kalu-def14a_20220602.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

 

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Check the appropriate box:

Preliminary Proxy Statement

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

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

Kaiser Aluminum Corporation

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

 

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

LETTER TO OUR STOCKHOLDERS

FROM OUR EXECUTIVE CHAIRMAN, OUR LEAD INDEPENDENT DIRECTOR AND,

OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER

 

 

 

April 29, 2022

 

 

Dear Stockholder:

 

On behalf of our Board of Directors and management team, thank you for your continued support of Kaiser Aluminum. It is our pleasure to invite you to attend the Annual Meeting of Kaiser Aluminum Corporation to be held at our corporate office, located at 1550 West McEwen Drive, Suite 500, Franklin, Tennessee, on Thursday, June 2, 2022, at 9:00 a.m. Central.  While we do not expect to make a separate presentation, we expect our directors and officers to be present at the Annual Meeting and available to respond to any questions you may have.

 

As part of our contingency planning regarding novel coronavirus (“COVID-19”), we are preparing for the possibility that the date, time or location of the Annual Meeting may be changed or that the Annual Meeting may be held by means of remote communication (sometimes referred to as a "virtual" meeting). If we take this step, we will announce the decision to do so in advance through a press release and public filing with the Securities and Exchange Commission, and details will be available at www.kaiseraluminum.com.

 

Your vote is very important to us. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares as promptly as possible. Details of the business to be conducted at the Annual Meeting are included in this proxy statement, which we encourage you to read carefully. You may submit your voting instructions over the Internet or by telephone as indicated on the enclosed proxy card or by completing, signing and dating the enclosed proxy card and returning it by mail in the accompanying envelope.  If you plan to attend the Annual Meeting, please review the information on attendance provided on in this proxy statement.

 

We would like to share with you several areas of particular significance in advance of our Annual Meeting and in connection with our distribution of this proxy statement:

 

PERFORMANCE HIGHLIGHTS AND BUSINESS STRATEGY

 

This past year was transformational for the company, and a year with a unique set of operational challenges as we continued to navigate through COVID-19 related impacts on market conditions and our operations, combined with rapidly rising costs, significant supply chain issues, labor constraints and other disruptions. Despite these challenges, we achieved a number of major milestones that served to strengthen the strategic positioning of our company as we continued to manage our business for long-term growth and profitability.

 

On April 1, 2021, we began a new chapter in the history of Kaiser Aluminum, as we completed the all-cash, $670 million acquisition of Alcoa Warrick LLC (“Warrick”), a leading North American rolling mill focused on the production of can stock for the beverage and food packaging industry with a focus on high margin coated products. We believe the packaging business conducted at Warrick is highly complementary to our existing aerospace, automotive and general engineering cyclic end markets and provides excellent opportunities with favorable demand and industry dynamics driving growth. The acquisition and Warrick’s focus provide a strategic re-entry into the resurging North American aluminum packaging market, and significantly enhances, diversifies and reduces the cyclicality of our portfolio.

 

In May 2021, recognizing the strength of the capital markets, we issued $550 million aggregate principal amount of 4.50% senior notes, maturing in 2031 and redeemed our then outstanding $350 million aggregate principal amount of 6.50% senior notes, maturing in 2025, significantly reducing the average interest rate and extending the average maturity of our debt and further increasing liquidity.  In early 2022, we proactively amended our undrawn revolving credit facility, increasing the commitment from $375 million to $575 million and extending the maturity date to 2027. Each of these financings reflects a key

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element of our business model and our ongoing commitment to maintaining financial strength and flexibility through all economic and business cycles.

 

During the latter part of 2021, we successfully completed multi-year contracts and extensions with key strategic aerospace and packaging partners securing additional long-term growth, and commenced a significant capital investment at our Warrick facility designed to strengthen our differentiated market position and further enhance profitability. In addition, our teams delivered record safety performance in 2021 even as we hired and trained hundreds of new employees to support growing demand in our business, and we delivered record claim-free performance to our customers, reflecting the strength of our organization and demonstrating our ability to perform while operating in a very challenging environment.

 

For the full year 2021, we reported net sales of $2.6 billion and value added revenue of $1.1 billion. Compared to 2020, net sales increased 117% to $1.2 billion and value added revenue increased 59% to $0.7 billion reflecting our acquisition of Warrick at the end of the first quarter 2021, in addition to year-over-year improvement in automotive and general engineering applications. We reported a net loss of $19 million reflecting a $36 million after-tax impact associated with the senior note refinancing. Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $193 million were partially offset by $27 million of higher costs related to supply chain issues, labor and training, inflation and integration costs.

 

Notwithstanding near-term challenges, with a diversified portfolio and strong secular growth trends in each of our aerospace/high strength, packaging, automotive and general industrial end markets, we believe we are well-positioned for continued long-term growth. Further supporting the secular growth in demand, our sustainability driven products provide light-weighting in applications such as aircraft and transportation improving fuel efficiency, increase the use of recycled aluminum in beverage and food packaging, and enable improved performance of our products used in general industrial applications.

 

With continued confidence in the long-term outlook for our business, in January 2022, our Board approved a 7.0% increase in the quarterly dividend to $0.77 per share, up from the 7.5% increase in early 2021, marking the 11th consecutive year we have increased our quarterly dividend. Our commitment to return capital to our stockholders remains one of the pillars of our capital allocation priorities.

 

CORPORATE SUSTAINABILITY

 

Sustainability and our approach to the environment are integral parts of our business, reflected in our culture and embraced by our employees. Our long-standing corporate values reflect a shared commitment to all of our stakeholders as we continue to strive to be a preferred investment, preferred supplier, preferred employer, preferred customer and a valued corporate citizen. These values continue to drive our strategy and ensure the continuity of our culture and the long-term sustainability of our company. We recognize that we must remain diligent in our efforts in order for our strategies and investment decisions to continue to incorporate initiatives that reduce our environmental impact and, in turn, reduce the environmental impact of our customers while creating a positive economic impact for all stakeholders.

 

Inherently sustainable and infinitely recyclable, our products are part of the carbon solution and efforts to limit global warming to below a 2° C threshold by 2050 by reducing final customer product lifetime emissions through light-weighting and sustainable recycling. Our continuing effort to increase use of recycled scrap to produce secondary aluminum produces less than 10% of the greenhouse gases (“GHG”) associated with primary aluminum production and reduces our purchase of primary aluminum. In addition, our research and development investments continue to focus on enhancing the quality of our products and producing our products to even tighter specifications, which further enhance the machinability of our products and reduce waste throughout the value stream. Our continuous improvement efforts to achieve increasing manufacturing efficiency and reduce environmental impact include focused lean initiatives, capital investments, and increased use of scrap/recycled aluminum.

 

As part of our efforts to continue to improve and expand on our environmental, social and governance (“ESG”) metrics and disclosures, we have publicly disclosed our GHG emissions, air emissions, water withdrawal and workforce gender and ethnicity diversity data. In addition, we further enhanced ESG-related policies and disclosures, including our Human Rights and Diversity, Equity, Inclusion and Belonging Policies, consistent with our corporate values and Code of Business Conduct and Ethics. We also implemented long-term goals to reduce our Scope 1 and Scope 2 emissions intensity by 20% compared to 2019 levels by 2030; reduce our Scope 3 estimated emissions intensity by more than 35% compared to 2019 levels by 2030; and reduce our overall Scope 1, 2 and 3 estimated emissions intensity by more than 30% compared to 2019 levels by 2030. We will continue to monitor and measure our disclosures based upon the Sustainability Accounting Standards Board (“SASB”) guidelines, as we continue to align with the SASB and the Task Force on Climate-Related Financial Disclosures (“TCFD”) frameworks.

 

We have made significant progress on our ESG programs and we remain committed to further advancing our initiatives in 2022 and beyond.  

 

 


 

BOARD OVERSIGHT OF STRATEGY

 

Our Board remains actively focused on overseeing our business strategies, risk management, talent development, succession planning and the development and execution of our long-term strategy. Although ESG has been an integral part of the board’s overall risk management oversight, recognizing the increasingly important areas of focus for the company’s stockholders and stakeholders around ESG activities and initiatives, in 2021 we expanded the scope of duties and responsibilities of our former Talent Development Committee, now known as the ESG Committee, to provide more focused oversight of the company’s ESG activities and strategic initiatives, including climate-related risks and opportunities.  The ESG Committee also continues to provide oversight of executive succession planning, human capital development, and diversity of management and the workforce.

 

Our Board contributes to management’s strategic plan by engaging senior management in robust discussions about our overall strategy, priorities for our businesses, capital allocation, risk assessment and opportunities for continued long-term growth through our regularly scheduled meetings, including a dedicated annual strategic planning session, and throughout the year. In addition, our Board, led by the ESG Committee, will also continue to engage with management on ESG matters in more detail, including the company’s internal metrics and goals, key ESG strategies and initiatives to achieve or exceed those goals, the company’s performance, and the associated risks and opportunities as well as emerging trends and investor expectations regarding ESG topics.  Overseeing the company’s activities related to its ESG programming and initiatives facilitates the Board’s ability to evaluate risks and opportunities for the company’s long-term sustainability and value creation for its stakeholders while ensuring consistency within the company’s culture and corporate values.

 

CORPORATE GOVERNANCE AND STAKEHOLDER ENGAGEMENT

 

We believe effective governance means ongoing and thoughtful evaluation of our governance structure, including our Board and Board committees, and constructive stockholder and other stakeholder engagement. Internally, we conduct an annual corporate governance survey of management and non-management employees in order to monitor the internal perception around a broad range of topics, including our control environment, risk mitigation and management, the use of technology and cybersecurity, our corporate values, diversity, equity, inclusion and belonging and the overall “tone at the top.” In addition, as we continue to foster and maintain open communication and constructive relationships with our employees, we conduct regular state of the plant meetings, provide business updates and engage regularly with union representatives on a wide variety of matters important to our employees and the long-term success of the company. Each of our union represented facilities also maintains a joint safety committee that includes union representation.

 

To help us achieve and maintain a strong safety culture and performance, we partner with our unions on a local and international level and actively participate in various industry groups, including the Aluminum Association and Metals Service Center Institute to share and identify best practices that are relevant for our industry. We also engage with and make contributions to the BlueGreen Alliance, a group formed by labor unions and environmental organizations to solve environmental challenges in ways that create and maintain quality jobs and build a clean, thriving and equitable economy. In addition, as part of our environmental focus and initiatives, we continue to expand our engagement with all stakeholders, including environmental groups, state and local government agencies, and industry and business peers to enhance our mutual understanding of opportunities, issues, concerns and challenges.

 

In 2021, in addition to interactions regarding our financial performance, management engaged with stockholders representing approximately 50% of our outstanding shares on a variety of matters relating to our long-term business strategy and performance, executive compensation and ESG, as well as to our strategic acquisition of Warrick. Our Board values the feedback and insights gained from frequent engagement with our stockholders and our directors occasionally participate in one-on-one meetings with our stockholders. We are committed to including the perspective of our stockholders in boardroom discussions, and we believe that regular engagement with our stockholders is necessary in order to ensure thoughtful and informed consideration of those matters. We look forward to continuing to engage in productive dialogue with our stakeholders in 2022 and beyond.

 

BOARD COMPOSITION

 

Our Board is highly independent, engaged and diverse in perspectives and backgrounds as reflected by its composition, which is currently 85% independent, 23% gender diverse and 23% ethnically diverse.  This structure underscores the Board’s belief that we are best served when we can draw upon members with a variety of perspectives to exercise strong and experienced oversight. We have a policy of encouraging diversity of gender, ethnicity, age and background, as well as a range of tenures among our directors to promote both continuity and fresh perspectives on our Board.

 

 

 

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BOARD REFRESHMENT AND SUCCESSION PLANNING

 

Our Board recognizes the importance of and is committed to board refreshment and succession planning such that our directors possess a composite set of skills, experience and qualifications necessary to review, challenge and shape our company’s strategic direction.  The Nominating and Corporate Governance Committee, working with our CEO, the Executive Chairman and the Lead Independent Director, regularly assesses each individual director’s performance, relevant skills and experience to promote Board refreshment and the continued alignment of the overall skillsets of our directors with the evolving needs and strategies of our company.

 

In 2021, in addition to our internal periodic assessment of the alignment of director skills and experience with the evolving needs of the company, we commissioned an evaluation of our board processes and director engagement, relevant skills and experiences by an independent third party consultant. The results from the interviews were summarized and reviewed with the Nominating and Corporate Governance Committee and the full Board.  The Executive Chairman and the Lead Independent Director also met with each director individually to review the feedback from the independent third party consultant.  In addition, we meet with the United Steel, Paper and Foresting, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC (the “USW”) at least  annually to discuss (i) our most recent assessment of strategic board skills, experience and attributes of all directors, (ii) desired strategic board skills, experience, attributes and priorities in the context of anticipated vacancies and upcoming elections and (iii) each board member nominated by the USW and contemplated future USW nominees in light of these considerations.

 

Furthermore, we thoughtfully plan for director succession and board refreshment by developing and following a long-term succession plan. The Board has an ongoing opportunity to evaluate the depth and diversity of experience of our Board; anticipate and plan for changes, including retirements; constructively engage with the USW; expand and replace key skills and experience that support our strategies; build on our record of board diversity; and maintain a balanced mix of tenures.

 

The Nominating and Corporate Governance Committee also plans for the orderly succession of our Lead Independent Director and of the Chairs of our Board's five committees, providing for the identification of potential successors, their development and the transition of responsibilities.  In the last five years, we have added seven highly qualified (six independent) directors to our Board, including the addition of Michael C. Arnold and Kevin W. Williams in 2021. Mr. Arnold is retired President and Chief Executive Officer of Ryerson Inc., has previously held various senior management positions with The Timken Company and has extensive manufacturing and distribution expertise in metals industries and public company board experience, as well as mergers and acquisition and supply chain experience in metals industries. Mr. Williams is President and Chief Executive Officer of GAA Manufacturing and Supply Chain Management, previously served as President and Managing Director of General Motors of Canada Limited and has extensive manufacturing, automotive and supplier quality and development expertise as well as experience in labor relations. The addition of Messrs. Arnold and Williams further strengthened our Board to help the company achieve long-term success.

  

SUMMARY

 

As we have noted, we will continue to manage our business for long-term success in a manner that is economically, environmentally and socially responsible. With this as our foundation, and with Kaiser Aluminum’s legacy of more than 75 years, our commitment to sustainability will continue to drive us forward for further success in the years ahead. We remain focused on adhering to our values and maintaining our corporate culture, strong corporate governance practices, a talented and diverse employee base, and implementing our strategies and investment decisions that continue to incorporate initiatives that reduce our environmental impact while promoting long-term growth. Consistent with our values, we will continue to be a valued corporate citizen and a good steward of capital and invest in a manner that supports the sustainability of Kaiser Aluminum, our employees and their families, the environment and interests of all of our stakeholders. We continue to be grateful for your support of Kaiser Aluminum and of our Board as the future of our company remains bright.

 

 

 

 

 

 

 

 

Keith A. Harvey

 

Jack A. Hockema

 

Alfred E. Osborne, Jr.

President and Chief Executive Officer

 

Executive Chairman of the Board

 

Lead Independent Director

 

 

 

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Kaiser Aluminum Corporation

1550 West McEwen Drive, Suite 500

Franklin, Tennessee 37067

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON June 2, 2022

NOTICE IS HEREBY GIVEN that the 2022 Annual Meeting of Stockholders (the "Annual Meeting") of Kaiser Aluminum Corporation will be held at the company's corporate office, located at 1550 West McEwen Drive, Suite 500, Franklin, Tennessee, on Thursday, June 2, 2022, at 9:00 a.m., local time, for the following purposes:

 

(1)

To elect four members to our board of directors for three-year terms to expire at our 2025 annual meeting of stockholders;

 

(2)

To approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in the accompanying Proxy Statement;

 

(3)

To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022; and

 

(4)

To consider such other business as may properly come before the Annual Meeting or any adjournments thereof.

As part of our contingency planning regarding novel coronavirus (COVID-19), we are preparing for the possibility that the date, time or location of the Annual Meeting may be changed or that the Annual Meeting may be held by means of remote communication (sometimes referred to as a "virtual" meeting). If we take this step, we will announce the decision to do so in advance through a press release and public filing with the Securities and Exchange Commission, and details will be available at www.kaiseraluminum.com.

Information concerning the matters to be acted upon at the Annual Meeting is set forth in the accompanying Proxy Statement.  This notice and the accompanying proxy materials are being mailed or made available to stockholders on or about April 29, 2022.

The close of business on April 11, 2022 has been fixed as the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof.

We urge stockholders to vote by proxy by submitting voting instructions over the Internet or by telephone as indicated on the enclosed proxy card or by completing, signing and dating the enclosed proxy card and returning it by mail in the accompanying envelope, which does not require postage if mailed in the United States.

 

 

By Order of the Board of Directors

 

 

John M. Donnan

 

Executive Vice President, Chief Administrative  

 

Officer and General Counsel

 

 

 

 

April 29, 2022

 

Franklin, Tennessee

 

 

 

 

 


 

 

PROPOSALS AND BOARD RECOMMENDATIONS

Proposal 1 - Election of Directors

The board of directors recommends a vote "FOR ALL" of the persons nominated by the board of directors.

Additional information about each director and his or her qualifications may be found beginning on page 4.

 

Name

Age

Director Since

Primary Occupation

Independent

Committee Membership

Keith A. Harvey

62

July 2020

President and Chief Executive Officer, Kaiser Aluminum Corporation

 

Executive

Alfred E. Osborne, Jr.

77

July 2006

Senior Associate Dean – External Affairs, University of California, Los Angeles (“UCLA”) Anderson School of Management

Executive

Nominating and Corporate Governance

Lead Independent Director

Teresa M. Sebastian

64

June 2019

President and Chief Executive Officer, The Dominion Asset Group

Audit

ESG

Nominating and Corporate Governance

Donald J. Stebbins

64

June 2019

Former President and Chief Executive Officer, Superior Industries International, Inc.

Compensation

Executive

Nominating and Corporate Governance

 

Proposal 2 - Advisory Vote to Approve Named Executive Officer Compensation

The board of directors recommends a vote "FOR" the approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement.

Additional information about executive compensation may be found beginning on page 13.

Proposal 3 - Ratification of Appointment of Independent Registered Public Accounting Firm

The board of directors recommends a vote "FOR" the ratification of the audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022.

Additional information about the independent registered public accounting firm may be found beginning on page 15.

 

 

 

 

 


 

 

PROXY STATEMENT SUMMARY

The past year was transformational for our company, although one with a unique set of operational challenges. This summary highlights information contained elsewhere in this Proxy Statement but does not contain all of the information that you should consider. We encourage you to read the entire Proxy Statement for more information about these topics prior to voting.

 

COMPANY OVERVIEW

Leading North American producer of highly engineered aluminum mill products that are part of the carbon solution

Focus on demanding applications for aerospace, packaging, automotive and general industrial end use markets

Integral “pass-through” business model to mitigate the impact of aluminum price volatility

Long-standing relationships with blue chip customers – original equipment manufacturers, tier 1 suppliers, metal service centers and beverage and food packaging manufacturers

Competitive cost position; differentiation through superior product attributes and “Best in Class” customer satisfaction

Commitment to sustainable practices remain a critical and integral part of corporate strategy

 

2021 PERFORMANCE

HIGHLIGHTS

Completed $670 million strategic acquisition of Kaiser Aluminum Warrick, LLC (formerly known as. Alcoa Warrick LLC); re-entered North American packaging market; diversified portfolio into growing non-cyclic end market

Commenced ~$150 million investment in a new roll coat line at the Warrick facility to shift additional 25% of production to higher-margin coated products

Completed multi-year contracts and extensions with key strategic aerospace and packaging customers, securing additional long-term growth

Completed opportunistic issuance of $550 million aggregate principal amount of 4.50% senior notes and redeemed $350 million aggregate principal amount of our 6.50% senior notes, increasing overall liquidity by ~$160 million

Continued to return cash to shareholders by increasing quarterly dividend for the 10th consecutive year in early 2021 by 7.5% to $0.72 per share (and again for a 11th consecutive year in early 2022 by an incremental 7.0% to $0.77 per share)

Strong safety performance with record LCIR performance

Record quality performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shipments

 

Net Sales

 

Net Loss (1)

 

Adjusted Net Income (2)

 

Value Added Revenue (2)

 

Adjusted EBITDA (2)

 

Net Loss Per Diluted Share (1)

 

Adjusted Earnings Per Diluted Share (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.1

 

$2.6

 

$19

 

$39

 

$1.1

 

$193

 

$1.17

 

$2.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Billion lbs

 

Billion

 

Million

 

Million

 

Billion

 

Million

 

 

 

 

_____________

(1)

Includes a $36 million after-tax impact associated with our senior note refinancing.

(2)

See Appendix A to this Proxy Statement for reconciliations of measures from generally accepted accounting principles (“GAAP”) to non GAAP. While our use of terms such as earnings before interest, tax, depreciation and amortization (“EBITDA”) or “adjusted” are not intended to be (and should not be relied on) in lieu of the comparable caption under GAAP to which it is reconciled, those terms are intended to provide greater clarity of the impact of certain material items on the GAAP measure and are not intended to imply those terms should be excluded

 

CAPITAL ALLOCATION PRIORITIES

Organic Investments

 

Invested ˃$900 million in the business since 2007 (~2x depreciation)

 

Long-term sustaining capital of ~60% of depreciation (varies by year)

Inorganic Growth

 

Opportunistic investment for strategic value creation

Regular Dividends

 

Dividends increased each year since 2011

 

>$400 million returned to stockholders since 2007

Share Repurchases

 

Deployed excess cash beyond recession contingency needs through share repurchases

~$474 million returned to stockholders through share repurchases since 2007

 

BOARD OF DIRECTORS

Diverse and highly independent Board

Ongoing commitment to board refreshment - seven highly qualified directors added since 2018 (six independent)

Robust and multi-tiered Board and Committee annual assessment process, including the use of an independent third party to facilitate 2021 Board and Committee evaluations

Continuing focus on identifying critical skills needed to support company strategy and board succession planning

Strong support for continued proactive and effective stockholder engagement (approximately 50% annually)

USW has general right to nominate 40% of our Board members

 

ESG HIGHLIGHTS

Issued updated Sustainability Report, which published Scope 1 and 2 greenhouse gas (“GHG”) emissions data, among other disclosure enhancements

Released workforce gender and ethnicity diversity metrics

Began process to align disclosure with SASB and TCFD

Continued to increase our use of recycled aluminum, which saves more than 90% of the energy generally required by primary aluminum production

Established 2030 GHG emission intensity reduction targets across Scope 1, 2 and 3 estimated emissions

Enhanced Human Rights Policy and Code of Business Conduct and Ethics and formalized Environmental and Diversity, Equity, Inclusion and Belonging Policies

Achieved record safety (LCIR) and quality performance in 2021

Implemented Women’s Leadership Program to commence in June 2022

 

Leveraged and incorporated well-established diversity, equity, inclusion and belonging (“DEIB”) best practices, including targeted training for hiring managers, employee resource groups and training

 

EXECUTIVE COMPENSATION

Approximately 80% of CEO target compensation is “at-risk”, with >50% subject to stringent performance metrics

Approximately 50% to 70% of the target compensation of the other named executive officers is “at-risk”, with 35% to 50% subject to stringent performance metrics

Compensation programs supported by best practices and aligned with our strategic objectives and stockholder interests

Continued stockholder support for executive compensation (approximately 95% approval in 2021)

Incentive plans continue to require increasing levels of performance

 

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EXECUTIVE COMPENSATION HIGHLIGHTS

Although payouts under our 2021 short-term and 2019 – 2021 long-term incentive plans were significantly impacted by the continued severe business conditions resulting from the COVID-19 pandemic and supply chain disruptions, based on management’s recommendation, the compensation committee did not make any adjustments to our existing incentive programs. Our incentive programs are designed to “pay for performance,” and it is expected that payouts may be impacted during difficult business/economic conditions. Accordingly, we determined that it was appropriate to maintain our existing incentive programs without adjustments that would otherwise mitigate the continued negative impact of the COVID-19 pandemic and supply chain disruptions on the payouts.   

As described in further detail in the “Executive Compensation - Compensation Discussion and Analysis” section of this Proxy Statement, or CD&A, our 2021 compensation structure was developed and designed to:

 

align the interest of our named executive officers and stockholders by tying a significant portion of compensation to enhancing stockholder return;

 

 

attract, motivate and retain highly experienced executives with significant industry experience vital to our short-term and long-term success, profitability and growth;

 

 

deliver a mix of fixed and at-risk compensation with the portion of compensation at risk increasing with seniority;

 

tie our executive compensation to our ability to pay and safety, quality, delivery, cost and individual performance directly linked to our strategic initiatives; and

 

require increasing levels of financial performance as we continue to invest in our business.

In 2021, the compensation of our named executive officers consisted primarily of the following components:

 

a base salary (1) compensating each named executive officer based on the level and scope of responsibility, individual expertise and prior experience and (2) providing a fixed amount of cash compensation upon which our named executive officers can rely;

 

 

a short-term annual cash incentive (1) payable only if our company achieved a certain adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, performance level, which performance level has continued to increase annually, as we continue to invest in our business, resulting in increasingly demanding performance required to realize the same or similar payouts year-over-year, (2) adjusted based on our (a) safety performance, (b) quality performance, (c) delivery performance, (d) cost performance, and (e) in exceptional instances approved by our compensation committee, positive and negative adjustments to individual awards based on individual, facility, and/or functional area performance, as well as performance against other strategic initiatives, and (3) capped at three times target; and

 

 

an equity-based, long-term incentive designed to align compensation with the interests of our stockholders and to enhance retention of our named executive officers consisting of (1) restricted stock units with three-year cliff vesting and (2) performance shares, which vest, if at all, based on our performance against demanding underlying metrics over the applicable three-year performance period.

 

Because grants under our long-term incentive program are outstanding for three years, at any time we have three over-lapping long-term incentive programs outstanding and the underlying metrics applicable to the performance shares can vary as our compensation committee assesses the effectiveness of our outstanding programs, metrics critical to our long-term success, feedback from our stockholders and compensation trends.  The following table describes the performance share metrics (described more fully below) we used for our 2019 – 2021, 2020 – 2022 and 2021 – 2023 long-term incentive programs:

 

 Performance Share Metrics

 

2019-2021

 

 

2020-2022

 

 

2021-2023

 

 Relative TSR

 

60%

 

 

60%

 

 

60%

 

 Total Controllable Cost

 

40%

 

 

20%

 

 

20%

 

Adjusted EBITDA Margin

 

 

 

 

 

20%

 

 

20%

 

 

The compensation committee, working with the compensation committee’s independent compensation consultant, Meridian Compensation Partners, LLC (referred to herein as Meridian), reviews, evaluates and updates our compensation peer group, which includes companies in both similar and different industries, at least annually. For 2021, the compensation committee approved the 30-company peer group more fully described in our CD&A section with (1) market capitalizations ranging from approximately $278 million to approximately $13.5 billion and a median market capitalization of approximately $2.0 billion, each as of the end of October 2020, and (2) 2019 revenues ranging from $493 million to approximately $3.5 billion and median revenue of approximately $1.7 billion.  Our market capitalization and revenue, both as of December 31, 2021, were $1.5 billion and $2.6 billion, respectively.  Due to the differences in size among the companies in our peer group, Meridian uses a regression analysis to adjust survey data results based on our revenue as compared to the revenue of other companies in our peer group.

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Pay for Performance

The table below summarizes the performance metrics under our 2021 short-term incentive and 2021 – 2023 long-term incentive plans:

 

 Incentive Program

Performance Metric

Weighting

 

Modifier*

Impact on Multiplier

 Short-Term Incentive Plan

Adjusted EBITDA

100%

 

Safety (TCIR & LCIR)

+/- 10%

 

 

 

 

 

Quality

+/- 10%

 

 

 

 

 

Delivery

+/- 10%

 

 

 

 

 

Cost

+/- 10%

 

 

 

 

 

Individual

+/- 100%

 Long-Term Incentive Plan

Total Controllable Cost

20%

 

 

 

 

TSR

60%

 

 

 

 

Adjusted EBITDA Margin

20%

 

 

 

_______________

* The safety modifier is measured using our total case incident rate ("TCIR") and lost-time case incident rate ("LCIR"), the quality modifier is measured using our no-fault claim rate, the delivery modifier is measured by our on-time delivery rate, and the cost modifier is measured by our manufacturing efficiency.  As noted, the individual modifier is discretionary and, with respect to our executive officers, only used in exceptional instances approved by the compensation committee based on actual performance, including individual, facility and/or functional area performance, as well as performance against other strategic initiatives.

 

The following summarizes our performance against the metrics under our 2021 short-term incentive and 2019- 2021 long-term incentive plans:

 

2021 Short-Term Incentive

 

______________

* The targets are based on the Adjusted EBITDA required to achieve the designated return on adjusted net assets (excluding cash) using our adjusted pre-tax operating income.  As noted, our increasing net assets and depreciation raise the year-over-year Adjusted EBITDA targets.  While we achieved record safety (LCIR) and quality performance in 2021, our on-time delivery and cost performance lagged and did not meet our demanding expectations and requirements, resulting in modifiers of +6%, +5%, -10% and -10%, respectively, and an overall reduction of our Adjusted EBITDA multiplier of -9% to a final multiplier of 0.65x.   

FEATURES

Pay for performance

Adjusted EBITDA target determined based on return on net assets (excluding cash) using our adjusted pre-tax operating income

Modifiers for safety, quality, delivery and cost performance establishing a strong linkage to strategic non-financial results

In exceptional instances approved by the compensation committee with respect to our executive officers, individual adjustment up to plus or minus 100% based on actual performance, including individual, facility and/or functional area performance, as well as performance against other strategic initiatives

No payout unless we:

 

(1)

achieve the threshold Adjusted EBITDA goal of a 6% return on our adjusted net assets; and

 

(2)

generate positive adjusted net income

Maximum payout capped at three times the target

Rigorous financial performance goals - target increases with investments and increasingly higher net assets and depreciation

 

 

 

 

 

 

 

iii


 

 

Annual Performance Award Payouts under Short-Term Incentive Plans for our Named Executive Officers

 

The Adjusted EBITDA targets under our short-term incentive plan reflect the Adjusted EBITDA required to achieve 6%, 12% and 30% returns on our adjusted net assets (excluding cash) based on adjusted pre-tax operating income at the threshold, target and maximum payout levels. As we have continued to invest in our business our net assets and depreciation have continued to grow and, as a result, the Adjusted EBITDA targets have continued to increase each year.  In 2021, our company size increased due to our acquisition of Warrick, resulting in a 17.5% increase of our Adjusted EBITDA target for 2021 compared to 2020.  

 

The table on the right illustrates our annual Adjusted EBITDA performance multiplier for the last three years under our short-term incentive plans before the application of modifiers.  See Appendix A to this Proxy Statement for reconciliations of GAAP to non-GAAP measures.

 

 

Our Adjusted EBITDA Multiplier under our 2021 Short-Term Incentive Plan was impacted by the continued challenging business conditions resulting from the COVID-19 pandemic and supply chain disruptions.  After the application of modifiers, the final multipliers under our short-term incentive plan for 2019, 2020, and 2021 were 0.96x, 0.51x and 0.65x, respectively, each reflecting the impact of our performance against demanding modifiers

2019- 2021 Long-Term Incentive

 

Relative TSR*

Total Payout Percentage:

31%

Controllable Cost**

_____________

* Relative TSR was against companies comprising the S&P 600 SmallCap Materials Sector Index.

** There was no payout under the Controllable Cost performance metric as we did not achieve the threshold performance

 

iv


 

 

 

FEATURES

Three-year performance period (2019-2021)

Includes retention features by utilizing time-vested restricted stock units

Pay for performance by utilizing performance shares subject to demanding metrics

Performance metrics:

 

(1)

40% based on controllable cost

 

(2)

60% based on relative TSR

Payout for relative TSR performance is capped at target if TSR is negative

Payout at target for controllable cost performance only if we offset inflation

No windfall upon a change in control for performance shares - only shares earned based on performance through the date of the change in control will vest

 

Annual Performance Award Payouts under Long-Term Incentive Plans         

The table below reflects our annual performance award payouts for the last three years under our long-term incentive plans.

 

 

 

2017-2019 Plan

2018-2020 Plan

2019-2021 Plan

 Metric

 

Weighting

Multiplier

Weighted

Multiplier

Weighting

Multiplier

Weighted Multiplier

Weighting

Multiplier

Weighted Multiplier

 TSR

 

 

40

%

1.92x

0.77x

 

30

%

1.24x

0.37x

 

60

%

0.52x

0.31x

 Cost

 

 

40

%

0.85x

0.34x

 

40

%

0.04x

0.02x

 

40

%

0.00x

0.00x

 EVA

 

 

20

%

0.00x

0.00x

 

30

%

0.00x

0.00x

 

0

%

0.00x

0.00x

 Plan Multiplier

 

 

 

 

 

1.11x

 

 

 

 

0.39x

 

 

 

 

0.31x

 

Performance Share Award Payouts Based on Relative TSR

The chart below illustrates the performance share award payouts based on our relative TSR performance for the 2017-2019, 2018-2020 and 2019- 2021 long-term incentive programs:

 

The performance shares earned were determined by our TSR over the applicable three year performance period compared to the TSR of the other companies comprising the S&P 600 SmallCap Materials Sector Index.  In considering constituents for the S&P SmallCap 600, S&P Dow Jones Indices looks for companies (1) with market capitalizations of between $850 million and $3.6 billion, (2) meeting certain float requirements, (3) with a U.S. domicile, (4) required to file Securities and Exchange Commission ("SEC") annual reports, and (5) listed on a major U.S. exchange, among other factors.

The beginning and ending stock prices used to determine our TSR are calculated using the 20-trading day average preceding the beginning and end of the performance period.

 

The performance share multiplier is determined by using straight line interpolation based on our TSR percentile ranking within our comparison group based on the table to the right:

Percentile Ranking

 

Multiplier

< 25th

 

0.0x

25th

 

0.5x

50th

 

1.0x

75th

 

1.5x

≥ 90th

 

2.0x

 

v


 

 

Performance Share Award Payout Based on Controllable Cost

For our 2019- 2021 long-term incentive compensation program, 40% of the performance shares issued to our named executive officers were subject to a controllable cost performance metric that required our company to reduce controllable costs to offset underlying inflation over the three-year performance period to achieve the target payout of performance shares subject to the controllable cost metric.  A 9% reduction of controllable costs after offsetting underlying inflation over the same three-year period would result in payout of performance shares equal to two times target and an increase of controllable costs of 9% or more over the three-year performance period would result in no payout of performance shares subject to the controllable cost metric.

Controllable costs are generally defined as our variable conversion costs which adjust with our product volume and mix plus corporate and plant overhead.  Controllable costs also (1) include benefits because we believe that management is required to take actions to influence benefit costs over the performance period and (2) exclude, among other things, major maintenance, research and development and enterprise resource planning costs to ensure that we continue to invest in the future of our company.

There was no payout under the controllable cost metric as we did not achieve the threshold performance by offsetting underlying inflation during the performance period.

2021 Total CEO Compensation

As previously noted, the mix of our CEO’s total target compensation is heavily weighted toward performance-based compensation with 80% of the total target compensation being at-risk (short- and long-term compensation), more than 60% of the total target compensation being long-term, and 70% of the long-term target being allocated to performance shares.

 

 

As a result of our increased company size due to our acquisition of Warrick, the compensation committee approved a new peer group for us for 2022.  The market pay analysis performed by Meridian at the end of 2021, using the new peer group for 2022, reflected that the total target compensation of our CEO for 2021 was 19% below the median of our compensation peer group and that our CEO’s (1) base salary was approximately 7% below the median base salary, (2) short-term incentive target was approximately 21% below the median and (3) long-term incentive target was approximately 21% below the median.  The payout to our CEO under the incentive program was further impacted by the challenging business conditions resulted from the COVID-19 pandemic and supply chain disruptions.  As previously discussed, although the payouts under our incentive programs were significantly impacted by the severe business conditions resulting from the COVID-19 pandemic and supply chain disruptions, based on management’s recommendation, the compensation committee did not make any adjustments to our existing incentive programs.  

 

 

 

vi


 

 

Kaiser Aluminum Corporation

1550 West McEwen Drive, Suite 500

Franklin, Tennessee 37067

 

PROXY STATEMENT

FOR

ANNUAL MEETING OF STOCKHOLDERS

To Be Held on June 2, 2022

 

TABLE OF CONTENTS

 

 

 

Page

GENERAL QUESTIONS AND ANSWERS

1

PROPOSALS REQUIRING YOUR VOTE

4

 

Proposal 1 - Election of Directors

4

 

Proposal 2 - Advisory Vote to Approve Named Executive Officer Compensation

13

 

Proposal 3 - Ratification of the Selection of our Independent Registered Public Accounting Firm

15

CORPORATE GOVERNANCE

16

 

Board Leadership Structure

17

 

Risk Oversight

17

 

Director Independence

18

 

Director Designation Agreement

18

 

Board Committees

19

 

Board and Committee Meetings and Consents in 2021

24

 

Annual Meetings of Stockholders

24

 

Annual Performance Reviews

24

 

Stockholder Engagement

25

 

Sustainable Value Creation

25

 

Stock Ownership Guidelines and Securities Trading Policy

27

 

Risks Arising from Compensation Policies and Practices

27

 

Stockholder Communications with the Board of Directors

28

EXECUTIVE OFFICERS

29

EXECUTIVE COMPENSATION

31

 

Compensation Committee Report

31

 

Compensation Discussion and Analysis

31

 

2021 Summary Compensation Table

48

 

All Other Compensation

50

 

Grants of Plan-Based Awards in 2021

51

 

Employment-Related Agreements and Certain Employee Benefit Plans

52

 

Outstanding Equity Awards on December 31, 2021

55

 

Option Exercises and Stock Vested in 2021

57

 

Pension Benefits as of December 31, 2021

57

 

Nonqualified Deferred Compensation for 2021

58

 

Potential Payments and Benefits Upon Termination of Employment

58

 

Pay Ratio

63

DIRECTOR COMPENSATION

64

 

Director Compensation for 2021

64

 

Director Compensation Arrangements

65

EQUITY COMPENSATION PLAN INFORMATION

66

PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP

67

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

68

AUDIT COMMITTEE REPORT

69

INDEPENDENT PUBLIC ACCOUNTANTS

71

DELINQUENT SECTION 16(a) REPORTS

71

OTHER MATTERS

72

STOCKHOLDER PROPOSALS

72

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 2, 2022: The Proxy Statement and our Annual Report to Stockholders are available at www.envisionreports.com/kalu.

 

 

vii


 

 

GENERAL QUESTIONS AND ANSWERS

Q:

When is the Proxy Statement being sent to stockholders and what is its purpose?

A:

This Proxy Statement is first being sent to our stockholders on or about May 6, 2022 at the direction of our board of directors in order to solicit proxies for our use at the Annual Meeting.

Q:

When is the Annual Meeting and where will it be held?

A:

The Annual Meeting will be held on Thursday, June 2, 2022, at 9:00 a.m., local time, at our corporate office, located at 1550 West McEwen Drive, Suite 500, Franklin, Tennessee 37067.

As part of our contingency planning regarding novel coronavirus (COVID-19), we are preparing for the possibility that the date, time or location of the Annual Meeting may be changed or that the Annual Meeting may be held by means of remote communication (sometimes referred to as a "virtual" meeting). If we take this step, we will announce the decision to do so in advance through a press release and public filing with the Securities and Exchange Commission, and details will be available at www.kaiseraluminum.com.

Q:

Who may attend the Annual Meeting?

A:

All of our stockholders of record may attend the Annual Meeting.

Q:

Who is entitled to vote?

A:

Stockholders as of the close of business on April 11, 2022 are entitled to vote at the Annual Meeting. Each share of our common stock is entitled to one vote.

Q:

On what am I voting?

A:

You will be voting on:

 

the election of four members to our board of directors to serve until our 2025 annual meeting of stockholders;

 

the approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement;

 

the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022; and

 

such other business as may properly come before the Annual Meeting or any adjournments.

Q:

How does the board of directors recommend that I vote?

A:

The board of directors recommends that you vote your shares:

 

"FOR ALL" the director nominees identified in "Proposals Requiring Your Vote - Proposal 1 - Election of Directors" below;

 

"FOR" the approval , on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement; and

 

"FOR" the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022.

Q:

How can I vote?

A:

You can vote at the Annual Meeting or you can vote prior to the Annual Meeting by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy without delay.

Q:

How do I vote by proxy?

A:

If you choose to vote your shares by proxy, you have the following options:

 


 

 

Over the Internet: You can vote over the Internet at the website shown on your proxy card. Internet voting will be available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Wednesday, June 1, 2022.

 

By telephone: You can vote by telephone by calling the toll-free number shown on your proxy card. Telephone voting will be available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Wednesday, June 1, 2022.

 

By mail: You can vote by mail by completing, signing and dating your proxy card and returning it in the enclosed prepaid envelope.

Q:

I want to attend the Annual Meeting and vote. How do I obtain directions to the Annual Meeting?

A:

You may obtain directions to the Annual Meeting by calling us at (629) 252-7040.

Q:

What constitutes a quorum?

A:

As of April 11, 2022, the record date, 15,904,321 shares of our common stock were issued and outstanding. A majority of these shares present or represented by proxy will constitute a quorum for the transaction of business at the Annual Meeting. If you properly vote by proxy by submitting your voting instructions over the Internet, by telephone or by mail, then your shares will be counted as part of the quorum. Abstentions or votes that are withheld on any matter will be counted towards a quorum but will be excluded from the vote relating to the particular matter under consideration. Broker non-votes are counted towards a quorum but are excluded from the vote with respect to the matters for which they are applicable. A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner. Among our proposals, brokers will have discretionary voting power only with respect to the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022.

Q:

What are the voting requirements for the proposals?

A:

There are different voting requirements for the proposals.

 

Each director will be elected by an affirmative vote of the majority of the votes cast with respect to the director in an uncontested election.  A “majority” of the votes cast with respect to a director means the number of votes for the director exceeds the number of votes withheld from the director.  If an incumbent director nominee receives a greater number of votes withheld than in favor of his or her election in an uncontested election, the nominee must promptly tender his or her resignation, and the board of directors will decide, through a process managed by the nominating and corporate governance committee, whether to accept the resignation, taking into account its fiduciary duties to our company and our stockholders. The board of director's explanation of its decision will be promptly disclosed in a Form 8-K furnished to the Securities and Exchange Commission. An election of directors is considered to be contested if there are more nominees for election than positions on the board of directors to be filled by election at the meeting of stockholders. In the event of a contested election, each director will be elected by a plurality vote of the votes cast at such meeting. The election of directors at the Annual Meeting is uncontested.

 

The affirmative vote of the holders of a majority of shares of our common stock present or represented by proxy at the Annual Meeting and entitled to vote on the subject matter and actually voted on the proposal is necessary to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement and to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022. If you abstain from voting on the proposal to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement, the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022, your shares will not be counted in the vote for such proposal and will have no effect on the outcome of the vote.

Q:

If my shares are held in "street name" by my broker, will my broker vote my shares for me?

A:

As discussed above, among our proposals, brokers will have discretionary voting power only with respect to the proposal to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022. To be sure your shares are voted, you should instruct your broker to vote your shares using the instructions provided by your broker.

Q:

What will happen if the compensation of the company's named executive officers is not approved by the stockholders on an advisory basis?

1


 

A:

Because this is an advisory vote, our board of directors and compensation committee will not be bound by the approval of, or the failure to approve, the compensation of our named executive officers as disclosed in this Proxy Statement.  The board of directors and the compensation committee, however, value the opinions that our stockholders express in their votes and expect to consider the outcome of the vote when determining future executive compensation programs.

Q:

What will happen if the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022 is not ratified by the stockholders?

A:

Pursuant to the audit committee charter, the audit committee of our board of directors has sole authority to appoint our independent registered public accounting firm, and the audit committee will not be bound by the ratification of, or failure to ratify, the selection of Deloitte & Touche LLP. The audit committee will, however, consider any failure to ratify the selection of Deloitte & Touche LLP in connection with the appointment of our independent registered public accounting firm the following year.

Q:

Can I change my vote after I give my proxy?

A:

Yes. If you vote by proxy, you can revoke that proxy at any time before voting takes place at the Annual Meeting. You may revoke your proxy by:

 

voting again over the Internet or by telephone no later than 11:59 p.m., Eastern Time, on Wednesday, June 1, 2022;

 

submitting a properly signed proxy card with a later date;

 

delivering, no later than 5:00 p.m., Eastern Time, on Wednesday, June 1, 2022, written notice of revocation to our Secretary, c/o Computershare, P.O. Box 43126, Providence, Rhode Island 02940-5138; or

 

attending the Annual Meeting and voting.

Your attendance alone will not revoke your proxy. To change your vote, you must also vote at the Annual Meeting. If you instruct a broker to vote your shares, you must follow your broker's directions for changing those instructions.

Q:

What does it mean if I receive more than one proxy card?

A:

If you receive more than one proxy card, it is because your shares are held in more than one account. You must vote each proxy card to ensure that all of your shares are voted at the Annual Meeting.

Q:

Who will count the votes?

A:

Representatives of Computershare, our transfer agent, will tabulate the votes and act as inspectors of election.

Q:

How much will this proxy solicitation cost?

A:

We will bear the cost of the solicitation of proxies.  We have hired MacKenzie Partners, Inc. to assist us in the distribution of proxy materials and solicitation of votes at a cost not to exceed $10,000, plus out-of-pocket expenses. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to the owners of our common stock. Our officers and regular employees may also solicit proxies, but they will not be specifically compensated for these services. In addition to the use of the mail, proxies may be solicited personally or by telephone by our employees or by MacKenzie Partners.

2


 

PROPOSALS REQUIRING YOUR VOTE

Proposal 1 - Election of Directors

General

We have a diverse and independent board of directors.  Our board of directors currently has 13 members, consisting of our CEO, our former CEO and 11 independent directors. Our current directors are:

 

Michael C. Arnold

Alfred E. Osborne, Jr., Ph.D.

 

 

David A. Foster

Teresa M. Sebastian

 

 

Leo W. Gerard

Donald J. Stebbins

 

 

Keith A. Harvey

 

Thomas M. Van Leeuwen

 

 

Jack A. Hockema

Brett E. Wilcox

 

 

Emily M. Liggett

Kevin W. Williams

 

 

Lauralee E. Martin

 

 

Mr. Hockema, our former CEO, serves as Executive Chairman of the Board, and Dr. Osborne serves as our Lead Independent Director. If each of our four director nominees is elected, the size of our board of directors will be reduced from 13 to 12 members.  

Our board of directors represents a breadth of experience and diversity in perspective and background, as reflected in the summary of their collective qualifications below.  Additionally, our directors have a broad range of tenures, from less than one year to almost 20 years of service, with an average tenure of approximately 8.5 years.  We believe this balances institutional knowledge and experience with new perspectives and ideas.

The table below sets forth the knowledge, skills or board experience, demographics and board tenure of our directors as of April 29, 2022:

BOARD DIVERSITY MATRIX (AS OF APRIL 29, 2022)

Total Number of Directors: 13

 

Arnold

Foster

Gerard

Harvey

Hockema

Liggett

Martin

Osborne

Sebastian

Stebbins

Van Leeuwen

Wilcox

Williams

DEMONGRAPHIC BACKGROUND

African American or Black

 

 

 

 

 

 

 

 

 

 

Asian

 

 

 

 

 

 

 

 

 

 

 

 

 

White

 

 

 

Hispanic or Latinx

 

 

 

 

 

 

 

 

 

 

 

 

 

Alaskan Native or Native American

 

 

 

 

 

 

 

 

 

 

 

 

 

Two or More Race or Ethnicity

 

 

 

 

 

 

 

 

 

 

 

 

 

LGBTQ+

 

 

 

 

 

 

 

 

 

 

 

 

 

Did Not Disclose Demographic Background

 

 

 

 

 

 

 

 

 

 

 

 

 

GENDER IDENTITY

Male

 

 

 

Female

 

 

 

 

 

 

 

 

 

 

Non-Binary

 

 

 

 

 

 

 

 

 

 

 

 

 

Did Not Disclose Gender

 

 

 

 

 

 

 

 

 

 

 

 

 

3


 

 

Arnold

Foster

Gerard

Harvey

Hockema

Liggett

Martin

Osborne

Sebastian

Stebbins

Van Leeuwen

Wilcox

Williams

KNOWLEDGE, SKILLS OR BOARD EXPERIENCE

Other Public Company Board Experience

 

 

 

 

Public Company CEO Experience or Equivalent

 

 

 

 

 

 

Industrial Specific / Operations Experience

 

 

 

Mergers and Acquisitions

 

International

 

 

 

Governance

 

 

Legal / Regulatory

 

 

 

 

 

 

 

 

 

 

 

Financial / Accounting

 

 

Public Policy / Academia

 

 

 

 

 

 

 

 

 

BOARD TENURE

Years

0

13

2

1

20

3

11

15

2

2

15

15

0

 

Our amended and restated certificate of incorporation and bylaws provide for a classified board of directors consisting of three classes. The term of our Class I directors expires at the Annual Meeting; the term of our Class II directors will expire at the 2023 annual meeting of stockholders; and the term of our Class III directors will expire at the 2024 annual meeting of stockholders.

 

Mr. Van Leeuwen is not standing re-election when his term ends at the Annual Meeting. To rebalance our Board classes, Mr. Harvey, who is currently a Class II director with a term expiring at the 2023 annual meeting of stockholders, agreed to being nominated for election as a Class I director and has resigned as a Class II director contingent on his election as a Class I director at the Annual Meeting.

 

Board Refreshment and Director Succession Planning

We are committed to board refreshment and have added seven highly qualified directors, six of whom are independent, to our board since 2018.  The table below illustrates the tenure of our directors:

 

Board Tenure

Number of Directors

Percentage

0-5 Years

7

54%

6-10 Years

0

0%

11+ Years

6

46%

 

We thoughtfully plan for director succession and board refreshment.  By developing and following a long-term succession plan, the board has an ongoing opportunity to:

 

evaluate the depth and diversity of experience of our board;

 

anticipate and plan for changes, including retirements;

 

constructively engage with the USW;

 

expand and replace key skills and experience that support our strategies;

 

build on our record of board diversity; and

 

maintain a balanced mix of tenures.

The nominating and corporate governance committee also plans for the orderly succession of the executive chair, independent lead director and each of the chairs of our board's five committees, providing for the identification of potential successors, their development and the transition of responsibilities.

Board Composition and Diversity

Bringing together informed directors with different perspectives and backgrounds, in a well-managed and constructive environment, fosters thoughtful and innovative decision-making. We have a policy of encouraging diversity of gender, ethnicity, age and background, as well as a range of tenures on the board to ensure both continuity and fresh perspectives among our directors. Our directors exhibit a balanced mix of tenures, ages, independence and diversity.

 

4


 

 

Gender Diversity

 

Ethnic Diversity

 

Independence

23%

 

23%

 

85%

 

Nominees for Class I Directors

The nominating and corporate governance committee of our board of directors has recommended, and our board of directors has approved, the nomination of the four nominees listed below. The nominees have indicated their willingness to serve as members of the board of directors if elected; however, in case any nominee becomes unavailable for election to the board of directors for any reason not presently known or contemplated, the proxy holders have discretionary authority to vote proxies for a substitute nominee. Proxies cannot be voted for more than four nominees.

The board of directors recommends a vote "FOR ALL" of the persons nominated by the board of directors.

Set forth below is information about the Class I director nominees, including their ages, present principal occupations, other business experience, directorships in other public companies in the past five years, membership on committees of our board of directors, and reasons why each individual nominee's specific experience, qualifications, attributes and skills led the nominating and corporate governance committee to recommend, and our board of directors to conclude, that the nominee should serve as a director of the company. As noted, to rebalance our classes, Mr. Harvey, who is currently a Class II director with a term expiring at the 2023 annual meeting of stockholders, agreed to being nominated for election as a Class I director and has resigned as a Class II director contingent on his election as a Class I director at the Annual Meeting.

Keith A. Harvey

 

President and Chief Executive Officer

 

Director since: 2020

 

Committee: Executive

 

Age: 62

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

For information as to Mr. Harvey, see “Executive Officers” below.

 

QUALIFICATIONS:

 

Mr. Harvey’s substantial experience with our company and in the aluminum industry allows him to provide his perspective to our board of directors regarding our business, our industry and the strategic direction for our company based on his years of experience with our company in increasing leadership roles and in the aluminum industry.

 

Alfred E. Osborne, Jr.

 

Lead Independent Director

 

Director since: July 2006

 

Committees: Executive and Nominating and Corporate Governance (Chair)

 

Age: 77

 

Other Public Board Memberships:

–     Waverley Capital Acquisition Corp. 1 (August 2021 - Present)

–     First Pacific Advisor family of seven funds (Capital, Crescent, International Value, New Income, Paramount, Perennial and Source Capital) (1999 - Present)

–     Wedbush Capital (1998 - Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Dr. Osborne is the Senior Associate Dean for external affairs at the UCLA Anderson School of Management, served as Interim Dean from July 2018 to July 2019 and is a Professor of Global Economics and Management since July 2008.  Dr. Osborne was previously the Senior Associate Dean at the UCLA Anderson School of Management from July 2003 to June 2018 and an Associate Professor of Global Economics and Management and served as the Director of the Harold and Pauline Price Center for Entrepreneurial Studies at the UCLA Anderson School of Management.

5


 

 

QUALIFICATIONS:

 

Dr. Osborne has served on many boards and board committees of public companies and investment funds over a more than 30-year period. During that time, Dr. Osborne worked extensively on the development of board and director best practices, as well as director training and governance programs sponsored by the UCLA Anderson School of Management. Dr. Osborne was one of the original directors selected by a search committee to serve as a director of our company upon our emergence from chapter 11 bankruptcy in 2006 and was selected because of his public company board experience and governance background. During his service on our board of directors, Dr. Osborne has gained an understanding of our company and the environment in which we operate. Dr. Osborne's experience as a director of public companies, as a member of various board committees of public companies, and as an educator in the fields of business management and corporate governance allows him to draw on his experience and offer guidance to our board of directors and management on issues that affect our company, including governance and board best practices.

 

Teresa M. Sebastian

 

Director Since: June 2019

 

Age: 64

 

Committees: Audit, ESG and Nominating and Corporate Governance

 

Other Public Board Membership:

–     Terminix Global Holdings (July 2021 – Present)

–     The AES Corporation (January 2021 – Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Ms. Sebastian has been the President and Chief Executive Officer of The Dominion Asset Group, an angel investment and venture capital firm, since June 2015, an adjunct professor for accounting and enterprise risk management at Vanderbilt Law School since August 2017, and an adjunct professor for governance and compliance at the University of Michigan Law School since August 2016.  Ms. Sebastian was previously the Senior Vice President, General Counsel, Corporate Secretary and Internal Audit executive leader, of Darden Restaurants, Inc., a publicly held multi-brand restaurant operator, from October 2010 to March 2015.

 

Before joining Darden Restaurants, Ms. Sebastian served as Vice President at Veyance Technologies, Inc., a manufacturer and marketer of engineered rubber products, Senior Vice President at Information Resources, Inc., a provider of information, analytics and insights, and held leadership roles in senior management in two regulated companies, DTE Energy Company, and CMS Energy Corporation.  She also held positions in financial analysis at Michigan Consolidated Gas Co., Morgan Stanley, and Bank of America.

 

QUALIFICATIONS:

 

The board of directors nominated Ms. Sebastian because of her broad experience and background in management, expertise in corporate governance and matters relating to the Sarbanes-Oxley Act, risk management and compliance, and experience in a wide variety of industries, including manufacturing, finance and data technology.  Ms. Sebastian has significant experience in public and private company capital raising, mergers and acquisitions, and global transactions.  Her service as a board member of a private company, chair of an audit committee for one of the largest non-profits in the U.S., internal audit executive leadership experience and accounting and financial background reinforce her qualification as an audit committee financial expert, ability to understand our financial statements and ability to provide guidance and insight to our board of directors and management regarding business, risk management, accounting and financial issues.  Ms. Sebastian was designated by the USW as a director candidate pursuant to the terms of our Director Designation Agreement (described under “Corporate Governance - Director Designation Agreement”) in connection with our 2019 annual meeting of stockholders.

 

 

 

 

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Donald J. Stebbins

 

Director Since: June 2019

 

Age: 64

 

Committees: Compensation (Chair), Executive, and Nominating and Corporate Governance

 

Other Public Board Memberships:

–     Snap-on Tools (2015 - Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Stebbins served as President and Chief Executive Officer, and also as a director, of Superior Industries International, Inc. ("Superior"), a manufacturer of aluminum wheels for the automotive industry, from May 2014 to December 2018. For two years prior to joining Superior, Mr. Stebbins provided consulting services to various private equity firms. Mr. Stebbins previously served as Chairman, President and Chief Executive Officer of Visteon Corporation, an automotive components manufacturer, from 2008 until 2012, after having served as Visteon’s President and Chief Operating Officer prior to that time. Before joining Visteon, Mr. Stebbins held various positions with increasing responsibility at Lear Corporation, a supplier of automotive seating and electrical distribution systems, including President and Chief Operating Officer–Europe, Asia and Africa, President and Chief Operating Officer–Americas, and Senior Vice President and Chief Financial Officer. Mr. Stebbins holds a Bachelor of Science degree in finance from Miami University and a Master of Business Administration degree from the University of Michigan.

 

PREVIOUS DIRECTORSHIPS:

–     Superior Industries International, Inc. (2014-2018)

 

QUALIFICATIONS:

 

The board of directors nominated Mr. Stebbins because of his board and chief executive officer experience and, among his other qualifications, his experience and expertise in the automotive industry, international business, manufacturing, sales, product innovation/development, operations, accounting and finance (including as a chief financial officer), mergers and acquisitions, strategy development, executive compensation and leadership development.

 

Continuing Directors

Set forth below is information about our continuing directors, including their ages, present principal occupations, other business experiences, directorships in other public companies in the past five years, membership on committees of our board of directors, and reasons why each individual director's specific experience, qualifications, attributes or skills led our board of directors to conclude that the director should serve on our board of directors.

Class II DirectorsTerm Expiring at the 2023 Annual Meeting

 

Jack A. Hockema

 

Executive Chairman of the Board

 

Director since: 2001

 

Committee: Executive (Chair)

 

Age: 75

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Hockema has served as Executive Chairman of the Board since July 2020 and a director since 2001.  Mr. Hockema served as our CEO from 2001 to July 2020 and as Chairman of the Board from July 2006 to July 2020. He previously served as President of our company from October 2001 to December 2015, as Executive Vice President of our company and President of the Kaiser Fabricated Products division from January 2000 to October 2001, and as Executive Vice President of our company from May 2000 to October 2001. He served as Vice President of our company from May 1997 to May 2000. Mr. Hockema was President of Kaiser Engineered Products from March 1997 to January 2000. He served as President of our company Extruded Products and Engineered Components from September 1996 to March 1997. Mr. Hockema served as a consultant to our company and acting President of Kaiser Engineered Components from September 1995 to September 1996. Mr. Hockema was an employee of our company from 1977 to 1982, working at our Trentwood facility in Spokane, Washington, and serving as plant manager of our former Union City, California can plant and as operations manager for Kaiser Extruded Products. In 1982, Mr. Hockema left our company to become Vice President and General Manager of Bohn Extruded Products, a division of Gulf+Western, and later served as Group Vice President of American Brass Specialty Products until June 1992. From June 1992 to September 1996, Mr. Hockema provided consulting and investment advisory services to individuals and companies in the metals industry. He holds a Master of Science degree in Management and a Bachelor of Science degree in Civil Engineering, both from Purdue University.

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PREVIOUS DIRECTORSHIPS:

–     Superior Industries International, Inc. (2014-2018)

 

QUALIFICATIONS:

 

Mr. Hockema has more than 30 years of experience with our company and more than 50 years in the metals industries, and, as a result, has a depth of experience in the aluminum and metals industries. Mr. Hockema's substantial experience with our company and in the metals industry allows him to provide a unique perspective to our board of directors regarding our business and strategic direction for our company.

 

Lauralee E. Martin

 

Director since: September 2010

 

Committees: Audit (Chair), ESG, Compensation, and Executive

 

Age: 71

 

Other Public Board Membership:

–     Marcus & Millichap, Inc. (August 2019 - Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Ms. Martin served as Chief Executive Officer and President of HCP, Inc., a real estate investment trust focusing on properties serving the healthcare industry, from October 2013 to July 2016.  Prior to joining HCP, Inc., Ms. Martin served as Chief Executive Officer of the Americas Division of Jones Lang LaSalle, Inc., a financial and professional services firm specializing in real estate services and investment management, from January 2013 to October 2013.  She served as Executive Vice President and Chief Financial Officer of Jones Lang LaSalle from January 2002 and was appointed Chief Operating and Financial Officer in October 2005 and served in that capacity until January 2013. She joined Jones Lang LaSalle after 15 years with Heller Financial, Inc., a commercial finance company with international operations, where she was Vice President, Chief Financial Officer, Senior Group President, and President of the Real Estate group. Prior to joining Heller Financial, Ms. Martin held certain senior management positions with General Electric Credit Corporation.

 

PREVIOUS DIRECTORSHIPS:

–     ABM Industries (2015 - 2019)

 

QUALIFICATIONS:

 

Having served as both the Chief Financial Officer and the head of the real estate lending group at Heller Financial and having served as the Chief Operating and Financial Officer for Jones Lang LaSalle for more than seven and 12 years, respectively, as well as having served as the Chief Executive Officer of the Americas division of Jones Lang LaSalle, Inc. and being the Chief Executive Officer of HCP, Inc., Ms. Martin has significant experience in all aspects of corporate financial and operational matters, including the oversight of complex financial, accounting and corporate infrastructure functions.  Her service as a member of the boards of directors of two real estate investment trusts and a major bank holding company have reinforced those qualifications and also have deepened her expertise in corporate governance and matters relating to the Sarbanes-Oxley Act. Ms. Martin also has a deep foundation in evaluating acquisition opportunities, managing banking relationships and investor relations.  Ms. Martin's experience and background, qualification as an audit committee financial expert, and understanding of our company's financial statements allow her to provide guidance and insight to our board of directors and management regarding business, strategic, accounting and financial issues.

 

Brett E. Wilcox

 

Director since: July 2006

 

Committees: Audit, Compensation, ESG (Chair), and Executive

 

Age: 68

 

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DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Wilcox has served as Chief Executive Officer of Cvictus, a Canadian company developing a single cell protein and related production process to substitute for soybean meal and fishmeal in animal feed, since September 2018 and has been an active investor in, on the board of directors of, or an executive consultant for, a number of metals and energy companies since 2005. From June 2005 to December 2011, Mr. Wilcox served as Chief Executive Officer of Summit Power Alternative Resources where he managed the development of wind generation and new energy technologies. Prior to that, Mr. Wilcox served as: Chief Executive Officer of Golden Northwest Aluminum Company and its predecessors. Mr. Wilcox has also served as Executive Director of Direct Services Industries, Inc., a trade association of large aluminum and other energy-intensive companies; an attorney with Preston, Ellis & Gates in Seattle, Washington; Vice Chairman of the Oregon Progress Board; Chairman of the Oregon Economic and Community Development Commission; a member of the Oregon Governor's Comprehensive Review of the Northwest Regional Power System; and a member of the Oregon Governor's Task Forces on structure and efficiency of state government, employee benefits and compensation, and government performance and accountability.

 

QUALIFICATIONS:

 

Mr. Wilcox was selected by the search committee to serve as a director of our company upon our emergence from chapter 11 bankruptcy in 2006 because of his business and financial background and experience, including his experience as the Chief Executive Officer of Golden Northwest Aluminum Company and its predecessors, his experience working successfully with the USW and his experience in the power industries, and because of his qualification as an audit committee financial expert. Mr. Wilcox was designated by the USW as a director candidate in connection with the search process, and, pursuant to the terms of the Director Designation Agreement, was designated by the USW as a director candidate in connection with our 2008, 2011, 2014, 2017 and 2020 annual meetings of stockholders. Mr. Wilcox's experience as a chief executive officer, his financial expertise, his experience in the aluminum and energy industries, and his working relationship with the USW allow him to offer guidance and insight to our board of directors and management on business, finance, strategic and labor issues.

 

Kevin W. Williams

 

Director since: September 2021

 

Committee: Audit

 

Age: 60

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Williams has served as President and Chief Executive Officer of GAA Manufacturing and Supply Chain Management, a third-party logistics and supply chain management company and one of the country's largest African American-owned businesses, since August 2018.  Mr. Williams previously served as President and Managing Director of General Motors of Canada Limited and Vice President and General Manager, Global Service and Parts Operations of General Motors Company.  Mr. Williams also held several other senior global roles at GM including chairman, president and managing director of GM de Mexico, Central America and the Cayman Islands; and global executive director of supplier quality and development for GM Worldwide and GM Europe among other assignments.  Mr. Williams holds a Bachelor’s degree in business administration and management, general from Tennessee State University and a Master of Science degree in business administration and management, general from Central Michigan University.  

 

QUALIFICATIONS:

 

The board of directors nominated Mr. Williams to our board because of his extensive manufacturing, automotive and supplier quality and development expertise as well as experience in labor relations.

Class III Directors – Term Expiring at the 2024 Annual Meeting

 

Michael C. Arnold

 

Director since: September 2021

 

Committee: Compensation

 

Age: 65

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Other Public Board Membership:

–     AGCO Corporation (2013 - Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Arnold is retired President and Chief Executive Officer of Ryerson Inc., a processor and distributor of industrial metals, and has previously held various senior management positions with The Timken Company from 1979 to 2010, including Executive Vice President; President, Bearings and Power Transmission Group; President, Industrial Group; Vice President, Bearings and Business Process Advancement; Director, Bearings and Business Process Advancement; and Director, Manufacturing and Technology, Europe, Africa and West Asia (Europe).  Mr. Arnold holds a Bachelor’s degree in mechanical engineering and a Master’s degree in sales and marketing from University of Akron.  

 

QUALIFICATIONS:

 

The board of directors nominated Mr. Arnold to our board because of his extensive manufacturing and distribution expertise in metals industries and public company board and board leadership experience, as well as his mergers and acquisition and supply chain experience in metals industries.  

 

David A. Foster

 

Director since: June 2009

 

Committees: ESG and Nominating and Corporate Governance

 

Age: 74

 

Other affiliations:

 

–     Member of board of directors of Evraz North America, d/b/a Oregon Steel Manufacturing (2006 - Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Since May 2017, Mr. Foster has served as Distinguished Associate of Energy Futures Initiative, a non-profit organization conducting objective, fact-based and rigorous technical, economic, financial and policy analyses supported by a multidisciplinary network of experts.  Mr. Foster has also served as a visiting scholar at the Massachusetts Institute of Technology since May 2019, working on the Roosevelt Project, a three-year research project focused on energy technology and economic development.

 

Mr. Foster was Senior Advisor to the Office of the Secretary of the U.S. Department of Energy from June 2014 to January 2017.  Prior to that, Mr. Foster was Executive Director of BlueGreen Alliance, a strategic national partnership between labor unions and environmental organizations to expand the job-creating potential of the green economy and improve the rights of workers at home and around the world, from June 2006 to June 2014 and an adjunct faculty member of the University of Minnesota from January 2003 to June 2014. Mr. Foster was also previously a director of the USW for District #11.

 

QUALIFICATIONS:

 

The board of directors nominated Mr. Foster because of his extensive labor experience representing the USW; experience with the BlueGreen Alliance which allows him to provide guidance and insight to the board and management regarding labor relations, including with the USW, relations with our hourly workforce, the impact of environmental and regulatory initiatives on US based manufacturers and sustainability; and experience with the Energy Future Initiatives and projects focused on energy technology.  Mr. Foster was designated by the USW as a director candidate pursuant to the terms of our Director Designation Agreement in connection with our 2009, 2012, 2015 and 2018 annual meetings of stockholders and again in 2021 in connection with the Annual Meeting. However, his experience with our company exceeds 20 years and includes his former role as the primary USW negotiator of our master labor agreement with the USW prior to joining our board of directors.

 

 

 

 

 

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Leo W. Gerard

 

Director since: September 2019

 

Committee: ESG

 

Age: 75

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Mr. Gerard served as International President of the USW from 2001 until he retired in July 2019.  During that time Mr. Gerard was a co-founder of the BlueGreen Alliance.

 

QUALIFICATIONS:

 

The board of directors nominated Mr. Gerard because of his extensive national and international labor experience, experience in Washington D.C. and experience with the BlueGreen Alliance which allows him to provide guidance and insight to the board and management regarding labor relations, including with the USW, relations with our hourly workforce, the impact of environmental, regulatory and trade initiatives on U.S. based manufacturers and sustainability.  Mr. Gerard was designated by the USW as a director candidate pursuant to the terms of our Director Designation Agreement and again in 2021 in connection with the 2021 annual meeting.

 

Emily M. Liggett

 

Director since: June 2018

 

Committees: Audit and ESG

 

Age: 66

 

Other Public Board Membership:

–     Ultra Clean Holdings (2014 - Present)

–     Materion Corporation (2020 - Present)

 

DESCRIPTION OF BUSINESS EXPERIENCE:

 

Ms. Liggett has served as a strategy consultant and business advisor at Liggett Advisors since January 2019.   Ms. Liggett also served as a seed business coach at the Stanford University for technology-based business from August 2017 to October 2018.  Ms. Liggett served as President and Chief Executive Officer of NovaTorque, Inc., a manufacturer of high-efficiency electric motor systems, from March 2009 until December 2016, when it was acquired by Regal Beloit. She previously served as President and Chief Executive Officer of Apexon, Inc., a provider of supply chain optimization software solutions for global manufacturers, from 2004 to 2007. Ms. Liggett served as President and Chief Executive Officer of Capstone Turbine Corporation, a provider of microturbine systems for clean, continuous distributed energy generation, from 2002 to 2003 and, prior to that, held various management and executive roles at Raychem Corporation (acquired by Tyco International in 1999) from 1984 to 2001, including corporate vice president of Raychem and managing director of Tyco Ventures.  Ms. Liggett holds a bachelor of science in chemical engineering from Purdue University, a Master of Science degree in engineering and manufacturing systems from Stanford University and a Master of Business Administration degree from the Stanford University Graduate School of Business.

 

QUALIFICATIONS:

 

The board of directors nominated Ms. Liggett because of her chief executive officer, management and board experience in a variety of manufacturing companies, as well as her experience managing worldwide businesses, partnerships and international joint ventures. She also has public company and private company operating and board experience, and expertise in strategy, operations, new product development, sales, marketing, and business development.

 

 

 

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Proposal 2 - Advisory Vote to Approve Named Executive Officer Compensation

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the Securities Exchange Act of 1934, referred to herein as the Exchange Act, we ask stockholders to vote annually on a non-binding, advisory resolution to approve our named executive officer compensation. The vote is not intended to address any specific component of our executive compensation program, but rather the overall compensation of our named executive officers as described in this Proxy Statement. The text of the resolution is as follows:

RESOLVED, that the compensation paid to the named executive officers of Kaiser Aluminum Corporation, as described in the proxy statement for the company's 2022 annual meeting of stockholders pursuant to Item 402 of Regulation S-K (which disclosure includes the "Executive Compensation - Compensation Discussion and Analysis" section and the Summary Compensation Table and other compensation tables and related narrative discussions), is hereby APPROVED.

Although the payout under our 2021 incentive plans was significantly impacted by the continued severe business conditions resulting from the COVID-19 pandemic, based on management’s recommendation, the compensation committee did not make any adjustments to our existing incentive programs. Our incentive programs are designed to “pay for performance,” and it is expected that payouts may be impacted during difficult business/economic conditions. According, we believe it is appropriate to maintain our existing incentive programs without adjustments to accommodate the continued negative impact of the COVID-19 pandemic.  

As described in further detail in the CD&A section, our compensation structure was developed to achieve the following objectives, which we believe are critical for enhancing stockholder value and our long-term success and sustainability:

 

creating alignment between our senior management and our stockholders by rewarding our senior management for achieving strategic goals that successfully drive our operations and enhance our stockholder return;

 

attracting, motivating and retaining highly experienced executives vital to our short-term and long-term success, profitability and growth; and

 

correlating our senior management compensation with our actual short- and long-term performance.

The compensation committee reviewed our compensation program for 2021.  The review included consideration of stockholder feedback, the approximately 95% approval of the 2021 advisory vote to approve our named executive officer compensation, and discussions with Meridian and management regarding existing and contemplated market practices, as well as the structure and objectives of each component of our compensation.  Upon completion of that review, the compensation committee determined that the compensation of our named executive officers in 2021 would consist primarily of the following components:

 

a base salary (1) compensating each named executive officer based on the level of responsibility, individual expertise and prior experience and (2) providing a fixed amount of cash compensation upon which our named executive officers can rely;

 

a short-term annual cash incentive (1) payable only if our company achieves a certain Adjusted EBITDA performance level which has continued to increase, resulting in increasingly demanding performance to realize the same or similar payouts year-over-year as more fully described below, (2) adjusted for (a) our safety performance based on our total case incident rate, or TCIR, which is the average number of work-related injuries incurred per 100 workers during a one-year period, as well as lost-time case incident rate, or LCIR, which is the average number work-related injuries that resulted in lost or restricted days or job transfer incurred per 100 workers during a one-year period, (b) our quality performance based on our no-fault claim rate, (c) delivery performance based on our on-time delivery rate, (d) cost performance based on our manufacturing efficiency, and (e) in exceptional instances approved by the compensation committee, individual performance based on individual, facility, and/or functional performance, as well as performance against other strategic initiatives, and (3) capped at three times target; and

 

an equity-based, long-term incentive designed to align compensation with the interests of our stockholders and to enhance retention of our named executive officers consisting of (1) restricted stock units with three-year cliff vesting and (2) performance shares, 60% of which vest, if at all, based on our TSR, compared to the TSR of our peers in the S&P 1000 Materials Index, 20% of which vest, if at all, based on our total controllable cost performance, and 20% of which vest, if at all, based on our adjusted EBITDA margin performance, each over the 2021-2023 performance period.

Our compensation committee, working with Meridian, reviews, evaluates and updates our compensation peer group, which includes companies in both similar and different industries, at least annually. For 2021, the compensation committee approved

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the 30-company peer group more fully described in our CD&A section with (1) market capitalizations ranging from $278 million to approximately $13.5 billion and a median market capitalization of approximately $2.0 billion, each as of the end of October 2020, and (2) 2019 revenues ranging from $493 million to approximately $3.5 billion and median revenue of approximately $1.7 billion.  Our market capitalization and revenue, both as of December 31, 2020, were $1.6 billion and $1.2 billion, respectively.  Due to the differences in size among the companies in our peer group, Meridian uses a regression analysis to adjust survey data results based on our revenue as compared to the revenue of other companies in our peer group.

We no longer maintain a defined benefit pension plan or retiree medical program that covers members of senior management.  Retirement benefits to our senior management, including our named executive officers, are provided through a defined contribution retirement program consisting of a 401(k) plan (which we refer to as our Savings Plan) and a nonqualified and unsecured deferred compensation plan (which we refer to as our Restoration Plan) intended to restore benefits that would be payable to designated participants in our Savings Plan but for the limitations on benefit accruals and payments imposed by the Internal Revenue Code of 1986, as amended (referred herein as the Code).

For 2021, approximately 80% of the target total compensation of our CEO and approximately 60% to 70% of the target total compensation of our other named executive officers, consisted of at-risk compensation, which we define as compensation that either (1) will be realized, if at all, only if certain financial performance levels are achieved as in the case of our annual short-term incentive and the portion of our long-term incentive consisting of performance shares or (2) is time-based as in the case of the portion of our long-term incentive compensation consisting of restricted stock units.

Our compensation structure also supports our corporate governance practices, which further align the interests of senior management and our stockholders.  The table below sets forth the best practice compensation features we have adopted as of 2021.

Best Practice Compensation Features

What We Do

 

What We Don't Do

DO align pay and performance by linking a significant portion of total compensation to company performance, including financial, safety, quality, delivery and cost performance, as well as individual performance

 

NO compensation or incentives that encourage unnecessary or excessive risk taking

DO balance both short-term (one-year) and long-term (three-year) performance across our incentive programs

 

NO repricing or buyout of "underwater" stock options or appreciation rights without stockholder approval

DO enhance retention with time-based, three-year cliff vesting for restricted stock unit awards

 

NO pledging of our securities

DO subject the vesting of approximately 55% (70% for our CEO) of long-term incentive awards to performance targets based on relative TSR and controllable cost, each over a three-year performance period

 

NO hedging or speculative transactions involving our securities

DO maintain rigorous stock ownership guidelines (6x base salary/base retainer for CEO and non-employee directors and 3x for other executive officers)

 

NO guaranteed payout for cash incentive compensation

DO maintain a clawback policy for both equity and cash awards

 

NO excessive perquisites or other benefits

DO cap payouts for awards under both of our short-and long-term incentive plans

 

NO evergreen equity plan provisions

DO appoint a compensation committee comprised solely of independent directors

 

NO dividend equivalents on unearned performance shares

DO use an independent compensation consultant

 

NO gross-up payments

 

We believe our incentive compensation programs are designed to demand continuous improvement in our year-over-year results for our named executive officers to realize the same year-over-year financial benefit under our compensation plans.  We also believe that design emphasizing the importance of successful execution of each of our six key strategic initiatives is important to our long-term success and aligns the interests of our named executive officers with our stockholders.

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We urge our stockholders to review our CD&A which describes our compensation philosophy and programs in detail and to approve the compensation of our named executive officers.  While this vote to approve our named executive officer compensation is non-binding and solely advisory in nature, our board of directors and the compensation committee value the opinions of our stockholders and expect to consider the outcome of the vote when determining future executive compensation programs.  We hold this advisory vote to approve our named executive officer compensation on an annual basis, and the next such vote is expected to be conducted at our 2023 annual meeting.

The board of directors recommends a vote "FOR" the approval, on a non-binding, advisory basis, of the compensation of our named executive officers as disclosed in this Proxy Statement.

Proposal 3 - Ratification of the Selection of our Independent Registered Public Accounting Firm

Pursuant to the audit committee charter, the audit committee has the sole authority to retain an independent registered public accounting firm for our company.  The board of directors requests that the stockholders ratify the audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022.

The audit committee will not be bound by the ratification of, or failure to ratify, the selection of Deloitte & Touche LLP, but the audit committee will consider any failure to ratify the selection of Deloitte & Touche LLP in connection with the appointment of our independent registered public accounting firm for 2023.

The board of directors recommends a vote "FOR" the ratification of the audit committee's selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2022.

 

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CORPORATE GOVERNANCE

Our board of directors is responsible for providing effective governance over the affairs of our company. Our corporate governance practices are designed to align the interests of our board of directors and management with those of our stockholders and to promote honesty, integrity and our corporate values throughout the company. Highlights of our corporate governance practices are described below.

A copy of the current charter, as approved by our board of directors, for each of the executive committee, audit committee, compensation committee, nominating and corporate governance committee and ESG committee, and a copy of each of our corporate governance guidelines and our code of business conduct and ethics, which applies to all of our directors employees, including our executive officers, are available on our website at www.kaiseraluminum.com under "Investor Relations - Corporate Governance." Furthermore, we will post any amendments to our code of business conduct and ethics, or waivers of the code for our directors or executive officers, on our website at www.kaiseraluminum.com under "Investors- Corporate Governance."

Corporate Governance Highlights

Highlights of our corporate governance practices are described below:

 

Board Structure

Highly independent - 85% of the directors are independent

Independent audit, compensation, ESG and nominating and corporate governance committees

Diverse in perspective and background - 23% gender diversity and 23% ethnic diversity

Separate CEO and Chairman roles

Strong lead independent director

Board Practices and Policies

Strong commitment to board refreshment - seven new highly qualified individuals (six independent) have joined the board since 2018

Regular executive session of independent directors without management present at every board and committee meeting

Oversight of management activities, including annual risk management assessment

Directors encouraged and invited to attend meetings of committees of which they are not members

Directors are prohibited from serving on more than three other boards of public companies or public investment funds without board approval

Robust annual board and committee assessments with external and/or internal resources – assessment in 2021 conducted by independent third party, followed by additional performance review of individual directors by Lead Independent Director and Executive Chairman

Policy encourages diversity of gender, ethnicity, age and background, as well as a range in tenure to ensure both continuity and fresh perspectives

Accountability

Regular extensive engagement by management with stockholders to discuss our performance, governance structure, compensation practices and other ESG initiatives, as well as other matters

Majority vote standard in uncontested director elections

Annual governance surveys to assess our culture and the effectiveness of our training

Encourage reporting of illegal or unethical behavior, including the use of InTouch, a third-party reporting program

Share Ownership / Compensation

“Pay for performance” compensation structure

Robust equity ownership and retention requirements for executives and directors

Prohibition of hedging and pledging of our shares

Robust clawback polies in our incentive compensation plans

 

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Board Leadership Structure

In July 2020, in connection with Mr. Harvey’s succession as CEO, we separated the roles of CEO and Chairman of the Board of our company and Mr. Hockema, our former CEO, became Executive Chairman of the Board, and Dr. Osborne serves as our Lead Independent Director. We believe that Mr. Hockema's substantial experience with our company and in the metals industries, the independence of the other directors, our governance structure and the interaction between and among Mr. Hockema, Mr. Harvey, our Lead Independent Director and the other directors make our board leadership structure the most appropriate for our company and our stockholders.

Our corporate governance guidelines and governance structure require a Lead Independent Director to be selected by a majority of the independent directors when the chairman of the board is not independent, thereby ensuring that there is independent leadership within our board of directors and allowing our independent directors to function as a body distinct from management and evaluate the performance of Mr. Harvey and our management independently and objectively. The responsibilities of our Lead Independent Director include:

 

establishing the agenda for executive sessions;

 

calling a meeting of independent directors upon the request of a majority of independent directors;

 

serving as a liaison between our independent directors and Executive Chairman of the Board;

 

presiding at meetings of our independent directors;

 

soliciting advice and input from our independent board members; and

 

routinely meeting and conferring with our CEO and Executive Chairman of the Board to address comments, issues and areas of interest expressed or identified by our independent directors, to assess the governance of our board of directors and our company, and to review board responsibilities, meeting schedules, meeting agenda and information requested or otherwise provided to our directors routinely or in connection with meetings of our board of directors.

Each of the audit, compensation, ESG and nominating and corporate governance committees consists solely of independent directors. The chair of each committee serves as a liaison to keep our full board of directors and our CEO apprised of the work performed by their respective committees at each of our regularly scheduled board meetings and as otherwise required.  Finally, under our bylaws, special meetings of our board of directors may be called by a majority of our board members, 11 of 13 of whom are currently independent.

Under our corporate governance guidelines, each member of our board of directors may submit items to be included on the agenda for any meeting of our board of directors and raise topics that are not on the agenda at any meeting of our board of directors.  In addition, our independent directors are required to meet at least quarterly in executive sessions at which only independent directors are present. Additionally, we encourage direct communication among our directors and with our CEO before, during and after formal board and committee meetings and facilitate those communications around all of our meetings. Our directors also have full access to our officers, employees and advisors.

Risk Oversight

We have policies in place to identify, assess and manage potential risks and to continually review the procedures that we have designed and implemented to mitigate those risks. We believe that our board of directors provides effective oversight of the risk management function. Under its charter, the audit committee of our board of directors is responsible for discussing our risk management policies, including, without limitation, the steps taken and to be taken to monitor and control our major financial risk exposures.  The compensation committee of our board of directors is responsible for assessing risks associated with our compensation policies and incentivizing the conduct of our business in a manner consistent with our corporate values and implementing our clawback policies. The ESG committee of our board of directors is responsible for overseeing our ESG risks, including overseeing our overall approach to ESG principles and related disclosures, reviewing and evaluating the succession planning of our executive officers (other than the CEO), and reviewing the diversity of our management and workforce and our approach to diversity, equity and inclusion.  Our Executive Vice President, Chief Administrative Officer and General Counsel, working with a committee of other members of senior management, oversees our climate-related risk management approach, and we report regularly to the ESG committee and the full board of directors.      

In addition, our full board of directors is actively engaged in the review and assessment of our risk management policies, conducts a comprehensive review at least annually during a regularly scheduled board meeting and routinely requests that specific risk-related items be included on board and committee meeting agendas, including by way of example, the COVID-19 pandemic, our COVID-19 contingency planning and health and safety measures implemented to protect our employees. We

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also engage in an ongoing enterprise risk management process pursuant to which we formally identify, categorize and assess our risks and risk mitigation strategies and routinely update the audit committee and our full board of directors regarding this process.

Information Security

We employ information systems to support our business.  As is the case for other manufacturing companies of comparable size and scope, we, from time to time, experience attempted cyber-attacks on our information system.  We also face risks associated with other potential significant failures or disruptions of our information technology networks. We utilize a risk-based, multi-layered information security approach following the National Institute of Standards and Technology Cybersecurity Framework and have adopted and implemented an approach to identify and mitigate information security risks that we believe is commercially reasonable for manufacturing companies of our size and scope, including many of the best practices of the National Institute of Standards and Technology Cybersecurity Framework.  

Our information security performance and recent cybersecurity industry trends are reviewed by management, including our Chief Information Officer (“CIO”), at least monthly and are reported to and reviewed by each of the audit committee and the full board of directors throughout the year but no less than once a year.  Our entire board of directors is responsible for overseeing management’s risk assessment and risk management processes designed to monitor and mitigate information security risks, including cyber risk and related insurance policies.

We regularly engage independent third parties to test our information security processes and systems as part of our overall enterprise risk management. We also conduct annual information security training to ensure employees are aware of information security risks and to enable them to take steps to mitigate those risks. As part of this program, we also take reasonable steps to ensure our executive management and employees who may come into possession of confidential financial information receive appropriate information security awareness training.

To date, no attempted cyber-attack or other attempted intrusion on our information technology networks has resulted in a material adverse impact on our operations or financial results, or in any penalties or settlements. In the event an attack or other intrusion were to be successful, we have a response team of internal and external resources engaged and prepared to respond.  

 

Director Independence

Our corporate governance guidelines require that a majority of the members of our board of directors satisfy the independence requirements set forth in the rules of the Nasdaq Stock Market. We refer to these requirements as the general independence criteria. Additionally, the audit committee charter, compensation committee charter and nominating and corporate governance committee charter require that all respective committee members satisfy the general independence criteria. There are no family relationships among our officers or directors.

Based upon information requested from and provided by our directors concerning their backgrounds, employment and affiliations, including family relationships, our board of directors has determined that each of Mmes. Liggett, Martin and Sebastian and Messrs. Arnold, Foster, Gerard, Osborne, Stebbins, Van Leeuwen, Wilcox and Williams, representing 11 of our 13 directors, satisfies the general independence criteria. The two remaining directors, Messrs. Harvey and Hockema, do not meet the independence requirement as our CEO and former CEO, respectively. In making such determination, our board of directors considered the relationships that each of our directors had with our company and all other facts and circumstances our board of directors deemed relevant in determining the independence of each of our directors in accordance with the general independence criteria.

Director Designation Agreement

On July 6, 2006, we entered into a Director Designation Agreement with the USW under which the USW has certain rights to designate board candidates for nomination. We believe that:

 

the USW has been a good steward of its rights under the Director Designation Agreement;

 

the nominees of the USW have made significant contributions to our board of directors;

 

the Director Designation Agreement reflects the constructive relationship between the USW and our company; and

 

the Director Designation Agreement facilitates discussions with the USW in regard to our strategy, our key strategic initiatives, the critical skills needed on our board of directors and other matters of mutual interest.  

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Accordingly, in connection with the renewal and ratification of a new five-year collective bargaining agreement with members of the USW at our Spokane, Washington and Newark, Ohio facilities, in December 2019, the Director Designation Agreement which was set to expire on December 31, 2020 was extended to December 31, 2025. Under the Director Designation Agreement, as amended, the USW generally has the right to designate for nomination the minimum number of director candidates necessary to ensure that, assuming the nominated candidates are elected by our stockholders, at least 40% of the members of our board of directors have been nominated by the USW.  Nonetheless, the USW agreed to allow us to increase the size of our board to 13 members without increasing the number of candidates that the USW has the right to designate for nomination, provided that if our board size is not reduced from 13 to 12 members by no later than immediately following our 2023 annual meeting of stockholders, we and the USW will revisit the board size and the USW’s nomination right, and, absent a mutual agreement on or before our 2024 annual meeting of stockholders, the USW’s nomination right shall increase to five candidates until the size of our board is reduced to not more than 12 members.  As previously noted, if our Class I director nominees are elected at our 2022 annual meeting of stockholders, the size of our board will be reduced to 12 members.

The Director Designation Agreement contains requirements as to the timeliness, form and substance of the notice the USW must give to the nominating and corporate governance committee in order to nominate candidates. The nominating and corporate governance committee is required to determine in good faith whether each properly submitted candidate satisfies the qualifications set forth in the Director Designation Agreement. Pursuant to the terms of the Director Designation Agreement, if the nominating and corporate governance committee determines that a nominated candidate satisfies the qualifications, the committee will, unless otherwise required by its fiduciary duties, recommend the candidate to our board of directors for inclusion in the slate of directors to be recommended by the board of directors in our proxy statement. Similarly, the board of directors will, unless otherwise required by its fiduciary duties, accept the designation for nomination and include the candidate in the slate of directors that the board of directors recommends.  Notwithstanding the foregoing, the USW may not nominate an incumbent candidate without our approval.

In addition, the Director Designation Agreement provides that, so long as our board of directors maintains an audit committee, executive committee or nominating and corporate governance committee, each of these committees will, unless otherwise required by the fiduciary duties of our board of directors, include at least one director nominated by the USW (provided at least one director nominated by the USW is qualified to serve on the applicable committee as determined in good faith by our board of directors). Current members of our board of directors that have been nominated by the USW are Messrs. Foster, Gerard and Wilcox and Ms. Sebastian.  

 

Board Committees

Currently, our board of directors has five standing committees: an executive committee; an audit committee; a compensation committee; an ESG committee; and a nominating and corporate governance committee.

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The following table sets forth the current chair and members of each committee of our board of directors and the number of meetings each committee held during 2021.

 

Committee

 

Members

 

Number of Meetings

Held in 2021

 

  Executive Committee

 

Jack A. Hockema (Chair)

 

 

1

 

 

 

Keith A. Harvey

 

 

 

 

 

 

Lauralee E. Martin

 

 

 

 

 

 

Alfred E. Osborne, Jr.

 

 

 

 

 

 

Donald J. Stebbins

 

 

 

 

 

 

Brett E. Wilcox

 

 

 

 

  Audit Committee (1)

 

Lauralee E. Martin (Chair)

 

 

6

 

 

 

Emily Liggett

 

 

 

 

 

 

Teresa M. Sebastian

 

 

 

 

 

 

Thomas M. Van Leeuwen

 

 

 

 

 

 

Brett E. Wilcox

 

 

 

 

 

 

Kevin W. Williams

 

 

 

 

  Compensation

 

Donald J. Stebbins (Chair)

 

 

6

 

  Committee (2)(3)

 

Michael C. Arnold

 

 

 

 

 

 

L. Patrick Hassey

 

 

 

 

 

 

Lauralee E. Martin

 

 

 

 

 

 

Thomas M. Van Leeuwen

 

 

 

 

 

 

Brett E. Wilcox

 

 

 

 

  ESG Committee (2)

 

Brett E. Wilcox (Chair)

 

 

4

 

 

 

David Foster

 

 

 

 

 

 

Leo Gerard

 

 

 

 

 

 

L. Patrick Hassey

 

 

 

 

 

 

Emily Liggett

 

 

 

 

 

 

Lauralee E. Martin

 

 

 

 

 

 

Teresa M. Sebastian

 

 

 

 

  Nominating and

 

Alfred E. Osborne, Jr. (Chair)

 

 

7

 

  Corporate Governance

 

David Foster

 

 

 

 

  Committee

 

Teresa M. Sebastian

 

 

 

 

 

 

Donald J. Stebbins

 

 

 

 

 

 

Thomas M. Van Leeuwen

 

 

 

 

___________________

(1)

Mr. Williams joined the audit committee in September 2021.

(2)

Mr. Arnold joined the compensation committee in September 2021.

(3)

Mr. Hassey served as a member of the compensation committee until June 2021.

 

Executive Committee

The executive committee of our board of directors manages our business and affairs requiring attention prior to the next regular meeting of our board of directors. However, the executive committee does not have the power to (1) approve or adopt, or recommend to our stockholders, any action or matter expressly required by law to be submitted to our stockholders for approval, (2) adopt, amend or repeal the bylaws of our company, or (3) take any other action reserved for action by our board of directors pursuant to a resolution of our board of directors or otherwise prohibited to be taken by the executive committee by law or pursuant to our amended and restated certificate of incorporation or bylaws.  

The executive committee charter requires that a majority of the members of the executive committee satisfy the general independence criteria. In addition, the members of the executive committee must include the chairman of our board of directors and at least one of the directors nominated by the USW. The executive committee is currently comprised of our CEO, executive chairman of the board of directors, lead independent director and the chair of each of the other standing committees of the board of directors.

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Audit Committee

The audit committee of our board of directors oversees our accounting and financial reporting practices and processes and the audit of our financial statements on behalf of our board of directors. The audit committee is responsible for appointing, compensating, retaining and overseeing the work of our independent accounting firm. Other duties and responsibilities of the audit committee include:

 

establishing hiring policies for employees or former employees of the independent accounting firm;

 

reviewing our systems of internal accounting controls;

 

discussing risk management policies;

 

approving related-party transactions;

 

establishing procedures for complaints regarding financial statements or accounting policies; and

 

performing other duties delegated to the audit committee by our board of directors from time to time.

The audit committee charter requires that all members of the audit committee satisfy the general independence criteria. The charter also requires that no audit committee members may have participated in the preparation of our financial statements during the three years prior to their appointment as a member and that each audit committee member be able to read and understand fundamental financial statements, including a balance sheet, an income statement and a cash flow statement. Additionally, at least one member of the audit committee must have had past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience which results in that individual's financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities, and that member or another member must have sufficient education or experience to have acquired the attributes necessary to meet the criteria of an "audit committee financial expert," as that term is defined in the rules promulgated by the SEC. In addition, the members of the audit committee must include at least one of the directors nominated by the USW so long as at least one director nominated by the USW is appropriately qualified.

Our board of directors has determined that all six members of the audit committee (1) meet the general independence criteria, the heightened independence criteria for members of the audit committee set forth in the rules of the Nasdaq Stock Market and the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act, and (2) are able to read and understand fundamental financial statements. Our board of directors has also determined that no member of the audit committee participated in the preparation of our financial statements during the three years prior to their appointment as members of the committee. Finally, our board of directors has determined that Mmes. Liggett, Martin and Sebastian and Messrs. Van Leeuwen, Wilcox and Williams satisfy the financial sophistication criteria described above and satisfy the criteria necessary to serve as the "audit committee financial expert," in each case based on his or her experience described in "Proposals Requiring Your Vote - Proposal 1 - Election of Directors" above.

Compensation Committee

General

The compensation committee of our board of directors establishes and administers our policies, programs and procedures for compensating our senior management, including determining and approving the compensation of our executive officers. Other duties and responsibilities of the compensation committee include:

 

administering plans adopted by our board of directors that contemplate administration by the compensation committee, including our 2021 Equity and Incentive Compensation Plan (referred to herein as our 2021 Plan);

 

overseeing regulatory compliance with respect to compensation matters;

 

reviewing director compensation; and

 

performing other duties delegated to the compensation committee by our board of directors from time to time.

The compensation committee solicits the views of our CEO on compensation matters, including as they relate to our compensation of our executive officers and other members of senior management, including those reporting to our CEO. The compensation committee has retained Meridian to advise the compensation committee on all matters related to compensation of our CEO and other members of senior management. The compensation committee has reviewed the factors that could affect, and has assessed, Meridian's independence.  Based on this review, the compensation committee has determined there are no conflicts of interest that have been raised by Meridian's work.

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Meridian's services include (1) providing competitive market data and related assessments of executive compensation as background against which the compensation committee considers executive compensation, (2) preparing and reviewing tally and compensation summary sheets for our named executive officers, (3) apprising the compensation committee of trends and best practices associated with executive and director compensation, (4) providing support with respect to legal, regulatory and accounting considerations impacting compensation and benefit programs, (5) the development and review of a list of compensation peer group companies, and (6) attending meetings of the compensation committee and our board of directors when requested. These services are typically directed by the compensation committee and coordinated with our human resources and legal departments.

The compensation committee charter requires that all members of the compensation committee satisfy the general independence criteria and the heightened independence criteria for members of the compensation committee set forth in the rules of the Nasdaq Stock Market, as well as qualify as "non-employee directors" within the meaning of Rule 16b-3 promulgated under the Exchange Act.  Our board of directors has determined that all members of the compensation committee during 2021 meet the applicable independence criteria.

The compensation committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and may delegate to the subcommittee any or all of the powers and authority of the committee.

Compensation Committee Interlocks and Insider Participation

None of Ms. Martin or Messrs. Arnold, Hassey, Stebbins, Van Leeuwen or Wilcox, the members of the compensation committee during 2021, (1) was an officer or employee of our company during 2021, (2) was formerly an officer of our company, or (3) had any relationships requiring disclosure by us under the rules of the Securities and Exchange Commission with respect to certain relationships and related-party transactions.  Furthermore, none of our executive officers currently serves, or served during the last fiscal year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

ESG Committee

The ESG committee (formerly known as the talent development committee) of our board of directors coordinates the environmental, social and governance efforts among all the board committees and assists the board of directors in discharging its responsibilities relating to management succession planning and oversight of leadership and talent development. We consider leadership, our corporate values and succession planning priorities throughout the company and recognize that, over the long term, our commitment to the sustainability of our business and creation of long-term value for our stakeholders provide competitive advantages.

The former talent development committee was formed in 2014 to review and evaluate (1) the succession planning for our executive officers, other than our CEO, whose succession is discussed routinely during board executive sessions, and (2) the leadership and development training of key employees with the potential to succeed our executive officers, including the progression and development of such key employees. In April 2021, our Board expanded the scope of duties and responsibilities of our former talent development committee to include more focused oversight of the company’s strategic ESG activities and initiatives, consistent with our corporate values, while continuing to provide oversight to our executive succession planning, human capital development, the diversity of our management and workforce and our DEIB initiatives.  The expanded duties and responsibilities include (1) the review, on a periodic basis, of our corporate values and key initiatives supporting our corporate values, (2) the coordination with the nominating and corporate governance committee on governance matters impacting our ESG principles (3) the oversight of the preparation and publication of our annual sustainability reports, (4) the oversight of ESG-related risks, including climate-related risks and opportunities, and review those risks and opportunities with the full board of directors, (5) the review of our ESG strategies and initiatives, including internal and external metrics and goals with respect to greenhouse gas emissions and other related ESG metrics, (6) the review of our ESG performance and (7) the review of emerging trends and investor expectations regarding ESG topics.  The ESG committee meets with our CEO to review its observations and management’s criteria for evaluating the performance and advancement potential of key employees and regularly reports its activities to our board of directors.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee of our board of directors identifies individuals qualified to become members of our board of directors, recommends candidates to fill vacancies and newly-created positions on our board of directors, recommends director nominees for election by stockholders at the annual meetings of stockholders and develops and recommends to our board of directors our corporate governance guidelines.

We believe that the nominating and corporate governance committee considers an appropriate range of criteria in assessing candidates for a position on the board of directors. Our corporate governance guidelines require that the criteria utilized by the

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corporate governance committee in assessing such candidates include factors such as judgment, diversity, integrity, experience with businesses and other organizations of comparable size, the interplay of a candidate's experience with the experience of other members of the board of directors and anything else that may bear upon the extent to which a candidate would be a desirable addition to our board of directors and any committees of our board of directors. The policies relating to the recommendation of director candidates adopted by the nominating and corporate governance committee are designed to ensure flexibility with respect to the process of evaluating candidates and do not establish specific minimum qualifications that an individual must meet to become a member of our board of directors. The nominating and corporate governance committee believes that our company is best served when it can draw from a variety of experiences and backgrounds provided by members of our board of directors. However, the nominating and corporate governance committee also believes that our company is best served when the members of the board of directors:

 

exhibit strong leadership in their particular fields or areas of expertise;

 

possess the ability to exercise sound business judgment;

 

have strong educational backgrounds or equivalent life experiences;

 

have substantial experience both in the business community and outside the business community;

 

contribute positively to the existing collaborative culture among members of our board of directors;

 

represent the best interests of all of our stockholders and not just one particular constituency;

 

have experience as senior executives of a company of significant size or prominence or another business or organization comparable to our company;

 

possess skills and experience which make them desirable additions to a standing committee of our board of directors;

 

consistently demonstrate integrity and ethics in their professional and personal lives; and

 

have the time and ability to participate fully in activities of our board of directors, including attendance at, and active participation in, meetings of our board of directors and the committee or committees of which they are a member.

Other duties and responsibilities of the nominating and corporate governance committee include:

 

assisting in management succession planning, including with respect to our CEO, executive chairman director of our board of directors and lead independent director;

 

considering possible conflicts of interest of members of our board of directors and management and making recommendations to prevent, minimize or eliminate such conflicts of interests;

 

evaluating whether an incumbent director should be nominated for re-election to our board of directors upon expiration of the incumbent's term;

 

making recommendations to our board of directors regarding the appropriate size of our board of directors; and

 

performing other duties delegated to the nominating and corporate governance committee by our board of directors from time to time.

The nominating and corporate governance committee has adopted policies and procedures by which our stockholders may submit director candidates to the nominating and corporate governance committee for consideration. If the nominating and corporate governance committee receives, by a date not less than 120, nor more than 150, calendar days before the anniversary of the date that the proxy statement was mailed to stockholders in connection with our previous year's annual meeting, a recommendation for a director nominee from a stockholder or group of stockholders that beneficially owned more than 5% of our outstanding common stock for at least one year as of the date of the recommendation, then such director candidate will be considered and evaluated by the nominating and corporate governance committee for the annual meeting immediately succeeding the date that proper written notice was timely delivered to and received by the nominating and corporate governance committee. When the date of our annual meeting of stockholders changes by more than 30 calendar days from the previous year's annual meeting, the written notice of the recommendation for the director candidate will be considered timely if, and only if, it is received by the nominating and corporate governance committee no later than the close of business on the tenth calendar day following the first day on which notice of the date of the upcoming annual meeting is publicly disclosed by us.

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Written notice from an eligible stockholder or group of eligible stockholders to the nominating and corporate governance committee recommending a director candidate must contain or be accompanied by:

 

proof that the stockholder or group of stockholders submitting the recommendation has beneficially owned, for the required one-year holding period, more than 5% of our outstanding common stock;

 

a written statement that the stockholder or group of stockholders intends to continue to beneficially own more than 5% of our outstanding common stock through the date of the next annual meeting of our stockholders;

 

the name and record address of each stockholder submitting a recommendation for the director candidate, the written consent of each such stockholder and the director candidate to be publicly identified (including, in the case of the director candidate, to be named in the company's proxy materials) and the written consent of the director candidate to serve as a member of our board of directors (and any committee of our board of directors to which the director candidate is assigned to serve by our board of directors) if elected;

 

a description of all arrangements or understandings between or among any of the stockholders or group of stockholders submitting the recommendation, the director candidate and any other person or persons (naming such person or persons) pursuant to which the submission of the recommendation is to be made by such stockholder or group of stockholders;

 

with respect to the director candidate, (1) the candidate’s name, age, business and residential address and principal occupation or employment, (2) the number of shares of our common stock beneficially owned by the candidate, (3) a resume or similar document detailing the candidate’s personal and professional experiences and accomplishments, and (4) all other information relating to the candidate that would be required to be disclosed in a proxy statement or other filing made in connection with the solicitation of proxies for the election of directors pursuant to the Exchange Act, the rules of the Securities and Exchange Commission or the rules of the Nasdaq Stock Market; and

 

a written statement that each submitting stockholder and the director candidate shall make available to the nominating and corporate governance committee all information reasonably requested in connection with the committee's evaluation of the candidate.

The notice must be signed by each stockholder submitting the proposal and the director candidate. The notice must be sent to the following address by registered or certified mail: Kaiser Aluminum Corporation, Attn: Corporate Secretary (Nominating and Corporate Governance Committee), 1550 West McEwen Drive, Suite 500, Franklin, Tennessee 37067.

The nominating and corporate governance committee charter requires that all members of the nominating and corporate governance committee satisfy the general independence criteria. In addition, the members of the nominating and corporate governance committee must include at least one of the directors nominated by the USW.

Board and Committee Meetings and Consents in 2021

During 2021, our board of directors held six meetings and acted by unanimous written consent five times. In addition to meetings of our board of directors, directors attended meetings of committees of our board of directors. Each director, except Mr. Gerard, attended at least 75% of the aggregate number of meetings that our board of directors held during the period the director was on our board of directors in 2021 and each committee on which the director served held during the period the director served on such committee in 2021.

Annual Meetings of Stockholders

Members of our board of directors are expected to make reasonable efforts to attend our annual meetings of stockholders. All of our directors then serving attended our 2021 annual meeting of stockholders.

 

Annual Performance Reviews

We conduct robust annual board and committee assessments using internal and/or external resources.  Under our corporate governance guidelines, our board of directors is required to conduct an annual self-evaluation to determine whether our board of directors, its committees functioning effectively. The charter for each committee of our board of directors also requires each committee to annually evaluate its performance. The nominating and corporate governance committee reviews the annual evaluation process and modifies the process as it deems appropriate.

In addition to the evaluation performed by the nominating and corporate governance committee with respect to whether an incumbent director should be nominated for re-election to the board of directors upon expiration of such director's term, in 2021, the evaluation was led by an independent third-party. The results from the interviews were summarized and reviewed

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with the nominating and corporate governance committee and the board of directors.  The Executive Chairman and the Lead Independent Director also met with each director individually to review the feedback from the independent third party.  In addition, we coordinate with the USW not less than annually to discuss (i) our most recent assessment of strategic board skills, experience, attributes of all directors, (ii) desired strategic board skills, experience, attributes and priorities in the context of anticipated vacancies and upcoming elections and (iii) each board member nominated by the USW and contemplated future USW nominees in light of these considerations.

Stockholder Engagement

We value stockholder feedback and insights and believe that accountability to stockholders is an essential component of good governance.  We engage in ongoing, proactive discussions of a variety of topics with significant stockholders throughout the year. Such discussions include our CEO, Executive Chairman, Lead Independent Director and/or other members of senior management. In addition to providing our perspective and seeking feedback on topics specific to our company, we invite discussion on any other topics or trends stockholders may wish to discuss with us. The feedback provided by stockholders is reported to the full board of directors.  Our board of directors reviews the feedback and determines whether additional discussion and actions are necessary by the full board or any board committees. In 2021, in addition to interactions regarding our financial performance, we engaged with stockholders representing approximately 50% of shares outstanding on matters relating to our long-term business strategy and performance, operations, capital allocation, strategic acquisition of Warrick, executive leadership succession, executive compensation and annual Sustainability Report as well as related ESG matters.  In addition, we utilize investor surveys to provide us with additional insight into the perceptions of our broader investor-base, across a wide range of topics.  This information is also reviewed by members of our senior management and the full board of directors.  The feedback from our stockholders continues to reflect that they are generally satisfied with our performance and the design of our executive compensation program.

Sustainable Value Creation

We manage our business for long-term success in a manner that is economically, environmentally and socially responsible. Below are highlights of our efforts to continue to be a valued corporate citizen in 2021:

 

Environmental

Established 2030 GHG emission intensity reduction targets across Scope 1, 2 and 3 estimated emissions

2020 Scope 1 and 2 emissions reflected 21% reduction in intensity since 2010

2020 freshwater withdrawals reflected a decrease of 20% since 2016

41% of purchased electricity came from renewable sources in 2020

Continued to increase our use of recycled aluminum, which saves more than 90% of the energy generally required by primary aluminum production

Began disclosure alignment with SASB and TCFD standards

Continued to improve manufacturing efficiency to reduce our environmental impact and the environmental impact of our customers

Issued updated Sustainability Report, which published first Scope 1 and 2 GHG emissions, air emissions, and water withdrawal data

Released workforce gender and ethnicity diversity metrics

Formalized Environmental Policy

 

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Social

Continued to strive for record safety performance

Achieved record LCIR in 2021, marking improvements for a third year in a row

Achieved record quality performance in 2021

Dedicated to fostering a supportive, inclusive workplace, including through internal talent development programs, such as the Kaiser Leadership Program, our Front Line Leader Development Program and Metallurgy Excellence and Technical Strength Program, and external resources, including Thayer Leadership, the G100 Network, the Productivity (LMAC) and Metals Service Center Institute and by enhancing our DEIB awareness training

Implemented our Women’s Leadership Program, which will begin its first cohort in June 2022

Leveraged and incorporated well-established DEIB best practices, including targeted training for hiring managers, employee resource groups and programing

Focused on expanding efforts to recruit more diverse candidates

Developed internal benchmarks and metrics for identifying opportunities to increase diversity and monitor progress

Released gender and ethnicity representation data

Formalized our DEIB Policy

Enhanced our Human Rights Policy and Code of Business Conduct and Ethics

 

Governance

Formalized Board’s oversight of ESG to include specific ESG initiatives and activities in 2021

Maintained corporate governance best practices, including:

 

+80% Independent Board

 

Separate CEO and Chairman

 

Diverse Board

 

Strong commitment to refreshment

Continued development of internal benchmarking and goals to help integrate ESG principles into our strategies and initiatives

Continued annual employee surveys, which gauge effectiveness of our corporate governance measures as well as employees' perception of our culture and values

Continued to actively engage with stockholders owning approximately 50% of our outstanding shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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2022 and Beyond

 

We recognize that long-term excellence requires sustainable business practices and strong stakeholder governance.  Accordingly, we will continue our efforts to advance our sustainability and governance as a company, including:

 

Environmental

Social

Governance

Focus efforts on identifying strategies to further reduce our GHG emissions and intensity

Leverage and incorporate well-established DEIB best practices, including employee resource groups and other initiatives

Promote Board refreshment and the continued alignment of overall Board skillsets with the evolving needs and strategies of our company

 

Invest in our business to increase manufacturing efficiency, and, in turn, reduce our environmental impact

Focus on talent development across the organization to attract, motivate and retain productive and engaged employees from all cultures and segments of the population based on ability

 

Maintain strong Board oversight of risk management and ESG matters

 

Optimize and increase our use of scrap in our operations

Provide a safe and clean workplace

Promote independence and diversity of our Board and Board committees

 

Align our disclosures more closely with SASB and TCFD standards

Treat all employees with dignity and respect

 

Actively engage with stockholders

Ongoing annual updates on key metrics reported in our sustainability report

Implement new systems and processes to monitor suppliers’ human rights policies and supplier diversity

 

 

 

Stock Ownership Guidelines and Securities Trading Policy

Our stock ownership guidelines require our non-employee directors to own company stock equal to six times their annual base retainer within five years of becoming a member of our board of directors. For purposes of measuring compliance with our stock ownership guidelines, restricted stock is valued at the closing price of our common stock on the grant date and all other shares of common stock purchased or acquired are valued at the purchase price of such shares.  Currently, each of our non-employee directors satisfies the applicable stock ownership requirements under the stock ownership guidelines.  Our stock ownership guidelines also apply to senior management.  For additional information regarding our stock ownership guidelines, see "Executive Compensation - Stock Ownership Guidelines."

Our securities trading policy prohibits our directors and employees, including our named executive officers, from purchasing financial instruments to hedge or offset, or otherwise engaging in transactions designed to hedge or offset, decreases in the market value of our equity securities, whether granted as part of compensation to, or otherwise held directly or indirectly by, such director or employee. Prohibited transactions include short sales, options, puts, calls and derivative instruments such as swaps, forwards and futures.  Our securities trading policy also prohibits our directors and employees, including our named executive officers, from buying our securities on margin (other than purchases where the related margin borrowings are effected solely for the purpose of paying the option exercise price upon the exercise of an option to purchase shares from the company, which are typically referred to as “cashless exercises”) or holding our securities in a margin account, and from pledging our securities as collateral for a loan or any other obligations.

Risks Arising from Compensation Policies and Practices

Our compensation policies and practices, discussed more fully below, are designed to create and maintain alignment between our employees and stockholders by rewarding employees, including our senior management, for achieving strategic goals that successfully drive our operations and enhance stockholder value and to preclude the taking of unreasonable risks through the use of incentive compensation that rewards decisions that result in strong performance in both the short-and long-term. We do not believe that our compensation policies and practices encourage decisions or actions which are likely to have a material adverse effect on our company.  Our determination is based on, among other factors, the following:

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Potential payouts under our incentive plans are capped, and overall variable compensation does not materially impact our financial results;

 

Our overall compensation is comprised of a mix of long- and short-term compensation which discourages short-term decisions that could be at the expense of long-term results;

 

A significant portion of the variable compensation is in the form of restricted stock units and performance shares with three-year vesting and performance periods (61% for our CEO and 36% to 50% for our other named executive officers), which ensure that three years of unvested grants are outstanding at any time and encourage decisions expected to create long-term value for our stockholders;

 

Underlying performance and results impacting our incentive compensation plans are subject to extensive review, verification and validation;

 

All of our incentive programs contain clawback provisions, which provide for the forfeiture of outstanding unvested awards and the return of vested awards;

 

Our short-term incentive plan and our performance shares require the attainment of demanding threshold and target company performance levels before any payments are earned or performance shares vest; and

 

Our stock ownership guidelines require our board of directors and executive officers to retain significant equity interests in our company to ensure the ongoing alignment of executive officers and our stockholders.

Stockholder Communications with the Board of Directors

Our stockholders may communicate with our board of directors as a group or with the chair of the executive committee, audit committee, compensation committee or nominating and corporate governance committee by sending an email to boardofdirectors@kaiseraluminum.com, execchair@kaiseraluminum.com, auditchair@kaiseraluminum.com, compchair@kaiseraluminum.com, or nominatingchair@kaiseraluminum.com, respectively, or by writing to such group or person at Kaiser Aluminum Corporation, Attn: Corporate Secretary (Board of Directors), 1550 West McEwen Drive, Suite 500, Franklin, Tennessee 37067. Communications that are intended specifically for any other group of directors or for any individual director, such as the independent directors as a group or the Lead Independent Director, should be sent to the attention of our corporate secretary at the address above or via email to corpsecretary@kaiseraluminum.com and should clearly state the individual director or group of directors that is the intended recipient of the communication.

Our corporate secretary will review each communication and determine whether or not the communication is appropriate for delivery. Communications that, in the judgment of our corporate secretary, are clearly of a marketing nature, that advocate that our company engage in illegal activity, that do not reasonably relate to our company or our business or that are similarly inappropriate will not be furnished to the intended recipient. If, in the judgment of the corporate secretary, any communication pertains to an accounting matter, it will be forwarded to our compliance officer.

Communications that, in the judgment of our corporate secretary, are appropriate for delivery will, unless requiring immediate attention, be assembled and delivered to the intended recipients on a periodic basis, generally at or in advance of each regularly scheduled meeting of our board of directors. Any communication that, in the judgment of our corporate secretary, requires immediate attention will be promptly delivered. In no case will the corporate secretary provide anyone but a member of our board of directors with access to any such communication, except as noted above with respect to communications pertaining to accounting matters.

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EXECUTIVE OFFICERS

The following table sets forth the names and ages of each of our executive officers and the positions they held as of April 11, 2022, the record date.  

 

Name

 

Age

 

Position(s)

Keith A. Harvey

 

62

 

President and CEO

Neal E. West

 

63

 

Executive Vice President and Chief Financial Officer

John M. Donnan

 

61

 

Executive Vice President, Chief Administrative Officer and General Counsel

Jennifer S. Huey

 

41

 

Vice President and Chief Accounting Officer

Melinda C. Ellsworth

 

63

 

Vice President - Investor Relations and Corporate Communications

Mark R. Krouse

 

70

 

Vice President - Human Resources

Del L. Miller

 

62

 

Vice President – Treasury, Risk and Procurement

Raymond D. Parkinson

 

63

 

Senior Vice President - Advanced Engineering