SEC Filing | AeroVironment, Inc.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐

Preliminary Proxy Statement

☐

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒

Definitive Proxy Statement

☐

Definitive Additional Materials

☐

Soliciting Material Pursuant to §240.14a-12

AEROVIRONMENT, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒

No Fee Required.

☐

Fee paid with preliminary materials.

☐

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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[MISSING IMAGE: lg_aerovironment-bw.jpg]

Notice of 2023 Annual Meeting
of Stockholders
and Proxy Statement

Friday, September 29, 2023
at 12:00 p.m. Eastern Daylight Time

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	MESSAGE AND Q&A WITH OUR CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
	NOTICE OF ANNUAL MEETING OF STOCKHOLDERS					1
	PROXY SUMMARY					4

	Proposal 1 — Election of Nominees to the Board of Directors					9
	Director Qualifications and Independence					11
	2023 Nominees for Class II Directors					13
	Summary of Director Nominees					22
	Corporate Governance					24
	Director Compensation					31
	Related Party Transactions					35
	Executive Officers					36
	SHARE OWNERSHIP					38
	Ownership of Equity Securities of the Company					38
	Delinquent Section 16(a) Reports					40
	Equity Compensation Plan Information					40
	EXECUTIVE COMPENSATION AND OTHER INFORMATION					41
	Compensation Committee Report					41
	Compensation Discussion and Analysis					41
	Executive Compensation Tables					56
	Pay Versus Performance					66

	AUDIT MATTERS					71
	Audit Committee Report					71
	Proposal 2 — Ratification of Selection of Deloitte & Touche LLP as Our Independent Registered Public Accounting Firm					72
	Proposal 3 — Non-Binding Advisory Vote on the Compensation of our Named Executive Officers					74
	Proposal 4 — Non-Binding Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers					76
	Proposal 5 — Approval of AeroVironment, Inc. 2023 Employee Stock Purchase Program					77
	STOCKHOLDER PROPOSAL					83
	Proposal 6 — Stockholder Proposal Regarding the Declassification of the Board of Directors					83
	Statement Against Stockholder Proposal Regarding Declassification of the Board					84
	QUESTIONS AND ANSWERS ABOUT ANNUAL MEETING AND VOTING					86

	Note About Forward-Looking Statements
	Certain statements in this Proxy Statement may constitute “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. These statements are made on the basis of current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from those expressed or implied. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the impact of our ability to successfully integrate acquisitions into our operations and avoid disruptions from acquisition transactions that will harm our business; the recording of goodwill and other intangible assets as part of acquisitions that are subject to potential impairments in the future and any realization of such impairments; any disruptions or threatened disruptions to our relationships with our distributors, suppliers, customers

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and employees, including shortages in components for our products; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government, including uncertainties in classification, pricing or potentially burdensome imposed terms for certain types of government contracts; availability of U.S. government funding for defense procurement and R&D programs; changes in the timing and/or amount of government spending; our reliance on limited relationships to fund our development of HAPS UAS; our ability to perform under existing contracts and obtain new contracts; risks related to our international business, including compliance with export control laws; potential need for changes in our long-term strategy in response to future developments; the extensive and increasing regulatory requirements governing our contracts with the U.S. government and international customers; the consequences to our financial position, business and reputation that could result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product development efforts; the impact of potential security and cyber threats or the risk of unauthorized access to our, our customers’ and/or our suppliers’ information and systems; changes in the supply and/or demand and/or prices for our products and services; increased competition; uncertainty in the customer adoption rate of commercial use unmanned aircraft systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; unexpected changes in significant operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; unfavorable results in legal proceedings; our ability to respond and adapt to unexpected legal, regulatory and government budgetary changes, including those resulting from the COVID-19 pandemic or future pandemics, such as supply chain disruptions and delays, potential governmentally-mandated shutdowns, travel restrictions and site access, diversion of government resources to non-defense priorities, and other business restrictions affecting our ability to manufacture and sell our products and provide our services; our ability to comply with the covenants in our loan documents; our ability to attract and retain skilled employees; the impact of inflation; and general economic and business conditions in the United States and elsewhere in the world; and the failure to establish and maintain effective internal control over financial reporting. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended April 30, 2023 made available with this Proxy Statement. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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MESSAGE AND Q&A WITH AEROVIRONMENT CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER WAHID NAWABI

What a difference a year makes!

At the beginning of fiscal year 2023, we said that we were going to set out to make this a noteworthy year filled with achievements, and we did just that. By carefully managing through some ongoing supply chain challenges and hiring constraints, and preparing for rapid growth, we put the Company on a path to success while supporting our customers’ vital missions.

Given our current book of business and strong demand for the Company’s broad portfolio of robotic systems and services — bolstered by our Switchblade and Puma performance in Ukraine — we are at the beginning of a new phase of growth, that will lead to further attractive returns for our shareholders. Fiscal year 2023 was an inflection point for the Company in terms of our long-term strategic vision to build the world’s premier autonomous robotic solutions provider, and we are honored to support our nation and allies around the world. With expanding markets, a newfound appreciation of our unique capabilities by international customers, key technology advancements powered by machine learning, and broad support for our products here at home, AeroVironment is well-positioned for success going forward.

I would like to thank our talented team for their dedication and hard work in helping our customers achieve their vital missions. Based on their perseverance, the faith entrusted in us by our customers, and the ongoing support of our investors, we believe we are in the best shape ever for a record-setting fiscal year 2024.

Q) What have been, and will continue to be, the key growth drivers for the Company?

A) Our success this past year demonstrated the depth and breadth of our portfolio and our ability to provide our customers with the best-in-class robotic solutions to meet their critical mission needs. The growth drivers that positively impacted us in fiscal 2023 — resulting in record revenue for our Small UAS (SUAS), Loitering Missile Systems (LMS), and Unmanned Ground Vehicle (UGV) segments — will continue to propel top-line growth going forward. For LMS, the U.S. government recently approved Switchblades for sale to nearly 50 countries in total, up from 20 last year. Similarly, our SUAS business expanded significantly on the back of our largest-ever Foreign Military Sales award in support of Ukraine; the Puma has proven itself on the battlefield there and is providing scouting and support for all U.S.-provided artillery weapon systems. At the same time, our UGV business has grown substantially due to demand in Ukraine and elsewhere. The trends for these segments — as well as much of our product portfolio — point to continued strength in our top-line results and overall underlying performance. The geopolitical environment has led to greater adoption of unmanned systems, and Ukraine has accelerated interest in distributed solutions such as small drones and loitering munitions by demonstrating their effectiveness against well-equipped adversaries. The fundamentals of our business are as strong as they’ve ever been, and we expect fiscal year 2024 to be another record-setting year for the Company.

Q) How will segment reporting change going forward?

A) Starting in the first quarter of fiscal year 2024, AeroVironment will define its operating units differently to reflect the larger, broader nature of our products and services, along with their associated end markets. Going forward, we will report in three segments: our SUAS, MUAS, and UGV product lines will be combined into a new “Unmanned Systems” segment; our Tactical Missile Systems will now become “Loitering Munition Systems;” and “MacCready Works” will include the current MacCready business along with HAPS and other customer-funded R&D programs. We believe this is a practical and appropriate evolution of our segment reporting, given our robust growth, that also provides adequate transparency for our investors. We look forward to sharing more on this new segmentation when we file our Q1 Fiscal Year 2024 results.

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Q) What is the outlook for MUAS given the FTUAS decision?

Unfortunately, AeroVironment was not selected by the U.S. Army to proceed with Increment 2 of the Future Tactical Unmanned Aircraft System, or FTUAS. While we respect the Army’s decision, we have fully assessed the Army’s evaluation process and submitted a request for further clarification. Despite this development, however, we remain bullish on our Medium UAS (or MUAS) product line. The JUMP 20 stands apart in its ability to perform in contested environments, with an unmatched capacity to carry armed payloads, and we believe it is the most versatile and cost-effective Group 2/3 solution on the market today. In addition, we are currently pursuing multiple domestic and international MUAS opportunities that present significant growth potential in the coming years. In the meantime, we are honored to support the Ukraine defense efforts as the only Group 2/3 UAS solution named in the recent U.S. aid package.

Importantly, the Army’s decision will not have a material impact on our near-term revenue growth. As we look ahead, we will focus on areas where we can improve our systems to ensure we meet customers’ evolving needs. Furthermore, we remain focused on winning other key upcoming programs by continuing to leverage the strength of our robust portfolio of innovative unmanned solutions.

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AEROVIRONMENT, INC.

NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS

Dear Stockholders,

We are pleased to invite you to join the board of directors and executive team of AeroVironment, Inc. (the “company”) at our 2023 annual meeting of stockholders (the “annual meeting”). We have chosen to hold this year’s annual meeting in a virtual meeting format. Stockholders will be able to attend and listen to the 2023 annual meeting live, submit questions to the board of directors and management, and vote their shares electronically, from virtually any location with internet connectivity.

Important information relating to the annual meeting is detailed below:

	TIME:			12:00 p.m. Eastern Daylight Time on Friday, September 29, 2023
	PLACE:			Online at: https://web.lumiagm.com/216888245

		Unanimous Recommendations of Board of Directors
ITEMS OF BUSINESS:	(1) Elect Philip S. Davidson, Mary Beth Long and Stephen F. Page, each to serve as a Class II director for a three-year term;	FOR
	(2) Ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending April 30, 2024;	FOR
	(3) Conduct a non-binding advisory vote on the compensation of our Named Executive Officers;	FOR
	(4) Conduct a non-binding advisory vote on the frequency of future non-binding advisory votes on the compensation of our Named Executive Officers	1 YEAR
	(5) Approve the AeroVironment, Inc. 2023 Employee Stock Purchase Plan; and	FOR
	(6) Consider and vote upon an advisory stockholder proposal seeking declassification of the Board of Directors;	AGAINST
	(7) Transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof.
RECORD DATE:	You are entitled to vote if you were a stockholder of the company at the close of business on August 2, 2023 (the “Record Date”).

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	MEETING PARTICIPATION AND ATTENDANCE:			You may participate in the annual meeting, including submitting questions, if you were a stockholder as of the Record Date or you hold a valid proxy for the meeting. This year’s annual meeting will be conducted in a virtual only format on the internet. Stockholders (or their proxies) can participate in and vote at the annual meeting by logging in with your 11-digit voter control number issued by Equiniti Trust Company, LLC (“EQ,” and formerly American Stock Transfer & Trust Company LLC) and password of AVAV2023 (case sensitive). Online access to the virtual stockholder meeting will open up approximately 60 minutes prior to the start of the annual meeting to allow for you to test your computer audio system.
				You can ask questions once you log in or when the meeting begins by clicking on the “ask a question” icon on the top of your screen.
				Beneficial Stockholders. If your shares are held in the name of a broker, bank or other holder of record, you should receive a proxy card and voting instructions with these proxy materials. To participate, including submitting questions, and vote at the virtual annual meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance to attend the annual meeting. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a legal proxy form.
				After obtaining a valid legal proxy from your broker, bank or other agent, to then register to attend the annual meeting, you must submit proof of your legal proxy reflecting the number of your shares along with your name and email address to EQ. Requests for registration should be directed to proxy@equiniti.com or to facsimile number 718-765-8730. Written requests can be mailed to:
				Equiniti Trust Company, LLC Attn: Proxy Tabulation Department 6201 15th Avenue Brooklyn, NY 11219
				Requests for registration must be labelled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Daylight Time, on September 8, 2023. You will receive a confirmation of your registration by email after we receive your registration materials.
	VOTING BY PROXY:			Registered Stockholders. To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the annual meeting virtually. Instructions for voting are on your proxy card. If you attend the annual meeting, you may also submit your vote during the virtual meeting, and any previous votes you submitted will be superseded by the vote that you cast at the annual meeting.
				You are urged to date, sign and promptly return the proxy card in the envelope provided to you, or to use the telephone or internet method of voting described on your proxy card, so that if you are unable to attend the meeting your shares can be voted.
				Beneficial Stockholders. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares. Without your instructions as to how to vote, brokers are not permitted to vote your shares at the annual meeting with respect to the election of directors or the non-binding advisory vote to approve the compensation of our named executive officers. Please instruct your broker how to vote your shares using the voting instructions provided by your broker.

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				This proxy statement is issued in connection with the solicitation of a proxy on the enclosed form by the board of directors of AeroVironment, Inc. for use at our 2023 annual meeting of stockholders. We will begin mailing this proxy statement, a form of proxy and our 2023 annual report on or about August 24, 2023.
				Thank you for your support.

Wahid Nawabi
President, Chief Executive Officer and
Chair of the Board

Arlington, Virginia
August 17, 2023

YOUR VOTE IS EXTREMELY IMPORTANT

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 29, 2023

This notice, the accompanying proxy statement, and our 2023 annual report to stockholders, which includes
our Form 10-K for the fiscal year ended April 30, 2023, are available on our website at
http://investor.avinc.com/financial-information/financial-filings-and-releases.

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PROXY SUMMARY

This proxy statement is furnished to our stockholders in connection with the solicitation of proxies by the board of directors (the “board” or “board of directors”) of AeroVironment, Inc. (the “company”) for our 2023 annual meeting of stockholders (the “annual meeting”) to be held on Friday, September 29, 2023, and any adjournments or postponements thereof, for the purposes set forth in the attached notice of annual meeting. Our principal executive offices are located at 241 18th Street South, Suite 415, Arlington, VA 22202. Enclosed with this proxy statement is a copy of our 2023 annual report, which includes our Form 10-K (without exhibits) for the fiscal year ended April 30, 2023. However, the 2023 annual report is not intended to be a part of, and shall not be deemed to be incorporated by reference into, this proxy statement or a solicitation of proxies.

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all the information that you should consider and you should read the entire proxy statement before voting. For more complete information regarding the company’s 2023 performance, please review our annual report on Form 10-K for the fiscal year ended April 30, 2023. This proxy statement and the accompanying proxy card are first being mailed to stockholders on or about August 24, 2023.

VOTING AND MEETING INFORMATION

It is important that you vote in order to impact the future of the company. Please carefully review the proxy materials for the annual meeting, which will be held on Friday, September 29, 2023, at 12:00 p.m., Eastern Daylight Time, online at https://web.lumiagm.com/216888245, and follow the instructions below to cast your vote on all of the voting matters.

Who is Eligible to Vote

You are entitled to vote at the annual meeting if you were a stockholder of record at the close of business on August 2, 2023, which we refer to as the “Record Date” of the annual meeting. On the Record Date, there were 26,292,130 shares of common stock issued and outstanding and entitled to vote at the annual meeting. The holders of our common stock are entitled to one vote per share on any proposal presented at the annual meeting. We have no other voting securities outstanding.

Voting in Advance of the Meeting

Even if you plan to attend the annual meeting, please vote right away using one of the following advance voting methods (see page 88 for additional details). Make sure to have your proxy card or voting instruction form in hand and follow the instructions.

You can vote in advance of the meeting in one of three ways:

				Visit the website listed on your proxy card/voting instruction form to vote BY INTERNET
				Call the telephone number on your proxy card/voting instruction form to vote BY TELEPHONE
				Sign, date and return your proxy card/voting instruction form in the enclosed envelope to vote BY MAIL

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PROXY SUMMARY

Attending and Voting at the Annual Meeting

All stockholders of record may vote virtually at the annual meeting. Beneficial owners may vote virtually at the meeting if they have a legal proxy, as described on page 87.

Important Note about Meeting Admission Requirements: If you plan to attend the meeting virtually, you should review the important details on admission requirements on page 87.

Electronic Document Delivery

Instead of receiving future copies of our notice of annual meeting, proxy statement and the annual report on Form 10-K by mail, stockholders of record and most beneficial owners can elect to receive an email that will provide electronic links to these documents. Opting to receive our proxy materials online will save on the cost of producing and mailing documents and significantly reduce paper waste and will also provide an electronic link to quickly and efficiently access the proxy voting site. Please see your proxy card for the website to which you are referred to vote your shares for instructions on how to elect to receive your future proxy materials electronically.

Roadmap of Voting Matters

Stockholders are being asked to vote on the following matters at the 2023 annual meeting of stockholders:

						Our Board’s Recommendation
		Proposal 1. Election of Directors (page 9) The board believes that the combination of qualifications, skills and experiences of Philip S. Davidson, Mary Beth Long, and Stephen F. Page contribute to an effective and well-functioning board and their continued service as directors would be in the best interests of the company and its stockholders. Mr. Davidson, Ms. Long, and Mr. Page possess the necessary qualifications to assist the board in providing effective oversight of the business and strategic advice and counsel to the company’s management.				FOR each Director Nominee
		Proposal 2. Ratification of the Appointment of Deloitte & Touche LLP as Our Independent Registered Public Accounting Firm (page 72) The audit committee of the board (the “Audit Committee”) has appointed Deloitte & Touche LLP to serve as the company’s independent registered public accounting firm for the fiscal year ending April 30, 2024. The Audit Committee and the board believe that the appointment of Deloitte & Touche LLP to serve as the company’s independent registered public accounting firm is in the best interests of the company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s selection of our independent registered public accounting firm.				FOR
		Proposal 3. Non-Binding Advisory Vote on the Compensation of Our Named Executive Officers (page 74) The company believes that our compensation programs are designed to attract, incentivize and reward our leadership for increasing stockholder value and align the interests of leadership with those of our stockholders on an annual and long-term basis. The company seeks a non-binding advisory vote from its stockholders to approve the compensation of our Named Executive Officers, as described in the Compensation Discussion and Analysis section beginning on page 41 and the Compensation Tables section beginning on page 56. The board values stockholder opinions and the compensation committee of the board (the “Compensation Committee”) will consider the outcome of the advisory vote when considering future executive compensation decisions.				FOR
		Proposal 4. Non-Binding Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of our Named Executive Officers (page 76) Proposal 4 affords stockholders the opportunity to cast a vote on how often we should conduct advisory votes at future annual stockholder meetings to approve the compensation (so-called “say-on-frequency” votes) of our Named Executive Officers. Stockholders may vote to have a say-on-pay vote every year, every two years, or every three years. Although the vote is non-binding, our Compensation Committee and board of directors value the opinions of the stockholders and will consider the outcome of the vote when determining the frequency of future advisory stockholder votes on the compensation of our Named Executive Officers.				1 YEAR

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PROXY SUMMARY

						Our Board’s Recommendation
		Proposal 5. Approval of the AeroVironment, Inc. 2023 Employee Stock Purchase Plan (page 77) The Compensation Committee and the board believe that it is in the best interests of the company and its stockholders to adopt the AeroVironment, Inc. 2023 Employee Stock Purchase Plan (“ESPP”) to allow employees to purchase shares of the company’s common stock at a discounted price.				FOR
		Proposal 6. Stockholder proposal seeking to declassify the Board of Directors (page 83) The Nominating and Corporate Governance Committee believes that a classified board structure continues to be in the best interests of the company and our stockholders. The company seeks a non-binding advisory vote from its stockholders on the stockholder proposal to declassify the board as described in the Stockholder Proposal section beginning on page 83. Although the board recommends AGAINST this vote, it values stockholder opinions and will take into account the outcome of the advisory vote.				AGAINST

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PROXY SUMMARY

QUESTIONS AND ANSWERS (PAGE 86)

Please see the Questions and Answers section beginning on page 86 for important information about the proxy materials, voting, the annual meeting, company documents, communications and the deadlines to submit stockholder proposals for the 2024 annual meeting of stockholders. Additional questions may be directed to Investor Relations at (805) 520-8350 x4278 or https://investor.avinc.com/contact-us.

CORPORATE GOVERNANCE (PAGE 24)

The company is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens board and management accountability and helps build public trust in the company. Highlights of our governance practices include:

•

Highly qualified and engaged board of directors, with relevant expertise for overseeing our strategy, capital allocation, performance, succession planning and risk

•

High proportion of independent directors (6 of 7)

•

Independent Audit, Compensation and Nominating and Corporate Governance Committees

•

Board comprised of directors with key skills, attributes and experiences linked to the company’s needs and business priorities

•

Disclosed “skills matrix” for the board

•

Regular board and committee self-evaluations

•

Majority vote standard for election of directors in uncontested elections

•

Lead Independent Director

•

Regular reviews for board refreshment

•

Active stockholder engagement

•

Anti-hedging, anti-pledging, and anti-short sale policies for all executives, directors and employees

•

Executive compensation driven by pay-for-performance philosophy

•

Annual Say-on-Pay advisory vote on executive compensation

•

Share ownership guidelines and share retention policy for executives and directors

•

Compensation recovery (clawback) policy for executives

•

Stockholders have a “proxy access” right to nominate director candidates and have those nominees included in our proxy statement, subject to meeting the requirements in our Bylaws

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PROXY SUMMARY

DIRECTOR NOMINEES AND OTHER DIRECTORS (PAGES 13 — 21)

Name	Age	Director Since	Primary Experience	Committee Membership	# of Other Public Company Boards
Director Nominees
Philip S. Davidson*	63	2023	Retired Navy Admiral, founder of Davidson Strategies, LLC and current director of two other public companies	—	2
Mary Beth Long	59	—	Former United States Assistant Secretary of Defense for International Security Affairs	—	0
Stephen F. Page*1	83	2013	Former Chief Financial Officer of United Technologies Corporation and Chief Executive Officer of its Otis Elevator division and former director of public companies	A, NCG	0
Other Directors
Charles Thomas Burbage*	75	2013	Former Executive Vice President and General Manager, Joint Strike Fighter Program of Lockheed Martin	C, NCG, E	0
Cindy K. Lewis*	66	2021	President and Chief Executive Officer of AirBorn Consolidated Holdings, Inc.	NGC	0
Catharine Merigold*2	67	2015	Founder and Managing Partner of Vista Ventures	A, C	0
Edward R. Muller*	71	2013	Former Chairman and Chief Executive Officer of GenOn Energy Inc. and current and former director of public companies	A, C, L	1
Wahid Nawabi	54	2016	President and Chief Executive Officer of the company since May 2016; former Chief Operating Officer and Senior Vice President of the company and General Manager of the company’s former Efficient Energy Systems (“EES”) division	—	0

* = Independent Director

L = Lead Independent Director

A = Audit Committee

C = Compensation Committee

E = Executive Committee

NCG = Nominating and Corporate Governance Committee

If re-elected, the nominee will serve on the Audit Committee and Nominating and Corporate Governance Committee.

Not standing for re-election at the 2023 annual meeting of stockholders.

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PROPOSAL 1. ELECTION OF NOMINEES TO THE BOARD OF DIRECTORS

Our board of directors currently consists of seven members and is divided into three classes of directors serving staggered three-year terms. Directors for each class are elected at the annual meeting of stockholders held in the year in which the term for their class expires and hold office until their resignation or removal or their successors are duly elected and qualified. In accordance with our certificate of incorporation and our bylaws, our board of directors may fill existing vacancies on the board of directors by appointment.

The term of office of the Class II directors, which include Philip S. Davidson, Catharine Merigold and Stephen F. Page, will expire at the beginning of the annual meeting.

Ms. Merigold has determined not to stand for re-election at the 2023 annual meeting.

At the recommendation of the Nominating and Corporate Governance Committee, our board of directors proposes the election of Philip S. Davidson, Mary Beth Long, and Stephen F. Page as Class II directors. Mr. Davidson and Mr. Page are incumbent directors. Our board of directors nominated Ms. Long to fill the vacancy to be created upon Ms. Merigold’s departure.

Each of Mr. Davidson, Ms. Long, and Mr. Page has indicated his or her willingness to serve if elected. If any of Mr. Davidson, Ms. Long or Mr. Page becomes unable to serve or for good cause will not serve, the individuals named as proxies on the enclosed proxy

card will vote the shares that they represent for the election of such other persons as the board may recommend, unless the board reduces the number of directors. There are currently two Class III directors, whose terms expire at the annual meeting of stockholders in 2024, and two Class I directors, whose terms expire at the annual meeting of stockholders in 2025.

Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named herein. If voting instructions are received, the proxy holders will vote the proxy cards received by them in accordance with the instructions received. In no event may the proxy holders vote for the election of more than three nominees. We have no reason to believe that the nominees will be unable or unwilling to serve if elected as directors.

The principal occupation and certain other information about the nominees, our other directors and our executive officers are set forth on the following pages.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THE THREE BOARD NOMINEES LISTED ABOVE.

Abstentions will be counted as present for the purposes of this vote but are not counted as votes cast. Broker non-votes will not be counted as present and are not entitled to vote on this proposal.

Election Process and Voting Standard

There are no limits on the number of terms a director may serve. We believe term limits may cause the loss of experience and expertise important to the effective operation of our board of directors. However, to ensure that the board remains composed of high-functioning members able to keep their commitments to board service, the Nominating and Corporate Governance Committee evaluates the qualifications and considers the performance of each incumbent director before recommending the nomination of that director for an additional term. The Class II directors will be elected on a majority vote standard basis, meaning that each of the three nominees must receive a vote of a majority of the total votes cast with respect to such nominee’s election (i.e. the number of votes cast “for” a nominee’s election exceeds the number of votes cast “against”

that nominee’s election) to be elected as a director. Our Corporate Governance Guidelines, require, following any stockholder meeting at which directors are subject to an uncontested election, any incumbent director who fails to receive a majority of votes cast at the meeting to submit, promptly after the final certification of the election results, a letter of resignation to the board of directors for consideration by the Nominating and Corporate Governance Committee of the board. The Nominating and Corporate Governance Committee shall consider the offer of resignation and recommend to the board of directors whether to accept or reject the resignation, or whether other action should be taken. The board of directors shall act on the Nominating and Corporate Governance Committee’s recommendation within one hundred (100) days

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PROPOSAL 1. ELECTION OF NOMINEES TO THE BOARD OF DIRECTORS

following the final certification of the election results and publicly disclose its decision, and the reasons for such decision if such offer of resignation is rejected.

In addition, pursuant to our Corporate Governance Guidelines, a director whose job responsibilities materially change since his or her last election as a

director may be asked to submit a letter of resignation to the board. The board may request such a resignation letter if continuing service on the board by the individual is not consistent with the criteria deemed necessary for continuing service on the board.

Director Nominations

The Nominating and Corporate Governance Committee is responsible for identifying and evaluating nominees for director and for recommending to the board a slate of nominees for the class of directors to be elected at each annual meeting of stockholders. Nominees may be suggested by directors, members of management or stockholders.

Stockholders who would like the Nominating and Corporate Governance Committee to consider their

recommendations for nominees to the board of directors should submit their recommendations in writing by mail to the Nominating and Corporate Governance Committee in care of the Office of the Corporate Secretary, AeroVironment, Inc., 241 18TH Street South, Suite 415 Arlington, VA 22202 or by email to corporatesecretary@avinc.com. Recommendations by stockholders that are made in accordance with these procedures will receive the same consideration as other nominees.

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DIRECTOR QUALIFICATIONS AND INDEPENDENCE

DIRECTOR QUALIFICATIONS AND
INDEPENDENCE

Directors are responsible for overseeing the company’s business consistent with their fiduciary duties to stockholders. This significant responsibility requires highly skilled individuals with diverse qualities, attributes and professional experience. The board believes that there are general requirements that are applicable to all directors and other skills and experience that only need

to be represented on the board as a whole, but not necessarily possessed by each director. The board and the Nominating and Corporate Governance Committee carefully consider the qualifications of directors and director candidates individually and in the broader context of the board’s overall composition and the company’s current and future needs.

Qualifications Required of All Directors

In its assessment of each potential director nominee, the Nominating and Corporate Governance Committee considers the nominee’s judgment, integrity, experience, independence, understanding of the company’s business or related industries and such other factors as the Nominating and Corporate Governance Committee determines are pertinent in light of the current needs of the board. The Nominating and Corporate Governance Committee also takes into account the ability of a potential nominee to devote the time and effort necessary to fulfill the responsibilities of a director to the company. The board and the Nominating and Corporate Governance Committee require that each director be a recognized person of high integrity, ethics and values, have a proven record of success and demonstrate respect for sound corporate governance requirements and practices. Each director must also possess practical and mature business judgment, as well as demonstrate innovative thinking and an entrepreneurial spirit — all qualities that the board believes are essential to its ability to maintain the company’s culture of innovation. In addition, the board conducts interviews of potential director candidates to assess intangible qualities, including the individual’s ability to ask difficult questions while maintaining collegiality.

Specific Qualifications, Attributes, Skills and Experience to Be Represented on the Board

The board has identified the following qualifications, attributes, skills and experience listed in the bullets below as important for the board to possess as a

whole, in light of the company’s current needs and business priorities:

•

personal and professional integrity, ethics and values;

•

experience in corporate management, such as serving as an officer or former officer of a publicly held company;

•

extensive knowledge of the company’s business;

•

aerospace and defense industry expertise;

•

global and international business experience;

•

strategic development experience, including mergers, acquisitions, venture capital and other strategic transactions;

•

diversity of expertise and experience, including substantive matters pertaining to our business, relative to other directors;

•

diversity of personal background, including gender, age and ethnicity, relative to other board members;

•

experience in marketing, engineering, technology and innovation, operations, supply chain, manufacturing and legal;

•

high level of financial literacy and experience;

•

experience as a board member of another publicly-held company;

•

data analytics experience;

•

commercial business experience; and

•

experience in scaling or growing a startup or small business into a significant business.

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DIRECTOR QUALIFICATIONS AND INDEPENDENCE

Independence Determinations

Under the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”), and the company’s Corporate Governance Guidelines, the board must consist of a majority of independent directors. In making independence determinations, the board observes Nasdaq and the Securities and Exchange Commission (“SEC”) criteria and considers all relevant facts and circumstances. To be considered independent under Nasdaq listing standards, a director must pass certain objective tests, such as not being an executive officer or employee of the company or having certain business dealings with the company. Additionally, Nasdaq independence standards include a subjective test that requires our board to make a subjective determination that an individual has no relationships that in the opinion of the company’s board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

The board undertook a review of the independence of each director and nominee and considered whether each such individual has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities as a director. Based upon information requested from and provided by each director and nominee regarding his or her business and personal activities and relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by each non-employee director and nominee, the board has determined that, other than Mr. Nawabi, all members of the board and Ms. Long qualify as independent directors in accordance with the Nasdaq listing standards and Rules 10C-1 and 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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2023 NOMINEES FOR CLASS II DIRECTORS

The board and the Nominating and Corporate Governance Committee believe that the combination of the various qualifications, skills and experience of the director nominees would contribute to an effective and well-functioning board. They also believe that the combination of the various qualifications, skills and experiences of the director nominees individually, and when combined with the other directors, will create a board possessing the necessary qualifications to provide effective oversight of the business and strategic advice and counsel to the company’s management.

Included in the biographies of the director nominees and the other directors below is an assessment of the specific qualifications, attributes, skills and experiences that such director nominees and the other members of the board provide to the board of directors and the company.

Catharine Merigold, director since 2015, is not standing for re-election at the 2023 annual meeting. The board wishes to thank Ms. Merigold for her years of leadership and service to AeroVironment, and to recognize her numerous contributions to the company during her tenure on the board. Due to her decision to not stand for re-election at the 2023 annual meeting, Ms. Merigold has been excluded from the biographies and qualifications, attributes, skills and experiences disclosures below. The board nominated Mary Beth Long to fill the vacancy to be created due to Ms. Merigold’s decision not to stand for re-election to the board.

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2023 NOMINEES FOR CLASS II DIRECTORS

Director Nominees

		Philip S. Davidson
		Director Since:				2023
		Age:				63
		Board Committees and Leadership:				None
		Summary of Experience:				Mr. Davidson has served as a member of our board of directors since June 2023. Mr. Davidson retired from the U.S. Navy in May 2021, following a highly distinguished military career which spanned nearly 39 years of service and culminated in his appointment as a four-star Admiral and in service as Commander of United States Indo-Pacific Command (INDOPACOM) from 2018 to 2021. Mr. Davidson founded and now runs Davidson Strategies LLC, a management, technical and strategic advisory firm. Mr. Davidson is currently on the board of directors of Par Pacific Holdings, Inc., an oil and gas exploration and production company, Norfolk Southern Corporation, a freight transportation network operator, and the Center for Strategic and Budgetary Assessments, an independent, non-profit policy research institute. He received a Bachelor of Science degree in Physics from the U.S. Naval Academy in 1982 and a Master of Arts in National Security and Strategic Studies from the U.S. Naval War College in 1992. He is also a Board Member at the Center for Strategic and Budgetary Assessments, an independent, non-partisan policy research institute, and serves on military advisory groups to the Sasakawa Peace Foundation USA, as well as the United States Institute of Peace.
		Specific Qualifications, Attributes, Skills and Experience
						Defense and Related Industry Experience From his 39 years of service in the U.S. Navy, and service on military advisory groups, Mr. Davidson brings highly relevant experience to our military-focused intelligent, multi-domain robotic systems business. He offers critical insight into the needs and demands of our UAS customers.
						Extensive Global or International Business Experience As a result of his military service and consulting experience, Mr. Davidson has extensive international business experience, including knowledge of international military customers, which is highly relevant to our expanding international business.
						Public Company Board Experience Mr. Davidson’s service as Director at Par Pacific Holdings, Inc. provides us with valuable corporate governance and board leadership experience.

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2023 NOMINEES FOR CLASS II DIRECTORS

		Mary Beth Long
		Director Since:				n/a
		Age:				59
		Board Committees and Leadership:				None
		Summary of Experience:				Ms. Long is an American foreign policy expert, entrepreneur, and former U.S. Government official. From 2007-2009, Ms. Long served as the Assistant Secretary of Defense under Secretary of Defense Robert E. Gates, where she was the first woman confirmed to a four-star military equivalent position by the U.S. Senate. This role was the culmination of 17 years of intelligence and defense related government service where she held multiple leadership roles including Chair of NATO’s nuclear and missile defense High Level Group (HLG), Principal Deputy Secretary of Defense for Asia and Southeast Asia, and Deputy Secretary of Defense for Counter Narco-terrorism. Ms. Long is currently the Principle at both MB Long and Associates, PLLC, a law firm specializing in defense sales, contracting and compliance, as well as Askari Defense & Intelligence, LLC, a firm focused on international consultancy, since founding each firm in 2010. Ms. Long was also a director for Red Cat Holdings, Inc. from November 2022 through July 2023. Ms. Long additionally acted as a consultant for Global Alliance Advisors, Inc., an international advisory firm, from 2017 to Novmber 2021. In addition, Ms. Long also founded and led a highly successful government contracting firm, Metis Solutions, LLC, which she sold in 2016 to a private equity group. Ms. Long is an Honors Graduate, magna cum laude, and Phi Beta Kappa from Penn State University, where she studied the Chinese language abroad in Taiwan. She currently serves on the university’s Provost’s Global Advisory Council. She also received her law degree, with honors, from Washington and Lee School of Law. Ms. Long is a member of the Board of Directors of the International Spy Museum and the Defense Intelligence Memorial Fund.
		Specific Qualifications, Attributes, Skills and Experience
						Defense and Related Industry Experience Ms. Long is regularly called upon to be a policy expert based on her many post government roles, including as Senior Subject Matter Expert for the Supreme Allied Commander of NATO, Senior Advisor to the Director of USAID at the Department of State, and as a Senior International Advisor to the Minister of Defense of Colombia. Ms. Long is a member of the U.S. Chamber of Commerce Defense and Aerospace Export Council and is a Cipher Brief Expert. She also is an active member of the Council on Foreign Relations (CFR) and has presided over meetings regarding NATO, Ukraine, Afghanistan and other timely topics. From her 17 years intelligence and defense related government service, in addition to her years serving as a multi-disciplinary policy expert, Ms. Long’s experience and insight would bring exceedingly relevant experience to our military-focused intelligent, multi-domain robotic systems business.
						Extensive Global or International Business Experience As the owner of the law firm MB Long & Associates, PLLC, specializing in export compliance and defense, as well as founding and leading multiple successful advisory firms focusing on international defense markets, Ms. Long’s international business experience would be extremely valuable to us as international business becomes an increasingly important component of our business.
						Public Company Board Experience Ms. Long’s prior service as Director at Red Cat Holdings, Inc. would provide us with valuable corporate governance and board leadership experience.

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2023 NOMINEES FOR CLASS II DIRECTORS

		Stephen F. Page
		Director Since:				2013
		Age:				83
		Board Committees and Leadership:				Member of Audit Committee and Chair of the Nominating and Corporate Governance Committee
		Summary of Experience:				Mr. Page has served as a member of our board of directors since 2013. Mr. Page served on the board of directors and audit committees of Lowe’s Companies, Inc., a home-improvement retailer, from 2003 to 2012; PACCAR, Inc., one of the largest manufacturers of medium and heavy duty trucks in the world, from 2004 to 2012; and Liberty Mutual Holding Company Inc., one of the largest property and casualty insurance companies in the U.S., where he was lead director. Before retiring in 2004, Mr. Page served in many leadership roles at United Technologies Corporation, a provider of high-technology products and services to the global aerospace and building systems industries that merged with Raytheon Corporation in April 2020 to form Raytheon Technologies Corporation, including director, Vice Chairman and Chief Financial Officer, and President and Chief Executive Officer of Otis Elevator, formerly a division of United Technologies. Mr. Page holds a B.S. in business administration from Loyola Marymount University and J.D. from Loyola Law School.
		Specific Qualifications, Attributes, Skills and Experience
						Chief Executive Officer and Executive Experience Mr. Page has extensive executive leadership experience at large public companies. He served as Chief Financial Officer of United Technologies, a global provider of high-technology products and support services in the aerospace and building industries with annual revenues of approximately $77 billion prior to its merger with Raytheon Corporation in April 2020, and he also served as Chief Executive Officer of Otis Elevator, a former multibillion dollar revenue generating unit of United Technologies, as Chief Financial Officer of Black & Decker Corporation, a manufacturer of power tools, and as General Counsel of the McCullough Corporation, a subsidiary of Black & Decker.
						Extensive Global or International Business Experience Mr. Page gained extensive experience leading international businesses in his executive leadership roles at United Technologies and as a director of PACCAR. This international business experience is extremely valuable to us as international business becomes an increasingly important component of our business.
						Defense and Related Industry Experience From his experience in leadership roles at United Technologies, Mr. Page brings highly relevant experience to our military-focused unmanned aircraft systems business.
						Commercial Business Experience Mr. Page gained substantial experience in commercial business operations through his positions at United Technologies and Black & Decker Corporation. Mr. Page’s commercial business experience is of significant importance to the board as the company expands its commercial operations.
						Public Company Board Experience Mr. Page’s service as Vice Chairman of United Technologies and as the Lead Independent Director at Liberty Mutual and his experience as a director of United Technologies, PACCAR and Lowe’s provides us with valuable corporate governance and board leadership experience.
						Financial Expertise Having served as Chief Financial Officer of two major public companies and as Audit Committee Chair of Lowe’s, PACCAR and Liberty Mutual, Mr. Page brings a wealth of financial, capital allocation and audit committee experience to the company and the board.

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2023 NOMINEES FOR CLASS II DIRECTORS

Continuing Directors

		Charles Thomas Burbage
		Director Since:				2013
		Age:				75
		Board Committees and Leadership:				Chair of Compensation Committee, member of Nominating and Corporate Governance Committee and Executive Committee
		Summary of Experience:				Mr. Burbage has served as a member of our board of directors since 2013. Mr. Burbage retired from Lockheed Martin Aeronautics Company in April 2013, after a 33-year career during which he served most recently as Executive Vice President and General Manager, Joint Strike Fighter Program from 2000 to 2013. Mr. Burbage also served on active duty in the U.S. Navy as a Naval aviator and recorded more than 3,000 flight hours in 38 types of military aircraft before retiring as a Captain in the U.S. Naval Reserve in 1994. Mr. Burbage currently serves as a director of Terma North America, Inc., Chemring Group, Inc., a subsidiary of Chemring Group PLC, and GKN Aerospace North America, Inc. Mr. Burbage received a B.S. in aerospace engineering from the U.S. Naval Academy and holds an M.S. in aeronautical systems from the University of West Florida and an M.B.A. from the University of California, Los Angeles.
		Specific Qualifications, Attributes, Skills and Experience
						Chief Executive Officer or Executive Experience Mr. Burbage was the Lockheed Martin executive responsible for the F-35 Joint Strike Fighter program from its inception to adoption. He brings to the board the experience of managing a complex global program involving U.S. military and international customers and global industrial partners.
						Extensive Global or International Business Experience Mr. Burbage’s leadership of the F-35 Joint Strike Fighter program involved international business development activities on a global basis. The F-35 was sold to more than 10 countries and involved a global manufacturing capability. This experience is particularly relevant to us as we pursue larger and more complex international business opportunities.
						Defense Industry Related Experience In addition to decades of experience as an executive of Lockheed Martin, Mr. Burbage previously served as a Naval aviator and test pilot. He received numerous industry awards, including the U.S. Naval Academy/Harvard Business Review Award for Ethical Leadership. His defense industry and Naval officer experience provides important insights to the board on our largest business and customer set.
						Science, Technology and Innovation Experience Mr. Burbage has an extensive engineering background. He has a B.S. in aeronautical engineering from the U.S. Naval Academy and an M.S. in aeronautical systems from the University of West Florida. He applied this technical and engineering knowledge as a Naval aviator and in his management roles at Lockheed Martin. This background and experience is critically important to the board because of the innovative nature and technical complexity of our products.

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2023 NOMINEES FOR CLASS II DIRECTORS

		Edward R. Muller
		Director Since:				2013
		Age:				71
		Board Committees and Leadership:				Chair of Audit Committee and member of Compensation Committee; Lead Independent Director
		Summary of Experience:				Mr. Muller has served as a member of our board of directors since 2013. Mr. Muller served as Vice Chairman of NRG Energy, Inc., a U.S.-based producer and retail supplier of electricity, from December 2012 to February 2017. Prior to the merger in 2012 of NRG and GenOn Energy Inc., Mr. Muller served as the Chairman and Chief Executive of GenOn, which also produced and sold electricity in the United States, a position he held beginning in 2010. From 2005 to 2010, Mr. Muller was Chairman and Chief Executive of Mirant Corporation, which produced and sold electricity in the United States and internationally. Previously, Mr. Muller served as President and Chief Executive Officer of Edison Mission Energy until 2000, which produced electricity in the United States and internationally. Mr. Muller previously served as Vice President, Chief Financial Officer, General Counsel and Secretary of Whittaker Corporation, a conglomerate with activities in aerospace, chemicals, healthcare and metals. Mr. Muller serves as a director of Transocean Ltd., an offshore oil and gas driller, CarbonBuilt, Inc., Concrete, AI, Inc., Equatic, Inc., Nextli Technologies, Inc., Specifx, Inc., and x/44, Inc. He previously served as a director of Contact Energy, Ltd., Edison Mission Energy, Interval, Inc., Oasis Residential, Inc., Ormat Technologies, Inc., RealEnergy, Inc., RigNet Inc., Strategic DataCorp., The Keith Companies, Inc., and Whittaker Corporation. Mr. Muller is a member of the Council on Foreign Relations and the Pacific Council on International Policy, and previously was Chairman of the U.S. — Philippines Business Committee, Co-Chairman of the International Energy Development Council and a member of the Board of Trustees of the Riverview School. Mr. Muller received his undergraduate degree from Dartmouth College and a J.D. from Yale Law School.
		Specific Qualifications, Attributes, Skills and Experience
						Chief Executive Officer and Executive Experience Mr. Muller brings broad and extensive executive leadership experience to our board, having served as Chief Executive Officer of large companies that produced electricity for more than 15 years and as Chief Financial Officer and General Counsel of Whittaker Corporation.
						Public Company Board Experience Serving or having served as a director of 11 different public companies, Mr. Muller brings tremendous business and corporate governance oversight experience to the company and its board.
						Financial Expertise Mr. Muller has extensive financial and accounting experience as a Chief Executive Officer of several energy companies and as Chief Financial Officer of Whittaker Corporation and from serving on numerous public company audit committees. Our board and Audit Committee benefit from Mr. Muller’s extensive financial and accounting experience.
						Extensive Global or International Business Experience Mr. Muller has extensive international business experience and is a recognized expert on international policy and energy development. Besides his substantial international business experience as a Transocean Ltd. director, Mr. Muller serves as a Member of the Council on Foreign Relations and the Pacific Council on International Policy and was previously Chairman of the U.S. Philippines Business Committee and Co-Chairman of the International Energy Development Council.

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2023 NOMINEES FOR CLASS II DIRECTORS

		Cindy K. Lewis
		Director Since:				2021
		Age:				66
		Board Committees and Leadership:				Member of the Nominating and Corporate Governance Committee
		Summary of Experience:				From July 1998 to June 2023, Ms. Lewis served as the President and Chief Executive Officer of AirBorn Consolidated Holdings, Inc. She has served as Chairperson of AirBorn since November 2013. AirBorn is a middle-market, employee-owned company specializing in high reliability electronics manufacturing. Ms. Lewis has served in the manufacturing industry for over 40 years, with experience in accounting and finance, supply chain and manufacturing, information technology, business development, distribution and general management. From approximately 2006 through 2019, Ms. Lewis served in various board and officer roles for the National and Southwest Chapter of the ESOP Association, which promotes employee ownership awareness, best practices and provides strong lobbying efforts in Congress. Ms. Lewis currently serves on the Georgetown, Texas Chamber of Commerce Board of Directors. Ms. Lewis earned her Bachelor’s Degree in Accounting from The University of Texas at Arlington — College of Business and completed an Executive Development Program at The Wharton School, University of Pennsylvania.
		Specific Qualifications, Attributes, Skills and Experience
						Global or International Business Experience Ms. Lewis has over 20 years of international business experience while at AirBorn, including developing both a broad global supply chain and a growing a global customer base. AirBorn has manufacturing locations in Canada and Europe, as well as strong contract manufacturing relationships in Asia. Ms. Lewis’ international business experience is a valuable asset to our board as we grow our international presence and sales.
						Science, Technology and Innovation Experience Ms. Lewis’s career includes management, development and oversight of various types of technologies. With electronic products that require heavy engineering and collaboration with customers for design, Ms. Lewis managed new product development for AirBorn, as well as new manufacturing processes and automation technologies. AirBorn filed for and received numerous patents under Ms. Lewis’ leadership. Ms. Lewis was the original architect of cybersecurity strategy for AirBorn and is the board cyber sponsor with a certificate of cybersecurity oversight from Carnegie Mellon. Ms. Lewis sponsors digital transformation and digital progression projects to ensure the company keeps pace with the rapid acceleration of software technology in all aspects of the business.
						Related Industry Experience — Customer Relationships Ms. Lewis was directly responsible for managing various key customer relationships, ensuring service, expectations and contract negotiations provided a favorable partnering environment for both AirBorn and its customers. Four of AirBorn’s five original customers from the 1950s remained top ten OEM customers through Ms. Lewis’ retirement as President and Chief Executive Officer of AirBorn. Primary industry experience includes Military Aerospace, Medical, Semiconductor, and Energy.
						Investment and M&A Expertise Ms. Lewis led AirBorn through five acquisitions since 2002, broadening the company’s capabilities and providing strategic market diversification. Ms. Lewis was directly involved in all negotiations with acquisition targets as well as funding for these acquisitions. Ms. Lewis directed subsequent integration activities. Ms. Lewis also led AirBorn through numerous major refinancing transactions over the years to fund acquisitions and growth capital investments. She led the selection of financial institutions for fund raising of major transactions, and was directly involved in all related contract negotiations. Ms. Lewis additionally led the strategy and execution of refinancing which transitioned AirBorn to a 100% ESOP owned subchapter S corporation in 2003.
						Experience Scaling and Small Business Under her leadership at AirBorn, Ms. Lewis and her team successfully led the company through several levels of transition from a small connector job shop to a middle market electronics company. Ms. Lewis developed AirBorn’s growth strategy and led the execution of initiatives to achieve AirBorn’s growth.
						Chief Executive Officer and Executive Experience Ms. Lewis served as President and Chief Executive Officer of AirBorn from 1998 to 2023, bringing significant experience and insight to the board from financial, operations and strategic growth perspectives. Her prior positions at AirBorn include Chief Operating Officer, Vice President of Manufacturing, Vice President of Supply Chain, General Manager.

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2023 NOMINEES FOR CLASS II DIRECTORS

		Cindy K. Lewis
						Defense Industry Experience Ms. Lewis has over 30 years of experience providing high reliability products and technical solutions to the Military and Aerospace industries domestically and internationally.
						ESG — Environmental, Social, Governance Ms. Lewis has extensive experience in regulatory compliance and ensured AirBorn maintained robust compliance and governance practices. She oversaw ESG strategy and activities, and led the company’s Diversity, Equity, Inclusion (DEI) activities.

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2023 NOMINEES FOR CLASS II DIRECTORS

		Wahid Nawabi
		Director Since:				2016
		Age:				54
		Board Committees and Leadership:				Chairman of the Board; member of the Executive Committee
		Summary of Experience:				Mr. Nawabi has served as our President and Chief Executive Officer since May 2016. Previously, Mr. Nawabi served as our President and Chief Operating Officer from January 2016 to May 2016 and as Senior Vice President and Chief Operating Officer from April 2015 to January 2016. He also served as Senior Vice President and General Manager, EES from December 2011 to April 2015. Prior to joining the company, Mr. Nawabi served as Vice President, Global Sales of Altergy Systems, a designer and manufacturer of fuel cell power systems, from March 2010 through November 2011, and as Vice President, Americas, and Vice President, Global Sales for C&D Technologies, a producer and marketer of electrical power storage and conversion products, from February 2009 through March 2010. Prior to joining C&D Technologies, Mr. Nawabi worked for 16 years with American Power Conversion Corporation, a provider of power protection products and services, in a succession of positions of increasing responsibility, most recently as Vice President, Enterprise Segment, North America and Canada. During his 16-year tenure at American Power Conversion, Mr. Nawabi was instrumental to the company’s growth into global market leadership positions in power protection and data center physical infrastructure, with significant roles in starting and growing the company’s data center physical infrastructure business and in developing and expanding the company’s business across Europe and Asia. Mr. Nawabi currently serves as the Chairman of the Board of LiquidStack, Inc. Mr. Nawabi has a B.S. in electrical engineering from the University of Maryland, College Park.
		Specific Qualifications, Attributes, Skills and Experience
						Chief Executive Officer and Executive Experience Mr. Nawabi brings significant executive and leadership experience to the board from his experience in various executive roles at the company since 2011 and his prior experience at Altergy Systems, C&D Technologies and American Power Conversion.
						Extensive Knowledge of the Company’s Business Mr. Nawabi has gained extensive knowledge of our business operations since joining our company in 2011 as Senior Vice President and General Manager, EES. His knowledge of all aspects of our business, operations and products, including his current service as our President and Chief Executive Officer, allows him to bring valuable practical information and insight to the board.
						Extensive Global or International Business Experience Through his experience as Vice President, Global Sales of Altergy Systems and of C&D Technologies, as well as his service as our Chief Operating Officer, President and Chief Executive Officer, Mr. Nawabi has gained extensive international business experience. At C&D Technologies, Mr. Nawabi helped expand and grow the business throughout Latin America, which led to the expansion of the company’s presence both in manufacturing capacity as well as sales, marketing and customer service in such regions. Additionally, Mr. Nawabi helped develop American Power Conversion’s business across Europe and Asia. As our international sales continue to increase, Mr. Nawabi’s international experience is a valuable asset to our board.
						Science Technology and Innovation Experience As the General Manager of the company’s former EES business segment, Mr. Nawabi oversaw the launch of multiple innovative and successful new products to market and was responsible for revamping the division’s product development processes, which were eventually implemented across the company’s UAS segment as well. Additionally, while at American Power Conversion, Mr. Nawabi was instrumental in launching numerous innovative products to market, many of which were recognized as “industry firsts.”

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2023 NOMINEES FOR CLASS II DIRECTORS

SUMMARY OF DIRECTOR NOMINEES

The following information and graphics summarize the qualifications of the nominees for Class II director and the other continuing members of the board, excluding Ms. Merigold who is not standing for re-election. Based on a careful assessment, the Nominating and Corporate Governance Committee and the board have concluded that each nominee is qualified to serve as a director and that the collective board, including the nominees for election, possesses the necessary qualifications, attributes, skills and experience to provide effective oversight of the business and provide strategic advice and counsel to the company’s management.

All nominees and other directors exhibit:

	• High integrity			• Innovative thinking
	• Proven record of success			• Knowledge of corporate governance

Our director nominees and other directors bring a balance of important skills to our boardroom

The fact that an item is not highlighted for a director does not mean that the director does not possess that qualification, attribute, skill or experience.

Nominees

Continuing Directors

Totals

Attribute

Davidson

Long

Page

Burbage

Lewis

Muller

Nawabi

Nominees

Board

CEO and Executive Experience

✓

Knowledge of Company Business

✓

Defense/Aerospace Industry or
Military Experience

✓

International Business Experience

✓

Other Public Board Experience

✓

Science, Technology and
Innovation

✓

Commercial Business Experience

✓

Financial Literacy

✓

Strategic Development Experience

✓

Scaling Business Experience

✓

Data Analytics Experience

✓

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2023 NOMINEES FOR CLASS II DIRECTORS

Our director nominees and other continuing directors provide an effective mix of experience and fresh perspective.

INDEPENDENCE

PRIOR BOARD SERVICE

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CORPORATE GOVERNANCE

Board of Directors and Committees

Our board of directors functions in a collaborative manner and all directors play an active role in overseeing the company’s business both at the board and committee levels. The 2023 director nominees consist of three Class II director nominees, each of whom is an independent director and each of whom has significant leadership experience and knowledge of the company’s industry.

Pursuant to our bylaws, our board must annually elect one of its members to serve as Chairman of the Board, who shall preside over meetings of the board and stockholders, consult and advise the board and its committees on the business and affairs of the company, and perform such other duties as may be assigned by the board. Our bylaws also require the board to designate annually an independent director to serve as the Lead Independent Director if the Chairman of the Board is not an independent director. The designation of a Lead Independent Director is for a one-year term and a Lead Independent Director may be eligible for re-election at the end of that term. Designation as such does not impose on the Lead Independent Director any obligation or standard greater than or different from those of the company’s other directors. The Lead Independent Director has the following roles and responsibilities:

•

presides at all meetings of the board or stockholders at which the Chairman of the Board is not present;

•

serves as a liaison on board-related issues between the Chairman of the Board and the independent directors;

•

reviews and provides input to the Chairman of the Board regarding the nature, scope and timeliness of information that management provides to the board;

•

reviews and provides input to the Chairman of the Board regarding the agendas for board meetings and the annual schedule of board meetings;

•

presides at meetings of the independent directors and apprises the Chairman of the Board of the issues discussed, as appropriate; and

•

performs such other duties as the board may from time to time delegate.

Our officers, under the direction of our Chief Executive Officer, are generally in charge of the day-to-day affairs of the company, subject to the powers reserved to the board.

As set forth in the company’s Corporate Governance Guidelines, regularly scheduled executive sessions of independent directors are held at least twice per year. In addition, the non-employee directors also hold regular executive sessions. These meetings allow our independent and non-employee directors to discuss issues of importance to the company, including the business and affairs of the company, as well as matters concerning management, without any member of management present. Independent directors chair all of the board committees (except our Executive Committee), which are described below.

Board Leadership Structure

We do not have a formal policy regarding the separation of the roles of Chairman of the Board and Chief Executive Officer. The company’s governance framework provides the board with flexibility to select the appropriate leadership structure for long-term success of the company. In making leadership structure determinations, including whether to separate or combine the Chairman of the Board and Chief Executive Officer roles, the board considers many factors, including the specific needs of the business and what is in the best interests of the company’s stockholders.

Our current leadership structure is as follows:

•

Chairman of the Board, President and Chief Executive Officer: Wahid Nawabi

•

Lead Independent Director: Edward R. Muller

•

Committees led by independent directors

•

Active engagement by all directors

The board believes that this leadership structure, consisting of a combined Chairman of the Board and Chief Executive Officer, an independent director serving as Lead Independent Director and strong, active independent directors, is the optimal structure to guide our company and maintain the focus required to achieve our business goals. The board believes this structure provides an effective balance between strong company leadership and appropriate safeguards and oversight by independent directors. It provides a single leader who is understood by our employees, customers, business partners, and stockholders as providing strong leadership for the company, which enhances our ability and agility to manage resources and provides the focus required to implement our complex business strategy.

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The Board’s Role in Strategy Oversight

Our board of directors is actively involved in overseeing our strategy and its execution. In addition to discussing business goals and priorities and broader strategic issues regularly, the board engages with management on future opportunities for the company and how emerging trends, technologies and global developments may impact the company, our customers and business partners, end markets and our stakeholders and how the company should navigate such matters. Our board of directors guides our strategic direction and helps ensure our business strategies align to long-term value creation.

The Board’s Role in Risk Oversight

Our board of directors is responsible for overseeing our risk management and delegates many of these functions to the Audit Committee, which reports regularly to the board. Under its charter, the Audit Committee is responsible for discussing with management the company’s policies with respect to risk assessment and risk management. The committee is chartered to discuss with management our significant risk exposures and the actions management has taken to limit, monitor or control such exposures. In addition to the Audit Committee’s work in overseeing risk management, our full board engages in discussions of the most significant risks that we face and how these risks are being managed. Our Compensation and Nominating and Corporate Governance Committees are also involved in evaluating risks that fall within the purview of those committees’ responsibilities.

The Board’s Role in Environmental, Social and Governance (ESG) Matters Oversight

Our board of directors provides oversight of ESG matters and regularly receives reports from our ESG Committee. Formed in 2020, the company’s ESG Committee, which is comprised of members of senior management and other functional area leaders, sets goals regarding ESG matters, directs ESG initiatives, and reviews progress on ESG matters with the board.

In 2022, the ESG Committee, with support of the board, commissioned the company’s first Corporate Social Responsibility (“CSR”) report, that was published on the company website in August 2022. The company expects to publish its updated CSR report in the second quarter of its Fiscal 2024. The Compensation Committee of the board also included an ESG metric in each of the 2022 and 2023 executive bonus plans. Company management included the same ESG metrics in the 2022 and 2023 bonus plans for non-executive employees as well.

The Board’s Role in Human Capital Management

The board acknowledges that our employees are the company’s most valuable asset and the driving force behind our success, and seeks to ensure that the company is known for cultivating a positive and welcoming work environment — one that fosters growth, provides a safe place to work, supports diversity and embraces inclusion. Our board of directors believes that a diverse and inclusive workforce is a major catalyst for driving innovation and an important aspect of our ESG efforts.

Board Meetings

Under the company’s bylaws, regular meetings of the board are held at such times as the board may determine. Special meetings of the board may be called by the Chairman of the Board or the President on 48 hours’ notice to each director or by the President or the Corporate Secretary after receiving a written request of two directors on 48 hours’ notice. The board held 7 meetings in fiscal year 2023. Each director attended at least 75% of all meetings of the board of directors and each committee on which he or she sat during fiscal year 2023.

Annual Meeting Attendance

The company does not have a formal policy regarding directors’ attendance at annual meetings of stockholders, but encourages all directors to attend such meetings. All six directors who were serving as directors after the start of the 2022 annual meeting of stockholders attended the annual meeting.

Board Committees

The board has an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. The board has adopted a written charter for each of these committees, which are available on the company’s website at www.avinc.com by clicking on “Investors” and then clicking on “Corporate Governance”. All of the members of each of these standing committees (other than the Executive Committee) meet the criteria for independence prescribed by the SEC and Nasdaq. The information contained on our website is not incorporated by reference into, and does not form a part of, this proxy statement. Our board of directors may establish other committees to facilitate the management of our business. Additional information about the committees is provided below.

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Audit Committee

	Committee Chair:			Edward R. Muller
	Other Committee Members:			Stephen F. Page and Catharine Merigold
	Meetings held in FY2023:			6

The board has determined that Mr. Muller and Mr. Page qualify as audit committee financial experts as defined by the rules of the SEC. All committee members are able to read and understand fundamental financial statements in accordance with Nasdaq requirements. Our Audit Committee’s main function is to oversee our accounting and financial reporting processes, internal systems of control, independent registered public accounting firm relationships and the audits of our financial statements. The Audit Committee’s responsibilities include:

•

selecting and hiring our independent registered public accounting firm;

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evaluating the qualifications, independence and performance of our independent registered public accounting firm;

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reviewing and approving the audit and non-audit services to be performed by our independent registered public accounting firm;

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reviewing the design, adequacy, implementation and effectiveness of our internal controls established for finance, accounting, legal compliance and ethics;

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reviewing the design, adequacy, implementation and effectiveness of our critical accounting and financial policies;

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overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters;

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reviewing with management and our independent registered public accounting firm our annual and quarterly financial statements;

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reviewing with management and our independent registered public accounting firm any earnings announcements or other public announcements concerning our operating results;

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establishing procedures for the receipt, retention and treatment of complaints (including procedures for receiving and handling complaints on a confidential and anonymous basis) regarding accounting, internal accounting controls or auditing matters, including employee concerns regarding questionable accounting or auditing matters;

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preparing the audit committee report that the SEC requires in our annual proxy statements; and

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reviewing and approving any related party transactions.

The Code of Business Conduct and Ethics (“code of conduct”), is our code of ethics for directors, executive officers, employees and agents. Any amendment to the code of conduct that applies to our directors or executive officers may be made only by the board or a board committee and will be disclosed on our website.

The code of conduct is available at http://investor.avinc.com. The Audit Committee charter and the code of conduct are also available in print to any stockholder who requests them.

Upon the retirement of Ms. Merigold as a director of the company, the board will appoint a qualified new member to the Audit Committee.

Compensation Committee

	Committee Chair			Charles Thomas Burbage
	Other Committee Members:			Catharine Merigold and Edward R. Muller
	Meetings held in FY2023			5

Our Compensation Committee’s purpose is to assist our board of directors in determining the development plans and compensation for our senior management and the compensation to be paid to directors for board and committee service. The Compensation Committee of our board consists of three independent directors. The Compensation Committee’s responsibilities with respect to executive and director compensation are:

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to review our compensation philosophy;

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to review and recommend to the board corporate goals and objectives relating to the compensation of our Chief Executive Officer, evaluate the performance of our Chief Executive Officer in light of those goals and objectives and review and recommend to the board the compensation of our Chief Executive Officer;

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to review and approve all compensation of our executive officers and all other officers subject to the reporting requirements of Section 16(a) of the Securities Exchange Act;

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to review all employment agreements and severance arrangements of executive officers;

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to review and recommend to the board compensation for non-management directors’ service on the board and any committees;

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to review all annual bonus, long-term incentive compensation, stock option, employee pension and welfare benefit plans;

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•

to review and approve the Compensation Discussion and Analysis contained in this proxy statement; and

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to review and approve executive officer indemnification and insurance matters.

In addition, the Compensation Committee is responsible for the general administration of all executive compensation plans, including:

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setting performance goals for our executive officers and reviewing their performance against these goals;

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approving all amendments to, and terminations of, all such compensation plans and any awards under such plans;

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granting awards under any performance-based annual bonus, long-term incentive compensation and equity compensation plans to executive officers; and

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making recommendations to the board with respect to awards for directors under our equity incentive plans.

In addition, the Compensation Committee has the sole authority, in accordance with applicable securities laws, rules and regulations and Nasdaq listing standards, to retain and/or replace, as needed, any independent counsel, compensation and benefits consultants and other outside experts or advisors as the Compensation Committee believes to be necessary or appropriate. The Compensation Committee is responsible for the appointment, compensation and oversight of the work of any compensation advisors retained by the Compensation Committee. Subject to any exceptions under the Nasdaq listing standards, prior to selection and engagement of any compensation advisor, the Compensation Committee will undertake an analysis of the independence of each such compensation advisor under the independence factors specified in the applicable requirements of the Exchange Act and the Nasdaq listing standards. The company will provide for appropriate funding, as determined by the Compensation Committee in its sole discretion, for payment of compensation to any compensation advisors retained by the Compensation Committee.

Compensation Committee Interlocks and Insider Participation

The members of our Compensation Committee during the fiscal year ended April 30, 2023 were Charles Thomas Burbage, Catharine Merigold and Edward R. Muller. None of the current or proposed members of our Compensation Committee at any time has been one of our executive officers or employees. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors

or compensation committee of any entity that has one or more executive officers serving on our board of directors or Compensation Committee.

Nominating and Corporate Governance Committee

	Committee Chair:			Stephen F. Page
	Other Committee Members:			Charles Thomas Burbage and Cindy K. Lewis
	Meetings held in FY2023:			5

Our Nominating and Corporate Governance Committee’s purpose is to assist our board by identifying individuals qualified to become members of our board of directors, consistent with criteria set by our board, and to develop our corporate governance principles. The Nominating and Corporate Governance Committee’s responsibilities include:

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evaluating the composition, size and governance of our board of directors and its committees and making recommendations regarding future planning and the appointment of directors to our committees;

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administering a policy for considering stockholder nominees for election to our board of directors;

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evaluating and recommending candidates for election to our board of directors;

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overseeing our board’s performance and self-evaluation process; and

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reviewing our corporate governance principles and providing recommendations to the board regarding possible changes.

Our board of directors believes that it should be composed of directors with varied, complementary backgrounds and that directors should, at a minimum, have expertise that may be useful to the company. Directors should also possess the highest personal and professional ethics and should be willing and able to devote the required amount of time to our business.

When evaluating director candidates, the Nominating and Corporate Governance Committee takes into account the degree to which a candidate fulfills the criteria contained in the Corporate Governance Guidelines and other factors consistent with those guidelines, including the following:

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independence from management;

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personal and professional integrity, ethics and values;

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practical and mature business judgment;

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experience as a Chief Executive Officer, President or other executive officer of a public or large private company;

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extensive knowledge of the company’s business or experience in one or more industries in which we

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compete, including aerospace and defense, or industrials;

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global and international business experience;

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experience in strategic development activities, including mergers, acquisitions, partnerships and venture capital transactions;

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experience in marketing, engineering, technology and innovation, operations, supply chain and manufacturing, and legal;

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a high degree of financial literacy and experience;

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experience as a board member of another publicly held company;

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diversity of expertise and experience in substantive matters pertaining to our business relative to other board members;

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diversity of personal background relative to other board members, including gender, age, and ethnic diversity;

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data analytics experience;

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commercial business experience; and

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experience in scaling or growing a startup or small business into a significant business.

The Nominating and Corporate Governance Committee will consider candidates for director suggested by stockholders applying the criteria for candidates described above and considering the additional information referred to below. Stockholders wishing to suggest a candidate for director should write to the Corporate Secretary and include:

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a statement that the writer is a stockholder and is proposing a candidate for consideration by the committee;

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the name of and contact information for the candidate and shareholder making the recommendation;

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a statement detailing any relationship between the candidate and any of our customers, suppliers or competitors;

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with respect to each of the proposing stockholder and the candidate, the class and number of shares of our capital stock which are, directly or indirectly, owned beneficially or of record;

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with respect to each of the proposing stockholder and the candidate, any derivative, swap or other transaction, or series of transactions, the purpose or effect of which is to give such party economic risk similar to ownership of shares of our capital stock;

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with respect to each of the proposing stockholder and the candidate, any proxy, agreement,

arrangement, understanding or relationship that confers a right to vote any of our shares of capital stock;

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with respect to each of the proposing stockholder and the candidate, any agreement, arrangement, understanding or relationship engaged in, directly or indirectly, to reduce the level of risk of loss to, or increase or decrease the voting power of, such party with respect to our shares of capital stock, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of our shares of capital stock;

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with respect to each of the proposing stockholder and the candidate, any right to dividends on any of our shares of capital stock owned beneficially by such party that are separated from our underlying shares of capital stock;

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with respect to each of the proposing stockholder and the candidate, opportunity to profit from, or any performance-related fees such party is entitled to, based on the increase or decrease in the value of any of our shares of capital stock;

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all information relating to the proposing stockholder and the candidate that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies or consents for election of directors in a contested election pursuant to Section 14 of the Exchange Act (including such candidate’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);

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a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the proposing stockholder, on the one hand, and the candidate, his or her respective affiliates and associates, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K promulgated under the Exchange Act if such proposing stockholder were the “registrant” for purposes of such rule and the candidate were a director or executive officer of such registrant; and

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a completed and signed questionnaire, representation and agreement with respect to the candidate’s background, any voting commitments or compensation arrangements and the candidate’s commitment to abide by our Corporate Governance Guidelines.

Under our by-laws, eligible shareholders may also nominate persons for our Board of Directors for inclusion in our Proxy Statement. This is commonly

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known as “proxy access.” A shareholder, or a group of up to 20 shareholders, owning at least three percent of our outstanding common stock continuously for at least three years, may nominate and include in our proxy materials director nominees constituting up to the greater of two individuals or twenty percent of the Board, subject to certain limitations and provided that the shareholders and the nominees satisfy the requirements specified in our by-laws.

In addition, we may require any candidate to furnish such other information as may reasonably be required by us to determine the eligibility of such candidate to serve as an independent director in accordance with our Corporate Governance Guidelines or that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such candidate.

Before nominating a sitting director for re-election at an annual meeting, the Nominating and Corporate Governance Committee will consider:

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the director’s performance on the board of directors; and

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whether the director’s re-election would be consistent with our Corporate Governance Guidelines.

Executive Committee

	Committee Chair:			Wahid Nawabi
	Other Committee Member:			Charles Thomas Burbage
	Meetings held in FY2023:			0

Our Executive Committee’s purpose is to exercise the powers of the board of directors when the board is not in session, subject to specific restrictions as to powers retained by the full board of directors or delegated to other committees of the board of directors. Powers retained by the full board of directors include those relating to amendments to our certificate of incorporation and bylaws, mergers, consolidations and sales or exchanges involving substantially all of our assets.

Board Self-Evaluations

The board of directors conducts annual self-evaluations to assess the qualifications, attributes, skills and experience represented on the board and to determine whether the board and its committees are functioning effectively. During the year, the Nominating and Corporate Governance Committee receives input on the board and committee performance from

directors and discusses the input with the full board. The self-assessment focuses on the board’s contribution to the company and on areas in which the board believes that the board or any of its committees could improve.

Communication with the Board

The board has established a process to facilitate communication with stockholders and other interested parties. Communications can be addressed to the directors in care of the Corporate Secretary, 241 18th Street South, Suite 415, Arlington, VA 22202 or by email to corporatesecretary@avinc.com. At the direction of the board, all mail received may be opened and screened for security purposes. The board of directors has requested that certain items that are unrelated to the duties and responsibilities of the board of directors should be excluded, including the following: junk mail and mass mailings; product complaints; product inquiries; new product suggestions; resumes and other forms of job inquiries; surveys; and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will not be distributed, with the provision that any communication that is not distributed will be made available to any independent director upon request. Mail addressed to a particular director will be forwarded or delivered to that director. Mail addressed to “outside directors” or “non-employee directors” will be forwarded or delivered to the Lead Independent Director. Mail addressed to the “board of directors” will be forwarded or delivered to the Chairman of the Board.

Commitment to Good Corporate Governance

The board has adopted various policies and guidelines as part of the company’s commitment to good corporate governance. Examples of such polices include:

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anti-hedging and anti-short sale policies for executives, directors and employees which prohibit the use any strategies or products (including derivative securities, such as put or call options, or short-selling techniques) to hedge against potential changes in the value of our common stock;

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share ownership guidelines and share retention policy for executives and directors; and

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a compensation recovery policy for executives.

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Board Diversity

Although the board does not have a formal policy regarding diversity, the Nominating and Corporate Governance Committee’s evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the board. Nominees are not discriminated against based on race, color, religion, sex, ancestry, national origin, sexual orientation, disability or any other basis prescribed by law. The Nominating and Corporate Governance Committee assesses the effectiveness of this approach as part of its review of the board’s composition as well as in the course of the board’s and Nominating and Corporate Governance Committee’s self-evaluation. With the assistance of the Nominating and Corporate Governance Committee, the Board regularly reviews trends in board composition, including on director diversity.

Board Diversity Matrix (As of August 2, 2023)1
Total Numbers of Directors	7
	Female	Male	Non-Binary	Did not Disclose Gender
Part 1: Gender Identity
Directors	2	5	0	0
Part 2: Demographic Background
African American or Black	0	0	0	0
Alaskan Native or Native American	0	0	0	0
Asian	0	1	0	0
Hispanic or Latinx	0	0	0	0
Native Hawaiian or Pacific Islander	0	0	0	0
White	2	4	0	0
Two or More Races or Ethnicities	0	0	0	0
LGBTQ+	0
Did Not Disclose Demographic Background	0

Table (a) includes Catharine Merigold, who is not standing for re-election at the 2023 annual meeting and (b) excludes director nominee Mary Beth Long who was not a director as of August 2, 2023.

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DIRECTOR COMPENSATION

Compensation of Non-Employee Directors

The general policy of our board of directors is that compensation for non-employee directors should be delivered through a mix of cash and equity-based pay. We do not pay management directors for board service in addition to their regular employee compensation. Our Compensation Committee, which consists solely of independent directors, has the primary responsibility for reviewing and considering any revisions to director compensation. The board of directors reviews the Compensation Committee’s recommendations and determines the amount of director compensation.

The Compensation Committee engages an independent compensation consultant, Pay Governance LLC (“Pay Governance”), a national compensation consulting firm, to assist it in reviewing

director compensation on a biennial basis. In June 2021, Pay Governance prepared a report for the Compensation Committee with non-employee director compensation data of peer companies identified by Pay Governance, which the Compensation Committee and the board of directors used in setting non-management director compensation for fiscal year 2023. In June 2022, after discussing the compensation of non-management directors with Pay Governance, the Compensation Committee recommended, and the board determined, that the annual cash retainer fees and size of the annual restricted stock awards provided to the non-management directors for their fiscal year 2023 service should remain at the same levels as in effect for fiscal year 2022.

The table below presents the annual cash retainer fees for our non-employee directors in effect in fiscal year 2023.

Director Responsibilities			Annual Retainer
Board Members			$60,000
Lead Independent Director			$20,000
Chair of Audit Committee			$20,000
Audit Committee Member (not including Chair)			$10,000
Chair of Nominating and Corporate Governance Committee			$10,000
Nominating and Corporate Governance Committee Member (not including Chair)			$ 5,000
Chair of Compensation Committee			$15,000
Compensation Committee Member (not including Chair)			$ 7,000

Annual retainer amounts are paid in four equal quarterly installments at the beginning of each of our fiscal quarters if the individual is still serving as a director at such time. We also reimburse non-employee directors for out-of-pocket expenses incurred in connection with their service as a director, such as attending board or committee meetings. We also pay for travel and hospitality costs for the spouses of directors to accompany such directors to an offsite board meeting, which expenses did not exceed $10,000 in fiscal year 2023 for any director.

In addition to cash retainer fees, our non-employee directors also receive an annual grant of restricted stock, which awards vest in three equal annual installments over a three-year period beginning approximately one year from the date of grant. Based on the report provided by Pay Governance in June 2021 and a subsequent discussion with Pay Governance, the Compensation Committee

recommended, and the board approved, an annual grant of restricted stock awards with an aggregate value of $130,000 to each non-management director for their fiscal year 2023 service. These annual awards for fiscal year 2023 service were granted in July 2022 to our non-employee directors serving as directors at such time. Such awards vest in three equal installments on July 11, 2023, 2024 and 2025. The number of shares subject to such awards was calculated on the date of grant based on the closing price per share of our common stock on such date. Newly elected or appointed non-employee directors will be granted restricted stock awards with an aggregate value of $170,000 on the date of grant (measured by the closing price per share of our common stock subject to the awards on the date of grant). The annual and new director equity grant values were determined by the board to be competitive with non-employee director equity awards at comparable companies based on discussions with Pay Governance. Mr. Davidson was

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granted his new director restricted stock award in June 2023 in connection with his commencement of service on the board, which award vests in equal installments on each of July 11, 2024, 2025 and 2026. If elected, Ms. Long is expected to be granted a new director restricted stock award in September 2023 following the Annual Meeting in connection with her commencement of service on the board, which award, if granted, is expected to vest in equal installments on each of October 5, 2024, 2025 and 2026.

The award agreements evidencing stock options and restricted stock awards issued to our non-employee directors provide for the acceleration of vesting and exercisability of all company stock options and restricted stock awards held by the director upon the completion of a change in control.

Fiscal Year 2023 Non-Employee Director Compensation Table

The following table identifies the compensation paid during fiscal year 2023 to each person who served as a non-employee director during fiscal year 2023.

Name	Fees Earned or Paid in Cash ($)	Stock Awards1 ($)	All Other Compensation ($)	Total ($)
Charles Thomas Burbage	80,000	129,982	—	209,982
Charles R. Holland2	23,805	129,982	66,0003	219,787
Cindy K. Lewis	65,000	129,982	—	194,982
Catharine Merigold	77,000	129,982	—	206,982
Edward R. Muller	107,000	129,982	—	236,982
Stephen F. Page	80,000	129,982	—	209,982

The value of the restricted stock awards granted during fiscal year 2023 equals their grant date fair value as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), Topic 718. For additional information regarding the valuation assumptions used in the calculation of these amounts, refer to Notes 13 and 14 to the financial statements included in our annual report on Form 10-K for our fiscal year ended April 30, 2023, as filed with the SEC.

Retired from the board and ceased serving as a director at the 2022 annual meeting of stockholders on September 23, 2022.

Consists of consulting fees received by Mr. Holland. Mr. Holland is currently a consultant for the company.

None of the non-employee members of our board who served on the board during fiscal year 2023 held unexercised options as of April 30, 2023.

The non-employee members of our board who served on the board during fiscal year 2023, held the following aggregate number of shares of unvested restricted stock as of April 30, 2023:

Name	Number of Securities Underlying Unvested Restricted Stock
Charles Thomas Burbage		2,919
Charles R. Holland		2,919
Cindy K. Lewis		2,792
Catharine Merigold		2,919
Edward R. Muller		2,919
Stephen F. Page		2,919

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The following table provides a breakdown of fees earned or paid in cash during fiscal year 2023.

Name	Annual Retainers ($)	Chairman of the Board, Lead Independent Director and Committee Chair Retainer Fees ($)	Committee Member Retainer Fees ($)	Total Fees ($)
Charles Thomas Burbage	60,000	15,000	5,000	80,000
Charles R. Holland1	23,805	—	—	23,805
Cindy K. Lewis	60,000	—	5,000	65,000
Catharine Merigold	60,000	—	17,000	77,000
Edward R. Muller	60,000	40,000	7,000	107,000
Stephen F. Page	60,000	10,000	10,000	80,000

Retired from the board effective upon the 2022 annual meeting of stockholders on September 23, 2022.

Compensation Policies Applicable to Non-Employee Directors

Annual Limits on Director Compensation

We have adopted annual limits on the amount of compensation that any individual non-employee director may receive for service on our board of directors. Under the 2021 Equity Incentive Plan, the sum of any cash compensation, other compensation and equity awards granted to a non-employee director as compensation for services on our board during any fiscal year may not exceed $500,000 (or $700,000 for the director’s initial year of service). The board of directors may make exceptions to this limit in extraordinary circumstances, provided that the director receiving the additional compensation may not participate in the decision to award such additional compensation.

Stock Ownership Guidelines for Non-Employee Directors

Our board of directors has adopted stock ownership guidelines for our non-employee directors. Pursuant to

the guidelines, as amended by the board of directors in September 2022, each non-employee director is expected to own shares of the company’s common stock with a market value of no less than five times his or her current annual cash retainer for serving as a member of the board of directors, exclusive of chairperson, committee or meeting fees, within five years of the date on which such person was appointed to the board. The company determines progress toward meeting the applicable ownership thresholds and ongoing compliance with the guidelines on the last day of each fiscal year.

The table below shows each non-employee director’s equity ownership in the company as a multiple of his or her cash retainer and the minimum ownership level required of the guidelines in effect on April 30, 2023 pursuant to these guidelines for each of our non-employee directors serving in such capacity as of April 30, 2023.

Name	Dollar Value of Equity Ownership as a Multiple of Annual Retainer ($)1	Minimum Ownership Level Required as a Multiple of Annual Retainer
Charles Thomas Burbage	79.9x	5x
Cindy K. Lewis	5.76x	5x
Catharine Merigold	37.4x	5x
Edward R. Muller	80.9x	5x
Stephen F. Page	85.1x	5x

For each non-employee director, calculated by dividing (a) the aggregate number of shares of vested and unvested common stock held by such non-employee director, multiplied by the closing price of $100.69 per share of our common stock on April 28, 2023, the last trading day of fiscal year 2023, by (b) the annual retainer paid to such non-employee director (excluding any annual cash retainer for committee membership or chairmanship or service as lead independent director).

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Post-Vesting Stock Retention Guidelines

The company has adopted post-vesting stock retention guidelines, which require non-employee directors to hold 50% of net after-tax shares issued upon the vesting of equity awards until their required stock ownership levels are achieved.

Insider Trading and Anti-Hedging and Anti-Pledging Policies

The company’s insider trading policies contain stringent restrictions on transactions in company stock by non-employee directors. All trades by non-employee directors must be pre-cleared. Furthermore, no member of our board of directors may use any

strategies or products (including derivative securities, such as put or call options, or short-selling techniques) to hedge against potential changes in the value of our common stock. Additionally, no non-employee director may pledge shares of our stock as collateral for a loan or hold any shares of our common stock in a margin account.

Stock ownership and retention guidelines and anti-hedging and anti-pledging policies for our executive officers, including Mr. Nawabi, are described below under “Executive Compensation and Other Information — Compensation Discussion and Analysis — Stock Ownership Guidelines for Executive Officers.

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RELATED PARTY TRANSACTIONS

Certain Transactions and Relationships

Review and Approval of Related Party Transactions. All transactions and relationships in which the company and our directors, director nominees and executive officers or their immediate family members are participants are reviewed by our Audit Committee or another independent body of the board of directors, such as the independent and disinterested members of the board. As set forth in the Audit Committee charter, the members of the Audit Committee, all of whom are independent directors, review and approve related party transactions for which such approval is required under applicable law, including SEC and Nasdaq rules. In the course of its review and approval or ratification of a disclosable related party transaction, the Audit Committee or the independent and disinterested members of the board may consider:

•

the nature of the related person’s interest in the transaction;

•

the material terms of the transaction, including, without limitation, the amount and type of transaction;

•

the importance of the transaction to the related person;

•

the importance of the transaction to the company;

•

whether the transaction would impair the judgment of a director or executive officer to act in the best interest of the company; and

•

any other matters the Audit Committee deems appropriate.

Reportable Related Party Transactions. Other than the employment arrangements described elsewhere in this proxy statement, since May 1, 2021, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party in which:

•

the amount involved exceeded or will exceed $120,000; and

•

a director, director nominee, executive officer, holder of five percent or more of any class of our capital stock or any member of his or her immediate family had or will have a direct or indirect material interest.

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EXECUTIVE OFFICERS

The following table sets forth certain information as of August 2, 2023 about our executive officers.

Name	Age	Position
Wahid Nawabi1	54	Chair, President and Chief Executive Officer
Kevin McDonnell	61	Senior Vice President and Chief Financial Officer
Melissa Brown	46	Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary
Brett Hush	60	Senior Vice President, Loitering Munitions
Jeff Rodrian	44	Senior Vice President, MacCready Works
Trace Stevenson	47	Senior Vice President, Unmanned Systems

The background and experience of Mr. Nawabi is detailed on page 21.

Kevin McDonnell was appointed our Senior Vice President and Chief Financial Officer on February 10, 2020. Before joining the company, Mr. McDonnell served as Senior Vice President, Chief Financial Officer of JAMS, Inc., which provides alternative dispute resolution services, from September 2014 to February 2020. Prior to joining JAMS, Inc., Mr. McDonnell served in a variety of management and finance roles including as the co-founder of DoubleBeam, Inc., a provider of mobile retail solutions, from 2011 to 2014, the Chief Financial and Administrative Officer of Orange County Container Group LLC, a manufacturer of paperboard and paper-based packaging, from 2008 to 2011, the Executive Vice President, Finance and Administration, and Chief Financial Officer for Leiner Health Products from 2006 to 2008 and the Senior Vice President, Finance and Administration, and Chief Financial Officer for Memorex Corporation from 2004 to 2006. Mr. McDonnell previously held financial leadership positions with Digital Insight, Printrak, Teradata and Mattel. Mr. McDonnell holds a B.A. in Business Administration from Loyola Marymount University and a J.D. from Loyola Law School.

Melissa Brown has served as our Senior Vice President, General Counsel, Chief Compliance Officer, and Corporate Secretary since May 2023. She began serving as our Chief Compliance Officer in May 2021 and served as Vice President, General Counsel and our Corporate Secretary beginning in December 2016. She was appointed as our Corporate Secretary in September 2016 and previously she served as our Corporate Counsel from April 2015 to December 2016. Prior to joining the company, Ms. Brown served as an associate attorney at various law firms, including K&L Gates LLP from 2007 to 2014. Ms. Brown earned a B.S. in Microbiology and Molecular Genetics from the University of California, Los Angeles and a J.D. from Arizona State University.

Trace Stevenson has served as our Senior Vice President and General Manager, Unmanned Systems since May 2023. Prior to that he served as Vice President and General Manager of our Small Unmanned Systems Product Line starting in February 2021. He also served as Deputy General Manager UAS from May 2015 to February 2021 and was responsible for the leadership of our Emerging Business overseeing our HAPS business where he served as a Board Member of HAPSMobile, a Joint Venture with SoftBank. Mr. Stevenson has 20 years of experience in the defense industry and earned a Bachelor of Science degree in Business and Economics from the University of Kansas.

Brett Hush has served as our Senior Vice President and General Manager of Loitering Munitions since May 2023. Mr. Hush joined AeroVironment in 2010 and served as Vice President of Switchblade until February 2019. From February 2019 until May 2023, Mr. Hush served as our Vice President, Product Line General Manager. Prior to joining AeroVironment, Mr. Hush was a Vice President at Teledyne Technologies. With a combined 35 years in the defense industry, Mr. Hush has also held various leadership roles at GE Aircraft Controls, Martin Marietta, Lockheed Martin, BAE Systems. Mr. Hush holds a Bachelor of Science degree in Electrical Engineering from Clarkson University and a Masters of Science in Electrical Engineering from Syracuse University and is a graduate of General Electric’s Advanced Course in Engineering Program and GE’s Edison Engineering Development Program.

Jeff Rodrian has served as the Senior Vice President of MacCready Works since May 2023. From October 2020 to May 2023, he served as Senior Director of AV Ventures. Mr. Rodrian first joined the company in 2010 as a Product Manager and held various positions at the company of increasing responsibility, before leaving in January 2020 to form Aireus, a sole proprietorship focused on developing

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disruptive technologies for the aerospace industry. Mr. Rodrian rejoined the company in October 2020. Prior to joining AeroVironment in 2010, Mr. Rodrian spent several years at start-ups focused on aerospace innovation for unmanned systems and commercial

aircraft. Mr. Rodrian earned an MBA from the University of Michigan Ross School of Business and a Bachelor and Master of Science in Aeronautics and Astronautics from Purdue University.

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SHARE OWNERSHIP

Ownership of Equity Securities of the Company

The following table presents information regarding the beneficial ownership of our common stock as of August 2, 2023, by:

•

our Named Executive Officers (as defined below);

•

our current directors and director nominees;

•

all of our directors and executive officers as a group; and

•

each stockholder known by us to be the beneficial owner of more than 5% of our common stock.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all

shares beneficially owned, subject to community property laws where applicable. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of August 2, 2023 are deemed to be outstanding and to be beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

The information presented in this table is based on 26,292,130 shares of our common stock outstanding on August 2, 2023. Except as set forth in the footnotes below, the address of each beneficial owner listed on the table is c/o AeroVironment, Inc., 241 18th Street South, Suite 415, Arlington, VA 22202.

Name of Beneficial Owner	Number of Shares Beneficially Owned	Percentage of Shares Outstanding
5% Stockholders
BlackRock, Inc.1	4,451,439	16.9%
The Vanguard Group2	2,605,972	9.9%
State Street Corporation3	1,472,744	5.6%
American Capital Management, Inc.4	1,468,641	5.6%
Named Executive Officers, Directors and Director Nominees:
Wahid Nawabi5	144,577	*
Kevin McDonnell	16,508	*
Melissa Brown	13,339	*
Charles Thomas Burbage	49,068	*
Philip S. Davidson	1,662	*
Cindy K. Lewis	4,897	*
Catharine Merigold	23,744	*
Edward R. Muller6	49,691	*
Stephen F. Page7	52,187	*
Mary Beth Long	—	—
Current Directors and Executive Officers as a Group (12 persons)	366,229	1.4%

Less than 1%.

Based solely on a Schedule 13G/A filed by BlackRock, Inc. on January 26, 2023 with the SEC reporting beneficial ownership as of December 31, 2022. The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.

Based solely on a Schedule 13G/A filed by The Vanguard Group on February 9, 2023 with the SEC reporting beneficial ownership as of December 30, 2022. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, PA 19355.

Based solely on a Schedule 13G/A filed by State Street Corporation on February 6, 2023 with the SEC reporting beneficial ownership as of December 31, 2022. The address of State Street Corporation is 1 Lincoln Street Boston, MA 02111.

Based on the Schedule 13F-HR filed with the SEC reporting holdings as of March 31, 2023. The address of American Capital Management, Inc. is 575 Lexington Avenue, 30th Floor, New York, NY 10022.

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SHARE OWNERSHIP

Includes 66,164 shares of our common stock reserved for issuance upon exercise of stock options which currently are exercisable or will become exercisable within 60 days of August 2, 2023.

Includes 45,963 shares held by the Edward R. Muller and Patricia E. Bauer 1991 Family Trust, of which Mr. Muller is one of the two trustees and with respect to which he shares investment authority with the other trustee, and 810 shares held by the Edward R. Muller IRA.

Includes 20,795 shares held by the Stephen F. Page Living Trust, of which Mr. Page is the trustee.

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DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires that our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC. Officers, directors and greater-than-ten percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms

they file. Based solely on our review of the copies of the forms received by us and written representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that, during the fiscal year ended April 30, 2023, all of our officers, directors and greater-than-ten percent stockholders complied with all Section 16(a) filing requirements.

EQUITY COMPENSATION PLAN
INFORMATION

The following table provides information as of April 30, 2023 about our common stock that may be issued, whether upon the exercise of options, warrants and rights or otherwise, under our existing equity compensation plans.

	(a)	(b)	(c)
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights1	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	66,1641	$27.82	878,005
Equity compensation plans not approved by security holders	—	—	—
Total	66,1641	$27.82	878,005

Consists of awards outstanding under the AeroVironment, Inc. 2021 Equity Incentive Plan and the AeroVironment, Inc. Amended and Restated 2006 Equity Incentive Plan. As of July 10, 2021, no additional awards may be granted under the AeroVironment, Inc. Amended and Restated 2006 Equity Incentive Plan.

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Compensation Committee Report

The Compensation Committee of our board of directors is primarily responsible for determining the annual salaries and other compensation of our executive officers and administering our equity compensation plans. The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis of the 2023 proxy statement. Based on such review and discussions, the Compensation Committee recommended to the board that the Compensation Discussion and Analysis be included in our annual report filed on Form 10-K and this proxy statement.

Compensation Committee:
Charles Thomas Burbage (Chairman)
Catharine Merigold
Edward R. Muller

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides information about the material components of our executive compensation program for:

•

Wahid Nawabi, our President and Chief Executive Officer;

•

Kevin McDonnell, our Senior Vice President and Chief Financial Officer;

•

Melissa Brown, our Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary; and

•

Alison Roelke, our former Vice President and Chief People Officer (Ms. Roelke’s employment with the company ended effective May 12, 2022).

We refer to these executive officers collectively in this Compensation Discussion and Analysis as the “Named Executive Officers.” Specifically, this Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program, and each compensation component that we provide. In addition, we explain how and why the Compensation Committee arrived at specific compensation policies and decisions involving our Named Executive Officers during fiscal year 2023.

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Executive Summary

Our executive compensation program is designed to support our business goals and objectives by providing a link between the total compensation for our executive officers, including the Named Executive Officers, and the creation of long-term stockholder value. The Compensation Committee reviews our executive compensation program on an annual basis to ensure that it is consistent with such objectives. In line with this philosophy, compensation awarded to our Named Executive Officers for fiscal year 2023 reflected our financial and strategic results and overall compensation philosophy.

Key Performance Indicators During Fiscal Year 2023

For fiscal year 2023, revenue, annual bookings and adjusted EBIDTA were the financial metrics used by the Compensation Committee to evaluate our financial performance under the company’s executive compensation program. Our consolidated performance for fiscal year 2023 for these metrics, relative to fiscal year 2022 consolidated performance, is reflected in the table below.

Financial Measure	Fiscal Year 2023 ($, in millions)	Fiscal Year 2022 ($, in millions)	Increase (decrease) (%)
Revenue	540.5	445.7	21.3
Annual Bookings1	752.3	430.5	74.8
Adjusted EBITDA2	90.0	62.6	43.8

Annual bookings are firm orders for products and services for which funding has been appropriated to us under the contract by the customer and which was fully executed during the fiscal year. Annual bookings excludes the value of the unfunded portion on order amounts under cost-reimbursable and fixed price contracts such as (i) multiple one-year options, and indefinite delivery, indefinite quantity, or IDIQ contracts, or (ii) incremental funded contracts.

Adjusted EBITDA means the company’s earnings (as calculated in accordance with generally accepted accounting principles (“GAAP”)), before interest, taxes, depreciation and amortization, excluding any acquisition-related deal & integration costs, expenses related to discontinued operations, equity method investments and stock-based compensation expenses. Adjusted EBITDA is a non-GAAP measure. See below for a reconciliation of Adjusted EBITDA to Net Income for fiscal years 2022 and 2023. An itemized reconciliation between net income (loss) and adjusted EBITDA (unaudited) for fiscal years 2023 and 2022 is set forth below:

	Fiscal Year 2023 ($, in millions)	Fiscal Year 2022 ($, in millions)
Net (loss) income	(176.2)	(4.2)
Interest expense, net	9.4	5.4
Provision for (benefit from) income taxes	(14.7)	(10.4)
Depreciation and amortization	100.0	60.8
EBITDA (Non-GAAP)	(81.5)	51.6
Amortization of purchase accounting adjustment included in loss on disposal of property and equipment	0.2	1.3
Amortization of cloud computing arrangement implementation	0.5	0.4
Stock-based compensation	10.8	5.4
Equity method and equity securities investments activity, net	2.6	(4.6)
Acquisition-related expenses	1.4	4.9
Goodwill impairment	156.0	—
Sale of ownership in HAPSMobile Inc. joint venture	—	(6.4)
Legal accrual related to our former EES business	—	10.0
Adjusted EBITDA (Non-GAAP)	90.0	62.6

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

For fiscal year 2023, we included six strategic objectives as components in our fiscal year 2023 bonus plan tied to each of our product lines, which included objectives such as receiving orders from certain customers, receiving orders for new products and obtaining new development program contracts. We also continued the inclusion of an Environmental, Social & Governance (“ESG”) component in our fiscal year 2023 bonus program to further our ESG priorities.

Based on our performance relative to the metrics established by our Compensation Committee for

annual bonus plan purposes in fiscal year 2023, our Named Executive Officers received payouts of their annual cash bonuses above target amounts. Our President and Chief Executive Officer, however, based on the overall performance of the company, voluntarily accepted a reduction in his bonus payout which resulted in him receiving only 90% of his target bonus for fiscal year 2023.

Summary of Executive Compensation Best Practices

Our executive compensation program is governed by policies and practices that are intended to align with industry practices and stockholder interests.

	Best Practices We Maintain
	✓			Majority of total potential compensation paid to executives based on our financial and company performance
	✓			Compensation recovery (or “clawback”) policy for the recoupment of incentive compensation of executive officers, directors and employees
	✓			Anti-hedging, anti-pledging and anti-short sale policies for all employees, including executives
	✓			Limited perquisites
	✓			Retention of independent compensation consultant
	✓			Annual risk assessment of compensation practices
	✓			Stock ownership guidelines requiring ownership of company stock by our Chief Executive Officer of 4x his base salary and by other Named Executive Officers of 2x their base salaries
	✓			Post-vesting stock retention guidelines requiring Named Executive Officers to hold 50% of net after-tax shares issued upon the vesting of equity awards until their required stock ownership levels are achieved

	Practices We Avoid
	✘			No automatic or guaranteed annual base salary increases
	✘			No employment agreements with executive officers
	✘			No executive pensions
	✘			No single-trigger benefits upon control situations under our Severance Plan
	✘			No excise tax gross-up payments upon a termination after a change in control
	✘			No repricing or exchange of “underwater” stock options without stockholder approval
	✘			No minimum guaranteed vesting for performance-based equity awards

Key Fiscal Year 2023 Compensation Determinations

During fiscal year 2023, the Compensation Committee made the following compensation decisions:

•

Base Salary Increases: For fiscal year 2023, Ms. Brown received a base salary increase due to her expanded responsibilities and to bring her base salary closer to the median of our peer group data for her position. No other Named Executive Officer received an increase in base salary for fiscal year 2023.

•

Continued Emphasis on Performance-Based Compensation: In fiscal year 2023, the Compensation Committee continued its practice of awarding the majority of total target compensation to the Named Executive Officers in the form of performance-based compensation. This emphasis on performance-based compensation is intended to align executive compensation with stockholder interests.

•

Above Target Achievement of Fiscal Year 2023 Annual Bonus Awards; Voluntary Reduction of Bonus

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Payout by CEO. As noted above, for fiscal year 2023, our executive annual cash bonus plan was tied primarily to the achievement of pre-established financial objectives related to revenue, annual bookings and adjusted EBIDTA for such period. Our bonus plan also included six strategic objectives tied to the achievement of various strategic initiatives in each of our product lines, as well as an ESG component. As described below in further detail, we achieved 106.0%, 136.6%, and 106.2% of target achievement with respect to our revenue, annual booking and adjusted EBIDTA objectives, respectively. Based on our achievement of the financial objectives, strategic objectives and ESG component for fiscal year 2023, each of our Named Executive Officers participating in the company’s executive officer bonus plan was awarded an annual performance bonus equal to 130.5% of his or her targeted bonus amount. However, based on the overall performance of the company, our Chief Executive Officer voluntarily agreed to reduce his fiscal year 2023 bonus payout to 90% of his target bonus amount. All other Named Executive Officers were paid the full amount awarded.

•

Continued Use of Long-Term Incentive Compensation Program. The company’s long-term incentive compensation program consists of a mix of performance-based restricted stock unit awards (“PRSUs”), which vest based on the company’s achievement of specified financial metrics over a three-year performance period, and restricted stock awards, which vest in equal annual installments over a three-year vesting period. If the financial metrics associated with payouts are earned, the PRSUs will settle in fully-vested shares of our common stock. In June 2022, the Compensation Committee granted time-based restricted stock awards and PRSUs to the Named Executive Officers, other than Ms. Roelke whose employment with the company ended in May 2022, with specified financial objectives for the cumulative three-year performance cycle comprising fiscal years 2023, 2024 and 2025.

•

Below Target Payouts under PRSUs for Fiscal Year 2021 — Fiscal Year 2023 Performance Period. In June 2023, the Compensation Committee determined that the PRSUs for the three-year performance period comprising fiscal years 2021-2023 would be paid out at 34.7% of the applicable target for such awards based on the company’s financial performance over the performance period and our achievement relative to the financial metrics associated with such awards for the performance period.

Objectives of Our Executive Compensation Program

Our executive compensation program is designed to support our business goals and objectives by providing a link between the total compensation opportunities for our executive officers, including the Named Executive Officers, and the creation of long-term stockholder value. Specifically, our executive compensation program is designed to:

•

Attract, motivate and retain superior talent;

•

Ensure that compensation is commensurate with the company’s performance and stockholder returns;

•

Provide performance awards for the achievement of financial and strategic objectives that are important to our long-term growth; and

•

Ensure that our executive officers have financial incentives to achieve growth in stockholder value.

Our compensation program is designed to achieve these objectives through a combination of the following types of compensation: base salary; annual cash incentive bonus awards; performance-based restricted stock units that will settle in fully-vested shares of common stock for multi-year performance periods, restricted stock awards subject to time-based vesting over a multi-year period; and other employee benefits. Each of these compensation components serve our interests in different ways and together represent a comprehensive pay package that can reward both the short-term and long-term performance of the company and each individual Named Executive Officer. A majority of the compensation provided to the Named Executive Officers is based on our performance, which helps align the interests of our executive officers with those of stockholders in achieving long-term financial goals for our company. Each element of our executive compensation program is discussed in greater detail below.

The Compensation Committee does not affirmatively set out in any given year, or with respect to any given executive, to apportion compensation in any specific ratio among the various categories of compensation (i.e., cash and non-cash compensation, between short-term and long-term compensation, or between non-performance-based and performance-based compensation). Rather, the Compensation Committee uses the principles described above, and the factors described for each category in the discussion that follows, as a guide in assessing the proper allocation among those categories.

Compensation-Setting Process

The Compensation Committee is responsible for overseeing our executive compensation program, as

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well as determining and approving the ongoing compensation arrangements for our executive officers, including the non-CEO Named Executive Officers. The Compensation Committee reviews and recommends for approval to our full board of directors the compensation of our President and Chief Executive Officer.

Generally, annual base salary adjustments for our executive officers are determined within the first quarter of each fiscal year. Annual cash bonus payouts are made within 75 days of our fiscal year end to synchronize award determinations with the conclusion of our fiscal year and the review of fiscal year financial results. Historically, long-term incentive awards have been made at the discretion of the Compensation Committee. Compensation adjustments in connection with changes in duties and/or other material changes in the primary assumptions forming the basis of a compensation decision will continue to be made as required by circumstances throughout the fiscal year.

Role of Our Chief Executive Officer

Typically, our Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of our executive officers (except with respect to his own compensation), including base salary levels, target annual cash bonus opportunities, long-term incentive performance compensation levels and equity awards, with the assistance of our people and culture and finance departments. Our Chief Executive Officer also provides recommendations for the corporate financial objectives and strategic objectives used in our annual cash bonus plan and long-term incentive compensation program. He supports his recommendations with competitive market data developed by our people and culture department, with information provided by the Compensation Committee’s independent compensation consultant, and by reviewing the historical performance of each executive officer with the Compensation Committee. Although the Compensation Committee carefully considers the recommendations of our Chief Executive Officer when determining the compensation of our executive officers, it bases its decisions on the collective judgment of its members after considering the input of its independent compensation consultant and any relevant supporting data.

While our Chief Executive Officer generally attends meetings of the Compensation Committee, the committee meets outside the presence of our Chief Executive Officer when discussing his compensation.

Decisions regarding non-CEO executive officers’ compensation are made by the Compensation Committee. The Compensation Committee

recommends the compensation of our Chief Executive Officer to our board of directors for approval.

The Compensation Committee may delegate and grant authority to our Chief Executive Officer and/or a committee of executive officers to grant equity awards under the company’s equity incentive plan to the employees holding positions below the level of Vice President.

Role of Compensation Consultant

The Compensation Committee is authorized to retain the services of executive compensation advisors, as it sees fit, in connection with its oversight of our executive compensation program. In fiscal year 2023, the Compensation Committee engaged Pay Governance, a national compensation consulting firm, to provide executive compensation advisory services, including an executive officer compensation assessment.

The Compensation Committee considered the independence of Pay Governance consistent with the requirements of Nasdaq Listing Rule 5605(a)(2). Further, as required under Item 407(e)(3) of Regulation S-K, the Compensation Committee conducted a conflicts of interest assessment and determined that there is no conflict of interest resulting from retaining Pay Governance. The Compensation Committee intends to reassess the independence of its compensation advisors at least annually.

Competitive Market Data

Each year, the Compensation Committee reviews the executive compensation practices of a group of companies in relevant industry sectors determined to be comparable to us based on their business size and public company status. In May 2022, with the assistance of Pay Governance, the Compensation Committee approved the following group of peer companies to include in a competitive market analysis of executive officer compensation for the company’s fiscal year 2023:

ADTRAN, Inc.
Aerojet Rocketdyne Holdings, Inc.
Ambarella, Inc.
Astronics Corporation
Axon Enterprise, Inc.
Casa Systems, Inc.
Digi International, Inc.
Ducommun Incorporated
EchoStar Corporation
iRobot Corporation
Kaman Corporation
Kratos Defense & Security Solutions, Inc.
Mercury Systems, Inc.
nLIGHT, Inc.
QinetiQ Group plc

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One prior peer company, FLIR Systems, Inc. was acquired by another company and thus no longer included in our peer group. One new company, Digi International, Inc., was added to our peer group for fiscal year 2023. At the time of the selection of the peer group, the company was at approximately the 66th percentile of the peer group in terms of market capitalization and approximately the 30th percentile of the peer group in terms of revenue. The specific companies were from relevant industries and within a range of company scope (primarily revenue and market capitalization) that we believe is appropriate for benchmarking executive compensation. The Compensation Committee reviews the peer group each year to ensure the group is sufficiently robust to produce meaningful compensation data for executive compensation evaluation purposes. We believe the peer group includes companies with which we compete for business, executive talent and/or investment dollars.

After identifying our peer group, the Compensation Committee’s independent compensation consultant conducts a compensation survey of the peer group to assess the competitiveness of our compensation programs. Where proxy data is not available, survey data for companies of comparable scope to the peer company are used.

We believe that by utilizing publicly available peer group data, we are able to develop an appropriate set of competitive data for use in making compensation decisions. The Compensation Committee uses the information derived from this review in two ways: to assist it in determining the appropriate level and reasonableness of total compensation, as well as each separate component of compensation, for our executive officers and to ensure that the compensation we offer to them is competitive and fair.

The Compensation Committee does not establish compensation levels based directly on benchmarking, although, it does target a Named Executive Officer’s overall target compensation to the market median. The Compensation Committee relies on the judgment of its members in making compensation decisions regarding base salaries, target bonus levels and long-term equity incentive awards. In addition to competitive market data, in making its compensation decisions, the Compensation Committee also considers an executive officer’s position, tenure with the company, individual and organizational performance, our retention needs, and internal pay equity. The Compensation Committee does not guarantee that any executive will receive a specific market-derived compensation level.

Executive Compensation Program Components

The following describes each component of our executive compensation program, the rationale for each, and how compensation amounts are determined.

Base Salary

We use base salaries to provide our executive officers, including the Named Executive Officers, with a fixed amount of compensation for their regular work. The Compensation Committee generally reviews the base salaries of our executive officers at the beginning of each fiscal year, as well as in connection with promotions or other changes in responsibilities. Base salary adjustments generally go into effect within the first quarter of each fiscal year. Base salary adjustments are based on an evaluation of peer company data provided by the Compensation Committee’s independent compensation consultant, an executive officer’s position, tenure with our company, experience with other companies, individual and organizational performance, our retention needs, and internal pay equity.

The Compensation Committee has adopted a general approach of compensating our executive officers with base salaries commensurate with the experience and expertise of the individual executive and competitive with the median base salaries of executives holding comparable positions among our peer group. The Compensation Committee will take into account the base salaries of comparable executives in our peer group in setting base salaries for our executive officers and may approve increases in base salaries of the relevant executive officers to move them closer to the median of our peer group data for their positions, although such approved base salaries may remain below the median.

In light of the considerations discussed above, for fiscal year 2023, the Compensation Committee determined not to increase the base salaries of our Named Executive Officers, with the exception of Ms. Brown, as shown below:

Named Executive Officer	2023 Salary ($)	Increase Over 2022 (%)
Wahid Nawabi	750,000	—
Kevin McDonnell	450,000	—
Melissa Brown1	420,000	5.0
Alison Roelke2	—	—

Ms. Brown’s base salary for fiscal year 2023 was increased in connection with her expanded responsibilities of

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overseeing additional departments and to bring her base salary closer to the median of our peer group data for her position.

Ms. Roelke’s employment with the company ceased effective May 12, 2022 and no fiscal year 2023 base salary was determined. Ms. Roelke’s base salary at the time of her termination was $310,000.

We believe that the base salaries paid to our Named Executive Officers during fiscal year 2023 helped to achieve our executive compensation objectives and are competitive with the salaries of the executives holding comparable positions based on the competitive market data provided by Pay Governance based on our peer group.

Annual Cash Bonuses

We believe that a significant portion of overall target compensation of our executive officers, including the Named Executive Officers, should be “at risk” (that is, contingent upon the successful implementation of our annual operating plan). Annual cash bonuses represent a portion of this “at risk” compensation. We use these annual cash bonus opportunities to motivate our executive officers to achieve our short-term financial imperatives, strategic objectives and our ESG priorities while making progress toward our longer-term growth and other goals.

At the end of the fiscal year, the Compensation Committee determines whether to pay cash bonuses to our executive officers, including the Named Executive Officers, based on our financial results relative to the corporate financial and strategic objectives established by the Compensation Committee at the beginning of the relevant fiscal year and such other factors as the Compensation Committee may determine in its discretion.

Setting Target Bonus Levels

Initially, the Compensation Committee establishes a “target bonus level” for each non-CEO executive officer and recommends for approval to the board a “target bonus level” for our President and Chief Executive Officer. In setting and recommending these target bonus levels, the Compensation Committee considers the cash compensation of executives holding comparable positions based on the competitive market data provided by its independent compensation consultant based on our peer group. Generally, the Compensation Committee sets and recommends the target bonus levels so that, assuming achievement of the corporate financial and strategic objectives and the ESG component at targeted levels, total annual cash compensation will be competitive with the market median and when above target performance occurs, total cash compensation will be above the median of total cash compensation level of executives holding comparable positions based on the competitive market data provided by its independent compensation consultant based on our peer group. The Compensation Committee believes that this approach is consistent with the high level of growth generally reflected in the corporate performance objectives applicable to the annual bonus determinations.

For fiscal year 2023, the Compensation Committee established the target bonus levels for the Named Executive Officers at the levels indicated in the table below, except for the President and Chief Executive Officer whose target bonus level was recommended by the Compensation Committee and established by the board of directors. No target bonus level was established for Ms. Roelke who ceased employment with the company in May 2022.

Named Executive Officer	Target Bonus Level	Percentage of Base Salary
Wahid Nawabi	$750,000	100.0%
Kevin McDonnell	$315,000	70.0%
Melissa Brown	$252,000	60.0%
Alison Roelke	—	—

Establishing Performance Measures

At the beginning of each fiscal year, the Compensation Committee identifies one or more corporate financial performance measures and establishes a specific performance target level for each such measure for purposes of calculating the bonus for each executive officer. Threshold, target and maximum levels of performance are established for each corporate financial performance measure. In the event that the threshold performance level for any corporate financial performance measure is not met, then no credit will be

given with respect to the portion of the annual bonus attributable to that corporate financial performance measure. For fiscal year 2023, in addition to establishing corporate financial performance measures, the Compensation Committee determined to include six separate strategic objectives tied to the achievement of various strategic initiatives in each of our product lines, as well as an ESG component for purposes of calculating the bonus payable to each executive officer, as described in more detail below.

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

Reviewing Performance Results

At the end of the fiscal year, the Compensation Committee reviews our actual performance against the target levels set for each of the corporate financial performance measures established at the beginning of the year. The Compensation Committee also reviews the achievement of the pre-established strategic objectives and ESG component. In no event may an executive officer’s annual cash bonus payout exceed his or her maximum permissible bonus as established by the Compensation Committee.

Fiscal Year 2023 Bonuses.

The Compensation Committee selected revenue, annual bookings and adjusted EBITDA as the corporate financial performance measures for the annual bonus plan for our executives based on the recommendation

of our Chief Executive Officer and after reviewing the company’s annual operating plan for fiscal year 2023 and the company’s long-term strategic plan. In order for any bonus to be paid, the company was required to achieve the pre-determined thresholds for both revenue and adjusted EBITDA. The targeted corporate financial goals the fiscal year 2023 bonus plan for revenue and adjusted EBITDA were above the range of public guidance provided by the company for such metrics at the beginning of fiscal year 2023. Additionally, the Compensation Committee selected six strategic objectives tied to the achievement of various strategic initiatives in each of our product lines which were individually weighted, as well as an ESG component. The table below provides the weightings selected by the Compensation Committee for fiscal year 2023:

Weighting for Fiscal 2023 Annual Bonus Plan Goals

			Weighting
Revenue			25%
Annual Bookings			25%
Adjusted EBITDA			20%
Strategic Objectives (collectively)1			25%
ESG Performance Goal			5%

Each strategic objective was individually weighted between 2.5% and 5.0%.