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

☐

Preliminary Proxy Statement

​

☐

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

​

☒

Definitive Proxy Statement

​

☐

Definitive Additional Materials

​

☐

Soliciting Material Pursuant to §240.14a-12

​

ARCONIC 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 the appropriate box):

☒

No fee required.

​

☐

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

​

(1)

Title of each class of securities to which transaction applies:

​

(2)

Aggregate number of securities to which transaction applies:

​

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

​

(4)

Proposed maximum aggregate value of transaction:

​

(5)

Total fee paid:

​

☐

Fee paid previously with preliminary materials.

​

☐

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

​

(1)

Amount previously paid:

​

(2)

Form, Schedule or Registration Statement No.:

​

(3)

Filing party:

​

(4)

Date Filed:

​

Letter to our Shareholders

March 27, 2019

Dear Arconic Shareholders:

You are cordially invited to attend the 2019 Annual Meeting of Shareholders of Arconic Inc. to be held on Tuesday, May 14, 2019, at 8:00 a.m. Eastern Time, at Arconic Cleveland Operations, 1616 Harvard Avenue, Building 53, Cleveland, OH 44105.

We are pleased to present you with our 2019 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 2019 Annual Meeting, shareholders will vote on the matters set forth in the 2019 Proxy Statement and the accompanying notice of 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. Whether or not you will attend the meeting, we hope that your shares are represented and voted. In advance of the meeting on Tuesday, May 14, 2019, please cast your vote through the Internet, by telephone or by mail. Instructions on how to vote are found in the section entitled “Proxy Summary—How to Cast Your Vote” on page 1.

Thank you for being a shareholder of Arconic. We look forward to seeing you at the meeting.

Sincerely,

John C. Plant
Chairman and Chief Executive Officer

Notice of 2019 Annual Meeting of Shareholders

The Annual Meeting of Shareholders of Arconic Inc. (“Arconic” or the “Company”) will be held on Tuesday, May 14, 2019, at 8:00 a.m. Eastern Time, at Arconic Cleveland Operations, 1616 Harvard Avenue, Building 53, Cleveland, OH 44105. Shareholders of record of Arconic common stock at the close of business on March 25, 2019 are entitled to vote at the meeting.

The purposes of the meeting are:

1.

to elect 10 directors to serve one-year terms expiring at the 2020 Annual Meeting of Shareholders;

​

2.

to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2019;

​

3.

to approve, on an advisory basis, executive compensation;

​

4.

to approve the 2013 Arconic Stock Incentive Plan, as Amended and Restated;

​

5.

to vote on a shareholder proposal, if properly presented at the meeting; and

​

6.

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

​

You will need an admission ticket if you plan to attend the meeting. Only shareholders and authorized guests of the Company may attend the meeting and all attendees will be required to show a valid form of ID (such as a government-issued form of photo identification). If you hold your shares in street-name (i.e., through a bank or broker), you must also provide proof of share ownership, such as a letter from your bank or broker or a recent brokerage statement. Street-name holders planning on voting in person at the annual meeting must provide a “legal proxy” from their bank or broker. Please see the “Questions and Answers About the Meeting and Voting” section of the proxy statement for instructions on how to obtain an admission ticket.

We will provide a live webcast of the meeting from our website at http://www.arconic.com under “Investors—Annual Meeting.”

On behalf of Arconic’s Board of Directors,

Katherine Hargrove Ramundo
Executive Vice President, Chief Legal Officer and Secretary

March 27, 2019

i

Proxy Statement

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 2019

The Notice of 2019 Annual Meeting of Shareholders and Proxy Statement and 2018 Annual Report are available at www.ReadMaterial.com/ARNC.
 

 

The Board of Directors of Arconic Inc. (“Arconic” or the “Company”) is providing this proxy statement in connection with Arconic’s 2019 Annual Meeting of Shareholders to be held on Tuesday, May 14, 2019 at 8:00 a.m. Eastern Time, at Arconic Cleveland Operations, 1616 Harvard Avenue, Building 53, Cleveland, OH 44105, and at any adjournment or postponement thereof.

Proxy materials or a Notice of Internet Availability of Proxy Materials (the “Notice”) are being first released to shareholders on or about March 28, 2019. 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.

ii

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 Arconic’s 2018 Annual Report before you vote.

2019 ANNUAL MEETING OF SHAREHOLDERS

 

How to Cast Your Vote

YOUR VOTE IS IMPORTANT! Please cast your vote and play a part in the future of Arconic.

Shareholders of Record, who hold shares registered in their names, 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. If you own shares in different accounts or in more than one name, you may receive different voting instructions for each type of ownership. Please vote all your shares.

If you are a shareholder of record or a beneficial owner who has a legal proxy to vote the shares, you may choose to vote in person at the annual meeting. Even if you plan to attend our annual meeting in person, please cast your vote by submitting a proxy as soon as possible.

Deadline for voting online or by telephone is 6:00 a.m. Eastern Time, on May 14, 2019. If you vote by mail, your proxy card must be received before the annual meeting. If you hold shares in an Arconic savings plan, your voting instructions must be received by 6:00 a.m. Eastern Time, on May 12, 2019.

See the “Questions and Answers About the Meeting and Voting” section for more details.

1

Proxy Summary (continued)

Voting Matters and Board Recommendations

The Board of Directors recommends that you vote as follows:

   

2

Proxy Summary (continued)

Director Nominees (Page 8)

Arconic’s Board of Directors currently comprises 12 members, led by Chairman and Chief Executive Officer John C. Plant, and independent Lead Director Arthur D. Collins, Jr. Directors are elected on an annual basis. On March 4, 2019, directors Arthur D. Collins, Jr. and David P. Hess notified the Board that they will not stand for re-election and will retire from the Board effective as of the date of the 2019 Annual Meeting. As a result, the Board determined to decrease the size of the Board from 12 to 10 members, effective as of the date of the 2019 Annual Meeting, and intends to elect a new independent Lead Director at its first meeting following the 2019 Annual Meeting. The following table provides summary information about each of the 10 director nominees standing for election to the Board for a one-year term expiring on the date of the Annual Meeting of Shareholders in 2020.

   

3

Proxy Summary (continued)

 

 

Corporate Governance Highlights (Page 21)

The Company is committed to good corporate governance, which we believe is important to the success of our business and to advancing shareholder interests. Our corporate governance practices are described in greater detail in the “Corporate Governance” section. Highlights include:

✓

Annually elected directors

​

✓

Majority voting for directors

​

✓

10 of our 12 current Board members are independent; 8 of the 10 director nominees are independent

​

✓

Average Board tenure, assuming all director nominees are elected, is 3.2 years

​

✓

No supermajority voting requirements in the Certificate of Incorporation

​

✓

Independent Lead Director with substantial responsibilities

​

✓

Directors have a broad array of attributes and skills directly relevant to the Company and its businesses

​

✓

Regular executive sessions of independent directors

​

✓

Attendance by incumbent directors at Board and committee meetings in 2018 averaged 97%

​

✓

Independent Audit, Compensation and Benefits, Finance, and Governance and Nominating Committees

​

✓

Finance Committee that reviews and provides advice regarding capital structure, capital allocation, financial exposures, mergers and acquisitions, pension investment performance and other financial matters

​

✓

Cybersecurity Advisory Subcommittee that reviews the Company’s enterprise risk relating to cybersecurity

​

✓

Risk oversight by full Board and committees

​

✓

Regular shareholder engagement

​

✓

Shareholders’ right to call special meetings

​

✓

Shareholders’ ability to take action by written consent

​

✓

Proxy access mechanism to enable eligible shareholders to nominate director candidates

​

✓

Policies prohibiting short sales, hedging, margin accounts and pledging

​

✓

Long-standing commitment to sustainability

​

4

Proxy Summary (continued)

​	WHAT WE DO	​	​	​	WHAT WE DON’T DO	​
​	✓ Pay for Performance ​ ✓ Cancellation of Unvested Equity Awards Upon Termination of Employment, Other Than in Very Limited Circumstances ​ ✓ Robust Stock Ownership Guidelines ​ ✓ Double-Trigger Change-in-Control Provisions ​ ✓ Active Engagement with Investors ​ ✓ Independent Compensation Consultant ​ ✓ Conservative Risk Profile ​ ✓ Claw-Back Policy ​	​	​	​	✗ No Guaranteed Annual Bonuses ​ ✗ No Parachute Tax Gross-Ups ​ ✗ No Short Sales, Derivative Transactions or Hedging of Company Stock ​ ✗ No Dividends on Unvested Equity Awards ​ ✗ No Share Recycling or Option Repricing ​ ✗ No Significant Perquisites ​	​

5

Item 1 Election of Directors

As of the date of this Proxy Statement, Arconic’s Board of Directors comprises 12 members, led by Chairman and Chief Executive Officer John C. Plant, and independent Lead Director Arthur D. Collins, Jr. On March 4, 2019, directors Arthur D. Collins, Jr. and David P. Hess notified the Board that they will not stand for re-election and will retire from the Board effective as of the date of the 2019 Annual Meeting. As a result, the Board determined to decrease the size of the Board from 12 to 10 members, effective as of the date of the 2019 Annual Meeting, and intends to elect a new independent Lead Director at its first meeting following the 2019 Annual Meeting.

The Board of Directors, upon the recommendation of the Governance and Nominating Committee, has nominated 10 incumbent directors to stand for reelection to the Board for a one-year term expiring in 2020: James F. Albaugh, Amy E. Alving, Christopher L. Ayers, Elmer L. Doty, Rajiv L. Gupta, Sean O. Mahoney, David J. Miller, E. Stanley O’Neal, John C. Plant, and Ulrich R. Schmidt. Each of the 10 director nominees was elected by shareholders at the 2018 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 13). 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 Messrs. Plant and Doty (due to their executive roles as Chairman and Chief Executive Officer and as President and Chief Operating Officer, respectively), 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 28.

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 Ms. Alving and Messrs. Albaugh, Ayers, Doty, Gupta, Mahoney, Miller, O’Neal, Plant, and Schmidt.

6

Item 1 Election of Directors (continued)

Summary of Director Attributes and Skills

Our directors have a diversity of experience that spans a broad range of industries, including the aerospace, automotive and finance sectors. They bring to our Board 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. In the director nominee biographies below, we describe certain areas of individual expertise that each director brings to our Board.

The table below is a summary of the range of skills and experiences that each director nominee brings to the Board. Because it is a summary, it does not include all of the skills, experiences, qualifications, and diversity that each director nominee offers, and the fact that a particular experience, skill, or qualification is not listed does not mean that a nominee does not possess it.

7

Item 1 Election of Directors (continued)

Director Nominees

​		​	​	James F. Albaugh	​
			​	Director since: 2017 Age: 68 Committees:  Compensation and Benefits Committee; Governance and Nominating Committee Other Current Public Directorships: American Airlines Group Inc.; GS Acquisition Holdings Corp; Harris Corporation	​

​		​	​	Amy E. Alving	​
			​	Director since: 2018 Age: 56 Committees:  Compensation and Benefits Committee; Cybersecurity Advisory Subcommittee (Chair); Governance and Nominating Committee Other Current Public Directorships: DXC Technology Company; Federal National Mortgage Association (Fannie Mae)	​

8

Item 1 Election of Directors (continued)

​		​	​	Christopher L. Ayers	​
			​	Director since: 2017 Age: 52 Committees: Audit Committee; Finance Committee Other Current Public Directorships: Universal Stainless & Alloy Products, Inc.	​

​		​	​	Elmer L. Doty	​
			​	Director since: 2017 Age: 64	​

9

Item 1 Election of Directors (continued)

​		​	​	Rajiv L. Gupta	​
			​	Director since: 2016 Age: 73 Committees: Compensation and Benefits Committee (Chair); Governance and Nominating Committee Other Current Public Directorships: Aptiv PLC (Chairman)	​

​		​	​	Sean O. Mahoney	​
			​	Director since: 2016 Age: 56 Committees: Audit Committee; Finance Committee (Chair) Other Current Public Directorships: Aptiv PLC	​

10

Item 1 Election of Directors (continued)

​		​	​	David J. Miller	​
			​	Director since: 2017 Age: 40 Committees: Finance Committee	​

​		​	​	E. Stanley O’Neal	​
			​	Director since: 2008 Age: 67 Committees: Audit Committee; Finance Committee Other Current Public Directorships: Clearway Energy, Inc.; Platform Specialty Products Corporation	​

11

Item 1 Election of Directors (continued)

​		​	​	John C. Plant	​
			​	Director since: 2016 Age: 65 Other Current Public Directorships: Gates Industrial Corporation PLC; Jabil Circuit Corporation; Masco Corporation	​

​		​	​	Ulrich R. Schmidt	​
			​	Director since: 2016 Age: 69 Committees: Audit Committee (Chair); Finance Committee	​

12

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: Arconic Inc., Governance and Nominating Committee, c/o Corporate Secretary’s Office, 390 Park Avenue, New York, NY 10022-4608. 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 Arconic’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: Arconic Inc., Corporate Secretary’s Office, 390 Park Avenue, New York, NY 10022-4608. For the 2020 Annual Meeting, such notice must be delivered no earlier than January 15, 2020 and no later than February 14, 2020.

Subject to the terms and conditions set forth in the Company’s Bylaws, shareholder nominations for candidates for election at the 2020 Annual Meeting of Shareholders, which the shareholder wishes to include in the Company’s proxy materials relating to the 2020 Annual Meeting, must be received by the Company at the above address no earlier than October 30, 2019 and no later than November 29, 2019, 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:

1.

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

​

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.

​

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.

​

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.

​

5.

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.

​

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.

​

13

Item 1 Election of Directors (continued)

7.

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.

​

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.”

​

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.

​

10.

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

​

11.

While the diversity, the variety of experiences and viewpoints represented on the Board should always be considered, a director nominee should not be chosen nor excluded solely or largely because of race, color, gender, national origin or sexual orientation or identity. In selecting a director nominee, the committee will focus on any special skills, expertise or background that would complement the existing Board, recognizing that the Company’s businesses and operations are diverse and global in nature.

​

12.

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

​

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 and experiences, 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 Arconic executives to interview the candidate to assess the candidate’s overall qualifications. The committee considers the candidate against the criteria it has adopted 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.

14

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 Arconic and fulfill the other responsibilities required of our directors. Messrs. Doty and Plant, our employee directors, do not receive additional compensation for their Board service.

The Governance and Nominating Committee reviews director compensation periodically and recommends changes to the Board when it deems appropriate. In 2017, the committee engaged an independent compensation consultant, Pearl Meyer & Partners, LLC, to conduct an independent review of our director compensation program. Pearl Meyer & Partners assessed the structure of our director compensation program compared to competitive market practices of similarly situated companies. In addition, Pay Governance LLC, an independent compensation consultant, provided advice regarding Board Chairman compensation. Based on the market information and recommendations by Pearl Meyer & Partners and Pay Governance, and taking into account various factors, including the responsibilities and time commitment of the directors, the Governance and Nominating Committee, and the Board in turn, reviewed and adopted the compensation program for non-employee directors that was in effect during 2018. In February 2019, in connection with the appointment of our Chairman, John C. Plant, to also serve as our Chief Executive Officer and the concurrent appointment of Arthur D. Collins, Jr. as the Company’s independent Lead Director, Pearl Meyer & Partners provided advice regarding Lead Director compensation. Based on the recommendations by Pearl Meyer & Partners, and taking into account various factors, the Governance and Nominating Committee, and the Board in turn, reviewed and adopted the current compensation program for non-employee directors. The Company’s non-employee director compensation for 2018 and 2019 is summarized in the table below under “Director Fees.”

Information regarding the retention of Pearl Meyer & Partners and Pay Governance can be found under “Corporate Governance—Compensation Consultants” on page 30.

Director Fees

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

15

Director Compensation (continued)

1

All Other Annual Fees are paid in cash, with the exception of the $300,000 Non-Executive Board Chair Fee, which comprises $170,000 in cash and $130,000 in deferred restricted share units.

​

2

Effective February 6, 2019, in connection with the appointment of our Chairman to also serve as our Chief Executive Officer and the concurrent appointment of an independent Lead Director, the Non-Executive Board Chair fee was eliminated, and the Board adopted a $40,000 per annum fee for the Lead Director.

​

3

A fee of  $1,500 is paid to a non-employee director for each Board or committee meeting attended by the director in excess of the number of regular Board or committee meetings scheduled by the Board for the applicable calendar year.

​

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 Arconic 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 Arconic stock until the stock ownership guideline is reached. Effective as of December 5, 2017, each director is required to reach the stock ownership guideline within six years of his or her initial appointment as a non-employee director.

Under the director compensation program in effect prior to November 1, 2016, directors who were not in compliance with the ownership value requirement were required to invest at least 50% of the fees they received as directors in Arconic stock until the stock ownership guideline was reached, either by deferring fees into deferred share units under the Company’s deferred fee plan for directors or purchasing shares on the open market. Deferred share units provide directors with the same economic interest as if they own Arconic 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.

Beginning November 1, 2016, directors receive a portion of their annual compensation in Arconic deferred restricted share units, which count towards meeting the stock ownership value requirement. The annual deferred restricted share unit 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 restricted share units 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 Arconic deferred restricted share units (but not into deferred share units), as described under “Director Deferral Program” on page 20. Each Arconic deferred restricted share unit is an undertaking by the Company to issue to the recipient one share of Arconic common stock upon settlement.

Accordingly, whether a director holds shares of Arconic common stock, deferred share units or deferred restricted share units, 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 Arconic common stock, deferred restricted share units, and deferred share units as of March 15, 2019, based on the closing price of our common stock on the New York Stock Exchange on that date.

16

Director Compensation (continued)

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.

17

Director Compensation (continued)

2018 Director Compensation

The following table sets forth the total compensation of the Company’s non-employee directors for the year ended December 31, 2018.*

*

In 2018, 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. In addition, the Company does not provide retirement benefits to non-employee directors. The last director to participate in the Company’s Fee Continuation Plan for Non-Employee Directors (which was frozen in 1995) retired from the Board effective May 1, 2015. 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

Charles P. Blankenship, who served as a director and Chief Executive Officer upon joining the Company on January 15, 2018, received no compensation for service as a director; his executive compensation is reflected in the “2018 Summary Compensation Table” on page 54.

​

2

Fees Earned or Paid in Cash (Column (b)). This column reflects the cash fees earned by directors for Board and committee service in 2018, whether or not such fees were deferred.

​

3

Stock Awards (Column (c)). The amounts in this column represent the aggregate grant date fair value of deferred restricted share unit awards granted to each non-employee director under the 2013 Arconic 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 restricted share unit award constitutes the equity portion of each director’s compensation for service from the Company’s annual meeting of shareholders in 2018 until the Company’s annual meeting of shareholders in 2019 and vests over such period (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 restricted share units 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. The grant date fair value of each deferred restricted share unit granted to Mr. Hess on January 22, 2018 was $30.43. The grant date fair value of each deferred restricted share unit granted to Messrs. Albaugh, Ayers, Collins, Doty, Gupta, Hess, Mahoney, Miller, O’Neal, Plant and Schmidt and Ms. Alving on May 18, 2018 was $18.08. The grant date fair value of each deferred restricted share unit granted to Mr. Plant on October 23, 2018 was $20.65. As of December 31, 2018, the aggregate number of unvested deferred restricted share units outstanding for each non-employee director was as follows: Mr. Albaugh (8,296); Ms. Alving (8,296); Mr. Ayers (8,296); Mr. Collins (8,296); Mr. Doty (8,296); Mr. Gupta (8,296); Mr. Hess (8,296); Mr. Mahoney (8,296); Mr. Miller (8,296); Mr. O’Neal (8,296); Mr. Plant (14,591); and Mr. Schmidt (8,296). The foregoing numbers do not include deferred restricted share units that have vested—see “—Director Deferral Program” on page 20.

​

4

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of  $5,500 for service on the Audit Committee from January 1 through June 30, 2018 and (iii) cash fees of  $15,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

5

Ms. Alving was elected to the Board of Directors effective May 16, 2018. The amount listed in Column (b) represents (i) a cash retainer of  $75,161 for service as a non-employee director from May 16 through December 31, 2018, (ii) a cash retainer of  $5,500 for service on

​

18

Director Compensation (continued)

the Audit Committee from July 1 through December 31, 2018 and (iii) cash fees of  $16,500 for meetings in excess of regularly scheduled meetings from May 16 through December 31, 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

6

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of  $11,000 for service on the Audit Committee during 2018 and (iii) cash fees of  $18,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

7

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of  $20,000 for service as Chair of the Compensation and Benefits Committee during 2018 and (iii) cash fees of  $15,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

8

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018 and (ii) cash fees of  $13,500 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

9

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018 and (ii) cash fees of  $24,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

10

Mr. Hess served as Interim Chief Executive Officer of the Company until January 15, 2018, and has served as a non-employee director since then. The amount listed in Column (b) represents (i) a cash retainer of  $115,484 for service as a non-employee director from January 15, 2018 through December 31, 2018, (ii) a cash retainer of  $10,586 for service on the Audit Committee from January 15, 2018 through December 31, 2018 and (iii) cash fees of  $18,000 for meetings in excess of regularly scheduled meetings from January 15, 2018 through December 31, 2018. The amount listed in Column (c) represents (i) a pro-rated equity award, for the period from January 15, 2018 through the 2018 annual meeting of shareholders, of 1,405 deferred restricted share units granted on January 22, 2018, and (ii) an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

11

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of   $11,000 for service on the Audit Committee during 2018, (iii) a cash retainer of   $16,500 for service as Chair of the Finance Committee during 2018 and (iv) cash fees of  $18,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

12

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018 and (ii) cash fees of  $12,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

13

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of  $11,000 for service on the Audit Committee during 2018 and (iii) cash fees of  $16,500 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

14

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of  $170,000 for service as Chairman of the Board during 2018, (iii) a cash retainer of  $10,335 for service as Chair of the Governance and Nominating Committee from May 16 through December 31, 2018 and (iv) cash fees of  $16,500 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents (i) an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018 and (ii) an equity award of 6,295 deferred restricted share units for service as Non-Executive Chairman granted on October 23, 2018, of which 4,450 units were forfeited on February 6, 2019 in connection with Mr. Plant’s appointment as Chief Executive Officer of the Company and in accordance with the terms of the Non-Executive Chairman Award.

​

15

Ms. Richardson resigned from the Board of Directors, effective February 15, 2018. The amount listed in Column (b) represents (i) a cash retainer of  $15,357 for service as a non-employee director from January 1, 2018 through February 15, 2018 and (ii) a cash retainer of  $1,408 for service on the Audit Committee from January 1 through February 15, 2018.

​

16

Ms. Russo retired from the Board of Directors, effective May 16, 2018. The amount listed in Column (b) represents (i) a cash retainer of $45,161 for service as a non-employee director from January 1 through May 16, 2018, (ii) a cash retainer of  $6,210 for service as Chair of the Governance and Nominating Committee from January 1 through May 16, 2018 and (iii) cash fees of  $4,500 for meetings in excess of regularly scheduled meetings from January 1 through May 16, 2018.

​

17

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2018, (ii) a cash retainer of  $27,500 for service as Chair of the Audit Committee during 2018 and (iii) cash fees of  $18,000 for meetings in excess of regularly scheduled meetings during 2018. The amount listed in Column (c) represents an annual equity award of 8,296 deferred restricted share units granted on May 18, 2018.

​

19

Director Compensation (continued)

Director Deferral Program

Prior to November 1, 2016, non-employee directors were able to defer all or part of their cash compensation pursuant to the Company’s 2005 Deferred Fee Plan for Directors (or a predecessor plan) and to invest any such deferred amounts into Arconic deferred share units or into the other investment options provided under the Company’s 401(k) tax-qualified savings plan.

Beginning November 1, 2016, the Board of Directors adopted the Amended and Restated Deferred Fee Plan for Directors pursuant to which 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 Arconic restricted share units or into the investment options provided under the Company’s 401(k) tax-qualified savings plan other than the Arconic Stock Fund (which represents Arconic deferred share units). The annual equity award granted to non-employee directors in the form of Arconic 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.

20

Corporate Governance

Arconic 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:

Shareholder Engagement

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. Each year we seek opportunities to meet with, and receive input from, our shareholders, and we intend to continue to seek such opportunities in the future.

Proxy Access

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

Shareholders’ Right to Call Special Meetings

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

Shareholders’ Action by Written Consent

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

Annual Election of Directors

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

No Supermajority Voting Requirements

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

Delaware Corporation

The Company is incorporated in Delaware, a leading jurisdiction with a comprehensive and coherent set of corporate laws that are responsive to the evolving legal and business needs of corporations.

Strong Independent Lead Director

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. Arconic’s independent Lead Director has a clear mandate and significant authority and responsibilities, which are described below and in our Board-approved Corporate Governance Guidelines.

Prohibition against Short Sales, Hedging, Margin Accounts and Pledging

Our Insider Trading Policy contains restrictions that, among other things:

•

prohibit short sales of Arconic securities and derivative or speculative transactions in Arconic securities;

​

•

prohibit the use of 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 Arconic securities; and

​

•

prohibit directors and executive officers from holding Arconic securities in margin accounts or pledging Arconic securities as collateral.

​

Commitment to Sustainability

The Company is committed to operating sustainably in the communities in which we do business.

21

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 of the Board 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 Board has concluded that the current structure provides a well-functioning and effective balance between strong Company leadership and appropriate safeguards and oversight by independent directors. A combined role of Chairman and Chief Executive Officer confers advantages, including those listed below.

•

By serving in both positions, the Chairman and Chief Executive Officer is able to draw on his detailed knowledge of the Company to provide the Board, in coordination with the Lead Director, leadership in focusing its discussions, review and oversight of the Company’s strategy, business, and operating and financial performance.

​

•

A combined role ensures that the Company presents its message and strategy to stakeholders with a unified voice.

​

•

The structure allows for efficient decision-making and focused accountability.

​

The Board believes that it is in the best interest of the Company and its shareholders for Mr. Plant to serve as Chairman and Chief Executive Officer, considering the strong role of our independent Lead Director and other corporate governance practices providing independent oversight of management as set forth below.

Arthur D. Collins, Jr. is our current Lead Director. Mr. Collins’s strength in leading the Board is complemented by his depth of experience in Board matters ranging from his service on the Company’s Compensation and Benefits Committee (including as Chair from November 2016 to February 2019) and Governance and Nominating Committee (including as Chair since February 2019) to his memberships on other company boards. On March 4, 2019, Mr. Collins announced his intention not to stand for re-election and to retire from the Board, effective as of the date of the 2019 Annual Meeting. The Board intends to elect a new independent Lead Director at its first meeting following the 2019 Annual Meeting.

22

Corporate Governance (continued)

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.

The Board as a whole has responsibility for risk oversight, including succession planning relating to the Chief Executive Officer (“CEO”) and risks relating to the competitive landscape, strategy, economic conditions, capital requirements, and operations of the Company. The committees of the Board also oversee the Company’s risk profile and exposures relating to matters within the scope of their authority. The Board regularly receives detailed reports from the committees regarding risk oversight in their areas of responsibility.

The Audit Committee regularly reviews treasury risks (including those relating to cash generation, liquidity, insurance, credit, debt, interest rates and foreign currency exchange rates), financial accounting and reporting risks, legal and compliance risks, and risks relating to information technology including cybersecurity, tax matters, asset impairments, contingencies, and internal controls.

The Cybersecurity Advisory Subcommittee was established by the Audit Committee to assist the Audit Committee in fulfilling its responsibility of reviewing the Company’s enterprise risk relating to cybersecurity.

The Compensation and Benefits Committee considers risks related to the attraction and retention of talent, and the design of compensation programs and incentive arrangements. The Company has determined that it is not reasonably likely that risks arising from compensation and benefit plans would have a material adverse effect on the Company. See “Conservative Compensation Risk Profile” on page 47.

The Finance Committee reviews and provides advice to the Board regarding financial matters, including the Company’s capital structure, capital allocation, financial exposures, capital plan, significant transactions such as acquisitions and divestitures, and the investment performance and funding of the Company’s retirement plans, and the risks relating to such matters.

23

Corporate Governance (continued)

The Governance and Nominating Committee considers risks related to corporate governance, and oversees succession planning for the Board of Directors, the structure and function of the Board, and the appropriate assignment of directors to the Board committees for risk oversight and other areas of responsibilities.

Director Qualifications, Board Diversity and Board Tenure

Our directors have a broad range of experience that spans different industries, including the aerospace, automotive and finance sectors. Directors bring to our Board a variety of skills, qualifications and viewpoints that strengthen their ability to carry out their oversight role on behalf of our shareholders. As described in the director biographies in “Item 1 Election of Directors,” directors bring to our Board attributes and skills that include those listed below:

Director Attributes and Skills

 

24

Corporate Governance (continued)

Board Meetings and Attendance

The Board met 14 times in 2018. The number of Board committee meetings can be found below in “—Committees of the Board.” Attendance by incumbent directors at Board and committee meetings averaged 97%. 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 2018 (or, in the case of Ms. Alving, who joined the Board in May 2018, 75% or more of the aggregate of all such meetings after joining the Board).

Under Arconic’s Corporate Governance Guidelines, all directors are expected to attend the annual meeting of shareholders. Twelve out of the then-thirteen members of the Board, including all incumbent directors, attended the Company’s 2018 annual meeting. In addition to Board meetings, directors visit Arconic business operations to deepen their understanding of the Company and interact with on-site employees. In addition, new directors receive an orientation that includes meetings with key members of management and visits to Company facilities.

Board, Committee and Director Evaluations

The Board of Directors annually assesses the effectiveness of the full Board, the operations of its committees and the contributions of director nominees. The Governance and Nominating Committee oversees the evaluation of the Board as a whole and its committees, as well as individual evaluations of those directors who are being considered for possible re-nomination to the Board.

25

Corporate Governance (continued)

Committees of the Board

There are four standing committees of the Board and one subcommittee of the Audit Committee. The Board has adopted written charters for each committee and subcommittee, which are available on our website at http://www.arconic.com under “Investors—Corporate Governance—Committees.”

The table below sets forth the standing Board committees and subcommittee and the members of each as of March 15, 2019. Each of the Audit, Compensation and Benefits, Finance, and Governance and Nominating Committees 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).

*

Independent Director

​

1

The Board as a whole held 14 meetings in 2018.

​

26

Corporate Governance (continued)

27

Corporate Governance (continued)

Voting for Directors

Arconic’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 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.

Communications with Directors

The Board of Directors is committed to meaningful engagement with Arconic shareholders and welcomes input and suggestions. Shareholders and other interested parties wishing to contact the Lead Director or the non-management directors as a group may do so by sending a written communication to the attention of the Lead Director c/o Arconic Inc., Corporate Secretary’s Office, 390 Park Avenue, New York, NY 10022-4608. To communicate issues or complaints regarding questionable accounting, internal accounting controls or auditing matters, send a written communication to the Audit Committee c/o Arconic Inc., Corporate Secretary’s Office, 390 Park Avenue, New York, NY 10022-4608. Alternatively, you may place an anonymous, confidential, toll free call in the United States to Arconic’s Integrity Line at 855-585-8256. For a listing of Integrity Line telephone numbers outside the United States, go to http://www.arconic.com under “Who We Are—How We Work—Ethics and Compliance.”

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 its 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 Messrs. Doty and Plant, who are employed by the Company and therefore do 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 Messrs. Doty’s and Plant’s employment.

28

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 Arconic executive officers (except employment of an Arconic executive officer that is an immediate family member of another Arconic 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;

​

(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.

​

29

Corporate Governance (continued)

Transactions with Related Persons in 2018

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

During 2018, the Compensation and Benefits Committee continued its retention of Pay Governance LLC as its independent compensation consultant. See “Executive Compensation—Compensation Discussion and Analysis—Compensation Philosophy and Design—Compensation Decision-Making Process—Use of Independent Compensation Consultant.” The committee assessed Pay Governance’s independence and found no conflict of interest. In its assessment, the committee took into account the following factors:

•

Pay Governance provides no other services to the Company;

​

•

the amount of fees received from the Company by Pay Governance as a percentage of Pay Governance’s total revenue;

​

•

the policies and procedures that Pay Governance has in place to prevent conflicts of interest;

​

•

any business or personal relationships between the consultant(s) at Pay Governance performing consulting services and any Compensation and Benefits Committee members or any executive officer; and

​

•

any ownership of Company stock by the consultant(s).

​

In addition, during 2018, the Governance and Nominating Committee continued to retain Pearl Meyer & Partners to provide consultation services regarding non-employee director compensation. The committee did not find any conflict of interest with Pearl Meyer and considered the following factors in its determination:

•

Pearl Meyer provides no other services to the Company;

​

•

the amount of fees received from the Company by Pearl Meyer as a percentage of Pearl Meyer’s total revenue;

​

•

the policies and procedures that Pearl Meyer has in place to prevent conflicts of interest;

​

•

any business or personal relationships between the consultant(s) at Pearl Meyer performing consulting services and any Board members or any executive officer; and

​

•

any ownership of Company stock by the consultant(s).

​

Corporate Governance Materials Available on Arconic’s Website

The following documents, as well as additional corporate governance information and materials, are available on our website at http://www.arconic.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

​

30

Corporate Governance (continued)

•

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

​

•

Hiring Members (or Former Members) of Independent Public Auditors

​

•

Human Rights Policy

​

•

Insider Trading Policy

​

•

Political Contributions

​

•

Related Person Transaction Approval Policy

​

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

•

Charters of each of our Board committees and subcommittee

​

Copies of these documents are also available in print form at no charge by sending a request to Arconic Inc., Corporate Communications, 201 Isabella Street, Pittsburgh, PA 15212-5858.

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

Business Conduct Policies and Code of Ethics

The Company’s Business Conduct Policies, which have been in place for many years, apply equally to the directors and to all officers and employees of the Company, as well as those of our controlled subsidiaries, affiliates and joint ventures. The directors and employees in positions to make discretionary decisions are surveyed annually regarding their compliance with the policies.

The Company also has a Code of Ethics applicable to the CEO, CFO and other financial professionals, including the principal accounting officer, and those subject to it are surveyed annually for compliance with it. 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.arconic.com. To date, no such amendments have been made or waivers granted.

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 Arconic Inc. 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 2009 Alcoa Stock Incentive Plan, the 2013 Arconic Stock Incentive Plan, as Amended and Restated, the Incentive Compensation Plan for annual cash incentives and the Arconic Internal Revenue Code Section 162(m) Compliant Annual Cash Incentive Compensation Plan each incorporate the terms of this policy.

31

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 2018 all of its directors and executive officers filed the required reports on a timely basis under Section 16(a), with the exception of  (i) director David P. Hess, who filed a late Form 4 on March 22, 2018, reporting the grant of restricted share units on January 22, 2018; (ii) Vice President and Controller W. Paul Myron, who filed a late Form 4 on May 23, 2018, reporting the grant of restricted share units on May 16, 2018; and (iii) Executive Vice President, Chief Legal Officer and Secretary Katherine H. Ramundo, who filed a late Form 4 on May 23, 2018, reporting the grant of restricted share units on May 16, 2018. The untimeliness of each of the foregoing Form 4s was due to administrative error by the Company.

Arconic 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 Arconic common stock, based on filings made under Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934, as amended.

32

Arconic Stock Ownership (continued)

1

Based on shares outstanding on March 15, 2019.

​

2

As of December 19, 2017: As reported in a Schedule 13D amendment dated December 20, 2017, Elliott Associates L.P. had sole power to vote and dispose of 16,352,683 shares; Elliott International, L.P. had shared power to vote and dispose of 34,749,450 shares; and Elliott International Capital Advisors Inc. had shared power to vote and dispose of 34,749,450 shares. In addition, these Elliott entities collectively had economic exposure comparable to approximately 1.5% 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 11, 2019, The Vanguard Group, an investment adviser, reported that, as of December 31, 2018, it had sole power to vote or direct to vote 502,612 shares, sole power to dispose or direct the disposition of 45,018,131 shares, shared power to vote or direct to vote 106,439 shares, and shared power to dispose or direct the disposition of 600,493 shares.

​

4

In a Schedule 13G amendment dated February 8, 2019, BlackRock, Inc., a parent holding company, reported that, as of December 31, 2018, it had sole power to vote or direct to vote 31,562,259 shares, sole power to dispose or direct the disposition of 35,102,981 shares, and no shared voting or dispositive power.

​

5

In a Schedule 13G amendment dated February 13, 2019, Orbis Investment Management Limited and Orbis Investment Management (U.S.), L.P. reported that, as of December 31, 2018, they may be deemed to constitute a “group” for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and as such they had sole power to vote or direct to vote 28,884,716 shares, sole power to dispose or direct the disposition of 28,884,716 shares, and no shared voting or dispositive power.

​

6

In a Schedule 13G dated February 11, 2019, First Pacific Advisors, LP (“FPA”), an investment adviser, and J. Richard Atwood and Steven T. Romick, each a controlling person of FPA, reported that, as of December 31, 2018, they had shared power to vote or direct the vote of 26,188,451 shares, shared power to dispose or direct the disposition of 26,188,451 shares, and no sole voting or dispositive power.

​

33

Arconic Stock Ownership (continued)

Stock Ownership of Directors and Executive Officers

The following table shows the ownership of Arconic common stock, deferred share units, and deferred restricted share units, as of March 15, 2019, by each director, each of the named executive officers, and all directors and executive officers (serving as of March 15, 2019) as a group.

Deferred share units provide holders with the same economic interest as if they own Arconic 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 Arconic deferred restricted share unit is an undertaking by the Company to issue to the recipient one share of Arconic 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 Arconic 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 Arconic 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 Arconic Retirement Savings Plan which confer voting rights through the plan trustee with respect to shares of Arconic common stock. This column also includes shares of Arconic common stock that may be acquired under employee stock options that are exercisable as of March 15, 2019 or will become exercisable within 60 days after March 15, 2019 as follows: Mr. Giacobbe (47,721); Mr. Myers (52,636); Ms. Ramundo (33,734); Mr. Blankenship (57,884); and all executive officers as a group (170,966). No awards of stock options have been made to non-employee directors. As of March 15, 2019, 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 Arconic Deferred Compensation Plan, and (ii) for directors, deferred share equivalent units held under the Amended and Restated Deferred Fee Plan for Directors. Each deferred

​

34

Arconic Stock Ownership (continued)

share equivalent unit tracks the economic performance of one share of Arconic common stock and is fully vested upon grant, but does not have voting rights.

3

This column lists deferred restricted share units issued under the 2013 Arconic 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 Arconic 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.

​

4

Held by a revocable trust of which Mr. Doty and his spouse are trustees and beneficiaries.

​

5

Held by a trust of which Mr. Plant is the trustee and a beneficiary.

​

6

Includes 44,166 shares held by a revocable trust, of which Mr. Hess and his spouse are trustees and beneficiaries, and 2,666 shares held by a charitable remainder unitrust, of which Mr. Hess and his spouse are trustees and beneficiaries.

​

35

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 2019. 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 at 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 2019.

36

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 2018 (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 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 Section 404 of the Sarbanes-Oxley Act, 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 Vice President—Internal Audit 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, and meets separately twice a year with the Chief Ethics and Compliance 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 GAAP, including those described in Auditing Standards No. 16, “Communication with Audit Committees”, as adopted by the PCAOB. 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.

37

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, 2018, for filing with the Securities and Exchange Commission. 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 2019.

The Audit Committee
Ulrich R. Schmidt, Chair
Christopher L. Ayers
David P. Hess
Sean O. Mahoney
E. Stanley O’Neal
 
February 12, 2019

Audit and Non-Audit Fees

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

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.” All services set forth in the table above were approved by the Audit Committee before being rendered.

Audit Fees include the base audit fee, effects of foreign currency exchange rates on the base audit fee, and scope adjustments to the base audit requirements. The decrease in audit fees from 2017 to 2018 was principally due to changes in statutory auditors, partially offset by non-recurring audit work.

Audit-Related Fees include due diligence and audit services for divestitures and agreed-upon or expanded audit procedures for accounting or regulatory requirements. The increase in audit-related fees from 2017 to 2018 was principally due to services for potential transactions.

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 benchmarking services across a number of Arconic entities.

38

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 executive compensation programs and policies and the resulting 2018 compensation of the individuals listed in the “2018 Summary Compensation Table” on page 54 (our “named executive officers”), 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 2020 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 (the “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 2019 Annual Meeting of Shareholders.

​

The Compensation and Benefits Committee
Rajiv L. Gupta, Chair
James F. Albaugh
Amy E. Alving
Arthur D. Collins, Jr.
 
March 5, 2019

39

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 2018 and the related decisions made by the Compensation and Benefits Committee (the “Compensation Committee”). For 2018, our NEOs are:

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 2018.

40

Executive Compensation — Compensation Discussion and Analysis (continued)

Executive Summary

Our Business

Arconic is a global leader in lightweight metals engineering and manufacturing. Arconic’s innovative, multi-material products, which include aluminum, titanium, and nickel, are used worldwide in aerospace, automotive, commercial transportation, packaging, building and construction, defense, and industrial applications.

Arconic is a global company operating in 18 countries and our operations consist of three worldwide reportable segments: Engineered Products and Solutions (EP&S), Global Rolled Products (GRP), and Transportation and Construction Solutions (TCS). We refer to these segments in this CD&A as our business groups.

Arconic was previously named Alcoa Inc. and changed its name following its separation from Alcoa Corporation in November 2016. On December 31, 2017, Arconic effected the change of its jurisdiction of incorporation from Pennsylvania to Delaware.

Leadership Team Transitions

Effective as of February 6, 2019, Chairman of the Board John C. Plant was appointed Chairman and Chief Executive Officer (CEO), succeeding Chip Blankenship as CEO. In addition, board member Elmer L. Doty was appointed to serve as President and Chief Operating Officer (COO). Mr. Blankenship had been appointed as CEO of Arconic on January 15, 2018 and had replaced David P. Hess who stepped down as Interim CEO but remained a board member.

Other management changes included the February 2019 departure of Mark J. Krakowiak, then Executive Vice President, Strategy and Development, and the resignation of Eric V. Roegner as Executive Vice President and Group President, EP&S in April 2018. The presidents of the three business units comprising EP&S—Arconic Engineered Structures, Arconic Engines, and Arconic Fastening Systems—currently report directly to Mr. Doty.

Investor Feedback and Implementation of 2018 Compensation Strategy

With 95% of the votes cast at the 2018 annual meeting of shareholders in favor of our say-on-pay proposal, our investors reinforced their support of our compensation philosophy and design. Arconic also solicits feedback from investors on a regular basis throughout the year. Investor engagement offers us an opportunity to obtain investor comments and insights related to investors’ policies and views on executive compensation and corporate governance matters. Arconic management and the Compensation Committee take into consideration investor feedback when it reviews annually the best practices of comparable companies with respect to compensation design and mix, short-term and long-term performance metrics, long-term incentive mix by award type, performance periods, vesting provisions, short-term and long-term incentive payout history, and stock ownership guidelines. Overall, in 2018, there was positive investor feedback to the significant changes to our executive compensation practices that were made in 2017, including (1) the application of a three-year performance period for performance restricted share units (RSUs); (2) the addition of a return metric (return on net assets) for

41

Executive Compensation — Compensation Discussion and Analysis (continued)

performance RSUs; and (3) the addition of a relative total shareholder return (TSR) multiplier for performance RSUs. The Compensation Committee took into consideration this feedback and additional factors when making compensation decisions for 2018, including as follows:

2018 Company Performance

Arconic’s revenue in 2018 was $14.0 billion, up 8% year over year, driven by higher volumes across all business segments; higher aluminum prices and favorable product mix primarily in the Global Rolled Products segment; and favorable foreign currency movements; partially offset by a decline in volumes in the industrial gas turbine end market; lower sales from the divestitures of the Latin America extrusions business (divested in April 2018) and the rolling mill in Fusina, Italy (divested in March 2017); the ramp-down of Arconic’s North American packaging operations; and costs related to settlements of certain customer claims primarily related to new product introductions.

Net income in 2018 was $642 million, or $1.30 per diluted share, versus a net loss of  $74 million, or $0.28 per share, in 2017. Net income excluding special items in 2018 was $676 million, or $1.36 per share, versus $618 million, or $1.22 per share, in 2017. Operating income in 2018 was $1.3 billion versus $480 million in 2017. Operating income excluding special items in 2018 was $1.4 billion versus $1.5 billion in 2017, down 4%, as higher volumes were more than offset by unfavorable product pricing and mix and higher aluminum prices.

During the first quarter of 2018, Arconic completed the early redemption of its remaining outstanding 5.72% Notes due in 2019, with aggregate principal amount of  $500 million, for $518 million in cash including accrued and unpaid interest. The Company ended the year with debt of $6.3 billion and cash on hand of $2.3 billion. In 2018, cash provided from operations was $217 million, cash used for financing activities was $649 million, and cash provided from investing activities was $565 million. Adjusted Free Cash Flow for the year was $465 million.

42

Executive Compensation — Compensation Discussion and Analysis (continued)

Segment performance in 2018 included the following:

•

Engineered Products and Solutions revenue of $6.3 billion, up 6% year over year; segment operating profit of $891 million, down $73 million year over year; and segment operating margin of 14.1%, down 210 basis points year over year.

​

•

Global Rolled Products revenue of $5.6 billion, up 12% year over year; segment operating profit of  $386 million, down $38 million year over year; and segment operating margin of 6.9%, down 160 basis points year over year, including a 100 basis point negative impact of higher aluminum prices.

​

•

Transportation and Construction Solutions revenue of $2.1 billion, up 6% year over year; segment operating profit of $304 million, up $14 million year over year; and segment operating margin of 14.3%, down 10 basis points year over year, including a 270 basis point negative impact of higher aluminum prices.

​

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.

2018 Incentive Compensation Results

Consistent with the Company’s pay-for-performance practices, a shortfall against targets in 2018 resulted in payouts that were well below target for annual incentive compensation and below target for long-term incentive compensation. The corporate annual incentive compensation plan had a payout of 18.5% based on 2018 performance against the targets set under the plan. One-third of the 2016 performance-based restricted share unit awards was earned at 55.5% based on performance against targets for the 2018 annual performance period. LTI performance-based restricted share unit awards granted since 2017 are based on three-year performance periods: 2017–2019 for the 2017 grant and 2018–2020 for the 2018 grant.

Compensation Philosophy and Design

Arconic’s executive compensation philosophy to provide pay for performance and shareholder alignment underlies our 2018 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 the proportion of performance-based equity incentives with the level of responsibility.

​

•

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

​

•

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

​

•

Target total compensation at median of market, while using annual IC and LTI compensation to motivate performance and to attract and retain exceptional talent.

​

43

Executive Compensation — Compensation Discussion and Analysis (continued)

Arconic’s 2018 Executive Compensation Design Relies on a Diversified Mix of Pay Elements

44

Executive Compensation — Compensation Discussion and Analysis (continued)

Long-Term Incentives and Pay at Risk

Consistent with our pay-for-performance philosophy and guiding principles, including emphasis on LTI as the most significant portion of compensation, 2018 annual target total direct compensation for Mr. Blankenship included nearly 90% pay at risk (excluding special one-time sign-on equity and cash awards):

Annual target total direct compensation in 2018 (excluding any special one-time awards) for our other NEOs who served the entire year also had a strong emphasis on equity and pay at risk:

Messrs. Blankenship and Krakowiak received special one-time grants of restricted share units and/or stock options subject to time-based vesting in connection with their commencement of employment with us (which awards have since been forfeited in their entirety due to each executive’s separation from the Company). In addition, Ms. Ramundo received a special one-time retention RSU award in 2018. Details of these awards are discussed further below.

45

Executive Compensation — Compensation Discussion and Analysis (continued)

The following shows the proportion of LTI awards granted in the form of performance-based awards to Mr. Blankenship, as well as the continuing NEOs, compared to the median proportion of LTI performance-based awards granted among our CEO peer group in 2018:

Our allocation of LTI compensation in the form of performance-based awards is consistently the highest percentage compared to the 16 companies in our CEO peer group, based on such companies’ prior year disclosures (see “CD&A— Comparator Peer Groups” for the list of the peers).

Challenging Payout Curves

The Compensation Committee has continued the practice of setting payout curves with a steep drop-off below target to incentivize hitting target and flatter curve above target so that higher payouts can only be earned with significant performance above target.

Under the 2018 annual cash IC plan:

•

earning 50% of the payout required performance at 95% of target for the adjusted operating income metric and 97% of target for the controllable free cash flow metric; and

​

•

earning 150% payout level required performance at 112% of target for the adjusted operating income metric and 117% of target for the controllable free cash flow metric.

​

Under the 2018 LTI plan (for the 2018 performance period applicable to the third tranche of the 2016 performance RSU grant):

•

earning 50% of the payout required performance at 87% of target for the RONA metric, 99% of target for the revenue metric, and 94% of target for the EBITDA margin metric; and

​

•

earning 150% of the payout required performance at 132% of target for the RONA metric, 104% of target for the revenue metric, and 117% of target for the EBITDA margin metric.

​

Investor Engagement and Benchmarking

We actively engage in compensation and governance-related discussions with investors throughout the year to obtain comments and insights that guide our executive compensation programs. Conversations with our investors’ governance and compensation professionals help us understand investor priorities and provide us with guidance on our compensation and governance practices. In 2018, we continued our ongoing dialogue with investors, holding meetings and calls with governance and compensation professionals at 18 of our largest 50 shareholders.

The Company also conducts an annual comparative study of the 16 companies in Arconic’s CEO peer group (see “CD&A—Comparator Peer Groups”). The study reviews compensation design and mix, short-term and long-term performance metrics, long-term incentive mix by award type, performance periods, vesting provisions, short-term and long-term incentive payout history, stock ownership guidelines and change-in-control provisions.

46

Executive Compensation — Compensation Discussion and Analysis (continued)

The investor insights and results from the peer benchmarking study guided the Compensation Committee in the 2018 design of Arconic’s executive compensation programs and practices.

Compensation Decision-Making Process in 2018

Use of Independent Compensation Consultant. The Compensation Committee has authority under its charter to retain its own advisors, including compensation consultants. In 2018, the Compensation Committee directly retained Pay Governance LLC, which is independent and without conflicts of interest with the Company. See “Corporate Governance—Compensation Consultants” on page 30. Pay Governance provided advice, as requested by the Compensation Committee, on the amount and 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 advice on setting the CEO’s compensation. Pay Governance also provided advice on the CD&A in this proxy statement. We use comparative compensation data from the proxy statements of the CEO 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 Peer Groups and Tally Sheets. The Compensation Committee uses peer group data to determine the target compensation levels of our CEO and other NEOs. We aim to set target annual direct compensation of each of our NEOs at the median of the applicable peer group. 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 unit 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 and the equity LTI plan;

​

•

Discretion retained by the Compensation Committee to adjust awards;

​

•