| Filed by the Registrant ☒ | | |
Filed by a party other than the Registrant ☐
|
| | | |
| Sincerely, | | | | |
|
|
| |
|
|
|
John C. Plant
Chairman of the Board |
| |
Charles “Chip” Blankenship
Chief Executive Officer |
|
| Wednesday, May 16, 2018 9:00 a.m. Eastern Time |
| | Lotte New York Palace Hotel 455 Madison Avenue New York, NY 10022 |
|
| Letter to our Shareholders | | | ||
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| Attachments | | | | | 84 | |||
| | | | | | | 84 | ||
| | | Arconic Inc. Peer Group Companies for Market Information for 2017 Executive Compensation Decisions (non-CEO positions) | | | | | 86 | |
| | | | | | | 87 | ||
| | | | | | | 94 |
|
Time and Date:
|
| | 9:00 a.m., Eastern Time, May 16, 2018 | |
|
Place:
|
| | Lotte New York Palace Hotel, 455 Madison Avenue, New York, NY 10022 | |
|
Record Date:
|
| | March 21, 2018 | |
|
Webcast:
|
| |
A live webcast of the meeting will be available from our website at http://www.arconic.com under “Investors—Annual Meeting.”
|
|
|
Voting:
|
| |
Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote on all matters to be voted on. As of March 21, 2018, the record date for the annual meeting, there were 482,807,490 shares of common stock outstanding and expected to be entitled to vote at the 2018 Annual Meeting. There are no other securities of the Company outstanding and entitled to vote at the 2018 Annual Meeting.
|
|
|
Admission:
|
| |
An admission ticket is required to enter Arconic’s annual meeting. See Question 3 in the “Questions and Answers About the Meeting and Voting” section regarding how to obtain a ticket. Only shareholders and authorized guests of the Company may attend the meeting and all attendees will be required to show a valid form of ID (such as a government-issued form of photo identification). If you hold your shares in street-name (i.e., through a bank or broker), you must also provide proof of share ownership, such as a letter from your bank or broker or a recent brokerage statement.
|
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| |
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| |
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|
|
Internet at
www.cesvote.com |
| |
calling 1-888-693-8683
toll-free from the U.S. or Canada |
| |
mail
return the signed proxy card |
|
|
Voting Matters
|
| | |
Unanimous Board
Recommendation |
| | |
Page Reference
(for more detail) |
| |||
| | | | | | | | | 6 | | | ||
| | | | | | | | | 37 | | | ||
| | | | | | | | | 40 | | | ||
| | | | | | | | | 67 | | | ||
| | | | ✗ AGAINST | | | | | | 77 | | |
|
Name
|
| | |
Age
|
| | |
Director
Since |
| | |
Professional Background
|
| | |
Independent
|
| | |
Committee
Memberships |
| | |
Other Current
Public Company Boards |
| |||
| James F. Albaugh | | | |
67
|
| | | | | 2017 | | | | | Former President and Chief Executive Officer of Commercial Airplanes, The Boeing Company; Former President and Chief Executive Officer of Integrated Defense Systems, The Boeing Company |
| | |
Yes
|
| | | Audit; Cybersecurity Advisory Subcommittee (Chair) |
| | | American Airlines Group Inc.; Harris Corporation | |
| Amy E. Alving | | | |
55
|
| | | | | — | | | | | Former Senior Vice President and Chief Technology Officer, Leidos Holdings, Inc. | | | |
Yes
|
| | |
—
|
| | | DXC Technology Company; Federal National Mortgage Association (Fannie Mae) |
|
| Christopher L. Ayers | | | |
51
|
| | | | | 2017 | | | | | Former President and Chief Executive Officer, WireCo WorldGroup, Inc. |
| | |
Yes
|
| | |
Audit; Finance
|
| | | Universal Stainless & Alloy Products, Inc. |
|
| Charles “Chip” Blankenship | | | |
51
|
| | | | | 2018 | | | | | Chief Executive Officer, Arconic Inc. | | | |
No
|
| | |
—
|
| | |
—
|
|
| Arthur D. Collins, Jr. | | | |
70
|
| | | | | 2010 | | | | | Former Chairman and Chief Executive Officer, Medtronic, Inc. |
| | |
Yes
|
| | | Compensation and Benefits (Chair); Governance and Nominating |
| | | The Boeing Company; U.S. Bancorp | |
| Elmer L. Doty | | | |
63
|
| | | | | 2017 | | | | | Operating Executive, The Carlyle Group LP; Former President and Chief Executive Officer, Accudyne Industries LLC | | | |
Yes
|
| | | Compensation and Benefits; Governance and Nominating |
| | |
—
|
|
| Rajiv L. Gupta | | | |
72
|
| | | | | 2016 | | | | | Chairman, Aptiv PLC; Chairman, Avantor Inc.; Former Chairman and Chief Executive Officer, Rohm and Haas Company |
| | |
Yes
|
| | | Compensation and Benefits; Governance and Nominating |
| | | Aptiv PLC (Chairman) | |
| David P. Hess | | | |
62
|
| | | | | 2017 | | | | | Former Interim Chief Executive Officer, Arconic Inc.; Former Executive Vice President and Chief Customer Officer of Aerospace, United Technologies |
| | |
Yes
|
| | |
Audit; Finance
|
| | |
—
|
|
| Sean O. Mahoney | | | |
55
|
| | | | | 2016 | | | | | Private Investor; Former Vice Chairman for Global Banking, Deutsche Bank Securities; Former Partner and Head of the Financial Sponsors Group, Goldman, Sachs & Co. |
| | |
Yes
|
| | | Audit; Finance (Chair) |
| | | Aptiv PLC; Cooper-Standard Holdings Inc. | |
|
Name
|
| | |
Age
|
| | |
Director
Since |
| | |
Professional Background
|
| | |
Independent
|
| | |
Committee
Memberships |
| | |
Other Current
Public Company Boards |
| |||
| David J. Miller | | | |
39
|
| | | | | 2017 | | | | | Senior Portfolio Manager and Head of U.S. Restructuring, Elliott Management Corporation | | | |
Yes
|
| | | Finance | | | |
—
|
|
| E. Stanley O’Neal | | | |
66
|
| | | | | 2008 | | | | | Former Chairman and Chief Executive Officer, Merrill Lynch & Co. |
| | |
Yes
|
| | |
Audit; Finance
|
| | | Platform Specialty Products Corporation | |
| John C. Plant | | | |
64
|
| | | | | 2016 | | | | | Former Chairman, President and Chief Executive Officer, TRW Automotive | | | |
Yes
|
| | | Compensation and Benefits; Governance and Nominating |
| | | Gates Industrial Corporation PLC; Jabil Circuit Corporation; Masco Corporation |
|
| Ulrich R. Schmidt | | | |
68
|
| | | | | 2016 | | | | | Former Executive Vice President and Chief Financial Officer, Spirit Aerosystems Holdings, Inc. |
| | |
Yes
|
| | | Audit (Chair); Finance | | | |
—
|
|
|
WHAT WE DO
|
| | |
WHAT WE DON’T DO
|
|
|
✓
Pay for Performance
✓
Cancellation of Unvested Equity Awards Upon Termination of Employment, Other Than in Very Limited Circumstances
✓
Robust Stock Ownership Guidelines
✓
Double-Trigger Change-in-Control Provisions
✓
Active Engagement with Investors
✓
Independent Compensation Consultant
✓
Conservative Risk Profile
✓
Claw-Back Policy
|
| | | ✗ No Guaranteed Annual Bonuses ✗ No Parachute Tax Gross-Ups ✗ No Accelerated Vesting of Equity Outside of a Double-Trigger Change-in-Control ✗ No Short Sales, Derivative Transactions or Hedging of Company Stock ✗ No Dividends on Unvested Equity Awards ✗ No Multi-Year Employment Contracts ✗ No Share Recycling or Option Repricing ✗ No Significant Perquisites |
|
|
Name
|
| | |
Albaugh
|
| | |
Alving
|
| | |
Ayers
|
| | |
Blankenship
|
| | |
Collins
|
| | |
Doty
|
| | |
Gupta
|
| | |
Hess
|
| | |
Mahoney
|
| | |
Miller
|
| | |
O’Neal
|
| | |
Plant
|
| | |
Schmidt
|
| |||||||||||||||||||||||||||||||||||||||
| Year of Joining Board |
| | |
2017
|
| | |
2018
nominee |
| | |
2017
|
| | |
2018
|
| | |
2010
|
| | |
2017
|
| | |
2016
|
| | |
2017
|
| | |
2016
|
| | |
2017
|
| | |
2008
|
| | |
2016
|
| | |
2016
|
| |||||||||||||||||||||||||||||||||||||||
| Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Finance
|
| | | |
|
✓
|
| | | | | | | | | | | |
|
✓
|
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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Industry
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
|
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✓
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✓
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✓
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| |
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International
|
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✓
|
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✓
|
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✓
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✓
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✓
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✓
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✓
|
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✓
|
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✓
|
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✓
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Leadership
|
| | | |
|
✓
|
| | | | |
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✓
|
| | | | |
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✓
|
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✓
|
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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| |
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Public Company Board
|
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✓
|
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✓
|
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✓
|
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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Risk Management
|
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✓
|
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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Technology
|
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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| |
James F. Albaugh
|
|
|
Director since: 2017
Age: 67
Committees: Audit Committee; Cybersecurity Advisory Subcommittee (Chair)
Other Current Public Directorships: American Airlines Group Inc.; Harris Corporation
|
|
|
|
| |
Amy E. Alving
|
|
|
Director from: 2016 – 2017
Age: 55
Other Current Public Directorships: DXC Technology Company; Federal National Mortgage Association (Fannie Mae)
|
|
|
|
| |
Christopher L. Ayers
|
|
|
Director since: 2017
Age: 51
Committees: Audit Committee; Finance Committee
Other Current Public Directorships: Universal Stainless & Alloy Products, Inc.
|
|
|
|
| |
Charles “Chip” Blankenship
|
|
|
Director since: 2018
Age: 51
|
|
|
|
| |
Arthur D. Collins, Jr.
|
|
|
Director since: 2010
Age: 70
Committees: Compensation and Benefits Committee (Chair); Governance and Nominating Committee
Other Current Public Directorships: The Boeing Company; U.S. Bancorp
|
|
|
|
| |
Elmer L. Doty
|
|
|
Director since: 2017
Age: 63
Committees: Compensation and Benefits Committee; Governance and Nominating Committee
|
|
|
|
| |
Rajiv L. Gupta
|
|
|
Director since: 2016
Age: 72
Committees: Compensation and Benefits Committee; Governance and Nominating Committee
Other Current Public Directorships: Aptiv PLC (Chairman)
|
|
|
|
| |
David P. Hess
|
|
|
Director since: 2017
Age: 62
Committees: Audit Committee;
Finance Committee |
|
|
|
| |
Sean O. Mahoney
|
|
|
Director since: 2016
Age: 55
Committees: Audit Committee; Finance Committee (Chair)
Other Current Public Directorships: Aptiv PLC; Cooper-Standard Holdings Inc.
|
|
|
|
| |
David J. Miller
|
|
|
Director since: 2017
Age: 39
Committees: Finance Committee
|
|
|
|
| |
E. Stanley O’Neal
|
|
|
Director since: 2008
Age: 66
Committees: Audit Committee; Finance Committee
Other Current Public Directorships: Platform Specialty Products Corporation
|
|
|
|
| |
John C. Plant
|
|
|
Chairman of the Board Since: 2017
Director since: 2016
Age: 64
Committees: Compensation and Benefits Committee; Governance and Nominating Committee
Other Current Public Directorships: Gates Industrial Corporation PLC; Jabil Circuit Corporation; Masco Corporation
|
|
|
|
| |
Ulrich R. Schmidt
|
|
|
Director since: 2016
Age: 68
Committees: Audit Committee (Chair);
Finance Committee |
|
|
Compensation Element
|
| | |
2017
|
| | |
2018
|
| | |
Effective Date of Change
|
|
| Annual Cash Retainer | | | |
$120,000
|
| | |
$120,000
|
| | |
N/A
|
|
| Annual Equity Award (Restricted Share Units Granted Following Each Annual Meeting of Shareholders) | | | |
$120,000
|
| | |
$150,000
|
| | |
Upon annual grant in May 2018
|
|
| Other Annual Fees1: | | | | | | | | | | | | | |
|
•
Board Chair Fee
|
| | |
Increased from $200,000 to $300,000 in October 2017
|
| | |
$300,000
|
| | |
October 23, 2017
|
|
|
•
Lead Director Fee2
|
| | |
$25,000
|
| | |
N/A
|
| | |
N/A
|
|
|
•
Audit Committee Chair Fee (includes Audit Committee Member Fee)
|
| | |
$27,500
|
| | |
$27,500
|
| | |
N/A
|
|
|
•
Audit Committee Member Fee
|
| | |
$11,000
|
| | |
$11,000
|
| | |
N/A
|
|
|
•
Compensation and Benefits Committee Chair Fee
|
| | |
$20,000
|
| | |
$20,000
|
| | |
N/A
|
|
|
•
Other Committee Chair Fee
|
| | |
$16,500
|
| | |
$16,500
|
| | |
N/A
|
|
| Per Meeting Fee for Meetings in Excess of Regularly Scheduled Meetings | | | |
None
|
| | |
$1,5003
|
| | |
January 1, 2018
|
|
| Ownership Requirements and Annual Compensation Limits |
| | |
2017
|
| | |
2018
|
| | |
Effective Date of Change
|
|
| Stock Ownership Requirement | | | |
$750,000
|
| | |
$750,000
|
| | |
N/A
|
|
| Timeline to Achieve Stock Ownership | | | |
None/6 years4
|
| | |
6 years
|
| | |
December 5, 2017
|
|
| Total Annual Director Compensation Limit | | | |
None/$750,0005
|
| | |
$750,000
|
| | |
December 5, 2017
|
|
|
Non-Employee Directors
|
| | |
Director
Since |
| | |
Value of Holdings in Arconic
Stock, Deferred Share Units and Deferred Restricted Share Units |
| ||||||
| James F. Albaugh | | | | | | 2017 | | | | | | $ | 228,074 | | |
| Christopher L. Ayers | | | | | | 2017 | | | | | | $ | 340,766 | | |
| Arthur D. Collins, Jr. | | | | | | 2010 | | | | | | $ | 2,335,839 | | |
| Elmer L. Doty | | | | | | 2017 | | | | | | $ | 252,314 | | |
| Rajiv L. Gupta | | | | | | 2016 | | | | | | $ | 182,309 | | |
| David P. Hess | | | | | | 2017 | | | | | | $ | 4,268,834 | | |
| Sean O. Mahoney | | | | | | 2016 | | | | | | $ | 359,261 | | |
| David J. Miller | | | | | | 2017 | | | | | | $ | 45,765 | | |
| E. Stanley O’Neal | | | | | | 2008 | | | | | | $ | 1,422,936 | | |
| John C. Plant | | | | | | 2016 | | | | | | $ | 641,100 | | |
| Patricia F. Russo | | | | | | 2008 | | | | | | $ | 1,424,754 | | |
| Ulrich R. Schmidt | | | | | | 2016 | | | | | | $ | 345,687 | | |
| Name1 (a) |
| | |
Fees Earned or
Paid in Cash ($)(b)2 |
| | |
Stock
Awards ($)(c)3 |
| | |
All Other
Compensation ($)(g) |
| | |
Total
($)(h) |
| ||||||||||||
| James F. Albaugh4 | | | | | $ | 78,247 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 198,260 | | |
| Amy E. Alving5 | | | | | $ | 52,470 | | | | | | | — | | | | | | | — | | | | | | $ | 52,470 | | |
| Christopher L. Ayers6 | | | | | $ | 72,258 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 192,271 | | |
| Arthur D. Collins, Jr.7 | | | | | $ | 140,000 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 260,013 | | |
| Elmer L. Doty8 | | | | | $ | 72,258 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 192,271 | | |
| Rajiv L. Gupta9 | | | | | $ | 120,000 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 240,013 | | |
| Sean O. Mahoney10 | | | | | $ | 146,125 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 266,138 | | |
| Patrice E. Merrin11 | | | | | $ | 68,387 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 188,400 | | |
| David J. Miller12 | | | | | $ | 4,194 | | | | | | $ | 51,618 | | | | | | | — | | | | | | $ | 55,812 | | |
| E. Stanley O’Neal13 | | | | | $ | 131,000 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 251,013 | | |
| John C. Plant14 | | | | | $ | 152,466 | | | | | | $ | 249,993 | | | | | | | — | | | | | | $ | 402,459 | | |
| L. Rafael Reif15 | | | | | $ | 48,065 | | | | | | | — | | | | | | | — | | | | | | $ | 48,065 | | |
| Julie G. Richardson16 | | | | | $ | 131,000 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 251,013 | | |
| Patricia F. Russo17 | | | | | $ | 251,803 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 371,816 | | |
| Ulrich R. Schmidt18 | | | | | $ | 147,500 | | | | | | $ | 120,013 | | | | | | | — | | | | | | $ | 267,513 | | |
| Martin S. Sorrell19 | | | | | $ | 30,000 | | | | | | | — | | | | | | | — | | | | | | $ | 30,000 | | |
| Ratan N. Tata20 | | | | | $ | 40,645 | | | | | | | — | | | | | | $ | 6,097 | | | | | | $ | 46,742 | | |
|
Our Chairman has substantial responsibilities.
|
| |
Our Chairman:
•
Calls and chairs all meetings of the Board, including executive sessions of the independent directors;
•
Responds directly to shareholder and other stakeholder questions and comments that are directed to the Chairman or to the independent directors as a group, with such consultation with the other directors as the Chairman may deem appropriate;
•
Chairs the annual shareholder meeting;
•
Ensures personal availability for consultation and direct communication with shareholders, as appropriate;
•
Oversees board governance, including approval of meeting agendas and meeting schedules to assure that all agenda items are adequately addressed;
•
Ensures personal availability for consultation and communication with independent directors;
•
Calls special meetings of the independent directors, as the Chairman may deem to be appropriate; and
•
Provides guidance and communication to the Chief Executive Officer and other members of management, as appropriate.
|
|
|
Shareholders’ interests are protected by effective and independent oversight of management:
•
12 out of our 13 directors are independent as defined by the listing standards of the New York Stock Exchange (“NYSE”) and the Company’s Director Independence Standards.
•
The Board’s key standing committees—the Audit Committee, the Compensation and Benefits Committee, the Finance Committee and the Governance and Nominating Committee—each is composed solely of independent directors.
•
Our independent directors meet at every regular meeting in executive session without management or the Chief Executive Officer present. These meetings are led by the Chairman.
|
| |
The Company’s
corporate governance practices and policies are designed to protect shareholders’ long-term interests. |
|
|
•
Leadership Experience
•
International Experience
•
Finance and Capital Allocation Experience
•
Automotive Industry Experience
|
| |
•
Aerospace Industry Experience
•
Risk Management Expertise
•
Manufacturing/Industrial Experience
•
Defense Industry Experience
|
| |
•
Technology/Innovation Expertise
•
Corporate Governance Expertise
•
Engineering Experience
•
Information Technology Experience
|
|
| | | | |
Audit
|
| | |
Cybersecurity
Advisory Committee of the Audit Committee |
| | |
Compensation
and Benefits |
| | |
Finance
|
| | |
Governance
and Nominating |
|
| James F. Albaugh* | | | |
X
|
| | |
Chair
|
| | | | | | | | | | | | |
| Christopher L. Ayers* | | | |
X
|
| | | | | | | | | | |
X
|
| | | | |
| Charles “Chip” Blankenship | | | | | | | | | | | | | | | | | | | | | |
| Arthur D. Collins, Jr.* | | | | | | | | | | | |
Chair
|
| | | | | | |
X
|
|
| Elmer L. Doty* | | | | | | | | | | | |
X
|
| | | | | | |
X
|
|
| Rajiv L. Gupta* | | | | | | | | | | | |
X
|
| | | | | | |
X
|
|
| David P. Hess* | | | |
X
|
| | | | | | | | | | |
X
|
| | | | |
| Sean O. Mahoney* | | | |
X
|
| | | | | | | | | | |
Chair
|
| | | | |
| David J. Miller* | | | | | | | | | | | | | | | |
X
|
| | | | |
| E. Stanley O’Neal* | | | |
X
|
| | | | | | | | | | |
X
|
| | | | |
| John C. Plant* | | | | | | | | | | | |
X
|
| | | | | | |
X
|
|
| Patricia F. Russo* | | | | | | | | | | | |
X
|
| | | | | | |
Chair
|
|
| Ulrich R. Schmidt* | | | |
Chair
|
| | | | | | | | | | |
X
|
| | | | |
|
2017 Meetings
|
| | |
7
|
| | |
3
|
| | |
7
|
| | |
11
|
| | |
8
|
|
| |
COMMITTEE
|
| |
RESPONSIBILITIES
|
| |
| |
Audit Committee
|
| |
•
Oversees the integrity of the financial statements and internal controls, including review of the scope and the results of the audits of the internal and independent auditors
•
Appoints the independent auditors and evaluates their independence and performance
•
Reviews the organization, performance and adequacy of the internal audit function
•
Pre-approves all audit, audit-related, tax and other services to be provided by the independent auditors
•
Oversees the Company’s compliance with legal, ethical and regulatory requirements
•
Discusses with management and the auditors the policies with respect to risk assessment and risk management, including major financial risk exposures
|
| |
| | Each member of the Audit Committee is financially literate, and the Board of Directors has determined that each member qualifies as an “audit committee financial expert” under applicable SEC rules. | | | |||
| |
Cybersecurity Advisory Subcommittee
|
| |
•
Assists the Audit Committee in regularly reviewing the state of the Company’s cybersecurity
•
Regularly brings cybersecurity developments or issues to the attention of the Audit Committee
|
| |
| |
Compensation and Benefits Committee
|
| |
•
Establishes the Chief Executive Officer’s compensation based upon an evaluation of performance in light of approved goals and objectives
•
Reviews and approves the compensation of the Company’s officers
•
Oversees the implementation and administration of the Company’s compensation and benefits plans, including pension, savings, incentive compensation and equity-based plans
•
Reviews and approves general compensation and benefit policies
•
Approves the Compensation Discussion and Analysis for inclusion in the proxy statement
•
Has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s fees and other terms of engagement (see “Corporate Governance—Compensation Consultants” regarding the committee’s engagement of a compensation consultant)
|
| |
| |
The Compensation and Benefits Committee may form and delegate its authority to subcommittees, including subcommittees of management when appropriate. Executive officers do not determine the amount or form of executive or director compensation although the Chief Executive Officer provides recommendations to the Compensation and Benefits Committee regarding compensation changes and incentive compensation for executive officers other than himself. For more information on the responsibilities and activities of the committee, including its processes for determining executive compensation, see the “Compensation Discussion and Analysis” section.
|
| | |||
| |
Finance Committee
|
| |
•
Reviews and provides advice and counsel to the Board regarding the Company’s:
•
capital structure;
•
financing transactions;
•
capital expenditures and capital plan;
•
acquisitions and divestitures;
•
share repurchase and dividend programs;
•
policies relating to interest rate, commodity and currency hedging; and
•
employee retirement plans.
|
| |
| |
Governance and Nominating Committee
|
| |
•
Identifies individuals qualified to become Board members and recommends them to the full Board for consideration, including evaluating all potential candidates, whether initially recommended by management, other Board members or shareholders
•
Review and make recommendations to the Board concerning the appropriate structure and operations of the Board and Board committees
•
Makes recommendations to the Board regarding Board committee assignments
•
Develops and annually reviews corporate governance guidelines for the Company, and oversees other corporate governance matters
•
Reviews related person transactions
•
Oversees an annual performance review of the Board, Board committees and individual director nominees
•
Periodically reviews and makes recommendations to the Board regarding director compensation
|
| |
|
Name and Address of Beneficial Owner
|
| | |
Title of Class
|
| | |
Amount and Nature
of Beneficial Ownership (#) |
| | |
Percent
of Class |
| |||
| Elliott Associates, L.P. c/o Elliott Management Corporation 40 West 57th Street New York, NY 10019 |
| | |
Common Stock
|
| | | | | 51,102,1331 | | | | |
10.6%
|
|
| Elliott International, L.P. c/o Maples & Calder P.O. Box 309 Ugland House, South Church Street George Town Cayman Islands, British West Indies |
| | | | | | | | | | | | | | | |
| Elliott International Capital Advisors Inc. 40 West 57th Street New York, NY 10019 |
| | | | | | | | | | | | | | | |
| The Vanguard Group 100 Vanguard Boulevard Malvern, PA 19355 |
| | |
Common Stock
|
| | | | | 46,511,1492 | | | | |
9.66%
|
|
| Blackrock, Inc. 55 East 52nd Street New York, NY 10022 |
| | |
Common Stock
|
| | | | | 32,715,2583 | | | | |
6.8%
|
|
|
Name and Address of Beneficial Owner
|
| | |
Title of Class
|
| | |
Amount and Nature
of Beneficial Ownership (#) |
| | |
Percent
of Class |
| |||
| Orbis Investment Management Limited Orbis House 25 Front Street Hamilton, Bermuda HM11 |
| | |
Common Stock
|
| | | | | 31,752,9844 | | | | |
6.6%
|
|
| Orbis Investment Management (U.S.), LLC 600 Montgomery Street, Suite 3800 San Francisco, CA 94111 |
| | | | | | | | | | | | | |
|
|
| Allan Gray Australia Pty Ltd Level 2, Challis House 4 Martin Place Sydney, NSW2000 Australia |
| | | | | | | | | | | | | |
|
|
|
Name of Beneficial Owner
|
| | |
Shares of
Common Stock1 |
| | |
Deferred
Share Units2 |
| | |
Deferred
Restricted Share Units3 |
| | |
Total
|
| ||||||||||||
| Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
James F. Albaugh
|
| | | | | 5,000 | | | | | | | — | | | | | | | 4,409 | | | | | | | 9,409 | | |
|
Christopher L. Ayers
|
| | | | | 7,478 | | | | | | | — | | | | | | | 6,580 | | | | | | | 14,058 | | |
|
Charles P. Blankenship
|
| | | | | 41,510 | | | | | | | — | | | | | | | — | | | | | | | 41,510 | | |
|
Arthur D. Collins, Jr.
|
| | | | | 16,666 | | | | | | | 67,132 | | | | | | | 12,565 | | | | | | | 96,363 | | |
|
Elmer L. Doty
|
| | | | | 6,0004 | | | | | | | — | | | | | | | 4,409 | | | | | | | 10,409 | | |
|
Rajiv L. Gupta
|
| | | | | — | | | | | | | — | | | | | | | 7,521 | | | | | | | 7,521 | | |
|
Sean O. Mahoney
|
| | | | | — | | | | | | | 7,300 | | | | | | | 7,521 | | | | | | | 14,821 | | |
|
David J. Miller
|
| | | | | — | | | | | | | — | | | | | | | 1,888 | | | | | | | 1,888 | | |
|
E. Stanley O’Neal
|
| | | | | — | | | | | | | 46,177 | | | | | | | 12,525 | | | | | | | 58,702 | | |
|
John C. Plant
|
| | | | | 10,0005 | | | | | | | 3,589 | | | | | | | 12,859 | | | | | | | 26,448 | | |
|
Patricia F. Russo
|
| | | | | 18,3336 | | | | | | | 32,155 | | | | | | | 8,289 | | | | | | | 58,777 | | |
|
Ulrich R. Schmidt
|
| | | | | 3,333 | | | | | | | 3,407 | | | | | | | 7,521 | | | | | | | 14,261 | | |
| Named Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
David P. Hess*
|
| | | | | 50,7817 | | | | | | | — | | | | | | | 125,326 | | | | | | | 176,107 | | |
|
Kenneth J. Giacobbe
|
| | | | | 40,604 | | | | | | | — | | | | | | | — | | | | | | | 40,604 | | |
|
Timothy D. Myers
|
| | | | | 54,810 | | | | | | | 17,046 | | | | | | | — | | | | | | | 71,856 | | |
|
Katherine H. Ramundo
|
| | | | | 12,780 | | | | | | | — | | | | | | | — | | | | | | | 12,780 | | |
|
Eric V. Roegner
|
| | | | | 121,465 | | | | | | | 1,450 | | | | | | | — | | | | | | | 122,915 | | |
|
Klaus Kleinfeld
|
| | | | | 638,100 | | | | | | | — | | | | | | | — | | | | | | | 638,100 | | |
|
Christoph Kollatz
|
| | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | |
|
Karl Tragl
|
| | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | |
| All Directors and Executive Officers as a Group (19 individuals) | | | | | | 453,341 | | | | | | | 178,256 | | | | | | | 211,413 | | | | | | | 843,010 | | |
| | | | |
2017
|
| | |
2016
|
| ||||||
| Audit Fees | | | | | $ | 10.2 | | | | | | $ | 14.7 | | |
| Audit-Related Fees | | | | | $ | 0.1 | | | | | | $ | 5.1 | | |
| Tax Fees | | | | | $ | 0.1 | | | | | | $ | 0.3 | | |
| All Other Fees | | | | | $ | 0.0 | | | | | | $ | 0.0 | | |
| David P. Hess | | | Interim Chief Executive Officer | |
| Kenneth J. Giacobbe | | | Executive Vice President and Chief Financial Officer | |
| Timothy D. Myers | | | Executive Vice President and Group President, Global Rolled Products and Transportation and Construction Solutions | |
| Katherine H. Ramundo | | | Executive Vice President, Chief Legal Officer and Secretary | |
| Eric V. Roegner | | | Executive Vice President and Group President, Engineered Products and Solutions | |
| Klaus Kleinfeld | | | Former Chairman and Chief Executive Officer | |
| Christoph Kollatz | | | Former Executive Vice President, Corporate Development, Strategy and New Ventures | |
| Karl Tragl | | | Former Executive Vice President and Group President, Engineered Products and Solutions | |
|
WHAT WE DO
|
| | |
WHAT WE DON’T DO
|
|
|
✓
Pay for Performance—We link compensation to measured performance in key financial and non-financial areas. The Company’s strategic priorities are reflected in its metrics at the corporate, group and individual levels.
✓
Cancellation of Unvested Equity Awards Upon Termination of Employment—Unvested equity awards are generally forfeited upon termination of employment, other than in connection with disability, death or change-in-control, or if retirement-eligible.
✓
Robust Stock Ownership Guidelines—All officers, directors, as well as senior executives, are subject to stock ownership guidelines to align their interests with shareholders’ interests.
✓
Double-Trigger Change-in-Control Provisions—Equity awards for all NEOs require a “double-trigger” of both a change-in-control and termination of employment for vesting acceleration benefits to apply.
✓
Active Engagement with Investors—We engage with investors throughout the year to obtain comments and insights that guide our executive compensation programs.
✓
Independent Compensation Consultant—The Compensation Committee retains a compensation consultant, which is independent and without conflicts of interest with Arconic.
✓
Conservative Risk Profile—We apply varied performance measures in incentive programs to mitigate risk that executives will be motivated to pursue results with respect to any one performance measure to the detriment of Arconic as a whole.
✓
Claw-Back Policy—Both our annual cash incentive compensation plan and our stock incentive plan contain “claw-back” provisions providing for reimbursement of incentive compensation from NEOs in certain circumstances.
|
| | | ✗ No Guaranteed Bonuses—Our annual incentive compensation plan is performance-based and does not include any minimum payment levels. ✗ No Parachute Tax Gross-Ups—As amended effective February 27, 2017, our Change in Control Severance Plan provides that no excise or other tax gross-ups will be paid. ✗ No Accelerated Vesting of Equity Outside of a Double-Trigger Change-in-Control ✗ No Short Sales, Derivative Transactions or Hedging—We do not allow short sales or derivative or speculative transactions in, or hedging of, Arconic securities by our directors, officers or employees. Directors and certain officers are also prohibited from pledging Arconic securities as collateral. ✗ No Dividends on Unvested Equity Awards—We do not pay dividends or dividend equivalents on unvested equity awards, but accrue dividends that only vest if the award vests. ✗ No Multi-Year Employment Contracts—The Compensation Committee’s policy is to not enter into multi-year employment contracts with senior executives providing for guaranteed annual bonus or equity compensation. ✗ No Share Recycling or Option Repricing—Our equity plans prohibit share recycling, the adding back of shares tendered in payment of the exercise price of a stock option award or withheld to pay taxes and repricing underwater stock options. ✗ No Significant Perquisites—We limit the perquisites we pay to our NEOs to those that serve reasonable business purposes. |
|
|
Shareholder Feedback & Best Practices
from Market Study* |
| | |
Our Responses/Changes
|
|
| Emphasize performance-based equity awards | | | | We affirmed our industry leading practice of granting 80% of long-term incentive awards for NEOs in the form of performance shares, the highest proportion in the market study* | |
| Establish long-term targets for performance-based restricted share units (RSUs) | | | | Beginning in 2017, performance RSUs are earned based on 3-year targets set at the beginning of the 3-year performance period | |
| Consider incentive metrics that are strongly linked to shareholder value and based on relative performance | | | |
Beginning in 2017, we implemented a new incentive compensation structure, including:
•
A return metric (return on net assets) for performance RSUs
•
A relative total shareholder return (TSR) multiplier for performance RSUs
|
|
|
Compensation Type
|
| | |
Principle
|
| |
Design/Structure
|
|
|
Base Salary
|
| | |
•
Target total direct compensation, including base salary, at median of market to provide competitive pay
|
| |
•
For CEO compensation, including base pay, we used a custom peer group of 17 industrial companies of a similar size and in similar industries in which Arconic operates. For other executives, we used Willis Towers Watson survey data for companies heavily weighted towards industrials with revenues between $7 billion and $26 billion
|
|
|
Short-Term
Annual Incentive Compensation |
| | |
•
Choose annual IC weighted metrics that focus management’s actions on achieving the greatest positive impact on Arconic’s financial performance and that include a means to assess and motivate performance relative to peers
•
Set IC targets that challenge management to achieve continuous improvement in performance and deliver long-term growth
•
Take into account individual performance contributing to the success of the Company
|
| |
•
NEO annual incentives are paid in cash and determined through a three-step performance measurement process:
1.
Initial Threshold Performance Goal: Corporate Performance Measures
2.
Financial and Non-Financial Goals: Weighted Metrics (0%–200% payout)
3.
Individual NEO Performance: Individual Multiplier to Plan Results (0%–150%)
•
Performance goals based on 90% financial and 10% non-financial metrics:
1.
Financial metrics split 45% each between Earnings Before Interest and Tax (EBIT) and Free Cash Flow to incentivize management to deliver profitable growth and efficient allocation of capital
2.
10% non-financial metrics based on safety and diversity
|
|
|
Long-Term
Incentives |
| | |
•
Make LTI equity the most significant portion of total compensation for senior executives and managers, increasing the portion of equity based on performance with the level of responsibility
•
Set LTI target grant levels in line with median among industry peers that are competitive to attract, retain and motivate executives and factor in individual performance and future potential for long-term retention
•
Choose LTI metrics that focus management’s actions on achieving the greatest positive impact on Arconic’s financial performance and that include a means to assess and motivate performance relative to peers
•
Set LTI targets that challenge management to achieve continuous improvement in performance and deliver long-term growth
|
| |
•
Beginning in 2017, grants of performance-based restricted share units that vest based on achievement of 3-year performance targets to emphasize long-term value creation
•
Stock options vest ratably over three years following the grant date and have value only to the extent of share price appreciation
•
To highlight Arconic’s focus on long-term capital efficiency and profitable growth:
1.
50% of 2017–2019 performance-based RSUs are based on return on net assets (RONA)
2.
25% of 2017–2019 performance-based RSUs are based on revenue growth
3.
25% of 2017–2019 performance-based RSUs are based on adjusted EBITDA margin
•
Measure performance relative to peers by applying a relative TSR multiplier at the end of the 2017–2019 performance period:
1.
Up to -10% for TSR below median
2.
Up to +10% for TSR above median (plan capped at 200% overall)
|
|