While full year 2020 financial results were significantly impacted by the COVID-19 pandemic, the second half of 2020 highlighted the resiliency of our business and showed strong recovery across all of our end markets. Here are some of our notable achievements for 2020:

We recognize that environmental, social and governance (“ESG”) matters are important to long-term shareholder value and we are committed to strong ESG practices, including the following highlights:

Please see the Environmental, Social and Governance Matters section on page 29 for additional information about our ESG practices.

We maintain several guiding principles with respect to the Company's executive compensation programs, and review our compensation programs on an ongoing basis to ensure that market and regulatory best practices, as well as input from our shareholders, are considered and addressed, including:

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 directors and employees, 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.

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.

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 engages in an annual review of the Company's enterprise risk management program, including discussing with management the Company’s overall risk profile. The Board also assesses specific key business or functional risk areas throughout the year. In addition, the Board, together with its standing committees, 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’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. As part of this oversight, the Audit Committee receives regular updates from management on information security and other trainings provided to the Company's global workforce. 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 oversees risks associated with executive and employee compensation and human capital management matters, and the Nominating & Corporate Governance Committee oversees risks associated with corporate governance matters.

The full Board considers specific risk topics, including risks related to 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 adversely affect our risk profile or other aspects of our business. Also, as provided in our Corporate Governance Guidelines, all directors have access to management and the Company's employees.

The Board oversees ESG matters generally as part of its oversight of our business strategy and risk management, and the Board's standing committees each oversee specific ESG matters that fall within their respective areas of responsibility. For example, the Audit Committee has oversight responsibility for compliance matters, the Compensation Committee has oversight responsibility for human capital management matters, including diversity, equity and inclusion, the EHS&S Committee has oversight responsibility for environmental, health, safety and sustainability matters and the Nominating & Corporate Governance Committee has responsibility for ensuring that Axalta maintains strong governance practices. As part of this effort, the Nominating & Corporate Governance Committee also regularly discusses the Company's ESG

practices and disclosures in order to ensure that all relevant ESG matters are overseen by the Board and its standing committees and communicated to our shareholders and other stakeholders. The Board and its standing committees regularly discuss with management a variety of ESG topics that are significant to our business and stakeholders.

Execution of the Company's ESG strategy is overseen by the Company's senior management team. In 2021, we created an ESG Steering Committee, which includes cross-functional members of our senior executive team. The ESG Steering Committee is responsible for setting direction and driving accountability as we address material ESG issues, work with key stakeholders, and measure and report our progress on ESG matters.

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 reaching this determination, 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 has provided 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. The Board considered the magnitude and nature of these relationships and determined that they did not impair the independence of Mr. Smolik.

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 2022 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.

 

The Board believes that its membership should consist of persons with sufficiently diverse and independent backgrounds and with the relevant 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 effectively perform its responsibilities.

The average tenure of our directors is approximately three years and none of our directors has a tenure longer than approximately six 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 Nine Directors to Serve Until the 2022 Annual General Meeting of Members.” We believe that our directors provide an appropriate diversity of background, experience and skills for the size and nature of our business.

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

Our Board currently consists of nine directors, with Mr. Garrett serving as non-executive Board Chair. 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 the Board-sponsored transition plan to eliminate our classified board structure, as approved by shareholders

at the 2018 Annual General Meeting, effective as of the Annual Meeting 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 Annual General Meeting or until a director’s earlier death, resignation or removal.

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 processes and key issues, as well as the Company’s governance and compliance policies and procedures. We encourage and

pay for our directors to attend continuing education programs on ESG matters, 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 and committees also receive educational programming through guest speakers and substantive issue presentations during Board and committee meetings and other Board events.

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 Messrs. Chapman and Sachdev who joined the Board in July 2020 and August 2020, respectively, attended the 2020 Annual General 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 2020, the Board met 14 times, and all directors attended 75% or more of the meetings of the Board and committees on which they served and held during their tenure.

Our Board believes that a comprehensive self-evaluation enhances the effectiveness of our Board and committees. Each of the Board's 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. In addition, the Nominating & Corporate Governance Committee oversees an annual self-evaluation of the Board and its standing committees to assess effectiveness and areas for improvement. The self-evaluation solicits director feedback on, among other things, the following topics:

 

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, 2020 in parentheses:

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:

Our Board is committed to strong ESG practices. The following summary highlights the ESG developments, including changes that were instituted in response to, and in coordination with, our shareholder engagement efforts,

overseen and implemented by the Board and management since our November 2014 initial public offering.

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 the Compensation Committee regularly review succession plans for the Chief Executive Officer and other members of senior management, including plans for emergency scenarios. The Board and the Compensation Committee also regularly assess the staffing of the Company’s key leadership positions to identify and develop employees for these positions. In addition, the Company provides a number of leadership training opportunities, including 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 believes that the diversity of background, experience and views of our employees, including a diversity of race, gender, ethnicity, nationality, sexual orientation and cultural backgrounds, is important to our long-term success, and we remain committed to enhancing the diversity of our leadership and broader employee population. To that end, we strive to ensure that our hiring processes include candidates with diverse backgrounds and we seek to identify high-potential employees with diverse backgrounds in connection with our internal talent reviews.

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.

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 “Stock

Ownership Guidelines” in the Director Compensation and Compensation Discussion and Analysis sections of this Proxy Statement.

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

circumstances, including violations of certain Company policies, such as the Code of Business Conduct and Ethics. More information is set forth under the heading “Incentive Compensation Recoupment Policy” in the Compensation Discussion and Analysis section of this Proxy Statement.

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:

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 2020, no related person has had a material interest in any of the Company’s business transactions or relationships.

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.

Axalta is committed to carefully managing ESG issues throughout the Company. Our approach includes internal and external stakeholder perspectives to ensure we are focusing our policies, programs and performance improvements on relevant ESG matters.

 

As described above, in 2021 we formed an ESG Steering Committee in order to continue to drive the evolution of Axalta's ESG practices.

The following are highlights of the ESG programs and practices at Axalta.

For additional information on certain components of our ESG programs, as well as certain ESG goals and performance, please read our latest Sustainability Report available at sustainability.axalta.com.

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.

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 October 2020 reviewed a peer comparison of director compensation conducted by Deloitte LLP. Following this

review, except as noted above, the Compensation Committee recommended no changes to the components and amounts of non-employee director compensation for 2021. In addition, in recognition of the impact of COVID-19 on our business and employees, in April 2020 the Compensation Committee approved a 20% reduction in the Board cash retainer and leadership fees from May 1, 2020 through August 31, 2020.

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 leadership 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 2021 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 2021 audit.

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, 2020 and

2019, and other services rendered during such years. A significant portion of the Tax Fees for both 2020 and 2019 resulted from a one-time capital structure event as described below.

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, comfort letter procedures and quarterly reviews.

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 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 2020 and 2019.

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.

In particular, advice from PwC was required in 2020 and 2019 in connection with a significant one-time capital structure event, the Company’s review of strategic alternatives, which began in June 2019 and was concluded in March 2020, and the fees for such advice ($1.025 million in 2020 and $1.575 million in 2019) represent approximately 21.5% and 22.4%, respectively, of the total “Tax Fees” set forth in the table above for 2020 and 2019. PwC played a critical role in advising the Company with various potential tax structuring matters and related tax consequences throughout the course of the review of strategic alternatives. Given PwC’s deep knowledge of our

operations and structure, we believe that it is unlikely that another service provider would have been able to provide the needed level of expertise, on both a timely and cost-effective basis.

The Audit Committee reviewed and pre-approved PwC’s engagement and the associated fees, and considered in each case whether such fees would impair the independence of PwC in auditing the Company’s consolidated financial statements for the years ended December 31, 2020 and 2019. Following the conclusion of the review of strategic alternatives in March 2020, we did not incur additional fees from PwC for this work.

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, such as in the case of the significant one-time capital structure event described above, PwC’s audit, audit-related and compliance fees should comprise a majority of its overall fees.

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 and/or the Audit Committee Chair 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 2020 and 2019 were pre-approved.

The approval of Proposal No. 2, to appoint PwC as our independent registered public accounting firm and auditor until the conclusion of the 2022 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, through virtual attendance 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.

As discussed in Proposal No. 4, the Board of Directors values the input of shareholders regarding the Company’s executive compensation practices. Shareholders are also invited to express their views on how frequently advisory votes on executive compensation, such as Proposal No. 4, will occur. Shareholders have the choice of voting for advisory votes on the Company’s executive compensation to occur once every one, two or three years, or abstaining from the vote.

Our Board recommends that future advisory votes on executive compensation occur every year. The Board believes an annual vote promotes accountability and transparency for our executive compensation program and practices, and recommends that shareholders vote to hold an advisory vote on executive compensation every year.

This is an advisory vote, and as such is not binding on the Company, the Board of Directors or the Compensation Committee. However, the Board of Directors and the Compensation Committee value the opinions expressed by shareholders in their votes on this Proposal No. 3 and will take the results of the vote into account when deciding when to call for the next advisory vote on executive compensation. The Board will consider the frequency (every one, two or three years) receiving the most votes as representing our shareholders' collective view on how frequently such votes should occur.

A frequency vote similar to this will occur at least once every six years. Abstentions and broker non-votes will not affect the outcome of this advisory vote.

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 41 and the tabular and other disclosures on compensation under Executive Compensation beginning on page 63, 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 2021 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 the 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 of our named executive officer'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 Company achieved strong financial and operational results in 2020 in the face of the unprecedented circumstances created by the COVID-19 pandemic, including decisive action that allowed us to continue serving customers while protecting the health and safety of our employees and to generate significant free cash flow despite depressed net sales and profit resulting from COVID-19. The compensation of our named executive officers in 2020 reflects these results and was not adjusted by the Compensation Committee.

This is an advisory vote and as such is not binding on the Company, the Board of Directors or the Compensation Committee. However, 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 decisions regarding the Company’s named executive officers. The Company strongly encourages all shareholders to vote on this matter.

The approval of Proposal No. 4, 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, through virtual attendance 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.

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.

Chief Executive Officer and President

Senior Vice President and Chief Financial Officer

Senior Vice President, General Counsel and Corporate Secretary

Senior Vice President, Global Refinish

Senior Vice President, Global Transportation Coatings starting October 12, 2020

Executive Vice President and President, Transportation Coatings and Greater China until October 12, 2020

The 2020 fiscal year was one of significant and unforeseeable challenges brought on by the COVID-19

pandemic, which began while we were still navigating the review of strategic alternatives that started in June 2019

and was concluded on March 31, 2020. The pandemic hit our business quickly, and our management responded in a timely and decisive manner. At the outset, we modified operating procedures in our manufacturing sites by implementing social distancing and increased sanitization, in order to protect the health and safety of our employees while maintaining continuity of service for our customers. We also instituted a number of actions in order to increase working capital efficiency in the near-term and to maximize cash flow and liquidity, including a 20% reduction in the salaries of the Company's senior management team and our NEOs for four months. In addition, we implemented a global restructuring program, as well as an organizational realignment, that we believe will drive shareholder value by enabling us to compete more effectively and grow faster in the long-term.

Notwithstanding the commitment and achievements of our employees, COVID-19 significantly dampened our 2020 financial performance, particularly in the second quarter. However, as a result of strong operational and

financial performance in the first, third and fourth quarters of 2020, the impact on net sales for the year was limited to a decrease of approximately 17% while Adjusted EBIT decreased roughly 24%. At the same time, our decisive actions in response to the pandemic helped us to generate free cash flow of approximately $442 million.

During the year, our business in large part tracked global economic cycles caused by COVID-19, with a severe decline in the second quarter of 2020, and, generally, a sequential recovery throughout the remainder of the year that was in line with, or exceeded, the improving business conditions across our end-markets. Throughout the pandemic, we were able to mitigate the impact of lower net sales with the cash flow and cost savings actions described above, ending the year with strong results and a healthy balance sheet, all of which could not have been achieved without the tremendous efforts of our employees during this difficult time.

The following table sets forth certain performance results and related payouts for our NEOs in 2020.

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 objectives, 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 objective. We believe this compensation structure incentivizes our NEOs to focus on Axalta’s overall performance, without over-emphasizing any particular objective.

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.

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 incentives tied to 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 charts 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.

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 2020, 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 2020 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.

COVID-19 created unprecedented public health and business challenges in 2020. The effects on our customer base were dramatic, as lockdowns and other COVID-19 containment measures significantly impacted, and in some cases eliminated entirely, our customers’ ability, or the need for them, to purchase our products. In response,

our global team, led by our NEOs, pivoted to focus on mitigating the effect of COVID-19 on our business in the near-term while preserving our ability for growth in the long-term as the effects of the pandemic moderate. Initially, we implemented robust safety protocols at our sites to keep our employees safe and healthy, while

providing uninterrupted service to our customers. Our procurement team worked to maintain the integrity of our supply chain. We also aggressively took steps to bolster our liquidity, including discrete and strategic cost reduction efforts, as well as two bond offerings. As a result of these efforts, we were able to generate significant free cash flow for the year. Under the 2020 Annual Bonus Plan (“ABP”), our 2020 financial performance resulted in below threshold achievement under the Adjusted EBIT metric (50% of the target award) and achievement of 200% for the Adjusted Free Cash Flow metric (30% of the target award). This resulted in a payout equal to 60% of the target ABP awards for our NEOs. See the discussion below under the heading “2020 Annual Bonus Plan Targets” for the definitions of Adjusted Free Cash Flow and Adjusted EBIT.

The Compensation Committee considered, and deliberated on, during its many meetings in 2020, how to appropriately compensate our employees in light of the effects of COVID-19 on our business. In doing so, the Compensation Committee received advice from, and reviewed market data and practices provided by, its independent compensation consultant and also took into account frequent updates from management. The process

was robust, as the Compensation Committee deliberated on an appropriate compensation framework that would balance a variety of factors, including our employees’ timely response to the pandemic, our actual performance relative to the applicable preestablished targets and shareholder and other stakeholder interests.

After considering all of these factors, and our 2020 financial results, the Compensation Committee determined not to exercise discretion to adjust the payouts to our NEOs under our ABP. The Compensation Committee believes that the unadjusted payout fairly compensates our NEOs for their performance in 2020, in the context of the performance of our business during the extraordinary circumstances created by COVID-19, and is aligned with shareholder value creation during the year.

Similarly, the Compensation Committee also held discussions regarding whether to exercise discretion to modify the Company’s in-flight performance-based equity incentive programs, all of which scored below threshold performance for performance periods ending during 2020. The Committee has determined not to do so at this time, while retaining the ability to subsequently exercise such discretion.

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 addition to 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 the authority to administer our Amended and Restated 2014 Incentive Award Plan and approve equity grants under the plan.

The Compensation Committee annually reviews the performance and compensation of our senior executives, including the NEOs. 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 Compensation Committee determines the compensation of the Chief Executive Officer with input from the other non-employee directors and the Chief Executive Officer does not participate in discussions about his own compensation. In particular, the Compensation Committee evaluates the Chief Executive Officer's performance against goals that are reviewed with, and subject to input from, the Board during the beginning part of each year. In determining compensation levels for all 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.

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 2020 compensation. In

2020, the Company paid Willis Towers Watson $261,000 for the services described in this Compensation Discussion and Analysis and above under the section “Director Compensation,” and $485,000 for other services relating primarily to pension actuarial support in multiple countries 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.

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 2020 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 2020 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.

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 2020 Annual General 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 due to the 2020 Say on Pay proposal results. 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.

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 2020 Annual General Meeting of Members, we met with the holders of an aggregate of approximately 70% of our outstanding common shares. No significant concerns regarding our compensation program were raised during these engagements. 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.”

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 share 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, 2020.

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.

In 2020, our Board of Directors adopted a revised version of our 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, such as the Code of Business Conduct and Ethics.

We set base salaries for our NEOs generally at a level we believe is 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 2020, the Compensation Committee set base salaries effective March 30, 2020 for all then-serving executive officers. In light of the impact of the COVID-19 pandemic on our business, each NEO’s base salary was reduced by 20% from April 27, 2020 through August 30, 2020 (other than Mr. Awada who joined after this period). The following table sets forth each NEO’s base salary for 2020, as well as any applicable increase from 2019, without regard to such base salary reductions.