SCHEDULE 14A INFORMATION

(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant ☒                            Filed by a Party other than the Registrant ☐

Check the appropriate box:

DUCOMMUN INCORPORATED

(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):

Ducommun Incorporated 2021 Proxy Statement

200 Sandpointe Avenue | Suite 700 Santa Ana, CA 92707-5759 657.335.3665 www.ducommun.com

Dear Fellow Shareholders, it is my pleasure to invite you to the 2021 Ducommun Incorporated Annual Meeting of Shareholders.

Due to the public health impact of the COVID-19 pandemic, and out of concern for the health and safety of our shareholders, employees and directors, this year’s annual meeting will be held virtually. The annual meeting will be held on Wednesday, April 21, 2021 at 9:00 a.m., Pacific Time and you will be able to attend the annual meeting online, vote your shares electronically, and submit your questions by visiting www.virtualshareholdermeeting.com/DCO2021 and entering your control number. You will not be able to attend the annual meeting in person. The attached Notice of Annual Meeting of Shareholders and Proxy Statement discuss the items scheduled for a vote by shareholders at the meeting.

The Securities and Exchange Commission rules allow companies to furnish proxy materials to their shareholders over the Internet. As a result, most of our shareholders will receive in the mail a notice regarding availability of the proxy materials for the annual meeting on the Internet instead of paper copies of those materials. The notice contains instructions on how to access the proxy materials over the Internet and instructions on how shareholders can receive paper copies of the proxy materials, including a proxy or voting instruction form. This process expedites shareholders’ receipt of proxy materials and lowers the cost of our annual meeting. The Board of Directors has fixed the close of business on February 23, 2021, as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting.

During 2020, I took the opportunity to increase my holdings of Ducommun stock, personally purchasing 72,500 shares. This activity along with my other holdings now has me among the top 20 largest shareholders in the company and certainly our interests are aligned. I also want to thank our shareholders for sticking with us in 2020 and supporting the company, my team and our board as we gave our best efforts addressing the many challenges and crises.

Finally, it is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend, please sign, date and return the enclosed proxy card or vote by telephone or using the internet as instructed on the enclosed proxy card. Please vote your shares as soon as possible. This is your annual meeting, and your participation is important.

Sincerely,

Stephen G. Oswald

Chairman, President and Chief Executive Officer

Ducommun Incorporated 2021 Proxy Statement

DUCOMMUN INCORPORATED

200 Sandpointe Avenue, Suite 700

Santa Ana, California 92707-5759

(657) 335-3665

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

April 21, 2021

The Board of Directors unanimously recommends that you vote your shares “FOR” the election of the one director nominee named in the Proxy Statement and “FOR” each of the other proposals above.

Your vote is very important. Please read the proxy materials carefully and submit your votes as soon as possible by the internet, telephone, or mail. Submitting your votes by one of these methods will ensure your representation at the 2021 Annual Meeting of Shareholders (the “Annual Meeting”) regardless of whether you attend the Annual Meeting.

Due to the continuing public health impact of the coronavirus (“COVID-19”), and to support the health and well-being of our shareholders and employees, the Annual Meeting will be held exclusively online via live audio webcast on the above date and time. You or your proxyholder will be able to attend the Annual Meeting online, vote your shares electronically, submit questions during the meeting, and examine our list of shareholders at the Annual Meeting by visiting www.virtualshareholdermeeting.com/DCO2021 and using your 16-digit control number included in the Notice of Internet Availability of Proxy Materials, on your proxy card, or in the instructions that accompanied your proxy materials.

In the event of a technical malfunction or other situation that the meeting chair determines may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of shareholders to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the Annual Meeting, the chair or secretary of the meeting will convene the meeting at 10:00 a.m. Pacific Time on the date specified above and at our address specified above solely for the purpose of adjourning the meeting to reconvene at a date, time and physical or virtual location announced by the meeting chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the investors’ relations page of our website at https://investors.ducommun.com.

By order of the Board of Directors

Rajiv A. Tata

Secretary

Santa Ana, California

March 8, 2021

Ducommun Incorporated 2021 Proxy Statement

Table of Contents

Ducommun Incorporated 2021 Proxy Statement

RECENT PERFORMANCE ACHIEVEMENTS

This summary of our recent performance achievements highlights information generally contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider and we encourage you to read the entire proxy statement before voting your shares. For additional and more complete information regarding our 2020 performance, please review the Company’s Annual Report on Form 10-K for the year ended December  31, 2020.

TOTAL SHAREHOLDER RETURN vs. PROXY PEERS, RUSSELL 2000 AND SELECTED INDICES

* Data for each year depicted in the graph above is as of December 31 of each year.

** Peer group data does not include Wesco Aircraft Holdings, Inc., which was acquired by Platinum Equity in January 2020.

*** Included to depict Ducommun’s performance against the broad, general market.

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Ducommun Incorporated 2021 Proxy Statement

OUR PROXY PEER GROUP

Our relative total shareholder return (“TSR”) compared to the Russell 2000 Index over the 3-year period between 2018 and 2020 was in the 86^th percentile, ranking 235^th out of 2000 companies¹.

RECENT PERFORMANCE HIGHLIGHTS

* Based on 11,332,841 shares outstanding and closing price of $28.45 per share as of December 31, 2017.

** Based on 11,417,863 shares outstanding and closing price of $36.32 per share as of December 31, 2018.

*** Based on 11,572,668 shares outstanding and closing price of $50.53 per share as of December 31, 2019.

**** Based on 11,728,212 shares outstanding and closing price of $53.70 per share as of December 31, 2020.

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* Includes $8.8 million of restructuring charges in 2017, $14.8 million of restructuring charges in 2018 and $2.4 million in 2020.

** Adjusted EBITDA and Backlog are non-GAAP financial measures. For a discussion of these measures and for reconciliation to the nearest comparable GAAP measures, see Appendix A to this Proxy Statement.

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Ducommun Incorporated 2021 Proxy Statement

DUCOMMUN INCORPORATED

200 Sandpointe Avenue, Suite 700

Santa Ana, California 92707-5759

(657) 335-3665

PROXY STATEMENT

We are providing you with these proxy materials in connection with the solicitation by the Board of Directors (the “Board” or “Board of Directors”) of Ducommun Incorporated of proxies to be used at our 2021 Annual Meeting of Shareholders (the “Annual Meeting”). The Annual Meeting will be held on April 21, 2021 at 9:00 a.m., Pacific Time online via live audio webcast at www.virtualshareholdermeeting.com/DCO2021. After carefully considering the format of our Annual Meeting and the ongoing public health impact of the coronavirus (“COVID-19”) and to support the health and well-being of our shareholders and employees, our Board concluded to hold the Annual Meeting exclusively online. Our goal for the Annual Meeting is to enable the largest number of shareholders to safely participate in the Annual Meeting, while providing substantially the same access and exchange with the Board and management as an in-person meeting. We believe we are observing some of the best practices for virtual shareholder meetings, including addressing as many shareholder questions as time allows. Our aim is to offer shareholders rights and participation opportunities during our virtual Annual Meeting that are comparable to those that have been provided at our past in-person annual meetings of shareholders. We intend to return to an in-person format for future shareholder meetings as soon as it is considered safe to do so. To participate in the Annual Meeting, you must go to www.virtualshareholdermeeting.com/DCO2021 and enter the 16-digit control number included in the Notice of Internet Availability of Proxy Materials, on your proxy card, or in the instructions that accompanied your proxy materials. During the Annual Meeting, shareholders may vote their shares electronically, submit questions, and examine our list of registered shareholders as of the record date by following the instructions available on the meeting website. Please refer to the “Attending the Annual Meeting” section of this Proxy Statement for more details about attending the Annual Meeting online.

This Proxy Statement contains important information regarding the Annual Meeting, the proposals on which you are being asked to vote, information you may find useful in determining how to vote, and information about voting procedures. As used herein, “we,” “us,” “our,” or the “Company” refers to Ducommun Incorporated, a Delaware corporation. A Notice of Internet Availability of Proxy Materials, this Proxy Statement, accompanying proxy card or voting instruction card, and our 2020 Annual Report to Shareholders will be made available to our shareholders on or about March 8, 2021. Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”) we are making our proxy materials available to our shareholders electronically via the Internet. The Notice of Internet Availability of Proxy Materials contains instructions on how to access an electronic copy of our proxy materials, including this Proxy Statement and our 2020 Annual Report to Shareholders. The Notice also contains instructions on how to request a paper copy of the Proxy Statement. We believe this process will allow us to provide you with the information you need in a timely manner, while conserving natural resources and lowering the costs of the Annual Meeting.

At the Annual Meeting, you will be asked to vote on the following proposals:

(1) Election of the one director named in this Proxy Statement to serve on the Board until the Company’s 2024 Annual Meeting and until her successor has been elected and qualified;

(2) Approve the Company’s executive compensation on an advisory basis;

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(3) Ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the Company’s year ending December 31, 2021; and

(4) Transact any other business as may properly come before the meeting or any adjournment thereof.

The Board of Directors recommends that you vote your shares “FOR” the election of the one director nominee named in this Proxy Statement and “FOR” each of the other proposals.

Holders of our common stock as of the close of business on February 23, 2021 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting. At the close of business on the Record Date, the Company had outstanding 11,833,064 shares of Common Stock, $.01 par value per share (the “Common Stock”). If you are a stockholder of record, there are several ways for you to vote your shares or submit your proxy:

(1) By Telephone—You can vote by telephone by calling (800) 690-6903 and following the instructions on the Notice or proxy card;

(2) By Internet—You can vote over the Internet before the Annual Meeting by visiting www.proxyvote.com by following the instructions on the Notice or proxy card;

(3) At the Annual Meeting—You can vote your shares online during the Annual Meeting by following the instructions provided on the meeting website during the Annual Meeting;

(4) By Mail—If you received your proxy materials by mail, you can vote by mail by signing, dating and mailing the enclosed proxy card.

If your shares are held in the name of a bank, broker or other nominee, you must follow the instructions of your bank, broker or other nominee in order for your shares to be voted. Shares held beneficially may be voted at the Annual Meeting only if you obtain a legal proxy from the broker or nominee giving you the right to vote the shares.

If you vote by proxy, the individuals named on the proxy card will vote your shares in the manner you indicate. Each shareholder may appoint only one proxy holder or representative to attend the Annual Meeting on his or her behalf. In the election of directors, holders of Common Stock have cumulative voting rights. Cumulative voting rights entitle a shareholder to a number of votes equal to the number of directors to be elected multiplied by the number of shares held. The votes so determined may be cast for one candidate or distributed among one or more candidates. Votes may not be cast, however, for a greater number of candidates than the number of nominees named herein. On all other matters to come before the Annual Meeting, each holder of Common Stock will be entitled to one vote for each share owned, and you may specify whether your shares should be voted for or against each of the other proposals.

If you submit a proxy without indicating your instructions, your shares will be voted as follows: (1) “FOR” the election of the one director named in the Proxy Statement to serve on the Board until the Company’s 2024 Annual Meeting of Shareholders and until her successor has been elected and qualified, (2) “FOR” approval of the Company’s executive compensation on an advisory basis, (3) “FOR” the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021, and (4) in their discretion on such other business as may properly come before the Annual Meeting or any adjournment thereof. Any shareholder may revoke his or her proxy at any time prior to its use by (1) sending a written revocation to the Corporate Secretary, (2) submitting a later dated proxy, or (3) voting over the internet during the virtual Annual Meeting.

In order to conduct business at the Annual Meeting, a “quorum” must be established. A quorum is a majority in voting power of the outstanding shares of Common Stock entitled to vote at the Annual Meeting. Shares of Common Stock that reflect both abstentions and broker non-votes will be treated as present and entitled to vote for the purposes of establishing a quorum. “Broker non-votes” are shares held by a broker, bank or other nominee with respect to which the holder of record does not have discretionary power to vote on a particular proposal and with respect to which instructions were never received from the beneficial owner. Shares that constitute broker non-votes with respect to a particular proposal will not be considered present and entitled to vote on that proposal at the Annual Meeting even though the same shares will be considered present

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for purposes of establishing a quorum and may be entitled to vote on other proposals. However, in certain circumstances, such as the appointment of the independent registered public accounting firm, the broker, bank or other nominee has discretionary authority and, therefore, is permitted to vote your shares even if the broker, bank or other nominee does not receive voting instructions from you.

Agenda items relating to the election of directors and the approval of the Company’s executive compensation on an advisory basis are not considered “routine” matters and as a result, your broker, bank or other nominee will not have discretion to vote on these matters at the Annual Meeting unless you provide applicable instructions to do so. Therefore, we strongly encourage you to follow the voting instructions on the materials you receive.

In the election of directors, the candidate receiving the highest number of votes will be elected. Abstentions and broker non-votes will have no effect on director elections. For all other proposals to be approved, the proposal must receive the affirmative vote of a majority of the shares of Common Stock present or represented by proxy and entitled to vote on the proposal. Abstentions will have the effect as a vote against Proposals 2, and 3, whereas broker non-votes will not affect the outcome of Proposal 2.

We intend to solicit proxies by mail, telephone, facsimile, and internet. D. F. King & Co., Inc. has been retained to assist in the solicitation of proxies for which it will be paid a fee of approximately $7,500 plus reimbursement of out-of-pocket expenses. Brokers, nominees, banks, and other custodians will be reimbursed for their costs incurred in forwarding solicitation material to beneficial owners. All expenses incident to the proxy solicitation will be paid by the Company.

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be Held on April 21, 2021.

The Notice of Annual Meeting, this Proxy Statement and the 2020 Annual Report to Shareholders are

available at

http://materials.proxyvote.com/264147.

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Ducommun Incorporated 2021 Proxy Statement

PROPOSAL 1: ELECTION OF DIRECTORS

Our Board is divided into three classes, with one class elected at each annual meeting of shareholders. Directors of each class are elected to serve for three year terms. Pursuant to the Company’s Bylaws, the Board is authorized to fix by resolution from time to time the size of the Board, provided that the Board is no greater than nine and no less than six directors. The Board has, by resolution, fixed the size of the Board at seven directors until effective immediately prior to the election of directors at the Annual Meeting at which time the Board has fixed the size of the Board at six directors.

At the Annual Meeting, the Company will elect the one director named in this Proxy Statement to serve for a three-year term ending at the Annual Meeting of Shareholders in 2024. The director nominee for such position is Shirley G. Drazba. Gregory S. Churchill, one of our existing Class 2021 directors, will not be standing for re-election at the Annual Meeting. On behalf of the Board and management, the Company thanks Mr. Churchill for his many years of invaluable leadership, guidance and contributions.

In the absence of a contrary direction, proxies in the accompanying form will be voted for the election of Ms. Drazba. If Ms. Drazba is unable or unwilling to serve as a nominee at the time of the Annual Meeting, the individuals named as proxies may vote for a substitute nominee chosen by the present Board to fill the vacancy. Alternatively, the Board may reduce the size of the Board. However, we have no reason to believe that Ms. Drazba will be unwilling or unable to serve if elected as a director. In the event that any person other than the nominee named herein should be nominated for election as a director, the proxy holders may vote for less than all of the nominees and in their discretion may cumulate votes. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF MS. DRAZBA TO THE BOARD OF DIRECTORS.

Directors’ Qualifications

The Board of Directors believes that the Board, as a whole, should possess a combination of skills, professional experience, and diversity of backgrounds necessary to oversee our management, and support the interests of our shareholders. In addition, the Board believes that there are certain attributes that every director should possess, as presented in our Corporate Governance Guidelines. Accordingly, the Board and its Corporate Governance and Nominating Committee consider the qualifications of directors and director candidates individually, and in the broader context of the Board’s overall composition and our current and future needs.

The Corporate Governance and Nominating Committee is responsible for developing and recommending director membership criteria to the Board for approval. The criteria, which are presented in our Corporate Governance Guidelines, include independent and sound judgment, integrity, the ability to commit sufficient time and attention to Board activities, and the absence of potential conflicts with our interests. In addition, the Corporate Governance and Nominating Committee periodically evaluates the composition of the Board to assess the skills, experience, and perspectives that are currently represented on the Board as well as those the Board believes will be valuable in the future given our current state and strategic plans.

As part of this periodic assessment, the Corporate Governance and Nominating Committee also evaluates the effectiveness of the overall Board dynamic. While we do not have a formal policy on board diversity, the Company’s recently revised Corporate Governance Guidelines reflect the Board’s belief that a blend of different perspectives contributes to the quality of the Board’s oversight, and is an essential component of effective governance. We therefore are committed to assuring that the Board’s diversity is reflected not just in the variety of the directors’ professional backgrounds and experiences, but also in the perspectives represented by directors of different personal characteristics, their gender, race, cultural heritage, and age in particular. As a result of such an assessment, in 2018 the Board recognized that additional expertise in the: (i) development and execution of technology based product and market strategies, and (ii) creation and deployment of innovative development, fabrication and management processes, would add to the effectiveness of the overall Board dynamic. Thereafter, the Corporate Governance Committee, with the assistance of an outside search firm, Spencer Stuart, identified Ms. Drazba from within a competitive pool of candidates, and recommended to the Board that she be appointed as a director.

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The Corporate Governance and Nominating Committee supports the Board’s commitment to engaging a diverse field of director candidates. As Board seats become available, the Corporate Governance and Nominating Committee will continue to actively identify qualified women and individuals from underrepresented communities to include in the pool from which Board nominees are chosen. The Corporate Governance and Nominating Committee is confident that with this commitment, individuals with diverse perspectives and personal characteristics will have significantly better representation and visibility within the pool of director candidates from which future Board members will be selected and nominated.

In evaluating director candidates, and considering incumbent directors for re-nomination to the Board, the Corporate Governance and Nominating Committee has considered a variety of factors. These include each nominee’s independence, financial literacy, personal and professional accomplishments, and experience. Below is a matrix of our Board’s skills:

The following information is furnished as of February 23, 2021, with respect to each person who is a nominee for election to the Board, as well as our other five directors whose terms of office will continue after the Annual Meeting.

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The Board met five times in 2020. All directors attended over ninety percent (90%) of all Board meetings and committee meetings of the Board of which they were members during 2020. We strongly encourage all directors to attend the Annual Meeting of Shareholders, and all eight of the directors at the time attended the 2020 Annual Meeting of Shareholders. We have a policy of holding regularly scheduled executive sessions of non-management directors following each regularly scheduled meeting of the full Board. Additional executive sessions of non-management directors may be held from time to time as required. The director currently serving as the presiding director during executive sessions is Mr. Flatt, the Lead Independent Director of the Board. The graphic below depicts the attendance of directors at Board and committee meetings held in 2020:

As illustrated below, the Board has determined that each of Ms. Drazba and Messrs. Baldridge, Churchill, Ducommun, Flatt, and Haberland qualify as independent directors under the independence standards of the New York Stock Exchange’s (“NYSE”) listing standards and that Mr. Robert Paulson qualified as an independent director under NYSE listing standards during the period he served on the Board until his retirement in May 2020.

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Ducommun Incorporated 2021 Proxy Statement

COMPENSATION OF DIRECTORS

Description of Director Compensation

Due to the various challenges facing the Company, our employees and our customers during the COVID-19 pandemic, directors who are not employees of the Company or a subsidiary voluntarily reduced the value of stock-based compensation to which they were entitled in 2020 from $100,000 to approximately $64,100. In addition, directors are paid an annual retainer and a fixed fee for each meeting of a committee of which they are a member and/or a chair as follows:

Under the Directors Deferred Income and Retirement Plan, which was updated in 2010, a director may elect to defer payment of all or part of his or her fees for service as a director until the director retires from service on the Board. Deferred directors’ fees may be notionally invested, at the election of the director, in a fixed interest account or a phantom stock account that tracks our Common Stock with dividends (if any), and will be paid with earnings thereon following the retirement of the director. Upon retirement from the Board, Mr. Ducommun will receive an annual retainer fee of $25,000, which was in effect in 2009, for life or for a period of years equal to his service as a director prior to 1997 (when the accrual of additional years of service was terminated), whichever is shorter, provided that he retires after the age of 65, and is not an employee of the Company when he retires.

2020 Director Compensation Table

The following table presents the compensation earned or paid by the Company to the non-employee directors for the year ended December 31, 2020.

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Ducommun Incorporated 2021 Proxy Statement

Director Stock Ownership Policy

The Board has adopted, and recently updated, a stock ownership requirement covering all non-employee directors. Under the revised policy, non-employee directors must acquire and hold shares of our common stock equal in value to at least five times the annual Board cash retainer paid to all non-employee directors. Non-employee directors are expected to meet the holding requirements of the updated stock ownership guidelines by December 31^st of the fifth year following their initial election to the Board. Under the updated guidelines, a non-employee director’s stock ownership is valued based on the average trading price of our stock over a twelve-month period ending on December 31^st of each calendar year. All directors are in compliance or have additional time in which to comply with the updated stock ownership guidelines.

BOARD LEADERSHIP STRUCTURE

Our Bylaws provide the Board with the discretion to elect a Chairman who may or may not be one of our officers. This provides the Board with flexibility to decide what leadership structure is in our best interests at any point in time and the Board periodically reviews the structure of Board and our leadership as part of the succession planning process. Below is an overview of our Board leadership structure:

At our 2018 Annual Meeting, the Board appointed Mr. Oswald to the position of Chairman, and Mr. Oswald has since held both the Chairman and Chief Executive Officer (“CEO”) roles. The independent members of the Board have determined that having the same person serve as Chairman and CEO provides us with a more efficient leadership structure when combined with an active lead independent director as such a structure allows the Board to benefit from the CEO’s extensive knowledge of our business and strategy, promotes alignment between the Board and management on corporate strategy, facilitates management’s effective execution of that strategy facilitates communications and relations with other members of senior leadership and also bolsters the quality of our governance. In the future, however, the roles of Chairman and CEO may be filled by the same or different individuals.

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The Board also believes that strong, independent leadership and oversight of management is an important component of an effective Board. To that end, the Board has elected Dean M. Flatt as the Lead Independent Director with significant leadership authority and responsibilities, including those as set forth below:

THE BOARD’S ROLE IN RISK OVERSIGHT

The Board of Directors oversees risk management as a whole and through its Committees. The Board regularly reviews information regarding, and risks associated with, our operations, liquidity, cybersecurity, and environmental, social and governance (“ESG”) issues. In addition, in 2020, the Board received monthly updates from management relating to risks related to COVID-19 and measures implemented to protect the health and safety of employees and maintain supply chains, and was therefore highly engaged with management in identifying and overseeing such measures. Moreover, the scope of the Board’s oversight regarding COVID-19 spanned, and continues to span, a broad range of matters, including protecting the health and safety of our employees, evaluating the impact of the pandemic on strategy, operations, capital allocation, liquidity and financial matters, succession planning matters, interruptions in supply chains and financial markets, and monitoring continued compliance with applicable laws.

While the full Board has the ultimate oversight responsibility for the risk management process, various Board Committees also have responsibilities for risk management in certain areas. In particular, the Audit Committee reviews risks related to financial reporting and internal controls. The Audit Committee also, at least annually, reviews and assesses enterprise-wide risks and risk mitigation plans implemented by management. Management regularly reports on each such risk to the Audit Committee or the full Board, as appropriate, and additional review or reporting on enterprise risks is conducted as needed or as requested by the Board or the Audit Committee. The Compensation Committee annually reviews our overall compensation programs and their effectiveness in aligning executive pay with performance in the interests of shareholders, as well as social and human capital-related risk oversight issues. The Corporate Governance and

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Ducommun Incorporated 2021 Proxy Statement

Nominating Committee reviews and makes recommendations to the Board concerning our leadership structure, director independence and oversees ESG issues. The Innovation Committee is responsible for assisting the Board in fulfilling its oversight responsibilities concerning technology-related opportunities and issues of strategic importance to us. The key risk oversight responsibilities of each of the Board’s committees are depicted in the diagram below.

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Ducommun Incorporated 2021 Proxy Statement

The Compensation Committee reviews the risks associated with our compensation policies and practices for executive officers and employees generally. The Compensation Committee did not identify any risks arising from these policies and practices that are reasonably likely to have a material adverse effect on us. In the course of its review, the Compensation Committee considered various features of the compensation policies and practices that discourage excessive risk taking, including, but not limited to, the following:

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Ducommun Incorporated 2021 Proxy Statement

COMMITTEES OF THE BOARD OF DIRECTORS

The Board is responsible for overseeing our enterprise risk management program, including but not limited to cybersecurity risks, and ESG issues. These responsibilities are fulfilled both directly and indirectly through the Board’s standing committees, each of which assists in overseeing a part of our overall risk management.

We have four standing Board committees: the Audit Committee, the Compensation Committee, the Corporate Governance and Nominating Committee, and the Innovation Committee. The membership, specific roles and responsibilities, and other information related to each committee are summarized in the table below and described in the pages that follow.

* Committee Chair

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Ducommun Incorporated 2021 Proxy Statement

ANNUAL BOARD AND COMMITTEE EVALUATIONS

The Corporate Governance and Nominating Committee, together with the Lead Independent Director, coordinates regular Board performance evaluations. These evaluations are conducted through a combination of formal and informal processes, including the following, among others:

As discussed above, the Board oversees risk management as a whole and through its Committees. A summary of our Board’s Committee’s charters and our governance documents can be visualized in the table below.

CODE OF BUSINESS CONDUCT AND ETHICS

The Board has adopted a Code of Business Conduct and Ethics that is applicable to all directors, employees, and officers (including our CEO, Chief Financial Officer and Principal Accounting Officer). Among other things, the Code of Business Conduct and Ethics requires directors, employees, and officers to avoid any activity that may result in a conflict of interest with the Company; maintain the confidentiality of information entrusted to them by us or our customers (except when disclosure is authorized or legally mandated); deal fairly with our customers, suppliers, competitors, and employees; protect the Company’s assets and their efficient use; and maintain our books, records, accounts and financial statements in reasonable detail, ensure they fairly reflect our transactions, and conform to both applicable legal requirements and to our system of internal controls. The Code of Business Conduct and Ethics is available on our website at https://www.ducommun.com in the Corporate Governance section of the Investor Relations webpage and in print to any shareholder that requests it. Any such request should be addressed to Ducommun Incorporated, 200 Sandpointe Avenue, Suite 700, Santa Ana, California 92707-5759, Attention: Corporate Secretary. We intend to post on our website amendments, if any, to the Code of Business Conduct and Ethics, as well as any waivers thereunder, with respect to our officers and directors as required to be disclosed by the SEC and NYSE rules.

The Board has also adopted a Code of Ethics for Senior Financial Officers that is applicable to our CEO and President, Chief Financial Officer, Treasurer and Controller, and the Controllers of each of our subsidiaries. The Code of Ethics for Senior Financial Officers, among other things, requires our Senior Financial Officers to provide full, fair, accurate, timely,

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and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us and to promptly report violations of the Code of Ethics for Senior Financial Officers to the Audit Committee. The Code of Ethics for Senior Financial Officers is available on our website at https://www.ducommun.com in the Corporate Governance section of the Investor Relations webpage and in print to any shareholder that requests it. Any such request should be addressed to Ducommun Incorporated, 200 Sandpointe Avenue, Suite 700, Santa Ana, California 92707-5759, Attention: Corporate Secretary. We intend to post on our website amendments, if any, to the Code of Ethics for Senior Financial Officers, as well as any waivers thereunder, with respect to our officers and directors as required to be disclosed by the SEC and NYSE rules.

CORPORATE GOVERNANCE GUIDELINES

The Board adopted Corporate Governance Guidelines, which among other things, specify the criteria to be considered for director candidates; impose tenure limits on directors; require independent directors to hold periodic meetings without executive management present; and reflect the Board’s belief that a blend of different perspectives contributes to the quality of the Board’s oversight, and is an essential ingredient of effective governance. In 2018, the Board revised our Corporate Governance Guidelines to emphasize its belief that diversity and a blend of different perspectives contributes to a vital and complementary Board dynamic, which is essential to effective governance. As such, we are committed to assuring that the Board’s diversity is reflected not only in the variety of directors’ professional backgrounds and experiences, but also in the perspectives represented by directors of different personal characteristics, including their gender, race, cultural heritage, and age. The Corporate Governance Guidelines are available on our website at https://www.ducommun.com in the Corporate Governance section of the Investor Relations webpage and in print to any shareholder that requests it. Any such request should be addressed to Ducommun Incorporated, 200 Sandpointe Avenue, Suite 700, Santa Ana, California 92707-5759, Attention: Corporate Secretary.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2020, no member of the Compensation Committee of the Board was or had been an officer or employee of ours, or had any relationship requiring disclosure hereunder. In addition, during 2020, no executive officer of ours served as a member of the compensation committee or as a director of another entity, and no executive officer of such other entity served on the Compensation Committee of the Board or as a director of the Company.

NOMINATING PROCESS

The Corporate Governance and Nominating Committee will consider director candidates recommended by our shareholders, provided that any shareholder recommending a director candidate must have beneficially owned more than five percent (5%) of our voting common stock continuously for at least one (1) year as of the date the recommendation is made and any such shareholder may submit the name of only one person each year for consideration as a director candidate. All such shareholders’ recommendations of director candidates must be submitted to our Secretary in writing no later than October 31^st of the year preceding the annual meeting of shareholders, and must include (i) the full name, address and Social Security number of the director candidate recommended, (ii) the full name, address and taxpayer identification number of each of the shareholders, and (iii) an affidavit of each of the shareholders that they satisfy the minimum beneficial ownership of common stock requirements set forth above. The Corporate Governance and Nominating Committee considers and evaluates candidates recommended by shareholders in the same manner that it considers and evaluates other director candidates.

The Corporate Governance and Nominating Committee believes that all Committee-recommended nominees for election as a director of the Company must, at a minimum, have (i) experience and expertise, sound judgment, and a record of accomplishment in areas relevant to our business activities, (ii) unquestionable integrity, (iii) a commitment to representing the interests of our shareholders in fulfillment of our goals and objectives, (iv) independence, and the absence of potential conflicts with the Company’s interests in fulfilling their responsibilities, (v) the willingness to devote sufficient time, energy, and attention in carrying out their duties and responsibilities, and (vi) the willingness to serve on the Board for an extended period of time.

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In identifying candidates to serve on the Board, the Corporate Governance and Nominating Committee follows the process delineated in the diagram below.

The results of an assessment completed in 2018 revealed the need for additional expertise in the (1) development and commercialization of technology-based products, and (2) creation and deployment of innovative development, fabrication and management processes. As a result, the Corporate Governance Committee, with the assistance of an outside search firm, Spencer Stuart, identified Ms. Drazba from within a competitive pool of candidates, and recommended to the Board that she be appointed as a director.

The Corporate Governance and Nominating Committee also believes that at least a majority, and preferably two-thirds, of our directors should be independent under the NYSE rules, and that at least one member of the Board must be an “audit committee financial expert” as defined by SEC rules. All persons to be considered for nomination as a director of the Company by the Corporate Governance and Nominating Committee must complete a questionnaire, provide such additional information as the Corporate Governance and Nominating Committee may request, and meet in person with our directors.

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Ducommun Incorporated 2021 Proxy Statement

CORPORATE ENVIRONMENTAL, SOCIAL AND GOVERNANCE

We are committed to improving the lives of our shareholders, employees, customers, business partners, and the communities in which we operate. To that end, we believe a strong focus on corporate responsibility, environmental and social issues and conducting our business in an ethical, transparent and accountable manner creates value for all of our stakeholders. An overview of our ESG initiatives and practices are summarized below:

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Our ESG initiatives are overseen by the Corporate Governance and Nominating Committee, the members of which all meet the independence criteria of the NYSE’s listing standards. The Corporate Governance and Nominating Committee reviews and provides input on those ESG metrics applicable to us and most relevant to our stakeholders. In 2020 and based on management’s recommendations, the Corporate Governance and Nominating Committee approved of the development of an ESG program based on the Sustainability Accounting Standards Board’s Aerospace and Defense Industry Standard (the “SASB Standard”), as modified, as being most reflective of, and relevant to, the Company’s operations. The Corporate Governance and Nominating Committee receives periodic updates relating to the progression, and status, of the development of our ESG program, and reports on the status of our initiatives to the full Board.

For more information on our ESG practices and programs, please visit our website at https://investors.ducommun.com/ under the Environment and Sustainability tab. Website references throughout this Proxy Statement are provided for convenience only, and the content on the referenced websites is not incorporated herein by reference and does not constitute a part of this Proxy Statement.

Operating Responsibly

We understand the importance of building trust with our investors, customers, vendors and suppliers and that the foundation for doing so begins with its employees. To establish this trust and reflect this commitment, we rely on an anonymous hotline to support our Code of Business Conduct and Ethics and empower our employees to provide suggestions, and report concerns or instances of misconduct. Honesty and trust are our foundational core values, and in keeping with these values, we offer employees regular ethics training and monthly ethics bulletins to promote a culture of high ethical standards where employees are free to voice any concerns.

We are also committed to respecting human rights and establishing expectations for high levels of ethical conduct throughout our supply chain.

COVID-19 Health and Safety

Employee safety has always been our top priority. Due to the COVID-19 pandemic, we implemented numerous protocols at all of our locations relating to the health, welfare and safety of our employees.

Specifically, the following health and safety protocols were implemented at all of our locations in March 2020:

Employee wellness programs and protocols that were implemented at all facilities included the provision of:

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In addition to the aforementioned protocols and programs, our management implemented weekly calls with facility managers, human resources leaders and environmental, health and safety personnel at all of the Company’s locations to ensure consistency in the application of our protocols, obtain real-time information on local conditions, answer questions and share best practices across the organization to ensure our workforce is constantly kept apprised of evolving regulations and safety measures. Finally, the Board was kept apprised with regular updates as to the successful implementation of our safety protocols, COVID-19 positivity rates among our workforce and wellness programs.

We also established an incident investigation policy to identify the root cause of accidents that result in lost time, implement corrective measures, and improve training to reduce occupational accidents. In addition, we track the number of lost time incidents and total recordable incidents incurred by our employees as a measure of the effectiveness of our health and safety programs. Lost time incidents are defined as incidents that resulted in days away from work and is similar to the days away, restricted or transferred metric utilized by the Occupational Safety and Health Administration. Over the three year period between January 1, 2018 and December 31, 2020, the Company’s lost work incident rate decreased by over 52% and the total recordable incident rate decreased by 35%, as depicted in the graphs below:

Environmental Initiative Highlights

In support of our pledge to deliver exceptional value to all stakeholders, we are committed to the following with respect to our environmental management practices:

1. Striving to avoid adverse impact and harm to the environment in the communities in which we do business, and to identify business partners who share these values.

2. Promoting compliance with all applicable laws and regulations pertaining to the environment and natural resources.

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3. Continually improving our Environmental Management System, employee awareness, and performance.

4. Establishing meaningful goals and objectives in the pursuit of Environmental, Health and Safety excellence, including but not limited to metrics established by the SASB applicable to our operations.

Pursuant to the foregoing commitment, the Corporate Governance and Nominating Committee approved the development of an ESG program based on the Sustainability Accounting Standards Board’s Aerospace and Defense Industry Standard (the “SASB Standard”), as modified, as being most reflective of, and relevant to, the Company’s operations. Below is a summary of our performance over the three-year time period between 2018 and 2020 relating to our greenhouse gas emissions and total energy use:

Moreover, we are pleased to report that in each of the years comprising the period between 2018 and 2020, only one reportable spill, as defined by the SASB Standard, occurred per year. For additional detail regarding the aforementioned metrics, please visit our website at https://investors.ducommun.com/ under the Environment and Sustainability tab.

Investment in our Employees

There are several programs we implemented and maintain for the financial and educational well-being of our employees and their families. For example, in 2019, we introduced our Employee Stock Purchase Plan (“ESPP”), which provides employees with the opportunity to share in the ownership of Ducommun and its performance through the purchase of shares of the Company’s stock. The plan allows eligible employees to accumulate contributions through after-tax payroll deductions to purchase shares of Ducommun stock at a 15% discount. In 2020, we continued to grow the program, resulting in a 35% increase in participation since it was launched. In addition, our 401(k) program has an 86% participation rate among eligible employees, with annual training and monthly educational sessions held at each Ducommun location. Finally, the Ducommun Scholarship program is an exclusive benefit for the children and grandchildren of full-time Ducommun employees who plan to continue their education in college or vocation school programs. Students are awarded scholarships based on merit and are renewable each year provided they maintain academic performance and their parents and grandparents remain employed by the Company. In 2020, we awarded a total of 25 scholarships, an increase from the 22 scholarships awarded in 2019 and 8 awarded in 2018. As of 2020, these scholarships may be renewed for an additional two or three years so eligible students can complete their education.

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Diversity and Inclusion

In 2020, we began seeing the results of the diversity and inclusion initiatives we implemented in 2019. As of December 31, 2020, 33% of our leaders were women and 23% were minorities, up from 31% and 22% in 2019, respectively. For additional information relating to our diversity programs, please visit our website at https://investors.ducommun.com/ under the Environment and Sustainability tab.

We continue to focus on the development of a diverse talent pipeline in an effort to support our ongoing focus on innovation, creativity and improving results. To this end, in 2020 we partnered with the Fund II Foundation to utilize its innovative internX platform to provide access to highly qualified and diverse science, technology, engineering and math (“STEM”) students. The program is intended to augment our existing internship matching process by providing access to more than 12,000 talented, highly qualified and diverse STEM students, while offering students an on-ramp to 21^st century jobs.

Community Investment

We are committed to being an active member of the communities in which we operate by contributing not only financial resources, but volunteering time to help these communities become stronger and better environments in which to live and work. We accomplish this by focusing on educational opportunities for underprivileged students, supporting small business recovery in communities facing social unrest, and in 2020, aiding those impacted by the COVID-19 pandemic. Specifically, working through industry associations during the initial phase of the pandemic, we shipped approximately 1,300 Tyvek safety suits and more than 90 lab coats to New York City area hospitals to help protect front-line health care workers.

In 2019, we founded The Ducommun Foundation, which is a Section 501(c)(3) organization dedicated to financially supporting local and national non-profit and charitable organizations in the communities in which we operate. In 2020, among other things, The Ducommun Foundation donated more than $1.3 million dollars to charitable organizations assisting those individuals impacted by the COVID-19 pandemic, with an average of $85,000 being donated in each location in which we operate.

STEM on the Sidelines™   In 2020, we once again teamed with the Los Angeles Chargers of the National Football League and the University of California, Irvine (“UCI”) on the STEM on the Sidelines™ program, which serves as a contest to promote STEM among more than 20 participating high schools in local Los Angeles and Orange County.

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Orange County Business Journal Recognition   In 2020, we were proud to be named to the Orange County (California) Business Journal’s 2020 List of Fastest-Growing Public Companies. To qualify for the recognition, companies are required to have more than $500 million in revenue and achieve a minimum of 15% revenue growth in the two years ended June 30, 2020.

SHAREHOLDERS AND OTHER INTERESTED PARTIES COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Shareholders and other interested parties may communicate with our Board in writing by mail, addressed to Board of Directors, Ducommun Incorporated, 200 Sandpointe Avenue, Suite 700, Santa Ana, CA 92707-5759. Persons wishing to communicate with the Board should include their full name and address. Shareholders and other interested parties wishing to communicate with the Board should also include the number of shares of common stock beneficially owned, and the name of the record holder of the common stock if different from themselves (e.g., the name of any broker or bank holding the stock). We intend to forward all communications from shareholders and other interested parties in the manner described above to the Corporate Governance and Nominating Committee members, who will then determine whether the communications should be distributed to the entire Board. If the Board receives a substantial number of communications from shareholders and other interested parties, the Corporate Governance and Nominating Committee may delegate to our Secretary the screening of these communications to remove solicitations and communications unrelated to our business. Should shareholders or other interested parties desire to communicate with our lead director or non-management directors as a group, such communications should be addressed to either the presiding director or the non-management directors at the address set forth above.

DELINQUENT SECTION 16 REPORTS

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our officers and directors, and persons who own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the SEC and to furnish copies of such forms to us. Based solely on a review of the copies of such forms furnished to us, and on written representations that no Form 5’s were required, we believe that during its past year all of its officers, directors, and greater than 10% owners timely complied with the filing requirements of Section 16(a) with the exception of one Form 3 for Mr. Rajiv Tata which was amended to include certain security holdings that were inadvertently omitted from the original Form 3 filing.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since the beginning of fiscal 2020, we were not a participant in any transaction in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock or any of the immediate family members of any of the foregoing persons had or will have a direct or indirect material interest.

Although we do not have a written policy for the review of related party transactions, we have designed our internal control framework to identify any related party transactions, including periodic disclosure certifications and monitoring controls. Any identified transactions are then reviewed to confirm that they comply with internal policies, procedures, and applicable regulations.

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EXECUTIVE OFFICERS

We believe our named executive officers have the appropriate balance of skills, knowledge and experience to position us for growth and maximize shareholder value going forward. Below is a graphic depicting the average age and tenure of our named executive officers:

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The tables below show the beneficial ownership of our common stock by beneficial owners of more than 5% of our common stock, each of our directors and nominees for director, each executive officer named in the Summary Compensation Table contained in this Proxy Statement, and all directors and executive officers as a group. This information is as of February 23, 2021, except as otherwise indicated in the notes to the tables, and does not account for any tax withholding of shares that may occur after February 23, 2021 in connection with the vesting of restricted stock units and/or settlement of performance stock units that will vest and/or settle within 60 days of February 23, 2021, as described in the notes to the tables. Unless otherwise indicated, such shareholders have sole voting and investment power (or share such power with their spouse) with respect to the shares set forth in the tables. We know of no contractual arrangements which may at a subsequent date result in a change in control of the Company.

For the purposes of the tables, beneficial ownership of shares has been determined in accordance with Rule 13d-3 of the SEC, under which a person is deemed to be the beneficial owner of securities if she or he has or shares voting or investment power with respect to such securities or has the right to acquire ownership thereof within 60 days. Applicable percentage of ownership is based upon 11,833,064 shares of common stock outstanding as of February 23, 2021, and the relevant number of shares of common stock issuable upon exercise of stock options or other awards that are exercisable, have vested, or will be exercisable within 60 days of February 23, 2021. The amounts shown in the tables do not purport to represent beneficial ownership for any purpose other than compliance with SEC reporting requirements.

Security Ownership of Certain Beneficial Owners

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Security Ownership of Directors and Management

PROPOSAL 2: RESOLUTION TO APPROVE EXECUTIVE COMPENSATION ON AN ADVISORY BASIS

We are asking shareholders to approve on an advisory basis the Company’s named executive officer compensation as reported in this Proxy Statement. As described below in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation Committee has structured our executive compensation program to achieve the following key objectives:

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Our pay-for-performance compensation approach consists of a mix of shorter-term and longer-term incentive compensation, including annual cash incentives, restricted stock units that vest in one-third annual increments over three years, and performance stock units that will cliff vest at the end of a three-year performance period. In 2020, despite unprecedented headwinds facing the Company relating to the temporary suspension of production of the Boeing 737 MAX, which was the Company’s largest program in 2019 with over $100 million in revenues, and the impact of the COVID-19 pandemic on commercial air travel, the Compensation Committee continued to adhere to our pay-for-performance compensation philosophy. With respect to annual incentives, the Compensation Committee took into account the following:

The Compensation Committee then incorporated these considerations into the final annual cash incentive awards that recognized the significant individual and team performance that drove yet another year of an increase in shareholder value. Moreover, the Compensation Committee firmly believes that the Company’s outstanding performance during 2020, while avoiding incurring meaningful restructuring costs and organizational disruptions, positions Ducommun favorably for further success once the commercial aviation recovery begins.

With respect to long-term incentives, as a result of the potential impact of COVID-19 on our operations, customers, vendors and employees, the Compensation Committee delayed setting targets for long-term incentive compensation until May 2020, when the scope of the pandemic’s impacts became more ascertainable, rather than amending targets mid-year. Moreover, the Compensation Committee decided not to award stock options in the 2020 fiscal year and instead, authorized the grant of performance and restricted stock units to executives. By so doing, the Compensation Committee was able to provide consistency with its philosophy of creating a pay-for-performance compensation approach to maintain alignment between executives’ interests and those of shareholders. As a result, and consistent with our emphasis on pay-for-performance, in 2020:

We urge shareholders to read the “Compensation Discussion and Analysis” below, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and related compensation tables and narrative, appearing on pages 57 through 65, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board strongly believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our executive officers reported in this Proxy Statement has supported and contributed to our success.

In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a matter of good corporate governance, we are asking shareholders to approve the following advisory resolution at the Annual Meeting:

RESOLVED, that the shareholders of Ducommun Incorporated (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed pursuant to Item 402 of Regulation S-K,

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including the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2021 Annual Meeting of Shareholders.

This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board. Although non-binding, the Board and the Compensation Committee will carefully review and consider the voting results when evaluating our executive compensation program. At the 2017 Annual Meeting, our shareholders approved, on an advisory basis, that future advisory resolutions relating to our named executive officer compensation be conducted every year. We considered the outcome of this advisory vote and determined that the Company will conduct annual “say-on-pay” resolutions until the next advisory shareholder vote on this matter is required under Section 14A of the Exchange Act, or until the Board of Directors otherwise determines that a different frequency for such votes is in the best interest of our shareholders. At the 2020 Annual Meeting, shareholders expressed substantial support for the compensation of our named executive officers, with over 89% of the votes cast (excluding abstentions) in approval of the “say-on-pay” advisory vote. Following the vote to be conducted at our 2021 Annual Meeting of Shareholders, it is anticipated that the next advisory vote to approve named executive officer compensation will be conducted at our 2022 Annual Meeting of Shareholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 2.

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2020 Compensation Discussion and Analysis

Table of Contents

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2020 Compensation Discussion and Analysis

Executive Summary

This Compensation Discussion and Analysis describes the compensation awarded to, earned by, or paid to our CEO, interim chief financial officer and three most highly compensated executive officers during 2020, who are listed below (the “Named Executive Officers” or “NEOs”):

2020 Operations and Performance

The following graph and table compare the Total Shareholder Return on $100 invested in Ducommun Incorporated’s common stock with the Total Shareholder Return on $100 invested in the Russell 2000 Index, companies identified in the Benchmarking and Peer Groups section of this Compensation and Disclosure Analysis, the NYSE Composite Index and the Dow Jones Industrial Average for the three year performance period for the years ended December 31, 2018 through December 31, 2020, with the year ended December 31, 2017 serving as the base period. The Russell 2000 Index measures the performance of approximately 2,000 small-capitalization companies in the Russell 3000 Index, a larger index of publicly traded companies that represents almost 98% of the investable U.S. stock market. The total returns include the reinvestment of cash dividends.

* Data for each year depicted in the graph above is as of December 31 of each year.

** Peer group data does not include Wesco Aircraft Holdings, Inc., which was acquired by Platinum Equity in January 2020.

*** Included to depict Ducommun’s performance against the broad, general market.

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Due to unprecedented headwinds facing the Company, including but not limited to significant reductions in commercial aerospace demand resulting from travel restrictions associated with the COVID-19 pandemic and the grounding of the Boeing 737 MAX aircraft that was not lifted until November 2020 by the U.S. Federal Aviation Administration, 2020 presented a temporary set-back to our continued positive transition and transformation since 2017. Despite these challenges, operational and financial performance highlights for the year are summarized below:

•   Revenues* in 2020 were $628.9 million, representing an approximately 13% year-over-year decrease from 2019. Management’s significant overdriving of the Company’s defense business contributed to a lower year-over-year decline in revenues than many of the Company’s peers.
•   Diluted Earnings per share* was $2.45 for 2020, as compared to $2.75 in 2019, reflecting a slight decrease of $0.30. Management’s overdriving the Company’s defense business and agility in implementing cost savings initiatives to avoid incurring restructuring expenses factored significantly in maintaining diluted EPS during 2020.
•   Gross profit margin* was 21.9% of revenues in 2020, as compared to 21.1% of revenues in 2019, an improvement of 80 bps and reflected Ducommun’s continued strong operating performance across the Company in spite of the unprecedented challenges faced in commercial aerospace in 2020.

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•   Operating Income Margin* remained relatively flat year over year, with a slight decrease of 60 bps, which was an excellent outcome in light of the unprecedented headwinds confronting Ducommun in 2020.
•   Adjusted EBITDA increased by 120 bps from 12.8% in 2019 to 14.0% in 2020, which again resulted in an excellent outcome due to management’s performance during an extremely challenging year.
•   Backlog, defined as customer placed purchase orders and long-term agreements with firm fixed price and delivery dates of 24 months or less, was $822 million at the end of 2020, compared to $910 million at the end of 2019, reflecting a slight decrease in demand for the Company’s products in commercial aerospace end-use markets, which was off-set by year-over-year gains of 31% in Ducommun’s defense business.

Our relative total shareholder return (“TSR”) compared to the Russell 2000 Index over the 3-year period between 2018 and 2020 was in the 86th percentile, ranking 235th out of 2000 companies.***

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Enhancement of Shareholder Value

The success of the Company’s pay-for-performance philosophy in compensating its named executive officers, including but not limited to its use of annual cash incentives based on performance targets whose growth is essential for achieving superior long-term shareholder value, and long term equity incentives that further align executive and shareholder interests, is demonstrated in the graph below. The graphic depicts a continued upward trajectory in our market capitalization between the years 2017 and 2020, despite the unprecedented disruptions caused by the 20 month grounding of the Boeing 737 MAX and COVID-19 during 2020:

* Based on 11,332,841 shares outstanding and closing price of $28.45 per share as of December 31, 2017.

** Based on 11,417,863 shares outstanding and closing price of $36.32 per share as of December 31, 2018.

*** Based on 11,572,668 shares outstanding and closing price of $50.53 per share as of December 31, 2019.

**** Based on 11,728,212 shares outstanding and closing price of $53.70 per share as of December 31, 2020.

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Pay for Performance

Our philosophy in compensating our named executive officers is oriented towards a pay-for-performance approach. In 2020, as reported in the Summary Compensation Table and other graphs below, performance-based compensation (defined, for this purpose, as all compensation contingent on the achievement of performance goals and/or increases in our stock price), at target, represented a significant percentage of the total compensation of each of the named executive officers:

2020 Pay Mix

* “Equity Incentives” includes the fair value of equity grants in 2020, based upon grant date fair value as disclosed in the 2020 Summary Compensation Table. “Cash Incentive” includes annual cash incentives to the NEOs, at target, as disclosed in the 2020 Grants of Plan-Based Awards Table. “Salary” reflects salaries paid to the NEOs during 2020, as disclosed in the 2020 Summary Compensation Table. “Equity” includes performance and restricted stock units granted to the NEOs as disclosed in the 2020 Grants of Plan-Based Awards Table.

Significant elements of total compensation of the named executive officers that are incentive based are as follows:

As discussed above, our executive compensation program reflects strong pay for performance alignment and our financial performance was the most significant factor affecting compensation of the named executive officers in 2020. As a result of the unprecedented external factors that impacted our performance in 2020, the total compensation of our CEO and other named executive officers decreased proportionately on a year-over-year basis, as reflected in the Summary Compensation Table on page 57. Our CEO’s total compensation for 2020 decreased by 13% compared to 2019 in direct proportion to our decrease in revenues, and on average, total compensation for our other named executive officers decreased by 12% since the prior year. Again, the year-over-year decrease in total compensation clearly demonstrates our strong pay-for-performance philosophy.

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Best Pay Practices

Our executive compensation program includes a number of positive pay practices.

Last Year’s Say on Pay Vote

We provided shareholders a “say-on-pay” advisory vote to approve our named executive compensation in 2020, as required under Section 14A of the Exchange Act. At the 2020 Annual Meeting, shareholders expressed substantial support for the compensation of our named executive officers, with over 89% of the votes cast (excluding abstentions) in approval of the “say-on-pay” advisory vote. The Compensation Committee carefully evaluated the results of the 2020 advisory vote in connection with its evaluation of our executive compensation programs more generally. Ultimately however, the Compensation Committee did not make any changes to our executive compensation program and policies as a result of the 2020 “say-on-pay” vote.

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Shareholder Engagement

We have historically been highly engaged with our shareholders on various topics of interest to them. In 2017, we engaged on specific topics of interest to our shareholders, including board diversity. As a result, in 2018, we updated our Corporate Governance Guidelines, as discussed in more detail in the section of this Proxy Statement under the correspondingly named heading, and appointed Shirley G. Drazba to our Board, who brings extensive experience in creating high value creation opportunities for our product lines, as well as experience in leading strategic acquisitions to enhance product portfolios and market positioning. In addition, based upon our “say-on-pay” vote results, we have historically had significant shareholder support for our executive compensation program. As a part of our ongoing dialogue with our shareholders, we will keep the channels of communication open and engage in any areas of concern to our shareholders, including compensation.

2020 Named Executive Officer Compensation

Compensation Objectives

Our compensation programs are designed to provide competitive levels of compensation that relate pay to the achievement of our financial goals, recognize individual initiative and performance, and assist the Company in attracting and retaining qualified executives. We intend for overall compensation of the named executive officers to be at levels that are broadly competitive with other companies of similar size and complexity of operations.

We do not target any specific mix of cash versus non-cash compensation for our named executive officers. Instead, each element of compensation (salary, annual cash incentive and long-term equity incentives) is awarded and targeted at amounts that are intended to be market competitive and consistent with the principles described above and internal pay equity within the Company. In keeping with this approach, and due to the market volatility over the first few months of the COVID-19 pandemic and potential ongoing business disruption related thereto, the Compensation Committee decided not to award stock options in 2020 and instead authorized the grant of performance and restricted stock units to executives. By so doing, the Compensation Committee was able to provide consistency with its philosophy of creating a pay-for-performance compensation approach to maintain alignment between executives’ interests and those of shareholders during the course of the pandemic.

Compensation Determinations

Decisions relating to compensation of our executive officers generally are made by the Compensation Committee of the Board. Each member of the Compensation Committee is an independent director of the Company.

Each element of compensation of the CEO is set by the Compensation Committee. Each element of compensation of the other named executive officers is recommended by the CEO and reviewed and approved by the Compensation Committee.

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Compensation Elements

The following are the primary elements of named executive officer compensation:

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Ducommun Incorporated 2021 Proxy Statement

Base Salaries

We pay salaries to our named executive officers in consideration of the performance of specific roles and responsibilities and competitive market practices. In establishing the salaries for the named executive officers in 2020, the Compensation Committee considered the compensation assessment prepared by Willis Towers Watson PLC (“WTW”) of base salary levels, which indicated that the CEO’s base salary was generally consistent with the 50^th percentile of our compensation peer group data and at the 75^th percentile of the published survey compensation data, while the base salaries of the other named executive officers was generally consistent with the 50^th percentile of the published survey compensation data. The Compensation Committee made the following base salary changes for 2020:

Annual Cash Incentives

Annual cash incentives are awarded based on our actual financial performance compared to targets (weighted 70% for operating income, 10% for net revenues and 20% for adjusted cash flow from operations), provided that the Company exceeds an adjusted net income threshold. The Compensation Committee chose adjusted operating income, net revenues and adjusted cash flow from operations as the performance targets because it believes that growth in these measures is essential to our objective to provide superior long-term total shareholder return. The Compensation Committee typically approves the thresholds, targets and maximums for the financial performance measures, and the formula for funding the bonus pool at the beginning of each year.

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Ducommun Incorporated 2021 Proxy Statement

The 2020 annual operating plan approved by the Board in early March, before the onset of the pandemic, reflected a continuation of the execution of our growth strategy that began in 2017 and our strong performance in 2019. As such, the metrics relating to our annual cash incentives reflected our expected significant growth in revenue, profitability and cash flow generation. Specifically, the Compensation Committee took into account expected spending increases from our defense end-market customers, low restructuring costs incurred and a historically high backlog, but also factored in the disruptions caused by the 2020 production shutdown of the Boeing 737 MAX as well as severe impacts relating to the COVID-19 pandemic. These factors were all incorporated into the final threshold, target and maximum levels for our annual cash incentive metrics.

In addition, and despite the industry challenges confronting the business due to the COVID-19 pandemic and the Boeing 737 MAX shutdown, in determining 2020 annual incentives, the Compensation Committee and the Board reviewed and took into consideration several significant achievements, which are summarized below. In addition, the Compensation Committee used discretion and based its decisions on its informed judgment considering all of these factors collectively. No individual weightings were assigned to any one of these factors:

Based on the metrics discussed above, and our performance in 2020, the table below summarizes the annual cash incentives earned by our named executive officers:

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Ducommun Incorporated 2021 Proxy Statement

While the Compensation Committee did not adjust plan metrics or targets during 2020, it does maintain discretion to make adjustments to final plan payouts. As such, in an effort to ensure we could reward our employees for their perseverance and excellent performance during the COVID-19 pandemic, the Compensation Committee exercised its discretion in determining that payouts to our named executive officers based on the circumstances would be reduced to a level of 200% of target, rather than 245% as indicated in the table above. By so doing, 2020 annual cash incentive payouts to officers were lower compared to the prior year, which was appropriate but still rewarded the improvements and value created. This also resulted in allowing more incentive dollars to be shared among all Ducommun employees for their efforts during 2020, who were granted bonuses only slightly below 2019 levels. As a result, the annual cash incentive determination for each of the named executive officers is reflected in the table below.