Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.  )

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Filed by a Party other than the Registrant  ☐

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Dear Arconic Corporation Shareholders:

We are pleased to invite you to the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Arconic Corporation to be held on Thursday, May 19, 2022, at 10:00 a.m. Eastern Time.

We will hold the Annual Meeting virtually again this year to provide the opportunity for full and equal participation of all shareholders regardless of location. It also improves efficiencies, enables more effective communication with shareholders and reduces the cost and environmental impact of traveling to meet in person. There will be no physical location for shareholders to attend the meeting. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit questions during the live webcast of the meeting.

We are pleased to present you with our 2022 Proxy Statement, which reflects our values-based culture and commitment to ethical and transparent corporate governance practices and performance-based executive compensation. Throughout the year, we engaged with shareholders representing a broad spectrum of investment priorities and levels of ownership on a wide range of issues. Our Board and management team take our shareholders’ concerns into consideration in setting the strategic direction and in managing the day-to-day operations of Arconic, and we look forward to ongoing dialogue with our shareholders as we continue to grow Arconic while living our core values.

Your vote is important to us. Whether you own a few shares or many, it is important that your views are represented and your shares are counted at the Annual Meeting. Instructions on voting and attending the virtual Annual Meeting can be found in the enclosed Proxy Statement and in the Notice Regarding Internet Availability of Proxy Materials that was mailed or sent to shareholders via electronic delivery on or about April 6, 2022. You will have the ability to submit questions in advance of the meeting and during the meeting via the virtual platform, and we look forward to hearing from you.

On behalf of the Board of Directors, thank you for your continued support and participation in our progress as a shareholder of Arconic Corporation.

 

Frederick A. “Fritz” Henderson

Chairman of the Board of Directors

 

The annual meeting of shareholders (the “Annual Meeting”) of Arconic Corporation (the “Company” or “Arconic”) will be held as a virtual meeting on Thursday, May 19, 2022, at 10:00 a.m. Eastern Time. We look forward to your attendance at our virtual meeting where you will be able to vote and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/ARNC2022 and entering your 16-digit control number located on your proxy card.

to consider any other business that may properly come before the meeting and any postponement or adjournment of the meeting.

The foregoing items of business are more fully described in the proxy statement accompanying this notice. All shareholders of record at the close of business on Friday, March 25, 2022, are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof.

In accordance with SEC rules allowing companies to furnish proxy materials to their shareholders via the Internet, we have sent shareholders of record at the close of business on March 25, 2022, a Notice of Internet Availability of Proxy Materials on or about April 6, 2022. The Notice of Internet Availability contains instructions on how to access our proxy statement and annual report online and how to request printed proxy materials, including a proxy card.

Your vote is very important. Whether or not you expect to attend the virtual Annual Meeting, we urge you to vote your shares in advance using any of the following methods.

On behalf of Arconic’s Board of Directors,

 

This proxy statement contains statements that relate to future events and expectations and, as such, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements that reflect Arconic’s expectations, assumptions, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, any future actions by Arconic. These statements reflect beliefs and assumptions that are based on Arconic’s perception of historical trends, current conditions and expected future developments, as well as other factors Arconic believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and changes in circumstances, many of which are beyond Arconic’s control. Such risks and uncertainties include, but are not limited to, the risk factors summarized in Arconic’s Form 10-K for the year ended December 31, 2021, and other reports filed with the U.S. Securities and Exchange Commission (“SEC”). Market projections are subject to the risks discussed in Arconic’s reports and other risks in the market. The statements herein are made as of the date of this proxy statement, even if subsequently made available by Arconic on its website or otherwise. Arconic disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

On April 1, 2020, Arconic completed its separation from Arconic Inc. and became an independent, publicly traded company (the “Separation”). In connection with the Separation, Arconic Inc. was renamed Howmet Aerospace Inc. That entity is referred to herein as “ParentCo” or “Howmet.” Upon completion of the Separation, Howmet and Arconic became separate companies with separate management teams and separate boards of directors.

The Board of Directors (the “Board”) of Arconic Corporation (the “Company,” “we,” “us,” “our” or “Arconic”) is furnishing this proxy statement and soliciting proxies in connection with the proposals to be voted on at the Arconic Corporation 2022 Annual Meeting of Shareholders (the “Annual Meeting”) and any postponements or adjournments thereof. This summary highlights certain information contained in this proxy statement but does not contain all the information you should consider when voting your shares. Please read the entire proxy statement carefully before voting.

It is important to understand the distinction between shareholders of record and beneficial owners. If you hold your shares in your own name (a record owner), you may vote your shares in any of the ways set forth below. If you are voting via the Internet or by telephone, be sure to have your 16-digit control number from your Notice of Internet Availability or proxy card, and follow the instructions. If you hold your shares through a bank, broker or other financial institution (a beneficial owner, and often referred to as “street name”), you must direct your financial institution to vote your shares by following the instructions provided by your financial institution. You may also contact your financial institution to obtain a legal proxy to vote your shares directly. For more information on the differences between “record owners” and “beneficial owners,” please see page 59 of this proxy statement.

You must vote any shares held in an Arconic 401(k) Plan no later than 11:59 p.m. ET on May 13, 2022.

If you are a record owner, you may join the Annual Meeting at www.virtualshareholdermeeting.com/ARNC2022 by entering the 16-digit control number that appears on your proxy card. If you are a beneficial owner and your voting instruction form indicates that you are able vote those shares through the http://www.proxyvote.com website, then you may join the Annual Meeting with the 16-digit access code indicated on that voting instruction form. Otherwise, beneficial owners should contact their bank, broker or other financial institution (preferably at least 5 days before the Annual Meeting) and obtain a legal proxy in order to be able to join and vote at the Annual Meeting.

We mailed a Notice of Internet Availability of Proxy Materials (the “Notice of Internet Availability”), which includes instructions on how to access this proxy statement and our annual report online, beginning on April 6, 2022. We also mailed a full set of proxy materials to shareholders who have previously requested delivery of proxy materials beginning on the same date.

A list of shareholders of record entitled to vote at the Annual Meeting will be available electronically at www.virtualshareholdermeeting.com/ARNC2022 during the virtual Annual Meeting.

A summary of information for the nominees for election to the Board is set forth below. All of the nominees are currently serving as directors. Additional information about the nominees and their qualifications is included in this proxy statement under “Directors.”

We seek to achieve a mix of directors that represent a diversity of attributes, backgrounds, experiences (including experience with businesses and other organizations of a comparable complexity), perspectives and skills, including with respect to differences in customs, culture, international background, thought, generational views, race, gender, ethnicity and specialized professional experience. The following charts summarize the diversity, independence, age, experience and skills of our current directors.

 

 

We continue to prioritize our commitment to being a good corporate citizen and living our values to achieve environmental, social and governance excellence.

We are committed to operating in a safe, responsible manner which respects the environment and the health of our employees, our customers and the communities where we operate worldwide. We have a robust environmental compliance program that emphasizes proactive identification of opportunities to reduce our impact, prompt implementation of effective management controls, and best-practice sharing.

We cultivate an inclusive and diverse culture that advocates for equity, acts with integrity, and upholds high standards for human rights. We strengthen our global workforce by providing learning opportunities, employee engagement programs and talent development efforts that drive innovation, agility, people development and collaboration. We are dedicated to maintaining an environment where everyone feels valued, and we celebrate both the differences and similarities among our people. We also believe that diversity in all areas, including cultural background, experience and thought, is essential in making Arconic stronger.

 

Our values guide our behavior at every level and apply across our organization on a global basis. We believe that sound corporate governance is essential to and consistent with our integrity culture.

Where to find additional information. For more information regarding our Environmental, Social and Governance (“ESG”) commitment, as well as our 2020 Sustainability Report, please visit www.arconic.com/sustainability-report or write to Corporate ESG at Arconic Corporation, 201 Isabella Street, Suite 400, Pittsburgh, PA 15212-5872; or e-mail sustainability@arconic.com. We expect to release our 2021 Sustainability & ESG Report during the second quarter of 2022. Our Human Rights Policy, Supplier Standards, Conflict Minerals Policy and other corporate policies are available on our website at www.arconic.com/governance-and-policies.

In addition, a number of our corporate governance policies and other materials, including our Corporate Governance Guidelines, Committee Charters, Code of Conduct, and Director and Officer Stock Ownership Policy, are available on our website at www.arconic.com/governance-and-policies.

Copies of any of these documents may be obtained at no charge by sending a request to Arconic Corporation, Corporate Secretary, 201 Isabella Street, Suite 400, Pittsburgh, PA 15212-5872 or email: Corporate.Secretary@arconic.com.

Information on our website is not, and will not be deemed to be, a part of this proxy statement or incorporated into any of our other filings with the SEC.

 

Our executive compensation program is comprised of three key elements, designed to balance the important objectives of the program, as set forth below. Equity awards are comprised of performance-based restricted share units and time-based restricted share units. At the 2021 annual meeting of shareholders, approximately 96% of the votes cast in respect of our say-on-pay proposal were in favor of the compensation of our NEOs.

 

The Compensation and Benefits Committee of our Board of Directors has established executive compensation policies and practices that the Compensation and Benefits Committee believes represent sound governance of executive compensation related matters and management of risks related to executive compensation. See “Compensation Discussion and Analysis.”

Our Certificate of Incorporation and Bylaws provide that the Board shall be composed of such number of directors as shall be established from time to time by the Board. The Board currently consists of ten directors, all of whom are standing for re-election. Pursuant to our Certificate of Incorporation and Bylaws, the Board has fixed the number of directors at ten.

The Board, on the recommendation of the Governance and Nominating Committee, has nominated the following individuals for election by shareholders at the Annual Meeting: Frederick A. Henderson, William F. Austen, Christopher L. Ayers, Margaret S. Billson, Jacques Croisetiere, Elmer L. Doty, Carol S. Eicher, Timothy D. Myers, E. Stanley O’Neal and Jeffrey Stafeil. All of the nominees currently are directors and were elected by the shareholders at the 2021 annual meeting of shareholders.

Each of the ten nominees, if elected, will hold office for a term that expires at the next annual meeting of shareholders and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Proxies solicited by the Board will, unless otherwise directed, be voted to elect each of the ten nominees to constitute the entire Board.

All nominees have consented to serve on the Board if elected. The Board knows of no reason why any nominee would be unable or unwilling to serve. If a nominee becomes unable or unwilling to serve, proxies will be voted for the election of such person as shall be designated by the Board to replace such nominee, or, in lieu thereof, the Board may reduce its size.

Information regarding each nominee’s experience and qualifications is set forth below under “Directors.”

The persons named as proxies have advised Arconic that, unless otherwise instructed, they intend to vote at the meeting the shares covered by the proxies “FOR” the election of each of the nominees, and that if any one or more of such nominees should become unavailable for election, they intend to vote such shares “FOR” the election of such substitute nominees as the Board may propose. Arconic has no knowledge that any nominee will become unavailable for election.

The affirmative vote of a majority of the votes cast at the Annual Meeting is required to elect each director. If the number of shares voted “for” an incumbent director’s election does not exceed fifty percent (50%) of the number of votes cast with respect to that director’s election (with votes cast including votes against in each case and excluding abstentions and broker non-}votes with respect to that director’s election) in an uncontested election, the nominee must promptly tender his or her resignation, and the Board will decide, through a process managed by the Governance and Nominating Committee and excluding the nominee, whether to accept the resignation. Abstentions and broker non-votes have no effect on the voting with respect to Proposal 1.

Our directors represent a range of backgrounds and overall experience. Biographical information and committee memberships as of the date of this proxy statement, including the specific experience, qualifications and skills of each of our directors is included below.

Our Board is responsible for overseeing our management, to help ensure we meet our responsibilities to our shareholders and to build long-term growth in shareholder value, as well as giving consideration to the interests of our other key stakeholders, including our customers, employees and the communities where we operate or have an impact. Our Board believes that sound corporate governance is essential to effective fulfillment of its oversight responsibilities and is consistent with our integrity culture. Our Board and its committees conduct regular reviews of our governance policies and practices to ensure that our governance program is in compliance with applicable rules and regulations, aligns with our management of the Company, reflects best practices and is consistent with our values. Key features of our corporate governance practices include:

Providing objective, independent judgment is at the core of our Board’s oversight function. Under our Director Independence Standards, which conform to the New York Stock Exchange (“NYSE”) listing standards, a director is not considered “independent” unless the Board affirmatively determines that the director has no material relationship with the Company or any subsidiary and that there are no other factors present that would impair the director’s ability to exercise independent judgment in carrying out his or her responsibilities.

Our Board has affirmatively determined that all of our current directors are independent except Messrs. Doty and Myers. In the course of its determination regarding independence, the Governance Committee reviewed all business relationships between Arconic and entities with which our directors or their family members have relationships and concluded that directors did not have a direct or indirect material interest in any such transactions. Mr. Doty is not independent as a result of his prior short-term management position with ParentCo following his service as an independent director on ParentCo’s board. Mr. Myers is not independent due to his current employment as our Chief Executive Officer.

Under our Corporate Governance Guidelines, the roles of Chairperson and CEO may be combined or separate, depending on the Board’s periodic evaluation of the composition of the Board and the Company’s leadership needs. The Company’s current Board leadership structure separates the roles of Chairperson and CEO. The Board believes this structure is critical to our success given the responsibilities of our CEO, and that our Chairperson’s extensive public company board and executive leadership experience provides an invaluable resource for our CEO and other members of the executive management team.

Our independent Chairperson’s duties and responsibilities include:

Under our Corporate Governance Guidelines, if the Chairperson is not an independent director, the independent members of the Board shall elect an independent director to serve as Lead Director, and the Board will develop duties and obligations for the Lead Director.

The Board has established three standing committees: the Audit and Finance Committee (the “Audit Committee”); the Compensation and Benefits Committee (the “Compensation Committee”); and the Governance and Nominating Committee (the “Governance Committee”). Each of the standing committees is governed by a charter that is reviewed annually by that committee. Proposed changes to the charter of any standing committee are reviewed by the applicable committee and recommended by the committee for approval by the Board. The charters of each of our Board committees are available on our website at www.arconic.com/corporate-governance. Information regarding current membership in the standing committees, the principal responsibilities of the standing committees, and other relevant information is described below.

The Board is actively engaged in overseeing and reviewing our strategic direction and objectives, taking into account, among other considerations, our risk profile and exposures. It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. We have established a rigorous, comprehensive and integrated enterprise risk management (“ERM”) assessment in order to aggregate, monitor, measure and manage risks. The ERM assessment is conducted throughout the year, with management conducting a formal review with the Board annually and reporting to the Board at such additional times as are necessary or appropriate. Our ERM approach is designed to establish a mutual understanding among the Board and management of the effectiveness of our risk management practices and capabilities, review our risk exposure, appropriately allocate resources to mitigation of various risks, and to support our long-term operating plans and overall strategy.

While the full Board has overall responsibility for risk oversight, it is supported in this function by each of its committees, as set forth below.

We engage in a robust process to identify and evaluate the qualifications of potential director nominees for election, ensure that all directors are committed to upholding Arconic’s core values and determine that directors have sufficient capacity to contribute meaningfully to Board and committee function. Our Governance Committee is responsible for evaluating the qualifications of director candidates and recommending director nominees for approval by the Board. See “Director Qualifications” and “Board and Committee Self-Evaluation and Director Assessment” for additional information.

Nomination of Incumbent Directors.  In connection with recommending the current nominees to the Board for re-election, the Governance Committee reviews the Board’s structure, performance and composition, as well as the performance, skills, qualifications and business and professional background of each of the current directors. The Governance Committee also reviews each director’s time commitments, including service and leadership positions on boards and committees at public and private companies as well as community or charitable organizations. Incumbent directors who (i) satisfy the criteria for membership on the Board set forth in our Director Selection Policy, (ii) continue to make important contributions to the Board, and (iii) consent to continued service on the Board will be considered for nomination for re-election. See “—Board and Committee Self-Evaluations and Director Performance” for additional information on our peer review process.

Evaluation of New Nominees.  Our Governance Committee will evaluate potential new director candidates in light of the criteria and factors set forth in our Director Selection Policy and our Corporate Governance Guidelines. The Governance Committee or a subcommittee will conduct interviews and may invite other Board members or Arconic executives to interview the candidate to assess the candidate’s overall qualifications. The Governance Committee will also consider the assessment of any search firm it has retained and the background information such firm provides on any person it recommends for

consideration. The nominee evaluation process and criteria are the same regardless of whether the candidate was identified by a search firm, a director, management or a shareholder. If the Governance Committee recommends a candidate to the Board, the Board may, as with any nominee, either accept or reject the recommendation.

Shareholder Nominations.  Shareholder nominations must be made pursuant to the procedures set forth in our Bylaws (including via our proxy access bylaw) and described in this proxy statement under the heading “Submitting Proxy Proposals and Director Nominations for the 2023 Annual Meeting.”

Shareholder Recommendations for Director Nominees.  Any shareholder wishing to recommend a candidate for director should follow the process outlined above under “Shareholder Nominations.” Candidates who are recommended, as opposed to nominated, will receive the same consideration as other proposed candidates.

Board Diversity and Experience.  The Governance Committee and the Board seek to achieve a mix of directors that represent a diversity of attributes, background, experiences (including experience with businesses and other organizations of a comparable complexity), perspectives and skills, including with respect to differences in customs, culture, international background, thought, generational views, race, gender, ethnicity and specialized professional experience. At least annually and when Board vacancies arise, the Governance Committee and the Board review the qualifications, judgment, attributes, background, experiences, perspectives and skills of each director and any director candidate and the interplay of such director’s or director candidate’s qualifications, judgment, attributes, background, experiences, perspectives and skills with the Board as a whole. While diversity and variety of experiences and viewpoints represented on the Board are always considered by the Governance Committee and the Board, no director nominee will be chosen or excluded solely because of race, color, gender, ethnicity, national origin or sexual orientation or identity. Our current Board is 30% diverse, including 20% gender diversity and 10% ethnic diversity, and Board leadership positions are 25% ethnically diverse. In addition, our Compensation Committee and Governance Committee reflect both gender and ethnic diversity, and our Audit Committee reflects gender diversity.

Director Qualifications.  A company of our size and geographic presence must have strong governance as well as leaders who understand and adapt to our diverse customers and business needs. The Board, pursuant to the Governance Committee’s recommendation, adopted a Director Selection Policy which, together with guidelines and requirements set forth in our Corporate Governance Guidelines and our committee charters, provides guidance with respect to the annual review of each incumbent director and the identification and evaluation of new director candidates.

Arconic believes in utilizing a holistic, values-based criterion for selecting Board members, and our policies reflect the premise that the need for directors possessing particular qualifications, judgment, attributes, background, experiences, perspectives and skills will vary from time to time based on our business operations and the interplay of those characteristics with the Board as a whole. Accordingly, while all directors are expected to meet certain minimum criteria that are indicative of the individual’s ability to uphold our values in fulfilling the oversight function of the Board, the Governance Committee and the Board have the discretion, in the evaluation of any particular incumbent director or candidate for nomination, to consider some or all of the following criteria, to eliminate one or more particular criteria as not applicable, to consider additional criteria that are determined to be relevant, and to afford equal or unequal weighting to various criteria considered.

Succession Planning. The Board has approved a plan providing for the succession of qualified individuals to positions of Board and committee leadership should the need arise, including Jacques Croisetiere (successor Chairperson of the Board); Christopher Ayers (successor Chair of the Audit Committee); Margaret S. Billson (successor Chair of the Compensation Committee); and Carol S. Eicher (successor Chair of the Governance Committee).

The Board and each committee conduct an annual self-evaluation of its performance. In addition, the Governance Committee conducts a formal annual assessment of the performance of each incumbent director in advance of its recommendation of a slate of director nominees for approval by the Board. The Governance Committee oversees the design and implementation of the self-evaluation process for the Board, each committee and individual directors. As part of the annual review and nomination process, each director engages in a robust peer review of each other director, which provides for the opportunity to rate the other directors’ performance and suitability for service in a variety of areas, provide tailored comments regarding other directors, and recommend whether each other director should be nominated for re-election and, if applicable, continue in positions of committee service or leadership.

Directors are elected by a majority of the votes cast. If the number of shares voted “for” an incumbent director’s election does not exceed fifty percent (50%) of the number of votes cast with respect to that director’s election (with votes cast including votes against in each case and excluding abstentions and broker non-votes with respect to that director’s election) in an uncontested election, the nominee must promptly tender his or her resignation, and the Board will decide, through a process managed by the Governance Committee and excluding the nominee, whether to accept the resignation. The Board will publicly disclose its decision regarding the tendered resignation and the rationale behind the decision within ninety (90) days from the date of the certification of the election results. Any director nominee not already serving on the Board who fails to receive a majority of votes cast in an uncontested election will not be elected to the Board. An election of directors is considered to be contested if the number of candidates for election as directors exceeds the number of directors to be elected, with the determination being made in accordance with our Bylaws.

Our Corporate Governance Guidelines provide that any director who changes his or her principal employment, position, or professional role or affiliation following election or re-election to the Board shall notify the Governance Committee and offer his or her resignation from the Board. The Governance Committee will evaluate the facts and circumstances and make a recommendation to the Board whether to accept an offer of resignation or request that the director continue to serve on the Board. Any employee of Arconic who is also a director must offer to resign from the Board effective as of the same date that he or she retires or otherwise ceases to be an employee.

During fiscal 2021, the Board held six meetings, the Audit Committee held eight meetings (which includes one joint meeting of the formerly separate Audit Committee and Finance Committee and one meeting of the Finance Committee), the Compensation Committee held six meetings and the Governance Committee held four meetings. During 2021, each incumbent director attended 100% of the aggregate of all meetings of the Board and the committees on which he or she served and following his or her appointment to the committees. All directors have access to materials for committee meetings, and are entitled to attend, as a guest, any meeting of a committee on which they do not serve.

Under Arconic’s Corporate Governance Guidelines, all directors are expected to attend the annual meeting of shareholders. All directors attended Arconic’s virtual annual meeting of shareholders in 2021.

No member of the Compensation Committee has served as one of our officers or employees at any time. None of our executive officers serves on the board or as a member of the compensation committee of any other company that has an executive officer serving as a member of our Board or as a member of our Compensation Committee.

The Board believes that effective communication with the Company’s shareholders is important. Shareholders and other interested parties wishing to contact the Chairperson, the chairperson of any committee, individual directors or the independent directors as a group may do so by sending a written communication to the attention of the Chairperson of the Board of Directors c/o Corporate Secretary, 201 Isabella Street, Suite 400, Pittsburgh, PA 15212-5872.

Communications addressed to the Board or to a Board member are distributed to the Board or to any individual director or directors as appropriate. The Board has asked the Corporate Secretary to submit to the Board all communications received, excluding only those items that are not related to Board duties and responsibilities, such as junk mail and mass mailings; product complaints and product inquiries; new product or technology suggestions; job inquiries and resumes; advertisements or solicitations; and surveys.

In consultation with the Governance Committee, management provides materials and briefings to new directors, on an individualized basis, to assist them in becoming familiar with our business, industry and corporate governance practices, and additional formal and informal opportunities to directors (including site visits to business operations) on an ongoing basis to enable them to better perform their duties and to recognize and deal appropriately with issues that arise. Director continuing education enhances the skills and knowledge necessary to fulfill director responsibilities. We provided three director orientation sessions following the Separation. We also provide in-boardroom educational sessions on emerging issues and matters relevant to our business. During 2021, we conducted a visit by our directors to a manufacturing facility that included facility tours and educational presentations by facility personnel on a variety of subjects, including site history, manufacturing processes, equipment operation, research and development, and employee safety issues. Additionally, we encourage directors to participate in external continuing director education programs.

We maintain a Code of Conduct that applies to all directors, officers and employees, as well as those of Arconic’s subsidiaries, affiliates, partnerships, joint ventures and other business associations that we effectively control. Amendments to or waivers of the Code of Conduct for directors and executive officers may only be granted by the Audit Committee. We intend to disclose any changes in, or waivers of, the Code of Ethics by posting such information on our website or by filing a Current Report on Form 8-K, in each case to the extent such disclosure is required by SEC or NYSE rules. To date, no such amendments have been made or waivers granted.

The Company is committed to managing the heightened risks of actual or perceived conflicts of interest that could damage the reputation of and public trust in the Company. Accordingly, the Board has adopted a written Related Person Transaction Approval Policy (the “Related Party Transaction Policy”) to govern the procedures for review and consideration of all related party transactions.

Our Policy on Related Party Transactions. The Related Party Transaction Policy applies to any transaction in which Arconic is a participant, the amount involved exceeds $120,000 and a related party has a direct or indirect material interest. A related party means any director or executive officer, any nominee for director, any shareholder known to Arconic to be the beneficial owner of more than 5% of any class of the Company’s voting securities, any immediate family member of any such persons, any entity in which any of such persons is employed or occupies a similar position, and any entity in which any of such persons has a direct or indirect ownership interest in such entity that, when aggregated with the ownership interests of all the persons identified above, amounts to a 10% or greater ownership interest.

It is the responsibility of the Audit Committee to review related party transactions and approve, revise or reject such transactions. It is our policy to enter into related party transactions only when it is determined that the related party transaction in question is in, or is not inconsistent with, the best interests of Arconic and its shareholders. In determining whether to approve a related party transaction, the Audit Committee may consider, among other factors it deems appropriate, whether the proposed transaction would occur in the ordinary course of business; the purpose and benefits of the proposed transaction to Arconic; the terms and conditions of the proposed transaction; and the terms and conditions available to unrelated third parties in arms-length negotiations in respect of similar transactions. No director may participate in the deliberations or vote regarding a transaction in which he or she, or a member of his or her immediate family, has a direct or indirect interest.

Pre-Approved Categories of Related Party Transactions. Under our Related Party Transaction Policy, certain types of transactions are deemed to be pre-approved, including compensation approved by the Compensation Committee, transactions not in excess of the greater of $1 million or 2% of the other party’s revenues where other controlling factors are not present, and transactions involving competitive bids or at rates fixed by governmental authority.

To further align our officers’ and directors’ interests with those of shareholders, Arconic maintains robust stock ownership requirements. Stock ownership requirements for officers are based on a multiple of base salary, and for non-employee directors are based on a multiple of annual cash retainers (excluding any special retainers, such as special retainers for service on or chair of any committee, as Chairperson of the Board or as lead independent director), in each case as set forth below. All of our non-employee directors and officers are in compliance with the stock ownership requirements.

The stock ownership requirements must be satisfied within 5 years of the later of (a) April 1, 2020 and (b) the date an individual becomes subject to these requirements or as a result of a promotion becomes subject to an increased ownership requirement. Non-employee directors must maintain compliance with the stock ownership requirements until their retirement from the Board. Officers are required to maintain compliance with the stock ownership requirements until their separation from service in a position causing them to be subject to requirements or until such time as the requirements no longer apply to the position in which they serve.

Until stock ownership requirements are met, each individual is required to retain 50% of the aggregate of the following:

This requirement increases to 100% in the event a sale of shares results in non-compliance. Registered shares, shares held in trust, unvested time-based restricted share units or stock awards, and shares held in stock funds of Arconic savings plans or deferred compensation plans count towards compliance with the stock ownership requirements. Unvested performance-based restricted share units or stock awards, shares underlying stock options, stock appreciation rights (“SARs”), and pledged shares are not counted towards compliance with the stock ownership requirements.

Our Insider Trading Policy contains restrictions that, among other things, prohibit directors, officers or employees from:

Our director compensation program is designed to provide competitive compensation to attract and retain high-quality outside directors. Our Governance Committee periodically reviews and makes recommendations to the Board regarding director compensation. As part of this review, the Governance Committee may solicit the input of outside compensation consultants. During fiscal 2021, the Governance Committee engaged Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consultant with expertise in director compensation, to provide advice to the Governance Committee and evaluate our director compensation in light of the practices of other similarly sized companies in our industry.

In 2021, the Board, upon the advice of Meridian and the recommendation of the Governance Committee, approved increases to the annual retainers payable to the Audit Committee Chair and the Compensation Committee Chair to $25,000 and $20,000, respectively, effective January 1, 2022.

Annual Compensation. The table below sets forth the components and limits of non-employee director compensation for fiscal 2021, as set forth in the Company’s Non-Employee Director Compensation Policy.

Director Compensation Table. The following table sets forth certain information regarding the compensation earned by or awarded to each non-employee director who served on our Board during the fiscal year ended December 31, 2021. Directors who are employees are not compensated for their services as directors.

Our executive compensation program is designed to provide competitive pay opportunities to attract, motivate and retain key executives. We target pay opportunities within a range of the median among appropriate peers against which we compete for talent, and emphasize performance-based compensation that aligns the interests of management and shareholders without motivating excessive risk taking. See “Compensation Discussion and Analysis” for additional information regarding the purpose, design and individual elements of our compensation program and “Executive Compensation” for additional information regarding executive compensation for the fiscal year ended December 31, 2021.

In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are asking our shareholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement. This proposal, commonly known as “say on pay”, gives our shareholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the principles, policies and practices described in this proxy statement. Accordingly, the following resolution is submitted for shareholder vote at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to applicable SEC rules, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion, is hereby APPROVED.”

The “say on pay” vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board. However, our Board and the Compensation Committee value the opinion of our shareholders and to the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

Advisory votes on executive compensation will occur on an annual basis, as determined by the Board and taking into consideration the results of the shareholder vote on frequency of advisory votes on executive compensation at the 2021 annual meeting of shareholders.

The approval of the advisory vote on executive compensation requires the affirmative vote of a majority of shares present and entitled to vote on this matter. Abstentions are counted as votes “against” and broker non-votes have no effect on the voting with respect to Proposal 2.

Arconic’s executive compensation programs are developed by the Compensation Committee. The Compensation Committee is responsible for reviewing Arconic’s compensation philosophy and establishing Arconic’s general compensation and benefit policies. Compensation levels, as well as performance metrics and targets under annual and long-term incentive plans, for each of our named executive officers (“NEOs”) are determined and approved annually by the Compensation Committee, except that the compensation of our Chief Executive Officer is determined by the Compensation Committee and approved by the independent directors.

Certain information in this “Compensation Discussion and Analysis” section of the proxy statement includes financial measures that have not been calculated in accordance with accounting principles generally accepted in the United States of America, commonly known as “non-GAAP” measures. For a reconciliation to the most directly comparable GAAP financial measures and management’s rationale for the use of such non-GAAP measures, please see Appendix A to this proxy statement.

Our Named Executive Officers. This Compensation Discussion and Analysis focuses on Arconic’s NEOs, who are our Chief Executive Officer, our Chief Financial Officer, and the three most highly compensated executive officers based on compensation for the year ended December 31, 2021.

Say on Pay Vote. Each year, Arconic provides shareholders with a say-on-pay advisory vote on our executive compensation program. At the 2021 annual meeting of shareholders, approximately 96% of the votes cast for the say-on-pay proposal were in favor of the compensation of our NEOs. Accordingly, the Compensation Committee determined that substantive changes to our executive compensation program were not required. To the extent there is any significant vote against the NEO compensation, the Compensation Committee will consider the impact of such vote on its future compensation policies and decisions.

The Compensation Committee modified certain features of Arconic’s 2021 incentive programs for the NEOs, after consideration of market studies and other information provided by Meridian, in order to transition from temporary compensation decisions that were intended to reflect the unique challenges presented in 2020 by operating as a newly public company and by the COVID-19 pandemic, and to enhance alignment of the compensation program with Arconic’s business strategy and externally reported metrics.

Annual Incentive Compensation Program. The Compensation Committee made the following modifications to the annual incentive compensation program.

Long-Term Incentive Compensation Program. The Compensation Committee made the following modifications to the long-term incentive compensation program.

2021 Long-Term Incentive Compensation Grants. As part of its review of governance practices, the Compensation Committee adopted an equity grant and vesting cadence for annual employee grants, with grants to occur on March 1st of every year (or the first business day thereafter), and with vesting dates three years from the grant dates. In order to align the 2021 grants with this cadence, in February 2021 the Compensation Committee approved the dollar value of the awards, the calculation of the number of shares underlying the awards based on the closing price of Arconic’s common stock on March 1, 2021, and a vesting date of March 1, 2024. Because amendments to the Stock Plan, including an increase in shares available for grants under the Stock Plan, were pending shareholder approval in February 2021, the Compensation Committee granted the 2021 awards on May 21, 2021 following receipt of shareholder approval. The dollar value of the 2021 awards significantly increased between March 1 and May 21, 2021. The Compensation Committee does not expect to deviate from the established cadence in determining or granting annual awards in future periods. The 2021 equity awards for our NEOs were comprised of PRSUs and RSUs.

New Executive Compensation Peer Group. The Compensation Committee approved a new peer group for purposes of setting executive compensation, replacing the separate CEO peer group and Other NEO peer group previously approved by the Compensation Committee of ParentCo’s board of directors (the “ParentCo Compensation Committee”). The Compensation Committee considers the practices of companies in the selected peer group as one of many factors when making compensation determinations. The executive compensation peer group includes a select group of automotive, materials and capital goods companies in the Russell 3000 index, refined to reflect similar materials conversion companies with a median revenue of $6.0 billion in 2020.

In addition, the Compensation Committee approved the use of a supplemental custom peer group comprised of materials and industrial companies with a median revenue of $7.15 billion in 2020 for purposes of further analyzing executive compensation. The supplemental peer group was not used by the Compensation Committee to benchmark compensation, but rather served as an additional reference point in evaluating current compensation practices among comparable companies.

Performance Peer Group. The Compensation Committee approved a new peer group for NEOs for purposes of evaluating Relative TSR beginning with the 2021 PRSU awards. The peer group consists of the materials companies in the S&P 1000 Index, which includes Arconic and other small-cap and mid-cap metals, mining and materials companies.

Arconic’s executive compensation program is comprised of three key elements, designed to balance the important objectives of the program, as set forth below. Arconic maintains two key compensation plans: the Arconic Corporation 2020 Annual Cash Incentive Plan (the “Cash Plan”) and the Arconic Corporation 2020 Stock Incentive Plan (the “Stock Plan”). Equity awards granted under the Stock Plan are comprised of performance-based restricted share units (“PRSUs”) and time-based restricted share units (“RSUs”).

Summary. The compensation structure for our NEOs for 2021 includes base salaries, annual cash incentive compensation and long-term equity incentive compensation. Total target direct compensation for each of our NEOs is set forth below.

This compensation structure reflects the pay-for-performance objective of Arconic’s compensation philosophy. The following charts illustrate the 2021 total direct compensation mix at target for Mr. Myers and the average of our other NEOs. Total direct compensation is comprised of (i) base salary for the year ended December 31, 2021, (ii) 2021 annual cash incentive opportunity at target and (iii) grant value of 2021 long-term incentives at target. A majority of total direct compensation is at risk because our annual cash incentives (“STI”), RSUs and PRSUs (together, “LTI”) are variable, performance-based compensation.

 

Base Salary. The Compensation Committee established the base salaries for the NEOs, considering a number of factors they determined were appropriate, including the responsibilities associated with each executive officer’s respective position, experience and individual performance, the base salary levels relative to the median of the applicable peer group, and, for NEOs other than the CEO, the recommendation of the CEO.

Annual Cash Incentive Compensation. Arconic’s NEOs participate in the annual incentive program, which provides them with the opportunity to earn awards under the Cash Plan based on the achievement of corporate performance goals. The goals are established by the Compensation Committee, and are intended to focus our NEOs on specific performance metrics and goals that the Compensation Committee believes reflect critical operating objectives. The table below sets forth the 2021 target incentive compensation awards for Arconic’s NEOs.

Each NEO has the opportunity to earn between 0% and 200% of his or her target cash incentive award, on an interpolated basis, depending on Arconic’s achievement of the performance metrics. In addition, the Compensation Committee has discretion, after the determination of achievement of applicable financial objectives, to apply a multiplier so as to increase any individual’s award for a particular year by up to 20% or to reduce any individual’s award by any amount to take into account individual performance during the applicable year. The individual performance multiplier may not be applied to increase any individual’s award to an amount that exceeds 200% of target. The performance metrics, weighting and targets for the 2021 cash incentive awards are set forth in the table below.

The Compensation Committee determined the performance metrics for cash incentive awards under the Cash Plan to incentivize management’s focus on appropriate operational and financial objectives.

The target ranges and actual performance results for purposes of the Cash Plan for the year ended December 31, 2021, based on the Compensation Committee’s assessment of the Company’s performance, are set forth below.

The annual cash incentive awards earned by our NEOs for the year ended December 31, 2021 are set forth below.