Edgar Filing: AMERICAN AXLE & MANUFACTURING HOLDINGS INC

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Table of Contents

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

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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
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Table of Contents

Table of Contents

Notice of Annual Meeting

of Stockholders and

Proxy Statement

Thursday, May 3, 2018

8:00 a.m. Eastern Time

Table of Contents



	David C. Dauch Chairman of the Board and Chief Executive Officer

March 22, 2018

Dear Fellow Shareholders:

There is one word that can describe 2017 — transformational.

During the last 12 months — in line with our long-term growth strategy to diversify our business, enhance our global capabilities and provide technology leadership to our customers — we completely transformed AAM. We are larger, stronger and more diversified. We have new customers in new markets. We advanced key products that will revolutionize the propulsion of future vehicles. And we did this all while maintaining our world-class quality, operational excellence and customer satisfaction.

Highlights of the year include:


–	Strategic acquisitions of Metaldyne Performance Group Inc. (MPG) and USM Mexico Manufacturing LLC (USM)


–	Record sales and profitability


–	Significant free cash flow generation


–	Substantial new business wins, including further commercialization of our e-AAM hybrid and electric driveline systems


–	Diversification of our customer base, product portfolio, global footprint, vehicle segment and end market


–	Continued investment in and advancement of advanced innovative mobility solutions

But we aren’t stopping there. We are looking forward to another year of outstanding results, further integration and significant product launches. 2018 is shaping up to be our best one yet.

Thank you for your loyal and continued support of AAM.

David C. Dauch

Chairman and Chief Executive Officer

Table of Contents



	Samuel Valenti III Lead Independent Director

March 22, 2018

Dear Fellow Shareholders:

As the Lead Independent Director of your Board of Directors, I am pleased to include a personal address to you as part of this year’s proxy statement. The Board understands that strong corporate governance is the foundation of financial integrity, shareholder transparency and sustainable results. Through good governance, we achieve effective Board operations, employ independent thought, and execute appropriate levels of Board involvement and oversight that produces consistent strong results.

AAM is committed to engaging in constructive and meaningful communications with our shareholders. Our outreach efforts this year included approaching shareholders representing over 80% of our stock ownership and speaking with shareholders representing over 50% of our then-outstanding shares. The Board was actively involved in the process and thoughtfully considered the feedback we heard from you. As a result, we took several important actions:


–	Implemented proxy access by-laws


–	Continued to align the metrics and rigor of our incentive plans to drive achievement of business strategy


–	Enhanced our disclosures, particularly in the area of executive compensation, and re-designed our proxy statement to include a succinct proxy summary, letters from our Chairman & CEO and myself, and other features that enable us to more effectively communicate AAM's business strategy and the Board's ongoing efforts to represent the interests of our shareholders.

As your Lead Independent Director, I am focused on the important obligations that our Board owes to you, our shareholders. My responsibilities include working with our Chairman & CEO to provide independent directors information needed to effectively govern and acting as a regular communications channel between our independent directors and our Chairman & CEO. These and other duties are designed to ensure efficient operation of the Board and effective oversight of the Company.

On behalf of the Board, I would like to express our sincere appreciation for the trust you have placed in us. Know that your Board remains focused on delivering value to you, today and long into the future.

Thank you for investing in AAM.

Samuel Valenti III

Lead Independent Director



Table of Contents	Notice of Annual Meeting

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 3, 2018

American Axle & Manufacturing Holdings, Inc.



Meeting Information		Voting Information

Time and Date	8:00 a.m., local time, on Thursday, May 3, 2018	Please vote your shares as soon as possible, even if you plan to attend the annual meeting.

Attend in Person	AAM World Headquarters Auditorium	Your broker will not be able to vote your shares on the election of directors and most of the other matters presented at the meeting unless you give your broker specific instructions to do so. We strongly encourage you to vote.
	One Dauch Drive
	Detroit, MI 48211

Record Date	March 6, 2018	You may vote via the internet, by telephone, or by mail

	You may vote if you owned shares on the record date.	See "Voting and Meeting Information" beginning on page XX of this proxy statement for more information.

Annual Meeting Agenda / Items of Business

1. Election of three members of the Board of Directors to serve until the Annual Meeting of Stockholders in 2021

2. Advisory vote on named executive officer compensation

3. Approval of 2018 Omnibus Incentive Plan

4. Ratification of the appointment of Deloitte & Touche LLP as independent public accounting firm for 2018

5. Other business properly presented at the meeting

Attending in Person

* You do not need to attend the annual meeting to vote if you submit your proxy in advance.

* To attend the annual meeting you will need to:

- provide proof of your stock ownership as of the record date

- provide government-issued photo identification (such as a driver's license) prior to entering the meeting

* Doors open at 7:30 a.m.

* Meeting starts at 8:00 a.m.

Our Notice of Internet Availability of Proxy Materials or this proxy statement and proxy card are being distributed on or about March 22, 2018. You are receiving these proxy materials in connection with the solicitation by Board of Directors of AAM of proxies to be voted at AAM's 2018 Annual Meeting of Stockholders.

Important Notice Regarding the Availability of Proxy Materials for the May 3, 2018 Stockholder Meeting: Our 2018 proxy statement and 2017 annual report and Form 10-K are available free of charge at www.envisionreports.com/axl.

Table of Contents

TABLE OF CONTENTS



Proxy Summary			Ratification of Independent Registered Public Accounting Firm
2	Proxy Summary		76	Proposal 4 - Ratification of Independent Registered Public Accounting Firm
			77	Policy for Pre-Approval of Audit and Non-Audit Services
Election of Directors			77	Independent Registered Public Accounting Firm's Fees
13	Proposal 1 - Election of Directors		78	Report of the Audit Committee
20	Corporate Governance
26	Compensation of Directors		Additional Information
28	Beneficial Stock Ownership		79	Voting and Meeting Information
29	Related Person Transactions Policy		81	Annual Report
29	Section 16(a) Beneficial Ownership Reporting Compliance		81	Electronic Delivery of Proxy Materials
			81	2019 Stockholder Proposals and Nominations
Advisory Vote on Executive Compensation			82	Cost of Solicitation
30	Proposal 2 - Advisory Vote on Executive Compensation
31	Compensation Discussion and Analysis
		Shareholder Engagement and Our Response	Appendix
		Business & Financial Highlights	A-1	Appendix A - 2018 Omnibus Incentive Plan
		2017 Compensation Overview
		Compensation Philosophy, Process and Market Analysis
		Direct Compensation Elements
		Indirect Compensation Elements
		Other Compensation Matters
50	Compensation Committee Report
51	Executive Compensation Tables
68	CEO Pay Ratio

Approval of 2018 Omnibus Incentive Plan
69	Proposal 3 - Approval of 2018 Omnibus Incentive Plan

2018 AAM Proxy Statement | 1



Table of Contents	Proxy Summary

Your Vote is Important



Voting Matters and Board Recommendations:		Votes Required	Board Vote Recommendation	More Information

Proposal 1	Election of three members of the Board of Directors to serve until the Annual Meeting of Stockholders in 2021	Majority of votes cast	FOR each nominee	Page 13
	Each nominee brings a strong and unique background and set of skills to the Board and has demonstrated sound judgment and integrity.
Proposal 2	Advisory vote on named executive officer compensation	Majority of votes cast	FOR	Page 30
	Our shareholder-approved incentive plan is designed to motivate superior performance by means of performance-related incentives that promote long-term financial success and shareholder value.
Proposal 3	Approval of 2018 Omnibus Incentive Plan	Majority of votes cast	FOR	Page 69
	AAM's executive compensation program is market-based, performance driven and aligns with stockholders' interests.
Proposal 4	Ratification of the appointment of Deloitte & Touche LLP as independent public accounting firm for the year ending December 31, 2018	Majority of votes cast	FOR	Page 76
	All independence standards have been met and sound practices are employed to ensure independent financial governance.

How You Can Vote

2018 AAM Proxy Statement | 2



Table of Contents	Proxy Summary

Governance Highlights

Board Practices

AAM's Board of Directors has a diverse mix of knowledge, experience, skills and perspectives that, when taken together, enhances the quality of the Board's deliberations and decisions and drives AAM's business strategy and governance.



þ	8 of 9 directors are independent (all except our CEO)	þ	No hedging or pledging of our securities permitted

þ	Lead Independent Director	þ	Alignment of director and shareholder interests through equity grants and stock ownership guidelines

þ	Independent directors meet regularly without management present	þ	Active shareholder engagement

þ	All standing committees are comprised of 100% independent directors	þ	Adopted a majority vote standard for uncontested director elections (2017)

þ	Our Nominating/Corporate Governance Committee is led by a woman	þ	Adopted proxy access by-laws (2018)

Board Skills and Composition



Top Skills and Qualifications:	Number of Directors:
Top Skills and Qualifications:	1	2	3	4	5	6	7	8	9

Industry Experience

CEO/COO/President Experience

Global Manufacturing Operations

Strategic Planning

Innovation and Technology

Financial Expertise

Legal / Regulatory

Risk Management

2018 AAM Proxy Statement | 3



Table of Contents	Proxy Summary

Business & Financial Highlights

Driving Long-Term Shareholder Value

AAM is a global Tier 1 supplier to the automotive, commercial and industrial markets, with broad capabilities across multiple product lines. Our mission is to deliver efficient, powerful and innovative solutions for our customers while leading the industry in quality, operational excellence and technology to maximize shareholder value. Our Board believes that AAM is well positioned to deliver long-term shareholder value by utilizing the following fundamental elements of our business:

AAM's 2017 Highlights



þ	Delivered on our key strategic objectives of profitable growth, diversification, outstanding financial performance and technology leadership	þ	Following the MPG acquisition, reduced our debt leverage on both a gross and net basis, including the prepayment of $200 million of Senior Notes

þ	Closed on the acquisition of MPG, nearly doubling our size and scale	þ	Won several new business awards, including further commercialization of our e-AAM hybrid and electric driveline systems

þ	Achieved record sales and profitability for AAM	þ	Realized over 50% of our sales from customers other than General Motors for the first time in AAM history — a key strategic milestone

þ	Generated Adjusted Free Cash Flow of over $300 million	þ	Successfully launched approximately 75 programs and facilities across the globe

þ	Continued to fund significant capital and R&D investments in order to drive organic growth to meet our strategic goals	þ	Received several global quality and operations excellence awards from our customers, including being named a Supplier of the Year by General Motors

2018 AAM Proxy Statement | 4



Table of Contents	Proxy Summary

Acquisition of Metaldyne Performance Group, Inc.

Our transformational acquisition of MPG in April 2017 nearly doubled the size of the Company and was supported by powerful industrial logic focused on driving long-term value for all shareholders through the benefits listed below. We have already begun to realize many of the key benefits from this transaction and they are evident in our financial results for 2017.



Acquisition Benefit	FY 2017 Result

Greater scale and financial profile	Pro forma sales of over $6.9 billion, an increase of over 75% compared to AAM's 2016 sales

Accelerated business diversification	Non-GM sales made up more than 50% of total sales Greater exposure to commercial and industrial business as those markets strengthened in 2017

Enhanced profitability and free cash flow generation	AAM achieved Adjusted EBITDA of approximately $1.1 billion AAM generated over $300 million of Adjusted Free Cash Flow

Synergy attainment and value capture	AAM recognized > $30 million of cost reduction synergies in 2017 and expects an annualized synergy attainment run rate of $73 million in January 2018 On track to meet our target of $120 million of annual run rate cost reduction synergies by 1Q 2019 and 70% of this total by 1Q 2018

2018 AAM Proxy Statement | 5



Table of Contents	Proxy Summary

Shareholder Engagement and Our Response

Refinements to AAM's Executive Compensation Program and

Adoption of Proxy Access

Prior to 2017, we consistently received strong shareholder support on our say-on-pay proposal, averaging more than 97% approval from 2014 through 2016. In 2017, approximately 38% of our shareholders voted in favor of our executive compensation programs. The Board and the Compensation Committee took this matter very seriously and sought to better understand what drove this decline in the say-on-pay vote.

It is AAM's practice to meet with investors throughout the year in various formats. However, following the 2017 annual meeting, the Compensation Committee and management conducted a targeted shareholder outreach program to discuss and obtain feedback regarding our executive compensation program and other governance matters. We contacted our 25 largest shareholders representing approximately 80% of our then-outstanding shares. As a result of this outreach, we spoke with shareholders representing over 50% of outstanding shares and with proxy advisors ISS and Glass Lewis. The Chair of our Compensation Committee participated throughout this process, along with our CFO and Investor Relations Director.

The information we received from shareholders was shared with the Board on multiple occasions. The Compensation Committee and the full Board had robust discussions and considered our shareholders' constructive feedback. Below is a summary of the feedback we received and our response.



Shareholder Feedback		Response

Shareholders generally believe our executive compensation program is aligned with shareholder interests.	ð	Significant design improvements have been made over the last several years including:
		- no discretionary incentive payments - double-trigger equity vesting - clawback policy - 66% of LTI compensation is performance based - prohibit excise tax gross ups - no excessive executive severance arrangements - New in 2017: increased stock ownership requirements for CEO, CFO and outside directors
		These programs will continue to be reinforced.

Incentive metrics • Goal rigor • Alignment with strategy • Enhanced disclosure	ð	Goal Rigor: Although our goals contained the appropriate rigor to accomplish our strategic objectives, we heard shareholder concerns and increased the rigor of new awards in 2018 to achieve a level of performance that would be the highest in our history. Alignment with strategy: To continue alignment with AAM's strategic goals, the Committee changed annual incentive pay metrics in 2018 to focus senior leadership on EBITDA, a key valuation/leverage reduction driver. The LTI program was also modified to emphasize cash flow and capital deployment strategies, which are key to value creation. Enhanced disclosure: We enhanced our disclosure of our goal-setting process for better understanding and transparency. We re-designed our proxy statement to include a proxy summary, letters from our Chairman & CEO and lead independent director, and other features that enable us to more effectively communicate AAM's business strategy and the Board's ongoing efforts to represent the interests of our shareholders.

2018 AAM Proxy Statement | 6



Table of Contents	Proxy Summary



Shareholder Feedback		Response

Alignment of CEO compensation with total shareholder return	ð	While AAM's financial and operational performance has been strong, our TSR performance has lagged in comparison to our comparative peer group over the last few years. AAM has increased EBITDA margin performance each year to a level that is one of the best in the industry and grown revenues to nearly $7 billion from $2.9 billion 5 years ago, while transforming AAM to become more diversified, with greater scale and increased global reach to support our customers with products that meet market demands. We believe this operational performance and growth will drive long-term value for our shareholders.
	ð
Ratio of fixed and variable pay of the CEO as compared to the other NEOs	ð	The Committee believes that the CEO's pay should be more variable than that of the other NEOs. As the leader of the Company, the CEO should have the highest level of pay at risk, which we believe drives superior performance.
	ð
Proxy access	ð	We adopted proxy access in February 2018.

In addition to this outreach effort, we engaged in our regular investor communications, which included equity and high-yield credit conferences, on-site investor visits, road shows, and individual and group conference calls. In light of the recent transformation of our company, we also engaged a third party to conduct an investor perception study. We incorporated many of the recommendations we received into our investor relations program.

Throughout all of our engagement activities, we strengthened our relationships with our investors by receiving candid, constructive feedback that we shared with our Board. Our Board believes that fostering long-term relationships with our shareholders and maintaining their trust and goodwill is critical to AAM's achievement of our strategic objectives and shareholder value creation.

2018 AAM Proxy Statement | 7



Table of Contents	Proxy Summary

Compensation Highlights

Executive Compensation Philosophy

AAM is committed to a compensation philosophy that incorporates the principles of supporting business strategy and performance, aligning with stockholder interests, and paying competitively based on a framework of best governance practices. The Compensation Committee reviews and recommends to the full Board AAM's overall compensation philosophy and executive compensation programs to support our business strategy and objectives.



Compensation Principle	Objective	How we achieve our objective

Support of Business Strategy and Performance	Compensation is variable and at risk	–	86% of CEO compensation is variable and at risk
Support of Business Strategy and Performance	Utilize metrics that emphasize company performance that are aligned with business strategy	–	Performance goals include key drivers of enterprise value creation such as EBITDA, Relative TSR and Cash Flow

Alignment with Stockholder Interests	Balance focus between short-term results and long-term share appreciation	–	Mix of annual and long-term incentive programs
		–	66% of LTI is performance based
		–	Cap on payout of performance shares based on relative TSR if absolute TSR is negative
		–	CEO stock ownership requirement of 6 times base salary

Market Competitive Pay	Attract and retain executive talent	–	Benchmark pay against a peer group of similarly sized companies
	Align pay and performance	–	Target direct compensation at the 50^th percentile
		–	Ensure incentive plans reward for desired behaviors and pay outcomes align with results

Best Governance Practices	Implement best governance practices into compensation programs	–	Clawback policy
		–	Anti-hedging policy
		–	Double-trigger equity vesting and severance in a change in control
		–	Annually review risks associated with compensation programs
		–	Retain independent compensation consultant
		–	Prohibit excise tax gross-ups
		–	No excessive executive perquisites

2018 AAM Proxy Statement | 8



Table of Contents	Proxy Summary

Pay for Performance Alignment

Our compensation programs are designed to balance short-term performance with long-term growth. To align executive pay with AAM's performance, a significant amount of our CEO's and other NEOs' compensation is performance based and is at risk.

Compensation Program Metrics Link to Strategic Business Objectives

The Compensation Committee utilizes both short- and long-term financial metrics relative to our business objectives, as well as relative TSR as a long-term metric. The following chart demonstrates how our incentive compensation metrics correlate to our strategic business objectives.



Strategic Business Objective	Alignment	Incentive Metric

Continue to strengthen the balance sheet; provide funding for organic growth, research and development, and other capital priorities.		Cash Flow - 2017 Annual Incentive Plan (50% component) - 2018 LTI Performance Shares (50% component)

Develop innovative technology, including electrification. Reinvest in research and development.		Relative TSR - LTI Performance Shares, including 2018 (50% component)

Create sustainable value for shareholders.

Achieve profitable growth, along with the ability to be flexible as the market changes, and reduce leverage.		EBITDA - 2017 LTI Performance Shares (50% component) - 2018 Annual Incentive Plan (100% component) Operating Income Margin - 2017 Annual Incentive Plan (50% component)

Deliver integration synergies from recent acquisitions.

2018 AAM Proxy Statement | 9



Table of Contents	Proxy Summary

Goal Rigor and Rationale

The Compensation Committee annually reviews performance metrics, targets and payouts to ensure that they are challenging stretch goals and are designed to mitigate risk. The following features of our executive compensation program demonstrate our pay for performance alignment.

2017 Annual Incentive Compensation

The Compensation Committee considered the effectiveness of the annual incentive plan design to drive desired levels of performance. The 2017 target performance levels were set above 2016 actual performance and required the achievement of synergies resulting from the pending MPG acquisition at the time the performance levels were determined.

2018 AAM Proxy Statement | 10



Table of Contents	Proxy Summary

LTI — 2015 - 2017 Performance Share Awards

Payouts under the long-term incentive performance share awards granted in 2015 were based on two equally weighted three-year performance metrics, EBITDA margin and relative TSR. The awards based on relative TSR resulted in a zero payout to senior management because the threshold performance level was not achieved. Our shareholders did not realize value on our stock over this time period. Consequently, our senior management team did not receive any value for these awards.



Governance Point
Payout capped at 50% if 3-year absolute TSR is negative.

The performance targets for the EBITDA performance share awards were determined in consideration of AAM's historical EBITDA margins in 2012 - 2014 as noted below. The maximum performance level was set to drive performance significantly above our peers and encourage EBITDA margin growth. Over this period, management delivered a result well in excess of targets and prior actual performance. This outstanding financial performance allowed us to reduce debt and position AAM for the strategic actions we took in 2017.



Adjusted EBITDA Margin

2018 AAM Proxy Statement | 11



Table of Contents	Proxy Summary

2018 Incentive Compensation

The performance levels set by the Compensation Committee for 2018 annual and long-term incentive metrics were set at a level above 2017 actual results and reflect stretch goals that are designed to reward growth and sustain profitability. In addition, the 2018 incentive compensation metrics were modified to drive significant focus on EBITDA for the short-term metric and free cash flow and relative TSR, weighted equally, for the long-term metrics. These targets require our management team to continue to perform at a high level, achieve integration synergies, implement productivity improvements, successfully launch new product programs and align the Company with long-term value creation.

2018 AAM Proxy Statement | 12



Table of Contents	Election of Directors

Election of Directors

Proposal 1: Election of Directors

The Board proposes that David C. Dauch, William L. Kozyra and Peter D. Lyons be re-elected to the Board as Class I directors for terms expiring at the annual meeting in 2021.

The Board is divided into three classes. Directors serve for staggered three-year terms. The Board believes that the staggered election of directors helps to maintain continuity and ensures that a majority of directors at any given time will have in-depth knowledge of the Company.

The Board unanimously approved the nominations of Mr. Dauch, Mr. Kozyra and Mr. Lyons based on their demonstrated effectiveness as members of our Board and the committees on which they serve, their relevant experience and expertise, and their sound judgment and integrity. Each nominee brings a strong and unique background and set of skills to the Board.

Collectively, the Board has high levels of competence and experience in a variety of areas, including manufacturing, engineering, finance, international business, management, law, risk management, strategic business development and the global automotive industry. A summary of the principal occupation, professional background and specific knowledge and expertise that qualify each nominee and returning director to serve on our Board is provided in the following pages of this proxy statement.



þ	The Board unanimously recommends a vote FOR each of the nominees.



Table of Contents	Election of Directors

Nominees for Director

Class I — Directors to hold office until the 2021 Annual Meeting of Stockholders



David C. Dauch	Chairman of the Board & Chief Executive Officer, AAM

	Current and Past Positions at AAM	Key Qualifications and Experience
	– Chairman of the Board since August 2013 – Chief Executive Officer since September 2012 – President & Chief Executive Officer September 2012 to August 2015 – President & Chief Operating Officer 2008 to 2012 – Various positions of greater responsibility 1995 to 2008	Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Dauch should serve on AAM's Board: his leadership experience as an officer of AAM since 1998; the breadth of his management experience within, and knowledge of, AAM's global operations; and his subject matter knowledge in the areas of innovation and technology, manufacturing, strategic planning and risk management.






Age: 53	Other Public Company Directorships	Current Directorships (non-profit) and Leadership Roles
Director Since:	Other Public Company Directorships	Current Directorships (non-profit) and Leadership Roles
2013 (Chairman)	– Amerisure Companies since 2014 – Horizon Global Corporation since 2015	– Business Leaders for Michigan – Detroit Economic Club – Detroit Regional Chamber – Great Lakes Council Boy Scouts of America – Boys & Girls Club of Southeastern Michigan – National Association of Manufacturers (NAM) – Original Equipment Suppliers Association (OESA) – Miami University Business Advisory Council – General Motors Supplier Council – FCA NAFTA Supplier Advisory Council
2009
Committees:
Executive (Chairman)



Table of Contents	Election of Directors



William L. Kozyra	President & Chief Executive Officer, TI Fluid Systems plc

	Current and Past Positions	Key Qualifications and Experience
	– President & Chief Executive Officer TI Fluid Systems plc (TI Automotive) (fluid storage, carrying and delivery systems) since 2008 – President & Chief Executive Officer Continental AG North America 1998 to 2008 – Member of Executive Board Continental AG (DAX) 2006 to 2008 – Vice President & General Manager Brake Products Division of Bosch Braking Systems 1995 to 1997	Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Kozyra should serve on AAM's Board: his leadership experience as an officer of TI Automotive since 2008; the breadth of his international experience with global companies in the automotive industry; and his subject matter knowledge in the areas of engineering, manufacturing, innovation and technology, strategic planning and risk management.






Age: 60	Other Public Company Directorships	Current Directorships (non-profit) and Leadership Roles
Director Since: 2015	Other Public Company Directorships	Current Directorships (non-profit) and Leadership Roles
Committees:	– TI Fluid Systems plc (TI Automotive) since 2008	– General Motors Supplier Council – Ford Motor Company Top 100 Supplier Forum – Notre Dame Preparatory School – Automotive Hall of Fame – Boy Scouts of America, Detroit – University of Detroit Alumni Council – Society of Automotive Engineers
Compensation
Nominating/Corp Gov
Technology



Peter D. Lyons	U.S. Regional Managing Partner, Freshfields Bruckhaus Deringer US LLP

	Current and Past Positions	Key Qualifications and Experience
	– Attorney, U.S. Regional Managing Partner Freshfields Bruckhaus Deringer US LLP New York, NY since September 2014 – Partner, Mergers & Acquisitions Group Shearman & Sterling LLP New York, NY 1979 to 2014	Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Lyons should serve on AAM's Board: his experience as an attorney of a major law firm since 1979; the breadth of his experience in advising global businesses on complex legal matters and transactions; and his subject matter knowledge in the areas of corporate governance, mergers and acquisitions, international business and risk management.






Age: 62
Director Since: 2015
Committees:
Compensation
Nominating/Corp Gov



Table of Contents	Election of Directors

Returning Directors

Class II— Directors to hold office until the 2019 Annual Meeting of Stockholders



Elizabeth A. Chappell	Executive Chairwoman, RediMinds, Inc.

	Current and Past Positions	Key Qualifications and Experience
	– Executive Chairwoman (co-founder) RediMinds, Inc. (data strategy, engineering and innovation firm) since December 2017 – President & Chief Executive Officer Detroit Economic Club 2002 to November 2017 – Executive Vice President, Corporate Communications & Investor Relations Compuware Corporation 1997 to 2001 – President & Chief Executive Officer of a consulting firm she founded 1995 to 2000 – Various executive positions with increasing responsibility with AT&T for 16 years	Based on her professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Ms. Chappell should serve on AAM's Board: her leadership experience as President & CEO of the Detroit Economic Club; the breadth of her community outreach and corporate citizenship experience in her professional, civic and charitable endeavors; and her subject matter knowledge in the areas of investor relations, marketing and communications, business development and risk management.





		Current Directorships (non-profit)
Age: 60	Previous Directorship	– Detroit Economic Club – Detroit Regional Chamber – Detroit Zoo – Michigan Israel Business Accelerator (MIBA) – Michigan State University Capital Campaign – United Way of Southeastern Michigan
Director Since: 2004	– Handleman Company 1999 to 2009
Committees:
Nominating/Corp Gov
(Chair)



John F. Smith	Principal, Eagle Advisors LLC

	Current and Past Positions	Key Qualifications and Experience
	– Principal, Eagle Advisors LLC (strategy development and performance improvement consulting) since 2011 Positions at General Motors: – Group Vice President, Corporate Planning and Alliances (most recent position) 2000 to 2010 – General Manager, Cadillac Motor Car 1997 to 1999 – President, Allison Transmission 1994 to 1996 – Vice President, Planning; International Operations, Zurich Switzerland 1989 to 1993	Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Smith should serve on AAM's Board: his leadership experience in the automotive industry; the breadth of his management experience with General Motors international operations; and his subject matter knowledge in the areas of manufacturing, finance, innovation and technology, strategic planning and risk management.




		Current Directorship (non-profit)
		– Boy Scouts of America National Advisory Board
Age: 67	Other Public Company Directorships
Director Since: 2011	– TI Fluid Systems plc (TI Automotive) since October 2017 – CEVA Holdings LLC since 2013
Committees:
Audit	Previous Directorships
Technology (Chair)	– Covisint Corporation -- September 2016 to July 2017 – Arnold Magnetics -- January 2015 to September 2016 – Plasan Carbon Composites -- December 2013 to December 2014 – Smith Electric Vehicles Corp. -- June 2012 to December 2013



Table of Contents	Election of Directors



George Thanopoulos	Former Chief Executive Officer, Metaldyne Performance Group, Inc.

	Past Positions	Key Qualifications and Experience
	– Chief Executive Officer Metaldyne Performance Group, Inc. August 2014 to April 2017 – Chief Executive Officer (founder) HHI Group Holdings (forged products) 2005 to 2015 Positions at former Metaldyne Corporation and predecessor company, MascoTech, Inc. – Engine Group President former Metaldyne Corporation 2001 to 2004 – Engineering, plant management and executive management positions with Mascotech, Inc. over 15 years	Based on his professional background and prior board experience with MPG, the following qualifications led the Board to conclude that Mr. Thanopoulos should serve on AAM's Board: his leadership experience as founder and CEO of HHI and as CEO of MPG until the acquisition by AAM; the breadth of his management experience within, and knowledge of, MPG's global operations; and his subject matter knowledge in the areas of innovation and technology, manufacturing, strategic planning and risk management.






Age: 54	Previous Directorships
Director Since: 2017	– Metaldyne Performance Group, Inc. 2014 to April 2017 – Global Brass and Copper Holdings, Inc. 2011 to 2014 – Chassis Brakes International 2012 to 2013 – JL French Automotive Castings, Inc. 2006 to 2012
Committees:
Technology



Table of Contents	Election of Directors

Class III — Directors to hold office until the 2020 Annual Meeting of Stockholders



James A. McCaslin	Retired President & Chief Operating Officer, Harley-Davidson Motor Co.

	Past Positions	Key Qualifications and Experience
	Positions at Harley-Davidson (Retired 2010): – President & Chief Operating Officer 2001 to 2009 – Various senior executive positions 1992 to 2001 Other Manufacturing Company Positions: – Manufacturing and Engineering executive JI Case (agricultural equipment) 1989 to 1992 – Manufacturing and Quality executive Chrysler Corporation Volkswagen of America General Motors Corporation 1966 to 1989	Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. McCaslin should serve on AAM's Board: his leadership experience as President & COO of Harley-Davidson Motor Company; the breadth of his manufacturing and engineering experience at global manufacturing companies; and his subject matter knowledge in the areas of engineering, innovation and technology, manufacturing and risk management.






Age: 69
Director Since: 2011	Previous Public Company Directorship
Committees:	– Maytag Corporation 2003 to 2006
Audit
Compensation (Chair)
Nominating/Corp Gov
Technology
Executive



William P. Miller II CFA	Head of Asset Allocation, Saudi Arabian Investment Company

	Current and Past Positions	Key Qualifications and Experience
	– Head of Asset Allocation Saudi Arabian Investment Company since October 2013 – Senior Managing Director & Chief Financial Officer Financial Markets International, Inc. April 2011 to October 2013 – Deputy Chief Investment Officer Ohio Public Employees Retirement System 2005 to 2011 – Senior Risk Manager Abu Dhabi Investment Authority 2003 to 2005 – Independent Risk Oversight Officer and Chief Compliance Officer Commonfund Group 1996 to 2002	Based on his professional background and prior AAM Board and Audit Committee experience, the following qualifications led the Board to conclude that Mr. Miller should serve on AAM's Board: his leadership qualities developed from his experience as Head of Asset Allocation for the Saudi Arabian Investment Company and as an officer with oversight responsibilities for investments, risk and compliance since 1996; the breadth of his experience in serving on the boards of the Chicago Mercantile Exchange and the Dubai Mercantile Exchange; and his subject matter knowledge in the areas of finance, investments, audit and accounting, innovation and technology, regulatory matters and risk management.






Age: 62
Director Since: 2005		Advisory Boards (Previous)
Committees:	Previous Directorships	– Public Company Accounting Oversight Board Standing Advisory Group – Golub Capital Institutional Investor Advisory Board
Audit (Chair)	– Chicago Mercantile Exchange 2003 to May 2017 – Dubai Mercantile Exchange 2011 to March 2017
Technology



Table of Contents	Election of Directors



Samuel Valenti III	Chairman & Chief Executive Officer, Valenti Capital LLC and World Capital Partners

	Current and Past Positions	Key Qualifications and Experience
	– Chairman & Chief Executive Officer Valenti Capital LLC and World Capital Partners (investment firms) since 2000 Positions at Masco Corporation (1968 to 2008) – President, Masco Capital Corporation 1988 to 2008 – Vice President - Investments Masco Corporation 1974 to 1998	Based on his professional background and prior AAM Board experience, the following qualifications led the Board to conclude that Mr. Valenti should serve on AAM's Board: his leadership experience as an executive of Masco for 40 years; the breadth of his management experience in diversified manufacturing businesses; and his subject matter expertise in the areas of strategic planning, finance, economics and asset management, and risk management.






Age: 72	Other Public Company Directorships	Current Directorships (non-profit) and Leadership Roles
Director Since: 2013	– TriMas Corporation since 2002 – Horizon Global Corporation since 2015	Current Directorships (non-profit) and Leadership Roles
Lead Independent Director		– Business Leaders for Michigan – Renaissance Venture Capital Fund (Michigan) Advisory Board Chairman
Committees:	Previous Directorship
Audit	– Masco Capital Corporation - 1988 to 2008
Compensation
Nominating/Corp Gov
Executive



Table of Contents	Corporate Governance

Corporate Governance

Corporate Governance Highlights

At AAM, we believe that strong corporate governance contributes to long-term shareholder value. We are committed to sound governance practices, including those described below:



Independence		Accountability
– All of our continuing directors and nominees, except our CEO, are independent – Our Lead Independent Director has a role with significant governance responsibilities – All standing Board committees (except the Executive Committee) consist entirely of independent directors – Independent directors meet regularly in executive session without management present		– Extensive shareholder engagement reached investors representing approximately 50% of our shares in 2017 – In 2018, we adopted proxy access by-laws, giving eligible shareholders the ability to include nominees in AAM's proxy statement – In uncontested elections, directors are elected by a majority of votes cast – The Board and each Board committee conducts an annual self-assessment



Sound Practices		Risk Management
– Director orientation and continuing education program includes visits to AAM manufacturing facilities and technical centers – Directors and executives are subject to stock ownership requirements – Directors and executives are prohibited from hedging or pledging AAM stock or engaging in short sales		– The Board oversees AAM's overall risk-management structure – Individual Board committees oversee certain risks related to their areas of responsibility – AAM has robust risk management processes throughout the company

Director Independence

The Board has adopted Director Independence Guidelines to assist in determining the independence of our directors under the independence standards of the New York Stock Exchange (NYSE). The Director Independence Guidelines are included in AAM’s Corporate Governance Guidelines, which are available on our website at http://investor.aam.com. The Board annually reviews and determines, on the recommendation of the Nominating/Corporate Governance Committee, whether any director has a material relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. No director qualifies as independent unless the Board determines that the director has no direct or indirect material relationship with the Company.

In February 2018, the Board reviewed the independence of each then-sitting director, applying the independence standards set forth in our Corporate Governance Guidelines. Based on these independence standards and the relevant facts and circumstances, the Board determined that no director other than Mr. Dauch, our CEO, has a material relationship with AAM and that each director other that Mr. Dauch is independent. Mr. Dauch is not independent because of his employment with AAM.

Board Leadership Structure

Our Board consists of a combined Chairman and CEO role, complemented with a Lead Independent Director chosen from our independent directors. This structure, along with our sound governance practices, provides effective and independent oversight of the Company.

The Chairman and CEO role brings to the Board the experience and expertise of both the Company and the automotive industry. The skills and experience of our CEO are well-suited for the role of Chairman, putting the Board in the best position to identify and assess key industry drivers and important changes in the competitive landscape so that the Board can develop effective strategies. In light of the opportunities and challenges facing



Table of Contents	Corporate Governance

AAM and the importance of the Chairman role, the Board believes that shareholders are best served by having Mr. Dauch serve in the combined role of Chairman and CEO.

While our independent directors bring diverse experiences and expertise from various perspectives outside AAM, Mr. Dauch's in-depth knowledge of our business enables him to identify important areas of focus for the Board and effectively recommend appropriate agendas. The combined role of Chairman and CEO facilitates information flow between management and the Board, provides clear accountability and promotes efficient decision making, all of which are essential to effective governance.

Lead Independent Director

Our Board leadership structure is further enhanced by a Lead Independent Director. The Lead Independent Director plays an important role in our governance structure, working with both the independent directors and the CEO to ensure the Company is well positioned with sound strategy, robust risk management and effective governance. The Lead Independent Director's key responsibilities are to:


–	preside at executive sessions of independent directors;


–	call special executive sessions of independent directors, as appropriate;


–	serve as liaison between the independent directors and the Chairman & CEO;


–	inform the Chairman & CEO of issues arising from executive sessions of the independent directors; and


–	with Board approval, retain outside advisors who report to the full Board on matters of interest to the Board.

In May 2017, the Board selected Mr. Valenti to serve in this role. Mr. McCaslin had served as Lead Independent Director since April 2014. The Board rotated Mr. Valenti to this position in conjunction with the rotation of certain directors' committee memberships as discussed below. The Board believes these periodic rotations provide the Board and committees with diverse views and robust deliberations.

Board Meetings

Under AAM's by-laws, regular meetings of the Board are held at least quarterly. Our practice is to schedule certain Board meetings at an AAM manufacturing or technical center so our directors have an opportunity to observe different aspects of our business first-hand. During 2017, the Board held four regularly scheduled meetings, one of which was held at a manufacturing facility, and one special meeting.

Directors are expected to attend all Board meetings, meetings of committees on which they serve, and the annual meeting of stockholders. Directors are expected to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. All continuing directors attended 100% of the Board and applicable committee meetings during 2017, except for one director who missed one committee meeting. Overall attendance at Board and committee meetings was 99%. All directors then in office attended the 2017 annual meeting of stockholders.

Board Committees

The Board has delegated some of its authority to five committees: the Executive Committee, the Audit Committee, the Compensation Committee, the Nominating/Corporate Governance Committee and the Technology Committee. Each of the Audit, Compensation and Nominating/Corporate Governance Committees has adopted a charter that complies with current NYSE rules relating to corporate governance. Copies of these committee charters are available at http://investor.aam.com.

The Board approved the rotation of certain directors' committee memberships effective May 2017. The Board believes that periodic rotation of committee membership is generally desirable to ensure that committees regularly benefit from diverse views. Committee membership as of March 22, 2018, the number of meetings held during 2017, and each committee's primary responsibilities are summarized below. Every committee other than the Executive Committee regularly reports on its activities to the full Board.



Table of Contents	Corporate Governance



Audit Committee

2017 Meetings: 4 Members: William P. Miller II (Chair) * James A. McCaslin John F. Smith* Samuel Valenti III *Financial Expert	– Oversees the independent auditors' qualifications, independence and performance
	– Oversees the quality and integrity of our financial statements
	– Oversees the performance of our internal audit function
	– Discusses with management the Company's risk assessment and risk management framework
	– Approves audit and non-audit services provided by the independent auditors
	– Oversees the Company's hedging and derivatives practices
*Financial Expert	– Provides oversight of the Company's ethics and compliance programs
	– Discusses with management the Company's information technology systems and related security



Compensation Committee

2017 Meetings: 5 Members: James A. McCaslin (Chair) William L. Kozyra Peter D. Lyons Samuel Valenti III	– Recommends the CEO's compensation to the Board and establishes the compensation of other executive officers
	– Recommends incentive compensation and equity-based plans to the Board
	– Approves executive officer compensation to ensure that is designed to support achievement of the Company's business strategy and objectives while considering competitive market practices and shareholder interests
	– Recommends non-employee director compensation to the Board
	– Oversees management's risk assessment of the Company's policies and practices regarding compensation of executive officers and other associates
	– Evaluates and approves corporate goals and objectives for executive officer compensation and evaluates performance in light of these criteria
	– Oversees the preparation of the Compensation Discussion and Analysis (CD&A) and produces a Committee report for inclusion in our annual proxy statement



Nominating/Corporate Governance Committee

2017 Meetings: 5 Members: Elizabeth A. Chappell (Chair) William L. Kozyra Peter D. Lyons James A. McCaslin Samuel Valenti III	– Identifies qualified individuals to serve on the Board and committees
	– Reviews our Corporate Governance Guidelines and Code of Business Conduct and recommends changes as appropriate
	– Oversees succession planning for the CEO and other executive officers
	– Oversees evaluation of the Board and its committees
	– Reviews committee charters and recommends any changes to the Board



Technology Committee

2017 Meetings: 4 Members: John F. Smith (Chair) William L. Kozyra James A. McCaslin William P. Miller II George Thanopoulos	– Advises the Board and management on the Company's strategy for innovation and technology
	– Maintains awareness of market demands for technology advancements relative to product, processes and systems
	– Oversees and advises management regarding product, process and systems technologies
	– Reviews technology opportunities as potential ways to increase productivity, efficiency, quality and warranty performance and to support the Company's goals and objectives



Table of Contents	Corporate Governance



Executive Committee

2017 Meetings: 0 Members: David C. Dauch (Chair) James A. McCaslin Samuel Valenti III	– Acts on matters requiring Board action between meetings of the full Board
	– Has authority to act on certain significant matters, limited by our by-laws
	– All members other than Mr. Dauch are independent

Board Oversight of Risk Management

The Board believes that strong and effective internal controls and risk management processes are essential for achieving shareholder value. The Board has oversight for risk management with a focus on the most significant risks facing the Company, including strategic, operational, financial and compliance risks. The Board's risk oversight process builds upon management's risk assessment and mitigation processes, which include an enterprise risk management program, regular internal management disclosure and compliance committee meetings, a global ethics and compliance program and comprehensive internal audit processes.

The Board implements its risk oversight function both as a full Board and through delegation to Board committees, which regularly report to the full Board. The Board has delegated the oversight of specific risks to Board committees that align with their functional responsibilities, as summarized in the table below.



Responsible Party		Primary Areas of Risk Oversight

Full Board		Oversees overall risk management function and regularly receives reports from the chairs of individual Board committees on risk-related matters falling within each committee's oversight responsibilities. Also receives reports from management on particular risks facing the Company, including through the review of AAM's strategic plan.

Audit Committee		Monitors financial, operational, and compliance risks by regularly reviewing reports and presentations given by management, Company advisors and the independent auditors. Regularly reviews risk management practices and risk-related policies (for example, AAM's risk management process and cyber-security strategy) and evaluates potential risks related to internal controls over financial reporting. Monitors financial risks, including capital structure and liquidity risks, and reviews the policies and strategies for managing financial exposure and contingent liabilities.

Compensation Committee		Monitors potential risks related to the design and administration of our compensation plans, policies and programs, including our performance-based compensation programs, to promote appropriate incentives that do not encourage executive officers to take unnecessary and/or excessive risks.

Nominating / Corporate Governance Committee		Monitors potential risks related to our governance practices by, among other things, reviewing succession plans and performance evaluations of the Board and CEO and monitoring legal developments and trends regarding corporate governance practices.

Technology Committee		Monitors risks associated with the Company's product portfolio and our innovation and technology plans.

Selection Process for Director Nominees

In consultation with the Chairman & CEO, the Nominating/Corporate Governance Committee identifies, evaluates and recommends potential candidates for membership on the Board. This committee conducts inquiries into the backgrounds and qualifications of candidates and considers questions of independence and possible conflicts of interest. Based on the committee’s evaluation, candidates who meet the Board’s criteria may receive further



Table of Contents	Corporate Governance

consideration, which may include interviews with the committee and other directors. The committee then submits its recommendations for nominees to the Board for approval.

Before the Board nominates an incumbent director for re-election by our stockholders, the incumbent director is evaluated by the Nominating/Corporate Governance Committee and/or the Board. This evaluation is based on, among other things, each incumbent director’s contributions to the activities of the Board. After consideration of each incumbent Class I director's qualifications and independence, the committee recommended that the Board nominate Mr. Dauch, Mr. Kozyra and Mr. Lyons for re-election as Class I directors, each with a term expiring on the date of the 2021 annual meeting of stockholders. Upon review, the Board decided to recommend Mr. Dauch, Mr. Kozyra and Mr. Lyons for re-election at the 2018 annual meeting.

Director Qualifications, Skills and Experience

AAM’s Corporate Governance Guidelines provide the qualifications for Board membership. Candidates for director nominees to the Board are reviewed in consideration of the current composition of the Board, the operating requirements of the Company and the interests of our shareholders. Although specific qualifications may vary from time to time, desired qualities and characteristics include:


–	high ethical character and shared values with AAM;


–	high-level leadership experience and achievement at a policy-making level in business, educational or professional activities;


–	breadth of knowledge of issues affecting AAM;


–	the ability to contribute special competencies to Board activities, such as financial, technical, international business or other expertise, or industry knowledge;


–	awareness of a director's vital role in AAM's good corporate citizenship and corporate image; and


–	sufficient time and availability to effectively carry out a director's duties.

The Board as a whole should reflect the appropriate balance of knowledge, experience, skills, expertise and diversity that, when taken together, will enhance the quality of the Board’s deliberations and decisions. Although the Board has no formal policy regarding diversity, the Board believes that diversity is an essential element of Board effectiveness. In this context, diversity is defined broadly to include differences in background, skills, education, experience, gender, race, national origin and culture. The current mix of top skills and qualifications of our nine Board members is shown below.



Top Skills and Qualifications:	Number of Directors:
Top Skills and Qualifications:	1	2	3	4	5	6	7	8	9

Industry Experience

CEO/COO/President Experience

Global Manufacturing Operations

Strategic Planning

Innovation and Technology

Financial Expertise

Legal / Regulatory

Risk Management



Table of Contents	Corporate Governance

Succession Planning

The Nominating/Corporate Governance Committee is responsible for overseeing the Company’s succession planning process for executive officers and other key executive positions at AAM. In performing this role, this committee monitors and approves management’s succession planning process and actions and, with respect to the CEO, makes recommendations to the full Board for approval. The Board has primary responsibility for CEO succession planning and develops both long-term and contingency plans for CEO succession. AAM's long-term and ongoing succession planning program is designed to support senior leadership development and succession in a manner that positions AAM to achieve its strategic, operating and financial performance goals, and enhance shareholder value.

Communicating with the Board

Our Board and management team value the opinions and feedback of our shareholders, and we engage with stockholders throughout the year on a variety of issues, including our executive compensation program and corporate governance. Shareholders and other interested parties who wish to communicate with us on these or other matters may contact our Investor Relations Department by email at investorrelations@aam.com or by mail at One Dauch Drive, Detroit, Michigan 48211-1198 (corporate address).

Shareholders or other interested parties may communicate with the Board through the Secretary of AAM by e-mail at AAMBoardofDirectors@aam.com or by mail at the corporate address above. The Board has instructed the Secretary to review all such communications and to exercise his discretion not to forward correspondence to the Board that is inappropriate, such as advertising and business solicitations, routine business matters and personal grievances. However, any director may instruct the Secretary to forward any communication received by the Secretary on behalf of the Board.

Corporate Governance Policies

Because we believe corporate governance is integral to creating long-term shareholder value, our Board has adopted company-wide corporate governance policies, which are periodically reviewed and revised as appropriate to ensure that they reflect the Board's corporate governance objectives.

Please visit the Governance section of our website (http://investor.aam.com/governance) to learn more about our corporate governance practices and to access the following materials:


–	Corporate Governance Guidelines


–	Code of Ethics for the CEO, CFO and other Senior Financial Executives (Code of Ethics)


–	Charters of our Board Committees


–	Code of Business Conduct

A written copy of our Code of Business Conduct and Code of Ethics also may be obtained by any stockholder without charge upon request to the AAM Investor Relations Department by email at investorrelations@aam.com or by mail at our corporate address above.



Table of Contents	Compensation of Directors

Compensation of Directors

The Compensation Committee has authority to develop and recommend to the full Board the compensation policies and programs for non-employee directors. The committee retained Meridian Compensation Partners LLC (Meridian) to advise when setting non-employee director compensation to ensure it is market-based, aligned with shareholder interests and consistent with our compensation principles.

AAM's compensation program for our non-employee directors is designed to meet the following objectives:


–	recognize the significant investment of time and expertise required of directors to oversee AAM's global affairs;


–	align the directors' interests with the long-term interests of our shareholders; and


–	ensure that their compensation is well perceived by our shareholders.

In connection with AAM's acquisition of MPG in April 2017, which nearly doubled the size of the Company, the Committee recommended, and the Board approved, changes to director compensation to reflect updated market information provided by Meridian and to continue to align compensation levels with that of our comparative peer group. Additional information regarding Meridian and our 2017 comparative peer group is provided in Compensation Philosophy, Process and Market Analysis.

2017 Annual Retainer and Committee Chair Retainers



Annual retainer	$	110,000
Committee chair annual retainer:
Audit Committee chair	20,000
Compensation Committee chair	15,000
Other committee chair	10,000
Lead director annual retainer	30,000

The only change in cash compensation for 2017 was an increase in the annual retainer for the Compensation Committee Chair from $10,000 to $15,000, effective April 1, 2017.

Annual Equity Grant

Non-employee directors serving on the Board on the date of the 2017 annual meeting received a grant of Restricted Stock Units (RSUs) of 7,513, or a grant date value of $125,000. This amount reflected an increase in value from $110,000 based on Meridian's updated benchmarking analysis. The awards are payable in stock and vest in one year, unless vesting is accelerated upon death, disability or a change in control. Non-employee directors may elect to defer settlement of RSUs until after termination of service from the Board.

Director Stock Ownership Guidelines

In connection with the MPG acquisition and updated market analysis, the Compensation Committee had Meridian review our stock ownership guidelines for non-employee directors. Based on this analysis, the committee recommended and the Board approved an increase in the multiple from three times to five times the annual cash retainer. Non-employee directors are expected to meet the guidelines within five years from the date of election to the Board. Shares owned directly, deferred RSUs and unvested RSUs count toward the guidelines. Each non-employee director has met, or is on track to meet, these ownership guidelines. Current stock ownership of non-employee directors is shown in the Beneficial Stock Ownership section below.

Anti-hedging and Anti-pledging policy

Non-employee directors are prohibited from entering into transactions that may result in a financial benefit if our stock price declines, or any hedging transaction involving our stock, including the use of financial derivatives, short sales or any similar transactions. Pledging of AAM stock is also prohibited.



Table of Contents	Compensation of Directors

Total 2017 compensation of our non-employee directors is shown below.



Name	Fees Earned or Paid in Cash⁽¹⁾ ($)	Stock Awards⁽²⁾ ($)	All Other Compensation⁽³⁾ ($)	Total ($)
Elizabeth A. Chappell	120,000	125,016	1,400	246,416
Loren Easton ⁽⁴⁾	77,917	125,016	—	202,933
William L. Kozyra	110,000	125,016	1,500	236,516
Peter D. Lyons	110,000	125,016	800	235,816
James A. McCaslin	131,250	125,016	500	256,766
William P. Miller II	130,000	125,016	700	255,716
Kevin Penn ⁽⁴⁾	77,917	125,016	—	202,933
John F. Smith	120,000	125,016	1,900	246,916
George Thanopoulos	82,500	125,016	—	207,516
Samuel Valenti III	132,500	125,016	1,600	259,116


(1)	Fees earned in 2017 for services whether paid in cash or deferred. Non-employee directors may elect to defer, on a pre-tax basis, a portion of their retainer and meeting fees and receive tax-deferred earnings (or losses) on the deferrals under AAM’s Executive Deferred Compensation Plan.

(2)

Reflects the full grant date fair value of restricted stock unit awards granted on May 4, 2017 calculated in accordance with FASB ASC 718 (without any reduction for risk of forfeiture) as determined based on applying the assumptions used in our financial statements. The grant date fair value of equity awards is calculated using the closing market price of AAM common stock on the grant date of $16.64. See Note 9 to the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2017 regarding assumptions underlying the valuation of equity awards.

(3)

The Company reimburses non-employee directors for travel and related out-of-pocket expenses in connection with attending Board, committee and stockholder meetings. From time to time, the Company invites spouses of non-employee directors to attend Company events associated with these meetings. The Company pays for spousal travel and certain other expenses and reimburses non-employee directors for taxes attributable to the income associated with this benefit. Amounts reflect reimbursement of taxes on this income.


(4)	Mr. Easton and Mr. Penn resigned from the Board on December 15, 2017 after completion of the sale by American Securities LLC of its interest in the Company. Outstanding equity awards were forfeited upon their resignation. Mr. Easton and Mr. Penn had been designated by American Securities LLC to serve on the Board in connection with the Company's acquisition of MPG on April 6, 2017.

As of December 31, 2017, each non-employee director had the following number of outstanding RSUs (including those deferred). No options were outstanding as of December 31, 2017.



Name	Restricted Stock Units Outstanding (#)
Elizabeth A. Chappell	51,446
William L. Kozyra	14,862
Peter D. Lyons	18,874
James A. McCaslin	40,346
William P. Miller II	54,696
John F. Smith	40,346
George Thanopoulos	7,513
Samuel Valenti III	24,333



Table of Contents	Beneficial Stock Ownership

Beneficial Stock Ownership

The following tables show the number of shares of AAM common stock beneficially owned by:


–	each person known to us who beneficially owns more than 5% of AAM common stock;


–	each of our non-employee directors and nominees as of March 6, 2018;


–	each of the named executive officers shown in the Summary Compensation Table; and


–	all directors, nominees and executive officers as a group as of March 6, 2018.

A beneficial owner of stock is a person who has voting power (the power to control voting decisions) or investment power (the power to cause the sale of the stock). All individuals listed below have sole voting and investment power over the shares (unless otherwise noted).The beneficial ownership calculation includes 111,655,962 shares of AAM common stock outstanding on March 6, 2018 (record date).



	Shares Beneficially Owned	Percent of Shares Outstanding
Greater Than 5% Owners
Blackrock, Inc.⁽¹⁾	12,973,513	11.70
55 East 52nd Street
New York, NY 10055
The Vanguard Group⁽²⁾	9,188,924	8.25
100 Vanguard Blvd.
Malvern, PA 19355
Dimensional Fund Advisors LP⁽³⁾	8,503,164	7.64
6300 Bee Cave Road
Austin, TX 78746
Non-Employee Directors ⁽⁴⁾
Elizabeth A. Chappell	53,422	*
William L. Kozyra	18,874	*
Peter D. Lyons	23,874	*
James A. McCaslin	44,346	*
William P. Miller II	62,396	*
John F. Smith	45,346	*
George Thanopoulos	298,713	*
Samuel Valenti III	34,333	*
Named Executive Officers
David C. Dauch⁽⁵⁾	393,036	*
Christopher J. May	19,464	*
Michael K. Simonte	102,684	*
Alberto L. Satine	40,382	*
Gregory S. Deveson	—	*
All Directors and Executive Officers as a Group (19 persons)	1,227,566	1.1

(*) Less than 1% of the outstanding shares of AAM common stock.


(1)	Based on the Schedule 13G filed on January 17, 2018 by Blackrock, Inc., reporting sole voting power over 12,723,854 shares and sole investment power over 12,973,513 shares.


(2)	Based on the Schedule 13G filed on February 7, 2018 by The Vanguard Group, reporting sole voting power over 110,493 shares, sole investment power over 9,076,668, shared voting power over 11,000 shares and shared investment power over 112,256 shares.


(3)	Based on the Schedule 13G filed on February 9, 2018 by Dimensional Fund Advisors LP, reporting sole voting power over 8,143,183 shares and sole investment power over 8,503,164 shares.


(4)	Includes vested RSUs awarded to non-employee directors that have been deferred. For the number of RSUs held by each non-employee director, see table included in Compensation of Directors.


(5)	Includes 548 shares held in trusts for the benefit of Mr. Dauch’s children.



Table of Contents	Corporate Governance

Related Person Transactions Policy

The Board has adopted a written policy and procedure for the review, approval and ratification of transactions involving AAM and any “related person” as defined in the policy. This policy supplements AAM’s other conflict of interest policies in our Code of Business Conduct. The Audit Committee is responsible for reviewing, approving and ratifying all related person transactions.

For purposes of this policy, a related person transaction includes any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which AAM is or is expected to be a participant, the amount involved exceeds $120,000, and a related person has or will have a material interest. A related person includes directors and executive officers and their immediate family members, stockholders owning more than five percent of the Company's outstanding common stock as of the last completed fiscal year, and any entity owned or controlled by any one of these persons.

The Audit Committee makes a determination whether a related person's interest in a transaction is material based on a review of the facts and circumstances. In deciding whether to approve or ratify a related person transaction, the Audit Committee will take into account, among other factors it deems appropriate, (1) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and (2) the significance of the related person's interest in the transaction.

A member of the Audit Committee may not participate in the review or vote concerning any related person transaction in which the Audit Committee member or his or her immediate family member is involved.

The policy also provides that certain types of transactions are deemed to be pre-approved by the Audit Committee and do not require separate approval or ratification. During fiscal year 2017 and as of the date of this proxy statement, the Company has not engaged in any reportable related person transactions.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of our common stock. Based solely on our review of these reports, and written representations from such reporting persons, we believe that the Section 16(a) filing requirements for such reporting persons were met during 2017.



Table of Contents	Advisory Vote on Executive Compensation

Proposal 2: Advisory vote on Executive Compensation

AAM is seeking a non-binding advisory vote from our stockholders to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis (CD&A) and narrative and tabular disclosures in this proxy statement. In the CD&A, we provide a detailed description of our compensation programs, including our compensation philosophy and objectives, the individual elements of executive pay, and how the programs are administered. We encourage you to review the CD&A, together with the other narrative and tabular disclosures, in considering your advisory vote on our named executive officers’ compensation (say-on-pay).

Pay for Performance Philosophy

Our executive officer compensation program is designed to reward performance that supports the achievement of our business objectives and creates long-term stockholder value. The Compensation Committee considers the following fundamental objectives, among others, in determining our compensation programs:


–	Compensation and benefit programs should attract, motivate and retain experienced executives who are vital to our short-term and long-term success, profitability and growth;


–	Compensation and benefit programs should reward Company and individual performance; and


–	Compensation and benefit programs should foster the long-term focus required to deliver value to our shareholders.

Our executive officer compensation program also reflects an externally competitive compensation structure based on a market study of executive compensation programs in AAM's comparative peer group. In order to ensure that our compensation program drives performance in support of our strategic objectives and cultural values, we regularly compare our compensation practices against market best practices and shareholder feedback.

Responsiveness to Shareholder Feedback

Prior to 2017, we consistently received strong shareholder support of our say-on-pay proposal, averaging more than 97% approval from 2014 through 2017. At our 2017 annual meeting, approximately 38% of our shareholders voted in favor of our executive compensation programs. Our Board and Compensation Committee took this matter very seriously and sought to better understand what drove this decline in the say-on-pay vote.

We contacted our 25 largest shareholders representing approximately 80% of our then-outstanding shares and were able to speak with shareholders representing over 50% of outstanding shares and with proxy advisors ISS and Glass Lewis. We describe the feedback we received and our response in the Proxy Summary and in the CD&A of this proxy statement. We encourage you to consider our actions in response to shareholder feedback in deciding how to vote on this proposal.

Although your vote on this proposal is advisory and non-binding, the Board and the Compensation Committee will continue to carefully consider the voting results when making future compensation decisions.



þ	The Board unanimously recommends a vote FOR the approval of the compensation of our named executive officers.



Table of Contents	Compensation Discussion and Analysis

Compensation Discussion and Analysis

Our executive compensation program is designed to attract, motivate and retain the high quality leaders that are necessary to manage a company of AAM's size and complexity. In designing the Company's executive compensation program, the Compensation Committee (Committee) strives to align the incentives of our named executive officers (NEOs) with the interests of our shareholders by using performance metrics and challenging goals that tie directly to our business strategy. We believe consistent execution of our strategy will drive long-term value creation.

The Compensation Discussion and Analysis (CD&A) provides a description of our executive compensation programs, including the underlying philosophy, the individual pay elements, the methodology and processes used by the Board and the Committee to make compensation decisions and the relationship between AAM's performance and compensation delivered in 2017. Our NEOs for the fiscal year ending December 31, 2017 are shown below.

Named Executive Officers

David C. Dauch

Chairman & Chief Executive Officer

Christopher J. May

Vice President & Chief Financial Officer

Michael K. Simonte

President

Alberto L. Satine

President Driveline

Gregory S. Deveson

President Powertrain



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Shareholder Engagement and Our Response

Refinements to AAM's Executive Compensation Program and

Adoption of Proxy Access

Prior to 2017, we consistently received strong shareholder support on our say-on-pay proposal, averaging more than 97% approval from 2014 through 2016. In 2017, approximately 38% of our shareholders voted in favor of our executive compensation programs. The Board and the Committee took this matter very seriously and sought to better understand what drove this decline in the say-on-pay vote.

It is AAM's practice to meet with investors throughout the year in various formats. However, following the 2017 annual meeting, the Committee and management conducted a targeted shareholder outreach program to discuss and obtain feedback regarding our executive compensation program and other governance matters. We contacted our 25 largest shareholders representing approximately 80% of our then-outstanding shares. As a result of this outreach, we spoke with shareholders representing over 50% of outstanding shares and with proxy advisors ISS and Glass Lewis. The Chair of the Committee participated throughout this process, along with our CFO and Investor Relations Director.

The information we received from shareholders was shared with the Board on multiple occasions. The Committee and the full Board had robust discussions and thoughtfully considered our shareholders' constructive feedback. Below is a summary of the feedback we received and our response.



Shareholder Feedback		Response

Shareholders generally believe our executive compensation program is aligned with shareholder interests.	ð	Significant design improvements have been made over the last several years including:
		- no discretionary incentive payments - double-trigger equity vesting - clawback policy - 66% of LTI compensation is performance based - prohibit excise tax gross ups - no excessive executive severance arrangements - New in 2017: increased stock ownership requirements for CEO, CFO and outside directors
		These programs will continue to be reinforced.



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Shareholder Feedback		Response

Incentive metrics • Goal rigor • Alignment with strategy • Enhanced disclosure	ð	Goal Rigor: Although our goals contained the appropriate rigor to accomplish our strategic objectives, we heard shareholder concerns and increased the rigor of new awards in 2018 to achieve a level of performance that would be the highest in our history. Alignment with strategy: To continue alignment with AAM's strategic goals, the Committee changed annual incentive pay metrics in 2018 to focus senior leadership on EBITDA, a key valuation/leverage reduction driver. The LTI program was also modified to emphasize cash flow and capital deployment strategies, which are key to value creation. Enhanced disclosure: We enhanced our disclosure of our goal-setting process for better understanding and transparency. We re-designed our proxy statement to include a proxy summary, letters from our Chairman & CEO and lead independent director, and other features that enable us to more effectively communicate AAM's business strategy and the Board's ongoing efforts to represent the interests of our shareholders.

Alignment of CEO compensation with total shareholder return	ð	While AAM's financial and operational performance has been strong, our TSR performance has lagged in comparison to our comparative peer group over the last few years. AAM has increased EBITDA margin performance each year to a level that is one of the best in the industry and grown revenues to nearly $7 billion from $2.9 billion 5 years ago, while transforming AAM to become more diversified, with greater scale and increased global reach to support our customers with products that meet market demands. We believe this operational performance and growth will drive long-term value for our shareholders.
	ð
Ratio of fixed and variable pay of the CEO as compared to the other NEOs	ð	The Committee believes that the CEO's pay should be more variable than that of the other NEOs. As the leader of the Company, the CEO should have the highest level of pay at risk, which we believe drives superior performance.
	ð
Proxy access	ð	We adopted proxy access in February 2018.



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Business & Financial Highlights

Driving Long-Term Shareholder Value

AAM's 2017 Highlights



þ	Delivered on our key strategic objectives of profitable growth, diversification, outstanding financial performance and technology leadership	þ	Following the MPG acquisition, reduced our debt leverage on both a gross and net basis, including the prepayment of $200 million of Senior Notes

þ	Closed on the acquisition of MPG, nearly doubling our size and scale	þ	Won several new business awards, including further commercialization of our e-AAM hybrid and electric driveline systems

þ	Achieved record sales and profitability for AAM	þ	Realized over 50% of our sales from customers other than General Motors for the first time in AAM history — a key strategic milestone

þ	Generated Adjusted Free Cash Flow of over $300 million	þ	Successfully launched approximately 75 programs and facilities across the globe

þ	Continued to fund significant capital and R&D investments in order to drive organic growth to meet our strategic goals	þ	Received several global quality and operations excellence awards from our customers, including being named a Supplier of the Year by General Motors



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Acquisition of Metaldyne Performance Group, Inc.



Acquisition Benefit	FY 2017 Result

Greater scale and financial profile	Pro forma sales of over $6.9 billion, an increase of over 75% compared to AAM's 2016 sales

Accelerated business diversification	Non-GM sales made up more than 50% of total sales Greater exposure to commercial and industrial business as those markets strengthened in 2017

Enhanced profitability and free cash flow generation	AAM achieved Adjusted EBITDA of approximately $1.1 billion AAM generated over $300 million of Adjusted Free Cash Flow

Synergy attainment and value capture	AAM recognized > $30 million of cost reduction synergies in 2017 and expects an annualized synergy attainment run rate of $73 million in January 2018 On track to meet our target of $120 million of annual run rate cost reduction synergies by 1Q 2019 and 70% of this total by 1Q 2018

2017 Compensation Overview

Components of Compensation Program

The primary components of AAM’s executive compensation program are summarized below.



Component	Purpose	Characteristics

Base Salary	Based on level of responsibility, experience, individual performance and internal pay equity	Fixed cash component generally targeted at the peer group median

Annual Incentive Compensation	Incentive to drive short-term performance aligned with strategic goals	Cash award that is at-risk subject to the attainment of performance targets

Long-Term Incentive Compensation	Reward for creating shareholder value	Awarded in a combination of Performance Shares (66%) and RSUs (34%) tied to financial and share performance that drive sustainable results and shareholder value

Retirement Benefits	Provide income upon retirement	401(k) and nonqualified defined benefit plans

Perquisites	Limited supplement to total direct compensation	Primary benefit is company-provided vehicles with AAM content



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Total NEO Direct Compensation Pay Mix

Total direct compensation consists of base salary plus target annual and long-term incentive compensation. Total direct compensation for each NEO may be above or below the 50^thpercentile of our comparative peer group based on various factors, including an individual's level of responsibility, demonstrated skills and experience, significance of position, contribution to Company performance, time in position, potential for advancement and internal pay equity considerations. The Committee generally sets performance objectives for annual and long-term incentive compensation so that targeted total direct compensation levels can be achieved only when target performance objectives are met. Consequently, actual pay may vary from targeted levels based on achieved performance against pre-established performance objectives.

The following chart illustrates the allocation of 2017 total direct compensation components at target for our CEO and for our other NEOs as a group as of December 31, 2017. This analysis highlights the Company's emphasis on long-term and at-risk compensation.



CEO	Other NEOs (Average)



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Compensation Philosophy, Process

and Market Analysis

Executive Compensation Philosophy

AAM is committed to a compensation philosophy that incorporates the principles of supporting business strategy and performance, aligning with stockholder interests, and paying competitively based on a framework of best governance practices. The Committee reviews and recommends to the full Board AAM's overall compensation philosophy and executive compensation programs to support our business strategy and objectives.



Compensation Principle	Objective	How we achieve our objective

Support of Business Strategy and Performance	Compensation is variable and at risk	–	86% of CEO compensation is variable and at risk
Support of Business Strategy and Performance	Utilize metrics that emphasize company performance that are aligned with business strategy	–	Performance goals include key drivers of enterprise value creation such EBITDA, Relative TSR and Cash Flow.

Alignment with Stockholder Interests	Balance focus between short-term results and long-term share appreciation	–	Mix of annual and long-term incentive programs
		–	66% of LTI is performance based
		–	Cap on payout of performance shares based on relative TSR if absolute TSR is negative
		–	CEO stock ownership requirement of 6 times base salary

Market Competitive Pay	Attract and retain executive talent	–	Benchmark pay against a peer group of similarly sized companies
	Align pay and performance	–	Target direct compensation at the 50^th percentile
		–	Ensure incentive plans reward for desired behaviors and pay outcomes align with results

Best Governance Practices	Implement best governance practices into compensation programs	–	Clawback policy
		–	Anti-hedging policy
		–	Double-trigger equity vesting and severance in a change in control
		–	Annually review risks associated with compensation programs
		–	Retain independent compensation consultant
		–	Prohibit excise tax gross-ups
		–	No excessive executive perquisites

Decision-Making Process

Comprised solely of independent, non-employee directors, the Committee oversees the compensation and benefits programs for our executive officers, including the NEOs. In its oversight of our 2017 executive compensation program, the Committee worked with its independent compensation consultant, and with the CEO, the President, the CFO, and the Vice President, Human Resources. The CEO and the other officers provided information and recommendations with respect to:


–	Company performance objectives and goals, which serve as a basis for incentive compensation;


–	attracting, retaining and motivating executive officers;



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–	information regarding financial performance, budgets and forecasts as they pertain to compensation; and


–	industry and market conditions affecting AAM's business strategy.

The Committee exercises its independent judgment to approve the compensation level for the CEO. For all other executive officers, the Committee considers the CEO's recommendation for setting compensation levels. The compensation approved for the CEO and other executives is aligned with the Company's overall compensation philosophy. For 2017, the Committee made pay decisions based on Meridian's market analysis, Company performance and specific factors about each NEO, including individual performance, experience, internal equity, scope and responsibility of position, retention and other factors described in more detail below.

Role of the Compensation Consultant

The Committee has retained Meridian Compensation Partners LLC as its independent compensation consultant. Meridian provides the Committee with independent advice and ongoing recommendations on compensation matters related to our executive officers and non-employee directors. Meridian also provides the Committee with competitive market data, peer group analyses and updates on compensation trends and regulatory developments. Meridian also worked with the Company in evaluating its incentive programs and the selection of performance measures in response to shareholder feedback.

In the course of fulfilling its responsibilities, Meridian frequently communicates with the Chair of the Committee both prior to and following Committee meetings. Meridian also meets with management to gather information, prepare materials and review proposals to be made to the Committee. Meridian provides no other services to the Company and has no other direct or indirect business relationships with AAM or any of its subsidiaries or affiliates. Based on information provided by Meridian, the Committee assessed Meridian's independence pursuant to NYSE and SEC rules and concluded that no conflict of interest exists that prevents Meridian from independently advising the Committee.

Peer Group and Market Analysis

The Committee annually reviews the composition of our comparative peer group and makes adjustments to reflect changes in our business, as well as industry and market conditions. The overall purpose of this peer group is to provide a market frame of reference for evaluating our compensation arrangements, understanding compensation trends among comparable companies and reviewing other compensation and governance-related topics. The companies are selected primarily based on the following criteria:


–	total revenue and market capitalization;


–	competitors in industry segment;


–	complexity of global business and operations; and


–	competition for talent and investor capital.

In April 2017, we completed the transformational acquisition of MPG. This transaction nearly doubled the size of the Company and significantly changed the complexity of our business operations. Based on these changes, the Committee requested Meridian to recommend a comparative peer group to reflect the size and complexity of the combined Company. This new peer group was used to benchmark executive compensation upon the closing of the MPG acquisition. AAM's revenues are at approximately the median of the new comparative peer revenues. The new peer group consists of the following companies:



2017 Comparative Peer Group
Ametek Inc.	Fluor Corp.	Navistar International Corp.
BorgWarner Inc.	Flowserve Corporation	Rockwell Automation
Cooper-Standard Holdings, Inc.	Goodyear Tire & Rubber Co	Tenneco Automotive Inc.
Cummins Inc.	Illinois Tool Works, Inc.	Terex Corporation
Dana Inc.	Lear Corporation	Trinity Industries, Inc.
Delphi Automotive plc	Meritor Inc.	Visteon Corporation
Dover Corporation	PACCAR Inc.
Federal-Mogul Corporation	Parker-Hannifin Corporation



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The comparative peer group above reflects the following changes made by the Committee:



2017 Changes	Companies		Rationale
Additions	Ametek Inc.	Goodyear Tire & Rubber Co.	More closely aligned with the size and complexity of our business
	Cummins Inc.	Illinois Tool Works, Inc.
	Delphi Automotive plc	PACCAR Inc.
	Dover Corporation	Parker-Hannifin Corporation
	Fluor Corp.
Removals	A.O. Smith Corporation	Tower International Inc.	No longer aligned with our size and business operations
	Briggs & Stratton	USG Corporation
	Donaldson Company, Inc.	Valmont Industries, Inc.
	Kennametal Inc.	Woodward Inc.
	Regal-Beloit Corporation

Direct Compensation Elements

Base Salary

In connection with AAM's acquisition of MPG in April 2017, which nearly doubled the size of the Company, the Committee adjusted NEO base salaries to reflect the size and complexity of the combined companies considering their greater levels of responsibilities resulting from the acquisition. Taking the market median of the new comparative peer group into consideration, the Committee increased base salaries effective April 1, 2017 for the NEOs, except for the CEO. Mr. Deveson's base salary took effect on April 17, 2017 when he joined AAM. NEO base salaries as of December 31, 2017 and 2016 are shown below.



	2017		2016		% Change
David C. Dauch	$	1,150,000	$	1,150,000	—	%
Christopher J. May	$	500,000	$	400,000	25	%
Michael K. Simonte	$	750,000	$	640,000	17	%
Alberto L. Satine	$	610,000	$	510,000	20	%
Gregory S. Deveson	$	530,000	$	—	—	%

The Committee increased Mr. May's base salary for 2017, recognizing that his base salary had been below the market median since his appointment as CFO in 2015. Since that time, the Committee periodically reviewed Mr. May's compensation in consideration of his professional development and strong performance in the position. The increases for Mr. Simonte and Mr. Satine also reflect that they had not received a base salary increase since 2015.

In October 2017, the Committee determined that base salaries for the CEO and the NEOs (other than Mr. May) will remain unchanged for 2018. The Committee decided to increase Mr. May's 2018 base salary to $550,000 in consideration of his performance and pay level relative to the market median. The Summary Compensation Table shows the base salary earned in 2017 for each NEO.



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Incentive Compensation

Compensation Program Metrics Link to Strategic Business Objectives

The Committee utilizes both short- and long-term financial metrics relative to our business objectives, as well as relative TSR as a long-term metric. The following chart demonstrates how our incentive compensation metrics correlate to our strategic business objectives.



Strategic Business Objective	Alignment	Incentive Metric

Continue to strengthen the balance sheet; provide funding for organic growth, research and development, and other capital priorities.		Cash Flow - 2017 Annual Incentive Plan (50% component) - 2018 LTI Performance Shares (50% component)

Develop innovative technology, including electrification. Reinvest in research and development.		Relative TSR - LTI Performance Shares, including 2018 (50% component)

Create sustainable value for shareholders.

Achieve profitable growth, along with the ability to be flexible as the market changes, and reduce leverage.		EBITDA - 2017 LTI Performance Shares (50% component) - 2018 Annual Incentive Plan (100% component) Operating Income Margin - 2017 Annual Incentive Plan (50% component)

Deliver integration synergies from recent acquisitions.

Goal Rigor

The Committee annually reviews performance metrics, targets and payouts to ensure that they are challenging, stretch goals and are designed to mitigate risk.

Annual Incentive Compensation

Each NEO's annual incentive compensation is based on achieved results against financial targets approved by the Committee under AAM’s Incentive Compensation Plan for Executive Officers. Payment of annual cash incentive awards is permitted to the extent the Company meets or exceeds threshold performance levels and reports positive net income.

The Committee approved the use of net operating cash flow and operating income margin for determining 2017 annual cash incentives considering their alignment to our strategic business objectives. In February 2017, taking into consideration the then-pending MPG acquisition, the Committee set the target level for each performance metric based on the 2017 financial objectives for the combined companies, which included anticipated integration synergies. Recognizing the importance of achieving integration synergies, the Committee increased the rigor of the threshold, target and maximum performance levels in order to drive management to achieve the key benefits of this transformational acquisition. In addition, these performance levels were set above our 2016 actual performance.



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The operating income margin target was also compared to that of our competitor peer group for the three most recent fiscal years. This target was set to drive a level of performance to exceed the top one-third of our competitor peer group. The following table describes the performance levels and results for 2017.



	Weighting		Threshold (Payout 50%)	Target (Payout 100%)		Maximum (Payout 200%)		2017 Actual Performance
Net Operating Cash Flow	50	%	$195 million	$260 million		$300 million		$340.9 million⁽¹⁾

Operating Income Margin	50	%	8.1%	10.75	%	11.25	%	11.10%⁽²⁾

(1) Excludes the impact of cash paid for restructuring and acquisition-related costs of $169.1 million. See Reconciliation of Non-GAAP and GAAP Information.

(2) Excludes the impact of restructuring and acquisition-related costs of $152.6 million. See Reconciliation of Non-GAAP and GAAP Information.

Based on the weighting of each performance metric, the 2017 annual incentive awards resulted in a payout of 185% of target. No discretionary increases were made to 2017 annual incentive payouts for any NEO. The amounts paid are shown in the Summary Compensation Table.

Target Annual Incentive Award Opportunities

The table below shows the 2017 target annual incentive opportunities for our NEOs, stated as a percentage of base salary.



	Target Annual Incentive Opportunity
	2017		2016
David C. Dauch	135	%	125	%
Christopher J. May	80	%	60	%
Michael K. Simonte	100	%	100	%
Alberto L. Satine	80	%	80	%
Gregory S. Deveson (effective April 17, 2017)	80	%	—	%

In connection with the acquisition of MPG and based on market data, the Committee increased Mr. Dauch's annual incentive target, effective April 1, 2017, to reflect his new challenges in leading a much larger, more complex organization.

For Mr. May, the Committee increased his annual incentive target opportunity, recognizing that his bonus target had been below the market median since his appointment as CFO in 2015. Since that time, the Committee periodically reviewed Mr. May's compensation in consideration of his professional development and strong



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performance in the position. As a result, the Committee decided to increase his annual incentive target to 80% effective April 1, 2017.

In October 2017, the Committee determined that the annual incentive target opportunities for each NEO will remain unchanged for 2018.

2018 Changes to Annual Incentive Compensation Program

During our shareholder outreach, emphasis was placed on our continuing to align performance measures with our business strategy. The Committee considered this feedback in selecting absolute EBITDA dollars as the sole metric for determining 2018 annual incentive payouts. Strong EBITDA performance positions AAM to generate cash, reduce debt and provide funding for profitable growth and other capital priorities. The selection of EBITDA dollars as the sole performance measure emphasizes its importance to our business strategy.

For 2018, the Committee set the annual incentive target at a level that drives management to continue to perform at a high level, achieve integration synergies, implement productivity improvements and successfully launch new product programs.

Long-Term Incentive Compensation

Our LTI program for executive officers is designed to reward NEOs for creating sustained shareholder value, to encourage ownership of Company stock, and to retain and motivate executives while aligning their interests with those of our shareholders. AAM generally makes equity grants to its executive officers and other executives on an annual basis, subject to the approval of the Committee. Grants are typically made in the first quarter of each year to coincide with the communication to executive officers of their annual cash incentive awards for the previous year’s performance. This timing increases the impact of the awards by strengthening the link between pay and performance.

2017 LTI Award Overview



	Form of Award
	Performance Shares		RSUs
LTI Mix	66	%	34	%

Objective	Drive and reward performance key to strategic business objectives		Encourage retention and ownership supporting shareholder alignment

Performance Measure	50% EBITDA Margin 50% RelativeTSR		Continued service with AAM

Competitor Peer Group for Relative TSR	Autoliv Inc. Borg Warner Inc. Dana Inc. Lear Corporation Magna International Inc Meritor Inc, Tenneco Automotive, Inc. Visteon Corporation		Not applicable

Performance / Vesting Period	Subject to achievement of performance measures over the three-year performance period January 1, 2017 through December 31, 2019		Cliff vest on the third anniversary of the grant date

Conversion	Converted to AAM stock upon vesting		Converted to AAM stock upon vesting

Our competitor peer group is used to assess relative performance for establishing long-term incentive award performance levels. The competitor peer group consists of companies that compete with AAM for capital and operate in similar markets. This group of eight companies serves as an appropriate benchmark for long-term incentives because of the likelihood that these companies will experience similar business conditions over a three-year cycle.



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The Committee approved the use of EBITDA margin and relative TSR as the 2017 LTI performance share measures considering their alignment to our strategic business objectives as described above. The target performance was set above the median of our competitor peer group based on estimated performance for the period 2015 to 2017. The maximum performance level was set above the 75th percentile of the competitor peer group in order to drive superior performance. The following table shows the threshold, target and maximum EBITDA margin and relative TSR performance levels to be used in determining the payouts for these awards for the performance period January 1, 2017 through December 31, 2019.



	EBITDA Margin Performance Measure				Relative TSR Performance Measure
Performance Level	3 Year Cumulative EBITDA Margin		Percent of Target Award Opportunity Earned		Company's TSR Percentile Rank	Percent of Target Award Opportunity Earned
Threshold	10	%	25	%	35^th	50	%
Target	12	%	100	%	50^th	100	%
Maximum	15	%	200	%	75^th	200	%

LTI Award Values

The table below shows the 2017 target long-term incentive opportunities for our NEOs.



	2017 Target Long-Term Incentive Opportunity
	($)⁽¹⁾	%⁽²⁾
David C. Dauch	5,175,000	450	%
Christopher J. May	412,000	100	%
Michael K. Simonte	1,516,160	230	%
Alberto L. Satine	787,950	150	%
Gregory S. Deveson	1,060,000	200	%

(1) Amounts reflect the value the Committee considered when granting the awards for 2017. These amounts differ from the value of the awards shown in the 2017 Summary Compensation Table and Grants of Plan-Based Awards Table because those tables reflect the probable outcome of the performance metrics for the performance shares.

(2) Stated as a percentage of base salary.

In connection with the acquisition of MPG and based on the market median of the new comparative peer group, the Committee increased the 2018 LTI target opportunities for the NEOs (except for Mr. Deveson) to reflect the significant increase in size and complexity of the Company. The Committee also considered the greater levels of responsibility and challenges ahead for each of the NEOs to deliver expected results. Mr. Deveson's 2018 LTI target was set when he joined AAM on April 17, 2017, after the MPG acquisition.



	2018 Target Long-Term Incentive Opportunity
	%
David C. Dauch	500	%
Christopher J. May	250	%
Michael K. Simonte	300	%
Alberto L. Satine	200	%
Gregory S. Deveson	200	%

For Mr. May, the Committee increased his LTI target opportunity, recognizing that his target had been below the market median since his appointment as CFO in 2015. Since that time, the Committee periodically reviewed Mr. May's compensation in consideration of his professional development and strong performance in the position. Accordingly, the Committee made incremental increases to Mr. May's 2018 target, resulting in the total amount shown above.



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Payout of 2015 Performance Share Awards

The performance period for 2015 performance awards ended on December 31, 2017. The number of shares earned was based on relative TSR and EBITDA margin over the three-year performance period as shown below.



	Actual Performance	% of Target Shares Earned		Award Weighting		Weighted Payout
Relative TSR	11^th percentile	0	%	50	%	0	%

EBITDA Margin	16.2%⁽¹⁾	200	%	50	%	100	%
		Final Payout as a % of Target				100	%

(1) Excludes the restructuring and acquisition-related costs and debt refinancing costs. See Reconciliation of Non-GAAP and GAAP information.

Payouts under the relative TSR performance share awards resulted in a zero payout to senior management because the threshold performance level was not achieved. Our shareholders did not realize value on our stock over this time period. Consequently, our senior management team did not receive any value for these awards.



Governance Point
Payout capped at 50% if 3-year absolute TSR is negative.



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The performance targets for the EBITDA margin performance share awards were determined in consideration of AAM's historical EBITDA margins in 2012 - 2014. The maximum performance level was set to drive performance significantly above our peers and encourage EBITDA margin growth. Over this period, management delivered a result well in excess of targets and prior actual performance. This outstanding financial performance allowed us to reduce debt and position AAM for the strategic actions we took in 2017.



Adjusted EBITDA Margin

2018 Changes to LTI Program

The Committee evaluated the performance measures for 2018 LTI performance share awards to ensure that the measures are aligned with our business strategy. In 2017, AAM acquired MPG to drive a much stronger long-term business profile. We incurred higher debt levels to finance this strategic acquisition. A key objective of the Company is to strengthen our balance sheet and continue to provide for profitable growth, research and development of innovative technology and other capital priorities. As a result, free cash flow is a key driver to reduce gross leverage and ultimately convert value to shareholders through the valuation process. Accordingly, the Committee replaced the EBITDA margin performance measure with free cash flow for the 2018 LTI performance share awards. The Committee believes that relative TSR continues to be an important measure of performance because of its alignment with shareholder value creation.

Based on these considerations, the 2018 performance share awards will be based 50% on free cash flow and 50% on relative TSR. Significantly, achievement of the 2018 LTI free cash flow target would represent the highest free cash flow performance in AAM's history.

Summary of Direct Compensation

The Committee believes each pay element of direct compensation is consistent with our compensation philosophy. The Committee reviews direct compensation for each NEO and compares each compensation element to the market data of our comparative peer group. The Committee also considers individual performance, experience, internal equity, scope and responsibility of position, retention and other factors.

Direct compensation for our CEO is higher than for the other NEOs due to the CEO's breadth of executive and operating responsibilities for the entire global enterprise. The Committee does not target CEO pay as a certain multiple of the pay of the other NEOs.

For 2017, the Committee set total direct compensation for Mr. Dauch, Mr. Simonte and Mr. Satine at approximately the 50^th percentile of the peer group. For Mr. May, who was appointed CFO in August 2015, the Committee set total direct compensation below the 50^th percentile based on his limited time in this position. The level of total direct compensation for Mr. Deveson was determined in consideration of internal pay equity for his position as a business unit leader and was set between the 50^thand the 75^th percentiles.



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Indirect Compensation Elements

Retirement and Other Benefits

Our NEOs participate in the same medical and 401(k) plans as our U.S. salaried associates. A group of approximately 60 senior executives, including the NEOs, also receive supplemental life, supplemental disability and umbrella liability insurance benefits. Our NEOs are eligible to participate in AAM’s nonqualified defined benefit pension plan and a nonqualified deferred compensation plan. These plans are described in the Pension Benefits and Nonqualified Deferred Compensation sections below.

Perquisites

AAM provides a very limited number of perquisites to senior executives, including our NEOs. Senior executives are eligible for the use of a Company-provided vehicle with AAM content. Mr. Dauch has the use of two Company-provided vehicles. Occasionally, the Company invites spouses of AAM executives to attend Company business events and pays for the spouse’s travel and related non-business expenses. AAM reimburses the executive for taxes attributable to the income associated with this benefit. We do not otherwise provide tax gross ups for executives except for those available for all salaried associates generally. Perquisites are further described in the footnotes to the Summary Compensation Table.

Other Compensation Matters

Employment Agreements

The terms of Mr. Dauch's and Mr. Simonte's employment agreements are described in the Narrative to the Summary Compensation Table and Grants of Plan-Based Awards Table and Potential Payments Upon Termination or Change in Control.

Change in Control Plan

The AAM Executive Officer Change in Control (CIC) Plan provides eligible executive officers severance payments and benefits in the event of termination of employment on or within two years following a CIC. Mr. Dauch and Mr. Simonte do not participate in the CIC Plan due to the severance payments and benefits provided under each of their employment agreements. The Board believes the CIC Plan enhances stockholder value by encouraging executive officers to consider CIC transactions that may be in the best interests of the Company and our stockholders while keeping them neutral to potential job loss. The Board also believes that the CIC Plan is aligned with competitive market practices and will help to retain key talent. Severance benefits provided to our NEOs are described under Potential Payments Upon Termination or Change in Control.

Executive Compensation Recoupment (Clawback) Policy

The clawback policy authorizes the Committee to determine whether to require recoupment of performance-based incentive compensation actually paid or awarded to any executive officer if certain conditions are met. For purposes of this policy, performance-based compensation includes all annual and long-term incentive awards, whether paid in cash or equity, to the extent the awards are based on the Company's financial performance.

The Committee may require recoupment if the executive officer engaged in fraud or intentional misconduct that caused or contributed to the need for a material restatement of the Company's financial statements filed with the SEC. If the Committee determines that any performance-based compensation paid or awarded to the executive officer would not have been awarded or would have been awarded at a lower amount had it been calculated based on such restated financial statements (adjusted compensation), the Committee may seek to recover for the benefit of the Company the excess of the awarded compensation over the adjusted compensation (excess compensation). In deciding whether to seek recovery of excess compensation from the executive officer, the Committee will consider the factors it deems relevant under the circumstances and whether the assertion of a claim is in the best interests of the Company.



Table of Contents	Compensation Discussion and Analysis

Executive Officer Stock Ownership Requirements

A fundamental objective of our compensation program is for executive officers to own AAM stock in order to align their interests with those of our stockholders and to reinforce the importance of making sound long-term decisions. In 2017, the Committee requested Meridian to provide an analysis of the stock ownership requirements of our peer group. Based on this analysis, the Committee increased the stock ownership requirements for the CEO from five times to six times base salary and from two times to three times base salary for the Chief Financial Officer. The Company's current stock ownership requirements are shown below.



	Multiple of Base Salary
Chief Executive Officer	6
Chief Financial Officer; President	3
Other Executive Officers	2

Executive officers have five years to meet these requirements or, for new executive officers, five years from the date of appointment. Shares owned directly, unvested RSUs and performance shares (at target) count toward the requirement. These ownership levels must be maintained as long as the person is an executive officer of AAM. NEOs who have not met these requirements may not sell shares. The Committee annually reviews each executive officer’s stock ownership level according to this policy. Each NEO has met or is on track to meet the ownership requirements established for his position.

Anti-Hedging and Anti-Pledging Policy

AAM prohibits employees and non-employee directors from entering into transactions that may result in a financial benefit if our stock price declines, or any hedging transaction involving our stock, including the use of financial derivatives, short sales or any similar transactions. Pledging of AAM stock is also prohibited.

Risk Assessment of Compensation Policies and Practices

We conducted an annual risk assessment for the Committee to determine whether the risks arising from our fiscal year 2017 compensation practices are reasonably likely to have a material adverse effect on the Company. The risk assessment considered AAM’s annual and long-term incentive programs and pay mix, performance measures used to calculate payouts, and pay philosophy and governance. Our annual assessment focuses on the program for executive officers in light of their decision-making authority and influence, but also considers the compensation of other salaried associates. Our methodology was reviewed by the Committee and Meridian.

We have designed our compensation programs with specific features to address potential risks while rewarding our executive officers and other associates for achieving long-term financial and strategic objectives through prudent business judgment and appropriate risk taking. Based on our risk assessment and consideration of various mitigating factors, we concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

Tax Deductibility of Compensation

Section 162(m) of the Code (Section 162(m)) generally disallows a tax deduction to public companies for compensation over $1 million paid to certain “covered employees,” which historically included a company's CEO and the three other most highly compensated executive officers, other than the CFO, employed by the company at year end. Pursuant to the Tax Cuts and Jobs Act, enacted on December 22, 2017, the definition of “covered employees” under Section 162(m) was amended to include the CFO. Once an officer is a “covered employee,” the officer’s pay will remain subject to Section 162(m) for so long as the officer is receiving compensation from the company. Further, the Tax Cuts and Jobs Act repealed the exclusion for “qualified performance‑based compensation” under Section 162(m) effective January 1, 2018, except for compensation payable pursuant to a written binding contract in place before November 2, 2017 that is not materially modified thereafter (a grandfathered arrangement). For 2017, although we had plans in place that were intended to permit the award of qualified performance-based compensation under Section 162(m), the Committee did not necessarily limit executive compensation to deductible amounts. Beginning in 2018, there will be no qualified performance-based compensation exemption, other than for grandfathered arrangements. Outstanding awards that previously qualified for the performance-based compensation exclusion under Section 162(m) may or may not qualify as grandfathered awards.



Table of Contents	Compensation Discussion and Analysis

Reconciliation of Non-GAAP and GAAP Information

AAM has included in the proxy statement adjusted operating income margin, adjusted net operating cash flow and adjusted EBITDA margin, which are financial metrics used in our Incentive Compensation Plan for Executive Officers and the 2012 Omnibus Incentive Plan. These metrics are non-GAAP financial measures. Such information is reconciled to its closest GAAP measure in the tables below in accordance with SEC rules.

Management believes that these non-GAAP financial measures are useful to both management and its shareholders in their analysis of the Company's business and operating performance. Management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures, as presented by AAM, may not be comparable to similarly titled measures reported by other companies.



2017 Annual Incentive Performance Metrics	Twelve Months Ended
	December 31, 2017
Adjusted Operating Income Margin:	(in millions)
Operating income, as reported	$	543.0
Restructuring and acquisition-related costs	110.7
Non-recurring items:
Acquisition-related fair value inventory adjustment	24.9
Other⁽¹⁾	(0.5		)
Adjustment for purchase accounting (primarily depreciation and amortization) for the acquisition of MPG and USM Mexico not included target	35.7
Impact of financial performance for acquisitions not included in target	(18.2		)
Adjusted operating income	$	695.6

Net sales, as reported	$	6,266.0

Adjusted operating income margin ⁽²⁾	11.10		%

Net Operating Cash Flow:
Cash provided by operations, as reported	$	647.0
Purchases of property, plant and equipment, net of proceeds from sale of property, plant and equipment and from government grants	(475.2		)
Cash payments for restructuring and acquisition-related costs	109.3
Acquisition-related settlement of pre-existing accounts payable balances with acquired entities	35.2
Interest payments upon settlement of acquired company debt	24.6
Net operating cash flow ⁽²⁾	$	340.9

(1) Includes the impact of a change in accounting principle and a pension settlement.

(2) The Committee established the performance goals for our annual incentive plan prior to the closing of the MPG and USM Mexico acquisitions. As a result, the impact of purchase accounting adjustments and the financial impact of USM Mexico were not known at the time that the performance goals were established. Accordingly, our GAAP reported operating income and net operating cash flow, for purposes, of calculating performance achievements under the annual incentive plan, were adjusted for certain restructuring and acquisition-related costs and non-recurring items as detailed above.



Table of Contents	Compensation Discussion and Analysis



2015 Long-term Incentive Performance Metric	Twelve Months Ended
	December 31,
	2017			2016			2015
Earnings before interest expense, income taxes and depreciation and amortization (EBITDA) and Adjusted EBITDA:	(in millions)
Net income	$	337.5		$	240.7		$	235.6
Interest expense	195.6			93.4			99.2
Income tax expense	2.5			58.3			37.1
Depreciation and amortization	428.5			201.8			198.4
EBITDA	$	964.1		$	594.2		$	570.3
Restructuring and acquisition-related costs	110.7			26.2			—
Debt refinancing and redemption costs	3.5			—			0.8
Non-recurring items:
Acquisition-related fair value inventory adjustment	24.9			—			—
Other⁽¹⁾	(0.5		)	(1.0		)	—
Adjusted EBITDA	$	1,102.7		$	619.4		$	571.1

Net sales, as reported	$	6,266.0		$	3,948.0		$	3,903.1

Adjusted EBITDA margin	17.6		%	15.7		%	14.6		%

3-year cumulative EBITDA margin	16.2		%

(1) For 2017, includes the impact of a change in accounting principle and a pension settlement.



Table of Contents	Compensation Committee Report

Compensation Committee Report

We have reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee of the Board of Directors

James A. McCaslin, Chair

William L. Kozyra

Peter D. Lyons

Samuel Valenti III



Table of Contents	Executive Compensation Tables

Executive Compensation Tables

Summary Compensation Table

The following table summarizes the compensation of our named executive officers (NEOs) for the fiscal years ended December 31, 2017, December 31, 2016 and December 31, 2015 to the extent they served as NEOs in such years.



Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards⁽²⁾($)	Options Awards ($)	Non-Equity Incentive Plan Compen- sation⁽³⁾ ($)	Change in Pension Value And Nonqualified Deferred Compensation Earnings⁽⁴⁾ ($)	All Other Compen- sation⁽⁵⁾ ($)	Total ($)
David C. Dauch⁽¹⁾Chairman & Chief Executive Officer	2017	1,150,000	—	7,319,937	—	2,819,000	1,869,698	86,982	13,245,617
	2016	1,150,000	—	5,617,069	—	2,875,000	1,385,652	74,599	11,102,320
	2015	1,150,000	—	5,348,595	—	5,447,875	1,201,615	67,131	13,215,216
Christopher J. May Vice President & Chief Financial Officer	2017	478,003	—	582,790	—	693,800	397,791	44,586	2,196,970
	2016	391,667	—	488,450	—	480,000	231,058	47,641	1,638,816
	2015	292,505	—	148,344	—	297,646	107,445	44,199	890,139
Michael K. Simonte President	2017	727,300	—	2,144,593	—	1,387,500	720,741	56,779	5,036,913
	2016	640,000	—	1,797,486	—	1,280,000	397,940	50,836	4,166,262
	2015	603,192	—	1,431,050	—	1,773,967	347,876	52,561	4,208,646
Alberto L. Satine President Driveline	2017	588,825	—	1,114,572	—	902,800	482,501	59,099	3,147,797
	2016	510,000	—	934,146	—	814,500