Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Check the appropriate box:

Engility Holdings, Inc.

(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):

Table of Contents

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

We are furnishing proxy materials to our stockholders over the Internet. On or about April 12, 2017, we mailed to all stockholders of record as of the Record Date a notice containing instructions on how to access our Annual Report to Stockholders, our proxy statement and proxy card. The notice also provides instructions on how you can request a paper copy of our proxy materials and Annual Report to Stockholders.

For questions on accessing proxy materials or voting, please call 1-800-579-1639.

By Order of the Board of Directors,

Thomas O. Miiller

Senior Vice President, General Counsel and

Corporate Secretary

April 12, 2017

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

T A B L E  O F  C O N T E N T S

I I

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider in voting your shares. You should read the entire proxy statement, as well as our annual report on Form 10-K for the fiscal year ended December 31, 2016, carefully before voting.

This proxy statement is being furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Engility Holdings, Inc. (“Engility,” or the “Company”), for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, May 25, 2017 at 12:00 p.m. eastern daylight time via live webcast, and any adjournments or postponements of the Annual Meeting. The Board is soliciting proxies for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. This proxy statement and the accompanying proxy card are being distributed and made available on or about April 12, 2017, to all stockholders of record as of the close of business on March 31, 2017.

We believe that good corporate governance is integral to our business, and the Board monitors developments in governance best practices to assure that it continues meeting its commitment to representation of stockholder interests. Below is a summary of certain corporate governance practices and facts:

P R O X Y  S U M M A R Y

1

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The following table provides summary information regarding each nominee to the Board. Information about each director’s experience, qualifications and skills can be found beginning on page 6.

P R O X Y  S U M M A R Y

2

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Our Amended and Restated Bylaws provide that the number of directors shall be fixed from time to time exclusively by the Board, and shall be divided into three classes. The Board is currently composed of 10 directors.

On February 26, 2015, we completed the acquisition of TASC, Inc. (“TASC”), a leading professional services provider to the national security and public safety markets, in an all-stock transaction valued at approximately $1.3 billion, including the assumption of net debt of approximately $614 million. As a condition to the closing of the TASC acquisition, on February 26, 2015, we entered into a Stockholders Agreement with Birch Partners, LP (“Birch Partners”), and for the limited purposes set forth therein, certain investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and certain investment funds affiliated with General Atlantic LLC (“GA” or “General Atlantic”) (the “Stockholders Agreement”), which establishes certain rights, restrictions and obligations of Birch Partners, KKR and GA, and sets forth certain governance and other arrangements relating to Engility, including the right of Birch Partners to designate (i) four directors for nomination to our Board for so long as each of KKR and GA (including their respective affiliates) beneficially owns at least 50% of the shares of our common stock it owned as of February 26, 2015, and (ii) two directors for nomination to our Board for so long as each of KKR and GA (including their respective affiliates) beneficially owns less than 50% but at least 25% of the shares of our common stock it owned as of February 26, 2015.

Pursuant to the Stockholders Agreement, we must include certain director nominees designated by Birch Partners (or after a distribution by Birch Partners to the KKR investors and GA investors, KKR and/or GA, respectively) in the slate of nominees recommended by the Board for election of directors. In the event any Board member nominated by such stockholder party resigns or is unable to serve, the stockholder parties will be entitled to appoint a replacement stockholder party director.

The four initial designees of Birch Partners were Peter A. Marino, David M. Kerko, Steven A. Denning and Lynn A. Dugle. Ms. Dugle’s initial term expired at the 2015 annual meeting, where she was subsequently reelected for another three-year term. Messrs. Denning and Kerko had initial terms which expired in 2016, and were re-elected in 2016 for another three year term. Mr. Marino has been nominated for re-election to our Board at this year’s Annual Meeting.

In 2016, there were two vacancies on the Board. The Board voted to fill one of the vacancies, adding Mr. Barter to our Board in January 2017. The other director position currently remains vacant and the Board will continue to periodically evaluate and address the needs of the Board in regards to the remaining vacancy. The Company has not waived any rights under the Stockholders Agreement.

In addition to the four directors up for election and/or re-election at this year’s Annual Meeting, two directors’ terms will expire at the 2018 annual meeting and four directors’ terms will expire at the 2019 annual meeting. In each case, directors are elected until their respective successors are duly elected and qualified or until their earlier death, resignation or removal. At each annual meeting, one class of directors is elected for a three-year term.

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

3

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Unless a proxy specifies otherwise, the persons named in the proxy will vote the shares covered thereby FOR the nominees as listed. Each nominee has consented to be a candidate and to serve, if elected. While the Board has no reason to believe that any nominee will be unavailable, if such an event should occur, it is intended that shares represented by proxies will be voted for substitute nominee(s) as selected by the Board.

We seek to ensure that our Board is composed of members whose particular experience, qualifications, attributes and skills, when taken together, will allow our Board to satisfy its oversight responsibilities effectively in light of our business and structure.

The TASC Directors, as noted above, were each a nominee designated by Birch Partners pursuant to the Stockholders Agreement.

When considering the experience, qualifications, attributes and skills of the Board, we focused primarily on the information discussed in each of the Board members’ biographical information set forth below.

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

4

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

5

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Nominees for Election to Board

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

6

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Continuing Directors Until 2018 Annual Meeting

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

7

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Continuing Directors Until 2019 Annual Meeting

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

8

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The affirmative vote of a plurality of the votes cast at the Annual Meeting is required to approve the election of each of the nominees for election as a director. All nominees for election as directors at the Annual Meeting currently serve on the Board. If no voting specification is made on a properly returned or voted proxy card, the proxies will vote FOR the election of John W. Barter, III, Anthony Principi, Peter A. Marino and David A. Savner as directors to hold office until the 2020 annual meeting of stockholders and until their respective successors are elected and qualified. Abstentions and broker non-votes will have no effect on Proposal 1 because they are not considered votes cast.

The Board unanimously recommends that stockholders vote “FOR” each of the director nominees.

P R O P O S A L  1  –  E L E C T I O N   O F  D I R E C T O R S

9

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The Company has adopted Corporate Governance Guidelines (the “Guidelines”) that we believe reflect the Board’s commitment to a system of governance that enhances corporate responsibility and accountability. Our Board regularly reviews developments in corporate governance and updates the Guidelines and other governance documents as it deems necessary and appropriate. The Guidelines contain provisions addressing the following matters, among others:

The Guidelines are available on the Company’s website at www.engilitycorp.com. In addition, we intend to disclose any future amendments to the Guidelines on our website.

C O R P O R A T E   G O V E R N A N C E

1 0

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Our Board, upon recommendation of the Nominating/Corporate Governance Committee of our Board (the “Governance Committee”), has determined that the following directors are independent, representing each of our non-executive directors: John W. Barter, III, Steven A. Denning, David M. Kerko, Peter A. Marino, Darryll J. Pines, Anthony Principi, Charles S. Ream, David A. Savner and William G. Tobin. Our Board annually determines the independence of directors based on a review by the Board and the Governance Committee. No director will be considered independent unless the Board affirmatively determines that he or she has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us. Material relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. To evaluate the materiality of any such relationship, the Board has determined it is in the best interests of the Company to adopt categorical independence standards that are set forth in the Guidelines.

The Board also considers certain objective standards in affirmatively determining whether a director is independent, including those objective standards set forth in the NYSE rules. For 2016, the Board specifically considered (i) that Messrs. Marino, Denning and Kerko were nominated pursuant to the Stockholders Agreement by Birch Partners, the owner of approximately 51.1% of our outstanding common stock, (ii) Mr. Marino’s former position as Executive Chairman of TASC prior to the completion of the TASC acquisition, (iii) Mr. Denning’s position as Chairman of GA and Mr. Kerko’s former position as an executive of KKR, and that GA and KKR through Birch Partners beneficially own approximately 51.1% of our outstanding common stock and (iv) Mr. Barter’s former position as Director of TASC. The Board considered the above relationships of Messrs. Marino, Denning, Kerko and Barter and affirmatively determined that these relationships did not impair their independence.

ISS Analysis – Peter A. Marino

In its May 11, 2016 report on our Company with respect to the 2016 annual meeting of stockholders, Institutional Shareholder Services (“ISS”) classified Mr. Marino as an “Affiliated Outside Director” due to his former role as Executive Chairman of the board of directors of TASC prior to its acquisition by Engility in February 2015. The ISS report also focused on the level of compensation that Mr. Marino received for his service on the TASC board. In reviewing the applicable ISS standards relating to Affiliated Outside Directors, we believe that Mr. Marino should be regarded as independent under those standards for the following reasons:

C O R P O R A T E   G O V E R N A N C E

1 1

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The primary standing committees of our Board include an Audit Committee, a Compensation Committee and a Governance Committee each as further described below. Each of these committees is composed exclusively of directors who are independent as defined in the NYSE listing standards. In addition, the Board has established a subcommittee of our Compensation Committee consisting of Messrs. Savner and Tobin for purposes of approving any compensation that may otherwise be subject to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Other committees may also be established by the Board from time to time. Committee membership shown below is as of the date of this proxy statement.

Audit Committee. The Audit Committee of our Board (the “Audit Committee”) has the responsibility, among other things, to meet periodically with management and with both our independent auditor and internal auditor to review audit results and the adequacy and effectiveness of our system of internal controls. In addition, the Audit Committee appoints or discharges our independent auditor, reviews and approves auditing services and permissible non-audit services to be provided by the independent auditor in order to evaluate the impact of undertaking such added services on the independence of the auditor and reviews and approves or ratifies transactions with related persons. The responsibilities of the Audit Committee are more fully described in our Audit Committee charter, which is posted on our website at www.engilitycorp.com and will be available in print to any stockholder who requests it. All members of the Audit Committee are independent and financially literate. Further, the Board affirmatively determined that Messrs. Ream and Barter possess accounting or related financial management expertise within the meaning of the NYSE listing standards and that both individuals qualify as “audit committee financial experts” as defined under the applicable Securities and Exchange Commission (“SEC”) rules. In 2016, the Audit Committee met 11 times.

Compensation Committee. The Compensation Committee of our Board (the “Compensation Committee”) oversees all compensation and benefit programs and actions that affect our executive officers and directors. The Compensation Committee also provides strategic direction for our overall compensation structure, policies and programs. Pursuant to the Compensation Committee’s charter, the Compensation Committee is entitled to delegate any or all of its responsibilities to a subcommittee of the Compensation Committee, consisting of one or more independent members of the Compensation Committee. The Board has established a subcommittee of our Compensation Committee consisting of Messrs. Savner and Tobin for

C O R P O R A T E   G O V E R N A N C E

1 2

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

purposes of approving any compensation that may otherwise be subject to Section 162(m) of the Code and for purposes of Section 16 of the Exchange Act. The responsibilities of the Compensation Committee are more fully described in the Compensation Committee charter, which is posted on our website at www.engilitycorp.com and will be available in print to any stockholder who requests it. Each member of the Compensation Committee is an independent, non-employee director, and there are no Compensation Committee interlocks involving any of the members of the Compensation Committee. In 2016, the Compensation Committee met five times.

Nominating/Corporate Governance Committee. The Governance Committee is responsible for developing and recommending to the Board criteria for the selection of director candidates; identifying, reviewing the qualifications of and proposing candidates for election to the Board, including the evaluation of candidates for the Board recommended by the Company’s stockholders in accordance with the instructions set forth under “Stockholder Nominees” below; reviewing the performance of incumbent directors in determining whether to recommend them for reelection to the Board; considering questions of independence and possible conflicts of interest of incumbent directors and executive officers; overseeing the annual performance review of the Company’s Chief Executive Officer; and overseeing and approving the continuity planning process. The Governance Committee also reviews and recommends action to the Board on matters involving corporate governance and, in general, oversees the evaluation of the Board. The responsibilities of the Governance Committee are more fully described in the Governance Committee charter, which is posted on our website at www.engilitycorp.com and will be available in print to any stockholder who requests it. Each member of the Governance Committee is independent. In 2016, the Governance Committee met three times.

The Guidelines provide that non-management directors shall meet at regularly scheduled executive sessions, which will typically occur at regularly scheduled Board meetings, without any member of management present. In addition, at least annually, the independent directors will meet in separate executive session. David A. Savner and Peter A. Marino, the independent Co-Chairs of the Board, currently preside over each session. The Guidelines also provide that the executive sessions shall serve as the forum for the annual evaluation of the performance of the Company’s Chief Executive Officer, the annual review of the Chief Executive Officer’s plan for management succession and the annual evaluation of the performance of the Board.

Our Board is responsible for nominating directors for election by stockholders. Subject to the requirements of the Stockholders Agreement, in nominating a slate of directors, our Board, with the assistance of the Governance Committee, will take into account (a) minimum individual qualifications, including strength of character, mature judgment, industry knowledge or experience and an ability to work collegially with the other members of our Board, and (b) all other factors it considers appropriate, which may include ensuring that the Board, as a whole, is appropriately diverse and consists of individuals with various and relevant career experience, relevant technical skills, industry knowledge and experience and financial and accounting experience to enable the Governance Committee to determine whether the director candidate would be suitable for membership on the Company’s Audit Committee (including as an “audit committee financial expert”). The Board should monitor the mix of specific experience, qualifications and skills of its directors in order to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. The Governance Committee also may consider the extent to which a director candidate would fill a present need on the Board.

C O R P O R A T E   G O V E R N A N C E

1 3

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

When seeking candidates for director, the Governance Committee may solicit suggestions from incumbent directors, management or others, including stockholders. Individuals recommended by stockholders for nomination as a director should be submitted to the Company’s Corporate Secretary and, if submitted in accordance with the procedures set forth in this proxy statement and the Company’s Amended and Restated Bylaws, will be forwarded to the Governance Committee. The Governance Committee will review all candidates in the same manner, regardless of the source of the recommendation. After conducting an initial evaluation of a candidate, the Governance Committee will interview that candidate if it believes the candidate might be suitable to be a director. The Governance Committee may also ask the candidate to meet with management. If the Governance Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board such candidate’s election.

Our Amended and Restated Bylaws provide that stockholders seeking to nominate candidates for election as directors or to bring business before an annual or special meeting of stockholders must provide timely notice of their proposal in writing to the Corporate Secretary of the Company. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices, addressed to the Corporate Secretary of the Company, and within the following time periods:

In no event shall an adjournment or postponement of a meeting of the stockholders for which notice has been given commence a new time period (or extend any time period) for the giving of the stockholder notice. You should consult our Amended and Restated Bylaws for more detailed information regarding the process by which stockholders may nominate directors. Our Amended and Restated Bylaws are posted on the Corporate Governance portion of our website located at www.engilitycorp.com.

The Board has determined that the Company and its stockholders are currently best served by having David A. Savner and Peter A. Marino serve as Co-Chairs. This structure promotes unified leadership in light of the recent business combination, and having independent chairmen enhances the ability of the Board to carry out its oversight function.

The Board believes that the decision as to whether to combine or separate the Chief Executive Officer and Chairman of the Board positions will depend on the facts and circumstances facing the Company at a given time and could change over time. The Board believes that the Company’s current leadership structure is appropriate and does not adversely affect the Board’s role in risk oversight of the Company.

C O R P O R A T E   G O V E R N A N C E

1 4

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Risk is inherent with every business. Management is responsible for the day-to-day management of risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. Our Board oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental aspect of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The involvement of the full Board in setting our business strategy is a key part of its assessment of management’s appetite for risk and also a determination of what constitutes an appropriate level of risk for the Company.

In 2016, we conducted an annual enterprise risk management assessment led by our Corporate Compliance Officer, with the assistance our Vice President of Internal Audit, who reports directly to our Audit Committee. In this process, we assessed risk throughout the Company by surveying both key employees and the members of our Board, soliciting information regarding business risks that could significantly adversely affect the Company. Our Corporate Compliance Officer then prepared a report which was presented to the full Board regarding the key identified risks and management’s plan to manage these risks. In addition, senior management attends the quarterly Board meetings and is available to address any questions or concerns raised by the Board regarding risk management and any other matters. Each quarter, the Board also receives presentations from senior management on strategic matters involving our operations.

While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board assist the Board in fulfilling its oversight responsibilities in certain areas of risk. In particular, the Audit Committee focuses on financial and enterprise risk exposures, including internal controls, and discusses with management, our Vice President of Internal Audit, our Corporate Compliance Officer, our Corporate Ethics Officer and our independent registered public accounting firm, our policies with respect to risk assessment and risk management. The Audit Committee also assists the Board in fulfilling its duties and oversight responsibilities relating to the Company’s compliance with applicable laws and regulations, the Code of Conduct and related Company policies and procedures. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs as described on page 35 of this proxy statement in “Executive Compensation—Compensation Discussion and Analysis.”

During 2016, our Board held eight meetings. All directors attended at least 75% of the Board meetings and meetings of the committees of the Board on which the director served, held during the period for which he or she served as a director. It is our policy that directors are strongly encouraged to attend the Company’s annual stockholder meetings. At the 2016 annual meeting of stockholders, all of the directors serving on our Board at the time attended the meeting.

C O R P O R A T E   G O V E R N A N C E

1 5

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

We have a Code of Conduct that is applicable to all our directors, officers and employees. The Code of Conduct is available on the Corporate Governance page of our website at www.engilitycorp.com. To the extent required pursuant to applicable SEC regulations, we intend to post amendments to or waivers from our Code of Conduct (to the extent applicable to our principal executive officer, principal financial officer or principal accounting officer) at these locations on our website or report the same on a Current Report on Form 8-K. Our Code of Conduct is available free of charge upon request to our Corporate Secretary, Engility Holdings, Inc., 4803 Stonecroft Boulevard Chantilly, VA 20151.

The members of our Compensation Committee in fiscal 2016 were Messrs. Denning, Marino, Savner and Tobin. All members of the Compensation Committee in fiscal 2016 were independent within the meaning of the NYSE listing standards, and no member was an employee or former employee of the Company. During fiscal 2016, no member of the Compensation Committee had any relationship requiring disclosure under the section entitled “Certain Relationships and Related Party Transactions.” None of our executive officers served during fiscal 2016 as a member of the compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director on the Board or as a member of the Compensation Committee. None of our executive officers served during fiscal 2016 as a director of any other entity, one of whose executive officers served as a member of the Compensation Committee.

Our stockholders and other interested parties may communicate directly with any chair of the Audit, Governance and Compensation Committees, or to the non-management directors as a group. All communications should be in written form and directed to Thomas O. Miiller, Senior Vice President, General Counsel and Corporate Secretary, Engility Holdings, Inc., 4803 Stonecroft Boulevard Chantilly, VA 20151.

Complaints or concerns about our accounting, internal accounting controls and auditing matters, including those regarding the circumvention or attempted circumvention of internal accounting control or that would otherwise constitute a violation of the Company’s accounting policies, may be reported anonymously to our Audit Committee by writing to Engility Holdings, Inc., Attention: Audit Committee, 4803 Stonecroft Boulevard Chantilly, VA 20151. Company employees must report any such accounting allegation in accordance with the Company’s Whistleblower Policy. The Company prohibits any employee from retaliating or taking any adverse action against anyone for raising or helping to resolve any integrity questions.

Directors who also serve as employees of the Company do not receive payment for services as directors. The Compensation Committee is responsible for reviewing and making recommendations to the Board regarding all matters pertaining to compensation paid to our directors for Board, committee and committee chair services. Under the Compensation Committee’s charter, the committee is authorized to engage consultants or advisors in connection with its review and analysis of director compensation.

In making non-employee director compensation recommendations, the Compensation Committee takes various factors into consideration, including, but not limited to, the responsibilities of directors generally, as well as committee chairs, and the forms of compensation paid to directors by comparable companies. The Board reviews the recommendations of the Compensation Committee and determines the form and amount of director compensation.

The 2016 compensation program for our non-employee directors is described further below.

C O R P O R A T E   G O V E R N A N C E

1 6

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The Board believes that our non-employee directors’ compensation program:

2016 Director Compensation Program

Non-employee director compensation in fiscal 2016 consisted of an annual cash retainer of $75,000 and an annual equity award of restricted stock units with a grant date fair value of $100,000 and a one-year cliff vesting. Under our fiscal 2016 non-employee director compensation program, we also paid an annual cash retainer for serving as a Board chairperson of $40,000, an annual cash fee for serving as chair of the Audit Committee of $20,000, an annual cash fee for serving as chair of the Compensation Committee of $15,000, an annual cash fee for serving as chair of the Governance Committee of $10,000, an annual cash fee for serving as an Audit Committee member of $10,000, an annual cash fee for serving as a Compensation Committee member of $7,500 and an annual cash fee for serving as a Governance Committee member of $5,000.

The following table details the total compensation of the Company’s non-employee directors for the year ended December 31, 2016.

Following its annual review of our director compensation program, the Board, upon the recommendation of the Compensation Committee and its independent compensation consultant, Frederic W. Cook & Co. Inc. (“FW Cook”), did not modify our non-employee director compensation for fiscal year 2017. Each of Steven A. Denning and David M. Kerko has waived his compensation as a director of the Company.

C O R P O R A T E   G O V E R N A N C E

1 7

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The following table sets forth the information as of March 31, 2017, regarding our executive officers.

Lynn A. Dugle—Ms. Dugle has served as a Director on our Board since February 2015 and as our Chief Executive Officer since March 2016. Ms. Dugle previously served as a member of our Audit Committee from February 2015 to March 2016. Ms. Dugle was a director of TASC from October 2014 to February 2015. Ms. Dugle joined Raytheon Company in April 2004 and served as the Vice President of Raytheon Company and President of Raytheon IIS until March 2015. She became President of the former Intelligence and Information Systems business in January 2009 and was previously its Vice President and Deputy General Manager. Ms. Dugle serves as a Director and member of the Audit and Technology Committees of State Street Corporation, and the Professional Services Council.

John P. Hynes, Jr.—Mr. Hynes has served as our President and Chief Operating Officer since March 2016, and previously served as our Executive Vice President and Chief Operating Officer since our acquisition of TASC in February 2015. Mr. Hynes served as President and Chief Executive Officer of TASC from 2013 to February 2015, and before being named to this role, Mr. Hynes was TASC’s Executive Vice President and Chief Operating Officer. Prior to his promotion to TASC’s Chief Operating Officer in September 2012, since 2011 Mr. Hynes was Senior Vice President of TASC’s Defense and Civil Group, the TASC organization that supported the Department of Defense, Department of Homeland Security and civilian agencies such as the Federal Aviation Administration and NASA. Before that, Mr. Hynes was Senior Vice President and General Manager of SAIC’s Mission Support Business Unit, a 3,600-person organization with more than $1 billion in revenue earned from a wide array of services to the intelligence community, including geospatial products, all-source analysis, operational support and language services. During his military service, Hynes was a naval aviator and served at the Navy Operational Intelligence Center. Mr. Hynes currently serves on the board of advisors of the Intelligence and National Security Association and on the board of directors of the Capital Area Food Bank.

Wayne M. Rehberger—Mr. Rehberger has served as our Senior Vice President and Chief Financial Officer since our acquisition of TASC in February 2015. He had previously served as Senior Vice President and Chief Financial Officer of TASC since June 2010. Mr. Rehberger has more than 30 years of diversified financial, operational and sales management experience. Prior to joining TASC in June 2010, he was the Chief Operating Officer of XO Communications, a facilities-based telecommunications services provider. Before taking on the role of Chief Operating Officer in May 2004, Mr. Rehberger had served as XO Communications’ Chief Financial Officer since November 2000. From June 1986 until March 2000, Mr. Rehberger was affiliated with MCI Communications, where he held several broad financial roles, including Senior Vice President of Finance. Mr. Rehberger began his corporate career with the KPMG consulting business in Washington, D.C., where he worked primarily with U.S. government agencies and defense contractors. Mr. Rehberger also served for 10 years in the United States Army and Army Reserve, achieving the rank of major. He earned a Master of Business Administration at the University of South Carolina and a Bachelor of Science degree in Business Administration at Bucknell University.

C O R P O R A T E   G O V E R N A N C E

1 8

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Thomas O. Miiller—Mr. Miiller has served as our Senior Vice President, General Counsel and Corporate Secretary since 2012. Mr. Miiller previously served as Senior Vice President and General Counsel of L-3 Services Group since he rejoined L-3 Communications Holdings, Inc. (“L-3”) in December 2004. He had previously served in various legal positions within L-3 and its predecessor companies from 1987 through 2000. In the years prior to rejoining L-3, Mr. Miiller was Vice President, General Counsel and Secretary of Allied Aerospace, Inc., a privately held defense aerospace company. Before joining L-3 in 1987, Mr. Miiller was an attorney in the Dykema Gossett law firm in Washington D.C. Mr. Miiller has a Bachelor’s degree in Political Science from the University of Utah and a Juris Doctor’s degree from the National Law Center, George Washington University.

Susan M. Balaguer— Ms. Balaguer joined our Company in May 2016 and serves as our Senior Vice President and Chief Human Resources Officer. Prior to that time, Ms. Balaguer served as Senior Vice President, Human Resources Operations for CACI International, Inc., a government contractor providing information solutions and services for intelligence, defense and federal civilian customers, beginning in 2014. Prior to joining CACI, Ms. Balaguer served as the Vice President of Human Resources at ASRC Federal from 2014 to 2014 and as the Executive Vice President of Business Services at the VT Group from 2009 to 2013. Before joining the VT Group, Ms. Balaguer spent 20 years at Raytheon Company in progressively senior roles. Ms. Balaguer holds a Bachelor’s degree in Applied Management from Tri-State University.

C O R P O R A T E   G O V E R N A N C E

1 9

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

In accordance with its charter, unless otherwise approved or ratified pursuant to the “Related Person Transaction Policy,” our Audit Committee, or the disinterested members of our Board, reviews and approves all related party transactions. Prior to its approval of any related party transaction, the Audit Committee or the disinterested directors will discuss the proposed transaction with management, including the nature of the related person’s interest in the transaction and all material terms and conditions of the transaction.

As discussed above, on February 26, 2015, the Company entered into the Stockholders Agreement with Birch Partners, certain investment funds affiliated with KKR and certain investment funds affiliated with GA. The Stockholders Agreement became effective upon the closing of the TASC acquisition and sets forth certain arrangements and contains various provisions relating to, among other things, standstill restrictions, voting restrictions, board representation, transfer restrictions and registration rights, described further below.

Each of Birch Partners, KKR and GA are affiliates of the Company. Birch Partners received 18,796,791 shares, or approximately 51.1%, of the issued and outstanding shares of common stock of the Company as a result of the acquisition of TASC. Birch GP, LLC (“Birch GP”) is the general partner of Birch Partners, and the members of Birch GP are investment funds affiliated with KKR and GA.

In the discussion of the terms of the Stockholders Agreement below, the “stockholder party” means Birch Partners, and, following a distribution of any shares of our common stock, par value $0.01 per share, held by Birch Partners to the KKR investors and the GA investors, the KKR investors and the GA investors. The “stockholder group” means Birch Partners, together with any affiliate of Birch Partners or a KKR investor or GA investor who becomes a “stockholder” within the meaning of the Stockholders Agreement, in each case that beneficially owns any of the Company’s common stock and has become a party to the Stockholders Agreement. In this item discussion, “independent directors” means the directors of the Company who are not nominees of the stockholder party.

Board Representation. The Stockholders Agreement provides the stockholder party with four nominees, subject to the following:

C E R T A I N   R E L A T I O N S H I P S    A N D   R E L A T E D   P A R T Y   T R A N S A C T I O N S

2 0

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Pursuant to the Stockholders Agreement, the Company will include the stockholder party nominees in the slate of nominees recommended by the Company’s Board for election of directors and will use its reasonable best efforts to cause the stockholders of the Company to elect the stockholder party nominees. In the event any of the Board members nominated by the stockholder party (a “Stockholder Party Director”) resigns or is unable to serve, the stockholder parties will be entitled to appoint a replacement Stockholder Party Director.

Pursuant to the Stockholder’s Agreement, until February 26, 2017, the Board was obligated to maintain a co-chair structure with one Stockholder Party Director co-chair and one co-chair elected by a majority of the independent directors. The Board has determined that the Company continues to benefit from the co-chair structure, and intends to retain Messrs. Savner and Marino as co-chairs of the Board following the 2017 annual meeting of shareholders, assuming the re-election of each.

In addition, so long as there are two or more Stockholder Party Directors, one Stockholder Party Director will serve on each committee of the Company’s Board (other than a committee that is to be composed solely of independent directors or a committee established to address conflicts with the stockholder group or the KKR investors or the GA investors). So long as there is at least one Stockholder Party Director serving on the Company’s Board, one Stockholder Party Director will serve on the Compensation Committee. No Stockholder Party Director will serve on any committee if it would violate mandatory legal or listing requirements concerning that director’s independence, but the Company will take all reasonable efforts to avoid any such disqualification.

Voting. So long as the stockholder party has director nomination rights under the Stockholders Agreement, with respect to any proposal or resolution relating to the election of directors, it will vote or cause to be voted all of its voting securities in the same manner as, and in the same proportion to, all shares voted by holders of voting securities (except that with respect to the Stockholder Party Director nominees, the stockholder party may vote all of its voting securities in favor of the Stockholder Party Director nominees). For purposes of the Stockholders Agreement, “voting securities” means the Company’s common stock and shares of any other class of capital stock or interests in any other equity securities of the Company then entitled to vote generally in the election of directors.

In the case of all other proposals or resolutions that require a stockholder vote, the stockholder party will vote or cause to be voted all of its excess voting power (defined as the aggregate percentage of voting power represented by the stockholder group’s voting securities out of the total voting power of all the Company’s common stock, less 30%) in the same manner as, and in the same proportion to, all shares voted by holders of voting securities, excluding the votes or actions of the stockholder group with respect to its voting securities representing 30% of the total voting power of all the Company’s common stock.

Standstill Restrictions. The Stockholders Agreement contains certain standstill provisions generally restricting the stockholder group, certain of the KKR investors and certain of the GA investors and certain of their respective affiliates from February 26, 2015, until, with respect to any party, six months after such party no longer has any rights to nominate or designate nominees to the Company’s board.

Change of Control. Without the approval of a majority of the independent directors, no member of the stockholder group, the KKR investors or the GA investors may enter into or affirmatively support any transaction resulting in a change of control of the Company in which any member of the stockholder group receives per share consideration in its capacity as a holder of the Company’s common stock in excess of that to be received by other holders of the Company’s common stock.

C E R T A I N   R E L A T I O N S H I P S    A N D   R E L A T E D   P A R T Y   T R A N S A C T I O N S

2 1

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Transfer Restrictions. The stockholder group, the KKR investors and the GA investors will be subject to certain transfer restrictions related to the Company’s common stock for a period beginning on February 26, 2015, and ending on the earlier of February 27, 2021, and the day following the date on which the Company undergoes an ownership change (as defined in Section 382(g) of the Code) (an “Ownership Change”), including the following:

Notwithstanding the restrictions discussed above, for the period beginning on February 27, 2018, and ending on the earlier of February 27, 2021, and the date on which the Company undergoes an Ownership Change, the Stockholders Agreement permits the KKR investors and GA investors and any partner or Co- Investor Partner to effect an indirect or direct sale or transfer of up to an aggregate of 16,481,516 shares of the Company’s common stock, as adjusted for any stock split, reverse stock split or similar transaction (the “Waived Transfer Amount”). Certain sales or transfers will not count toward or reduce the Waived Transfer Amount, including:

Notwithstanding the restrictions described above, beginning on the earlier of (i) February 27, 2021, and (ii) the day following the date on which the Company undergoes an Ownership Change, the stockholder

C E R T A I N   R E L A T I O N S H I P S    A N D   R E L A T E D   P A R T Y   T R A N S A C T I O N S

2 2

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

group, the KKR investors, the GA investors, the partners and the Co-Investor Partners may, subject to the restrictions described in the immediately following paragraph, directly or indirectly sell or transfer any of the shares of the Company’s common stock held directly or indirectly by them regardless of whether such sale or transfer results in an Owner Shift.

In addition to and notwithstanding the restrictions described above, no member of the stockholder group may, individually or in the aggregate, other than in connection with a registered public offering, including any underwritten offering or a change of control transaction affecting the Company, which change of control transaction is approved by the Board, knowingly transfer shares of the Company’s common stock to a person (other than to any permitted transferee, as defined in the Stockholders Agreement) who, after such acquisition, would hold in excess of 5% of the outstanding shares of the Company’s common stock.

The persons in the stockholder group are, with respect to the shares of the Company’s common stock they hold (“registrable shares”), entitled to certain registration rights beginning February 26, 2018, including (i) the right to request that the Company file an automatic shelf registration statement and effect unlimited underwritten offerings pursuant to such shelf registration statement; (ii) up to eight demand registration rights in the event that the Company is no longer eligible to use or otherwise ceases to maintain an effective shelf registration statement; and (iii) unlimited piggyback registration rights that allow holders of registrable shares to require that shares of the Company’s common stock owned by such holders be included in certain registration statements filed by the Company, in each case subject to the transfer restrictions contained in the Stockholders Agreement. In connection with these registration rights, the Company has agreed to effect certain procedural actions, including taking certain actions to properly effect any registration statement or offering and to keep the participating stockholder parties reasonably informed with adequate opportunity to comment and review, as well as customary indemnification and contribution agreements.

Termination. The Stockholders Agreement will terminate by consent of all parties or when the stockholder group no longer beneficially owns any shares of the Company’s common stock. Certain sections of the Stockholders Agreement, including those relating to indemnification, will survive such termination, and the provisions relating to registration rights will survive termination of the Stockholders Agreement until the first date on which there are no registrable shares outstanding.

Certain investment funds affiliated with KKR hold limited partner interests in Birch Partners, LP and membership interests in Birch GP, LLC, the general partner of Birch Partners, LP, the holder of approximately 51.1% of our outstanding common stock. Further, David M. Kerko, a Director on our Board since February 26, 2015, is a former executive of KKR.

Certain banking institutions (including affiliates of KKR) were commitment parties under our bridge loan commitment which consisted of a commitment to provide a promissory note of $585 million (the “Bridge Loan Commitment”) which was used among other things, to: (1) repay outstanding indebtedness under our existing credit facilities; (2) following such repayment but prior to the consummation of the acquisition of TASC, provide funds for the payment of the special cash dividend in connection with the acquisition of TASC; and (3) pay transaction fees and expenses and for general corporate purposes.

Certain banking institutions (including affiliates of KKR) were also party to the Second Amended and Restated First Lien Joinder Agreement, dated December 23, 2014, to TASC’s existing First Lien Credit Agreement, dated as of May 23, 2014 and the Second Amended and Restated Second Lien Joinder Agreement, dated January 26, 2015, to TASC’s existing Second Lien Credit Agreement, dated as of May 23, 2014, pursuant to which KKR (among other entities) agreed to provide debt facilities consisting of (i) new senior secured first lien incremental term loans in an aggregate amount of $435.0 million (the “Incremental First Lien Term Facility”), (ii) additional senior secured first lien revolving commitments in an aggregate

C E R T A I N   R E L A T I O N S H I P S    A N D   R E L A T E D   P A R T Y   T R A N S A C T I O N S

2 3

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

amount of $65.0 million (the “Incremental First Lien Revolving Facility”) and (iii) new senior secured second lien incremental term loans in an aggregate amount of $150.0 million (together with the Incremental First Lien Term Facility and the Incremental First Lien Revolving Facility, the “Incremental Debt Facilities”). The Incremental Debt Facilities were implemented in connection with the closing of the acquisition of TASC and used to repay the outstanding indebtedness of the Bridge Loan Commitment.

Certain banking institutions (including at certain points affiliates of KKR) were also lenders under TASC’s credit facilities consisting of (i) a $395 million first lien term loan facility (the “First Lien Term Facility”), (ii) a $50 million revolving credit facility, with a $12.5 million letter of credit sublimit and a $15 million swing line loan sublimit (the “First Lien Revolving Facility”) and (iii) a $250 million second lien term loan facility (together with the First Lien Term Facility and the First Lien Revolving Facility, the “Refinanced Credit Facilities”). The Refinanced Credit Facilities together with the Incremental Debt Facilities are referred to as the “TASC Credit Facilities”.

Certain banking institutions (including affiliates of KKR) are also lenders under our existing credit facilities consisting of (i) a senior secured term B1 loan facility in the original principal amount of $200 million (“Term B1 Loan”), (ii) a senior secured term B2 loan facility in the original principal amount of $680 million (“Term B2 Loan”) and (iii) a $165 million senior secured revolving credit facility (“Revolver” and, together with the Term B1 Loan and the Term B2 Loan, our “Existing Credit Facilities”), which we entered into in August 2016 to refinance the TASC Credit Facilities (the “Refinancing”) and amended in February 2017. As of March 31, 2017, the interest rates on our Term B1 Loan, Term B2 Loan and Revolver were approximately 4.23%, 4.75% and 7.75%, respectively. An affiliate of KKR received approximately $465,599 in total fees under our Existing Credit Facilities during 2016.

After (i) repayment in full of the Bridge Loan Commitment in connection with the closing of the acquisition of TASC and (ii) the Refinancing, as of March 31, 2017, we, through the Existing Credit Facilities, had $190.0 million outstanding under our Term B1 Loan, $601.0 million outstanding under our Term B2 Loan, and no outstanding amounts under our Revolver. The amount of principal and interest paid from the closing of the acquisition of TASC to March 31, 2017 was approximately $389.1 million.

C E R T A I N   R E L A T I O N S H I P S    A N D   R E L A T E D   P A R T Y   T R A N S A C T I O N S

2 4

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

This Compensation Discussion and Analysis (“CD&A”) is a review of the 2016 compensation programs provided for our named executive officers (“NEOs”), including the factors considered and decisions made by the Compensation Committee (the “Committee”). Engility’s NEOs for 2016 were:

For purposes of this CD&A, the narrative as well as the tables, charts and other graphics below will focus on our five executive officers as of December 31, 2016.

E X E C U T I V E   C O M P E N S A T I O N

2 5

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Executive Summary

2016 Business Highlights

2016 was a transitional year as we consolidated the benefits from the successful 2015 acquisition and integration of TASC and positioned the Company for growth. Foremost among the changes were operational improvements, highlighted by new leadership in key positions such as Human Resources, Business Development, Contracts, Communications and, most notably, the Chief Executive Officer (CEO). Lynn A. Dugle, a member of our Board, was appointed CEO, effective March 21, 2016.

Compensation Overview

The Committee, working with its independent consultant, FW Cook, and management, oversees our executive compensation process. For each NEO position, FW Cook prepares benchmark compensation data derived from proxy data disclosed by our Total Compensation Peer Group, as well as general industry survey data. The benchmark data is used to define the median compensation for each executive position. We pay our executives within a competitive band around the respective medians to ensure that we are competitive in attracting, retaining and motivating our senior leadership, but do not overpay.

Management designs the short- and long-term incentive compensation plans so that such plans promote achievement of the Company’s strategic objectives. Financial goals in the incentive plans are based on the Company’s annual operating plan (“AOP”) approved by the Board of Directors. The plan designs, including financial targets, are reviewed and approved by the Committee, with support from FW Cook.

Consideration of 2016 “Say-on-Pay” Advisory Vote

The Company conducts a stockholder “say-on-pay” advisory vote regarding executive compensation at each annual stockholder meeting. In 2016, our stockholders overwhelmingly approved of our executives’ compensation with 97.3% voting in favor. The Committee then evaluated these results. The Committee made no changes to our executive compensation program and policies as a result of the 2016 vote.

E X E C U T I V E   C O M P E N S A T I O N

2 6

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Compensation Philosophy

Engility’s compensation program is designed to align executive and stockholder interests, provide rewards commensurate with Company performance and attract, retain and motivate highly qualified executives. Payment for performance is the guiding principle. This means, more specifically, payment for delivering financial results that benefit our stockholders. By adhering to this principle, our program ensures that the compensation paid to our NEOs and other senior leaders is aligned with our stockholders’ interests.

We believe that above-market pay is appropriate for superior performance and below-market pay is appropriate for underperformance. For this reason, more than 50% of each NEO’s target total direct compensation (i.e., salary, annual incentive and long-term incentive) is performance-based. The 2016 annual cash incentive is 100% performance-based and 60% of the equity granted under our long-term incentive plan is performance-based to emphasize stockholder returns and long-term performance. Each NEO’s compensation is based on the officer’s role, responsibilities, performance and experience.

The designs of our incentive plans use financial metrics that provide an inherent check and balance relative to each other. In general, the plan metrics establish complementary goals for profit, growth and cash flow. This holistic design promotes a balanced performance approach, reducing the risk of management maximizing any single aspect of financial performance for personal gain. The overall objective is profitable revenue growth with healthy cash flow that reduces debt and drives the share price.

Executive Compensation Practices

Below are executive compensation practices that we use to drive performance. We also list practices we exclude because they do not serve our stockholders’ long-term interests.

What We Do
		Pay for Performance — For 2016, more than 50% of our target total direct compensation was composed of variable performance-based compensation.
		Reasonable Severance/Change in Control Provisions — We have amended our severance and change-in-control plans to align them with peer and industry practices. The amended plans go into effect in 2017. Beginning In 2016, we included double trigger acceleration provisions in all new equity grants.
		Modest Perquisites — We provide modest perquisites, consisting of executive health benefits, life insurance and tax and financial planning.
		Stock Ownership and Retention Guidelines — Our stock ownership guidelines for executive officers are designed to align their long-term interests with those of our stockholders. Additionally, our non-executive directors must retain their vested Engility equity until the earlier of their resignation or a change in control.
		Regular Review of Share Utilization — We evaluate share utilization by reviewing overhang levels and burn rates (i.e., the dilutive impact of equity compensation) prior to approving our annual compensation program.
		Independent Compensation Consulting Firm — The Committee uses an independent compensation consulting firm that provides no other services to the Company.
		Mitigate Undue Risk in Compensation Programs — We mitigate undue compensation risks by using caps on performance payments and a clawback policy, as well as processes to identify risk. The incentive plans feature performance targets chosen to incentivize balanced annual and long-term performance.

E X E C U T I V E   C O M P E N S A T I O N

2 7

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Risk Considerations

The Committee, supported by FW Cook, assessed our compensation program to determine whether associated risks were likely to have a material adverse effect on the Company. The Committee found that the program design, including features such as payout caps, reduced the likelihood of excessive risk-taking without undermining the program’s purpose and did not encourage risk-taking that could have a material adverse effect.

What We Pay and Why: Elements of Total Direct Compensation

Our annual target total direct compensation (“TDC”) is composed of three elements: base salary, annual cash incentive compensation and long-term equity grants, discussed in the following sections.

The proper relative weight for each element helps to instill a pay-for-performance culture and align executive compensation with stockholder interests. For example, greater weight on variable performance-based compensation (e.g., annual bonus) helps motivate executives to drive shareholder value through Company achievements. Similarly, long-term compensation helps mitigate short-term risk taking. For our CEO, 80% of her 2016 target TDC was either performance-based or long-term incentive compensation. Similarly, 67% of target TDC for the other NEOs was performance-based or long-term incentive compensation.*

* Pay mix for the Other NEOs reflects the average TDC mix for Messrs. Hynes, Rehberger, and Miiller and Ms. Balaguer.

  * Target compensation does not include one-time hire-on inducements for Ms. Dugle and Ms. Balaguer.

TDC Element One: Base Salary

We pay base salaries to attract talented executives and provide a fixed level of cash compensation. The Committee generally sets NEO base salaries within a competitive range of market median. The base salaries for each NEO for 2016 are set forth below.

E X E C U T I V E   C O M P E N S A T I O N

2 8

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The Board approved the compensation offered to Ms. Dugle as a new hire. The Committee approved the compensation offered to hire Ms. Balaguer and approved a base salary increase for Mr. Hynes relative to his being named President.

TDC Element Two: Annual Incentive Awards

The 2016 annual incentive compensation plan (the “2016 AICP”)¹ is the basis for annual cash bonuses paid to Company leadership. Each participant was assigned a target bonus in the first quarter of 2016, based on a defined percentage of their base salary. As discussed in further detail below, in February 2017, the Committee approved the following 2016 cash bonuses payable to our NEOs:

Discussion of AICP Payout Calculations

NEO payouts under the 2016 AICP were based on 1) a Financial Rating derived from the Company’s performance relative to pre-established metrics and target values and 2) subject to a Personal Performance Adjustment determined by the Committee and, with respect to the CEO, approved by the Board. The following graphic depicts the 2016 AICP design with metrics, target values and payout calculation.

E X E C U T I V E   C O M P E N S A T I O N

2 9

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

2016 AICP Design – Financial Rating

Engility’s 2016 AICP design used two equally-weighted financial metrics – 2016 AEBITDA and 2016 Revenue² – each of which has a target, threshold and ceiling value, based on the Company’s 2016 AOP. Following are adjustments to EBITDA that may be made by the Committee, when applicable:

A target, threshold and ceiling value was set for each metric, with target performance resulting in a 100% payout with respect to such metric; ceiling performance resulting in a 200% payout and threshold resulting in a 50% payout. Below threshold performance would result in no payout with respect to such metric. Straight line interpolation was used to calculate the rating for results between the threshold, target and ceiling values.

²  Revenue replaced Days Sales Outstanding (DSO) as a metric in our 2016 AICP because the Company had achieved industry leading DSO results and needed to emphasize the importance of organic growth in incentivizing its leaders.

AICP STRUCTURE Target AICP award opportunity is defined as percent of base salary Target Bonus Financial Rating Personal Performance Adjustment Total AICP Payout Metric 1 FY16 AOP Adjusted EBITDA (50% Weight) 200% Ceiling = $230M 100% Target = $190.2M 50% Threshold = $180M Metric 2 FY16 AOP Revenue (50% Weight) 200% Ceiling = $2,325M 100% Target = $2,125M 50% Threshold = $2,025M

E X E C U T I V E   C O M P E N S A T I O N

3 0

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The ratings for each metric were combined to create a “Financial Rating,” which then was applied as a multiple to each NEO’s award target to determine their bonus payout, subject to the Personal Performance Adjustment discussed below.

The table below presents the rationale and target value for each metric target, as well as the performance of the Company relative to target values, and the corresponding financial rating for 2016.

2016 AICP Design – Personal Performance Adjustment

Our Board annually evaluates our CEO relative to pre-determined goals. This evaluation process is managed by the Governance Committee. The CEO submitted to the Governance Committee a self-assessment that addressed her overall leadership and performance. The Governance Committee (with support from FW Cook) solicited input from each Director (excluding the CEO) and delivered an assessment of her performance to the Committee. The Committee then considered the CEO’s performance as it related to compensation and provided its compensation recommendations to the Board for approval.

Our CEO provided performance assessments and recommended compensation actions (including AICP payout adjustments) to the Committee for the other NEOs. The Committee considered the recommendations and adjusted NEO compensation as it deemed appropriate.

2016 AICP FINANCIAL TARGETS Metric Target Value Weighting Rational Adjusted Earnings Before Measures profitability Interest, Taxes, Depreciation $190.2M 50% Forecasts ability to grow cash and Amortization (AEBITDA) reserves and repay debt Measures Company growth Revenue $2,125M 50% Key performance measure evaluated by peers and industry analysts 2016 AICP FINANCIAL RESULTS Actual Financial Metric Performance Rating AEBITDA $189.7M 97.5% Revenue $2,075M 75% TOTAL WEIGHTED FINANCIAL RATING 86.2%

E X E C U T I V E   C O M P E N S A T I O N

3 1

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

In recommending or approving NEO payouts, the Committee considered the 2016 performance of each NEO, as described below.

TDC Element Three: Long-Term Incentive Awards

We provide long-term incentive (“LTI”) awards to our NEOs in the form of equity grants. Other participants are chosen based on their ability to influence Company results and their personal performance. The target annual LTI for each participant, and the participating group as a whole, takes into account the Company’s long-term business objectives, competitive market practices, equity usage and shareholder dilution.

E X E C U T I V E   C O M P E N S A T I O N

3 2

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

2016 LTIP Grants

Our 2016 LTI plan³ (“LTIP”) is composed of two equity-based awards: performance units (“PUs”) and time-based restricted stock units (“RSUs”). LTIP awards are 60% PUs and 40% RSUs and were awarded pursuant to the following plan design:

The total award value is based on a percentage of each participant’s base salary and calculated by dividing the award value by the closing EGL share price on the grant date. The following table sets forth the 2016 LTIP awards made to our NEOs.

³ The Committee approved the Engility Holdings, Inc. 2016 LTIP, an annual equity compensation plan pursuant to the Equity Plan. All equity awarded under the 2016 LTIP may be settled in Company stock or the cash equivalent at the Committee’s discretion.

LTIP STRUCTURE 60% Performance Units (3-year cliff vesting) 40% Restricted Stock Units (25%-25%-50% annual ratable vesting) Pu (60% Award Weight) RSU (40% Award Weight) Total LTIP Payout Metric 1 YE 2018 Revenue 200% Ceiling = $2,401M 100% Target = $2,250M 50% Threshold = $2,168M (50% Weight) Metric 2 Operating Cash Flow 2016 -2018 200% Ceiling = $350M 100%Target = $330M 50% Threshold = $310M (50% Weight)

E X E C U T I V E   C O M P E N S A T I O N

3 3

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Performance Units Discussion

The 2016 LTIP PUs cliff vest on the third anniversary of March 8, 2016, which follows a 3-year performance period beginning January 1, 2016, and ending December 31, 2018 (the “Performance Period”). The number of shares of Company common stock that ultimately vest varies depending on the Company’s performance against two equally-weighted metrics:

Actual 2018 Revenue and Cash Flow performance will be measured at December 31, 2018. The payout on these awards for each metric can range from zero (below threshold) to 200% (ceiling) of the target number of units. Results between threshold, target and ceiling are calculated using straight line interpolation.

Restricted Stock Units Discussion

RSUs enhance the retention of executives critical to the Company’s long-term success and facilitate stock ownership. The 2016 RSUs vest ratably over 3 years: 25% on each of the first and second anniversaries of the grant date and 50% on the third anniversary.

Executive Benefits and Perquisites

Deferred Compensation. The nonqualified Engility Corporation 2013 Deferred Compensation Plan (the “2013 Deferred Compensation Plan”), effective January 1, 2013, offers highly compensated senior employees, including our NEOs, an opportunity to save for their future financial needs. The Company does not match contributions, but does pay interest at the prime rate on deferred amounts. For 2016, none of our NEOs participated in the 2013 Deferred Compensation Plan.

Perquisites. We provide our NEOs modest perquisites, consisting of executive medical benefits, supplemental life insurance coverage and financial planning and tax assistance.

As inducements to secure Ms. Dugle’s employment, the Company provided (1) a one-time $900,000 award of Company RSUs with a 2-year cliff vesting period, based on the March 21, 2016, closing share price and (2) a one-time $425,000 sign-on bonus that Ms. Dugle used to purchase shares of Company common stock on the open market. Further, the Company provides a monthly allowance up to $3,500 (net after taxes) for housing in the Washington, D.C., area for such time as Ms. Dugle maintains her primary residence in Texas. Finally, Ms. Dugle is entitled to 200 hours paid time off per year and was deemed to have accrued 160 such hours as of her start date.

Similarly, as an inducement to secure Ms. Balaguer’s employment, the Company provided her a one-time $100,000 award of Company restricted stock units based on the May 2, 2016, closing share price. The award has a 2-year cliff vesting period.

Severance and Change in Control Benefits. We have two severance plans – the Engility Holdings, Inc. Severance Plan (“Severance Plan”) and the Engility Holdings, Inc. Change in Control Severance Plan (“CIC Severance Plan”) – to provide competitive severance benefits to the Company’s executive officers, including our NEOs, upon a qualifying separation event. In addition, our executives’ RSU awards granted after 2015 and all performance-based equity awards only vest following a qualifying termination after a change in control, as described further beginning on page 44 herein. Our CIC Severance Plan also includes a double trigger provision with respect to the cash awards and other benefits specified thereunder.

E X E C U T I V E   C O M P E N S A T I O N

3 4

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The TASC acquisition constituted a change in control under the CIC Severance Plan. As a result, Mr. Smeraglinolo received severance benefits under this plan in 2016 following his separation from Engility.

Messrs. Hynes and Rehberger are parties to legacy employment agreements with TASC that were assumed by the Company in the TASC acquisition. In the event of an involuntary employment termination without “cause” or for “good reason” (each as defined in the employment agreements), Messrs. Hynes and Rehberger would be entitled to severance benefits equal to 1.5 times base salary and average annual bonus for the two preceding fiscal years, as well as a lump sum payment to cover 18 months of COBRA premiums for continued participation in the Company’s health and welfare plans. They would also receive a pro rata bonus for their service period during the year of termination.

For information on the amounts that would be payable under these plans and otherwise upon a change in control, see “Executive Compensation—Potential Payments Upon Change in Control/Employment Termination” beginning on page 44 herein. There are no tax gross-ups on any of these severance benefits.

Compensation Decision-Making Process

Key Participants; Roles and Responsibilities

Role of the Compensation Committee

Our executive compensation program is administered by the Committee, which is ultimately responsible for the review and approval of compensation for our CEO and all Executive Officers that report directly to the CEO. Key areas of responsibility for the Committee are described in “Corporate Governance—Committees of the Board of Directors—Compensation Committee” beginning on page 12 herein.

Role of Management and Our Chief Executive Officer

Management provides the Committee with data, analysis and suggested plan designs to ensure that Engility’s compensation program aligns with and supports the Company’s business objectives. Our CEO annually reviews the NEOs’ performance and recommends salary adjustments, annual incentive award targets and long-term incentive award values. Our CEO has no role in her compensation.

Role of the Compensation Consultant

The Committee selects and compensates an independent consultant to advise it on matters concerning executive and director compensation. Since 2012, the Committee has retained FW Cook as its independent compensation consultant. To maintain its independence, FW Cook performs no other services for the Company. In February 2016, the Committee formally assessed FW Cook’s independence and concluded that there was no other relationship that raised a conflict of interest or impaired FW Cook’s independence.

Use of Market Data and Competitive Compensation Positioning

Setting Median Compensation Benchmarks

The Committee uses data collected from the annual proxy statements of our Total Compensation Peer Group (see below) as well as industry surveys (collectively, “market data”) to define an approximate base salary median for each NEO position. The Committee regards compensation within 15% above or below median as competitive. The Committee also looks to set target TDC within 15% of the medians established by market data for each NEO position. Market data benchmarks, however, may not always account for our NEOs’ specific responsibilities and, thus, may fail to accurately assess the competitiveness of the compensation. Accordingly, our NEOs may be compensated below or above benchmark levels based on other considerations, including whether they perform duties beyond those typical for their position.

E X E C U T I V E   C O M P E N S A T I O N

3 5

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Total Compensation Peer Group

For 2016, we used the below comparator group of peer companies as a key input when making compensation decisions.

Specifically, our peer group was used:

Additional Information

Executive Stock Ownership Guidelines

We use the following stock ownership guidelines for executives, including our NEOs, to align executives’ long-term financial interests with those of our stockholders.

Shares that count towards compliance with the guidelines include:

Until they satisfy their applicable ownership guideline, executive officers are required to retain 50% of their vested net shares (after settlement of taxes) acquired pursuant to the Company’s LTIP.

E X E C U T I V E   C O M P E N S A T I O N

3 6

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

Trading Controls and Prohibition on Speculative Transactions

Our NEOs must receive permission from the General Counsel’s office prior to entering into any transactions in Company securities, including any pledge of securities. Generally, trading is permitted only during announced trading periods. All Company employees are prohibited from entering into hedging transactions, or engaging in speculative transactions in our stock such as the use of puts, calls and short sales.

Timing of Equity Grants

We typically determine annual executive equity compensation awards each year at a pre-determined February or March meeting of our Committee or a subcommittee thereof. We have policies and controls to avoid the appearance of impropriety with respect to the timing of executive equity compensation awards.

Executive Compensation Recovery Policy

In April 2013, the Board adopted a policy providing for recoupment of performance-based compensation from our executive officers and chief accounting officer (each, a “Covered Officer”) in the event of a material restatement of the Company’s financial results. In such a situation, the Board will review all incentive compensation received by each Covered Officer that was based on the Company’s financial performance during the fiscal periods materially affected by the restatement. If the Board determines that such compensation would have been lower based on the restated results, the Board will, to the extent permitted by law, seek recoupment of any compensation that it deems appropriate from each Covered Officer.

Tax Considerations

Section 162(m) of the Code generally limits tax deductibility of compensation paid by a public company to its CEO and certain other highly compensated executive officers to $1 million in the year compensation becomes taxable to the executive, subject to an exception for performance-based compensation that meets specific requirements. The Committee considers the effect of this rule when developing and implementing its executive compensation programs; however, the Committee reserves the right to provide compensation that is not tax deductible if it believes the value in doing so outweighs the value of the lost tax deduction. We anticipate that payments under the AICP and qualifying performance-based awards under the LTIP are deductible by the Company.

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

Engility Holdings, Inc.

Compensation Committee

William G. Tobin (Chairman)

David A. Savner

Steven A. Denning

Peter A. Marino

The foregoing Report of the Compensation Committee shall not be deemed “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The Report of the Compensation Committee shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, regardless of any general incorporation language in such filing.

E X E C U T I V E   C O M P E N S A T I O N

3 7

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The following table provides summary information concerning compensation paid or accrued by us to our NEOs in 2016.

E X E C U T I V E   C O M P E N S A T I O N

3 8

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

E X E C U T I V E   C O M P E N S A T I O N

3 9

Table of Contents

E    N    G    I    L    I     T    Y       H    O    L    D    I    N    G    S     ,       I    N    C    .       |       P     R    O    X    Y       S    T    A    T    E    M     E    N    T

The following table summarizes awards made to our NEOs during the year ended December 31, 2016.