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

​

☐

​

☒

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 28, 2018

Dear Arconic Shareholders:

You are cordially invited to attend the 2018 Annual Meeting of Shareholders of Arconic Inc. to be held on Wednesday, May 16, 2018, at 9:00 a.m. Eastern Time, at Lotte New York Palace Hotel, 455 Madison Avenue, New York, NY 10022.

We are pleased to present you with our 2018 Proxy Statement, which represents our continual commitment to transparency, good governance and performance-based executive compensation, and reflects the input we have received during dialogue with our investors. At the 2018 Annual Meeting, shareholders will vote on the matters set forth in the 2018 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 Wednesday, May 16, 2018, 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.

Notice of 2018 Annual Meeting of Shareholders

The Annual Meeting of Shareholders of Arconic Inc. (“Arconic” or the “Company”) will be held on Wednesday, May 16, 2018, at 9:00 a.m. Eastern Time, at the Lotte New York Palace Hotel, New York, NY. Shareholders of record of Arconic common stock at the close of business on March 21, 2018 are entitled to vote at the meeting.

The purposes of the meeting are:

1.

to elect 13 directors to serve one-year terms expiring at the 2019 Annual Meeting of Shareholders;

​

2.

to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2018;

​

3.

​

4.

to approve the 2013 Arconic Stock Incentive Plan, as amended and restated;

​

5.

​

6.

​

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 28, 2018

i

Proxy Statement

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2018

The Notice of 2018 Annual Meeting of Shareholders and Proxy Statement and 2017 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 2018 Annual Meeting of Shareholders to be held on Wednesday, May 16, 2018 at 9:00 a.m. Eastern Time, at the Lotte New York Palace Hotel, 455 Madison Avenue, New York, NY 10022, 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 29, 2018. 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 2017 Annual Report before you vote.

2018 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 16, 2018. 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 14, 2018.

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 comprises 13 members, and directors are elected on an annual basis. The following table provides summary information about each of the director nominees standing for election to the Board for a one-year term expiring on the date of the Annual Meeting of Shareholders in 2019.

   

3

Proxy Summary (continued)

 

 

Corporate Governance Highlights (Page 23)

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:

✓

​

✓

​

✓

​

✓

​

✓

​

✓

Separation of the Chairman and the Chief Executive Officer positions

​

✓

​

✓

​

✓

​

✓

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

​

✓

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

​

✓

​

✓

​

✓

​

✓

​

✓

​

✓

​

✓

​

4

Proxy Summary (continued)

Executive Compensation Highlights (Page 41)

The Compensation Discussion and Analysis section includes a discussion of the Company’s compensation philosophy and design and 2017 compensation decisions. Based on input from investors and benchmarking analyses, the Company designed an executive compensation structure most suited to drive shareholder value for Arconic in 2017 and beyond.

Arconic’s executive compensation philosophy to provide pay for performance and shareholder alignment underlies our compensation structure whose design is based on four guiding principles:

•

Make equity long-term incentive (LTI) compensation the most significant portion of total compensation for senior executives and managers.

​

•

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.

​

•

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

​

•

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

​

 

5

Item 1 Election of Directors

As of the date of this proxy statement, Arconic’s Board of Directors comprises 13 members. Directors are elected for one-year terms.

The Board of Directors, upon the recommendation of the Governance and Nominating Committee, has nominated 12 incumbent directors to stand for reelection to the Board for a one-year term expiring in 2019: James F. Albaugh, Christopher L. Ayers, Charles “Chip” Blankenship, Arthur D. Collins, Jr., Elmer L. Doty, Rajiv L. Gupta, David P. Hess, Sean O. Mahoney, David J. Miller, E. Stanley O’Neal, John C. Plant, and Ulrich R. Schmidt; and 1 nominee to stand for election to the Board for a one-year term expiring in 2019: Amy E. Alving.

Mr. Plant was appointed by the Board of Directors, effective February 5, 2016, in connection with an agreement that the Company entered into on February 1, 2016 with Elliott Associates, L.P., a Delaware limited partnership, Elliott International, L.P., a Cayman Islands limited partnership, and Elliott International Capital Advisors Inc., a Delaware corporation (collectively, “Elliott”). Messrs. Collins, Mahoney, and O’Neal were elected by the shareholders at the 2016 Annual Meeting of Shareholders. Mr. Gupta was appointed to the Board of Directors, effective November 1, 2016, concurrently with the separation of Alcoa Corporation from the Company. Mr. Albaugh was appointed to the Board of Directors, effective May 25, 2017, to fill a vacancy. Messrs. Ayers, Doty, Hess, and Schmidt were elected by the shareholders at the 2017 Annual Meeting of Shareholders. Mr. Miller was appointed by the Board of Directors, effective December 19, 2017, in connection with a letter agreement that the Company entered into on December 19, 2017 with affiliates of Elliott Management Corporation and to fill a vacancy. The letter agreement is included as an exhibit to a Form 8-K that we filed with the Securities and Exchange Commission on December 19, 2017. Mr. Blankenship was appointed by the Board of Directors, effective January 15, 2018, in connection with his appointment as the Chief Executive Officer of the Company. Ms. Alving was previously a director of Arconic from November 2016 until May 2017 and was recommended to the Board by a non-management director as a candidate for election to the Board for a one-year term expiring in 2019.

The Board of Directors has affirmatively determined that each of the 13 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 15). Included in each nominee’s biography below is a description of the qualifications, experience, attributes and skills of such nominee.

In addition, the Board of Directors has determined that each director nominee except Mr. Blankenship 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 29.

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, Blankenship, Collins, Doty, Gupta, Hess, 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: 67 Committees:  Audit Committee; Cybersecurity Advisory Subcommittee (Chair) Other Current Public Directorships: American Airlines Group Inc.; Harris Corporation	​

​		​	​	Amy E. Alving	​
			​	Director from: 2016 – 2017 Age: 55 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: 51 Committees: Audit Committee; Finance Committee Other Current Public Directorships: Universal Stainless & Alloy Products, Inc.	​

​		​	​	Charles “Chip” Blankenship	​
			​	Director since: 2018 Age: 51	​

9

Item 1 Election of Directors (continued)

​		​	​	Arthur D. Collins, Jr.	​
			​	Director since: 2010 Age: 70 Committees: Compensation and Benefits Committee (Chair); Governance and Nominating Committee Other Current Public Directorships: The Boeing Company; U.S. Bancorp	​

​		​	​	Elmer L. Doty	​
			​	Director since: 2017 Age: 63 Committees: Compensation and Benefits Committee; Governance and Nominating Committee	​

10

Item 1 Election of Directors (continued)

​		​	​	Rajiv L. Gupta	​
			​	Director since: 2016 Age: 72 Committees: Compensation and Benefits Committee; Governance and Nominating Committee Other Current Public Directorships: Aptiv PLC (Chairman)	​

​		​	​	David P. Hess	​
			​	Director since: 2017 Age: 62 Committees: Audit Committee; Finance Committee	​

11

Item 1 Election of Directors (continued)

​		​	​	Sean O. Mahoney	​
			​	Director since: 2016 Age: 55 Committees: Audit Committee; Finance Committee (Chair) Other Current Public Directorships: Aptiv PLC; Cooper-Standard Holdings Inc.	​

​		​	​	David J. Miller	​
			​	Director since: 2017 Age: 39 Committees: Finance Committee	​

12

Item 1 Election of Directors (continued)

​		​	​	E. Stanley O’Neal	​
			​	Director since: 2008 Age: 66 Committees: Audit Committee; Finance Committee Other Current Public Directorships: Platform Specialty Products Corporation	​

​		​	​	John C. Plant	​
			​	Chairman of the Board Since: 2017 Director since: 2016 Age: 64 Committees: Compensation and Benefits Committee; Governance and Nominating Committee Other Current Public Directorships: Gates Industrial Corporation PLC; Jabil Circuit Corporation; Masco Corporation	​

13

Item 1 Election of Directors (continued)

​		​	​	Ulrich R. Schmidt	​
			​	Director since: 2016 Age: 68 Committees: Audit Committee (Chair); Finance Committee	​

14

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 who comply with the foregoing procedures and 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 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 2019 Annual Meeting, such notice must be delivered no earlier than January 16, 2019 and no later than February 15, 2019.

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.

​

15

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 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 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.

Five of the Board’s incumbent director nominees recommended by the Governance and Nominating Committee for the 2018 Annual Meeting have not previously been elected by shareholders—namely, Messrs. Plant, Gupta, Albaugh, Miller, and Blankenship. Mr. Plant was appointed by the Board of Directors, effective February 5, 2016, in connection with an agreement that the Company entered into on February 1, 2016 with Elliott. Mr. Gupta was appointed to the Board of Directors, effective November 1, 2016, concurrently with the separation of Alcoa Corporation from the Company. Mr. Albaugh was appointed to the Board of Directors, effective May 25, 2017, to fill a vacancy. Mr. Miller was appointed by the Board of Directors, effective December 19, 2017, in connection with a letter agreement that the Company entered into on December 19, 2017 with affiliates of Elliott Management Corporation and to fill a vacancy. Mr. Blankenship was appointed by the Board of Directors, effective January 15, 2018, in connection with his appointment as the Chief Executive Officer of the Company. In addition, Ms. Alving is a director nominee who has not been previously elected by shareholders.

16

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. Mr. Blankenship, our sole employee director, does not receive additional compensation for his Board service.

The Governance and Nominating Committee reviews director compensation periodically and recommends changes to the Board when it deems appropriate. In 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 the compensation program for non-employee directors and adopted certain changes to the program. The Company’s non-employee director compensation 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 31.

Director Fees

The following table describes the components of compensation for non-employee directors and the effective dates of certain changes to the compensation program:

17

Director Compensation (continued)

1

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

​

2

In April 2017, the roles of Chairman and Chief Executive Officer were separated, and an independent director was appointed Chairman of the Board. As a result, the role of Lead Director ended in April 2017.

​

3

Effective January 1, 2018, a fee of  $1,500 will be 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.

​

4

Effective December 5, 2017, non-employee directors are required to attain ownership of at least $750,000 in the Company’s common stock within six years of initial appointment to the Board.

​

5

On December 5, 2017, the Board approved amendments to the Arconic Inc. Non-Employee Director Compensation Policy, to adopt an overall limit on total non-employee director compensation of  $750,000 per 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 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 22. 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 non-employee director’s holdings in Arconic common stock, deferred restricted share units, and deferred share units as of March 15, 2018, based on the closing price of our common stock on the New York Stock Exchange on that date.

18

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.

19

Director Compensation (continued)

2017 Director Compensation

The following table sets forth the total compensation of the Company’s non-employee directors for the year ended December 31, 2017.*

*

In 2017, 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 Blankenship is a Company employee and receives no compensation for service as a director; his compensation is reflected in the “2017 Summary Compensation Table” on page 56. David P. Hess joined the Board of Directors, effective March 10, 2017, and served as Interim Chief Executive Officer of the Company from April 13, 2017 until January 15, 2018. Mr. Hess received no compensation for service as a director while serving as Interim Chief Executive Officer; his compensation for service as a non-employee director and as Interim Chief Executive Officer is reflected in the “2017 Summary Compensation Table.”

​

2

Fees Earned or Paid in Cash (Column (b)). This column reflects the cash fees earned by directors for Board and committee service in 2017, 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 2017 until the Company’s annual meeting of shareholders in 2018 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 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 March 10, 2017 was $26.83. The grant date fair value of each deferred restricted share unit granted to Messrs. Albaugh, Ayers, Doty, Gupta, Mahoney, O’Neal, Plant and Schmidt and Mmes. Merrin, Richardson and Russo on May 30, 2017 was $27.22. The grant date fair value of each deferred restricted share unit granted to Mr. Plant on October 23, 2017 was $24.35. The grant date fair value of each deferred restricted share unit granted to Mr. Miller on December 27, 2017 was $27.34. As of December 31, 2017, the aggregate number of unvested deferred restricted share units outstanding for each non-employee director was as follows: Mr. Albaugh (4,409); Ms. Alving (0); Mr. Ayers (4,409); Mr. Collins (4,409); Mr. Doty (4,409); Mr. Gupta (4,409); Mr. Mahoney (4,409); Ms. Merrin (4,409); Mr. Miller (1,888); Mr. O’Neal (4,409); Mr. Plant (9,747);

​

20

Director Compensation (continued)

Mr. Reif  (0); Ms. Richardson (4,409); Ms. Russo (4,409); Mr. Schmidt (4,409); Mr. Sorrell (0); and Mr. Tata (0). The foregoing numbers do not include deferred restricted share units that have vested—see “—Director Deferral Program” on page 22.

4

Mr. Albaugh joined the Board of Directors effective May 25, 2017. The amount listed in Column (b) represents (i) a cash retainer of $72,258 for service as a non-employee director from May 25 through December 31, 2017 and (ii) a cash retainer of  $5,989 for service on the Audit Committee from May 25 through December 31, 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

5

Ms. Alving’s term on the Board ended on May 25, 2017. The amount listed in Column (b) represents (i) a cash retainer of  $48,065 for service as a non-employee director from January 1 through May 25, 2017 and (ii) a cash retainer of  $4,406 for service on the Audit Committee from January 1 through May 25, 2017.

​

6

Mr. Ayers was elected to the Board of Directors effective May 25, 2017. The amount listed in Column (b) represents (i) a cash retainer of  $72,258 for service as a non-employee director from May 25 through December 31, 2017 and (ii) a cash retainer of  $5,989 for service on the Audit Committee from May 25 through December 31, 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

7

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017 and (ii) a cash retainer of  $20,000 for service as Chair of the Compensation and Benefits Committee during 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

8

Mr. Doty was elected to the Board of Directors effective May 25, 2017. The amount listed in Column (b) represents a cash retainer of $72,258 for service as a non-employee director from May 25 through December 31, 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

9

The amount listed in Column (b) represents a cash retainer of  $120,000 for service as a non-employee director during 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

10

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017, (ii) a cash retainer of  $11,000 for service on the Audit Committee during 2017 and (iii) a cash retainer of  $15,125 for service as Chair of the Finance Committee from February 23 through December 31, 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

11

Ms. Merrin was elected to the Board of Directors effective May 25, 2017, and resigned from the Board of Directors effective December 19, 2017. The amount listed in Column (b) represents a cash retainer of  $68,387 for service as a non-employee director from May 25 to December 19, 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017. Due to her resignation, and in accordance with the Director Compensation Policy in effect as of December 5, 2017, 1,884 of the 4,409 deferred stock awards reflected in Column (c) will be forfeited.

​

12

Mr. Miller joined the Board of Directors, effective December 19, 2017. The amount listed in Column (b) represents a cash retainer of $4,194 for service as a non-employee director from December 19 through December 31, 2017. The amount listed in Column (c) represents a prorated annual equity award of 1,888 deferred restricted share units granted on December 27, 2017.

​

13

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017 and (ii) a cash retainer of  $11,000 for service on the Audit Committee during 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

14

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017 and (ii) a cash retainer of $32,466 for service as Chairman of the Board from October 23 through December 31, 2017. The amount listed in Column (c) represents (i) an annual equity award of 4,409 deferred restricted share units for service as a director granted on May 30, 2017, and (ii) an equity award of 5,338 deferred restricted share units for service as Chairman granted on October 23, 2017.

​

15

Mr. Reif’s term on the Board ended on May 25, 2017. The amount listed in Column (b) represents a cash retainer of  $48,065 for service as a non-employee director from January 1 through May 25, 2017.

​

16

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017 and (ii) a cash retainer of  $11,000 for service on the Audit Committee during 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017. Ms. Richardson resigned from the Board of Directors, effective February 15, 2018. Due to her resignation, and in accordance with the Director Compensation Policy in effect as of December 5, 2017, 1,184 of the 4,409 deferred stock awards reflected in Column (c) will be forfeited.

​

21

Director Compensation (continued)

17

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017; (ii) a cash retainer of  $16,500 for service as Chair of the Governance and Nominating Committee during 2017; (iii) a cash retainer of  $2,521 for service as Chair of the Executive Committee from April 21 through June 15, 2017; (iv) a cash retainer of  $7,083 for service as Lead Independent Director from January 1 through April 12, 2017; and (v) a cash retainer of  $105,699 for service as Chairman of the Board from April 13 to October 23, 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

18

The amount listed in Column (b) represents (i) a cash retainer of  $120,000 for service as a non-employee director during 2017 and (ii) a cash retainer of  $27,500 for service as Chair of the Audit Committee during 2017. The amount listed in Column (c) represents an annual equity award of 4,409 deferred restricted share units granted on May 30, 2017.

​

19

Mr. Sorrell resigned from the Board of Directors, effective March 10, 2017. The amount listed in Column (b) represents a cash retainer of  $30,000 for service as a non-employee director from January 1 through March 10, 2017.

​

20

Mr. Tata resigned from the Board of Directors, effective May 2, 2017. The amount listed in Column (b) represents a cash retainer of $40,645 for service as a non-employee director from January 1 through May 2, 2017. The amount listed in Column (g) represents payment by the Company of  $6,097 related to tax withholding from January 1 through May 2, 2017.

​

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.

22

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:

Board Membership and Participation

•

​

•

Directors who serve as chief executive officers of public companies should not serve on more than two outside public company boards in addition to the Arconic Board.

​

•

​

•

​

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. We have sought additional 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.

Separate Chairman and Chief Executive Officer

The Board has separated the Chairman and Chief Executive Officer positions, with John Plant serving as the Chairman of the Board and Chip Blankenship serving as CEO. The Board has determined that this leadership structure best serves the interests of shareholders and the Company at this time.

Annual Election of Directors

The Board of Directors is not a classified board; each director serves 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.

Prohibition against Short Sales, Hedging, Margin Accounts and Pledging

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

•

​

•

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.

23

Corporate Governance (continued)

The Structure and Role of the Board of Directors

Board Leadership Structure

The Company’s current Board leadership structure comprises a separate Chairman of the Board and Chief Executive Officer. 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 separation of the roles of Chairman and Chief Executive Officer best serves the interests of shareholders and the Company at this time because it allows our Chief Executive Officer to focus on operating and managing the Company, while our Chairman can focus on the leadership of the Board.

John C. Plant is our current Chairman of the Board. Mr. Plant’s strength in leading the Board is complemented by his prior experience as the Chairman of the Board of TRW Automotive and his depth of experience in Board matters ranging from his service on the Company’s Compensation and Benefits Committee and Governance and Nominating Committee to his memberships on other company boards.

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

24

Corporate Governance (continued)

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 mergers and acquisitions, and the investment performance and funding of the Company’s retirement plans, and the risks relating to such matters.

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.

25

Corporate Governance (continued)

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

 

Board Meetings and Attendance

The Board met 29 times in 2017. 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 96%. 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 2017 (or, in the case of Messrs. Albaugh, Ayers, Doty, Hess, and Miller, each of whom joined the Board in 2017, 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. Eight out of the eleven members of the Board at the time attended the Company’s 2017 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.

26

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.” In April 2017, after Klaus Kleinfeld stepped down as Chairman and CEO of the Company, the Board appointed a special CEO Search Committee, comprising six directors, to lead the search for the Company’s permanent Chief Executive Officer (CEO). After a thoughtful and deliberative search, on October 23, 2017, the Board announced the appointment of Charles Blankenship as CEO, effective as of January 15, 2018.

The table below sets forth the standing Board committees and subcommittee and the current members of each. 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

​

27

Corporate Governance (continued)

28

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 Chairman or the non-management directors as a group may do so by sending a written communication to the attention of the Chairman 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 Mr. Blankenship, who is employed by the Company and therefore does not meet the independence standards set forth in the Director Independence Standards. In the course of its determination regarding independence, the Board did not find any material relationships between the Company and any of the directors, other than Mr. Blankenship’s employment.

29

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.

​

30

Corporate Governance (continued)

Transactions with Related Persons in 2017

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 2017, 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:

•

​

•

​

•

​

•

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

​

•

​

In addition, during 2017, 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:

•

​

•

​

•

​

•

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

​

•

​

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”:

•

​

•

​

•

​

•

​

•

​

•

​

•

​

31

Corporate Governance (continued)

•

​

•

​

•

​

•

​

•

​

•

​

•

​

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.

32

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 2017 all of its directors and executive officers filed the required reports on a timely basis under Section 16(a), with the exception of director David P. Hess, who filed a late amendment to a timely filed Form 3 to disclose indirect ownership of Company common stock held in a revocable trust and a charitable remainder unitrust of which he is a trustee and a beneficiary.

Arconic Stock Ownership

Stock Ownership of Certain Beneficial Owners

The following shareholders reported to the Securities and Exchange Commission that they beneficially owned more than 5% of Arconic common stock as of December 31, 2017, except as noted below.

33

Arconic Stock Ownership (continued)

1

As of December 19, 2017; as reported in a Schedule 13D amendment dated December 19, 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.

​

2

As reported in a Schedule 13G amendment dated February 7, 2018, The Vanguard Group, an investment adviser, reported that it had sole power to vote or direct to vote 577,532 shares, sole power to dispose or direct the disposition of 45,836,040 shares, shared power to vote or direct to vote 104,426 of the reported shares, and shared power to dispose or direct the disposition of 675,109 shares.

​

3

As reported in a Schedule 13G amendment dated January 29, 2018, BlackRock, Inc., a parent holding company, reported that it had sole power to vote 28,907,987 shares and sole power to dispose of 32,715,258 shares.

​

4

As reported in a Schedule 13G dated February 14, 2018, Orbis Investment Management Limited, Orbis Investment Management (U.S.), LLC and Allan Gray Australia Pty Ltd reported that 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 31,752,984 shares and sole power to dispose or direct the disposition of 31,752,984 shares.

​

34

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, 2018, by each director, each of the named executive officers, and all directors and executive officers (serving as of March 15, 2018) 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, 2018 or will become exercisable within 60 days after March 15, 2018 as follows: Mr. Giacobbe (22,294); Mr. Myers (31,503); Ms. Ramundo (12,780); Mr. Roegner (49,867); and all executive officers as a group (148,759). No awards of stock options have been made to non-employee directors. As of March 15, 2018, 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.

​

35

Arconic Stock Ownership (continued)

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 and the Deferred Fee Plan for Directors (in effect before 2005). Each deferred 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 (with certain limited exceptions). 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

Held by a trust of which Ms. Russo is the trustee and a beneficiary.

​

7

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.

​

36

Item 2 Ratification of Appointment of Independent Registered Public Accounting Firm

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

The Audit Committee annually evaluates the qualifications, performance and independence of the Company’s independent auditors. Based on its evaluation, the Audit Committee has appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2018. 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 2018.