CARPENTER TECHNOLOGY CORP
For the period ended Oct 7, 2024. Filed Sep 13, 2024.
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Oct 7, 2024 · Filed Sep 13, 2024
Contents
Compensation Program Risk Assessment
The Committee retains an independent compensation consultant to confirm that Carpenter Technology’s compensation policies and practices do not encourage excessive or unnecessary risk taking and assess whether the executive compensation program contains a reasonable amount of risk. In its most recent review of Carpenter Technology’s compensation program, the compensation consultant concluded that it was not reasonably likely that our compensation policies and practices would have a materially adverse effect on the Company.
Consultant Analysis of Risk Concepts in Carpenter Technology Compensation Design
| Compensation Element | Balanced Approach | Balance Achieved |
|---|
| Performance Metrics | Growth | Profitability | Compensation program does not inappropriately emphasize performance along one metric. | |||
|---|---|---|---|---|---|---|
| Returns | Stockholders’ Experience | |||||
| Target Setting | Internal Perspective | External Perspective | Objectives are meaningful and appropriate. Pay outcomes make sense. | |||
| Measurement Approach | Absolute Performance | Relative Performance | Enables executive team to unite behind shared absolute goals and performance standards. Recognizes external conditions impacting industry. | |||
| Form of Compensation | Cash | Equity | Individual pay mix balances an executive’s (group’s) impact on Company results, link to stockholders’ experience, and risk/reward profile. | |||
| Annual | Long-Term | |||||
| Time Horizon | Short-term (1 year) | Intermediate (2 to 4 years) | Long-term(>5 years) | Less emphasis on attaining short-term goals. Varying time horizons help mitigate risk. | ||
| Sustainable Performance | ||||||
Additionally, the Committee considers the following features of our compensation program and our Company generally to be important in discouraging excessive risk:
| ▶ | Code of Business Conduct and Ethics |
|---|
We are a performance-based company and hold each other accountable for high standards of excellence in all that we do. Our Code of Business Conduct and Ethics reflects our corporate culture. The Committee believes that Carpenter Technology’s values-oriented culture is a key factor in reducing risky behavior.
| ▶ | Performance Goals and Variable Pay Mix |
|---|
We set our performance goals at levels that are high enough to encourage strong performance, but within reasonably attainable levels to discourage risky business strategies or actions. Consistent with market practices, the
| CARPENTER TECHNOLOGY 2024 PROXY STATEMENT | 53 |
|---|
Compensation Discussion and Analysis • Fiscal Year 2024 NEO Compensation
NEO total pay program has a heavy emphasis on LTIs that encourage our executives to engage in business strategies or actions that promote long-term growth over actions that may produce risky short-term outcomes. In addition, incentive awards are capped.
| ▶ | Stock Ownership Guidelines |
|---|
Our NEOs are required to hold substantial amounts of equity. We believe that stock ownership encourages appropriate decision-making that aligns with the long-term interests of our stockholders.
| ▶ | Peer Group Compensation Benchmarking |
|---|
Annual benchmarking of compensation program target levels ensures consistency with our peer group.
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