Exhibit 10.1

 

  EXECUTION COPY     [image_001.jpg]

Arconic

201 Isabella Street

Pittsburgh PA 15212

 

August 1, 2019

 

John C. Plant

c/o Arconic Inc.

201 Isabella Street

Pittsburgh PA 15212

Dear John:

 

This letter memorializes our recent discussions concerning an extension of your
service as Chief Executive Officer of Arconic Inc. (“Arconic” or the “Company”)
through the expected consummation of the separation of the Company’s engineered
products and forging and global rolled products businesses through a spinoff of
one of such businesses (such spinoff, the “Separation,” and the date of its
consummation the “Spinoff Date”).

 

Position:

 

It is expected that you will continue to serve as Chief Executive Officer of the
Company through the earlier of the Spinoff Date and August 6, 2020. If the
Separation occurs prior to August 6, 2020, you will remain employed with the
Company until the conclusion of the Term (as defined in the letter agreement
between you and the Company, dated as of February 13, 2019 (the “Letter
Agreement”)) as an Advisor to the Company and its Board of Directors.

 

The Term is hereby extended to conclude on August 6, 2020. In addition, you and
the Company have agreed that, at the Company’s request and upon mutual
agreement, the Term may be extended. In any event, the Term shall automatically
conclude upon termination of your employment with the Company for any reason.

 

Base Salary

 

During the Term, you will continue to receive a base salary at an annual rate of
$1,600,000, payable in accordance with the Company’s normal payroll practices,
and subject to all applicable taxes and withholdings.

 

Incentive Compensation:

 

As soon as practicable following the date hereof, the Company will grant you
restricted stock units (the “RSUs”) pursuant to the Company’s 2013 Stock
Incentive Plan, as amended and restated (the “Equity Plan”) in respect of
600,000 shares of common stock of the Company, par value $1 (“Shares”) on the
terms set forth below.

 

 

 

 

Vesting Conditions. 400,000 RSUs will be “Service-Vesting RSUs” and 200,000 RSUs
will be “Performance-Vesting RSUs”.

 

·Service-Vesting RSUs. The Service-Vesting RSUs will vest on August 6, 2020,
subject, except as otherwise provided below, to your continued employment as
Chief Executive Officer or as Advisor, as applicable, pursuant to the second
paragraph of this letter, through such vesting date.

 

oTermination for Cause; Resignation without Good Reason. In the event of a
termination of your employment by the Company for Cause (as defined in the
Letter Agreement) or your resignation without Good Reason (as defined in the
Letter Agreement), in either case, prior to August 6, 2020, all Service-Vesting
RSUs will be forfeited.

 

oTermination due to Death or Disability; Resignation for Good Reason. In the
event of a termination of your employment prior to August 6, 2020 due to your
death or Disability (as customarily defined in award agreements under the Equity
Plan), or by you for Good Reason, then a portion of the Service-Vesting RSUs
equal to the product of (i) the total number of Service-Vesting RSUs, multiplied
by (ii) a fraction (not to exceed 1.0), the numerator of which is the number of
days from August 6, 2019 through the date of such termination of employment and
the denominator of which is 366, will vest immediately and the remainder of the
Service-Vesting RSUs will be forfeited.

 

oChange in Control; Termination without Cause. In the event that a Change in
Control (as defined in the Equity Plan) occurs prior to August 6, 2020 or that
your employment is terminated without Cause prior to August 6, 2020, then all
Service-Vesting RSUs will immediately and fully vest on the date of such Change
in Control or termination of employment, as applicable.

 

·Performance-Vesting RSUs. The Performance-Vesting RSUs will vest in four
tranches, each comprised of 50,000 RSUs.

 

oSeparation-Related Performance-Vesting RSUs. One tranche of 50,000
Performance-Vesting RSUs will vest on August 6, 2020 if the Spinoff Date has
occurred prior to August 6, 2020 and, except as otherwise provided below, you
have remained employed as Chief Executive Officer or as Advisor, as applicable,
pursuant to the second paragraph of this letter, through August 6, 2020.

 

§Performance Condition Not Achieved; Termination for Cause; Resignation without
Good Reason. Except as otherwise provided below, if the Spinoff Date does not
occur by August 6, 2020, or if your employment is terminated by the Company for
Cause or you resign without Good Reason, in either case, prior to August 6,
2020, then this tranche of Performance-Vesting RSUs will be forfeited.

 

§Termination due to Death or Disability; Resignation for Good Reason. In the
event of a termination of your employment prior to August 6, 2020 due to your
death or Disability, or by you for Good Reason, then a portion of this tranche
of Performance Vesting RSUs equal to the product of (i) the total number of
Performance-Vesting RSUs in such tranche, multiplied by (ii) a fraction (not to
exceed 1.0), the numerator of which is the number of days from August 6, 2019
through the date of such termination of employment and the denominator of which
is 366, will vest immediately and the remainder (if any) of such tranche of
Performance-Vesting RSUs will be forfeited.

 

§Termination without Cause. In the event that your employment is terminated
without Cause prior to August 6, 2020, this tranche of Performance-Vesting RSUs
will remain outstanding and will vest if the Spinoff Date ultimately occurs
under circumstances that would have resulted in vesting of this tranche had you
remained employed through August 6, 2020, and will be forfeited on the first
date that such condition can no longer be satisfied.

 

§Change in Control. In the event that a Change in Control occurs prior to August
6, 2020, then this tranche of Performance-Vesting RSUs will immediately and
fully vest on the date of such Change in Control.

 

Notwithstanding the foregoing, if you remain employed by the Company on August
6, 2020, the Spinoff Date has not occurred prior to August 6, 2020 principally
because the Board of Directors had determined that the Separation should be
delayed, and the Spinoff Date actually occurs after August 6, 2020 (but prior to
January 1, 2021), then this tranche of Performance-Vesting RSUs will vest on the
Spinoff Date.

 

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oStock Price Performance-Vesting RSUs. The remaining three tranches each of
50,000 Performance-Vesting RSUs will each vest on the later of August 6, 2020
and the date of achievement of the specified Average Price (as defined below)
set forth below with respect to the applicable Tranche, subject to achievement
of such Average Price for each no later than August 6, 2021 and, except as
otherwise provided below, to your continued employment as Chief Executive
Officer or as Advisor, as applicable, pursuant to the second paragraph of this
letter, through August 6, 2020.

 

§Performance Condition Not Achieved; Termination for Cause; Resignation without
Good Reason. All such tranches of Performance-Vesting RSUs will be forfeited
upon the termination of your employment by the Company for Cause or your
resignation without Good Reason, in either case, prior to August 6, 2020. Each
such tranche of Performance Vesting RSUs will also be forfeited if the
applicable Average Price for such tranche has not been achieved as of August 6,
2021.

 

§Termination due to Death or Disability; Resignation for Good Reason;
Termination without Cause; Change in Control. If you experience a termination of
employment prior to August 6, 2020 due to your Death or Disability, by the
Company without Cause, or by you for Good Reason, or in the event that a Change
in Control occurs prior to August 6, 2020, and the Average Price performance
goal is ultimately achieved for a tranche of Performance-Vesting RSUs, then a
portion of such tranche of Performance-Vesting RSUs equal to the product of (i)
the total number of Performance-Vesting RSUs in such tranche, multiplied by (ii)
(x) if the applicable event is a Change in Control or a termination of your
employment by the Company without Cause, 1.0 or (y) if the applicable event is
your termination of employment due to death or Disability or resignation for
Good Reason, a fraction (not to exceed 1.0), the numerator of which is the
number of days from August 6, 2019 through the date of such termination of
employment and the denominator of which is 366, will vest upon achievement of
the Average Price performance goal and the remainder of such tranche of
Performance-Vesting RSUs will be forfeited.

 

For purposes hereof, the “Average Price” for any day shall mean the average of
the five highest daily per-share closing prices of the Shares on the New York
Stock Exchange occurring during the 20 consecutive trading days preceding such
date; provided that in the event that a Change in Control occurs prior to August
6, 2021, “Average Price” shall mean the value of the per-Share consideration
delivered to shareholders of the Company in the Change in Control transaction
(which value shall be reasonably determined by the Compensation Committee of the
Board of Directors to the extent that the consideration is not in the form of
cash). The Average Price hurdle for each of the three 50,000 Performance-Vesting
RSU Tranches subject to an Average Price goal shall be $32, $34, and $36,
respectively.

 

In the event of an adjustment event of the type described in Section 4(f) of the
Equity Plan (including without limitation (for purposes of clarity and the
avoidance of doubt) the Separation or any other split-off or a spin-off
involving the equity of the Company), the Committee (as defined in the Equity
Plan) will make such adjustments as it reasonably and in good faith deems
equitable to the amounts of the Average Price targets and/or to actual Share
values.

 

Other Terms and Conditions. The RSU Award may, at the Company’s election, be
settled in cash rather than Shares. The RSU Award shall be subject to the
additional terms and conditions contained in the award agreement attached to
this letter as Annex A.

 

The RSUs shall be your sole incentive compensation for the extended portion of
the Term contemplated hereby, it being understood that nothing herein shall
modify the terms of your existing RSU Award and Outperformance Bonus opportunity
(each as defined in the Letter Agreement). You will not be eligible for annual
bonuses during the Term or for any equity-based compensation other than as
contemplated hereby.

 

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 Miscellaneous:

 

The Company will pay directly to your attorney, within ten days following the
full execution of this letter, all reasonable and documented attorneys’ fees
incurred in the review, negotiation and drafting of this letter in an amount not
to exceed $8,500.

 

Neither party hereto may assign any rights or delegate any duties under this
letter without the prior written consent of the other party; provided, that this
letter shall inure to the benefit of and be binding upon the successors and
assigns of the Company upon any sale of all or substantially all of the
Company’s assets, or upon any merger, consolidation or reorganization of the
Company with or into any other corporation, all as though such successors and
assigns of the Company and their respective successors and assigns were the
Company.

 

Except as otherwise contemplated herein, this letter (including attachments
hereto) contains the entire agreement between you and the Company with respect
to the subject matter hereof, it being understood that, except as expressly
modified hereby, the Letter Agreement remains in full force and effect in
accordance with its terms. No modification or termination of this letter may be
made orally, but must be made in writing and signed by you and the Company.

 

Governing Law; Jurisdiction:

 

This letter will be governed and interpreted in accordance with the laws of the
State of New York without reference to its choice of law principles. Any action
arising out of or related to this letter will be brought in the state or federal
courts with jurisdiction in New York, New York, and you and the Company consent
to the jurisdiction and venue of such courts.

 

 

[Signature Page Follows.]

 

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To accept our offer, please sign and date the bottom of this letter.

 

Best Regards,

 

/s/ James F. Albaugh   James F. Albaugh   Chair of the Compensation and Benefits
Committee   Arconic Board of Directors  

 

 

 

 

 

 

 

I, John C. Plant, acknowledge and agree to the terms set forth in this letter.

 

Accepted by:   Date:       /s/ John C. Plant   08/01/2019

John C. Plant

   

 

[Signature Page to Letter Agreement]

 

 

Annex A

 

ARCONIC INC.
CHIEF EXECUTIVE OFFICER INITIAL EQUITY AWARD
Grant Date: August __, 2019

 

This Restricted Share Unit Award represents a grant of Restricted Share Units
relating to 600,000 shares of common stock of the Company, par value $1. The
terms and conditions of this Restricted Share Unit Award Agreement, as set forth
in this agreement between the Company and John C. Plant (the “Participant”, and
this agreement, the “Award Agreement”) are authorized by the Compensation and
Benefits Committee of the Board of Directors. The Restricted Share Unit award is
granted pursuant to the 2013 Arconic Stock Incentive Plan, as amended and
restated and as may be further amended from time to time (the “Plan”).
Capitalized terms used but not defined in the Award Agreement shall have the
meaning given to such terms in the Plan. Reference is made to the letter
agreement dated as of August 1, 2019 between the Company and the Participant
(the “Letter Agreement”).

 

General Terms and Conditions

 

1.             The Restricted Share Units are subject to the provisions of the
Award Agreement (including the provisions of the Plan deemed to be incorporated
by reference herein). Interpretations of the Award Agreement by the Committee
are binding on the Participant and the Company. A Restricted Share Unit is an
undertaking by the Company to issue a Share or an equivalent cash amount in
accordance with Section 3 of the Award Agreement, subject to the fulfillment of
certain conditions, except to the extent otherwise provided in the Plan or
herein. A Participant has no voting rights or rights to receive dividends on
Restricted Share Units, but the Board of Directors may authorize that dividend
equivalents be accrued and paid on Restricted Share Units upon vesting in
accordance with Section 2 of the Award Agreement.

 

Vesting and Payment

 

2.             The Restricted Share Units will be subject to the vesting terms
and conditions set forth in the Letter Agreement which are deemed to be
incorporated herein.

 

3.             Upon the vesting of the Restricted Share Units in accordance with
the terms of the Award Agreement, Participant will receive, within 30 days
following the vesting date, one Share for each vested Restricted Share Unit;
provided, that the Company may instead make a cash payment in settlement of all
or a portion of such vested Restricted Share Units that equals, for each
applicable Restricted Share Unit, the Fair Market Value of a Share on the date
of such settlement. Subject to Section 14 of the Award Agreement, the Company
shall have sole discretion to determine whether to settle Restricted Share Units
in Shares, cash or a combination thereof.

 

Taxes

 

4.             All taxes required to be withheld under applicable tax laws in
connection with the Restricted Share Units must be paid by the Participant at
the appropriate time under applicable tax laws. The Company will satisfy
applicable tax withholding obligations by withholding from the Shares to be
issued (or cash to be paid) upon payment of the Restricted Share Units, unless
an alternative withholding method is approved by the Committee or withholding in
Shares is problematic under applicable tax or securities law or has materially
adverse accounting consequences, in which case withholding will be made pursuant
to Section 15(l) of the Plan. The number of Shares or amount of cash withheld
will be that number or amount with a fair market value equal to the taxes
required to be withheld at the minimum required rates or, to the extent
permitted under applicable accounting principles and approved by the Committee,
at up to the maximum individual tax rate for the applicable tax jurisdiction,
which include applicable income taxes, federal and state unemployment
compensation taxes and FICA/FUTA taxes. Further, notwithstanding anything herein
to the contrary, the Company may cause a portion of the Restricted Share Units
to vest prior to the stated vesting date set forth in the Letter Agreement in
order to satisfy any tax-related items that arise prior to the date of
settlement of the Restricted Share Units; provided, that to the extent necessary
to avoid a prohibited distribution under Section 409A of the Code, the number of
Restricted Share Units so accelerated and settled shall be with respect to a
number of Shares with a value that does not exceed the liability for such
tax-related items.

 

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Beneficiaries

 

5.             If permitted by the Company, Participants will be entitled to
designate one or more beneficiaries to receive the amounts payable in respect of
any Restricted Share Units that are outstanding and have not been settled at the
time of death of the Participant. All beneficiary designations will be on
beneficiary designation forms approved for the Plan. Copies of the form are
available from the Communications Center on Merrill Lynch’s OnLine® website
www.benefits.ml.com.

 

6.             Beneficiary designations on an approved form will be effective at
the time received by the Communications Center on Merrill Lynch’s
OnLine® website www.benefits.ml.com. A Participant may revoke a beneficiary
designation at any time by written notice to the Communications Center on
Merrill Lynch’s OnLine® website www.benefits.ml.com or by filing a new
designation form. Any designation form previously filed by a Participant will be
automatically revoked and superseded by a later-filed form.

 

7.             A Participant will be entitled to designate any number of
beneficiaries on the form, and the beneficiaries may be natural or corporate
persons.

 

8.             The failure of any Participant to obtain any recommended
signature on the form will not prohibit the Company from treating such
designation as valid and effective. No beneficiary will acquire any beneficial
or other interest in any Restricted Share Unit prior to the death of the
Participant who designated such beneficiary.

 

9.             Unless the Participant indicates on the form that a named
beneficiary is to receive Restricted Share Units only upon the prior death of
another named beneficiary, all beneficiaries designated on the form will be
entitled to share equally in the amounts payable in respect of the Restricted
Share Units upon settlement. Unless otherwise indicated, all such beneficiaries
will have an equal, undivided interest in all such Restricted Share Units.

 

10.           Should a beneficiary die after the Participant but before the
Restricted Share Unit is paid, such beneficiary’s rights and interest in the
Award will be transferable by the beneficiary’s last will and testament or by
the laws of descent and distribution. A named beneficiary who predeceases the
Participant will obtain no rights or interest in a Restricted Share Unit, nor
will any person claiming on behalf of such individual. Unless otherwise
specifically indicated by the Participant on the beneficiary designation form,
beneficiaries designated by class (such as “children,” “grandchildren” etc.)
will be deemed to refer to the members of the class living at the time of the
Participant’s death, and all members of the class will be deemed to take “per
capita.”

 

11.           If a Participant does not designate a beneficiary or if the
Company does not permit a beneficiary designation, the Restricted Share Units
that have not yet vested or been paid at the time of death of the Participant
will be paid to the Participant’s legal heirs pursuant to the Participant’s last
will and testament or by the laws of descent and distribution.

 

Adjustments

 

12.           In the event of an Equity Restructuring, the Committee will
equitably adjust the Restricted Share Unit as it deems appropriate to reflect
the Equity Restructuring, which may include (i) adjusting the number and type of
securities subject to the Restricted Share Unit; and (ii) adjusting the terms
and conditions of the Restricted Share Unit. The adjustments provided under this
Section 12 will be nondiscretionary and final and binding on all interested
parties, including the affected Participant and the Company; provided that the
Committee will determine whether an adjustment is equitable.

 

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Repayment/Forfeiture

 

13.           As an additional condition of receiving the Restricted Share Unit,
the Participant agrees that the Restricted Share Unit and any benefits or
proceeds the Participant may receive hereunder shall be subject to forfeiture
and/or repayment to the Company to the extent required (i) under the terms of
any recoupment or “clawback” policy adopted by the Company to comply with
applicable laws or with the Company’s Corporate Governance Guidelines or other
similar requirements, as such policy may be amended from time to time (and such
requirements shall be deemed incorporated into the Award Agreement without the
Participant’s consent) or (ii) to comply with any requirements imposed under
applicable laws and/or the rules and regulations of the securities exchange or
inter-dealer quotation system on which the Shares are listed or quoted,
including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010. Further, if the Participant
receives any amount in excess of what the Participant should have received under
the terms of the Restricted Share Unit for any reason (including without
limitation by reason of a financial restatement, mistake in calculations or
administrative error), all as determined by the Committee, then the Participant
shall be required to promptly repay any such excess amount to the Company.

 

Miscellaneous Provisions

 

14.           Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in the Award Agreement, no Shares issuable upon vesting
of the Restricted Share Units, and no certificate representing all or any part
of such Shares, shall be issued or delivered if, in the opinion of counsel to
the Company, such issuance or delivery would cause the Company to be in
violation of, or to incur liability under, any securities law, or any rule,
regulation or procedure of any U.S. national securities exchange upon which any
securities of the Company are listed, or any listing agreement with any such
securities exchange, or any other requirement of law or of any administrative or
regulatory body having jurisdiction over the Company or a Subsidiary.

 

15.           Non-Transferability. The Restricted Share Units are
non-transferable and may not be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Participant other than by will or the
laws of descent and distribution and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company; provided, that, the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance.

 

16.           Shareholder Rights. No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Shares unless
the Restricted Share Unit shall have vested and been paid in the form of Shares
in accordance with the provisions of the Award Agreement.

 

17.           Notices. Any notice required or permitted under the Award
Agreement shall be in writing and shall be deemed sufficient when delivered
personally or sent by confirmed email, telegram, or fax or five days after being
deposited in the mail, as certified or registered mail, with postage prepaid,
and addressed to the Company at the Company’s principal corporate offices or to
the Participant at the address maintained for the Participant in the Company’s
records or, in either case, as subsequently modified by written notice to the
other party.

 

18.           Severability and Judicial Modification. If any provision of the
Award Agreement is held to be invalid or unenforceable under the applicable laws
of any country, state, province, territory or other political subdivision or the
Company elects not to enforce such restriction, the remaining provisions shall
remain in full force and effect and the invalid or unenforceable provision shall
be modified only to the extent necessary to render that provision valid and
enforceable to the fullest extent permitted by law. If the invalid or
unenforceable provision cannot be, or is not, modified, that provision shall be
severed from the Award Agreement and all other provisions shall remain valid and
enforceable.

 

19.           Successors. The Award Agreement shall be binding upon and inure to
the benefit of the Company and its successors and assigns, on the one hand, and
the Participant and his or her heirs, beneficiaries, legatees and personal
representatives, on the other hand.

 

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20.           Imposition of Other Requirements. The Company reserves the right
to impose other requirements on the Restricted Share Unit and on any Shares
acquired under the Award Agreement, to the extent the Company determines it is
necessary or advisable for legal or administrative reasons, and to require the
Participant to sign any additional agreements or undertakings that may be
necessary to accomplish the foregoing.

 

21.           Compliance with Code Section 409A. It is intended that the
Restricted Share Right granted pursuant to the Award Agreement be compliant with
Section 409A of the Code and the Award Agreement shall be interpreted, construed
and operated to reflect this intent. Notwithstanding the foregoing, the Award
Agreement and the Plan may be amended at any time, without the consent of any
party, to the extent necessary or desirable to satisfy any of the requirements
under Section 409A of the Code, but the Company shall not be under any
obligation to make any such amendment. Further, the Company and its Subsidiaries
do not make any representation to the Participant that the Restricted Share
Right granted pursuant to the Award Agreement satisfies the requirements of
Section 409A of the Code, and the Company and its Subsidiaries will have no
liability or other obligation to indemnify or hold harmless the Participant or
any other party for any tax, additional tax, interest or penalties that the
Participant or any other party may incur in the event that any provision of the
Award Agreement or any amendment or modification thereof or any other action
taken with respect thereto, is deemed to violate any of the requirements of
Section 409A of the Code.

 

22.           Waiver. A waiver by the Company of breach of any provision of the
Award Agreement shall not operate or be construed as a waiver of any other
provision of the Award Agreement, or of any subsequent breach by the Participant
or any other Participant.

 

23.           No Advice Regarding Award. The Company is not providing any tax,
legal or financial advice, nor is the Company making any recommendations
regarding the Participant’s acceptance of the Restricted Share Unit, or the
Participant’s acquisition or sale of the underlying Shares. The Participant is
hereby advised to consult with the Participant’s own personal tax, legal and
financial advisors regarding the Participant’s acceptance of the Restricted
Share Unit before taking any action related thereto.

 

24.           Governing Law and Venue. As stated in the Plan, the Restricted
Share Unit and the provisions of the Award Agreement and all determinations made
and actions taken thereunder, to the extent not otherwise governed by the laws
of the United States, shall be governed by the laws of the State of New York,
United States of America, without reference to principles of conflict of laws,
and construed accordingly. The jurisdiction and venue for any disputes arising
under, or any actions brought to enforce (or otherwise relating to), the
Restricted Share Unit will be exclusively in the courts in the State of New
York, County of New York, including the Federal Courts located therein (should
Federal jurisdiction exist).

 

25.           Electronic Delivery and Acceptance. The Company may, in its sole
discretion, decide to deliver any documents related to the Restricted Share Unit
by electronic means. The Participant hereby consents to receive such documents
by electronic delivery and agrees to participate in the Restricted Share Unit
through an on-line or electronic system established and maintained by the
Company or a third party designated by the Company.

 

26.           Entire Agreement. The Award Agreement and the Plan embody the
entire understanding and agreement of the parties with respect to the subject
matter hereof, and no promise, condition, representation or warranty, express or
implied, not stated or incorporated by reference herein, shall bind either party
hereto.

 

 

[Signature Page Follows.]

 

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IN WITNESS WHEREOF, the parties have duly executed the Award Agreement as of the
Grant Date first written above.

 

ARCONIC INC.

by

 

        Name:   Katherine Hargrove Ramundo  

Title:

Executive Vice President
Chief Legal Officer and Secretary

      John C. Plant