AAR CORP Grants $15M Performance-Based Stock Award to CEO

What Happened
AAR CORP (AIR) filed an 8-K on July 24, 2026 disclosing that its Human Capital and Compensation Committee approved a special long-term performance incentive grant to Chairman, CEO and President John M. Holmes. The award is 161,500 performance-based restricted shares with a targeted grant date fair value of approximately $15 million. The award cliff vests on July 31, 2031, subject to continued service and achievement of specified stock price vesting conditions.

Key Details

• Grant approved July 23, 2026: 161,500 performance-based restricted shares (target value ≈ $15M).
• Vesting: cliff vest on July 31, 2031 (five-year period), contingent on continued service (with limited exceptions).
• Stock-price hurdles (based on 30-day VWAP met on or before July 31, 2031): $175 (33.33% vest), $200 (additional 33.33%), $250 (additional 33.33%) — 100% if all met.
• Hurdles represent premiums of ~35%, 54% and 93% over the $129.47 closing price on July 23, 2026; full vesting would require the stock price and company value to more than double from May 31, 2026.
• Partial vesting may occur on a change in control or if Mr. Holmes is terminated due to death, disability, or by the company not for cause, but only to the extent corresponding price hurdles have been met.
• The award is presented as a special, separate grant from the CEO’s regular annual long-term incentive compensation; the full award agreement is filed as Exhibit 10.1.

Why It Matters
This grant ties a significant portion of the CEO’s compensation to outsized share price appreciation over a five-year period, strengthening pay-for-performance alignment and providing a long-term retention incentive. The stock-price hurdles are ambitious, so investors should view the award as contingent on substantial future stock-price gains rather than immediate dilution. The filing and attached award agreement give investors the precise terms and conditions that determine whether and when these shares will actually be earned.