Alcoa Corp

Executive Compensation Process

The Committee followed the process illustrated below in determining the CEO’s and other NEOs’ compensation at the beginning of the fiscal year. Officers do not determine the amount or form of executive or director compensation, although the CEO provides recommendations to the Committee regarding compensation changes and incentive compensation for other officers.

To attract, motivate, align, and retain high performing executives, we designed our 2024 executive compensation program to target total compensation generally at the median of the peer group, with cash and equity incentive opportunities that aim to motivate and reward exceptional performance if goals are achieved above target levels.

The potential for an above-target award of IC and LTI compensation has proven to be a significant retention factor, with a demonstrable impact on motivating managers to achieve strong operational and financial performance. While our program includes a reduced payout from minimum to target, we have also established payout multiples for overachievement that can be earned with significant upside performance but with caps on potential maximum payouts.

In 2024, Alcoa continued to design its executive compensation program to pay for performance, with equity as the most significant portion of total compensation. We established performance metrics and targets at the beginning of 2024 for our annual IC awards and our three-year cumulative PRSU program. As with last year, the Committee approved weighting performance-based incentives commensurate with each NEO’s position and level of responsibility. For 2024, approximately 89% of the target compensation for the CEO and approximately 77% of our other NEOs’ target compensation was performance-based, variable, and/or at-risk, with the remaining amounts in the form of base salary.

Compensation Consultant

The Compensation Committee directly retained an independent consultant, Pay Governance, in 2024. Pay Governance provided advice as requested by the Committee on the amount and form of certain executive compensation components, including, among other items, advising on executive compensation market practices, trends, and developments, benchmarking data, plan design elements, and an analysis and review of the compensation arrangements for executives. Pay Governance also provided advice to the Governance and Nominating Committee regarding non-employee director compensation and comparative market information and practices as described under “Non-Employee Director Compensation Program.” Pay Governance did not provide any services to Alcoa other than the services provided directly to the Board committees.

The Committee performed its annual assessment of the consultant’s independence and found no conflict of interest. In its assessment, the Committee considered, among other matters: that Pay Governance provides no other services to the Company (other than to the Compensation and Governance and Nominating Committees); the amount of fees received from the Company by Pay Governance as a percentage of Pay Governance’s total revenue; the policies and procedures that Pay Governance has in place to prevent conflicts of interest; any business or personal relationships between the consultants at Pay Governance performing consulting services and any Compensation Committee members or any executive officer; and any ownership of Company stock by the consultants. In addition to information provided by Pay Governance, the Company utilized broad-based comparative compensation survey data from Willis Towers Watson, which survey data was not customized for the Company (other than to remove financial services and insurance companies), in order to assist the Company with its general understanding as to whether its compensation programs were competitive with the market.

Consideration of Peer Groups in Establishing Compensation

To help determine 2024 total direct compensation for our NEOs, the Committee developed and approved the use of two peer groups: one group primarily for our Executive team (the “Executive Peer Group”), which consists of 16 companies, and a second group, consisting of over 300 companies, for our other officers (the “Non-Executive Peer Group”), which uses a broader base of companies. During 2024, the Committee reviewed the continued appropriateness of our peer groups.

The Executive Peer Group is determined primarily based upon Global Industry Classification Standards, revenue, and market capitalization. For 2024, the Committee replaced The Sherwin-Williams Company and WestRock Company with Celanese Corporation and Packaging Corporation of America, which companies align closer with Alcoa in terms of revenue. The 2024 component companies for the Executive Peer Group are listed below.

The Non-Executive Peer Group is determined primarily based upon the same revenue criteria as the Executive Peer Group and is limited to companies who also participated in the Willis Towers Watson Executive Compensation Survey, excluding financial services and insurance companies. We believe that using this larger peer group creates more stability and consistency in the data, as outside of the CEO and CFO, the position of each NEO varies by organization and may change year-to-year.

Review of Tally Sheets

For 2024, the Committee utilized and reviewed tally sheets that summarized various elements of historic and current compensation for the CEO and other NEOs, which helped the Committee synthesize the various components of the 2024 executive compensation program. This information included compensation opportunities, actual compensation, and historical awards.

We review each NEO’s base salary with the following primary considerations in mind: experience in the position, individual responsibilities, previous salary changes, and the median of the peer group for their respective positions, as well as other market data.

Alcoa pays salaries to its NEOs to provide an appropriate level of fixed compensation that enables the attraction and retention of highly skilled executives and mitigates the incentive to assume highly risky business strategies to maximize at-risk compensation.