8-KLeadership ChangesExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Executive Changes (Apr 29, 2011)

Filed April 29, 2011For Securities:HWM

Summary

Howmet Aerospace Inc. (HWM), formerly Alcoa Inc. at the time of this filing, announced on April 29, 2011, amendments to the terms and conditions of its 2011 performance-based restricted share units (Performance RSUs). These amendments are particularly relevant to senior officers, including named executive officers, and are designed to align executive compensation with long-term company performance. The Performance RSUs are a significant portion of equity compensation, with 80% of the value for senior officers tied to these units. The amended Performance RSUs will be measured over a three-year period (2011-2013) based on specific performance targets for Revenue Growth and Adjusted EBITDA Margin. These targets are segmented by the company's four business units: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products & Solutions. The metrics aim to drive improvements in cost positions, revenue generation, and profitability across these segments, with payouts occurring in 2014 based on performance across the three years. This filing also clarifies that these equity incentive metrics are separate from the company's annual cash incentive compensation metrics.

Key Highlights

  • 1Amendments to 2011 Performance RSU terms and conditions for senior officers and key executives.
  • 280% of senior officers' equity compensation is tied to Performance RSUs.
  • 3Performance measured over a three-year period (2011-2013) with payouts in 2014.
  • 4Key performance metrics for Performance RSUs are Revenue Growth and Adjusted EBITDA Margin.
  • 5Specific, quantitative performance targets are set for each of Alcoa's four business segments (Alumina, Primary Metals, Flat-Rolled Products, Engineered Products & Solutions).
  • 6Performance RSUs are paid out based on the average performance against 2011, 2012, and 2013 targets, with forfeiture of awards for performance below minimum levels.
  • 7Equity incentive metrics for Performance RSUs are distinct from the company's cash incentive compensation metrics.

Frequently Asked Questions

The primary purpose of the amendments is to adjust the performance metrics and targets for performance-based restricted share units (Performance RSUs) granted in 2011. These changes aim to better align executive compensation with the company's long-term strategic goals, focusing on revenue growth and profitability across different business segments over a three-year period.

Performance is measured over a three-year period from 2011 to 2013, with payouts in 2014. The measurement is based on two key financial metrics: Revenue Growth and Adjusted EBITDA Margin. Specific targets are set for each of Alcoa's four business segments, and the CEO's award is based on a composite of these segment targets weighted by their contribution to company revenue and EBITDA.

No, the targets are not guaranteed. The payout of the Performance RSUs is contingent upon achieving the specific business targets set for each segment and for the company as a whole. There are also minimum performance levels established for each year; performance below these levels can result in forfeiture of that portion of the award, which does not carry over.

The Performance RSUs are equity-based incentives with performance measured by Revenue Growth and Adjusted EBITDA Margin over a multi-year period. The company's cash incentive compensation metrics, which remain unchanged, are different and include Adjusted Income from Continuing Operations, Adjusted Free Cash Flow, and ESG-related factors like CO2 reduction, safety, and diversity.