UNITED STATES
SECURITIES AND EXCHANGE COMMISSION​

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.   )

Filed by the Registrant ☒

Filed by a party other than the Registrant ☐

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

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HOWMET AEROSPACE INC.​

(Name of Registrant as Specified in its Charter)​

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)​

Payment of Filing Fee (Check all boxes that apply):

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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Letter to Our Shareholders

Dear Howmet Aerospace Shareholders:

We are pleased to invite you to attend the 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Howmet Aerospace Inc. to be held on Wednesday, May 25, 2022, at 9:00 a.m. Eastern Time. This year’s Annual Meeting will be held in a virtual format through a live webcast.

We believe hosting a virtual Annual Meeting enables greater shareholder attendance and participation from any location around the world, improves meeting efficiency and our ability to communicate effectively with our shareholders, and reduces the cost and environmental impact of the Annual 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 by visiting www.virtualshareholdermeeting.com/HWM2022 and entering your 16-digit control number.

We are pleased to present you with our 2022 Proxy Statement, which represents our continuing commitment to transparency, good governance and performance-based executive compensation, and reflects the input we have received during dialogue with our investors. At the Annual Meeting, shareholders will electronically vote on the matters set forth in the 2022 Proxy Statement and accompanying notice of the annual meeting. We encourage you to read the proxy statement prior to the Annual Meeting. Highlights of the detailed information included in the proxy statement can be found in the “Proxy Summary” starting on page 1.

Your vote is very important to us. Whether or not you will attend and participate in the Annual Meeting, we hope that your shares are represented and voted. In advance of the meeting on Wednesday, May 25, 2022, please cast your vote through the internet, by telephone or by mail. Instructions on how to vote are found in the section entitled “Questions and Answers About the Meeting and Voting—How Do I Vote My Shares” on page 64.

Thank you for being a shareholder of Howmet Aerospace. On behalf of the Board of Directors and employees of the company, we appreciate your continued support.

Sincerely,

John C. Plant
Executive Chairman and Chief Executive Officer

April 8, 2022

Notice of 2022 Annual Meeting of Shareholders

The 2022 Annual Meeting of Shareholders (the “Annual Meeting”) of Howmet Aerospace Inc. (“Howmet Aerospace” or the “Company”) will be held virtually via live webcast on Wednesday, May 25, 2022, at 9:00 a.m. Eastern Time at www.virtualshareholdermeeting.com/HWM2022. There will be no physical in-person meeting.

Shareholders of record of Howmet Aerospace common stock as of the close of business on March 29, 2022 are entitled to vote at the meeting. Shareholders will be able to virtually attend the Annual Meeting, vote their shares electronically and submit questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/HWM2022 and entering their 16-digit control number. Voting now at www.proxyvote.com will ensure your representation at the Annual Meeting regardless of whether you participate in our live webcast. If you have already voted, there is no need to vote again unless you wish to change your vote.

The purposes of the meeting are:

1.

to elect 10 directors to serve a one-year term expiring at the 2023 Annual Meeting of Shareholders;

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2.

to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2022;

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3.

to approve, on an advisory basis, executive compensation;

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4.

to vote on a shareholder proposal regarding an independent Board Chairman, if properly presented at the meeting; and

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5.

to transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

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For further information about how to participate in the meeting via live webcast, and how to submit questions and vote your shares during the live webcast, please see the “Questions and Answers About the Meeting and Voting” section of the proxy statement. A complete list of shareholders entitled to vote at the meeting will be available for examination during the meeting at www.virtualshareholdermeeting.com/HWM2022.

On behalf of Howmet Aerospace’s Board of Directors,

Lola F. Lin
Executive Vice President, Chief Legal Officer and Secretary

April 8, 2022

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Proxy Statement

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 2022

 

 

The Board of Directors of Howmet Aerospace Inc. (“Howmet Aerospace” or the “Company”) is providing this proxy statement in connection with Howmet Aerospace’s 2022 Annual Meeting of Shareholders to be held on Wednesday, May 25, 2022 at 9:00 a.m. Eastern Time via live webcast at www.virtualshareholdermeeting.com/HWM2022. Shareholders may attend the virtual meeting, vote their shares and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/HWM2022. There will be no physical in-person meeting.

Proxy materials or a Notice of Internet Availability of Proxy Materials (the “Notice”) are being first released to shareholders on or about April 8, 2022. In accordance with the rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of the Company’s proxy materials to each shareholder of record, the Company may furnish proxy materials by providing access to those documents on the internet. The Notice contains instructions on how to access our proxy materials and vote online, or in the alternative, request a paper copy of the proxy materials and a proxy card. Shareholders who do not receive the Notice will continue to receive either a paper or an electronic copy of our proxy materials.

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Table of Contents

Proxy Summary

We provide below highlights of certain information in this Proxy Statement. As it is only a summary, please refer to the complete Proxy Statement and the 2021 Annual Report of Howmet Aerospace Inc. before you vote.

2022 Annual Meeting of Shareholders

 

Voting Matters and Board Recommendations

The Board of Directors recommends that you vote as follows:

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How to Vote Your Shares

Shareholders of Record or Registered Shareholders and Howmet Aerospace Savings Plan participants can vote by:

Beneficial Owners of Shares, who own shares through a bank, brokerage firm or other financial institution, can vote by returning the voting instruction form, or by following the instructions for voting via telephone or the internet, as provided by the bank, broker or other organization.

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Proxy Summary (continued)

​	​	​	​	​	​	​	​	​	​
​	(in millions, except per share amounts)	​	​	​	2021​				​
​	Sales	​	​	​	​	$	4,972	​	​
​	Operating income	​	​	​	​	$	748	​	​
​	Operating income excluding special items*	​	​	​	​	$	866	​	​
​	Income from continuing operations after income taxes	​	​	​	​	$	258	​	​
​	Income from continuing operations excluding special items*	​	​	​	​	$	442	​	​
​	Total assets	​	​	​	​	$	10,219	​	​
​	Total liabilities	​	​	​	​	$	6,711	​	​
​	Common stock outstanding (on December 31)	​	​	​	​	​	422	​	​
​	Per common share data	​	​	​	​	​	​	​	​
​	Diluted earnings per share (continuing operations)	​	​	​	​	$	0.59	​	​
​	Diluted earnings per share excluding special items*	​	​	​	​	$	1.01	​	​

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Proxy Summary (continued)

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Name and Professional Background

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Age

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HWM Director Since

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Independent

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Committee Memberships

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Other Current Public Company

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James F. Albaugh Former President and Chief Executive Officer of Commercial Airplanes, The Boeing Company

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71

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2017

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Lead Director Audit; Governance and Nominating

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American Airlines Group Inc.

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Amy E. Alving Former Senior Vice President and Chief Technology Officer, Leidos Holdings, Inc.

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59

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2018

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Cybersecurity Advisory Subcommittee (Chair); Governance and Nominating (Chair)

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DXC Technology Company; Federal National Mortgage Association

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Sharon R. Barner Vice President, Chief Administrative Officer and Corporate Secretary and Interim Chief Human Resources Officer, Cummins Inc.

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2021

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Governance and Nominating

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Joseph S. Cantie Former Executive Vice President and Chief Financial Officer, ZF TRW

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2020

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Audit; Compensation and Benefits; Finance

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Summit Materials, Inc.; Top Build Corporation

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Robert F. Leduc Former President of Pratt & Whitney Company Inc.

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66

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2020

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Compensation and Benefits (Chair)

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AAR Corporation; JetBlue Airways Corporation

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David J. Miller Equity Partner and Senior Portfolio Manager, Elliott Management Corporation

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2017

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Finance

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Jody G. Miller Co-Chief Executive Officer, Business Talent Group

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2020

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Cybersecurity Advisory Subcommittee; Governance and Nominating

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LKQ Corporation

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Nicole W. Piasecki Former Vice President and General Manager, Propulsion Systems Division, Commercial Airplanes, The Boeing Company

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2020

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Compensation and Benefits; Cybersecurity Advisory Subcommittee

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Weyerhauser Co.

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John C. Plant Executive Chairman and Chief Executive Officer, Howmet Aerospace Inc.

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68

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2016

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Jabil Circuit Corporation; Masco Corporation

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Ulrich R. Schmidt Former Executive Vice President and Chief Financial Officer, Spirit Aerosystems Holdings, Inc.

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72

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2016

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Audit (Chair); Finance (Chair)

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Proxy Summary (continued)

Environmental, Social and Governance (ESG) Highlights

Howmet Aerospace is committed to improving our environmental footprint, creating a work environment where all employees can thrive, investing in the communities where we operate, and maintaining good governance practices.

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Commitment to Good Corporate Citizenship

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The Company has a longstanding commitment to good corporate citizenship. The Board oversees and provides guidance to management on the Company’s ESG programs, initiatives and objectives, including corporate social responsibility, environmental sustainability, health and safety, and diversity and inclusion.

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Environmental and Social Responsibility

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ESG has the full attention of the organization at every level. Key ESG metrics are reviewed on a regular basis, including quarterly updates with the CEO and senior leadership, and ESG goals and plans are reviewed at least annually.

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Shareholder Engagement

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Our directors and executive officers value direct and recurring engagement with our shareholders as part of our continuing efforts to create shareholder value, to refine our corporate governance practices and to address any shareholder concerns.

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Proxy Access

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Shareholders may nominate director candidates to Howmet Aerospace’s Board and include those nominees in Howmet Aerospace’s proxy statement in accordance with the Company’s Bylaws.

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Shareholders’ Right to Call Special Meetings

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Shareholders are permitted to call special meetings in accordance with the Company’s Certificate of Incorporation and Bylaws.

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Shareholders’ Action by Written Consent

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Shareholders may act by written consent in accordance with the Company’s Certificate of Incorporation and Bylaws.

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Annual Election of Directors

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The Board of Directors is not a classified board; each director is elected annually for a one-year term.

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No Supermajority Voting Requirements

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The Certificate of Incorporation does not contain any provisions that require a supermajority vote of shareholders.

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Strong Independent Lead Director

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The Board recognizes that in circumstances where the positions of Chairman and CEO are combined, a strong and independent Lead Director with a clearly defined role and set of responsibilities is paramount for constructive and effective leadership. Howmet Aerospace’s independent Lead Director has a clear mandate and significant authority and responsibilities.

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Proxy Summary (continued)

Executive Compensation Highlights

The Compensation Discussion and Analysis section includes a discussion of the Company’s compensation philosophy and design and 2021 compensation decisions.

Howmet Aerospace’s executive compensation philosophy to provide pay for performance and shareholder alignment underlies our 2021 compensation structure, which is designed based on four guiding principles:

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Make equity long-term incentive (LTI) compensation the most significant portion of total compensation for senior executives and managers, increasing alignment between our executive’s incentives and shareholder value.

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Choose annual incentive compensation (IC) metrics that focus management’s actions on achieving the greatest positive impact on Howmet Aerospace’s financial performance and that include a means to assess and motivate performance relative to peers.

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Set annual IC targets that challenge management to achieve continuous improvement in performance and deliver long-term growth.

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Target the market median for our executive compensation packages, while providing the opportunity to earn above-market pay for strong performance, and also allowing for the flexibility to provide additional compensation for retention purposes as it relates to special circumstances or unique leadership talent and the need to ensure continued Company success.

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We are committed to executive compensation practices that drive performance, mitigate risk and align the interests of our leadership team with the interests of our shareholders. Best practices in 2021 generally include:

 

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Item 1 Election of Directors

Howmet Aerospace’s Board of Directors comprises 10 members, led by Executive Chairman and Chief Executive Officer John C. Plant, and independent Lead Director James F. Albaugh.

The Board of Directors, upon the recommendation of the Governance and Nominating Committee, has nominated 10 incumbent directors to stand for re-election to the Board for a one-year term expiring on the date of the 2023 Annual Meeting of Shareholders: James F. Albaugh, Amy E. Alving, Sharon R. Barner, Joseph S. Cantie, Robert F. Leduc, David J. Miller, Jody G. Miller, Nicole W. Piasecki, John C. Plant, and Ulrich R. Schmidt. Each of the 10 director nominees was elected by shareholders at the 2021 Annual Meeting of Shareholders.

The Board of Directors has affirmatively determined that each of the 10 director nominees qualifies for election under the Company’s criteria for evaluation of directors (see “Minimum Qualifications for Director Nominees and Board Member Attributes” on page 14). Included in each nominee’s biography below is a description of the qualifications, experience, attributes and skills of such nominee.

In addition, the Board of Directors has determined that each director nominee, except Mr. Plant (due to Mr. Plant’s role as the Company’s Chief Executive Officer), qualifies as an independent director under New York Stock Exchange corporate governance listing standards and the Company’s Director Independence Standards. See “Director Independence” on page 30.

If any of the Board’s nominees is unable to serve or for good cause will not serve as a director, the Board of Directors may reduce its size or choose a substitute nominee. If any substitute nominees are designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected, and includes certain biographical and other information about such nominees required by SEC rules.

The Board of Directors recommends that you vote FOR the election of each of Mmes. Alving, Barner, Miller and Piasecki and Messrs. Albaugh, Cantie, Leduc, Miller, Plant, and Schmidt.

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Item 1 Election of Directors (continued)

Summary of Director Diversity and Attributes

A diverse board encompassing a variety of skills, experiences and viewpoints contributes to the collective strength and effectiveness of the Board of Directors. Among the factors considered in nominating a director candidate or incumbent director is the extent to which the individual will contribute to the diversity of the Board. When evaluating potential director nominees, the Governance and Nominating Committee considers a broad range of diversity, including diversity with respect to professional experience, skills and background, as well as diversity of gender, race and ethnicity, sexual orientation and identity.

Our Board comprises a diversity of experience that spans a broad range of industries, including the aerospace, transportation and finance sectors, and a wide variety of skills, qualifications and viewpoints that strengthens the Board’s ability to carry out its oversight role on behalf of our shareholders. Director nominees are well-suited to oversee the Company’s global operations and evolving business strategy. The skills matrix below is a summary of the range of skills and experiences that each director nominee brings to the Board.

50/50 Women on Boards 3+ Designation: In 2021, our Board received the “3+” designation from 50/50 Women on Boards for having three or more women on its board. 50/50 Women on Boards is the leading global education and advocacy campaign driving the movement toward diverse, gender-balanced corporate boards.

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Item 1 Election of Directors (continued)

Director Nominees

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Item 1 Election of Directors (continued)

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Item 1 Election of Directors (continued)

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Item 1 Election of Directors (continued)

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Item 1 Election of Directors (continued)

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Item 1 Election of Directors (continued)

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Item 1 Election of Directors (continued)

Nominating Board Candidates—Procedures and Director Qualifications

Shareholder Recommendations for Director Nominees

Any shareholder wishing to recommend a candidate for director should submit the recommendation in writing to our principal executive offices: Howmet Aerospace Inc., Governance and Nominating Committee, c/o Corporate Secretary’s Office, 201 Isabella Street, Suite 200, Pittsburgh, PA 15212-5872 or email: CorporateSecretary@howmet.com. The written submission should comply with all requirements set forth in the Company’s Certificate of Incorporation and Bylaws. The committee will consider all candidates recommended by shareholders in compliance with the foregoing procedures and who satisfy the minimum qualifications for director nominees and Board member attributes.

Shareholder Nominations

The Company’s Certificate of Incorporation and Bylaws provide that any shareholder entitled to vote at an annual meeting of shareholders may nominate one or more director candidates for election at that annual meeting by following certain prescribed procedures. The shareholder must provide to Howmet Aerospace’s Corporate Secretary timely written notice of the shareholder’s intent to make such a nomination or nominations. In order to be timely, the shareholder must provide such written notice not earlier than the 120th day and not later than the 90th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made. The notice must contain all of the information required in the Company’s Certificate of Incorporation and Bylaws. Any such notice must be sent to our principal executive offices: Howmet Aerospace Inc., Corporate Secretary’s Office, 201 Isabella Street, Suite 200, Pittsburgh, PA 15212-5872 or email: CorporateSecretary.howmet.com. For the 2023 Annual Meeting, such notice must be delivered no earlier than January 25, 2023 and no later than February 24, 2023.

Subject to the terms and conditions set forth in the Company’s Bylaws, shareholder nominations for candidates for election at the 2023 Annual Meeting of Shareholders, which the shareholder wishes to include in the Company’s proxy materials relating to the 2023 Annual Meeting, must be received by the Company at the above address no earlier than November 9, 2022 and no later than December 9, 2022, together with all information required to be provided by the shareholder in accordance with the proxy access provision in the Bylaws.

Minimum Qualifications for Director Nominees and Board Member Attributes

The Governance and Nominating Committee has adopted Criteria for Identification, Evaluation and Selection of Directors:

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Directors must have demonstrated the highest ethical behavior and must be committed to the Company’s values.

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2.

Directors must be committed to seeking and balancing the legitimate long-term interests of all of the Company’s shareholders, as well as its other stakeholders, including its customers, employees and the communities where the Company has an impact. Directors must not be beholden primarily to any special interest group or constituency.

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3.

It is the objective of the Board that all non-management directors be independent. In addition, no director should have, or appear to have, a conflict of interest that would impair that director’s ability to make decisions consistently in a fair and balanced manner.

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4.

Directors must be independent in thought and judgment. They must each have the ability to speak out on difficult subjects; to ask tough questions and demand accurate, honest answers; to constructively challenge management; and at the same time, act as an effective member of the team, engendering by his or her attitude an atmosphere of collegiality and trust.

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Each director must have demonstrated excellence in his or her area and must be able to deal effectively with crises and to provide advice and counsel to the Chief Executive Officer and his or her peers.

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6.

Directors should have proven business acumen, serving or having served as a chief executive officer, or other senior leadership role, in a significant, complex organization; or serving or having served in a significant policy-making or leadership position in a well-respected, nationally or internationally recognized educational institution, not-for-profit organization or governmental entity; or having achieved a widely recognized position of leadership in the director’s field of endeavor which adds substantial value to the oversight of material issues related to the Company’s business.

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Item 1 Election of Directors (continued)

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Directors must be committed to understanding the Company and its industry; to regularly preparing for, attending and actively participating in meetings of the Board and its committees; and to ensuring that existing and future individual commitments will not materially interfere with the director’s obligations to the Company. The number of other board memberships, in light of the demands of a director nominee’s principal occupation, should be considered, as well as travel demands for meeting attendance.

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8.

Directors must understand the legal responsibilities of board service and fiduciary obligations. All members of the Board should be financially literate and have a sound understanding of business strategy, business environment, corporate governance and board operations. At least one member of the Board must satisfy the requirements of an “audit committee financial expert.”

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9.

Directors must be self-confident and willing and able to assume leadership and collaborative roles as needed. They need to demonstrate maturity, valuing Board and team performance over individual performance and respect for others and their views.

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10.

New director nominees should be able and committed to serve as a member of the Board for an extended period of time.

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11.

A diverse board encompassing a variety of skills, experiences and viewpoints contribute to the collective strength and effectiveness of the Board. When evaluating the diversity of potential director nominees, the Governance and Nominating Committee will consider a broad range of diversity, including diversity with respect to professional experience, skills and background, as well as diversity of gender, race, ethnicity, sexual orientation and identity. In selecting a director nominee, the committee will focus on characteristics that would complement the existing Board, recognizing that the Company’s businesses and operations are diverse and global in nature.

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12.

Directors should have reputations, both personal and professional, consistent with the Company’s image and reputation.

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Process of Evaluation of Director Candidates

The Governance and Nominating Committee makes a preliminary review of a prospective director candidate’s background, career experience and qualifications based on available information or information provided by an independent search firm, which identifies or provides an assessment of a candidate, or by a shareholder nominating or suggesting a candidate. If a consensus is reached by the committee that a particular candidate would likely contribute positively to the Board’s mix of skills, experiences and diversity, and a Board vacancy exists or is likely to occur, the candidate is contacted to confirm his or her interest and willingness to serve. The committee conducts interviews and may invite other Board members or senior Howmet Aerospace executives to interview the candidate to assess the candidate’s overall qualifications. The committee considers the candidate against the criteria it has adopted, as well as in the context of the Board’s then current composition and the needs of the Board and its committees.

At the conclusion of this process, the committee reports the results of its review to the full Board. The report includes a recommendation as to whether the candidate should be nominated for election to the Board. This procedure is the same for all candidates, including director candidates identified by shareholders.

The Governance and Nominating Committee retains from time to time the services of a search firm that specializes in identifying and evaluating director candidates. Services provided by the search firm include identifying potential director candidates meeting criteria established by the committee, verifying information about the prospective candidate’s credentials, and obtaining a preliminary indication of interest and willingness to serve as a Board member.

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Director Compensation

Our non-employee director compensation program is designed to attract and retain outstanding director candidates who have the requisite experience and background as set forth in our Corporate Governance Guidelines, and to recognize the substantial time and effort necessary to exercise oversight of a complex global organization like Howmet Aerospace and fulfill the other responsibilities required of our directors. Mr. Plant, our sole employee director, does not receive additional compensation for his Board service.

The Governance and Nominating Committee reviews director compensation periodically and recommends changes to the Board when it deems appropriate. In 2021, the Committee asked management to conduct a review of the Company’s director compensation program compared to benchmark companies in our CEO compensation peer group. Based on management’s review, and taking into account various factors, the Governance and Nominating Committee did not recommend any changes to the compensation program for non-employee directors.

Director Fees

The following table describes the components of compensation for non-employee directors:

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1

All Other Annual Fees are paid in cash.

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2

Each non-employee director may receive only one additional annual retainer fee in connection with service as the Chair of a committee (whether in the position of Lead Director, Audit Committee Chair, Compensation and Benefits Committee Chair or Other Committee Chair), regardless of how many committee Chair positions held by such director.

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3

A fee of  $1,200 for each Board or committee meeting attended by a non-employee director in excess of five special Board or committee meetings during the applicable calendar year and applies only to any non-regularly scheduled meeting in excess of a two-hour duration.

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Directors’ Alignment with Shareholders

Stock Ownership Guideline for Directors

In order to further align the interests of our directors with the long-term interests of our shareholders, non-employee directors are required to own, until retirement from the Board, at least $750,000 in Howmet Aerospace common stock. Compliance with the ownership value requirement is measured annually and if the stock price declines in value, directors must continue to invest in Howmet Aerospace stock until the stock ownership guideline is reached. Each director is required to reach the stock ownership guideline within six years of his or her initial appointment as a non-employee director.

Prior to November 1, 2016, directors could defer director fees into deferred share units under the Company’s deferred fee plan for directors. Deferred share units provide directors with the same economic interest as if they own Howmet Aerospace common stock. Specifically, the deferred share units track the performance of our common stock and accrue dividend equivalents that are equal in value to dividends paid on our common stock. Upon a director’s retirement from the Board, the deferred share units are settled in cash at a value equivalent to the then-prevailing market value of our common stock.

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Director Compensation (continued)

Beginning November 1, 2016, directors receive a portion of their annual compensation in Howmet Aerospace deferred restricted share units (RSUs), which count towards meeting the stock ownership value requirement. The annual deferred RSU award vests on the first anniversary of the grant date, or, if earlier, the date of the next subsequent annual meeting of shareholders following the grant date, subject to continued service through the vesting date (however, accelerated vesting provisions apply for certain termination scenarios, such as death and change in control, and pro-rata vesting provisions apply in the event of a director’s termination of service for any other reason). Settlement of the annual deferred RSUs is deferred pursuant to the Amended and Restated Deferred Fee Plan for Directors. Also, beginning November 1, 2016, directors may elect to defer the cash portion of their annual compensation into additional Howmet Aerospace deferred RSUs (but not into deferred share units), as described in the “Director Deferral Program” section. Each Howmet Aerospace deferred RSU is an undertaking by the Company to issue to the recipient one share of Howmet Aerospace common stock upon settlement.

Accordingly, whether a director holds shares of Howmet Aerospace common stock, deferred share units or deferred RSUs, directors have the same economic interest in the performance of the Company, which further aligns directors’ interests with those of our shareholders.

The following table shows the aggregate value of each current director’s holdings in Howmet Aerospace common stock, deferred share units, and deferred RSUs, as of March 31, 2022, based on the closing price of our common stock on the New York Stock Exchange on that date.

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1

Unvested equity awards are not included.

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Prohibitions against Short Sales, Hedging, Margin Accounts and Pledging

Company policy prohibits members of the Board of Directors from pledging, holding in margin accounts, or engaging in short sales or hedging transactions with respect to any of their Company stock. The policy continues to align the interests of our directors with those of our shareholders.

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Director Compensation (continued)

2021 Director Compensation

The following table sets forth the 2021 compensation of each non-employee director who served on the Board in 2021.

In 2021, we did not issue any option awards to directors, and we do not have a non-equity incentive plan for directors. Accordingly, no such compensation is reported and we have omitted columns (d) and (e) from the table. Further, the Company does not pay above-market or preferential earnings on fees that are deferred. The Amended and Restated Deferred Fee Plan for Directors and a predecessor plan have the same investment options as the Company’s 401(k) tax-qualified savings plan for salaried employees. We therefore do not report changes in pension value or earnings on deferred fees and we have omitted column (f) from the table.

1

John C. Plant, Executive Chairman and Chief Executive Officer, is a Company employee and receives no compensation for service as a director. His compensation is reflected in the “2021 Summary Compensation Table.”

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2

Fees Earned or Paid in Cash (Column (b)). This column reflects the cash fees earned by directors for Board and committee services in 2021, whether or not such fees were deferred by a director (see “Director Deferral Program” below).

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3

Stock Awards (Column (c)). The amounts in this column represents the aggregate grant date fair value of deferred restricted share unit (RSU) awards granted to each non-employee director under the 2013 Howmet Aerospace Stock Incentive Plan, as Amended and Restated, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. Except as described below, the deferred RSU award constitutes the equity portion of each director’s compensation for service from the Company’s annual meeting of shareholders (“Annual Meeting”) in 2021 until the Company’s Annual Meeting in 2022 and vests on the earlier of the first anniversary date of the grant date or the date of the Company’s 2022 annual meeting (however, accelerated vesting provisions apply for certain termination scenarios, such as death and change in control, and pro-rata vesting applies in the event of a director’s termination of service for any other reason). The exact number of deferred RSUs comprising an equity award is calculated by dividing the dollar value of the award (as specified in our Non-Employee Director Compensation Policy) by the closing price of our common stock on the day of grant, rounded to the nearest whole share.

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•

Ms. Barner joined the Board of Directors on April 1, 2021. For her service from April 1, 2021 to the Company’s 2021 Annual Meeting (on May 25, 2021), she received a pro-rated equity award of 982 deferred RSUs on April 8, 2021, with a grant date fair value of  $31,237 based on the closing price per share of our common stock on the date of grant ($31.81). These deferred RSUs vested on May 25, 2021.

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•

Messrs. Albaugh, Cantie, Leduc, D. Miller and Schmidt and Mmes. Alving, Barner, J. Miller and Piasecki were each granted an annual equity award on May 27, 2021 for service from the Company’s 2021 Annual Meeting to the Company’s 2022 Annual Meeting. Each director received 4,228 deferred RSUs, with a grant value fair value of  $150,009, based on the closing price per share of our common stock on the date of grant ($35.48).

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•

The aggregate number of unvested deferred RSUs outstanding for each of Messrs. Albaugh, Cantie, Leduc, D. Miller and Schmidt and Mmes. Alving, Barner, J. Miller and Piasecki at December 31, 2021 was 4,228. The foregoing amounts do not include deferred RSUs that have vested—see “Director Deferral Program” below.

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4

All Other Compensation (Column (g)). The amount shown in this column for Messrs. Albaugh and Cantie; and Mmes. Alving and Barner represents imputed income related to a 2021 board event. Spouses and partners of directors were invited to attend this event and imputed income was charged to those directors whose spouses or partners attended. This imputed income is primarily for travel and expenses. Directors do not receive tax gross-ups for imputed income.

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5

Ms. Barner joined the Board of Directors, effective April 1, 2021.

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18

Director Compensation (continued)

Director Deferral Program

Pursuant to the Amended and Restated Deferred Fee Plan for Directors, non-employee directors may elect to defer all or part of the cash portion of their annual compensation and to invest such deferred amounts into fully-vested Howmet Aerospace restricted share units or into the investment options provided under the Company’s 401(k) tax-qualified savings plan other than the Howmet Aerospace Stock Fund (which represents Howmet Aerospace deferred share units). The annual equity award granted to non-employee directors in the form of Howmet Aerospace restricted share units is, by its terms, deferred under the Amended and Restated Deferred Fee Plan for Directors. Deferred amounts are paid either in a lump sum or installments, as elected by the director, upon retirement from the Board of Directors.

19

Environmental and Social Responsibility

Howmet Aerospace is committed to improving our environmental footprint, creating a work environment where all employees can thrive, investing in the communities where we operate, and maintaining good governance practices. These values, which are specified in our Code of Conduct, form the basis of our environmental, social and governance (ESG) plans and are reflected in our daily work. Central to this effort is addressing the needs of the industries we serve, where our customers are seeking to reduce their environmental impacts and carbon footprints. Our proprietary technologies help customers meet their sustainability goals by reducing the fuel consumption of their aircraft and truck fleets.

Our approach and efforts related to ESG matters are detailed in the Company’s annual ESG Report and are guided by the following:

The Company’s ESG Report can be found at www.howmet.com/esg-report. Information on our website, including the Company’s ESG Report or sections thereof, 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. The ESG Report is prepared in accordance with the recommendations from the Task Force on Climate-related Financial Disclosure (TCFD), Sustainability Accounting Standards Board for the A&D Industry (SASB) and Global Reporting Initiative (GRI) standards among other guiding standards.

20

Environmental and Social Responsibility (continued)

Some highlights of the Company’s annual ESG Report* are as follows:

​

*

Since the Company separated from Arconic Corporation in April 2020, the 2020 ESG metrics referenced herein do not include Arconic Corporation.

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21

Corporate Governance

Howmet Aerospace is a values-based company. Our values guide our behavior at every level and apply across the Company on a global basis. The Board has adopted a number of policies to support our values and good corporate governance, which we believe are important to the success of our business and in advancing shareholder interests. We highlight below certain of our corporate governance practices and features:

   

22

Corporate Governance (continued)

   

23

Corporate Governance (continued)

The Structure and Role of the Board of Directors

Board Leadership Structure

The Company’s current Board leadership structure comprises a combined Chairman and Chief Executive Officer, an independent director serving as the Lead Director, and strong, active independent directors. The Board will continue to exercise its judgment, under the circumstances at the time, to evaluate the Board leadership structure that the Board believes will provide effective leadership, oversight and direction, while optimizing the functioning of both the Board and management and facilitating effective communication between the two.

The Company’s corporate governance practices are designed to ensure that shareholders’ interests are protected by effective and independent oversight of management:

•

Independence. 9 of our 10 directors are independent as defined by the listing standards of the New York Stock Exchange (“NYSE”) and the Company’s Director Independence Standards.

​

24

Corporate Governance (continued)

•

Committees. 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.

​

•

Executive Sessions. Our independent directors meet at every regular Board Meeting in executive session without management present. These meetings are led by the independent Lead Director. The independent Lead Director may call extra sessions as needed. Committee meetings also include an executive session at which Committee members meet without management in attendance.

​

The Board’s Role in Risk Oversight

The Board of Directors is actively engaged in overseeing and reviewing the Company’s strategic direction and objectives, taking into account, among other considerations, the Company’s 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. The Board has oversight responsibility of the processes established to report and monitor material risks applicable to the Company. The Board annually reviews the Company’s enterprise risk management and receives regular updates on risk exposures.

While the Board and the committees of the Board oversee enterprise risk management, Company management is responsible for managing risk and the creation, implementation and monitoring of the risk management programs and appropriate risk management policies and procedures. The Company has robust internal processes and an effective internal control environment that facilitates the identification and management of risks and regular communication with the Board. These include an enterprise risk management committee, regular management disclosure committee meetings, Business Conduct Policies, a strong Legal Department and Ethics and Compliance Office, and a comprehensive internal and external audit process. Management communicates routinely with the Board, Board committees and individual directors on the significant risks identified and how they are being managed. Directors are free to communicate directly with senior management.

   

25

Corporate Governance (continued)

Board Oversight of COVID-19

The risk landscape associated with the COVID-19 pandemic has been, and continues to be, discussed with the Board. Over the course of 2021, management, including the Executive Chairman and Chief Executive Officer and the Chief Financial Officer, regularly updated the Board on the impact of the COVID-19 pandemic on our business and the strategic, operational and financial risks and considerations associated with the pandemic. Discussions with the Board have included, among other topics, financial and operational matters, employee health and safety, and implementation of Howmet Aerospace’s safety protocols to protect the Company’s people and processes.

Committees of the Board

Each of the Audit, Compensation and Benefits, Finance, and Governance and Nominating Committees, as well as the Cybersecurity Advisory Subcommittee, is composed solely of directors who have been determined by the Board of Directors to be independent in accordance with Securities and Exchange Commission (“SEC”) regulations, NYSE listing standards and the Company’s Director Independence Standards (including the heightened independence standards for members of the Audit and Compensation and Benefits Committees).

For information on how to access the written charters for each committee and subcommittee, see “—Our Corporate Governance Documents” below.

   

26

Corporate Governance (continued)

   

27

Corporate Governance (continued)

Board Meetings and Attendance

The Board met 9 times in 2021. The number of Board committee meetings can be found above in “Board Committee Membership and Responsibilities”. Attendance by incumbent directors at Board and committee meetings averaged 97.4%. Each incumbent director attended 75% or more of the aggregate of all meetings of the Board and the committees on which he or she served during 2021.

Under Howmet Aerospace’s Corporate Governance Guidelines, all directors are expected to attend the annual meeting of shareholders. All eleven of the then members of the Board attended the Company’s 2021 annual meeting.

Director Orientation and Continuing Education

The Company has a robust orientation program for new directors. New directors meet with key members of management to learn about the Company’s business, including its strategy, business segments, resource units and ESG priorities. As part of our Board’s continuing education, directors strive to visit one Company’s business facility each year to deepen their understanding of the Company and interact with on-site employees. In September 2021, the Board engaged in an extensive tour of the Company’s Engine Products operations in Whitehall, Michigan, which provided the Board with valuable insight into the Company’s operations, technology and innovations. Directors are also encouraged to attend outside continuing education programs at the Company’s expense. Company presentations and materials, including updates on business developments and other important topics, are provided from time to time to directors, as appropriate or upon request.

Board, Committee and Director Evaluations

The Board of Directors believes that a robust and constructive Board, committee and director performance evaluation process is an essential component of board effectiveness. Each year, the Board conducts a comprehensive evaluation process, overseen by the Governance and Nominating Committee, of its own performance, as well as the performance of each committee and each director.

   

28

Corporate Governance (continued)

Shareholder Engagement

The Board of Directors and the Company believe ongoing engagement with Howmet Aerospace shareholders is important to understanding shareholder views on issues that are important to them or that affect our Company. We have embraced an active engagement strategy for many years: to provide visibility and transparency into our business, our performance and our corporate governance, environmental, social and compensation practices. Our engagement program is designed to address shareholder questions and concerns, provide shareholders with our perspective on Company policies and practices, seek shareholder input and incorporate feedback, as appropriate.

   

29

Corporate Governance (continued)

Communications with Directors

The Board of Directors is committed to meaningful engagement with Howmet Aerospace shareholders and welcomes input and suggestions. Shareholders and other interested parties wishing to contact the Executive Chairman, independent Lead Director, individual directors, or the independent directors as a group may do so by sending a written communication to the attention of the Independent Lead Director c/o Howmet Aerospace Inc., Corporate Secretary’s Office, 201 Isabella Street, Suite 200, Pittsburgh, PA 15212-5872 or email: CorporateSecretary@howmet.com.

To communicate issues or complaints regarding questionable accounting, internal accounting controls or auditing matters, send a written communication to the Audit Committee c/o Howmet Aerospace Inc., Corporate Secretary’s Office, 201 Isabella Street, Suite 200, Pittsburgh, PA 15212-5872 or email: CorporateSecretary@howmet.com.

Alternatively, you may place an anonymous, confidential, toll-free call in the United States to Howmet Aerospace’s Integrity Line at 1-844-932-1021. For a listing of Integrity Line telephone numbers outside the United States, go to http://www.howmet.com under “About Us—Our Fundamentals—Ethics and Compliance—Speak-Up Culture—Howmet Aerospace Integrity Line.”

Communications addressed to the Board or to a Board member are distributed to the Board or to any individual director or directors as appropriate, depending upon the facts and circumstances outlined in the communication. The Board of Directors has asked the Corporate Secretary’s Office 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.

Director Independence

In the Company’s Corporate Governance Guidelines, the Board recognizes that independence depends not only on directors’ individual relationships, but also on the directors’ overall attitude. Providing objective, independent judgment is at the core of the Board’s oversight function. Under the Company’s Director Independence Standards, which conform to the corporate governance listing standards of the New York Stock Exchange, a director is not considered “independent” unless the Board affirmatively determines that the director has no material relationship with the Company or any subsidiary in the consolidated group. The Director Independence Standards comprise a list of all categories of material relationships affecting the determination of a director’s independence. Any relationship that falls below a threshold set forth in the Director Independence Standards, or is not otherwise listed in the Director Independence Standards, and is not required to be disclosed under Item 404(a) of SEC Regulation S-K, is deemed to be an immaterial relationship.

The Board has affirmatively determined that all the directors are independent except Mr. Plant, who is employed by the Company and therefore does not meet the independence standards set forth in the Director Independence Standards. In the course of its determination regarding independence, the Board did not find any material relationships between the Company and any of the directors, other than Mr. Plant’s employment.

Voting for Directors

Howmet Aerospace’s Certificate of Incorporation and Bylaws provide a majority voting standard for election of directors in uncontested elections. 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 nonvotes 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 or reject the resignation at its next regularly scheduled Board meeting. The Board’s explanation of its decision will be promptly disclosed in accordance with SEC rules and regulations. 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 the Bylaws.

30

Corporate Governance (continued)

Related Person Transactions

Review, Approval and Ratification of Transactions with Related Persons

The Company has a written Related Person Transaction Approval Policy regarding the review, approval and ratification of transactions between the Company and related persons. The policy applies to any transaction in which the Company or a Company subsidiary is a participant, the amount involved exceeds $120,000 and a related person has a direct or indirect material interest. A related person means any director or executive officer of the Company, any nominee for director, any shareholder known to the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, and any immediate family member of any such person.

Under this policy, reviews are conducted by management to determine which transactions or relationships should be referred to the Governance and Nominating Committee for consideration. The Governance and Nominating Committee then reviews the material facts and circumstances regarding a transaction and determines whether to approve, ratify, revise or reject a related person transaction, or to refer it to the full Board or another committee of the Board for consideration. The Company’s Related Person Transaction Approval Policy operates in conjunction with other aspects of the Company’s compliance program, including its Business Conduct Policies, which require that all directors, officers and employees have a duty to be free from the influence of any conflict of interest when they represent the Company in negotiations or make recommendations with respect to dealings with third parties, or otherwise carry out their duties with respect to the Company.

The Board has considered the following types of potential related person transactions and pre-approved them under the Company’s Related Person Transaction Approval Policy as not presenting material conflicts of interest:

(i)

employment of Howmet Aerospace executive officers (except employment of a Howmet Aerospace executive officer that is an immediate family member of another Howmet Aerospace executive officer, director, or nominee for director) as long as the Compensation and Benefits Committee has approved the executive officers’ compensation;

​

(ii)

director compensation that the Board has approved;

​

(iii)

any transaction with another entity in which the aggregate amount involved does not exceed the greater of $1,000,000 or 2% of the other entity’s total annual revenues, if a related person’s interest arises only from:

​

(a)

such person’s position as an employee or executive officer of the other entity; or

​

(b)

such person’s position as a director of the other entity; or

​

(c)

the ownership by such person, together with his or her immediate family members, of less than a 10% equity interest in the aggregate in the other entity (other than a partnership); or

​

(d)

both such position as a director and ownership as described in (b) and (c) above; or

​

(e)

such person’s position as a limited partner in a partnership in which the person, together with his or her immediate family members, have an interest of less than 10%;

​

(iv)

charitable contributions in which a related person’s only relationship is as an employee (other than an executive officer), or a director or trustee, if the aggregate amount involved does not exceed the greater of   $250,000 or 2% of the charitable organization’s total annual receipts;

​

(v)

transactions, such as the receipt of dividends, in which all shareholders receive proportional benefits;

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(vi)

transactions involving competitive bids;

​

(vii)

transactions involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority; and

​

(viii)

transactions with a related person involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services.

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31

Corporate Governance (continued)

Transactions with Related Persons in 2021

Based on information provided by the directors, the executive officers, and the Company’s legal department, the Governance and Nominating Committee determined that there are no material related person transactions to be reported in this proxy statement. We indemnify our directors and officers to the fullest extent permitted by law against personal liability in connection with their service to the Company. This indemnity is required under the Company’s Certificate of Incorporation and the Bylaws, and we have entered into agreements with these individuals contractually obligating us to provide this indemnification to them.

Compensation Committee Interlocks and Insider Participation

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

Compensation Consultants

In 2021, the Compensation and Benefits Committee directly retained Compensation Advisory Partners (CAP) as its independent compensation consultant. See “Executive Compensation—Compensation Discussion and Analysis—​Compensation Philosophy and Design—Executive Compensation Design Relies on a Diversified Mix of Pay Elements and Targets the Market Median—Use of Independent Compensation Consultant”. The committee assessed CAP’s independence and found no conflict of interest. In its assessment, the committee took into account the following factors: CAP provides no other services to the Company; the amount of fees received from the Company by CAP as a percentage of CAP’s total revenue; the policies and procedures that CAP has in place to prevent conflicts of interest; any business or personal relationships between the consultants at CAP performing consulting services and any Compensation and Benefits Committee members or any executive officer; and any ownership of Company stock by the consultants.

Recovery of Incentive Compensation

The Board of Directors adopted the following policy in 2006:

If the Board learns of any misconduct by an executive officer that contributed to the Company having to restate all or a portion of its financial statements, it shall take such action as it deems necessary to remedy the misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, take remedial action against the wrongdoer in a manner it deems appropriate. In determining what remedies to pursue, the Board shall take into account all relevant factors, including whether the restatement was the result of negligent, intentional or gross misconduct. The Board will, to the full extent permitted by governing law, in all appropriate cases, require reimbursement of any bonus or incentive compensation awarded to an executive officer or effect the cancellation of unvested restricted or deferred stock awards previously granted to the executive officer if: (a) the amount of the bonus or incentive compensation was calculated based upon the achievement of certain financial results that were subsequently the subject of a restatement; (b) the executive engaged in intentional misconduct that caused or partially caused the need for the restatement; and (c) the amount of the bonus or incentive compensation that would have been awarded to the executive had the financial results been properly reported would have been lower than the amount actually awarded. In addition, the Board may dismiss the executive officer, authorize legal action for breach of fiduciary duty or take such other action to enforce the executive’s obligations to Howmet Aerospace as the Board determines fit the facts surrounding the particular case. The Board may, in determining appropriate remedial action, take into account penalties or punishments imposed by third parties, such as law enforcement agencies, regulators or other authorities. The Board’s power to determine the appropriate punishment for the wrongdoer is in addition to, and not in replacement of, remedies imposed by such entities.

The 2013 Howmet Aerospace Stock Incentive Plan, as Amended and Restated, the Howmet Aerospace Inc. 2020 Annual Cash Incentive Plan, and the 2009 Alcoa Stock Incentive Plan each contains recoupment provisions consistent with this policy.

32

Corporate Governance (continued)

Business Conduct Policies and Code of Ethics

The Company’s Business Conduct Policies, which have been in place for many years, apply to the directors, officers and employees of the Company, as well as those of our controlled entities. The Business Conduct Policies provide that such individuals shall comply with: all laws and regulations that are applicable to the Company’s activities; the Company’s Code of Conduct; and all applicable Company policies and procedures. The Company’s Code of Conduct is our roadmap for leading with integrity, guiding how we work with one another, conduct business, build our partnerships, protect our assets and support our communities.

The Company also has a Code of Ethics applicable to the CEO, CFO and other Financial Professionals, including the principal accounting officer. Only the Audit Committee can amend or grant waivers from the provisions of the Company’s Code of Ethics, and any such amendments or waivers will be posted promptly at http://www.howmet.com. To date, no such amendments have been made or waivers granted.

Our Corporate Governance Documents

The following documents, as well as additional corporate governance Information and materials, are available on our website at http://www.howmet.com under “Investors—Corporate Governance—Governance and Policies”:

•

Certificate of Incorporation

​

•

Bylaws

​

•

Board Confidentiality Policy

​

•

Corporate Governance Guidelines

​

•

Director Independence Standards

​

•

Anti-Corruption Policy

​

•

Business Conduct Policies

​

•

Code of Conduct

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•

Code of Ethics for the CEO, CFO and Other Financial Professionals

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•

Policy for Hiring Members (or Former Members) of Independent Public Auditors

​

•

Human Rights Policy

​

•

Insider Trading Policy

​

•

Related Person Transaction Approval Policy

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In addition, the following documents are available on our website at https://www.howmet.com under “Investors—Corporate Governance—Board Committees”:

•

Charters of each of our Board committees and subcommittee

​

The Company’s annual ESG Report can be found at www.howmet.com/esg-report.

Copies of these documents are also available in print form at no charge by sending a request to Howmet Aerospace Inc., Corporate Secretary’s Office, 201 Isabella Street, Suite 200, Pittsburgh, PA 15212-5872 or email: CorporateSecretary@howmet.com.

Information on our website, including the Company’s ESG Report or sections thereof, 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.

33

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file initial reports of ownership and reports of changes in ownership of the Company’s common stock and other equity securities with the SEC within specified periods. Due to the complexity of the reporting rules, the Company undertakes to file such reports on behalf of its directors and executive officers and has instituted procedures to assist them with these obligations. Based solely on a review of filings with the SEC and written representations from the Company’s directors and executive officers, the Company believes that in 2021 all of its directors and executive officers filed the required reports on a timely basis under Section 16(a).

Howmet Aerospace Stock Ownership

Stock Ownership of Certain Beneficial Owners

The following table sets forth certain information about each person or entity known to us to be the beneficial owner of more than five percent of Howmet Aerospace common stock, based on filings made under Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934, as amended.

​

1

Based on 417,622,524 shares outstanding on March 29, 2022.

​

2

In a Schedule 13D amendment dated June 3, 2021, Elliott Investment Management L.P. reported that, as of June 1, 2021, it had shared power to vote and dispose of 41,565,658 shares. In addition, Elliott International, L.P. and Elliott Associates L.P. collectively had economic exposure comparable to approximately 0.9% of the shares of common stock outstanding pursuant to certain derivative agreements disclosed in the Schedule 13D amendment.

​

3

In a Schedule 13G amendment dated February 9, 2022, The Vanguard Group, an investment adviser, reported that, as of December 31, 2021, it had shared power to vote or direct to vote 629,924 shares, sole power to dispose or direct the disposition of 39,664,322 shares, and shared power to dispose or direct the disposition of 1,563,336 shares.

​

4

In a Schedule 13G amendment dated January 31, 2022, BlackRock, Inc., a parent holding company, reported that, as of December 31, 2021, it had sole power to vote or direct to vote 32,145,726 shares, sole power to dispose or direct the disposition of 35,653,055 shares, and no shared voting or dispositive power.

​

34

Howmet Aerospace Stock Ownership (continued)

Stock Ownership of Directors and Executive Officers

The following table shows the ownership of Howmet Aerospace common stock, deferred share units, and deferred restricted share units, as of March 31, 2022, by each director, each of the named executive officers, and all directors and executive officers (serving as of March 31, 2022) as a group.

Deferred share units provide holders with the same economic interest as if they own Howmet Aerospace common stock. Upon a holder’s separation from the Company, the deferred share units are settled in cash at a value equivalent to the then-prevailing market value of our common stock.

Each Howmet Aerospace deferred restricted share unit is an undertaking by the Company to issue to the recipient one share of Howmet Aerospace common stock upon settlement. Deferred amounts are paid either in a lump sum or installments, as elected by the director, upon retirement from the Board.

​

*

Also serves as a director

​

1

This column shows beneficial ownership of Howmet Aerospace common stock as calculated under SEC rules. Unless otherwise noted, each director and named executive officer has sole voting and investment power over the shares of Howmet Aerospace common stock reported. None of the shares are subject to pledge. This column includes shares held of record, shares held by a bank, broker or nominee for the person’s account, shares held through family trust arrangements, and for executive officers, share equivalent units held in the Howmet Aerospace Retirement Savings Plan which confer voting rights through the plan trustee with respect to shares of Howmet Aerospace common stock. This column also includes shares of Howmet Aerospace common stock that may be acquired under employee stock options that are exercisable as of March 31, 2022 or will become exercisable within 60 days after March 31, 2022, each as follows: Mr. Giacobbe (79,548 options); Mr. Chanatry (31,202 options); and all directors and executive officers as a group (115,377 options). No awards of stock options have been made to non-employee directors. As of March 31, 2022, individual directors and executive officers, as well as all directors and executive officers as a group, beneficially owned less than 1% of the outstanding shares of common stock.

​

2

This column lists (i) for executive officers, deferred share equivalent units held under the Howmet Aerospace Deferred Compensation Plan, and (ii) for directors, deferred share equivalent units held under the Amended and Restated Deferred Fee Plan for Directors. Each deferred share equivalent unit tracks the economic performance of one share of Howmet Aerospace common stock and is fully vested upon grant, but does not have voting rights.

​

3

This column lists deferred restricted share units issued to directors under the 2013 Howmet Aerospace Stock Incentive Plan, as Amended and Restated. Each deferred restricted share unit is an undertaking by the Company to issue to the recipient one share of

​

35

Howmet Aerospace Stock Ownership (continued)

Howmet Aerospace common stock upon settlement. The annual deferred restricted share units to directors vest on the first anniversary of the grant date, or, if earlier, the date of the next subsequent annual meeting of shareholders following the grant date, subject to continued service through the vesting date (however, accelerated vesting provisions apply for certain termination scenarios, such as death and change in control, and pro-rata vesting provisions apply in the event of a director’s termination of service for any other reason). Deferred restricted share units granted in lieu of cash compensation pursuant to a director’s deferral election are fully vested at grant. Deferred restricted share units are paid/settled either in a lump sum or installments, as elected by the director, upon retirement from the Board.

4

Includes 1,587,730 shares that are held in trusts of which Mr. Plant is the trustee and beneficiary or annuitant.

​

5

Mr. Oal departed the Company, effective October 14, 2021.

​

36

Item 2 Ratification of Appointment of Independent Registered Public Accounting Firm

Under its written charter, the Audit Committee of the Board of Directors has sole authority and is directly responsible for the appointment, retention, compensation, oversight, evaluation and termination of the independent registered public accounting firm retained to audit the Company’s financial statements.

The Audit Committee annually evaluates the qualifications, performance and independence of the Company’s independent auditors. Based on its evaluation, the Audit Committee has appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2022. PricewaterhouseCoopers LLP or its predecessor firms have served continuously as the Company’s independent auditors since 1950. The Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders.

The Audit Committee is responsible for the approval of the engagement fees and terms associated with the retention of PricewaterhouseCoopers LLP. In addition to assuring the regular rotation of the lead audit partner as required by law, the Audit Committee is involved in the selection and evaluation of the lead audit partner and considers whether, in order to assure continuing auditor independence, there should be a regular rotation of the independent registered public accounting firm.

Although the Company’s Bylaws do not require that we seek shareholder ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, we are doing so as a matter of good corporate governance. If the shareholders do not ratify the appointment, the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP.

Representatives of PricewaterhouseCoopers LLP are expected to be present on the live webcast of the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions by shareholders.

The Board of Directors recommends a vote “FOR” ITEM 2, to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2022.

37

Item 2 Ratification of Appointment of Independent Registered Public Accounting Firm (continued)

Report of the Audit Committee

In accordance with its written charter, the Audit Committee of the Board of Directors is responsible for assisting the Board to fulfill its oversight of:

•

the integrity of the Company’s financial statements and internal controls;

​

•

the Company’s compliance with legal and regulatory requirements;

​

•

the independent auditors’ qualifications and independence; and

​

•

the performance of the Company’s internal audit function and independent auditors.

​

It is the responsibility of the Company’s management to prepare the Company’s financial statements and to develop and maintain adequate systems of internal accounting and financial controls. The Company’s internal auditors are responsible for conducting internal audits intended to evaluate the adequacy and effectiveness of the Company’s financial and operating internal control systems.

PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm for 2021 (the “independent auditors”), is responsible for performing independent audits of the Company’s consolidated financial statements and internal control over financial reporting and issuing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America (GAAP) and on the effectiveness of the Company’s internal control over financial reporting. The independent auditors also review the Company’s interim financial statements in accordance with applicable auditing standards.

In evaluating the independence of PricewaterhouseCoopers LLP, the Audit Committee has (i) received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the Public Company Accounting Oversight Board (PCAOB) regarding the audit firm’s communications with the Audit Committee concerning independence; (ii) discussed with PricewaterhouseCoopers LLP the firm’s independence from the Company and management; and (iii) considered whether PricewaterhouseCoopers LLP’s provision of non-audit services to the Company is compatible with the auditor’s independence. In addition, the Audit Committee has assured that the lead audit partner is rotated at least every five years in accordance with Securities and Exchange Commission (SEC) and PCAOB requirements, and considered whether there should be a regular rotation of the audit firm itself in order to assure the continuing independence of the outside auditors. The Audit Committee has concluded that PricewaterhouseCoopers LLP is independent from the Company and its management.

The Audit Committee has reviewed with the independent auditors and the Company’s internal auditors the overall scope and specific plans for their respective audits, and the Audit Committee regularly monitored the progress of both in assessing the Company’s compliance with internal and disclosure controls over financial reporting, including their findings, required resources and progress to date.

At every regular meeting, the Audit Committee meets separately, and without management present, with the independent auditors and the Company’s chief internal audit executive to review the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s accounting and financial reporting. The Audit Committee also meets separately at its regular meetings with the Chief Financial Officer and the Chief Legal Officer.

The Audit Committee has met and discussed with management and the independent auditors the fair and complete presentation of the Company’s financial statements. The Audit Committee has also discussed and reviewed with the independent auditors all communications required by applicable requirements of the PCAOB and the SEC. The Audit Committee has discussed significant accounting policies applied in the financial statements, as well as alternative treatments. Management has represented that the consolidated financial statements have been prepared in accordance with GAAP, and the Audit Committee has reviewed and discussed the audited consolidated financial statements with both management and the independent auditors.

38

Item 2 Ratification of Appointment of Independent Registered Public Accounting Firm (continued)

Relying on the foregoing reviews and discussions, the Audit Committee recommended to the Board of Directors, and the Board approved, inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, for filing with the SEC. In addition, the Audit Committee has approved, subject to shareholder ratification, the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2022.

The Audit Committee
Ulrich R. Schmidt, Chair
James F. Albaugh
Joseph S. Cantie
 
April 8, 2022

Audit and Non-Audit Fees

The following table shows fees incurred for professional services rendered by PricewaterhouseCoopers LLP (PwC) for the past two fiscal years ended December 31 (in millions):

​

1

The separation of Arconic Inc. into two standalone, publicly-traded companies—Howmet Aerospace Inc. (the new name for Arconic Inc.) and Arconic Corporation—became effective on April 1, 2020. The 2020 fees shown in the table relate to audit and non-audit fees incurred by Arconic Inc. prior to the separation and Howmet Aerospace post separation.

​

The Audit Committee has adopted policies and procedures for pre-approval of audit, audit-related, tax and other services, and for pre-approval of fee levels for such services. See “Attachment A—Pre-Approval Policies and Procedures for Audit and Non-Audit Services” on page 70. All services set forth in the table above were approved by the Audit Committee before being rendered.

Audit Fees are comprised of the base audit fee (including statutory audit fees), effects of foreign currency exchange rfates on the base audit fee, and scope adjustments to the base audit requirements. The decrease in audit fees from 2020 to 2021 was principally a result of the Arconic Inc. separation into Howmet Aerospace Inc. and Arconic Corporation.

Audit-Related Fees include agreed-upon or expanded audit procedures for accounting or regulatory requirements.

Tax Fees include U.S. federal, state and local tax support, international tax support, and review and preparation of tax returns.

All Other Fees include subscriptions for online resources available from PwC.

39

Item 3 Advisory Approval of Executive Compensation

As required pursuant to Section 14A of the Securities Exchange Act of 1934, the Board of Directors is asking you to approve, on an advisory basis, the Company’s executive compensation programs and policies and the resulting 2021 compensation of the individuals listed in the “2021 Summary Compensation Table” ​(our “named executive officers” or “NEOs”), as described in this proxy statement.

Because the vote is advisory, the result will not be binding on the Compensation and Benefits Committee and it will not affect, limit or augment any existing compensation or awards. The Compensation and Benefits Committee will, however, take into account the outcome of the vote when considering future compensation arrangements.

The Board has determined that advisory votes on executive compensation will be submitted to shareholders on an annual basis, at least until the next required advisory vote on the frequency of shareholder votes in 2023. The next advisory vote on executive compensation will occur at the 2023 Annual Meeting of Shareholders.

We believe you should read the Compensation Discussion and Analysis and the compensation tables in determining whether to approve this proposal.

The Board of Directors recommends approval of the following resolution:

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the executive compensation tables and the related narrative discussion, is hereby APPROVED.

The Board of Directors recommends a vote “FOR” ITEM 3, to approve, on an advisory basis, the compensation of the Company’s named executive officers, as stated in the above resolution.

Compensation Committee Report

The Compensation and Benefits Committee has:

1.

reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement; and

​

2.

based on the review and discussions referred to in paragraph (1) above, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s proxy statement relating to the 2022 Annual Meeting of Shareholders.

​

The Compensation and Benefits Committee
Robert F. Leduc, Chair
Joseph S. Cantie
Nicole W. Piasecki
 
April 8, 2022

40

Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis (CD&A) includes the compensation and benefits of our named executive officers (NEOs) with respect to fiscal year 2021 and the related decisions made by the Compensation and Benefits Committee (the “Compensation Committee”). For 2021, our NEOs are:

In this CD&A, we will highlight:

1.

The Company’s 2021 performance;

​

2.

Shareholder feedback received in 2021;

​

3.

The decision to appoint Mr. Plant as sole CEO and the 2021 letter agreement with Mr. Plant;

​

4.

The Company’s compensation philosophy and design;

​

5.

2021 incentive plan results;

​

6.

2021 compensation decisions for Mr. Plant, including an update on his performance restricted share units; and

​

7.

Individual compensation decisions for the other NEOs, including retention grants made in 2021.

​

Summary of Key 2021 Inputs and Decisions

Our Business and 2021 Company Performance

Howmet Aerospace is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation.

Howmet Aerospace operates in 20 countries. The Company has four reportable segments, which are organized by product on a worldwide basis: Engine Products, Fastening Systems, Engineered Structures, and Forged Wheels. We refer to these segments in this CD&A as our “business groups”.

Howmet Aerospace delivered a strong finish to a challenging 2021, performing well despite the effects of a COVID-19 variant and continued production declines of the Boeing 787 aircraft. Fourth quarter 2021 revenue increased 4% year over year and was in line with the third quarter 2021, while income from continuing operations was $77 million, and adjusted EBITDA margin excluding special items was 23%, exceeding expectations and marking a healthy exit rate heading into 2022. Second half 2021 income from continuing operations was $104 million, and adjusted EBITDA margin excluding special items was 22.9%.

41

Executive Compensation—Compensation Discussion and Analysis (continued)

Full Year 2021 Highlights

•

Revenue of  $5.0 billion, down 5% year over year

​

•

Structural cost reductions of approximately $130 million achieved

​

•

Income from continuing operations of  $258 million, or $0.59 per share, versus income from continuing operations of $211 million, or $0.48 per share, in the full year 2020

​

•

Income from continuing operations excluding special items of  $442 million, or $1.01 per share, versus $354 million, or $0.80 per share in the full year 2020

​

•

Generated $449 million cash from operations and $517 million of adjusted free cash flow versus $9 million and $387 million, respectively, in the full year 2020; $1.4 billion of cash used for financing activities versus $369 million in the full year 2020; and $107 million of cash provided from investing activities versus $271 million in the full year 2020

​

•

Share repurchases of approximately 13.4 million common shares for $430 million in 2021

​

•

Reinstated quarterly dividend on the Company’s common stock in third quarter 2021

​

Full year 2021 operating income was $748 million, up 19% versus the full year 2020. Operating income excluding special items was $866 million, up 7% versus the full year 2020. The year-over-year increase was driven by growth in the commercial transportation and industrial gas turbine markets, variable and fixed cost reductions, and favorable product pricing, partially offset by declines in the commercial aerospace and defense aerospace markets. Operating income margin, excluding special items, was up approximately 200 basis points year over year to 17.4%.

See “Attachment C—Calculation of Financial Measures” for the reconciliations to the most directly comparable GAAP (accounting principles generally accepted in the United States of America) measures and management’s rationale for the non-GAAP financial measures used in this CD&A.

Shareholder Feedback

The Company solicits feedback from shareholders on a regular basis throughout the year. Shareholder engagement offers us an opportunity to obtain shareholders’ comments and insights, including those related to their policies and views on executive compensation, corporate governance, and environmental and social matters. Our engagement program is designed to address shareholder questions and concerns, provide perspective on Company policies and practices, seek shareholder input and incorporate feedback, as appropriate. The regular dialogue with our shareholders has informed our Board meeting agendas, and contributes to governance and disclosure enhancements that help us address the issues our shareholders tell us matters most to them. For a detailed description of the Company’s year-round outreach, see the “Corporate Governance—​Shareholder Engagement” section.

In 2021, we received approximately 45% support for our annual executive compensation proposal. The Compensation and Benefits Committee and the entire Board take the outcome of this vote seriously and have been highly focused on understanding and responding to our shareholders’ feedback reflected in this vote. Through the Company’s fall 2021 engagement, the Compensation Committee sought to elicit and consider a range of shareholder perspectives related to the Company’s executive compensation program.

In the fall of 2021, we reached out to our top 30 shareholders representing approximately 68% of our outstanding shares, other than Elliott Management (who has a representative on the Board). Of the invites that were sent out:

•

Five investors, representing approximately 10% of our outstanding shares, accepted our invitation;

​

•

Eight investors, representing approximately 23% of our outstanding shares, indicated that no discussion was necessary;

​

•

Sixteen investors, representing approximately 25% of our outstanding shares, did not respond after multiple attempts to engage.

​

•

We held one additional call with another investor, representing approximately 0.3% of our outstanding shares, who had reached out to us requesting a call.

​

Company participants in each of our discussions included at least one member of the Compensation Committee and Neil Marchuk—Executive Vice President (EVP) and Chief Human Resources Officer, Lola Lin—EVP, Chief Legal Officer and Secretary, and other members of management representing relevant functions, including compensation and benefits, environmental, health and safety, corporate governance and investor relations.

42

Executive Compensation—Compensation Discussion and Analysis (continued)

Set forth below are key themes from the executive compensation discussions.

Appointing as Mr. Plant Sole CEO and His 2021 Letter Agreement

On October 14, 2021, the Board decided to remove Mr. Oal from his position of Co-CEO, and Mr. Oal left the company to pursue other opportunities. The Co-CEO structure had been put in place to allow Mr. Oal time to grow into the sole CEO role while learning from Mr. Plant. Mr. Plant had been Co-CEO with Mr. Oal since April 2020, and, from February 2019 to April 2020, he was the CEO of Arconic Inc., as the Company was then known prior to its separation from Arconic Corporation. The Board regularly assessed Mr. Oal’s progress and decided to take action proactively while Mr. Plant still had approximately 19 months left on his 2020 letter agreement, which ran through March 2023.

Concurrently with Mr. Oal’s removal, the Board entered into a new arrangement with Mr. Plant in which he agreed to an indefinite extension of the term of his agreement in the role of sole CEO, and under which he received 500,000 restricted share units, with a grant value of  $15,445,000, that will vest on January 1, 2024.

In the 2021 proxy statement, the Board had indicated that there would be no further incentive awards to Mr. Plant, including additional equity grants in 2021 and 2022. While this was an appropriate statement to make under the Co-CEO structure and the succession plan in place at the time, the rationale changed with the evaluation of Mr. Oal’s performance and the decision to appoint Mr. Plant as sole CEO. The Board felt it was in the best interest of shareholders to incentivize Mr. Plant to stay beyond the timeline laid out in his previous agreement for the following reasons:

•

Mr. Plant has led the Company to exceptional results during extremely challenging times, including the COVID-19 pandemic and resulting significant disruptions in end markets, and the Board felt it was critical to retain him through the continued market uncertainty and to drive the Company through the expected aerospace market upturn;

​

•

The Board wanted sufficient time to consider succession timing and alternatives.

​

43

Executive Compensation—Compensation Discussion and Analysis (continued)

Compensation Philosophy and Design

The Company’s executive compensation philosophy to provide pay for performance and shareholder alignment underlies our compensation structure, which is designed based on four guiding principles:

•

Make equity long-term incentive (LTI) compensation the most significant portion of total compensation for senior executives and managers, increasing alignment between our executive’s incentives and shareholder value.

​

•

Choose annual incentive compensation (IC) metrics that focus management’s actions on achieving the greatest positive impact on the Company’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 and deliver long-term growth.

​

•

Target the market median for our executive compensation packages, while providing the opportunity to earn above-market pay for strong performance, and also allowing for the flexibility to provide additional compensation for retention purposes as it relates to special circumstances or unique leadership talent and the need to ensure continued Company success.

​

Key Compensation Practices

We are committed to executive compensation practices that drive performance, mitigate risk and align the interests of our leadership team with the interests of our shareholders. Below is a summary of our best practices in 2021.

44

Executive Compensation—Compensation Discussion and Analysis (continued)

Executive Compensation Design Relies on a Diversified Mix of Pay Elements and Targets the Market Median

The compensation design for our NEOs, other than Mr. Plant, consists of the following elements:

Compensation Levels. Base salaries and target incentive compensation levels are designed to attract, motivate, reward and retain executive talent, as well as to align pay with performance. At the beginning of each fiscal year, the Compensation Committee determines each continuing NEO’s targeted compensation (salary, target annual incentive compensation, and target long-term incentive compensation), taking into consideration alignment to market data of industry peers. The Compensation Committee generally sets target total direct compensation at median of market to provide competitive pay, unless a specific executive merits an alternative arrangement, such as due to experience or a unique set of skills like our CEO.

2021 Market Comparator Groups. To help guide compensation decisions, the Company uses two market comparator groups. The data from each of these comparator groups described below is considered in establishing compensation programs, policies, pay levels and targets, and to ensure that the Company provides appropriate compensation to attract, retain and motivate employees.

1.

Proxy Peer Group: A peer group of 18 companies from which we collect proxy data, which helps inform and determine compensation levels and target setting for the CEO, CFO and other named executive officers for whom data is available. This peer group is also used to help determine appropriate short and long-term incentive metrics. The Compensation Committee reviewed the Proxy Peer Group in 2022, considering industry, and key financial metrics including revenue, market cap, EBITDA, EBITDA margin and total assets.

​

See “Attachment B—Howmet Aerospace Inc. Peer Group Companies”.

2.

Willis Towers Watson Custom Survey Comparator Group: We also use a comparator group of companies heavily weighted towards industrials with revenues between $3 billion and $15 billion. These companies participated in the Willis Towers Watson Executive Compensation Survey. This comparator group is used as a supplement to proxy data and to benchmark roles for which proxy data is not available.

​

45

Executive Compensation—Compensation Discussion and Analysis (continued)

Use of Independent Compensation Consultant. The Compensation Committee has authority under its charter to retain its own advisors, including compensation consultants. In 2021, the Compensation Committee directly retained Compensation Advisory Partners (CAP), which is independent and without conflicts of interest with the Company. See “Corporate Governance—Compensation Consultants” on page 32. CAP provided market perspective, as requested by the Compensation Committee, on the form of Mr. Plant’s compensation arrangement, the form of certain executive compensation components, including, among other things, executive compensation best practices, insights concerning Securities and Exchange Commission (SEC) and say-on-pay policies, analysis and review of the Company’s compensation plans for executives, and the composition of the Proxy Peer Group (as discussed above). CAP also provided advice on the CD&A in this proxy statement. We use comparative compensation data from the proxy statements of the peer group companies and survey data from Willis Towers Watson to help evaluate whether our compensation programs are competitive with the market. The latter is not customized based on parameters developed by Willis Towers Watson. Willis Towers Watson does not provide any advice or recommendations to the Compensation Committee on the amount or form of executive or director compensation.

Use of Tally Sheets. In making annual compensation decisions, the Compensation Committee also reviews tally sheets that summarize various elements of historic and current compensation for each NEO. This information includes compensation opportunity, actual compensation realized, and wealth accumulation. We have found that the tally sheets help us synthesize the various components of our compensation programs in making decisions.

Conservative Compensation Risk Profile. We evaluate the risk profile of our compensation programs when establishing policies and approving plan design. These evaluations have noted numerous factors that effectively manage or mitigate compensation risk, including the following:

•

A balance of corporate and business group weighting in incentive compensation programs;

​

•

A balanced mix between short-term and long-term incentives;

​

•

Caps on incentives;

​

•

Use of multiple performance measures in the annual cash incentive compensation plan;

​

•

Discretion retained by the Compensation Committee to adjust awards;

​

•

Stock ownership guidelines requiring holding substantial equity in the Company until retirement;

​

•

Claw-back policies applicable to all forms of incentive compensation; and

​

•

Anti-hedging provisions in the Company’s Insider Trading Policy.

​

In addition, (i) no business group has a compensation structure significantly different from that of the other groups or that deviates significantly from the Company’s overall risk and reward structure; (ii) unlike financial institutions involved in the financial crisis, where leverage exceeded capital by many multiples, the Company has a conservative leverage policy; and (iii) compensation incentives are not based on the results of speculative trading. As a result of these evaluations, we have determined that it is not reasonably likely that risks arising from our compensation and benefit plans would have a material adverse effect on the Company.

Compliance with Stock Ownership Guidelines. Our stock ownership requirements further align the interests of management with those of our shareholders by requiring executives to hold substantial equity in the Company until retirement. Our stock ownership guidelines require that the Mr. Plant retain equity equal in value to six times his base salary, that Mr. Giacobbe, Mr. Marchuk and Ms. Lin each retain equity equal in value to three times base salary, and that Mr. Chanatry retain equity equal in value to one and a half times his base salary. Unlike many of our peers, we do not count any unvested or unexercised options, restricted share units, performance-based restricted share units or stock appreciation rights towards compliance. Our guidelines reinforce management’s focus on long-term shareholder value and commitment to the Company. Until the stock ownership requirements are met, each executive is required to retain until retirement 50% of shares acquired upon vesting of restricted share units (including performance-based restricted shares units) or upon exercise of stock options, after deducting shares used to pay for the option exercise price and taxes.

Messrs. Plant, Giacobbe, Marchuk, and Chanatry have met the stock ownership requirements, while Ms. Lin, who was hired in 2021, has not yet met the guidelines but will continue to retain a minimum of 50% of all shares acquired upon vesting of Company equity awards until she meets the guidelines.

No Short Sales, Derivative or Speculative Transactions, Hedging, or Pledging of Company Securities. Short sales of Company securities (a sale of securities which are not then owned) and derivative or speculative transactions in Company securities by our directors, officers and employees are prohibited. No director, officer or employee or any designee of such

46

Executive Compensation—Compensation Discussion and Analysis (continued)

director, officer or employee is permitted to purchase or use financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of Company securities. Directors and officers subject to Section 16 of the Securities Exchange Act of 1934 are prohibited from holding Company securities in margin accounts, pledging Company securities as collateral, or maintaining an automatic rebalance feature in savings plans, deferred compensation plans or deferred fee plans.

Tax Deductibility and our Incentive Compensation Plans. Although an exception exists for certain qualified performance-based arrangements in place as of November 2, 2017, under Section 162(m) of the Internal Revenue Code, only the first $1 million in annual compensation paid to our named executive officers generally is deductible for federal income tax purposes. While the Compensation Committee considers tax deductibility as one of several relevant factors in determining executive compensation, it retains the flexibility to approve compensation that is not deductible by the Company in order to maintain a compensation program that is consistent with our executive compensation philosophy described above.

2021 Annual Cash Incentive Compensation Plan Design, Targets and Results

Each of the NEOs, other than Mr. Plant, was eligible to participate in our corporate annual incentive (IC) plan for 2021. Mr. Plant did not have any short-term annual incentives in 2021.

We did not make any adjustments to our incentive targets in 2021 relating to COVID-19; however we did modify some design elements to help drive performance and ensure a fair payout:

•

We used a 2nd half 2021 adjusted EBITDA margin excluding special items (“EBITDA Margin”) target instead of a full-year as it was important to drive EBITDA Margin performance in what we anticipated would be a potential upturn in market conditions.

​

•

A “strategic goals” component of up to +20% was implemented to allow the Compensation Committee to take into account non-financial metrics, such as ESG-related performance, and to balance a fair payout with overall financial and shareholder-value performance.

​

In setting the annual incentive targets for 2021, the Compensation Committee considered the market conditions, the business forecast for the year, and the prior year’s targets and results.

•

For Adjusted Free Cash Flow, the 2021 target range was set at $425M—$490M. This reflects an increase over the full-year 2020 Adjusted Free Cash Flow result of  $387 million and an increase over the 2020 Q2-Q4 target of  $340M—$400M, particularly given that historically, the first quarter of the year has been a cash outflow for the company.

​

•

For EBITDA Margin, the 2021 2nd half target was set at 21.9%—23.7%. This reflects an increase over the full-year 2020 EBITDA Margin result of 20.8% and the 2020 Q4 EBITDA Margin target of 19.0%—21.0%.

​

For 2021, the Corporate IC plan payout was at 95%.

*Adjusted Free Cash Flow result excludes $28M voluntary cash pension payment made in Q4 2021

See “Attachment C—Calculation of Financial Measures” for the reconciliations to the most directly comparable GAAP measures and management’s rationale for the non-GAAP financial measures used in this CD&A.

The Compensation Committee considered a number of positive factors in assessing how to value the achievement of strategic goals in 2021 including:

•

Year-over-year improvement in EBITDA Margin despite challenging markets and a decline in revenue.

​

47

Executive Compensation—Compensation Discussion and Analysis (continued)

•

The strong health, safety, and business performance during the global COVID-19 pandemic.

​

•

A 6.2% decrease in greenhouse gas (GHG) emissions and 3.0% decline in energy consumption, each as compared to 2020.

​

•

Zero employee and contractor fatalities.

​

•

Total recordable incidents remained constant, and an 8.3% decline in days away, restricted and transfer rate compared to 2020.

​

•

Water use decreased by 10.8% compared to 2020.

​

•

Landfilled waste decreased by 6.8% compared to 2020.

​

•

Named one of the “Best Places to Work for LGBTQ Equality” by the Human Rights Campaign Foundation.

​

For more information on the Company’s ESG approach, please see the “Environmental and Social Responsibility” and the “Corporate Governance” sections. Ultimately, upon the recommendation of the CEO, the Committee decided to cap the payout at 95% for 2021, given the continued market uncertainty and current state of the aerospace industry and its impact on the Company’s business.

2021 Long-Term Incentives

Each of the NEOs, except for Mr. Plant, received a long-term incentive award in 2021, consisting of 40% time-vested RSUs and 60% PRSUs.

We did not make any adjustments to our long-term incentive targets in 2021 relating to COVID-19, however we did modify some design elements to help drive performance and ensure a fair payout:

•

We continued to use EBITDA Margin as our sole internal financial metric as it is the most important internal long-term metric for our shareholders.

​

•

We continued to use three one-year performance periods due to the continued market uncertainty. The Compensation Committee intends to move back to one three-year period to measure performance when market conditions stabilize.

​

•

The relative TSR multiplier was decreased from +/- 50% to +/- 20% measured over a 3-year period from 2021 through 2023.

​

The final payout for the 2020 and 2021 PRSUs will be equal to: [{Year 1 Performance Result} + {Year 2 Performance Result} + {Year 3 Performance Result}]/3 * Relative TSR Multiplier

The following tables show the targets and performance to date for the PRSUs granted in 2020 and 2021.

EBITDA Margin Performance Targets (three one-year periods)