Item 7.01.
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Regulation FD Disclosure.
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On February 20, 2017, the Compensation and Benefits
Committee (the Committee) of the Board of Directors of Alcoa Corporation (the Company) considered and approved the following executive compensation arrangements for the Companys Chief Executive Officer, Chief Financial
Officer and the other named executive officers noted below (collectively, the NEOs) which should be reviewed in conjunction with the compensation information disclosed in the Companys Registration Statement on Form S-1 originally
filed on January 18, 2017 and amended on February 8, 2017.
Base Salary Increase
The Committee approved an increase to the base salary of the Companys Chief Financial Officer from $550,000 to $605,000, effective
March 1, 2017. Base salary amounts for the Companys other NEOs remain unchanged. Base salaries are used to calculate the incentive award opportunities described below.
Approval of 2017 Annual Incentive Compensation Awards
The Committee approved the performance measures and targets for the Companys 2017 annual incentive compensation (IC) awards,
under which officers and employees of the Company, including the NEOs, are provided the opportunity to earn cash awards to the extent that annual performance goals are met. The 2017 IC awards are based on (i) financial targets (80% of total)
and (ii) non-financial targets (20% of total), as follows (collectively, the 2017 IC Performance Metrics).
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Measures
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Metric
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Weight
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Financial Measures
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Adjusted EBITDA
(1)
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40%
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Free cash flow
(1)
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40%
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Non-Financial Measures
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Safety
(2)
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5%
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Environmental
(3)
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5%
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Diversity
(4)
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10%
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Total
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100%
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(1)
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EBITDA and free cash flow will be adjusted for various items approved by the Committee, including for London Metal Exchange (LME) pricing, the alumina pricing index, 50% of regional premiums and foreign
currency exchange rate fluctuations (the Adjustments).
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(2)
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The Safety metric focuses on eliminating fatalities and reducing the number of serious injuries.
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(3)
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The Environmental metric relates to the reduction of carbon dioxide emissions.
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(4)
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The Diversity metric measures the number of women employees globally.
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After reviewing prior
year performance and consideration of the Companys business plan, the Committee considered the targets for the 2017 IC Performance Metrics, which are confidential, to be challenging but attainable.
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The following are target award values for each NEO, expressed as a percentage of base salary
(with a payout range of 0200% of target, based on the results of the 2017 IC Performance Metrics relative to target):
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Named Executive Officer
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Target Annual IC Opportunity
(1)
(% of Base Salary Earnings)
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Roy C. Harvey,
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140%
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Chief Executive Officer
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William F. Oplinger,
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100%
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Executive Vice President and Chief Financial Officer
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Tomas M. Sigurðsson,
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100%
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Executive Vice President and Chief Operating Officer
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Leigh Ann C. Fisher,
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75%
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Executive Vice President and Chief Administrative Officer
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Jeffrey D. Heeter,
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75%
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Executive Vice President, General Counsel and Secretary
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(1)
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The Committee also may apply an individual performance modifier (0% to 150%) to an NEOs award, which has the effect of reducing or increasing the payout subject to limits set forth in the plan and 2017 IC award
terms.
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The 2017 IC awards contain the same termination, death, disability, retirement, and change in control provisions as
previous awards granted to the NEOs.
Approval of 2017 Long-Term Incentive Awards
The Committee previously approved the long-term incentive (LTI) mix of awards to be granted to the NEOs in 2017 under the
Companys 2016 Stock Incentive Plan, as follows: 60% performance restricted share units (PRSUs), 20% restricted share units (RSUs), and 20% stock options (collectively, the 2017 LTI Awards). RSUs generally
vest on the third anniversary of the grant date, and stock options generally vest ratably over a three-year period.
On February 20,
2017, the Committee approved the performance measures and targets applicable to the NEOs 2017 PRSU awards. The 2017 PRSU awards have a performance period of January 1, 2017 through December 31, 2019 (the LTI Performance
Period). If and to the extent determined by the Committee to be earned, the 2017 PRSUs will be paid out in shares of the Companys common stock on a one-unit to one-share basis. The amount of the 2017 PRSUs earned, if any, will be based
on the Companys performance against goals relating to the following metrics (the 2017 LTI Performance Metrics), with payout ranging from 0 to 200% of each NEOs 2017 PRSU award (at target).
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Metric
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Weight
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ROC Improvement
(1)
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50%
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Relative TSR
(2)
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50%
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Total
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100%
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(1)
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ROC means return on capital improvement measured against the 2016 result (that was normalized for LME pricing, the alumina pricing index, 50% of regional premiums and foreign currency exchange rate fluctuations), with
the Committee reserving the discretion to normalize achievement by applying Adjustments.
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(2)
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Relative TSR means total shareholder return relative to S&P 500 Index performance over the LTI Performance Period.
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After reviewing prior year performance and consideration of the Companys business plan, the Committee considered the targets for the
2017 LTI Performance Metrics, which are confidential, to be challenging but attainable.
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The Companys NEOs were granted the following 2017 LTI Awards:
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Executive Officer
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Stock Options
(# of shares)
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RSUs
(# of shares)
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PRSUs
(# of shares at target)
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Roy C. Harvey
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88,360
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29,200
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87,580
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William F. Oplinger
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32,130
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10,620
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31,850
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Tomas M. Sigurðsson
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17,680
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5,840
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17,520
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Leigh Ann C. Fisher
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11,050
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3,650
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10,950
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Jeffrey D. Heeter
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12,050
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3,990
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11,950
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The 2017 LTI Awards contain the same termination, death, disability, retirement, and change in control
provisions as previous awards granted to the NEOs.
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