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

SCHEDULE 14A
(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Check the appropriate box:

AXALTA COATING SYSTEMS LTD.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Notice of 2020 Annual General Meeting
of Members and Proxy Statement

Axalta Coating Systems Ltd.

Wednesday, April 29, 2020 at 2:15 p.m., local time
Convene, 2001 Market Street, 2nd Floor, Philadelphia, PA 19103

Who Can Vote:

Only holders of our common shares at the close of business on March 6, 2020, the record date, will be entitled to receive notice of, and to vote at, the Annual General Meeting.

Annual Report:

Our 2019 Annual Report to Members accompanies but is not part of this Proxy Statement.

Proxy Voting:

Your Vote is Important. Please vote your shares at your earliest convenience. This will ensure the presence of a quorum at the meeting. Promptly voting your shares via the Internet, by telephone, or by signing, dating and returning the enclosed proxy card or voting instruction form will save the Company the expense and extra work of additional solicitation. If you wish to vote by mail, for those receiving printed copies of the proxy materials we have enclosed an envelope, postage prepaid if mailed in the United States. Submitting your proxy now will not prevent you from voting your shares at the meeting, as your proxy is revocable at your option. You may revoke your proxy at any time before it is voted by delivering to the Company a subsequently executed proxy or a written notice of revocation or by voting in person at the Annual General Meeting.

Items of Business:

Date of Mailing:

A Notice of Internet Availability of Proxy Materials or this Proxy Statement is first being mailed to shareholders on or about March 20, 2020.

BY ORDER OF THE BOARD OF DIRECTORS,

Sincerely,
Brian A. Berube
Senior Vice President, General Counsel & Corporate Secretary
March 20, 2020

*   We are actively monitoring the public health and travel safety concerns relating to the coronavirus (COVID-19) and the advisories or mandates that federal, state and local governments, and related agencies, may issue. In the event it is not possible or advisable to hold the Annual General Meeting as currently planned, we will announce alternative arrangements for the Annual General Meeting as promptly as practicable, which may include switching to a virtual meeting format, or changing the time, date or location of the Annual General Meeting. Any such change will be announced via press release, which will be filed as additional soliciting materials with the Securities and Exchange Commission. As always, we encourage you to vote your common shares prior to the Annual General Meeting.

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL GENERAL MEETING OF MEMBERS TO BE HELD ON APRIL 29, 2020:

The Notice of Internet Availability of Proxy Materials, Notice of Annual General Meeting of Members, Proxy Statement and Annual Report are available at www.proxyvote.com.

TABLE OF CONTENTS
   

PROXY SUMMARY
   

This proxy statement (the “Proxy Statement”) and accompanying proxy materials are being furnished to the members (referred to herein as “shareholders” or “members”) of Axalta Coating Systems Ltd., a Bermuda exempted company (the “Company” or “Axalta”), in connection with the solicitation of proxies by the board of directors of the Company (the “Board” or the “Board of Directors”) for use at the 2020 Annual General Meeting of Members, and at any adjournment or postponement thereof (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of 2020 Annual General Meeting. This summary highlights information contained elsewhere in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. For more complete information about these topics, please review the Company’s complete Proxy Statement and Annual Report on Form 10-K. Please also see the Questions and Answers section beginning on page 69 for important information about proxy materials, voting, the Annual Meeting, Company documents and communications.

Our Board of Directors

2019 Financial and Operating Highlights

Axalta accomplished a great deal in 2019 in the face of several headwinds. Notably:

contribution. Organic net sales before foreign exchange and divestiture-related impacts were down only 0.5% for the year.

industry on total recordable safety incidents, as well as ongoing progress in lowering overall inventory levels as we focused on working capital performance.

Corporate Governance Highlights

We recognize that strong corporate governance contributes to long-term shareholder value. We are committed to strong governance practices, including those described below:

and management topics on a regular basis by guest speakers and Company experts, as well as various corporate and governance “updates” throughout the year. In addition, Board members have the opportunity to attend outside trainings on topics relevant to their Board responsibilities.

Executive Compensation Highlights

We maintain several guiding principles with respect to our executive compensation, and review our compensation programs on an ongoing basis to ensure that market and regulatory best practices are considered and addressed, including:

Compensation Committee may require reimbursement of incentive compensation awarded to an executive officer if the Company is required to restate its financial results. This policy was amended in 2020 to permit the Compensation Committee to recoup incentive compensation in certain other instances, including as a result of a covered person’s material breach of certain Company policies.

Our Board of Directors currently consists of seven directors divided into three classes with staggered three-year terms, so that the term of one class expires at each Annual General Meeting of Members. At our Annual General Meeting of Members in 2018 (the “2018 Annual Meeting”), our shareholders approved a Board-sponsored proposal to adopt our Second Amended and Restated Bye-laws (“Bye-laws”) which eliminate our classified board structure over a three-year transition period. In accordance with this transition, the nominee listed below will be proposed for election as a Class III director at the Annual Meeting to serve until the Annual General Meeting of Members in 2021, or until his successor is duly elected or until the earliest of his death, resignation or removal. Information regarding our directors’ professional experience, education, skills, ages and other relevant information (as of March 6, 2020) is set forth below.

The nominee is presently serving as a director of the Company and non-executive Board Chair. The nominee has agreed to stand for reelection. However, if for any reason he shall not be a candidate for election as a director at the Annual Meeting, it is intended that shares represented by the accompanying proxy will be voted for the election of a substitute nominee designated by our Board of Directors, or, alternatively, the Board may determine to leave the vacancy temporarily unfilled.

Nominee for Election as a Class III Director with a Term Expiring at the 2021 Annual General Meeting of Members

	Mark Garrett
	Age: 57
	Axalta Board Service
	• Tenure: 3 years (June 2016) • Non-Executive Board Chair • Audit Committee • Environment, Health, Safety & Sustainability Committee
	Independent

Professional Experience

Education

Relevant Skills

Other

The Board of Directors recommends a vote “FOR” the election of the Class III director nominee to serve until the 2021 Annual General Meeting. Election of the director nominee to our Board of Directors requires the affirmative vote of a plurality of votes cast at the Annual Meeting. Abstentions and broker non-votes will have no effect on the outcome of the vote.

Continuing Class I Directors with Terms Expiring at the 2021 Annual General Meeting of Members

	Robert W. Bryant
	Age: 51
	Axalta Board Service
	• Tenure: 1 year (December 2018)

Professional Experience

Education

Relevant Skills

Other

	Robert M. McLaughlin
	Age: 62
	Axalta Board Service
	• Tenure: 5 years (April 2014) • Audit Committee (Chair) • Compensation Committee
	Independent

Professional Experience

Education

Relevant Skills

Other

	Samuel L. Smolik
	Age: 67
	Axalta Board Service
	• Tenure: 3 years (September 2016) • Environment, Health, Safety & Sustainability Committee (Chair) • Nominating & Corporate Governance Committee
	Independent

Professional Experience

Education

Relevant Skills

Other

Continuing Class II Directors with Terms Expiring at the 2021 Annual General Meeting of Members

	Deborah J. Kissire
	Age: 62
	Axalta Board Service
	• Tenure: 3 years (December 2016) • Nominating & Corporate Governance Committee (Chair) • Compensation Committee
	Independent

Professional Experience

Education

Relevant Skills

Other

	Elizabeth C. Lempres
	Age: 59
	Axalta Board Service
	• Tenure: 2 years (April 2017) • Compensation Committee (Chair) • Nominating & Corporate Governance Committee
	Independent

Professional Experience

Education

Relevant Skills

Other

	William M. Cook
	Age: 66
	Axalta Board Service
	• Tenure: <1 year (May 2019) • Audit Committee • Environment, Health, Safety & Sustainability Committee
	Independent

Professional Experience

Education

Relevant Skills

Other

CORPORATE GOVERNANCE MATTERS AND COMMITTEES OF THE BOARD OF DIRECTORS
   

Policies on Corporate Governance

Our Board believes that strong corporate governance is important to ensure that our business is managed for the long-term benefit of our shareholders. We have adopted, and recently updated, a Code of Business Conduct and Ethics that applies to all of our employees and directors, including our executive officers and senior financial and accounting officers. The Board has also adopted Corporate Governance Guidelines, which cover topics including, among other things, director qualification criteria,

continuing director education and succession planning. Copies of the current versions of the Code of Business Conduct and Ethics and the Corporate Governance Guidelines are available on our website and will also be provided upon request to any person without charge. Requests should be made in writing to our Corporate Secretary at Axalta Coating Systems Ltd., Two Commerce Square, 2001 Market Street, Suite 3600, Philadelphia, PA 19103, or by telephone at (855) 547-1461.

Board Leadership Structure

The Board of Directors does not have a set policy with respect to the separation of the offices of the Chair and the Chief Executive Officer (“CEO”), as the Board believes it is in the best interests of the Company and our shareholders to make that determination based on the performance of, and other circumstances affecting, the Company as well as the membership of the Board. The Board regularly evaluates whether the roles of Chair and Chief Executive Officer should be separate. The Board believes it is important to retain flexibility on this issue and that it should be considered as part of the Board’s broader oversight and succession planning process.

At this time, the Board believes that the separation of the Chair and CEO positions is in the best interests of our Company and our shareholders. It allows Mr. Bryant to focus primarily on our vision, business strategy and operations, while leveraging Mr. Garrett’s experience and perspectives to lead our Board. Upon Mr. Garrett's appointment as non-executive Board Chair his service as Presiding Director ended and the Board has not, consistent with our Corporate Governance Guidelines, appointed a successor Presiding Director because Mr. Garrett is an independent director.

Board Role in Risk Oversight

While risk management is primarily the responsibility of our executive team, the Board provides overall risk oversight focusing on the most significant risks facing our Company. The Board annually reviews with management the Company’s overall risk profile and assesses specific key business or functional risk areas throughout the year. The Board also oversees the risk management processes that are implemented by our executives to determine whether these processes are functioning as intended and are consistent with our business and strategy as well as best practices. The Board executes its oversight responsibility for risk management directly and through its committees. The Board’s role in risk oversight has not had a significant effect on its leadership structure, although we believe our current leadership structure, with Mr. Garrett serving as non-executive Board Chair and Mr. Bryant serving as Chief Executive Officer, enhances the Board’s effectiveness in risk oversight.

The Audit Committee is specifically tasked with reviewing our compliance with legal and regulatory requirements and any related compliance policies and programs with management, our independent auditors and our legal counsel, as appropriate. The Audit Committee is also tasked with reviewing our financial risks and risk management policies. Members of our management who have responsibility for designing and implementing our risk

management processes regularly meet with the Audit Committee, and the Audit Committee is updated on a regular basis on relevant and significant risk areas. In addition, the Audit Committee oversees cybersecurity risks facing the Company, which are also regularly reviewed by the full Board. The EHS&S Committee is tasked with overseeing management’s monitoring and enforcement of the Company’s policies to protect the health and safety of employees, contractors, customers, the public and the environment as well as other sustainability matters, including human rights. The Compensation Committee and the Nominating & Corporate Governance Committee oversee risks associated with executive and employee compensation and corporate governance matters, respectively.

The full Board considers specific risk topics, including risks involved with CEO and management succession planning, risks associated with our business plan, strategies and capital structure and other significant risks that merit review and discussion by the Board. In addition, the Board receives reports from members of our management that include discussions of the risks and exposures involved with their respective areas of responsibility, and the Board is routinely informed of developments that could affect our risk profile or other aspects of our business.

Director Independence

Our Corporate Governance Guidelines require that the Board be composed of a majority of directors who are “independent” under applicable NYSE rules, and state the Board’s belief that a substantial majority of directors should be independent. Our Board has determined that all of our directors other than Mr. Bryant are independent under the NYSE listing standards. In addition, the Board had determined that Andreas Kramvis and Lori Ryerkerk, who served as members of the Board during a portion of fiscal year 2019, were independent during all of their fiscal year 2019 service.

In reaching this determination, the Board considered the fact that Ms. Lempres served until October 2019 on the Board of Directors of MIO Partners, a privately-held asset manager serving McKinsey & Company partners and the McKinsey retirement fund which is operated separately

from McKinsey’s consulting business, and that the Company has and may continue to engage McKinsey for strategic consulting services on an arms-length basis, and did so prior to Ms. Lempres joining the Board. In addition, the Board considered the fact that Mr. Smolik serves on the Ducks Unlimited Conservation Programs Committee and the Boards of Directors of Ducks Unlimited, Inc. and Ducks Unlimited de Mexico on a volunteer basis, and that the Company provides annual corporate support to Ducks Unlimited and Ducks Unlimited de Mexico at a level well below 2% of the organization’s gross revenues, and did so prior to Mr. Smolik joining the Board. In each case, the Board considered the magnitude and nature of these relationships and determined that they did not impair the independence of Ms. Lempres or Mr. Smolik.

Director Recruitment and Nominations

The Nominating & Corporate Governance Committee will consider director nominees recommended by our shareholders. A shareholder who wishes to recommend a director candidate for consideration by the Nominating & Corporate Governance Committee should send the recommendation to our Corporate Secretary at Axalta Coating Systems Ltd., Two Commerce Square, 2001 Market Street, Suite 3600, Philadelphia, PA 19103, who will then forward it to the Nominating & Corporate Governance Committee. The recommendation must include a description of the candidate’s qualifications for board service, including all of the information that would be required to be disclosed pursuant to Item 404 of Regulation S-K (as amended from time to time) promulgated by the Securities and Exchange Commission (“SEC”), the candidate’s written consent to be considered for nomination and to serve if nominated and elected, and addresses and telephone numbers for contacting the shareholder and the candidate for more information. A shareholder who wishes to nominate an individual as a candidate for election, rather than recommend the individual to the Nominating & Corporate Governance Committee as a nominee, must comply with the notice procedures set forth in our Bye-laws. See “Shareholder Proposals for the Company’s 2021 Annual General Meeting of Members” for more information on these procedures.

The Nominating & Corporate Governance Committee will consider and evaluate persons recommended by the shareholders in the same manner as it considers and evaluates other potential directors, including incumbent directors.

Director Qualifications

The Board believes that its membership should consist of persons with sufficiently diverse and independent backgrounds and with the appropriate expertise required to serve as a director of the Company. The Nominating & Corporate Governance Committee is tasked with ensuring that the Board meets this objective, and is responsible for reviewing the qualifications of potential director candidates and recommending to the Board candidates to be nominated for election to the Board of Directors. Our Corporate Governance Guidelines, which are available on our website as described above, set forth criteria that the Nominating & Corporate Governance Committee will consider when evaluating a director candidate for

membership on the Board of Directors. These criteria are as follows: professional experience; education; skill; diversity; differences of viewpoint; other individual qualities and attributes that will positively contribute to the Board, including integrity and high ethical standards; experience with business administration processes and principles; ability to express opinions, ask difficult questions and make informed, independent judgments; significant experience in at least one specialty area; and the ability to devote sufficient time to prepare for and attend Board meetings. The Nominating & Corporate Governance Committee does

not assign specific weights to particular criteria and no particular criterion is a prerequisite for any prospective nominee.

Our Nominating & Corporate Governance Committee also considers the mix of backgrounds and qualifications of the directors and the challenges and needs of the Company to ensure that the Board of Directors has the necessary experience, knowledge and abilities to perform its responsibilities effectively.

As Axalta has only been a stand-alone company since February 2013, the average tenure of our directors is three years and none of our directors has a tenure longer than approximately five years. The Nominating & Corporate Governance Committee considers Board tenure and

refreshment as additional relevant criteria in its identification, consideration and recommendation of director candidates.

When considering whether our directors and nominee(s) have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth in “Proposal No. 1: Election of one Class III Director to Serve Until the 2021 Annual General Meeting of Members.” We believe that our directors provide an appropriate diversity of experience and skills for the size and nature of our business.

Limitations on Board Service

Our Corporate Governance Guidelines provide for certain limitations on the service of our directors:

Board Composition

Our Board currently consists of seven directors, with Mr. Garrett serving as non-executive Board Chair. Consistent with the terms of our Bye-laws, the Board currently is authorized to have up to nine directors. The number of directors on our Board may be modified from time to time by our Board of Directors in accordance with our Bye-laws.

Under our current Bye-laws, until our Annual General Meeting of Members in 2021, our Board is divided into three classes whose directors serve three-year terms expiring in successive years. Directors hold office until their successors have been duly elected and qualified or until the earliest of their respective death, resignation or removal.

Under the Board-sponsored transition plan to eliminate our classified board structure, as approved by shareholders at the 2018 Annual Meeting, the Class I directors elected at the 2018 Annual Meeting, the Class II directors elected at the 2019 Annual General Meeting of Members (the “2019 Annual Meeting”) and the nominee for election as a Class III director at this year’s Annual Meeting will each serve terms expiring at the Annual General Meeting of Members in 2021. At that time, our classified board structure will end and the entire Board will be elected annually. Any directors appointed by the Board to fill vacancies after such time would serve only until the next election of directors by the shareholders or until a director’s earlier death, resignation or removal.

Director Orientation and Continuing Education

We have a process for onboarding and orienting new directors and for providing continuing education to our Board members. As part of our director orientation program, new directors participate in one-on-one introductory meetings with Axalta’s business and functional leaders and are briefed on the Company’s strategic plans, financial statements and key issues, as well as the Company’s governance and compliance policies and

procedures. We identify and pay for our directors to attend continuing education programs on corporate governance, compliance and other critical issues associated with a director’s service on a public company board, as well as site visits to our facilities around the world. Our Board also receives training through guest speakers and substantive issue presentations during Board and committee meetings and other Board events.

Board Meetings, Attendance and Executive Sessions

Directors are expected to spend the time needed and to meet as frequently as necessary to properly fulfill their responsibilities. The Board meets on a regularly scheduled basis during the year to review significant developments affecting us and to act on matters requiring Board approval. It also holds special meetings when an important matter between scheduled meetings requires Board review or action. Members of senior management regularly attend meetings of the Board and its committees to report on and discuss their areas of responsibility. Directors are expected to attend Board meetings and meetings of committees on which they serve. In addition, all directors are invited, but not required, to attend our Annual General Meeting of Members. All of our current

directors, other than Mr. Cook who joined the Board in May 2019, as well as Messrs. Kramvis and Shaver and Ms. Ryerkerk, attended the 2019 Annual Meeting.

In general, the Board reserves time during each regularly scheduled meeting to allow the directors to meet without management and to allow the independent directors to meet alone in executive sessions, over which the independent non-executive Board Chair presides.

During 2019, the Board met 12 times. All directors attended 75% or more of the meetings of the Board and committees on which they served and held during their tenure.

Board and Director Evaluation Process

Our Board believes that a comprehensive evaluation process enhances the effectiveness of our Board and committees. Therefore, our Board and each of our standing committees conducts an annual evaluation to determine whether it has complied with its responsibilities under our Bye-laws, the committee charter and applicable laws and regulations and whether it is functioning effectively. The evaluations are overseen by the Nominating & Corporate Governance Committee and consider, among other things, the following topics:

Board Committees

Our Board of Directors oversees the management of our business and affairs as provided by Bermuda law and conducts its business through its meetings and its four standing committees: Audit Committee, Compensation

Committee, Nominating & Corporate Governance Committee, and Environment, Health, Safety & Sustainability Committee. In addition, from time to time,

other committees may be established under the Board’s direction when necessary or advisable to address specific issues.

Each of the standing committees operates under a charter that was approved by our Board of Directors, copies of which are available on our website at www.axalta.com.

Set forth below is the current membership and descriptions of each of the standing committees, with the number of meetings held during the year ended December 31, 2019 in parentheses:

In addition to our standing committees, in June 2019, our Board of Directors announced that we had begun a comprehensive review of strategic alternatives to maximize shareholder value, including a potential sale of the Company, changes in capital allocation and ongoing execution of the Company's strategic plan. The Board appointed a committee comprised of Messrs. Garrett, Smolik and Bryant, with Mr. Garrett serving as committee chair, to oversee the strategic review process.

Our Board’s Commitment to Shareholder Engagement

Why We Engage

Our Board and management team appreciate the benefits of regular engagement with our shareholders in order to maintain awareness of their perspectives on Axalta and matters affecting the Company.

Our shareholder engagement efforts allow the Board to:

How We Engage

Our Board’s Commitment to Improving our Corporate Governance and Compensation Standards

Our Board is committed to strong governance practices. The following summary highlights the governance and compensation developments overseen and implemented

by the Board since our November 2014 initial public offering (“IPO”).

Succession Planning and Increasing Diversity

The Company actively engages in succession planning in order to ensure that it has a strong pipeline of internal executive talent. The Board of Directors and its committees regularly review succession plans for the Chief Executive Officer and other members of senior management, including plans for emergency scenarios. The Board and its committees also regularly assess the staffing of the Company’s key leadership positions to identify and develop employees for these positions. In addition, the

Company holds an annual senior leadership program to recognize the Company’s emerging leaders from around the globe and to connect them with peers and senior executives of the Company. The Company seeks the best person for every open role and strives to identify candidates from differing backgrounds and with experience and perspectives to continue to enhance the diversity of our management team.

Communications with the Board

The Board of Directors provides a process for shareholders and other interested parties to send communications to the Board. Shareholders and other interested parties may send written communications to the Board, c/o the Corporate Secretary of the Company at Axalta Coating Systems Ltd., Two Commerce Square, 2001 Market Street,

Suite 3600, Philadelphia, PA 19103. Communications concerning substantive Board or Company matters shall promptly be forwarded by the Corporate Secretary to the non-executive Board Chair, and the Corporate Secretary shall keep and regularly provide to the non-executive Board Chair a summary of any communications received.

Stock Ownership Guidelines

In order to ensure meaningful share ownership in Axalta by the Company’s directors and officers, the Company has adopted minimum share ownership requirements. More information is set forth under the heading “Non-Employee

Director Stock Ownership Guidelines” in the Director Compensation section and under the heading “Executive Officer Stock Ownership Guidelines” in the Compensation Discussion and Analysis sections of this Proxy Statement.

Clawback Policy

The Board of Directors has adopted a policy regarding the recoupment of compensation paid to current and former executive officers in the event of a restatement of the Company’s financial results, as well as certain other

circumstances. More information is set forth under the heading “Incentive Compensation Recoupment Policy” in the Compensation Discussion and Analysis section of this Proxy Statement.

Certain Relationships and Related Person Transactions

Our Board has adopted a written policy for the review and approval of transactions involving us and “related persons,” which include our executive officers, directors, director nominees, shareholders owning 5% or more of our outstanding common shares, and the immediate family members of any of the foregoing persons. The policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $100,000 and a related person had or will have a direct or indirect material interest. Pursuant to this policy, our management will present to our Audit Committee each proposed related person transaction, including all relevant facts and circumstances relating thereto. Our Audit Committee will then:

of the transaction, the benefits to us, the availability of other sources for comparable products or services, whether the transaction is on terms no less favorable to us than those that could be obtained in arm’s-length dealings with an unrelated third party or employees generally and the extent of the related person’s interest in the transaction; and

All related person transactions require the approval of, or ratification by, our Audit Committee in accordance with the guidelines set forth in the policy. Certain types of transactions have been pre-approved by our Audit Committee under the policy, including ordinary course purchases of Company products, resolution of warranty claims, receipt of compensation and benefits,

reimbursement of expenses, and transactions where the related person’s interest arises only from certain roles with the other party. No director may participate in the approval of a related person transaction of which he or she, or his or her immediate family member, is a party.

From time to time the Company may engage in ordinary course transactions with other parties affiliated with our

directors; however, to the Company’s knowledge, since the beginning of fiscal year 2019, no related person has had a material interest in any of the Company’s business transactions or relationships.

Indemnification Agreements

We have entered into indemnification agreements with each of our directors and our executive officers. These indemnification agreements provide the directors and executive officers with contractual rights to indemnification

and expense advancement that are, in some cases, broader than the specific indemnification rights granted to directors and officers under Bermuda law.

Executive Restrictive Covenant and Severance Agreements

See “Compensation Discussion and Analysis – Severance Arrangements” for information regarding the Executive

Restrictive Covenant and Severance Agreements that we have entered into with our executive officers.

Sustainability Matters

Our sustainability strategy is to develop, manufacture and sell high performance coatings in a responsible manner. Axalta has taken a deliberate approach to operating our business and addressing the sustainability goals of our stakeholders through the lens of our impact on the environment, social performance and governance. The EHS&S Committee was established to oversee these matters, which include, among others, safe operations, responsible sourcing and human rights, customer sustainability requirements, and product quality and regulatory matters. We established four overarching goals, endorsed by the EHS&S Committee, to guide our approach to sustainability:

For additional information on our sustainability programs, goals and performance, please read our latest Sustainability Report available at www.axalta.com/sustainability.

Spotlight on Safe and Responsible Manufacturing

At all Axalta manufacturing locations around the world, we are committed to safe operations for our employees, contractors and communities. Axalta’s Global Environment, Health and Safety Policy, available at www.axalta.com, outlines our commitments to operate safely, protect the environment, and maintain regulatory compliance. As a member of the American Chemistry Council’s Responsible Care program, Axalta has implemented a global, third-party certified Responsible Care management system (RC 14001:2015) that covers nearly all of our manufacturing sites. This management system, in addition to our ISO 14001:2015 environmental certification, guides our

everyday actions to protect health, safety and the environment, maintain a secure workplace, and ensure product stewardship. Axalta also holds ISO 9001:2015 quality management system certifications at most of our manufacturing locations.

In 2019, Axalta employees around the world contributed ideas to help develop our new global safety slogan: Driving Perfect Performance. This reaffirmation of our Company’s commitment to safe operations helped drive a global total recordable incident rate of 0.27 in 2019, a notable decrease from the past several years and well below the U.S. coatings industry average recordable incident rate of 1.9.

Spotlight on Responsible Sourcing and Human Rights

Another key focus area in Axalta’s sustainability efforts is ensuring responsible sourcing practices are upheld and human rights are respected throughout our supply chain. Our Supplier Code of Conduct, available on our website at www.axalta.com, outlines the expectations we have of our suppliers regarding compliance with laws, business practices and treatment of people. We work closely with

our suppliers and customers to identify and mitigate risks in our global supply chain. Axalta is an active member of the Responsible Minerals Initiative and works alongside peers, customers and other stakeholders to advance responsible sourcing practices for mica, cobalt and conflict minerals, particularly in conflict-affected and high-risk areas.

DIRECTOR COMPENSATION
   

Overview

Our non-employee director compensation program is designed to fairly compensate directors for the work required at a company of our size and scope as well as to align directors’ interests with the long-term interests of our shareholders. The annual compensation under our

program is detailed below. We pay additional annual compensation to the non-executive Board Chair, Presiding Director (if any) and chairs of each standing committee in recognition of the workload and responsibilities required of these positions. No additional meeting fees are paid.

Mr. Bryant receives no additional compensation for serving on our Board of Directors or its committees.

Mr. Garrett was appointed as non-executive Board Chair following Mr. Shaver’s resignation from the Board, effective as of June 30, 2019, and the Board approved payment to Mr. Garrett of the annual non-executive Board Chair annual cash fee, prorated for his service in 2019. He did not receive any incremental equity in addition to the annual equity retainer granted to all directors for his service as non-executive Board Chair. Mr. Garrett also received a prorated Presiding Director fee for the time that he served in that position during 2019 prior to his appointment as non-executive Board Chair.

In connection with Mr. Shaver’s stepping down as Chief Executive Officer in September 2018 and his continued service on the Board during the transition, the Compensation Committee modified our non-employee director compensation program to include a $125,000 annual cash fee for the role of non-executive Board Chair. In addition, the Board granted Mr. Shaver an award of RSUs for 2019 with a grant date fair value of $125,000, payable at the same time and on the same terms as the annual

equity retainer provided to all non-employee directors, in recognition of the additional time, workload and responsibility expected of Mr. Shaver during the transition of leadership that occurred in 2019. When making these decisions, the Compensation Committee considered relevant benchmarking data of chair compensation compiled by its independent compensation consultant. Upon Mr. Shaver’s resignation from the Board, effective as of June 30, 2019, he forfeited all unvested equity granted to him in connection with his service as a director and employee of the Company.

The Compensation Committee reviews all director compensation, including the non-executive Board Chair compensation, annually assisted by a third-party compensation consultant. The Compensation Committee in December 2019 reviewed a peer comparison of director compensation conducted by its independent compensation consultant. Following this review, the Compensation Committee recommended no changes to the components and amounts of non-employee director compensation for 2020.

Director Compensation Table 2019

For the year ended December 31, 2019, we provided the compensation set out in the table below to our directors.

Non-Employee Director Stock Ownership Guidelines

Our Compensation Committee adopted stock ownership guidelines for all non-employee directors, which require that, within five years after first appointment to the Board, each of our non-employee directors must directly or indirectly own an amount of our common shares equal to

five times the director’s annual cash retainer for Board service (excluding any additional fees for chair roles), or $375,000 based on the amount of the retainer at this time. All directors are in compliance with this requirement or within the grace period of the guidelines.

The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm and auditor to examine the books of account and other records of the Company and its consolidated subsidiaries for the 2020 fiscal year. The Board of Directors is asking shareholders to approve this action and to delegate authority to the Board, acting through the Audit Committee, to set the terms and remuneration thereof.

Representatives of PwC are expected to be present at the Annual Meeting and will be afforded the opportunity to

make a statement and will be available to respond to appropriate questions that may come before the Annual Meeting.

In the event that shareholders fail to approve the appointment of PwC as the Company’s independent registered public accounting firm and auditor, the Audit Committee will consider the shareholder vote in determining whether to retain the services of PwC in connection with the 2020 audit.

Independent Registered Public Accounting Firm

The following table shows the aggregate fees for professional services provided by PwC and its affiliates for the audits of the Company’s consolidated financial

statements for the years ended December 31, 2019 and 2018, and other services rendered during such years:

Audit Fees

Audit Fees were for professional services rendered for the audit of the U.S. GAAP consolidated financial statements and the effectiveness of internal controls over financial

reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, statutory audits and quarterly reviews.

Audit-Related Fees

Audit-Related Fees consist of the fees and expenses for audits and related services that are not required under

securities laws, reviews of financial statements and due diligence associated with acquisitions.

Tax Fees

Tax Fees consist of the fees and expenses for tax planning, advisory and compliance services. Compliance fees consist of the aggregate fees billed for professional services

rendered for tax return preparation and related compliance documentation. The following table details the associated tax fees for 2019 and 2018.

When engaging PwC on these matters, management and the Audit Committee considered PwC’s expertise in domestic and international corporate taxation as well as its institutional knowledge of our operations. As such, management and the Audit Committee determined that the engagement of PwC would ensure efficient and quality advice that is pertinent to our business and consistent with our overall business strategy.

The Audit Committee discussed and determined that PwC’s performance of the tax services would not impair its independence. Nonetheless, our Audit Committee has instructed PwC and management that, absent extenuating circumstances, PwC’s audit, audit-related and compliance fees should comprise a majority of its overall fees.

All Other Fees

Fees for all other services and related expenses not included in other fee categories, principally for accounting research software.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee is responsible for selecting the independent registered public accounting firm retained by us to audit our financial statements. The Audit Committee also has responsibility for the retention, compensation, oversight and termination of any independent auditor employed by us.

The Audit Committee has adopted policies and procedures for pre-approving all audit and non-audit services provided by the Company’s independent registered public accounting firm prior to the engagement of such firm with respect to such services. Under these policies and procedures, proposed services may be pre-approved on a periodic basis or individual engagements may be separately approved by the Audit Committee prior to the services being performed. However, the authority to pre-approve up to $500,000 per engagement has been delegated to the Audit Committee Chair to accommodate time-sensitive service proposals and the Audit Committee

Chair reports any such pre-approvals to the full committee at the next meeting. In each case, the Audit Committee considers whether the provision of such services would impair the independent registered public accounting firm’s independence. All audit services, audit-related services, tax services and other services provided by PwC for 2019 and 2018 were pre-approved by the Audit Committee.

The approval of Proposal No. 2, to appoint PwC as our independent registered public accounting firm and auditor until the conclusion of the 2021 Annual General Meeting of Members and delegation of authority to the Board, acting through the Audit Committee, to set the terms and remuneration thereof, requires the affirmative vote of a majority of our common shares present, in person or by proxy, at the Annual Meeting and entitled to vote. Abstentions and broker non-votes will have no effect on the outcome of the vote.

The Board of Directors recommends a vote “FOR” Proposal No. 2, to approve the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm and auditor until the conclusion of the 2021 Annual General Meeting of Members and the delegation of authority to the Board, acting through the Audit Committee, to set the terms and remuneration thereof. Proxies will be voted “FOR” such appointment, unless otherwise specified in the proxy.

AUDIT COMMITTEE REPORT
   

Notwithstanding anything to the contrary set forth in any of the previous or future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate this Proxy Statement or future filings with the Securities and Exchange Commission, in whole or part, the following report shall not be deemed to be incorporated by reference into any such filing.

The Audit Committee of the Board of Directors is providing this report to enable shareholders to understand how the Audit Committee monitors and oversees the Company’s financial reporting process. The Audit Committee serves an independent oversight role by consulting with and providing guidance to management and the Company’s independent registered public accounting firm on matters such as accounting, audits, compliance, controls, disclosure, finance and risk management. The Audit Committee members do not act as accountants or auditors for the Company. Management is responsible for the preparation of the Company’s financial statements and the financial reporting process, including the implementation and maintenance of effective internal control over financial reporting. The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles. The Company’s independent registered public accounting firm has free access to the Audit Committee to discuss any matters it deems appropriate. The Audit Committee operates pursuant to an Audit Committee charter that is reviewed annually by the Audit Committee and updated as appropriate. A copy of the charter can be found on the Company’s website at www.axalta.com.

The Audit Committee is responsible for the appointment of the independent registered public accounting firm, as well as for reviewing the appointment or replacement of the leader of the Company’s internal audit function. In 2018, the Audit Committee reviewed and participated in the appointment of a new leader of the Company’s internal audit function, which participation included conducting interviews with candidates for the role. Additionally, the Audit Committee is directly involved in selecting the lead engagement audit partner to ensure that the lead partner is appropriately qualified to lead the Company’s audit. Under SEC rules, the lead audit partner is required to rotate every five years and a new lead audit partner from PwC, which has served as the Company’s independent registered public accounting firm since 2011, was appointed for fiscal year 2019.

Regularly throughout fiscal year 2019, the Audit Committee reviewed and discussed with management, including internal audit, and PwC, with and without management present, the Company’s progress in the testing and evaluation of its internal control over financial reporting and discussed the results of their respective audit examinations and the overall quality of the Company’s financial reporting. The Audit Committee met separately with the Company’s Senior Vice President and Chief Financial Officer. The Audit Committee also discussed and reviewed with management and the Company’s internal auditors the Company’s enterprise-wide risk assessment as well as cyber and information security generally.

The Audit Committee consists of three directors, Messrs. McLaughlin, Cook and Garrett, each of whom satisfies the independence requirements promulgated by the SEC and applicable NYSE rules. The Board has determined that all of the members of the Audit Committee are audit committee financial experts as defined by the rules of the SEC.

This report confirms that the Audit Committee has: (i) reviewed and discussed the audited financial statements for the year ended December 31, 2019 with management and the Company’s independent registered public accounting firm, PwC; (ii) discussed with PwC the matters required to be discussed under standards of the Public Company Accounting Oversight Board, or the “PCAOB”; (iii) reviewed the written disclosures and letters from PwC as required by the rules of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence; and (iv) discussed with PwC its independence from the Company.

The Audit Committee has considered whether the provision of non-audit professional services rendered by PwC, and disclosed elsewhere in this Proxy Statement, is compatible with maintaining its independence.

Based upon the above review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements for the year ended December 31, 2019 be included in the Company’s Annual Report on Form 10-K for filing with the SEC.

Respectfully submitted,

AUDIT COMMITTEE

Robert M. McLaughlin (Chair)
William M. Cook
Mark Garrett

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the “Dodd-Frank Act,” the SEC enacted requirements for the Company to present to its shareholders a separate resolution, subject to an advisory (non-binding) vote, to approve the compensation of its named executive officers. This proposal is commonly referred to as a “Say on Pay” proposal. This proposal is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the executive compensation philosophy, policies and practices described in this Proxy Statement. As required by these rules, the Board of Directors invites you to review carefully the Compensation Discussion and Analysis beginning on page 33 and the tabular and other disclosures on compensation under Executive Compensation beginning on page 56, and to cast an advisory vote on the Company’s executive compensation programs through the following resolution:

“Resolved, that the members approve, on an advisory basis, the compensation of the Company’s named executive officers, including the Company’s compensation practices and principles and their implementation, as discussed and disclosed in the Compensation Discussion and Analysis, the compensation tables, and any narrative executive compensation disclosure contained in the Company’s Proxy Statement for the 2020 Annual General Meeting of Members.”

As discussed in the Compensation Discussion and Analysis, the Board of Directors believes that the Company’s long-term success depends in large measure on the talents of our employees. The Company’s compensation system

plays a significant role in our ability to attract, retain and motivate the highest quality workforce that is critical to our Company’s success and will drive the creation of shareholder value. The Company sets challenging financial and operational performance targets, and a significant amount of each NEO’s annual compensation is tied to our achievement of these performance targets. Therefore, payment is earned only if performance warrants it. The Board of Directors believes that our current compensation program directly links executive compensation to Company performance, aligning the interests of the Company’s executive officers with those of its shareholders. The compensation of our NEOs in 2019 reflected the Company’s strong 2019 financial performance.

Pursuant to the Dodd-Frank Act, this vote is advisory and will not be binding on the Company. While the vote does not bind the Board of Directors or the Compensation Committee to any particular action, the Board of Directors and the Compensation Committee value the input of the shareholders and will take into account the outcome of this vote in considering future compensation arrangements. The Company strongly encourages all shareholders to vote on this matter.

The approval of Proposal No. 3, to approve an advisory (non-binding) resolution regarding the compensation paid to the Company’s named executive officers, requires the affirmative vote of a majority of our common shares present, in person or by proxy, at the Annual Meeting and entitled to vote. Abstentions and broker non-votes will have no effect on the outcome of the advisory vote.

The Board of Directors recommends a vote “FOR” Proposal No. 3, to approve an advisory (non-binding) resolution regarding the compensation of the Company’s named executive officers.

COMPENSATION DISCUSSION AND ANALYSIS
   

CD&A Table of Contents

Introduction

This Compensation Discussion and Analysis provides an overview and analysis of our executive compensation program, including: (i) the elements of our compensation program for our named executive officers listed below (“NEOs”); (ii) the material compensation decisions made under that program and reflected in the executive compensation tables that follow this Compensation Discussion and Analysis; and (iii) the material factors considered in making those decisions.

Robert W. Bryant

Chief Executive Officer and President

Sean M. Lannon

Senior Vice President and Chief Financial Officer

Steven R. Markevich

Executive Vice President and President, Transportation Coatings and Greater China

Brian A. Berube

Senior Vice President, General Counsel and Corporate Secretary

Joseph F. McDougall

Former Executive Vice President and President, Global Refinish and EMEA*

Michael A. Cash

Former Senior Vice President and President, Industrial Coatings*

* For the year ended December 31, 2019, our NEOs listed above include two former executive officers who were not employed by Axalta at the end of fiscal year 2019.

Executive Summary

2019 Highlights

2019 Performance

Axalta performed very well in 2019 even in the face of headwinds, including a slowdown in certain of our end-markets, global macroeconomic uncertainty for large parts of the year, as well as the time and effort required by management to oversee our review of strategic alternatives. Net sales for the year decreased approximately 4.6% while Adjusted EBIT increased roughly 4.7%, and we delivered free cash flow of approximately $475 million, an increase of 31% from 2018. Incremental

global pricing actions and productivity gains enabled Axalta to increase margins despite input cost inflation and a slowdown in global automotive and industrial production. These accomplishments, together with the individual performance and key achievements of each NEO, are reflected in the performance-based compensation paid to our NEOs for 2019, as described below.

Review of Strategic Alternatives

In June 2019, our Board of Directors announced that we had begun a process of evaluating a wide range of strategic alternatives to maximize shareholder value, including a potential sale of the Company, changes in capital allocation and ongoing execution of the Company's strategic plan. Certain 2019 compensation decisions, including retention awards for senior management and other key employees, including those for our NEOs as described below in the section “Retention Awards,” were made in light of increased attrition during 2019 as well as the strategic alternatives review process. The Compensation Committee and the Board believed that it was critical to create a stable working environment that would afford our employees the conditions necessary to achieve the Company’s financial and operational

performance targets during this period of significant uncertainty. We believe these decisions, which resulted from a unique set of circumstances that we do not expect to reoccur, were critical in the face of challenging market conditions, and the time and attention required of the Company’s management to perform work for the strategic review while continuing to oversee the Company's day-to-day operations. Further, we believe that Axalta's strong 2019 financial results demonstrate the effectiveness of these compensation decisions, which enabled management to successfully execute on our strategy and business plan, amidst a variety of challenges, to achieve our 2019 goals and to position Axalta for continued success in 2020 and beyond.

Alignment with Shareholder Interests

Our Compensation Committee made several modifications to our executive compensation program in 2019 to better align with our compensation philosophy, business strategy and shareholder interests, detailed below:

Objectives, Philosophy and Practices

Our compensation philosophy is rooted in pay-for-performance, with compensation that is structured to incentivize management to achieve near-term performance targets as well as long-term shareholder value, without motivating undue risk taking. This means that a significant amount of our NEOs’ compensation is performance based, and contingent on the Company achieving near-term and long-term performance targets. Our compensation program includes multiple forms of compensation as well as performance targets, and, as a result, the aggregate compensation that may be earned by our NEOs is not dependent on a single form of compensation or a single performance target. We believe this incentivizes our NEOs to focus on Axalta’s overall performance, without over-emphasizing any particular target.

Overall, we believe our compensation program is structured to attract, motivate and retain highly qualified executives by paying them competitively, consistent with our success and their contribution to that success. We believe compensation should be structured to ensure that a portion of an executive’s compensation opportunity will be related to factors that directly and indirectly influence shareholder value.

We maintain several guiding practices and review our compensation programs on an ongoing basis to ensure

that market and regulatory best practices are considered and addressed.

Pay for Performance

Total compensation for our NEOs has been allocated between cash and equity compensation, taking into consideration the balance between providing near-term incentives and long-term investment in our financial performance, to align the interests of management with the interests of our shareholders. The variable annual performance-based awards and the long-term equity awards, including the performance-based stock awards, are designed to ensure that total compensation reflects our overall level of success and to motivate the NEOs to

meet appropriate performance measures tied to maximizing shareholder value. The mix of base salary and performance-based compensation, including the annual bonus and long-term equity incentive compensation, for our NEOs is shown in the chart below. The Compensation Committee determined this mix, taking into account market compensation information, to balance both long-term and near-term objectives and to motivate each NEO to attain those objectives.

Elements of Compensation Program

Compensation for our NEOs consists primarily of the elements, and their corresponding objectives, identified in the following table.

To serve the foregoing objectives, our overall compensation program is generally designed to be adaptive rather than purely formulaic. Our Compensation Committee has primary authority to determine and approve compensation decisions with respect to our NEOs. For 2019, compensation for our NEOs reflected the overall performance of the Company, each individual’s area of responsibility and the individual’s specific contributions to

Axalta’s performance. Our compensation decisions for the NEOs in 2019 are discussed below in relation to each of the above-described elements of our compensation program. The below discussion is intended to be read in conjunction with the executive compensation tables and related disclosures that follow this Compensation Discussion and Analysis.

Review of Strategic Alternatives

In June 2019, our Board of Directors announced that we had begun a comprehensive review of strategic alternatives to maximize shareholder value, including a potential sale of the Company, changes in capital allocation and ongoing execution of the Company's strategic plan. Certain 2019 compensation decisions, including the retention awards made to senior management and other key employees, were made upon the determination by the Compensation Committee that the pendency of the review of strategic alternatives created significant uncertainty for our senior management and key employees regarding their continued employment. As a result, the Compensation Committee believed that there was a heightened risk of departure, particularly in light of the already increased attrition prior to the initiation of the review of strategic alternatives, and

that such compensation decisions were critical for the Company to achieve its financial and operational performance targets during this uncertain period of time.

The Compensation Committee discussed the retention awards with its independent compensation consultant and other strategic advisors, and reviewed market data and practices provided by the independent compensation consultant in determining the structure and the amount of the retention awards. We believe that our strong financial and operational performance for 2019 validate these decisions, because they provided stability in a time of significant uncertainty and will incentivize management to continue to drive our strong performance in 2020 and beyond.

Compensation Governance: Oversight and Administration of the Executive Compensation Program

Role of the Compensation Committee

The Compensation Committee, which is comprised entirely of independent directors, oversees the Company’s executive compensation program and is provided with the primary authority to establish the general compensation policies of the Company and to determine and approve the compensation paid to our NEOs. The Compensation Committee is charged with, among other things, reviewing compensation policies and practices to ensure: (1) adherence to our compensation philosophies; and (2) that the total compensation paid to our NEOs is fair, reasonable and competitive, taking into account our position within our industry, including our comparative performance, and our NEOs’ level of expertise and experience in their respective positions. In furtherance of the considerations described above, the Compensation Committee is primarily responsible for: (i) determining any future adjustments to base salary and target annual performance-based award levels (representing the non-equity incentive compensation that may be awarded expressed as a percentage of base salary or as a dollar amount for the year) for the CEO and other NEOs; (ii) assessing the performance of the Chief Executive Officer and other NEOs for each applicable performance

period; and (iii) determining the awards to be paid to our Chief Executive Officer and other NEOs under the long-term equity incentive program for each year. The Compensation Committee is also delegated authority to administer our Amended and Restated 2014 Incentive Award Plan and approve equity grants under the plan.

To aid the Compensation Committee in making its determinations, the Chief Executive Officer, with input from and in consultation with the Chief Human Resources Officer, provides recommendations to the Compensation Committee regarding the compensation of all NEOs, excluding himself. The Chief Executive Officer does not participate in discussions about his own compensation, which is determined by the Compensation Committee. The Compensation Committee annually reviews the performance and compensation of our senior executives, including the NEOs. In determining compensation levels for our NEOs, the Compensation Committee considers each NEO’s particular position and responsibility, reviews executive compensation data for our industry, and receives advice from the independent compensation consultant as discussed below.

Role of the Independent Compensation Consultant

The Compensation Committee engages an independent compensation consultant on executive compensation matters, including:

The Compensation Committee engaged Willis Towers Watson as the independent compensation consultant for assistance in the determination of 2019 compensation. In 2019, the Company paid Willis Towers Watson $124,000 for assistance in determining or recommending the amount or form of executive and director compensation as described in this Compensation Discussion and Analysis and above under the section “Director Compensation,” and $299,000 for other services relating primarily to pension actuarial support and compensation surveys. The Company's engagement of Willis Towers Watson for pension actuarial support and other services predated the Compensation Committee's engagement of Willis Towers Watson as the independent compensation consultant, and the Compensation Committee was aware of the provision of such services by Willis Towers Watson at the time of such engagement.

The Compensation Committee determined that Willis Towers Watson does not have a relationship with the Company that would present a conflict of interest with Willis Towers Watson serving as the committee’s advisor or

would impair its independence. In making this determination, the Compensation Committee considered, among other things, the following factors: (1) the other services provided to the Company by Willis Towers Watson (primarily related to pension actuarial support and compensation surveys); (2) the amount of fees paid by the Company to Willis Towers Watson as a percentage of its total revenue; (3) Willis Towers Watson’s policies and

procedures to prevent or mitigate conflicts of interest; (4) that there are no other business or personal relationships between Willis Towers Watson and members of the Compensation Committee or Axalta executive officers; and (5) none of the Willis Towers Watson representatives who provide compensation services to the Company own any Axalta common shares.

Compensation Peer Group and Survey Data

We believe that total compensation opportunities for our senior management (including the NEOs) should be competitive with comparable opportunities for individuals with similar positions, experience and responsibilities in our marketplace. We generally seek to align base salaries with peer median benchmarks and calibrate variable compensation opportunities to provide actual compensation opportunities above peer benchmarks when Company and individual performance are strong, while providing for consequences when performance targets are not met.

Willis Towers Watson provided the Compensation Committee with a comprehensive report that included

publicly available compensation data relating to the peer group set forth in the table below as well as compensation data from Willis Towers Watson’s general industry survey.

The Compensation Committee utilized the peer group set forth below as the primary reference point for benchmarking 2019 compensation for our Chief Executive Officer, Chief Financial Officer and General Counsel. The peer group broadly reflects the companies with which we compete for talent, business and investment capital based on the scope of our operations, as measured by revenue and market capitalization.

The Compensation Committee also utilized Willis Towers Watson’s survey data for benchmarking 2019 compensation as a secondary reference point for the Chief Executive Officer, Chief Financial Officer and General Counsel and

primary reference point for our business leader NEOs as well as other executives. The survey data focuses on general industry companies and matches each discrete executive role.

Role of “Say on Pay” Votes

We provide our shareholders with the opportunity to cast an annual advisory vote on our executive compensation program for our NEOs (referred to as a “Say on Pay” proposal) and consider this vote in future compensation determinations for our NEOs. At our 2019 Annual Meeting, 86% of the votes cast on the “Say on Pay” proposal were voted in favor of the compensation paid to our NEOs, which we consider support for our executive compensation program, practices and policies. Accordingly, no significant

changes were made to our compensation program for our NEOs as a result of the 2019 Say on Pay proposal. Notwithstanding historical shareholder support for our compensation program, the Compensation Committee continually reassesses the competitiveness of our pay programs and their appropriateness in supporting our business strategy. Changes to the program have been, and will be, made to align with our business priorities, market norms and best practices.

Shareholder Feedback

To ensure that our Board and Compensation Committee are apprised of the views of our shareholders and the proxy advisory firms as well as evolving best practices, senior management regularly meets with these parties regarding our executive compensation program and follows developments in their methodologies and analyses. As part of this process, we conduct regular outreach initiatives with our significant shareholders. Since our 2019 Annual Meeting, we met with the holders of an aggregate of approximately 50% of our outstanding

common shares. Our Compensation Committee will continue to consider the input from these parties along with the outcome of our shareholders’ votes on Say on Pay proposals when making future decisions on our compensation programs for NEOs. Shareholders who would like to communicate on executive compensation directly with the Compensation Committee or the Board may contact the Board of Directors as described above in the section “Communications with the Board.”

Executive Officer Stock Ownership Guidelines

To directly align the interests of our NEOs with our shareholders, our Compensation Committee has adopted stock ownership and holding guidelines. The guidelines require that, within five years of becoming subject to the guidelines, or the appointment to their current position,

our NEOs and other officers listed below must directly or indirectly own an amount of our common shares at least equal to the multiple of their respective base salaries set forth below.

An executive that is out of compliance with the ownership requirement must retain 50% of our common shares acquired upon stock option exercises and 75% of our common shares issued upon the vesting of restricted stock, restricted stock unit, performance stock and performance stock unit grants, in each case net of applicable taxes, until the executive satisfies the ownership requirement. The

Compensation Committee annually reviews each NEO’s compliance with the stock ownership and holding guidelines based on the NEO’s current base salary and the price of our common shares as of the end of the prior year. All of our NEOs were in compliance with the guidelines or within the grace period as of December 31, 2019.

Prohibition on Pledging, Hedging and Other Transactions

Our insider trading policy prohibits our officers, directors and employees from pledging their Axalta common shares as collateral to secure loans, utilizing their common shares

as collateral for margin loans, engaging in hedging transactions and otherwise speculating on short-term movements in the price of our common shares.

Incentive Compensation Recoupment Policy

In 2020, our Board of Directors adopted a revised version of the Incentive Compensation Recoupment Policy (the “Recoupment Policy”) that was originally adopted in 2017. The Recoupment Policy provides, among other things, that, in the event the Company must restate its financial results to correct an accounting error due to material noncompliance with any financial reporting requirement under applicable securities laws within three years after the first issuance of such results, the Company, at the discretion of the Compensation

Committee, will seek to recover any incentive compensation (cash or equity-based) from executive officers and other senior management if a lower award would have been made based upon the restated results. As revised, the Recoupment Policy now also permits the Compensation Committee to recoup incentive compensation in certain other instances, including as a result of a covered person’s material breach of certain Company policies.

Elements of 2019 Compensation Program

Base Salary

We set base salaries for our NEOs generally at a level we deem necessary to attract and retain individuals with superior talent. Each year, the Compensation Committee will determine base salary adjustments, if any, after reviewing market data and evaluating the job responsibilities and demonstrated proficiency of the NEOs as assessed by the Compensation Committee and, for NEOs other than the Chief Executive Officer, in conjunction with recommendations to be made by the Chief Executive Officer, with input from and in consultation with the Chief Human Resources Officer.

Based on the Compensation Committee’s review of the job responsibilities, market data, proficiency and individual performance of each NEO as discussed above under “Compensation Governance: Oversight and Administration of the Executive Compensation Program,” in February 2019, the Compensation Committee set base salaries effective April 2, 2019 for all then-serving executive officers. Each NEO’s respective base salary increase at that time is set forth in the table below.

Annual Performance-Based Compensation

We structure our compensation programs to reward NEOs based on our performance and the individual executive’s relative contribution to that performance. This allows NEOs to receive annual performance-based awards under the Annual Bonus Plan (“ABP”) in the event certain specified performance measures are achieved. The ABP pool is determined by the Compensation Committee based upon a pre-established formula with reference to the achievement of corporate-level, business-level and

regional performance targets established annually by the Compensation Committee.

The ABP is designed to reward NEOs for contributions made to help us meet our annual performance goals. The amount actually received by the NEOs will depend on our achievement of the performance goals and the NEOs’ individual performance during the year. For the target ABP, the financial performance measures are collectively weighted at 80% and each NEO’s respective individual performance is weighted at 20%.

2019 Annual Bonus Plan Formula

Under the terms of the ABP, the NEOs’ annual incentive awards are based on a percentage of their base salaries. Once the achievement of corporate and business financial performance against targets has been determined, the Compensation Committee reviews and approves the individual performance component of each NEO’s ABP award, which is based on each respective NEO’s business impact, leadership and attainment of individual objectives, as well as other related factors. In addition, in

determining the achievement of corporate and business financial performance targets, the Compensation Committee may account for unusual events such as significant foreign currency exchange rate fluctuations, extraordinary transactions, asset dispositions and purchases, and mergers and acquisitions if, and to the extent, the Compensation Committee does not consider the effect of such events indicative of our performance.

2019 Annual Bonus Plan Targets

The 2019 target percentage under the ABP approved by the Compensation Committee for each of our NEOs is set forth

in the table below. Target-level percentages remained the same for each NEO who was employed by us in 2018.

For the year ended December 31, 2019, financial performance metrics under the ABP were based upon Adjusted EBIT (as defined below) and Adjusted Free Cash Flow (as defined below) on a Corporate level and, for Mr. Markevich, with respect to the business unit and region he oversees. For this purpose, “Adjusted EBIT” was defined as our adjusted earnings before interest expense or tax expense adjusted for certain items that the Company believed due to discrete events should not be included in our incentive compensation metrics. “Adjusted Free Cash Flow” was defined as cash flows from operations plus interest proceeds from net investment hedges less capital expenditures adjusted for certain items that the Company believed due to discrete events should not be included in

our incentive compensation metrics. Adjusted EBIT was chosen as the principal financial performance metric for the ABP, and weighted at 50% of the target ABP award, because we believe that it best reflects the financial performance of our Company. Adjusted Free Cash Flow was chosen, and weighted at 30% of the target ABP award, because we believe the amount of free cash flow that we generate each year is essential for us to maintain appropriate working capital, complete acquisitions and otherwise deploy capital, including returning capital to shareholders through share repurchases.

For each performance year under the ABP, the Compensation Committee assigns a target, threshold and maximum value to each financial performance metric. The

Compensation Committee sets these metrics in order to challenge our executives, including our NEOs, to drive our financial and business performance, taking into account the state of our business and industry dynamics. The financial performance measures are assigned a weight of 80% of the ABP at target, and the actual payout can range from 0 to 200% of the assigned target weighting depending on our achievement of such performance measures. Award amounts for performance between the threshold and maximum levels are determined at the beginning of the applicable performance period and depend on the level of achievement for each metric relative to its assigned performance target, in accordance with a predetermined payout matrix. The minimum award under the payout matrix (i.e., 50% of the target award) is payable only upon achievement of the threshold performance goals for each financial performance metric. For the year ended December 31, 2019, the minimum achievement threshold for each financial performance metric was 85% (i.e., >85% of target Adjusted EBIT, and

>85% of target Adjusted Free Cash Flow). If the threshold performance goal for a financial performance metric is not achieved, the award for that metric is zero. The maximum award under the payout matrix (i.e., 200% of the target award) is payable only upon achievement of maximum-level performance goals for each financial performance metric (i.e., 108% of Adjusted EBIT and 108% of Adjusted Free Cash Flow). Award amounts increase linearly with a 3.3:1 slope between threshold and target-level financial performance and linearly with a 12.5:1 slope between target and maximum-level financial performance.

For the individual performance component, the Compensation Committee approves an individual performance factor for each NEO, which reflects each NEO’s performance, business impact, contributions and leadership, among other factors. The individual performance factor is assigned a weight of 20% of each NEO’s ABP at target, and the actual payout can range from 0 to 200% of the target weighting depending on the NEO’s individual contributions during the performance period.

2019 Annual Bonus Plan Results

For 2019, the Compensation Committee considered the following key achievements in approving the individual performance component for each of our NEOs, excluding Messrs. McDougall and Cash who were not entitled to an ABP award due to the termination of their employment in 2019:

The following chart sets forth for each NEO, other than other than for Messrs. McDougall and Cash who were not entitled to an ABP award due to the termination of their employment in 2019, the weighting of each performance

metric, the threshold, target and maximum performance goals, the actual performance achieved for the year ended December 31, 2019, and resulting weighted bonus payout percentage: