceeded management’s plan, program cash flows materially underperformed both management’s plan and the prior year. KEY PROGRAMS BURNING CASH Missile Defense Defense a
Slide 18: Evidence of Deterioration: Hemorrhaging Talent
EVIDENCE OF DETERIORATION: HEMORRHAGING TALENT, INCLUDING 750+ EMPLOYEES IN 2021 We believe that Ms. Drake is alienating key talent, as evidenced by historically high rates of attrition and the recent departure of her chief operating officer and general counsel. Examples of these numerous departures
Slide 19: Evidence of Deterioration: Unhappy Employees
EVIDENCE OF DETERIORATION: UNHAPPY EMPLOYEES Current and former Aerojet Rocketdyne employees appear to be overwhelmingly disappointed by Ms. Drake’s inability to run the Company effectively and create a long-term, strategic vision. […] Horrible senior and executive Company is bleeding talent from al
Slide 20: Evidence of Deterioration: Poorly Performing Business Units
EVIDENCE OF DETERIORATION: POORLY PERFORMING BUSINESS UNITS DEFENSE ▪ The Company’s defense programs have suffered from an inability to reach quantitative production goals, underperforming management’s plan by between $22 - $25 million EACH YEAR for the past two years. ▪ Specifically, the Standard M
Slide 21: Evidence of Deterioration: Poor Capital Allocation
EVIDENCE OF DETERIORATION: POOR CAPITAL ALLOCATION Overspending on Materials Underspending on Key R&D Functions High Levels of Corporate Overhead Has the Effect of Boosting Revenue and Profits Significantly Impacting Long-Term Competitive Advantage Misuse of Company Resources Contract Assets ($ in m
Slide 22: Mr. Lichtenstein Was Prevented From Trying to Stop the Deterioration
MR. LICHTENSTEIN WAS PREVENTED FROM TRYING TO STOP THE DETERIORATION Documents show that management was directed to withhold information pertaining to the business from Mr. Lichtenstein, who was entitled to such information as Executive Chairman. “[…] Tyler is not avoiding you on his own desire. We
Slide 23: Mr. Lichtenstein Was Prevented From Trying to Stop the Deterioration (Cont.)
MR. LICHTENSTEIN WAS PREVENTED FROM TRYING TO STOP THE DETERIORATION (CONT.) Documents show that Mr. Lichtenstein attempted to call a Board meeting to address critical issues but was rebuffed. 23
Slide 24: Why Ms. Drake Cannot Be Relied Upon to Fix and Run the Company
WHY MS. DRAKE CANNOT BE RELIED UPON TO FIX AND RUN THE COMPANY MOVING FORWARD ▪ Fall 2020: When pressed about whether the Lockheed deal was the best option for shareholders, Ms. Drake told the Board it would face litigation risk and threatened to leave the Company – putting shareholders at risk. ▪ S
Slide 25: Recap: The Deterioration of Aerojet Rocketdyne Is Undeniable, But Fixable
RECAP: THE DETERIORATION OF AEROJET ROCKETDYNE IS UNDENIABLE, BUT FIXABLE As a result of management’s inaction and ineffectiveness following the announcement of the Lockheed deal, challenges have mounted at Aerojet Rocketdyne – putting shareholders at significant risk today. ▪ BUSINESS UNIT UNDERPER
Slide 26: The Path Forward: Mark Tucker's Vision
THE PATH FORWARD: MARK TUCKER’S VISION “We are going to heal the organization so employees, customers and shareholders once again trust us. From there, we can enhance shareholder value over the next three years and unlock growth opportunities for the longer term by establishing fundamentally sound p
Slide 27: Mark Tucker Is the Right CEO at the Right Time
MARK TUCKER IS THE RIGHT CEO AT THE RIGHT TIME Mr. Tucker, who served as Aerojet Rocketdyne COO and held senior roles at Northrop Grumman, has deep organization knowledge and a vision for fixing morale, delivery, production and operational issues threatening shareholder value. He is ready to do the
Slide 28: Mr. Tucker Has the Endorsement of Former CEO Scott Seymour
MR. TUCKER HAS THE ENDORSEMENT OF FORMER AEROJET ROCKETDYNE CEO SCOTT SEYMOUR Mr. Seymour, who was CEO for five years and spent time overseeing both Mr. Tucker and Ms. Drake, provided the following statement on June 7, 2022: “Mark Tucker has the experience, skills and vision required to be CEO of a
Slide 29: Mr. Tucker Already Working on Preemptive Initiatives
MR. TUCKER HAS ALREADY BEEN WORKING WITH HIS FELLOW NOMINEES ON PREEMPTIVE INITIATIVES TO ADDRESS RISKS AND MAINTAIN CONTINUITY FORTIFY LEADERSHIP TEAM REASSURE & RETAIN CUSTOMERS ENSURE FINANCIAL STABILITY ▪ Conducted review of leaders impacted by ▪ Developed plan to review all customer ▪ Conducted
Slide 30: Overview: A Commitment to Healing the Organization
OVERVIEW: A COMMITMENT TO HEALING THE ORGANIZATION Mr. Tucker will take the lead on engaging with several key stakeholder groups over his first 100 days to understand their pain points and go-forward needs. ✓ IN-PERSON EMPLOYEE LISTENING TOUR AT ALL PLANTS ✓ INITIATE EMPLOYEE SURVEY TO UNDERSTAND PA
Slide 31: Overview: A Commitment to Stronger Governance and Shareholder Engagement
OVERVIEW: A COMMITMENT TO STRONGER GOVERNANCE AND SHAREHOLDER ENGAGEMENT In addition to immediately eliminating the Executive Chairman role after the Special Meeting, Mr. Tucker and his fellow nominees are firmly committed pursuing a number of enhancements once seated. ✓ APPOINTING A LEAD DIRECTOR ✓
Slide 32: Overview: The Strategy to Fix the Business
OVERVIEW: THE STRATEGY TO FIX THE BUSINESS AND STRENGTHEN ITS VALUE PROPOSITION Mr. Tucker intends to strengthen operations and optimize costs to drive enhanced sales, margins and cash flows – which we estimate could result in $65 per share in value or more within three years. Improve performance ac
Slide 33: Viable Path to Realizing More Than $65 Per Share Within Three Years
THERE IS A VIABLE PATH TO REALIZING MORE THAN $65 PER SHARE WITHIN THREE YEARS Operational improvements and capital structure optimization should drive meaningful appreciation in the Company’s stock price. ▪ Baseline unlevered free cash flow based on illustrative 50% EBITDAP conversion. ▪ Operationa
Slide 34: Viable Path to Significantly Improving Profitability
THERE IS ALSO A VIABLE PATH TO SIGNIFICANTLY IMPROVING PROFITABILITY Enhanced program management and disciplined allocation of SG&A spend should drive a meaningful increase in profitability. 2025 Adjusted EBITDAP Bridge ($ in millions) $500 $30 million necessary $50 million gross profit $35 million
Slide 35: Why Ms. Drake and Her Slate Should Not Lead the Company
WHY MS. DRAKE AND HER SLATE SHOULD NOT LEAD THE COMPANY
Slide 36: The Company's Financial Performance Lags Peers
THE COMPANY’S FINANCIAL PERFORMANCE LAGS PEERS Under Ms. Drake’s leadership, Aerojet Rocketdyne has fallen behind peers. Revenue Growth(1) Gross Profit Margin 2018A 2019A 2020A 2021A 2022E 5-yr Avg. 2018A 2019A 2020A 2021A 2022E 5-yr Avg. AeroVironment 37% (6%) 23% 14% 11% 16% AeroVironment 42% 43%
Slide 37: Aerojet Rocketdyne Trades at a Discount to Its Peers
AEROJET ROCKETDYNE TRADES AT A DISCOUNT TO ITS PEERS Under Ms. Drake’s leadership, Aerojet Rocketdyne trades at a discount to peers and has failed to optimally capitalize on the business. Select Public Aerospace & Defense Companies ($ in millions, except per share figures) Valuation 2021 Financial S
Slide 38: Trades at a Discount to Relevant Recent M&A Transactions
AEROJET ROCKETDYNE TRADES AT A DISCOUNT TO RELEVANT RECENT M&A TRANSACTIONS Under Ms. Drake’s leadership, Aerojet Rocketdyne’s market valuation has continued to lag peers’ realized transaction value. Select Precedent Aerospace & Defense Transactions Date Transaction EV / LTM Announced Target Acquire
Slide 39: Ms. Drake's Credibility as CEO Has Eroded
MS. DRAKE’S CREDIBILITY AS CEO HAS ERODED OVER THE LAST 18 MONTHS She has not focused on running the business since the Lockheed transaction was announced. MISUSE OF RESOURCES UNPROFESSIONAL THREATS Ms. Drake spent Company funds and requested additional uncapped capital Ms. Drake has threatened to q
Slide 40: Ms. Drake's Choice of Nominees Demonstrates Lack of Credibility
MS. DRAKE’S CHOICE OF NOMINEES FURTHER DEMONSTRATES HER LACK OF CREDIBILITY AND VISION Gail Baker Marion Blakey Maj. Gen. Charlie Bolden Kevin Chilton x Lack of public company x Lack of corporate x Lack of operating x Lack of operating board experience governance expertise experience experience x In
Slide 41: Ms. Drake's Choice of Nominees (Cont.)
MS. DRAKE’S CHOICE OF NOMINEES FURTHER DEMONSTRATES HER LACK OF CREDIBILITY AND VISION (CONT.) Thomas Corcoran Eileen Drake Deborah Lee James Gen. Lance Lord x Lack of corporate x Insufficient ownership x Lack of capital allocation x Lack of operating governance expertise acumen experience x Failure
Slide 42: Drake Faction Put Forth a Bare-Bones Plan
THE DRAKE FACTION PUT FORTH A BARE-BONES “PLAN” THAT COPIES THE KEY TENETS OF OUR PLAN BUT LACKS ANY SPECIFICITIES The Drake Faction’s presentation released on June 7th essentially copies the key elements of our plan but is devoid of any detailed forward-looking plans for the business – demonstratin
Slide 43: Ms. Drake Is Not Aligned With Shareholders
MS. DRAKE IS NOT ALIGNED WITH SHAREHOLDERS – AND NOW WANTS TO TAKE THE UNPRECEDENTED STEP OF HAND-PICKING HER OWN BOARD Ms. Drake has been a persistent seller of Aerojet Rocketdyne stock and has never purchased shares in the open market. ▪ As far as we can tell, Ms. Drake has never – in all her year
Slide 44: Ms. Drake Has Received Outsized Compensation Despite Underperformance
MS. DRAKE HAS RECEIVED OUTSIZED COMPENSATION DESPITE UNDERPERFORMANCE Despite an apparent lack of accountability and focus on performance as demonstrated by poor results since the Lockheed merger was announced, the Organization and Compensation Committee – led by Ms. Drake’s allies – has rewarded Ms
Slide 45: Ms. Drake's Compensation Is Inordinately High
MS. DRAKE’S COMPENSATION IS INORDINATELY HIGH AND DETERMINED BY HER FACTION Total Compensation ($ in thousands) Short-Term Incentive Plan Performance Targets (% of maximum) $12,000 150% Bookings have consistently been exactly in $9,640 Ms. Drake’s equity line with Ms. Drake’s maximum incentive $9,00
Slide 46: Ms. Drake Has Wasted Shareholder Capital
MS. DRAKE HAS WASTED SHAREHOLDER CAPITAL Ms. Drake launched a costly, distracting and unnecessary investigation into Mr. Lichtenstein on baseless claims that we believe was retaliatory and had nothing to do with the best interest of shareholders. The investigation’s conclusions discredited Ms. Drake
Slide 47: Ms. Drake Attempted to Avoid Consequences of Misuse of Corporate Resources
MS. DRAKE HAS ATTEMPTED TO AVOID THE CONSEQUENCES OF HER MISUSE OF CORPORATE RESOURCES AND ABUSE HER POSITION OF POWER In our view, Ms. Drake acted unlawfully by misusing Company resources to pursue her personal takeover campaign and was hit with a temporary restraining order by the Delaware Court o
Slide 48: Why Mr. Lichtenstein's Slate and Mark Tucker Should Lead the Company
WHY MR. LICHTENSTEIN’S SLATE AND CEO CANDIDATE MARK TUCKER SHOULD LEAD THE COMPANY
Slide 49: Mr. Lichtenstein's Track Record of Long-Term Shareholder Value Creation
MR. LICHTENSTEIN HAS A TRACK RECORD OF LONG-TERM SHAREHOLDER VALUE CREATION AT AEROJET ROCKETDYNE Since Mr. Lichtenstein joined the Board in 2008, he has helped drive TSR of more than 250%. DURING MR. LICHTENSTEIN’S BOARD TENURE, DURING MR. LICHTENSTEIN’S BOARD TENURE, AEROJET ROCKETDYNE HAS PRODUCE
Slide 50: Drake's Investigation of Mr. Lichtenstein Did Not Support Her Claims
MS. DRAKE’S HIGHLY-TOUTED INVESTIGATION OF MR. LICHTENSTEIN DID NOT SUPPORT HER CLAIMS The investigation found that: Mr. Lichtenstein’s conduct did not constitute harassment or retaliation and was not improper under applicable Company policies or law. Mr. Lichtenstein did not violate his fiduciary d
Slide 51: Mr. Lichtenstein Responsibly Engaged in Contingency Planning
MR. LICHTENSTEIN RESPONSIBLY ENGAGED IN CONTINGENCY PLANNING In contrast to Ms. Drake, Mr. Lichtenstein attempted to best position Aerojet Rocketdyne for the future. ✓ In March 2021 – days after Aerojet Rocketdyne shareholders voted to approve the Merger Agreement – Aerojet’s stock price fell to app
Slide 52: Mr. Tucker Is the Right Choice to Fix the Company
MR. TUCKER IS THE RIGHT CHOICE TO FIX THE COMPANY AND ENHANCE SHAREHOLDER VALUE Our CEO candidate, Mr. Tucker, is a proven operator with the right experience and skillsets to help turn around the Company and create long-term value. Issues Currently Plaguing Aerojet Rocketdyne Mr. Tucker’s Relevant E
Slide 53: Mr. Tucker Committed to Measurable Progress and Engaging Shareholders
MR. TUCKER IS COMMITTED TO ACHIEVING MEASURABLE PROGRESS AND ENGAGING WITH SHAREHOLDERS Mr. Tucker intends to have an open line of communication with shareholders and be transparent about the Company’s operating performance and goals. Intends to meet with all major Will host quarterly earnings calls
Slide 54: Our Slate Possesses the Right Backgrounds and Skillsets
OUR SLATE POSSESSES THE RIGHT BACKGROUNDS AND SKILLSETS NEEDED AT THE COMPANY Hon. Tina Jonas Warren Lichtenstein Joanne Maguire Aimee Nelson ✓ Government financial experience ✓ Long-term shareholder perspective: ✓ Operational and engineering ✓ Extensive financial and and customer perspective: Serve
Slide 55: Our Slate Possesses the Right Backgrounds and Skillsets (Cont.)
OUR SLATE POSSESSES THE RIGHT BACKGROUNDS AND SKILLSETS NEEDED AT THE COMPANY (CONT.) Mark Tucker Martin Turchin Vice Admiral Mathias Winter Heidi Wood ✓ Deep operational familiarity with ✓ Extensive familiarity with Aerojet ✓ Decades of leadership, defense, ✓ Aerospace sector experience and Aerojet
Slide 56: Our Nominees Have the Skills and Experience Urgently Needed
OUR NOMINEES HAVE THE SKILLS & EXPERIENCE THAT ARE URGENTLY NEEDED AT AEROJET ROCKETDYNE Hon. Tina Warren Joanne Aimee Mark Martin Vice Admiral Heidi Jonas Lichtenstein Maguire Nelson Tucker Turchin Mathias Winter Wood Prior Operational & Executive Experience Capital Allocation & Finance Acumen Prio
Slide 57: A New Operating Plan and Value-Creation Strategy
A NEW OPERATING PLAN AND VALUE-CREATION STRATEGY
Slide 58: Tremendous Short and Long-Term Value Creation Potential
AEROJET ROCKETDYNE HAS TREMENDOUS SHORT AND LONG-TERM VALUE CREATION POTENTIAL We firmly believe that operational improvements and capital structure optimization can yield significant shareholder value creation, including a potential share price increase to more than $65 in three years based on our
Slide 59: Opportunity to Significantly Improve Profitability
OPPORTUNITY TO SIGNIFICANTLY IMPROVE PROFITABILITY We believe improved program management and disciplined allocation of SG&A spend can drive a significant improvement in profitability. 2025 Adjusted EBITDAP Bridge ($ in millions) $500 $30 million necessary $50 million gross profit $35 million SG&A i
Slide 60: Opportunity to Return Meaningful Cash to Shareholders
OPPORTUNITY TO RETURN MEANINGFUL CASH TO SHAREHOLDERS In the near-term, the Company could return between $1.2 billion and $1.8 billion of capital to shareholders through capital structure optimization, monetization of non-core assets and working capital improvements. Release of Cash / Cash Efficienc
Slide 61: Our Slate's Plan Could Achieve At Least $65 Per Share
OUR SLATE’S PLAN COULD ACHIEVE AT LEAST $65 PER SHARE OVER THREE YEARS BASED ON OUR ESTIMATES Mr. Tucker will look to significantly improve the Company’s operations and performance with the support of the rest of our highly qualified and experienced slate. Improve production and operations in defens
Slide 62: Our Slate Has a Viable Vision for Value Creation
OUR SLATE HAS A VIABLE VISION FOR VALUE CREATION If elected, our CEO candidate and director nominees plan to implement a two-pronged operating strategy that could achieve up to $65 per share in three years based on our estimates. 1 2 Implement a new operating plan that seeks to Conduct a holistic, c
Slide 63: Prioritize Human Capital Management
PRIORITIZE HUMAN CAPITAL MANAGEMENT ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES The failed Lockheed transaction, on top of leadership attrition a
Slide 64: Emphasize Customer Relations at All Levels
EMPHASIZE CUSTOMER RELATIONS AT ALL LEVELS OF THE BUSINESS ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Eroding customer confidence in Aerojet Roc
Slide 65: Program Execution and Operational Excellence
PROGRAM EXECUTION AND OPERATIONAL EXCELLENCE ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Underperforming programs represent a significant amount
Slide 66: Strengthen the Company's Defense Unit
STRENGTHEN THE COMPANY’S DEFENSE UNIT ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Our nominees would focus on fixing the internal production and
Slide 67: Strengthen the Company's Space Unit
STRENGTHEN THE COMPANY’S SPACE UNIT ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Based on our analysis, the Space unit’s cash flow position can al
Slide 68: Reduce Corporate Overhead and Spending
REDUCE CORPORATE OVERHEAD & SPENDING ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Over the next three years, our analysis suggests that $20 millio
Slide 69: Capital Structure and Allocation Improvements Are Needed
CAPITAL STRUCTURE & ALLOCATION IMPROVEMENTS ARE NEEDED ACROSS THE BOARD ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES We see significant opportunit
Slide 70: Prudently Reinvest in the Company's Business
PRUDENTLY REINVEST IN THE COMPANY’S BUSINESS ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES We are also cognizant of the importance of reinvestment
Slide 71: Enhance the Company's Corporate Governance
ENHANCE THE COMPANY’S CORPORATE GOVERNANCE ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Our nominees have a plan to adopt leading corporate govern
Slide 72: Focus on Shareholder Engagement
FOCUS ON SHAREHOLDER ENGAGEMENT ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES Investors have not been given the insight to the fundamental strength
Slide 73: Undertake a Credible, Holistic Review of Strategic Alternatives
UNDERTAKE A CREDIBLE, HOLISTIC REVIEW OF STRATEGIC ALTERNATIVES ORGANIZATIONAL STABILITY & LEADERSHIP PROGRAM EXECUTION & OPERATIONAL CAPITAL STRUCTURE & ALLOCATION CORPORATE GOVERNANCE ROBUST REVIEW OF STRATEGIC EXCELLENCE IMPROVEMENTS ENHANCEMENTS ALTERNATIVES If elected, our nominees will bring f
Slide 74: Conclusion: Vote on the GREEN Proxy Card
CONCLUSION We feel the choice between our slate and Ms. Drake’s slate should come down to credibility and vision. When evaluated through that lens, we expect the right choice will be clear. VOTE ON THE GREEN PROXY CARD WWW.SAVEAEROJET.COM 74
Slide 75: Appendix I – Nominee Biographies
APPENDIX I – NOMINEE BIOGRAPHIES
Slide 76: Biography for Hon. Tina Jonas
BIOGRAPHY FOR HON. TINA JONAS Ms. Jonas has held executive roles within the government and commercial sectors and is a recognized expert in military, defense and aerospace. ▪ Has decades of experience serving at the highest levels of the federal government, including as Undersecretary of Defense/Com
Slide 77: Biography for Warren Lichtenstein
BIOGRAPHY FOR WARREN LICHTENSTEIN Warren Lichtenstein has extensive experience in corporate finance, executive management and investing, serving as a director and advisor to a diverse group of public companies with significant operations experience in aerospace, defense, manufacturing and banking. ▪
Slide 78: Biography for Joanne Maguire
BIOGRAPHY FOR JOANNE MAGUIRE Ms. Maguire possesses significant engineering and general management expertise across the aerospace and defense sector as well as experience serving on the boards of directors of public technology companies. ▪ Currently serves on the boards of directors of CommScope Hold
Slide 79: Biography for Aimee Nelson
BIOGRAPHY FOR AIMEE NELSON Ms. Nelson possesses valuable expertise in business strategy as a result of her experience serving in various executive roles across different industries. ▪ Currently serves on the Board of Directors of CorpHousing Group Inc., an apartment rental operator. ▪ Former Chief F
Slide 80: Biography for Mark Tucker
BIOGRAPHY FOR MARK TUCKER Our CEO candidate, Mr. Tucker, possesses more than 35 years of experience in operations and management at leading aerospace and defense technology and manufacturing companies. ▪ Former Chief Operating Officer of Aerojet Rocketdyne from 2015 through 2020, where he oversaw a
Slide 81: Biography for Martin Turchin
BIOGRAPHY FOR MARTIN TURCHIN Mr. Turchin has held various leadership positions and has broad experience at public companies, with a particular focus on legal and real estate matters. ▪ Director of Aerojet Rocketdyne since 2008 and is member of the Audit and Corporate Governance & Nominating Committe
Slide 82: Biography for Vice Admiral Mathias Winter
BIOGRAPHY FOR VICE ADMIRAL MATHIAS WINTER Vice Admiral Winter possesses extensive leadership, defense, procurement, technology and national security expertise, including 35 years of military experience. ▪ Currently serves as an independent consultant providing technology and business advice to C-sui
Slide 83: Biography for Heidi Wood
BIOGRAPHY FOR HEIDI WOOD Ms. Wood has served in various executive leadership positions and has expertise in the aerospace industry. ▪ Currently serves as Executive Vice President, Business Development & Growth Initiatives of CAE Inc. (NYSE: CAE) (“CAE”), a manufacturer of simulation technologies, mo
Slide 84: Appendix II – Additional Context
APPENDIX II – ADDITIONAL CONTEXT
Slide 85: Timeline of Key Events (1/2)
TIMELINE OF KEY EVENTS (1/2) Ms. Drake met with the full Lockheed’s initial offer for Board outside of Mr. On March 9, 2021, Aerojet an all-cash merger valued After Lockheed informed shareholders voted to approve the Lichtenstein’s presence and Aerojet at $47.50 per Aerojet that $56 per share was Me
Slide 86: Timeline of Key Events (2/2)
TIMELINE OF KEY EVENTS (2/2) Mr. Lichtenstein proposed that (i.) the Board nominate seven incumbent Ms. Drake told the Organization and directors, leaving out Mr. Corcoran, (ii.) after the 2022 Annual Meeting, Compensation Committee that several the Board would add two diverse directors and (iii.) S
Slide 87: Mr. Lichtenstein's Compensation Has Been Tied to Share Price
MR. LICHTENSTEIN’S COMPENSATION HAS BEEN TIED TO SHARE PRICE Mr. Lichtenstein’s compensation as Executive Chairman is directly tied to appreciation of the Company’s share price and certain shares only vest if the stock reaches specific targets. Mr. Lichtenstein received no compensation in 2022. (ii)
Slide 88: The Company's Pension Plan Is Suffering
THE COMPANY’S PENSION PLAN IS SUFFERING FROM MS. DRAKE’S ACTIONS While the Company’s pension plan produced strong returns under the benefits management committee’s oversight, Ms. Drake’s recent actions have adversely impacted the cash balance and funding status. Source: Company financials. 88
Slide 89: Ms. Drake Threatened to Leave
MS. DRAKE THREATENED TO LEAVE Ms. Drake has threatened to quit and take her executive team with her, reflecting her vindictive management style and lack of commitment to the Company. ▪ In October 2020, Ms. Drake met with the full Board outside of Mr. Lichtenstein’s presence, noting to the Board that
Slide 90: Ms. Drake Threatened the Board for Doing Its Job
MS. DRAKE THREATENED THE BOARD FOR DOING ITS JOB MS. DRAKE THREATENED THE BOARD WITH MS. DRAKE FALSELY CLAIMED THAT ENDLESS LAWSUITS IF THE LOCKHEED DEAL WAS CONTINGENCY PLANNING WAS A NOT CONSUMMATED BREACH OF THE DEAL ▪ Ms. Drake has consistently threatened and implied that the ▪ Ms. Drake and her
Slide 91: Ms. Drake Has Acted Unlawfully
MS. DRAKE HAS ACTED UNLAWFULLY– HOW CAN SHAREHOLDERS VOTE FOR HER? Ms. Drake’s actions since the point in which the Lockheed deal began facing regulatory headwinds have placed the Company’s investors, employees and customers at tremendous risk. Ms. Drake has repeatedly misled shareholders Ms. Drake
Slide 92: The Drake Faction Is Attempting to Mislead Shareholders
THE DRAKE FACTION IS ATTEMPTING TO MISLEAD SHAREHOLDERS The Drake Faction has misrepresented several key facts related to its performance and our slate. THE DRAKE FACTION’S MYTHS THE FACTS/REALITY x The Drake Faction falsely claims that Mr. Lichtenstein’s nominees are not ✓ Our slate was refreshed t
Slide 93: Appendix III – Revenue Recognition
APPENDIX III – REVENUE RECOGNITION
Slide 94: Revenue Recognition – Form 10-K
REVENUE RECOGNITION – FORM 10-K Source: The Company’s 10-K filed on February 18, 2022, https://www.sec.gov/ix?doc=/Archives/edgar/data/40888/000004088822000005/ajrd-20211231.htm. 94
Slide 95: Revenue Recognition – Form 10-K (Cont.)
REVENUE RECOGNITION – FORM 10-K (CONT.) Source: The Company’s 10-K filed on February 18, 2022, https://www.sec.gov/ix?doc=/Archives/edgar/data/40888/000004088822000005/ajrd-20211231.htm. 95
Aerojet Rocketdyne Holdings — Proxy Contest (June 2022) on 6ix