| Filed by the Registrant ☒ | | |
Filed by a party other than the Registrant ☐
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| Tuesday, May 14, 2019 8:00 a.m. Eastern Time |
| | Arconic Cleveland Operations 1616 Harvard Avenue Building 53 Cleveland, OH 44105 |
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| Letter to our Shareholders | | | | |
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| Item 4 Approval of 2013 Arconic Stock Incentive Plan, as Amended and Restated, Including Increase of Reserved Shares | | | | |
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| Attachments | | | | | 83 | |||
| | | | | | | 83 | ||
| | | Arconic Inc. Peer Group Companies for Market Information for 2018 Executive Compensation Decisions (non-CEO positions) | | | | | 85 | |
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| | | | | | | 92 |
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Time and Date:
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8:00 a.m. Eastern Time, May 14, 2019
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Place:
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| | Arconic Cleveland Operations, 1616 Harvard Avenue, Building 53, Cleveland, OH 44105 | |
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Record Date:
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| | March 25, 2019 | |
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Webcast:
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A live webcast of the meeting will be available from our website at http://www.arconic.com under “Investors—Annual Meeting.”
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Voting:
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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 25, 2019, the record date for the annual meeting, there were 453,083,173 shares of common stock outstanding and expected to be entitled to vote at the 2019 Annual Meeting. There are no other securities of the Company outstanding and entitled to vote at the 2019 Annual Meeting.
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Admission:
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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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Internet at
www.cesvote.com |
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calling 1-888-693-8683
toll-free from the U.S. or Canada |
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mail
return the signed proxy card |
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Voting Matters
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Unanimous Board
Recommendation |
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Page Reference
(for more detail) |
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| | | | | | | | | 6 | | | ||
| | | | | | | | | 36 | | | ||
| | | | | | | | | 39 | | | ||
| | | | | | | | | 64 | | | ||
| | | | | | | | | 76 | | |
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Name
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Age
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Director
Since |
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Professional Background
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Independent
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Committee
Memberships |
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Other Current
Public Company Boards |
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| James F. Albaugh | | | |
68
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| | | | | 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 |
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Yes
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| | | Compensation and Benefits; Governance and Nominating |
| | | American Airlines Group Inc.; GS Acquisition Holdings Corp; Harris Corporation |
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| Amy E. Alving | | | |
56
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| | | | | 2018 | | | | | Former Senior Vice President and Chief Technology Officer, Leidos Holdings, Inc. |
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Yes
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| | | Compensation and Benefits; Cybersecurity Advisory Subcommittee (Chair); Governance and Nominating |
| | | DXC Technology Company; Federal National Mortgage Association (Fannie Mae) |
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| Christopher L. Ayers | | | |
52
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| | | | | 2017 | | | | | Former President and Chief Executive Officer, WireCo WorldGroup, Inc. |
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Yes
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Audit; Finance
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| | | Universal Stainless & Alloy Products, Inc. |
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| Elmer L. Doty | | | |
64
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| | | | | 2017 | | | | | President and Chief Operating Officer, Arconic Inc. |
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No
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—
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—
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| Rajiv L. Gupta | | | |
73
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| | | | | 2016 | | | | | Chairman, Aptiv PLC; Chairman, Avantor Inc.; Former Chairman and Chief Executive Officer, Rohm and Haas Company |
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Yes
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| | | Compensation and Benefits (Chair); Governance and Nominating |
| | | Aptiv PLC (Chairman) | |
| Sean O. Mahoney | | | |
56
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| | | | | 2016 | | | | | Private Investor; Former Vice Chairman for Global Banking, Deutsche Bank Securities; Former Partner and Head of the Financial Sponsors Group, Goldman, Sachs & Co. |
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Yes
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| | | Audit; Finance (Chair) |
| | | Aptiv PLC | |
| David J. Miller | | | |
40
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| | | | | 2017 | | | | | Equity Partner, Senior Portfolio Manager and Head of U.S. Restructuring, Elliott Management Corporation |
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Yes
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| | | Finance | | | |
—
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| E. Stanley O’Neal | | | |
67
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| | | | | 2008 | | | | | Former Chairman and Chief Executive Officer, Merrill Lynch & Co., Inc. |
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Yes
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Audit; Finance
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| | | Clearway Energy, Inc.; Platform Specialty Products Corporation | |
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Name
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Age
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Director
Since |
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Professional Background
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Independent
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Committee
Memberships |
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Other Current
Public Company Boards |
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| John C. Plant | | | |
65
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| | | | | 2016 | | | | | Chairman and Chief Executive Officer, Arconic Inc. | | | |
No
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—
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| | | Gates Industrial Corporation PLC; Jabil Circuit Corporation; Masco Corporation |
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| Ulrich R. Schmidt | | | |
69
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| | | | | 2016 | | | | | Former Executive Vice President and Chief Financial Officer, Spirit Aerosystems Holdings, Inc. |
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Yes
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| | | Audit (Chair); Finance | | | |
—
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WHAT WE DO
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WHAT WE DON’T DO
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✓
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
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✗
No Guaranteed Annual Bonuses
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No Parachute Tax Gross-Ups
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No Short Sales, Derivative Transactions or Hedging of Company Stock
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No Dividends on Unvested Equity Awards
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No Share Recycling or Option Repricing
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No Significant Perquisites
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Name
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Albaugh
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Alving
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Ayers
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Doty
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Gupta
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Mahoney
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Miller
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O’Neal
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Plant
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Schmidt
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| Year of Joining Board |
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2017
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2018
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2017
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2017
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2016
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2016
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2017
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2008
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2016
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2016
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| Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Finance
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| | | | | ✓ | | | | | | | | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | |
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Industry
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| | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | |
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International
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| | | | | ✓ | | | | | | | | | | | | | | | | | | | | | ✓ | | | | | | | ✓ | | | | | | | | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | |
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Leadership
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| | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | |
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Public Company Board
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| | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | |
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Risk Management
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| | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | |
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Technology
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| | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | ✓ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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James F. Albaugh
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Director since: 2017
Age: 68
Committees: Compensation and Benefits Committee; Governance and Nominating Committee
Other Current Public Directorships: American Airlines Group Inc.; GS Acquisition Holdings Corp; Harris Corporation
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Amy E. Alving
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Director since: 2018
Age: 56
Committees: Compensation and Benefits Committee; Cybersecurity Advisory Subcommittee (Chair); Governance and Nominating Committee
Other Current Public Directorships: DXC Technology Company; Federal National Mortgage Association (Fannie Mae)
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Christopher L. Ayers
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Director since: 2017
Age: 52
Committees: Audit Committee; Finance Committee
Other Current Public Directorships: Universal Stainless & Alloy Products, Inc.
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Elmer L. Doty
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Director since: 2017
Age: 64
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Rajiv L. Gupta
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Director since: 2016
Age: 73
Committees: Compensation and Benefits Committee (Chair); Governance and Nominating Committee
Other Current Public Directorships: Aptiv PLC (Chairman)
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Sean O. Mahoney
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Director since: 2016
Age: 56
Committees: Audit Committee; Finance Committee (Chair)
Other Current Public Directorships: Aptiv PLC
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David J. Miller
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Director since: 2017
Age: 40
Committees: Finance Committee
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E. Stanley O’Neal
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Director since: 2008
Age: 67
Committees: Audit Committee; Finance Committee
Other Current Public Directorships: Clearway Energy, Inc.; Platform Specialty Products Corporation
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John C. Plant
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Director since: 2016
Age: 65
Other Current Public Directorships: Gates Industrial Corporation PLC; Jabil Circuit Corporation; Masco Corporation
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Ulrich R. Schmidt
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Director since: 2016
Age: 69
Committees: Audit Committee (Chair);
Finance Committee |
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Compensation Element
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2018 Amount
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2019 Amount
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| Annual Cash Retainer | | | |
$120,000
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$120,000
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| Annual Equity Award (Restricted Share Units Granted Following Each Annual Meeting of Shareholders) | | | |
$150,000
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$150,000
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| Other Annual Fees1: | | | | | | | | | |
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•
Non-Executive Board Chair Fee
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$300,000
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N/A2
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•
Lead Director Fee
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N/A2
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$40,0002
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•
Audit Committee Chair Fee (includes Audit Committee Member Fee)
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$27,500
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$27,500
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•
Audit Committee Member Fee
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$11,000
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$11,000
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•
Compensation and Benefits Committee Chair Fee
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$20,000
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$20,000
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•
Other Committee Chair Fee
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$16,500
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$16,500
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| Per Meeting Fee for Meetings in Excess of Regularly Scheduled Meetings | | | |
$1,5003
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$1,5003
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Ownership Requirements and Annual Compensation Limits
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2018 Amount
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2019 Amount
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| Stock Ownership Requirement | | | |
$750,000
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$750,000
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| Timeline to Achieve Stock Ownership | | | |
6 years
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6 years
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| Total Annual Director Compensation Limit | | | |
$750,000
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$750,000
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Directors
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Director
Since |
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Value of Holdings in Arconic Stock,
Deferred Share Units and Deferred Restricted Share Units |
| ||||||
| James F. Albaugh | | | | | | 2017 | | | | | | $ | 336,218 | | |
| Amy E. Alving | | | | | | 2018 | | | | | | $ | 256,536 | | |
| Christopher L. Ayers | | | | | | 2017 | | | | | | $ | 568,997 | | |
| Arthur D. Collins, Jr. | | | | | | 2010 | | | | | | $ | 2,148,794 | | |
| Elmer L. Doty | | | | | | 2017 | | | | | | $ | 7,666,358 | | |
| Rajiv L. Gupta | | | | | | 2016 | | | | | | $ | 300,365 | | |
| David P. Hess | | | | | | 2017 | | | | | | $ | 3,331,701 | | |
| Sean O. Mahoney | | | | | | 2016 | | | | | | $ | 600,654 | | |
| David J. Miller | | | | | | 2017 | | | | | | $ | 193,394 | | |
| E. Stanley O’Neal | | | | | | 2008 | | | | | | $ | 1,425,788 | | |
| John C. Plant | | | | | | 2016 | | | | | | $ | 23,773,885 | | |
| Ulrich R. Schmidt | | | | | | 2016 | | | | | | $ | 467,154 | | |
| Name1 (a) |
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Fees Earned or Paid
in Cash ($)(b)2 |
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Stock
Awards ($)(c)3 |
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All Other
Compensation ($)(g) |
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Total
($)(h) |
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| James F. Albaugh4 | | | | | $ | 140,500 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 290,492 | | |
| Amy E. Alving5 | | | | | $ | 97,161 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 247,153 | | |
| Christopher L. Ayers6 | | | | | $ | 149,000 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 298,992 | | |
| Arthur D. Collins, Jr.7 | | | | | $ | 155,000 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 304,992 | | |
| Elmer L. Doty8 | | | | | $ | 133,500 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 283,492 | | |
| Rajiv L. Gupta9 | | | | | $ | 144,000 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 293,992 | | |
| David P. Hess10 | | | | | $ | 144,070 | | | | | | $ | 192,746 | | | | | | | — | | | | | | $ | 336,816 | | |
| Sean O. Mahoney11 | | | | | $ | 165,500 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 315,492 | | |
| David J. Miller12 | | | | | $ | 132,000 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 281,992 | | |
| E. Stanley O’Neal13 | | | | | $ | 147,500 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 297,492 | | |
| John C. Plant14 | | | | | $ | 316,835 | | | | | | $ | 279,983 | | | | | | | — | | | | | | $ | 596,818 | | |
| Julie G. Richardson15 | | | | | $ | 16,765 | | | | | | | — | | | | | | | — | | | | | | $ | 16,765 | | |
| Patricia F. Russo16 | | | | | $ | 55,871 | | | | | | | — | | | | | | | — | | | | | | $ | 55,871 | | |
| Ulrich R. Schmidt17 | | | | | $ | 165,500 | | | | | | $ | 149,992 | | | | | | | — | | | | | | $ | 315,492 | | |
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Our independent Lead Director has
substantial responsibilities. |
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Our Lead Director:
•
Presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
•
Responds directly to shareholder and other stakeholder questions and comments that are directed to the Lead Director or to the independent directors as a group, with such consultation with the Chairman or other directors as the Lead Director may deem appropriate;
•
Reviews and approves meeting agendas and schedules for the Board;
•
Ensures personal availability for consultation and communication with independent directors and with the Chairman, as appropriate;
•
Calls executive sessions of the Board;
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Calls special meetings of the independent directors, as the Lead Director may deem to be appropriate; and
•
In his capacity as Chair of the Governance and Nominating Committee, oversees the Board’s self-evaluation process.
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Shareholders’ interests are protected by effective and independent oversight of management:
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10 of our 12 current directors—and 8 of the 10 director nominees—are independent as defined by the listing standards of the New York Stock Exchange (“NYSE”) and the Company’s Director Independence Standards.
•
Each of the Board’s key standing committees—the Audit Committee, the Compensation and Benefits Committee, the Finance Committee and the Governance and Nominating Committee—is composed solely of independent directors.
•
Our independent directors meet at every regular meeting in executive session without management or the Chairman and Chief Executive Officer or the President and Chief Operating Officer present. These meetings are led by the Lead Director.
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| | The Company’s corporate governance practices and policies are designed to protect shareholders’ long-term interests. |
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•
Leadership Experience
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International Experience
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Finance and Capital Allocation Experience
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Automotive Industry Experience
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•
Aerospace Industry Experience
•
Risk Management Expertise
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Manufacturing/Industrial Experience
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Defense Industry Experience
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•
Technology/Innovation Expertise
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Corporate Governance Expertise
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Engineering Expertise
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Information Technology Experience
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Audit
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Cybersecurity
Advisory Committee of the Audit Committee |
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Compensation
and Benefits |
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Finance
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Governance
and Nominating |
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| James F. Albaugh* | | | | | | | | | | | |
X
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X
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| Amy E. Alving* | | | | | | | |
Chair
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X
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X
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| Christopher L. Ayers* | | | |
X
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X
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| Arthur D. Collins, Jr.* | | | | | | | | | | | |
X
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Chair
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| Elmer L. Doty | | | | | | | | | | | | | | | | | | | | | |
| Rajiv L. Gupta* | | | | | | | | | | | |
Chair
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X
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| David P. Hess* | | | |
X
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X
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| Sean O. Mahoney* | | | |
X
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Chair
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| David J. Miller* | | | | | | | | | | | | | | | |
X
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| E. Stanley O’Neal* | | | |
X
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X
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| John C. Plant | | | | | | | | | | | | | | | | | | | | | |
| Ulrich R. Schmidt* | | | |
Chair
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X
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2018 Committee Meetings1
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8
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4
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6
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9
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7
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COMMITTEE
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RESPONSIBILITIES
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Audit Committee
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•
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
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| | 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. | | | |||
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Cybersecurity Advisory Subcommittee
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•
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 and the Board
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Compensation and Benefits Committee
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•
Establishes the Chief Executive Officer’s compensation for Board ratification, 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)
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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.
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Finance Committee
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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 plan performance and funding.
|
| |
| |
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
•
Reviews and makes recommendations to the Board regarding 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 Class1 |
| |||
| Elliott Associates, L.P. c/o Elliott Management Corporation 40 West 57th Street New York, NY 10019 |
| | |
Common Stock
|
| | | | | 51,102,1332 | | | | |
11.28%
|
|
| 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
|
| | | | | 45,618,6243 | | | | |
10.07%
|
|
| BlackRock, Inc. 55 East 52nd Street New York, NY 10055 |
| | |
Common Stock
|
| | | | | 35,102,9814 | | | | |
7.75%
|
|
|
Name and Address of Beneficial Owner
|
| | |
Title of Class
|
| | |
Amount and Nature
of Beneficial Ownership (#) |
| | |
Percent
of Class1 |
| |||
| Orbis Investment Management Limited Orbis House 25 Front Street Hamilton, Bermuda HM11 |
| | |
Common Stock
|
| | | | | 28,884,7165 | | | | |
6.38%
|
|
| Orbis Investment Management (U.S.), L.P. 600 Montgomery Street, Suite 3800 San Francisco, CA 94111 |
| | | | | | | | | | | | | |
|
|
| First Pacific Advisors, LP J. Richard Atwood Steven T. Romick 11601 Wilshire Blvd., Suite 1200 Los Angeles, CA 90025 |
| | |
Common Stock
|
| | | | | 26,188,4516 | | | | |
5.78%
|
|
|
Name of Beneficial Owner
|
| | |
Shares of
Common Stock1 |
| | |
Deferred
Share Units2 |
| | |
Deferred
Restricted Share Units3 |
| | |
Total
|
| ||||||||||||
| Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
James F. Albaugh
|
| | | | | 5,000 | | | | | | | — | | | | | | | 12,705 | | | | | | | 17,705 | | |
|
Amy E. Alving
|
| | | | | 2,026 | | | | | | | — | | | | | | | 11,483 | | | | | | | 13,509 | | |
|
Christopher L. Ayers
|
| | | | | 7,501 | | | | | | | — | | | | | | | 22,462 | | | | | | | 29,963 | | |
|
Arthur D. Collins, Jr.
|
| | | | | 16,666 | | | | | | | 67,972 | | | | | | | 28,516 | | | | | | | 113,154 | | |
|
Elmer L. Doty
|
| | | | | 6,0004 | | | | | | | — | | | | | | | 397,705 | | | | | | | 403,705 | | |
|
Rajiv L. Gupta
|
| | | | | — | | | | | | | — | | | | | | | 15,817 | | | | | | | 15,817 | | |
|
Sean O. Mahoney
|
| | | | | — | | | | | | | 7,391 | | | | | | | 24,239 | | | | | | | 31,630 | | |
|
David J. Miller
|
| | | | | — | | | | | | | — | | | | | | | 10,184 | | | | | | | 10,184 | | |
|
E. Stanley O’Neal
|
| | | | | — | | | | | | | 46,755 | | | | | | | 28,326 | | | | | | | 75,081 | | |
|
John C. Plant
|
| | | | | 220,0005 | | | | | | | 3,634 | | | | | | | 1,028,282 | | | | | | | 1,251,916 | | |
|
Ulrich R. Schmidt
|
| | | | | 5,333 | | | | | | | 3,450 | | | | | | | 15,817 | | | | | | | 24,600 | | |
| Named Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Kenneth J. Giacobbe
|
| | | | | 77,568 | | | | | | | — | | | | | | | — | | | | | | | 77,568 | | |
|
Timothy D. Myers
|
| | | | | 85,949 | | | | | | | 17,451 | | | | | | | — | | | | | | | 103,400 | | |
|
Katherine H. Ramundo
|
| | | | | 33,734 | | | | | | | — | | | | | | | — | | | | | | | 33,734 | | |
|
Charles P. Blankenship
|
| | | | | 99,394 | | | | | | | — | | | | | | | — | | | | | | | 99,394 | | |
|
David P. Hess*
|
| | | | | 75,5256 | | | | | | | — | | | | | | | 99,920 | | | | | | | 175,445 | | |
|
Mark J. Krakowiak
|
| | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | |
|
Eric V. Roegner
|
| | | | | 72,506 | | | | | | | — | | | | | | | — | | | | | | | 72,506 | | |
| All Directors and Executive Officers as a Group (17 individuals) | | | | | | 614,770 | | | | | | | 146,653 | | | | | | | 1,695,456 | | | | | | | 2,456,869 | | |
| | | | |
2018
|
| | |
2017
|
| ||||||
| Audit Fees | | | | | $ | 9.0 | | | | | | $ | 10.2 | | |
| Audit-Related Fees | | | | | $ | 2.0 | | | | | | $ | 0.1 | | |
| Tax Fees | | | | | $ | 0.1 | | | | | | $ | 0.1 | | |
| All Other Fees | | | | | $ | 0.0 | | | | | | $ | 0.0 | | |
| 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 | |
| Charles P. “Chip” Blankenship | | | Former Chief Executive Officer | |
| David P. Hess | | | Former Interim Chief Executive Officer | |
| Mark J. Krakowiak | | | Former Executive Vice President, Strategy and Development | |
| Eric V. Roegner | | | 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 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—Officers and directors are subject to stock ownership guidelines to align their interests with shareholder interests.
✓
Double-Trigger Change-in-Control Provisions—Equity awards for NEOs generally 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 insights that guide our executive compensation programs.
✓
Independent Compensation Consultant—The Compensation Committee retains a compensation consultant, who is independent and without conflicts of interest with Arconic.
✓
Conservative Risk Profile—We generally 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—Our Change in Control Severance Plan provides that no excise or other tax gross-ups will be paid.
✗
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 on unvested equity awards but accrue dividend equivalents that only vest when and if the award vests.
✗
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 and Best Practices
|
| | |
Our Responses/Changes
|
|
| Emphasize long-term performance-based equity awards | | | | We maintained our industry leading practice of granting 80% of long-term incentive (LTI) awards for NEOs in the form of performance shares, which is the highest proportion within our CEO peer group, among which the median mix was 50% performance-based LTI and 50% time-vested (see page 46). Our 2018 LTI performance RSUs are subject to a three-year performance period (2018-2020). | |
| Focus on performance metrics that drive operational performance and shareholder value | | | | Our 2018 annual incentive compensation (IC) design incorporates two equally weighted metrics, controllable free cash flow and adjusted operating income. We believe that these metrics, as well as our LTI compensation metrics of revenue, EBITDA margin, return on net assets and relative TSR, incentivize management actions to maximize operational performance and shareholder value. | |
| Focus on operational improvements and profitability in our business groups | | | | To emphasize operational results and hold managers accountable for factors they directly control, 2018 annual IC for those who work in our business groups was weighted 60% based on the performance of the applicable business group and 40% based on corporate (total company) performance. In prior years, the weighting had been equal at 50% each. | |
|
Compensation Type
|
| | |
Guiding 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 16 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 $6 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 annual IC targets that challenge management to achieve continuous improvement in performance as part of an overall strategy to deliver long-term growth
•
Take into account individual performance that may include non-financial measures 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 and, as applicable, Group Performance Measures
2.
Financial Goals: Weighted Metrics (0%–200% payout)
3.
Individual NEO Performance: Individual Multiplier Applied to Attained Results (0%–150%)
•
Performance goals based on:
1.
50% on adjusted operating income to incentivize management to deliver profitable growth
2.
50% on controllable Free Cash Flow, emphasizing efficient allocation of capital
|
|
|
Long-Term
Incentive Compensation |
| | |
•
Make LTI equity the most significant portion of total compensation for senior executives and managers, increasing the proportion 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
|
| |
•
LTI grants of performance-based restricted share units are earned 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 2018–2020 performance-based RSUs are based on return on net assets (RONA)
2.
25% of 2018–2020 performance-based RSUs are based on revenue growth
3.
25% of 2018–2020 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 2018–2020 performance period:
1.
Up to -10% for TSR below median
2.
Up to +10% for TSR above median (plan capped at 200% overall)
|
|
|
Arconic’s CEO Peer Group (for 2018 Pay Decisions)
|
| ||||
|
•
BorgWarner Inc.
•
Cummins Inc.
•
Delphi Technologies
•
Eaton Corporation plc
•
Honeywell International Inc.
•
Illinois Tool Works Inc.
•
Ingersoll-Rand plc
•
L3 Technologies, Inc.
|
| | |
•
Northrop Grumman Corporation
•
PACCAR Inc
•
Parker-Hannifin Corporation
•
Raytheon Company
•
Rockwell Collins, Inc.
•
Spirit AeroSystems Holdings, Inc.
•
Stanley Black & Decker, Inc.
•
Textron Inc.
|
|
|
2018 Median Revenue: $14.535 billion
|
|
|
Financial Metric
|
| | |
Defined Corporate Level Payout Percentage
|
| | |
Result
|
| | |
% of
Target |
| | |
Weighting
|
| | |
Weighted
Result |
| |||||||||||||||||||
|
0%
|
| | |
50%
|
| | |
100%
(Target) |
| | |
150%
|
| | |
200%
|
| | ||||||||||||||||||||||
| ($in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
Adjusted Operating Income
|
| | |
$1,470
|
| | | | $ | 1,549 | | | | |
$1,627
|
| | |
$1,827
|
| | |
$2,027
|
| | |
$1,391
|
| | |
0.0%
|
| | |
50.0%
|
| | |
0.0%
|
|
|
Controllable Free Cash Flow
|
| | |
$1,382
|
| | | | $ | 1,426 | | | | |
$1,471
|
| | |
$1,716
|
| | |
$1,871
|
| | |
$1,415
|
| | |
37.0%
|
| | |
50.0%
|
| | |
18.5%
|
|
| IC RESULT | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
18.5%
|
|
|
Performance Metric
|
| |
Payout Percentage
|
| |
2018
Actual |
| |
Plan
Result |
| |
Weighting
|
| |
Payout
Result |
| ||||||||||||
|
0%
|
| |
50%
|
| |
100%
|
| |
150%
|
| |
200%
|
| |||||||||||||||
|
Revenue ($M)
|
| |
$13,297 or
below |
| |
$13,499
|
| |
$13,700
|
| |
$14,305
|
| |
$14,507 or
above |
| |
$14,076
|
| |
131.0%
|
| |
25%
|
| |
32.8%
|
|
|
EBITDA Margin (%)
|
| |
14.3% or
below |
| |
15.2%
|
| |
16.1%
|
| |
18.8%
|
| |
19.7% or
above |
| |
14.0%
|
| |
0.0%
|
| |
25%
|
| |
0.0%
|
|
|
RONA (%)
|
| |
7.9% or
below |
| |
9.3%
|
| |
10.6%
|
| |
14.0%
|
| |
14.7% or
above |
| |
9.1%
|
| |
45.6%
|
| |
50%
|
| |
22.8%
|
|
| | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
TOTAL
|
| |
100%
|
| |
55.5%
|
|
| Name and Principal Position |
| |
Year
|
| |
Salary
($) |
| |
Bonus
($) |
| |
Stock
Awards ($) |
| |
Option
Awards ($) |
| |
Non-Equity
Incentive Plan Compensation ($) |
| |
Change in
Pension Value and Non-Qualified Deferred Compensation Earnings ($) |
| |
All Other
Compensation ($) |
| |
Total
($) |
| |||
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
| |
(h)
|
| |
(i)
|
| |
(j)
|
| |||
|
Kenneth J. Giacobbe
Executive Vice President and Chief Financial Officer |
| |
2018
|
| | | $ | 512,500 | | | |
$0
|
| |
$960,089
|
| |
$240,051
|
| |
$94,813
|
| |
$0
|
| |
$105,621
|
| |
$1,913,074
|
|
|
2017
|
| | | $ | 493,333 | | | |
$0
|
| |
$1,348,867
|
| |
$324,018
|
| |
$357,987
|
| |
$308,675
|
| |
$324,571
|
| |
$3,157,451
|
| |||
|
2016
|
| | | $ | 386,250 | | | |
$0
|
| |
$390,381
|
| |
$0
|
| |
$281,824
|
| |
$149,741
|
| |
$429,478
|
| |
$1,637,674
|
| |||
|
Timothy D. Myers
Executive Vice President and Group President, Global Rolled Products and Transportation and Construction Solutions |
| |
2018
|
| | | $ | 542,500 | | | |
$0
|
| |
$1,056,189
|
| |
$264,036
|
| |
$233,818
|
| |
$0
|
| |
$57,120
|
| |
$2,153,663
|
|
|
2017
|
| | | $ | 436,250 | | | |
$0
|
| |
$949,308
|
| |
$228,052
|
| |
$396,356
|
| |
$516,994
|
| |
$19,333
|
| |
$2,546,293
|
| |||
|
Katherine H.
Ramundo Executive Vice President, Chief Legal Officer and Secretary |
| |
2018
|
| | | $ | 550,000 | | | |
$0
|
| |
$1,960,185
|
| |
$240,051
|
| |
$101,750
|
| |
$0
|
| |
$60,953
|
| |
$2,912,938
|
|
|
2017
|
| | | $ | 550,000 | | | |
$0
|
| |
$999,226
|
| |
$240,008
|
| |
$381,755
|
| |
$0
|
| |
$54,498
|
| |
$2,225,487
|
| |||
|
Chip Blankenship1
Former Chief Executive Officer |
| |
2018
|
| | | $ | 1,204,710 | | | |
$0
|
| |
$9,800,346
|
| |
$5,700,064
|
| |
$0
|
| |
$0
|
| |
$952,087
|
| |
$17,657,207
|
|
|
David P. Hess2
Former Interim Chief Executive Officer |
| |
2018
|
| | | $ | 39,855 | | | |
$0
|
| |
$0
|
| |
$0
|
| |
$0
|
| |
$0
|
| |
$27,563
|
| |
$67,418
|
|
|
2017
|
| | | $ | 802,669 | | | |
$744,100
|
| |
$3,019,240
|
| |
$0
|
| |
$0
|
| |
$0
|
| |
$170,764
|
| |
$4,736,773
|
| |||
|
Mark J. Krakowiak3
Former Executive Vice President, Strategy and Development |
| |
2018
|
| | | $ | 463,768 | | | |
$0
|
| |
$700,107
|
| |
$0
|
| |
$64,348
|
| |
$0
|
| |
$530,413
|
| |
$1,758,636
|
|
|
Eric V. Roegner4
Former Executive Vice President and Group President, Engineered Products and Solutions |
| |
2018
|
| | | $ | 320,208 | | | |
$0
|
| |
$960,089
|
| |
$240,051
|
| |
$23,695
|
| |
$0
|
| |
$1,219,858
|
| |
$2,763,901
|
|
|
2017
|
| | | $ | 478,482 | | | |
$0
|
| |
$729,590
|
| |
$0
|
| |
$317,821
|
| |
$0
|
| |
$55,241
|
| |
$1,581,134
|
|
| | | | |
Grant Date Value of
Performance Award |
| ||||||||||
|
Name
|
| | |
At
Target |
| | |
At
Maximum |
| ||||||
| Kenneth J. Giacobbe | | | | |
|
$960,089
|
| | | | |
|
$1,920,179
|
| |
|
Timothy D. Myers
|
| | | | | $1,056,189 | | | | | | | $2,112,378 | | |
|
Katherine H. Ramundo
|
| | | | | $960,089 | | | | | | | $1,920,179 | | |
| Chip Blankenship | | | | |
|
$6,800,104
|
| | | | |
|
$13,600,209
|
| |
| Eric V. Roegner | | | | |
|
$960,089
|
| | | | |
|
$1,920,179
|
| |
|
Name
|
| |
Company Matching Contribution
|
| |
3% Retirement Contribution
|
| |
Total Company
Contribution |
| ||||||
|
Savings Plan
|
| |
Def. Comp. Plan
|
| |
Savings Plan1
|
| |
Def. Comp. Plan
|
| ||||||
| Kenneth J. Giacobbe | | |
$15,950
|
| |
$0
|
| |
$16,500
|
| |
$6,675
|
| |
$39,125
|
|
| Timothy D. Myers | | |
$16,500
|
| |
$16,050
|
| |
$16,500
|
| |
$8,070
|
| |
$57,120
|
|
| Katherine H. Ramundo | | |
$16,500
|
| |
$16,500
|
| |
$8,250
|
| |
$19,703
|
| |
$60,953
|
|
| Chip Blankenship | | |
$16,500
|
| |
$52,250
|
| |
$8,250
|
| |
$27,891
|
| |
$104,891
|
|
| David P. Hess | | |
$0
|
| |
$0
|
| |
$8,250
|
| |
$15,269
|
| |
$23,519
|
|
| Mark J. Krakowiak | | |
$16,500
|
| |
$0
|
| |
$8,250
|
| |
$5,663
|
| |
$30,413
|
|
| Eric V. Roegner | | |
$16,500
|
| |
$2,713
|
| |
$8,250
|
| |
$11,774
|
| |
$39,236
|
|
|
Name
|
| |
Grant
Dates |
| |
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards1 |
| |
Estimated Future Payouts Under
Equity Incentive Plan Awards2 |
| |
All Other
Stock Awards: Number of Shares of Stock or Units3 (#) |
| |
All Other
Option Awards: Number of Securities Underlying Options4 (#) |
| |
Exercise
or Base Price of Option Awards ($/sh) |
| |
2018 Grant
Date Fair Value of Stock and Option Awards ($) |
| |||||||||||||||
|
Threshold
($) |
| |
Target
($) |
| |
Maximum
($) |
| |
Threshold
(#) |
| |
Target
(#) |
| |
Maximum
(#) |
| |||||||||||||||||||||
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
| |
(h)
|
| |
(i)
|
| |
(j)
|
| |
(k)
|
| |
(l)
|
| |||
|
Kenneth J. Giacobbe
|
| | | | | | $ | 256,250 | | | |
$512,500
|
| |
$1,537,500
|
| | | | | | | | | | | | | | | | | | | | | |
| | | |
1/19/2018
|
| | | | | | | | | | | | | |
0
|
| |
31,770
|
| |
63,540
|
| | | | |
24,520
|
| |
$30.22
|
| |
$1,200,140
|
|
|
Timothy D. Myers
|
| |
|
| | | $ | 271,250 | | | |
$542,500
|
| |
$1,627,500
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| | | |
1/19/2018
|
| | | | | | | |
|
| |
|
| |
0
|
| |
34,950
|
| |
69,900
|
| |
|
| |
26,970
|
| |
$30.22
|
| |
$1,320,225
|
|
|
Katherine H. Ramundo
|
| | | | | | $ | 275,000 | | | |
$550,000
|
| |
$1,650,000
|
| | | | | | | | | | | | | | | | | | | | | |
| | | |
1/19/2018
|
| | | | | | | | | | | | | |
0
|
| |
31,770
|
| |
63,540
|
| | | | |
24,520
|
| |
$30.22
|
| |
$1,200,140
|
|
| | | |
5/16/2018
|
| | | | | | | | | | | | | | | | | | | | | | |
55,530
|
| | | | | | | |
$1,000,095
|
|
|
Chip Blankenship
|
| |
|
| | | $ | 903,533 | | | |
$1,807,065
|
| |
$5,421,195
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| | | |
1/19/2018
|
| | | | | | | |
|
| |
|
| |
0
|
| |
225,020
|
| |
450,040
|
| |
99,280
|
| |
537,620
|
| |
$30.22
|
| |
$15,500,410
|
|
|
David P. Hess5
|
| |
—
|
| | | | — | | | |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Mark J. Krakowiak
|
| |
|
| | | $ | 173,913 | | | |
$347,826
|
| |
$1,043,478
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| | | |
2/15/2018
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
27,760
|
| |
|
| |
|
| |
$700,107
|
|
|
Eric V. Roegner
|
| |
1/19/2018
|
| | | $ | 160,104 | | | |
$320,208
|
| |
$960,624
|
| |
0
|
| |
31,770
|
| |
63,540
|
| | | | |
24,520
|
| |
$30.22
|
| |
$1,200,140
|
|
|
Name
|
| |
Option Awards
|
| |
Stock Awards
|
| |||||||||||||||||||||||||||
|
Number of
Securities Underlying Unexercised Options (Exercisable) (#) |
| |
Number of
Securities Underlying Unexercised Options (Unexercisable) (#) |
| |
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| |
Number of
Shares or Units of Stock That Have Not Vested (#) |
| |
Market Value
of Shares or Units of Stock That Have Not Vested ($) |
| |
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| |
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
| | ||||||||
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |
(g)
|
| |
(h)
|
| |
(i)
|
| |
(j)
|
| | |||||
| Kenneth J. Giacobbe | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
|
Stock Awards1
|
| | | | | | | | | | | | | | | | | | | |
20,688
|
| |
$348,800
|
| |
97,394
|
| |
$1,642,063
|
| | ||
|
Time-Vested Options2
|
| |
5,040
|
| | | | — | | | |
—
|
| |
$22.92
|
| |
1/20/2022
|
| | | | | | | | | | | | | | ||
| | | |
17,254
|
| | | | 34,506 | | | |
—
|
| |
$21.13
|
| |
1/13/2027
|
| | | | | | | | | | | | | | ||
| | | |
—
|
| | | | 24,520 | | | |
—
|
| |
$30.22
|
| |
1/19/2028
|
| | | | | | | | | | | | | | ||
| Timothy D. Myers | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
|
Stock Awards1
|
| | | | | | | | | | | | | | | | | | | |
16,566
|
| |
$279,303
|
| |
81,581
|
| |
$1,375,456
|
| | ||
|
Time-Vested Options2
|
| |
10,332
|
| | | | — | | | |
—
|
| |
$30.51
|
| |
1/26/2020
|
| | | | | | | | | | | | | | ||
| | | |
9,027
|
| | | | — | | | |
—
|
| |
$22.92
|
| |
1/20/2022
|
| | | | | | | | | | | | | | ||
| | | |
12,144
|
| | | | 24,286 | | | |
—
|
| |
$21.13
|
| |
1/13/2027
|
| | | | | | | | | | | | | | ||
| | | |
—
|
| | | | 26,970 | | | |
—
|
| |
$30.22
|
| |
1/19/2028
|
| | | | | | | | | | | | | | ||
| Katherine H. Ramundo | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
|
Stock Awards1
|
| | | | | | | | | | | | | | | | | | | |
74,277
|
| |
$1,252,310
|
| |
77,210
|
| |
$1,301,761
|
| | ||
|
Time-Vested Options2
|
| |
12,780
|
| | | | 25,560 | | | |
—
|
| |
$21.13
|
| |
1/13/2027
|
| | | | | | | | | | | | | | ||
| | | |
—
|
| | | | 24,520 | | | |
—
|
| |
$30.22
|
| |
1/19/2028
|
| | | | | | | | | | | | | | ||
| Chip Blankenship | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
|
Stock Awards1
|
| | | | | | | | | | | | | | | | | | | |
99,280
|
| |
$1,673,861
|
| |
225,020
|
| |
$3,793,837
|
| | ||
|
Time-Vested Options2
|
| |
—
|
| | | | 537,620 | | | |
—
|
| |
$30.22
|
| |
1/19/2028
|
| | | | | | | | | | | | | | ||
| David P. Hess4 | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
| | |
—
|
| | | | — | | | |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| | |||
| Mark J. Krakowiak | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
|
Stock Awards1
|
| | | | | | | | | | | | | | | | | | | |
27,760
|
| |
$468,034
|
| |
—
|
| |
—
|
| | ||
| Eric V. Roegner3 | | |
|
| | | | | | | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| | ||
| | |
—
|
| | | | — | | | |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
Name
|
| |
Option Awards
|
| |
Stock Awards
|
| |||||||||
|
Number of Shares
Acquired on Exercise (#) |
| |
Value Realized on
Exercise ($) |
| |
Number of Shares
Acquired on Vesting (#) |
| |
Value Realized on
Vesting ($) |
| ||||||
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |||
|
Kenneth J. Giacobbe
|
| |
—
|
| | | | — | | | |
10,281
|
| |
$312,851
|
|
|
Timothy D. Myers
|
| |
—
|
| | | | — | | | |
9,809
|
| |
$298,488
|
|
|
Katherine H. Ramundo
|
| |
—
|
| | | | — | | | |
—
|
| |
—
|
|
|
Chip Blankenship
|
| |
—
|
| | | | — | | | |
—
|
| |
—
|
|
|
David P. Hess1
|
| |
—
|
| | | | — | | | |
123,210
|
| |
$3,746,816
|
|
|
Mark J. Krakowiak
|
| |
—
|
| | | | — | | | |
—
|
| |
—
|
|
|
Eric V. Roegner
|
| |
31,760
|
| | | $ | 162,935 | | | |
17,212
|
| |
$523,761
|
|
|
Name1
|
| |
Plan Name(s)
|
| |
Years of
Credited Service |
| |
Present
Value of Accumulated Benefits |
| |
Payments
During Last Fiscal Year |
| |||
|
Kenneth J. Giacobbe
|
| |
Arconic Retirement Plan
|
| | | | 13.78 | | | |
$377,115
|
| | | |
| | | |
Excess Benefits Plan C
|
| | | | | | | |
$498,596
|
| | | |
| | | |
Total
|
| | | | | | | |
$875,711
|
| |
N/A
|
|
|
Timothy D. Myers
|
| |
Arconic Retirement Plan
|
| | | | 26.52 | | | |
$949,231
|
| |
|
|
| | | |
Excess Benefits Plan C
|
| | | | | | | |
$1,268,304
|
| |
|
|
| | | |
Total
|
| | | | | | | |
$2,217,535
|
| |
N/A
|
|
|
Name
|
| |
Executive
Contributions in 2018 ($) |
| |
Registrant
Contributions in 2018 ($) |
| |
Aggregate
Earnings in 2018 ($) |
| |
Aggregate
Withdrawals Distributions ($) |
| |
Aggregate
Balance at 12/31/2018 FYE ($) |
| |||||||||||||||
|
(a)
|
| |
(b)
|
| |
(c)
|
| |
(d)
|
| |
(e)
|
| |
(f)
|
| |||||||||||||||
|
Kenneth J. Giacobbe
|
| | | $ | 0 | | | | | $ | 6,675 | | | | | $ | 539 E | | | | | | — | | | | | $ | 31,665 | | |
| | $ | 0 D | | | |||||||||||||||||||||||||||
|
Timothy D. Myers
|
| | | $ | 26,900 | | | | | $ | 24,120 | | | | | $ | 0 E | | | | | | — | | | | | $ | 355,061 | | |
| | $ | 3,972 D | | | |||||||||||||||||||||||||||
|
Katherine H. Ramundo
|
| | | $ | 16,500 | | | | | $ | 36,203 | | | | | $ | 0 E | | | | | | — | | | | | $ | 96,080 | | |
| | $ | 0 D | | | |||||||||||||||||||||||||||
|
Chip Blankenship
|
| | | $ | 52,250 | | | | | $ | 80,141 | | | | | $ | 0 E | | | | | | — | | | | | $ | 121,248 | | |
| | $ | 0 D | | | |||||||||||||||||||||||||||
|
David P. Hess
|
| | | $ | 3,746,8161 | | | | | $ | 15,269 | | | | | $ | 562 E | | | | | $ | 31,723 | | | | | $ | 2,077,321 | | |
| | $ | 0 D | | | |||||||||||||||||||||||||||
|
Mark J. Krakowiak
|
| | | $ | 0 | | | | | $ | 5,663 | | | | | $ | 0 E | | | | | | — | | | | | $ | 5,409 | | |
| | $ | 0 D | | | |||||||||||||||||||||||||||
|
Eric V. Roegner
|
| | | $ | 51,662 | | | | | $ | 14,486 | | | | | $ | 0 E | | | | | | — | | | | | $ | 1,919,131 | | |
| | $ | 338 D | | |
|
Name
|
| |
Estimated Net
Present Value of Cash Severance Payments |
| |
Estimated Net Present
Value of Two Years Additional Retirement Accrual |
| |
Estimated net present
value of continued active health care benefits |
| |
Total
|
| ||||||||||||
| Kenneth J. Giacobbe | | | | $ | 1,004,731 | | | | | $ | 60,284 | | | | | $ | 39,692 | | | | | $ | 1,104,707 | | |
| Timothy D. Myers | | | | $ | 1,065,210 | | | | | $ | 63,913 | | | | | $ | 40,334 | | | | | $ | 1,169,457 | | |
| Katherine H. Ramundo | | | | $ | 1,073,014 | | | | | $ | 64,381 | | | | | $ | 591 | | | | | $ | 1,137,986 | | |
| Chip Blankenship | | | | $ | 6,096,671 | | | | | $ | 182,900 | | | | | $ | 40,334 | | | | | $ | 6,319,905 | | |
| Mark J. Krakowiak | | | | $ | 853,534 | | | | | $ | 51,212 | | | | | $ | 1,963 | | | | | $ | 906,709 | | |
|
Name
|
| |
Estimated net
present value of change in control severance and benefits |
| |||
|
Kenneth J. Giacobbe
|
| | | $ | 4,287,661 | | |
|
Timothy D. Myers
|
| | | $ | 4,225,791 | | |
|
Katherine H. Ramundo
|
| | | $ | 4,366,013 | | |
|
Chip Blankenship
|
| | | $ | 16,108,721 | | |
|
Mark J. Krakowiak
|
| | | $ | 2,368,783 | | |
| Stock options outstanding | | | |
9,557,304
|
|
| Weighted average exercise price | | | |
$24.80
|
|
| Weighted average remaining contractual life | | | |
4.04 years
|
|
| Restricted share units outstanding (unvested)1 | | | |
6,230,854
|
|
| Shares remaining for grant under the 2013 Plan2 | | | |
15,695,465
|
|
| | | | | | | | |
Performance RSUs
|
| ||||
|
Name and Position
|
| | |
Options & RSUs
No. of Shares |
| | |
Target No.
of Shares |
| | |
Maximum No.
of Shares |
|
|
Kenneth J. Giacobbe
Executive Vice President and Chief Financial Officer |
| | |
196,590
|
| | |
145,030
|
| | |
290,060
|
|
|
Timothy D. Myers Executive Vice President and Group President, Global Rolled Products and Transportation and Construction Solutions |
| | |
118,034
|
| | |
130,040
|
| | |
260,080
|
|
|
Katherine H. Ramundo
Executive Vice President, Chief Legal Officer and Secretary |
| | |
149,037
|
| | |
124,810
|
| | |
249,620
|
|
|
Chip Blankenship2
Former Chief Executive Officer |
| | |
636,900
|
| | |
225,020
|
| | |
450,040
|
|
|
David P. Hess3
Former Interim Chief Executive Officer |
| | |
123,210
|
| | |
N/A
|
| | |
N/A
|
|
|
Mark J. Krakowiak2
Former Executive Vice President, Strategy and Development |
| | |
27,760
|
| | |
N/A
|
| | |
N/A
|
|
|
Eric V. Roegner2 Former Executive Vice President and Group President, Engineered Products and Solutions |
| | |
124,940
|
| | |
48,690
|
| | |
97,380
|
|
| Current Executive Officers as a Group4: | | | |
714,896
|
| | |
420,460
|
| | |
840,920
|
|
| Current Non-Executive Directors as a Group: | | | |
234,792
|
| | |
N/A
|
| | |
N/A
|
|
| All Employees who are not Executive Officers, as a Group: | | | |
10,137,325
|
| | |
383,580
|
| | |
767,160
|
|
|
Plan Category
|
| | |
Number of
securities to be issued upon exercise of outstanding options, warrants and rights (a) |
| | |
Weighted-
average exercise price of outstanding options, warrants and rights (b) |
| | |
Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
|
| Equity compensation plans approved by security holders1 | | | |
17,430,3551
|
| | |
$24.95
|
| | |
18,850,6102
|
|
| Equity compensation plans not approved by security holders | | | |
—
|
| | |
—
|
| | |
—
|
|
| Total | | | |
17,430,3551
|
| | |
$24.95
|
| | |
18,850,6102
|
|
| Air Products and Chemicals | | | Entergy | | | NRG Energy | |
| American Electric Power | | | FirstEnergy | | | Occidental Petroleum | |
| Arrow Electronics | | | Goodyear Tire & Rubber | | | Oshkosh | |
| Avnet | | | Ingersoll Rand | | | Parker Hannifin | |
| Ball | | | International Paper | | | Praxair | |
| BorgWarner | | | Jabil Circuit | | | Rockwell Automation | |
| Corning | | | Jacobs Engineering | | | Stanley Black & Decker | |
| Danaher | | | Kinder Morgan | | | Stryker | |
| Dominion Energy | | | L-3 Communications | | | Textron | |
| Eastman Chemical | | | Lafarge North America | | | Thermo Fisher Scientific | |
| Eaton | | | Lear | | | United States Steel | |
| Ecolab | | | Mosaic | | | Whirlpool | |
| Edison International | | | Northrup Grumman | | | | |
|
($ in millions)
|
| | |
Year ended
|
| ||||||||||
| | | | |
December 31,
2018 |
| | |
December 31,
2017 |
| ||||||
| Engineered Products and Solutions: | | | | | | | | | | | | | | | |
|
Third-party sales
|
| | | | $ | 6,316 | | | | | | $ | 5,943 | | |
|
Segment operating profit
|
| | | | $ | 891 | | | | | | $ | 964 | | |
|
Segment operating profit margin
|
| | | | | 14.1% | | | | | | | 16.2% | | |
| Global Rolled Products: | | | | | | | | | | | | | | | |
|
Third-party sales
|
| | | | $ | 5,604 | | | | | | $ | 5,000 | | |
|
Intersegment sales
|
| | | | $ | 160 | | | | | | $ | 148 | | |
|
Segment operating profit
|
| | | | $ | 386 | | | | | | $ | 424 | | |
|
Segment operating profit margin
|
| | | | | 6.9% | | | | | | | 8.5% | | |
| Transportation and Construction Solutions: | | | | | | | | | | | | | | | |
|
Third-party sales
|
| | | | $ | 2,126 | | | | | | $ | 2,011 | | |
|
Segment operating profit
|
| | | | $ | 304 | | | | | | $ | 290 | | |
|
Segment operating profit margin
|
| | | | | 14.3% | | | | | | | 14.4% | | |
| Reconciliation of Total segment operating profit to Consolidated income before taxes: | | | | | | | | | | | | | | | |
|
Total segment operating profit
|
| | | | $ | 1,581 | | | | | | $ | 1,678 | | |
|
Unallocated amounts:
|
| | | | | | | | | | | | | | |
|
Restructuring and other charges
|
| | | | | (9) | | | | | | | (165) | | |
|
Impairment of goodwill
|
| | | | | — | | | | | | | (719) | | |
|
Corporate expense
|
| | | | | (247) | | | | | | | (314) | | |
|
Consolidated operating income
|
| | | | | 1,325 | | | | | | | 480 | | |
|
Interest expense
|
| | | | | (378) | | | | | | | (496) | | |
|
Other income (expense), net
|
| | | | | (79) | | | | | | | 486 | | |
|
Consolidated income before income taxes
|
| | | | $ | 868 | | | | | | $ | 470 | | |
|
|
(in millions, except per-share amounts)
|
| | |
Year ended
|
| ||||||||||
| | | | |
December 31,
2018 |
| | |
December 31,
2017 |
| ||||||
| Net income (loss) | | | | | | $642 | | | | | | | $(74) | | |
| Diluted earnings (loss) per share (EPS) | | | | | | $1.30 | | | | | | | $(0.28) | | |
| Special items: | | | | | | | | | | | | | | | |
|
Restructuring and other charges
|
| | | | | 9 | | | | | | | 165 | | |
|
Discrete tax items1
|
| | | | | (15) | | | | | | | 223 | | |
|
Other special items2
|
| | | | | 59 | | | | | | | 264 | | |
|
Tax impact3
|
| | | | | (19) | | | | | | | 40 | | |
| Net income excluding Special items | | | | | | $676 | | | | | | | $618 | | |
| Diluted EPS excluding Special items | | | | | | $1.36 | | | | | | | $1.22 | | |
| Average number of shares – diluted EPS excluding Special items4 | | | | | | 502,627,363 | | | | | | | 471,472,729 | | |
|
($ in millions)
|
| | |
Year ended
|
| ||||||||||
| | | | |
December 31,
2018 |
| | |
December 31,
2017 |
| ||||||
| Cash provided from (used for) operations | | | | | $ | 217 | | | | | | $ | (39) | | |
| Cash receipts from sold receivables1 | | | | | | 1,016 | | | | | | | 792 | | |
| Capital expenditures | | | | | | (768) | | | | | | | (596) | | |
| Adjusted free cash flow | | | | | $ | 465 | | | | | | $ | 157 | | |
|
|
($ in millions)
|
| | |
Year ended
|
| ||||||||||
| | | | |
December 31,
2018 |
| | |
December 31,
2017 |
| ||||||
| Operating income | | | | | $ | 1,325 | | | | | | $ | 480 | | |
| Special items: | | | | | | | | | | | | | | | |
|
Restructuring and other charges
|
| | | | | 9 | | | | | | | 165 | | |
|
Impairment of goodwill
|
| | | | | — | | | | | | | 719 | | |
|
Separation costs
|
| | | | | — | | | | | | | 18 | | |
|
Proxy, advisory and governance-related costs
|
| | | | | — | | | | | | | 58 | | |
|
Delaware reincorporation costs
|
| | | | | — | | | | | | | 3 | | |
|
Legal and other advisory costs related to Grenfell Tower
|
| | | | | 18 | | | | | | | 14 | | |
|
Strategy and portfolio review costs
|
| | | | | 7 | | | | | | | — | | |
|
Settlements of certain customer claims primarily related to product introductions
|
| | | | | 38 | | | | | | | — | | |
| Operating income excluding Special items | | | | | $ | 1,397 | | | | | | $ | 1,457 | | |
| Adjustment for incentive compensation1 | | | | | | (6) | | | | | | | n/a | | |
| Operating income excluding Special items – as adjusted for incentive compensation | | | | | $ | 1,391 | | | | | | | n/a | | |
|
($ in millions)
|
| | |
Year ended
December 31, 2018 |
| |||
| Operating income | | | | | $ | 1,325 | | |
| Special items: | | | | | | | | |
|
Restructuring and other charges
|
| | | | | 9 | | |
|
Legal and other advisory costs related to Grenfell Tower
|
| | | | | 18 | | |
|
Strategy and portfolio review costs
|
| | | | | 7 | | |
|
Settlements of certain customer claims primarily related to product introductions
|
| | | | | 38 | | |
| Operating income excluding Special items | | | | | $ | 1,397 | | |
| Add: Depreciation and amortization | | | | | | 576 | | |
| Less: Capital expenditures | | | | | | (768) | | |
| Less: Change in Receivables from customers, less allowances | | | | | | (12) | | |
| Less: Change in Deferred purchase program | | | | | | (47) | | |
| Less: Change in Inventories | | | | | | (12) | | |
| Add: Change in Accounts payable, trade | | | | | | 290 | | |
| Controllable Free Cash Flow | | | | | $ | 1,424 | | |
| Adjustment for incentive compensation1 | | | | | | (9) | | |
| Controllable Free Cash Flow – as adjusted for incentive compensation | | | | | $ | 1,415 | | |
|
($ in millions)
|
| | |
Year ended
December 31, 2018 |
| |||
| Sales | | | | | $ | 14,014 | | |
| Adjustment for performance-based restricted share units1 | | | | | | 62 | | |
| Revenue – as adjusted for performance-based restricted share units | | | | | $ | 14,076 | | |
|
|
($ in millions)
|
| | |
Year ended
December 31, 2018 |
| |||
| Net income | | | | | $ | 642 | | |
| Add: | | | | | | | | |
|
Provision for income taxes
|
| | | | | 226 | | |
|
Other expense (income), net
|
| | | | | 79 | | |
|
Interest expense
|
| | | | | 378 | | |
|
Restructuring and other charges
|
| | | | | 9 | | |
|
Provision for depreciation and amortization
|
| | | | | 576 | | |
| Consolidated adjusted EBITDA | | | | | $ | 1,910 | | |
| Add: | | | | | | | | |
|
Settlements of certain customer claims primarily related to product introductions
|
| | | | | 38 | | |
|
Strategy and portfolio review costs
|
| | | | | 7 | | |
|
Legal and other advisory costs related to Grenfell Tower
|
| | | | | 18 | | |
| Consolidated adjusted EBITDA, excluding Special items | | | | | $ | 1,973 | | |
| Sales | | | | | $ | 14,014 | | |
| Adjusted EBITDA margin | | | | | | 13.6% | | |
| Adjusted EBITDA margin, excluding Special items | | | | | | 14.1% | | |
| Adjustment for performance-based restricted share units1 | | | | | | (0.1)% | | |
| Adjusted EBITDA margin, excluding Special items – as adjusted for incentive compensation | | | | | | 14.0% | | |
|
|
($ in millions)
|
| | |
Year ended
December 31, 2018 |
| |||
| Net income | | | | | $ | 642 | | |
|
Special items1
|
| | | | | 34 | | |
| Net income excluding Special items | | | | | | 676 | | |
|
|
Net Assets:
|
| | |
December 31,
2018 |
| |||
|
Add: Receivables from customers, less allowances
|
| | | | $ | 1,047 | | |
|
Add: Deferred purchase program2
|
| | | | | 234 | | |
|
Add: Inventories
|
| | | | | 2,492 | | |
|
Less: Accounts payable, trade
|
| | | | | 2,129 | | |
| Working capital | | | | | | 1,644 | | |
|
Properties, plants, and equipment, net (PP&E)
|
| | | | | 5,704 | | |
| Net assets - total | | | | | $ | 7,348 | | |
| RONA | | | | | | 9.2% | | |
| Adjustment for performance-based restricted share units3 | | | | | | (0.1)% | | |
| RONA – as adjusted for incentive compensation | | | | | | 9.1% | | |
|