8-KLeadership ChangesExhibits & Filings

Howmet Aerospace Inc. 8-K Report, Executive Changes (Sep 23, 2021)

Filed September 23, 2021For Securities:HWM

Summary

Howmet Aerospace Inc. (HWM) filed an 8-K on September 23, 2021, to report amendments to its Executive Severance Plan and Change in Control Severance Plan, effective September 17, 2021. These amendments primarily impact 'Tier I' participants, reducing the severance multipliers and the duration of continued benefits following a qualifying termination. Specifically, cash severance multipliers for non-change in control terminations were reduced from 2x to 1.5x, and for change in control terminations, from 3x to 2.5x. Additionally, the period for continued health and retirement plan benefits was shortened by six months in both scenarios. These changes are noteworthy as they reduce potential executive payouts. Currently, only Co-Chief Executive Officer Tolga Oal is classified as a Tier I participant. Importantly, Mr. Oal had already agreed to these prospective reductions through his prior employment letter agreement, mitigating immediate financial impact or surprise for the company. Investors should note that these amendments reflect a tightening of executive compensation terms, which could be viewed positively in terms of cost management and shareholder alignment.

Key Highlights

  • 1Amendments to Executive Severance Plan and Change in Control Severance Plan effective September 17, 2021.
  • 2Reductions in severance multipliers for 'Tier I' participants.
  • 3Cash severance reduced from 2x to 1.5x for non-change in control terminations.
  • 4Cash severance reduced from 3x to 2.5x for change in control terminations.
  • 5Post-termination benefit continuation period reduced by six months for both plan types.
  • 6The sole 'Tier I' participant, Co-CEO Tolga Oal, had previously agreed to these reductions.
  • 7The amended plans are filed as exhibits to the 8-K.

Frequently Asked Questions

The main purpose of this 8-K filing is to inform investors about the amendments made to Howmet Aerospace's Executive Severance Plan and Change in Control Severance Plan, which reduce certain benefits for 'Tier I' participants.

The changes primarily affect 'Tier I' participants. Currently, only Tolga Oal, the Company's Co-Chief Executive Officer, is a Tier I participant. Notably, Mr. Oal had already consented to these specific reductions in his prior employment agreement.

For a qualifying termination not related to a change in control, the cash severance multiplier is reduced from 2 times to 1.5 times the sum of annual base salary and target annual cash incentive. For a termination related to a change in control, the multiplier is reduced from 3 times to 2.5 times the same sum.

Yes, the period over which a Tier I participant is eligible for continued health benefits and the cash value of continued benefits under retirement plans has also been reduced by six months. This period is now 18 months (down from 24) for non-change in control terminations and 30 months (down from 36) for change in control terminations.