Table of Contents
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UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.    )
 
 
Filed by the Registrant   ☒
Filed by a Party other than the Registrant   ☐
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 under
§240.14a-12
CARPENTER TECHNOLOGY CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
  No fee required.
  Fee paid previously with preliminary materials.
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
14a-6(i)(1)
and
0-11.
 
 
 


Table of Contents

LOGO

NOTICE OF 2023 Annual Meeting and Proxy Statement AEROSPACE & DEFENSE | ENERGY | INDUSTRIAL & CONSUMER | MEDICAL | TRANSPORTATION


Table of Contents

LOGO

CarpenterTechnology.com CARPENTER TECHNOLOGY STRATEGY Distinctive product and process capabilities Our driving force is to leverage our core technical strength in engineered materials and process capabilities to solve our customers' current and anticipated challenges. We will grow in market segments where we can provide differentiated and value-added solutions to complex problems. We will solidify our position as the industry leader by being the preferred solutions provider and providing our customers a competitive advantage. Areas of excellence Technology development Translate customer needs into solutions quickly Develop proprietary and breakthrough products Respond quickly to customer technical questions Operational excellence Prioritize safety, systematic thinking, and problem solving Establish and maintain process excellence Identify and eliminate waste Strategic marketing Demonstrate market knowledge and support growth Think, act, and execute in a future outcome manner Support the go-to-market approach and advantage Talent engagement Acquire and develop talent on an ongoing basis Anticipate the requirements of a shifting workforce Create compelling careers with competitive rewards


Table of Contents

LOGO

September 15, 2023

Dear Stockholders:

You are cordially invited to attend the 2023 Annual Meeting of Stockholders of Carpenter Technology Corporation to be held on October 10, 2023, at 11:00 a.m. Eastern Daylight Time. This year’s Annual Meeting will again be completely virtual. You will be able to attend the Annual Meeting as well as vote and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/CRS2023. Details regarding admission to the meeting and the business to be conducted are provided in the accompanying Notice of Annual Meeting and Proxy Statement.

Fiscal year 2023 was a year of increasing momentum for Carpenter Technology marked by a significant increase in market demand as the Aerospace supply chain emerged from the pandemic. In order to meet the accelerating demand, we focused on increased productivity, improved product mix, and the realization of higher sales prices. More than a year ago, we set the goal to return to pre-pandemic, fiscal year 2019 profitability on a run-rate basis by the end of fiscal year 2023. Not only did we achieve that goal in the fourth quarter of fiscal year 2023, but we exceeded it. This was an important milestone in the recovery from the COVID-19 pandemic, marking a waypoint on our growth trajectory goal of doubling our fiscal year 2019 operating income by fiscal year 2027.

Some highlights from the fiscal year include:

 

   

The safety of our employees has and will continue to be our top priority. Our fiscal year 2023 total case incident rate (TCIR) of 1.7 was higher than our fiscal year 2022 rate of 1.0, but continues to be significantly below industry averages. Our ultimate goal continues to be a zero-injury workplace, and we remain focused on instilling a safety culture, mindset and focus.

 

   

The execution of our solutions-focused commercial approach continues to drive backlog to record levels in a strengthening demand environment in each of our end-use markets, particularly in the Aerospace and Defense and Medical end-use markets.

 

   

Our SAO business accelerated productivity improvements and capacity optimization for improving product mix, resulting in significant increases in operating income and margin during fiscal year 2023.

 

   

We maintained a healthy liquidity position, providing us with sufficient capacity to fund our cash needs over the foreseeable future.

 

   

We realized price gains through contract negotiations with customers across end-use markets and increased base prices on transactional business multiple times over the course of the fiscal year.

 

   

We continued to advance our ESG-related strategy and activities that are aligned with our overall business strategy, including implementing for the first time an ESG-based metric as a component of our long-term compensation elements for executives and senior leaders.

 

   

We demonstrated our continued commitment to provide direct returns to our stockholders as fiscal year 2023 marks our 116th straight year of uninterrupted dividend payments.

As we enter fiscal year 2024, we seek to further capitalize on the momentum and results we delivered in fiscal year 2023. We will continue to execute our strategy to be the preferred solutions provider in specialty materials with an ultimate goal of zero injuries, unquestionable quality, close customer connections, innovative growth, creative technology and engaged talent.

Thank you for your continued support and confidence in Carpenter Technology. I hope you can join us at the Annual Meeting.

 

 

         LOGO

 

Sincerely,

 

LOGO

 

Tony R. Thene

President & Chief Executive Officer


Table of Contents

Notice of Annual Meeting

of Stockholders

 

Carpenter Technology Corporation will hold its 2023 Annual Meeting of Stockholders virtually via live webcast at www.virtualshareholdermeeting.com

/CRS2023 on Tuesday, October 10, 2023, at 11:00 a.m. EDT. We will vote on the following matters:

 

1.

The election of four directors to three-year terms expiring in 2026;

 

2.

Ratification of the appointment of PricewaterhouseCoopers LLP as Carpenter Technology’s independent registered public accounting firm for fiscal year 2024;

 

3.

Approval of our named executive officers’ compensation, in an advisory vote;

 

4.

An advisory vote on the frequency of future votes on executive compensation; and

 

5.

Any other business that is properly presented at the meeting.

The 2023 Annual Meeting of Stockholders of Carpenter Technology Corporation will be held in a virtual meeting format only, via live webcast. We believe that holding the Annual Meeting virtually will allow us to increase stockholder accessibility and to broaden participation.

Only stockholders who were record owners of our common stock at the close of business on August 11, 2023, may vote at the meeting. A list of those stockholders will be available during the meeting on the internet at www.virtualshareholdermeeting.com/CRS2023. Carpenter Technology’s Board of Directors solicits this proxy.

As used throughout this Proxy Statement, unless the context requires otherwise, the terms “Carpenter Technology,” “Company,” “Registrant,” “we” and “our” refer to Carpenter Technology Corporation and “Board” or “Board of Directors” refer to Carpenter Technology’s Board of Directors.

How to Vote:

It is important that you vote your shares. We encourage you to take advantage of the easy and cost-effective internet and telephone voting that Carpenter Technology offers.

 

       

LOGO

 

 

Internet:

 

Visit the website listed on your proxy card. You will need the control number that appears on your proxy card when you access the web page.

 

   

    

 

 

 

LOGO

 

Mail:

 

Complete and sign the proxy card and return it in the enclosed postage pre-paid envelope.

       
       

LOGO

 

Telephone:

 

If your shares are held in the name of a broker, bank, or other nominee: Follow the telephone voting instructions, if any, provided on your proxy card. If your shares are registered in your name: Call 1-800-690-6903 and follow the telephone voting instructions. You will need the control number that appears on your proxy card when you call.

 

   


    

 

 

 

 

LOGO

 

At the Meeting:

 

You may attend the Annual Meeting virtually and vote during the live webcast at www.virtualshareholdermeeting.com /CRS2023.

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on October 10, 2023. This Proxy Statement and our Annual Report to Stockholders for the fiscal year ending June 30, 2023, are available electronically at www.proxyvote.com.

Selected information from Carpenter Technology’s 2023 Annual Report on Form 10-K, including financial statements, is being delivered along with this Proxy Statement, but is not incorporated as part of the Proxy Statement and is not to be considered part of the proxy solicitation material.

This Proxy Statement and the accompanying Notice of Annual Meeting of Stockholders are being sent to stockholders on or about September 15, 2023.

On behalf of the Board of Directors,

 

 

LOGO

 

 

James D. Dee

Senior Vice President, General Counsel and Secretary

 

 

   
  

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

Table of Contents

 

Proxy Summary      6  
Proposal No. 1 – Election of Directors      10  
Nomination Process and Criteria for Selection      10  
Board Diversity and Experience      11  
Nominees      12  
Corporate Governance      19  
Board Information      19  

Majority Voting Standard for Election of Directors

     19  

Board Independence

     19  

Board Leadership Structure

     19  

Meetings of the Board, Committees and Independent Directors

     19  

Board Committees

     20  
Board of Directors’ Role in Risk Oversight      22  
Stockholder Engagement and Communication with the Board      23  
Transactions with Related Parties      24  
Compensation Committee Interlocks and Insider Participation      24  
Delinquent Section 16(a) Reports      24  
Corporate Responsibility and Sustainability      25  

Environmental, Social and Governance (“ESG”)

Overview

     25  

Environmental

     25  

Safety

     27  

Social

     27  

Governance Policies and Practices

     28  
Security Ownership of Principal Beneficial Owners      29  
Directors, Nominees and Management Stock Ownership      30  
Director Compensation      32  
Fiscal Year 2023 Director Compensation Table      34  
Proposal No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm      36  
Audit/Finance Committee Report      38  
Proposal No. 3 – Advisory Vote to Approve the Compensation of our Named Executive Officers      40  
Proposal No. 4 – Advisory Vote on Whether the Advisory Vote to Approve the Compensation of our Named Executive Officers Should Occur Every One, Two or Three Years      41  
Human Capital Management Committee Report      42  
Compensation Discussion and Analysis (Table of Contents)      43  
Executive Compensation (Table of Contents)      66  
General Information      87  

Why We Solicit Proxies

     87  

Method and Cost of Solicitation

     87  

Who Can Vote

     87  

How to Vote

     87  

Broker Non-Votes and Abstentions

     88  

Quorum and Required Votes

     89  

If You Change Your Mind After Voting

     89  

Stockholder Nominations to the Board of Directors

     89  

2024 Stockholder Proposals

     89  

Householding of Proxy Materials

     90  

Where You Can Find More Information

     90  
Other Matters      90  
 

 

Forward-Looking Statements: This Proxy Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. Words such as “guidance,” “believe,” “expect,” “anticipate,” “project” and similar expressions may identify forward-looking statements. Please read these forward-looking statements in conjunction with our Annual Report on Form 10-K, which identifies factors that could cause future results to differ materially from forward-looking statements, expectations, and assumptions expressed or implied in this Proxy Statement.

Website References: No websites that are cited or referred to in this Proxy Statement shall be deemed to form a part of, or to be incorporated by reference into, this Proxy Statement or any of our filings with the Securities and Exchange Commission.

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

  


Table of Contents

 

Proxy Summary

 

 

 

Annual Meeting of Stockholders

 

Meeting Date:

October 10, 2023

 

Time:

11:00 a.m.

 

Held Virtually at:

www.virtualshareholder
meeting.com/CRS2023

 

Record Date:

August 11, 2023

 

This summary gives you an overview of selected information in this year’s proxy. Please read the entire proxy before voting.

Agenda and Voting Matters

 

Proposal

 

  

Board

Recommendation

 

  

Page

Reference

 

 

 

1. Election of four directors to three-year terms expiring in 2026

 

  

 

For all nominees

 

    

 

 

10

 

 

 

 

 

 

2. Ratification of PricewaterhouseCoopers LLP as our independent auditors for fiscal year 2024

 

  

 

For

 

    

 

 

36

 

 

 

 

 

 

3. Advisory vote to approve the compensation of our named executive officers

 

  

 

For

 

    

 

 

40

 

 

 

 

 

 

4. Advisory vote on the frequency of future advisory votes on executive compensation

 

  

 

One Year

 

    

 

 

41

 

 

 

 

 

 

 

Director Nominees: Terms to Expire 2026

 

Name

 

Director
Since

   

Experience and
Qualifications

 

Board
Committees

 

Board
Tenure

 

 

Steven E. Karol

 

 

 

 

2012

 

 

 

 

Chief Executive Officer, Key Industry Knowledge, Strategic and Financial Experience

 

 

  Strategy (Chair)

  Corporate Governance

  Human Capital Management

 

 

 

 

 

11 years

 

 

 

Charles D. McLane, Jr.

 

 

 

 

2020

 

 

 

 

Key Industry Knowledge, Strategic and Financial Experience

 

 

 

  Audit/Finance (Chair)

  Strategy

 

 

 

 

 

3 years

 

 

 

Colleen S. Pritchett

 

 

 

 

2023

 

 

 

 

Operational, Manufacturing, International and Deep Industry Experience

 

 

  Corporate Governance

  Human Capital Management

  Strategy

 

 

 

 

4 months

 

 

 

Tony R. Thene

 

 

 

 

2015

 

 

 

 

Chief Executive Officer, Financial, Deep Industry and Operational Manufacturing Experience

 

 

  Strategy

 

 

 

 

8 years

 

 

 

LOGO

 

   

6

 

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

 

    Proxy Summary • Governance Highlights    

 

 

 

LOGO

Governance Highlights

Our commitment to good corporate governance is illustrated by the following practices:

 

  Board independence (10 out of 11 directors are independent)

 

  Strong corporate governance guidelines and policies

 

  Diversity of Board skills and experience

 

  Robust stock ownership guidelines for Directors and Executive Management

 

  Directors attended all Board and Committee meetings in fiscal year 2023, except Colleen S. Pritchett, who joined the Board in June 2023

 

  Separate Chairman and Chief Executive Officer

 

  Succession planning process
  Majority voting with Director resignation policy for uncontested elections

 

  Stockholder outreach program

 

  Director training and education

 

  Annual Board and Director evaluations

 

  Mandatory retirement policy

 

  Board risk oversight and assessment

 

  Independent Directors meet in executive sessions without management present
 

 

Compensation Governance Practices

Our executive compensation program reflects the Board’s strong commitment to good governance.

 

       

What we do

       

Balanced portfolio: The program design provides a balanced mix of cash and equity, annual and long-term incentives, and performance metrics (financial and operational goals).

 

Double-trigger benefits: We have a double-trigger for change-in-control separation benefits. This means that a Change in Control of Carpenter Technology alone does not trigger any severance obligations to our Named Executive Officers (“NEOs”) under our Change-in-Control Severance Plan or vesting of awards.

 

Clawback policy: We have a clawback policy that applies to both annual cash bonuses and short- and long-term cash incentives, as well as equity awards for NEOs and other senior executives.

 

Key practices: The Human Capital Management Committee analyzes performance against robust and diversified performance metrics, ensures substantial equity ownership guidelines, annually reviews compensation peer groups, and provides and oversees limited perquisites.

 

    

Equity ownership guidelines: We maintain equity ownership guidelines that require Corporate Vice Presidents and above to achieve an equity ownership level, over a five-year period, equal to a certain multiple of base salary. For the CEO, the level is 5x base salary; for Senior Vice Presidents, 3x base salary; and for Corporate Vice Presidents, 2x base salary.

 

Independent compensation consultants: We engage independent compensation consultants who provide information to support the Human Capital Management Committee’s work, including a peer group analysis, market compensation data, and an analysis of various compensation instruments and metrics.

 

Risk assessment: The Human Capital Management Committee reviews an annual assessment by the independent compensation consultant to confirm that metrics and goals are appropriate to drive high performance without encouraging risk-taking beyond established risk parameters.

  

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

 

7


Table of Contents

 

    Proxy Summary • Compensation Governance Practices    

 

 

       

What we don’t do

       

Excise tax gross-ups: The compensation program does not include any change-in-control tax gross-ups to our executives.

 

Dividend payments or accruals on unearned restricted stock units (“RSUs”): We do not pay or accrue dividends on unearned RSUs. Dividend equivalents will only be paid on time-based RSU awards upon satisfaction of the terms and conditions applicable to the underlying RSUs. Additionally, no dividend equivalent rights are granted on shares underlying stock options.

 

Excessive perquisites: We do not provide excessive perquisites to our NEOs. Those offered are primarily financial and tax counseling, tax preparation, medical examinations, individual disability income protection plans, relocation expenses and parking fees at our Philadelphia headquarters.

 

    

Hedging/pledging of company stock: Our policy prohibits hedging or pledging of Carpenter Technology stock by NEOs.

 

Option repricing: Our long-term incentive program does not permit repricing of stock options without stockholder approval. Additionally, the plan does not permit Carpenter Technology to offer a cash buyout of underwater options.

 

Employment contracts: We do not provide employment contracts to our NEOs.

  

 

   

8

 

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

 

    Proxy Summary Stockholder Engagement and Advisory Say-On-Pay Vote    

 

 

 

LOGO

 

Pay for Performance

Our compensation program targets market median positioning but is strongly focused on delivering a substantial portion of that compensation through performance-based compensation elements. This ensures proper alignment with our stockholders and ties the ultimate value delivered to NEOs (above/below target) to Carpenter Technology’s performance.

Target Direct Compensation Mix – CEO

 

 

LOGO

Target Direct Compensation Mix – NEOs*

 

 

LOGO

 

*

Represents target pay mix for Messrs. Dee, Graf, Lain and Malloy.

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

 

9


Table of Contents

Proposal 1:

Election of Directors

Carpenter Technology has a strong Board, bringing diverse experience and perspectives in areas vital to our business of manufacturing, fabricating and distributing specialty metals, including products for critical industries in aerospace, defense, medical, energy, transportation, and industrial and consumer end-use markets.

Our Board has eleven directors that serve in three classes, with each class serving for three-year terms. The term of office of one class of directors expires each year at the Annual Meeting. Steven E. Karol, Charles D. McLane, Jr., Colleen S. Pritchett and Tony R. Thene have been re-nominated for election at the 2023 Annual Meeting of Stockholders to serve for an additional term. If elected, their terms will expire at the 2026 Annual Meeting.

Unless otherwise directed by the stockholders, the shares represented by proxies will be voted for the four nominees. Each nominee has consented to being nominated as a director and is expected to serve as a director if elected.

Majority voting standard: Generally, directors will be elected by a majority of the votes cast. In the event of a contested election, where the number of candidates exceeds the number of directors to be elected, directors will be elected by a plurality of the votes cast.

Resignation policy: If an incumbent director fails to obtain the required majority vote in an uncontested election, that director must promptly tender a resignation to the Board. The Corporate Governance Committee will recommend to the Board whether to accept or reject the resignation. The Board will then decide whether to accept or reject the resignation and publicly disclose its decision within 90 days following certification of the election results.

Mandatory retirement policy: All non-management directors must retire at the Annual Meeting of Stockholders that occurs after the director attains age 72, unless the Board determines there are extraordinary circumstances that warrant a longer tenure. A management director (officer of Carpenter Technology) must retire from the Board at the earlier of attaining age 65 or retiring as an officer of Carpenter Technology.

Mr. Inglis attained age 72 on October 2, 2022. The Board determined by resolution that his tenure be extended until the expiration of his elected term in 2025 due to his outstanding leadership and extensive financial and operational management experience, and the shareholders voted for his re-election at the 2022 Annual Meeting of Stockholders.

Nomination Process and Criteria for Selection

The Board’s Corporate Governance Committee is responsible for identifying and recommending qualified individuals to become members of the Board of Directors. Candidates are considered for nomination based upon various criteria, including their general training and experience in business, science, engineering, finance or administration, and their personal integrity and judgment. The Corporate Governance Committee will review and consider any candidates for director recommended by a stockholder of record who is entitled to vote at an annual meeting and who satisfies the notice, information and consent provisions set forth in Carpenter Technology’s By-Laws. The Corporate Governance Committee will use the same evaluation criteria and process for director nominees recommended by stockholders as it uses for other director nominees. The Corporate Governance Committee functions pursuant to a written charter that was adopted and is reviewed annually by the Board. A copy of the charter is posted on Carpenter Technology’s website at https://ir.carpentertechnology.com/governance/committee-charters.

In evaluating candidates to recommend to the Board of Directors, the Corporate Governance Committee considers whether a candidate enhances the diversity of the Board. The Corporate Governance Committee considers a number of characteristics, including each candidate’s professional background and capabilities, knowledge of specific industries, and experience working outside the United States. We believe the foremost responsibility of a Carpenter Technology director is to represent the interests of stockholders, which requires directors to have time available to devote to Board activities. Accordingly, Carpenter Technology seeks to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to Carpenter Technology. Carpenter Technology believes there should be mostly independent directors on the Board, and it is our policy to avoid nominating outside professionals, such as lawyers, investment bankers, or accountants, whose firms provide services to Carpenter Technology.

 

   

10

 

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

 

Proposal 1: Election of Directors    

 

 

Board Diversity and Experience

Our Board of Directors brings diverse experience and perspectives to areas critical to our business. Their collective knowledge ensures appropriate management and risk oversight and supports our strategy of long-term sustainable stockholder value creation.

 

Director Name:

 

   

 

   

Acoff

 

   

Hannan

 

   

Hart

 

   

Inglis

 

   

Karol

 

   

Ligocki

 

   

McLane

 

   

Pritchett

 

   

Thene

 

   

Ward

 

   

Younessi

 

 

Knowledge, Skills and Experience

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CEO Experience

Chief Executive Officer experience demonstrating a practical understanding of strategy, risk management, business operations and talent development.

 

 

                                                                               

 

Key Industry Experience

Provides valuable, in-depth knowledge of our industry and/or the end-use markets we serve, with a detailed understanding of our business challenges and opportunities.

 

 

                                                                 

 

Operational Manufacturing Experience

Experience and practical understanding of the development and implementation of our business plan and the risks and opportunities that can impact our operations and strategies.

 

 

                                                                           

 

Financial Experience

Experience in, and an understanding of, financial reporting and accounting processes, resulting in proficiency in financial management and reporting, capital allocation, and internal controls.

 

 

                                                                     

 

Strategy Experience

Experience in allocation of capital and designing and implementing new initiatives to grow a business and create stockholder value.

 

 

                                                                   

 

International Experience

Experience in working in global markets and understanding the nuances of international business environments.

 

 

   

 

 

 

 

 

         

 

 

 

 

 

                                               

 

R&D or Innovation Experience

Experience in technology-related business, technological functions or implementing innovative technological business strategies, as well as an understanding of emerging technology trends.

 

 

                     

 

 

 

 

 

                                                 
 

Age/Board Tenure

    Average      

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                     

Age

    62         56       62       44       72       69       66       70       50       62       68       58  
                     

Years on the Board

    7         4       1       4       20       11       6       3       0       8       22       2  
                     

Gender

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                     

Female

   

 

 

 

 

 

               

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

         

 

 

 

 

 

         

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                     
Male  

 

 

 

 

 

 

 

 

 

 

 

                   

 

 

 

       

 

 

 

                 
                     

Race/Ethnicity

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                     
White/Caucasian    

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                                                   

 

 

 

 

 

                     
Black or African American    

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                     
American Indian or Alaska Native    

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

                     
Middle Eastern    

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

 

FOR

  

 

The Board of Directors recommends that you vote FOR the election of Steven E. Karol, Charles D. McLane, Jr., Colleen S. Pritchett and Tony R. Thene

 

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

  

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Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Nominees

 

Terms to Expire 2026

 

Steven E. Karol

 

Mr. Karol is Managing Partner and founder of Watermill Group, a private investment firm specializing in strategic and operational management. He serves on the Boards of private companies owned by the Watermill Group, including Quality Metalcraft, Inc., Experi-Metal, Inc., Cooper and Turner, LTD., Beck Industries, Weston Industries and ENBI Global, Inc. Additionally, Mr. Karol is Chairman of the Board and CEO of HMK Enterprises, Inc., a privately-held investment company. From 2006 through February 2012, Mr. Karol served as a Director of Latrobe Specialty Metals, Inc. (“Latrobe”), a manufacturer and distributor of high-performance materials, which was partially owned by the Watermill Group during this time period and was acquired by Carpenter Technology in February 2012.

 

Mr. Karol is currently a member of the Board of Advisors of The Walter Group. He has also served as Chairman of the Board at Mooney Aircraft Company, Director and Chairman of the Audit Committee at StockerYale, and as a Director for Jeepers! Inc., Intelligent Energy Limited, Inter-Tel Corp., Superior Tubes, and Fine Tubes.

 

Mr. Karol is currently a member of the Young President’s Organization-Gold and has served as a member of the leadership team for this organization. During this time, Mr. Karol served on the International Board of Directors (1991—2001), Chairman of Strategic Planning (1993—1996), and as International President (1998—1999). He is currently a trustee of Tufts University and is Chairman of the Committee on Trusteeship. He received the 2009 Tufts Distinguished Service Award. He is also past Chairman of the Board of Trustees of Vermont Academy, and a Director Emeritus at the National Brain Tumor Society. In addition, he is a co-founder and President of the Herbert M. Karol Cancer Foundation. He formerly served as a member of the Board of Overseers of the Boston Symphony Orchestra, and he is a Trustee Emeritus of the Boston Ballet.

 

These skills and experiences led to the conclusion that Mr. Karol should be re-elected to serve as a director of the Company.

 

    

LOGO

 

Managing Partner, Watermill Group; Chairman and Chief Executive Officer, HMK Enterprises, Inc.

 

AGE                    DIRECTOR SINCE

 

69                2012

 

COMMITTEES

  Strategy (Chair)

  Corporate Governance

  Human Capital Management

 

CURRENT NON-CARPENTER TECHNOLOGY

PUBLIC DIRECTORSHIPS 0

 

Qualifications

       

  Chief Executive Officer

 

  Key Industry Knowledge

 

  Strategic Experience

 

  Financial Experience

  

Mr. Karol’s qualifications include, among other things, his extensive business experience and experience as a Chief Executive Officer and Chairman of the Board, which enable him to contribute to the Board’s operational and growth initiatives. In addition, Mr. Karol’s experience as a Director of Latrobe (a wholly owned subsidiary of Carpenter Technology) enhances his contributions to the Board, particularly with respect to his industry knowledge and expertise.

 

    

 

   

12

  

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Charles D. McLane, Jr.

 

Mr. McLane served as the Executive Vice President and Chief Financial Officer of Alcoa Corporation from 2007 to 2013. As Chief Financial Officer, he had accountability for Alcoa’s Finance organization, which included Treasury, Controllership, Pension, Investor Relations, Tax, Audit and Financial Planning & Analysis. He was also responsible for the Global Business Service group, which provides IT, purchasing and business support services globally.

 

Mr. McLane joined Alcoa in 2000 as Director of Investor Relations, following Alcoa’s acquisition of Reynolds Metals Company. Two years later, he was appointed Vice President and Corporate Controller, which also had responsibility for Alcoa Business Support Services. He also had accountability for Alcoa’s transactional service functions, including procurement, financial shared services, environment, health and safety services, and corporate aircraft operations. Prior to joining Alcoa, Mr. McLane worked for Reynolds Metals for 27 years serving in a series of financial assignments, including Division Controller, Director of Finance and Administration for Reynolds’ Global Can business unit, Assistant Controller and Assistant Treasurer.

 

Mr. McLane currently serves on the board of Motion & Control Enterprises (MCE), a private company owned by Frontenac Company, a private equity firm specializing in strategic and operational management. Mr. McLane has served on the board of directors of the Alcoa Foundation, Alcoa World Alumina, and the National Board of Directors for the Girl Scouts of the USA. Previously, he was a member of the Conference Board’s Council of Financial Executives Institute and a member of the CFO Board Academy, as well as a member of the board of Sapa AB. Mr. McLane earned both a bachelor’s and a master’s degree in Accounting from Virginia Commonwealth University. He also attended the Executive Programs at the University of Virginia’s Darden School of Business and the Wharton School of Business at the University of Pennsylvania.

 

These skills and experiences led to the conclusion that Mr. McLane should be re-elected to serve as a director of the Company.

 

    

LOGO

 

Former Executive Vice President and Chief Financial Officer – Alcoa Corporation

 

AGE                    DIRECTOR SINCE

 

70                2020

 

COMMITTEES

  Audit/Finance (Chair)

  Strategy

 

CURRENT NON-CARPENTER TECHNOLOGY

PUBLIC DIRECTORSHIPS 0

 

Qualifications

       

  Key Industry Knowledge

 

  Strategic Experience

 

  Financial Experience

 

  International Experience

 

   Mr. McLane’s qualifications include, among other things, his extensive accounting and financial expertise and background as a Chief Financial Officer in the public sector.     

 

Colleen S. Pritchett

 

Ms. Pritchett brings more than 25 years of global leadership experience and demonstrated success improving operations and expanding product portfolios through innovation and growth strategies in industrial, electronics, and aerospace industries. Ms. Pritchett is currently the President, Aperture Solutions - U.S. at Cornerstone Building Brands, Inc., the largest manufacturer of exterior building products in North America, a position she’s held since August 2022. From 2018 to 2022, she served as President, Americas Aerospace, a division of Hexcel Corporation, a leading producer of carbon fiber reinforcements and resin systems, and the world leader in honeycomb manufacturing for the commercial aerospace industry. Prior to Hexcel, Ms. Pritchett spent 22 years in various roles of increasing responsibility with DuPont.

 

Ms. Pritchett received her Bachelor of Science in Chemical Engineering from Penn State University and an MBA from Goizueta Business School at Emory University. She also has leadership training from the Harvard Business School Leadership Program and Women in Governance Program at UCLA.

 

These skills and experiences led to the conclusion that Ms. Pritchett should be re-elected to serve as a director of the Company.

 

 

    

LOGO

 

President, Aperture Solutions - U.S. at Cornerstone Building Brands, Inc.

 

AGE                    DIRECTOR SINCE

 

50                2023

 

COMMITTEES

  Corporate Governance

  Human Capital Management

  Strategy

 

CURRENT NON-CARPENTER TECHNOLOGY

PUBLIC DIRECTORSHIPS 0

 

Qualifications

       

 

  Operational Manufacturing Experience

 

  International Experience

 

  Deep Industry Experience

 

  Strategic Experience

 

  

 

Ms. Pritchett’s qualifications include, among other things, her leadership skills, and extensive operational, manufacturing, international and commercial experience.

  

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

  

13


Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Tony R. Thene

 

Mr. Thene was appointed to serve as Carpenter Technology’s President and Chief Executive Officer in July 2015, when he was also appointed to the Board of Directors. He previously served as Carpenter Technology’s Senior Vice President and Chief Financial Officer from January 2013 until June 2015. Prior to joining Carpenter Technology, Mr. Thene served as the Chief Financial Officer of the Engineered Products and Solutions Business Group at Alcoa, Inc. from 2010 until 2013. Previously, he served as Vice President, Controller and Chief Accounting Officer of Alcoa. He also previously held various other positions during his 23-year career at Alcoa, including Director, Investor Relations; Chief Financial Officer for the Flat Rolled Products Group; Chief Financial Officer for Alcoa World Alumina and Chemicals; and manufacturing manager for the Alumina Chemicals business.

 

Mr. Thene earned his undergraduate degree in Accounting from Indiana State University and his MBA from Case Western Reserve University, Cleveland, Ohio.

 

Mr. Thene serves on the Board of Directors of Mativ Holdings, Inc., formed on July 6, 2022, by merger of Schweitzer-Mauduit International Inc., and Neenah, Inc., two leading global manufacturers of specialty materials. Previously he served on the Board of Directors of Neenah, Inc. from 2018 until 2022. He also served on Furman University’s Board of Trustees.

 

These skills and experiences led to the conclusion that Mr. Thene should be re-elected to serve as a director of the Company.

 

 

    

LOGO

 

President and Chief Executive Officer, Carpenter Technology Corporation

 

AGE                    DIRECTOR SINCE

 

62                2015

 

COMMITTEE

  Strategy

 

CURRENT NON-CARPENTER TECHNOLOGY

PUBLIC DIRECTORSHIPS 1

  Mativ Holdings, Inc.

 

Qualifications

       

 

  Chief Executive Officer

 

  Financial Experience

 

  Deep Industry Experience

 

  Operational Manufacturing Experience

 

  

 

Mr. Thene’s qualifications include his extensive financial knowledge, operational and manufacturing experience, and his leadership skills.

  

 

Terms to Expire 2024

 

Dr. A. John Hart

 

Dr. Hart is Professor of Mechanical Engineering and Head of the Department of Mechanical Engineering at the Massachusetts Institute of Technology (“MIT”). He is also the Director of the MIT Laboratory for Manufacturing and Productivity (LMP) and Center for Advanced Production Technologies (APT). From 2013 to 2020, he was an Associate Professor of Mechanical Engineering at MIT. Dr. Hart has worked extensively with industry and is a co-founder of Desktop Metal, Inc. and VulcanForms, Inc.

 

Dr. Hart earned his master’s and Ph.D. degrees from MIT, and his undergraduate degree from the University of Michigan. He has received numerous awards for his research and teaching accomplishments.

 

These skills and experiences led to the conclusion that Dr. Hart should serve as a director of the Company.

 

    

LOGO

 

Professor and Head of the Department of Mechanical Engineering at the Massachusetts Institute of Technology

 

AGE                    DIRECTOR SINCE

 

44                2019

 

COMMITTEES

  Audit/Finance

  Science, Technology and Sustainability (Co-Chair)

 

CURRENT NON-CARPENTER TECHNOLOGY

PUBLIC DIRECTORSHIPS 0

 

 

Qualifications

       

  Research and Development

 

  Key Industry Experience

 

  Innovation Experience

 

  Strategic Experience

 

  

Dr. Hart’s qualifications include, among other things, his extensive work in the areas of additive manufacturing, advanced materials, machine design, and automation. His industry expertise and his background as a professor in these areas add valuable support to both the Board and Carpenter Technology.

 

  

 

   

14

  

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Kathleen Ligocki

 

Kathleen Ligocki is a serial CEO, an experienced board member and an advisor for growth companies. During her operating career from 2015 to 2019, Ms. Ligocki served as the CEO of Agility Fuel Solutions, a leader in sustainable clean energy storage and propulsion solutions for commercial vehicles around the world. From 2014 to 2015, she served as the Chief Executive Officer of Harvest Power, one of the leading organics management companies in North America with a mission to create a more sustainable future by transforming organic wastes into bioenergy and soil amendment products. From 2012 to 2014, she worked as an Operating Partner at Kleiner Perkins Caufield & Byers, one of Silicon Valley’s top venture capital providers. From 2010 to 2012, Ms. Ligocki served as Chief Executive Officer of Next Autoworks, an auto company with a unique low-cost business model. From 2008 to 2009, Ms. Ligocki served as Chief Executive Officer of GS Motors, a Mexico City based auto retailer owned by Grupo Salinas, a large Mexican conglomerate. From 2003 to 2007, she served as Chief Executive Officer of Tower Automotive, a Fortune 1000 global auto supplier. Ms. Ligocki also founded her own firm, Pine Lake Partners, a consultancy firm focused on start-ups and turnarounds. She has held executive positions at Ford and United Technologies, where she led operations in the Americas, Europe, Africa, the Middle East, and Russia. She started her career at General Motors in manufacturing leadership, sales and strategy/program management.

 

In addition to Carpenter Technology, Ms. Ligocki currently serves as an Independent Director on the public boards of Lear Corporation (Fortune 200 auto supplier) and PPG Industries (Fortune 500 coatings company), one private company board at Aperia Technologies, a tech start-up for tire management, and two advisory boards focused on tackling the world’s climate challenges through innovation: Lime Rock New Energy and Assembly Ventures. Ms. Ligocki is a board member at Indiana University Foundation.

 

Ms. Ligocki earned a BA degree with highest distinction from Indiana University Kokomo and holds an MBA from the Wharton School at the University of Pennsylvania where she was a GM fellow. She also has been awarded honorary doctorate degrees from Indiana University Kokomo, Central Michigan University, and Oakland University.

 

These skills and experiences led to the conclusion that Ms. Ligocki should serve as a director of the Company.

 

    

LOGO

 

Former CEO of Agility Fuel Solutions

 

AGE                    DIRECTOR SINCE

 

66                2017

 

COMMITTEES

  Human Capital Management (Chair)

  Corporate Governance

  Strategy

 

CURRENT NON-CARPENTER TECHNOLOGY
PUBLIC DIRECTORSHIPS
2

  Lear Corporation

  PPG Industries

 

 

Qualifications

       

 

  Chief Executive Officer

 

  International Experience

 

  Key Industry Experience

 

  Operational Manufacturing Experience

 

  Financial Experience

 

  

 

Ms. Ligocki’s qualifications include, among other things, her Chief Executive Officer experience and leadership skills. Her international knowledge and operational manufacturing experience bring valuable insight to the Board.

 

  

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

  

15


Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Ramin Younessi

 

Mr. Younessi served as Group President, Construction Industries Group, of Caterpillar, Inc. before retiring in January 2021. As Group President of Caterpillar’s Construction Industries Group, he was responsible for Earthmoving, Excavation, Building Construction Products, China Operations and Global Construction & Infrastructure Divisions, Global Rental and Used Equipment Services, and Strategic Procurement. Mr. Younessi joined Caterpillar in 2013 and has also served as Caterpillar’s Group President of Energy & Transportation and Vice President of Industrial Power Systems. Prior to joining Caterpillar, Mr. Younessi held a number of senior executive positions at Daimler AG and Navistar Inc. In addition, Mr. Younessi has been a board member, investor, and Senior Advisor to Madison Dearborn Partners (MDP), a leading private equity investment firm, and board member on several portfolio companies since 2013.

 

Mr. Younessi holds a bachelor’s degree in Electrical Engineering from Rochester Institute of Technology, a master’s degree in Electrical Engineering from Syracuse University and a master’s degree in Engineering Management from the University of Maryland. Mr. Younessi is a registered professional engineer in the state of Illinois and a member of SAE International.

 

These skills and experiences led to the conclusion that Mr. Younessi should serve as a director of the Company.

 

 

    

LOGO

 

Retired Group President – Caterpillar Inc.

 

AGE                    DIRECTOR SINCE

 

58                2021

 

COMMITTEES

  Audit/Finance

  Science, Technology and Sustainability

 

CURRENT NON-CARPENTER TECHNOLOGY
PUBLIC DIRECTORSHIPS
0

 

 

Qualifications

       

 

  Operational Manufacturing Experience

 

  Financial Experience

 

  International Experience

 

  Research and Development

 

  

 

Mr. Younessi’s qualifications include, among other things, his extensive, operational manufacturing experience, research and development, financial experience, and global business experience.

 

  

 

Terms to Expire 2025

 

Dr. Viola L. Acoff

 

Dr. Acoff is currently the Dean of the School of Engineering and Professor of Mechanical Engineering at the University of Mississippi, a position she has held since July 2023. From 2014 through June 2023, Dr. Acoff was the Associate Dean for Undergraduate and Graduate Programs and Professor of Metallurgical Engineering at The University of Alabama, where she served nearly 30 years on the faculty in the College of Engineering and in various administrative positions. She received a Doctor of Philosophy in Materials Engineering and holds graduate and undergraduate degrees in the same field. All degrees were earned at the University of Alabama at Birmingham.

 

Dr. Acoff also serves on the TMS Board of Directors, the Board of Trustees for the Alabama School of Cyber Technology and Engineering, and the Board of Trustees for the Four Little Girls Memorial Fund. She holds multiple awards, honors, and publications.

 

These skills and experiences led to the conclusion that Dr. Acoff should serve as a director of the Company.

 

    

LOGO

 

Dean of the School of Engineering and Professor of Mechanical Engineering at the University of Mississippi

 

AGE                    DIRECTOR SINCE

 

56                2019

 

COMMITTEES

  Corporate Governance

  Human Capital Management

  Science, Technology and Sustainability (Co-Chair)

 

CURRENT NON-CARPENTER TECHNOLOGY
PUBLIC DIRECTORSHIPS
0

 

 

Qualifications

       

 

  Innovation Experience

  Research and Development

  Intellectual Property

 

  

 

Dr. Acoff’s qualifications include, among other things, her expertise in additive manufacturing, advanced materials, welding metallurgy, physical metallurgy and materials characterization. Additionally, Dr. Acoff’s strong background as a professor in the metallurgical and materials area enables her to contribute valuable knowledge to our Board.

 

  

 

 

   

16

  

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT


Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Dr. Kathy Hopinkah Hannan

 

Dr. Hannan is a former partner with KPMG, where she held several global leadership roles during her distinguished 30-year career. Her roles included Global Lead Partner & National Managing Partner for Diversity & Corporate Responsibility, Vice Chairman of Human Resources, and a leader in KPMG’s tax practice. In addition, she served on KPMG’s U.S. and Americas Management Committees and as a member of the Board of Trustees of The KPMG Foundation.

 

Dr. Hannan currently serves on the Boards of Otis Worldwide Corporation, Ginko Bioworks and Annaly Capital Management, Inc. She also serves on the Board of Trustees of The Conference Board. Dr. Hannan holds a bachelor’s degree in Accounting from Loras College, and a PhD in Leadership/Ethics from Benedictine University. She is a Certified Public Accountant.

 

These skills and experiences led to the conclusion that Dr. Hannan should serve as a director of the Company.

    

LOGO

 

Former Partner with KPMG

 

AGE                    DIRECTOR SINCE

 

62                2022

 

COMMITTEES

  Audit/Finance

  Strategy

 

CURRENT NON-CARPENTER TECHNOLOGY
PUBLIC DIRECTORSHIP
3

  Otis Worldwide Corporation

  Ginkgo Bioworks

  Annaly Capital Management, Inc.

 

 

Qualifications

       

 

  Financial Experience

  Strategic Experience

  Leadership Experience

  

 

Dr. Hannan’s qualifications include, among other things, her extensive accounting and financial expertise. Dr. Hannan’s strategy and leadership experience enable her to share valuable perspectives on a variety of issues.

 

  

 

I. Martin Inglis

 

Mr. Inglis joined Battelle, a research and development enterprise headquartered in Columbus, Ohio, in 2004, and served as Executive Vice President and Chief Operating Officer, retiring in July 2014. Through July 2013, he also served as Chief Financial Officer. Previously, he had retired as Group Vice President, Business Strategy for Ford Motor Company. He joined Ford of Europe in London in 1971 and held various finance and operations positions in international and domestic markets. He was named head, Global Products and Business Strategy, and elected a corporate Vice President in 1996; President, Ford South America, in 1999; head, Ford North America, in 2000; and Chief Financial Officer in 2001. Mr. Inglis also served on the Advisory Board of three venture funds (Reservoir Ventures, Battelle Ventures, and Fletcher Spaght), stepping down in mid-2015 from the first two.

 

Mr. Inglis is active in local charities and serves on the Board of Breckenridge Creative Arts where he is the Chairman. He served as the Chairman of the Columbus Symphony Orchestra for six years through 2014. He holds a bachelor’s degree in Business Economics from Strathclyde University, Glasgow, Scotland.

 

These skills and experiences led to the conclusion that Mr. Inglis should serve as a director of the Company.

 

    

LOGO

 

Chairman, Carpenter Technology Corporation; Retired Chief Operating
Officer, Battelle; Previous Chief
Financial Officer, Ford Motor Company

 

AGE                    DIRECTOR SINCE

 

72                2003

 

CURRENT NON-CARPENTER TECHNOLOGY
PUBLIC DIRECTORSHIPS
0

 

Qualifications

       

 

  Financial Experience

 

  Strategic Experience

 

  Labor Relations

 

  

 

Mr. Inglis’ qualifications include, among other things, his extensive financial expertise and background as a Chief Financial Officer in both the public and private sectors. Additionally, Mr. Inglis’ substantial operational and labor relations experience and broad international knowledge enable him to provide valuable perspective to support Carpenter Technology’s growth strategies.

 

  

 

   

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Table of Contents

 

    Proposal 1: Election of Directors    

 

 

Stephen M. Ward, Jr.

 

Mr. Ward is the retired President and Chief Executive Officer of Lenovo Corporation, the international computer company formed by the acquisition of IBM’s PC business by Lenovo. Mr. Ward is a member of the founding team of C3.ai, the leading developer of Artificial Intelligence enterprise platforms and serves as a board member and Compensation Committee Chairperson. He has served on the Molekule Group, Inc. Board of Directors since 2022.

 

Prior to joining Lenovo, Mr. Ward was Senior Vice President and General Manager of IBM’s Personal Systems Group, responsible for the Personal Computing Division, the Retail Store Solutions Division, and the Printing Systems Division. In his 26-year career with IBM, he also served as IBM’s Chief Information Officer, and IBM Vice President of Business Transformation, directing business process and information technology investments. Mr. Ward was also General Manager of IBM’s Global Industrial Sector, responsible for the marketing, sales, and service of IBM products and services to all manufacturing and industrial companies worldwide and General Manager of the IBM ThinkPad product lines. Mr. Ward began his career at IBM as an engineer in the Storage Products Division. He held various management positions in manufacturing, production control, and project development for disk drive, tape, and optical storage projects and software development, and was also an assistant to the IBM Chairman.

 

Previously, he held positions on the boards of Lenovo, E-Ink, E2open, where he was a co-founder, QDVision, KLX Aerospace, KLXE Energy, and Vonage Holdings. Mr. Ward earned a BS degree in Mechanical Engineering from California Polytechnic State University at San Luis Obispo.

 

These skills and experiences led to the conclusion that Mr. Ward should serve as a director of the Company.

 

    

LOGO

 

Retired President and Chief Executive
Officer, Lenovo Corporation

 

AGE                     DIRECTOR SINCE

 

68                2001

 

COMMITTEES

  Corporate Governance (Chair)

  Human Capital Management

  Science, Technology and Sustainability

 

CURRENT NON-CARPENTER TECHNOLOGY
PUBLIC DIRECTORSHIPS
2

  C3.ai

  Molekule Group, Inc.

 

Qualifications

       

 

  Chief Executive Officer

 

  Chief Information Officer

 

  Information Technology and Digital Transformation

 

  Innovation Experience

 

  International Experience

 

  Financial Experience

 

  

 

Mr. Ward’s qualifications include, among other things, his broad executive experience and focus on General Management, Digital Transformation, Cyber, and Product and Services innovation, which enable him to share with the Board valuable perspectives on a variety of issues relating to management, strategic planning, tactical capital investments, and international growth.

 

  

 

   

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Corporate Governance

Carpenter Technology’s business, property and affairs are managed under the direction of its Board of Directors in accordance with the General Corporation Law of the State of Delaware and Carpenter Technology’s Certificate of Incorporation and By-Laws. While Carpenter Technology’s non-employee directors are not involved in day-to-day operating details, they are kept informed of Carpenter Technology’s business through written reports and documents provided to them regularly, as well as by operating, financial and other reports presented by Carpenter Technology’s officers during meetings of the Board of Directors and its committees.

Board Information

Majority Voting Standard for Election of Directors

The By-Laws provide that directors will be elected by a majority of the votes cast except in the event of a contested election, where the number of candidates for election exceeds the number of directors to be elected. In a contested election, directors will be elected by a plurality of the votes cast.

Board Independence

In determining independence, each year the Board evaluates whether directors have a “material relationship” with Carpenter Technology. To assess the “materiality” of a director’s relationship with Carpenter Technology, the Board considers all relevant facts and circumstances, including the individuals or organizations with which the director has an affiliation. When a director is affiliated with one of Carpenter Technology’s service providers or customers, the Board considers how often or regularly services are provided, whether the services are being carried out at arm’s length in the ordinary course of business, and whether the services are being provided substantially on the same terms as those prevailing at the time for unrelated parties in comparable transactions.

Mr. Thene was appointed Carpenter Technology’s President and Chief Executive Officer (“CEO”) and a member of Carpenter Technology’s Board of Directors effective July 1, 2015. With the exception of Mr. Thene, all other members of the Board of Directors qualify as independent directors under the applicable requirements of the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”). Board committees also satisfy applicable requirements for certain of their members to qualify as independent directors.

Board Leadership Structure

At Carpenter Technology, the roles of Chairman and Chief Executive Officer are split into two separate positions. The Board believes this split is the most appropriate leadership structure for Carpenter Technology to clearly distinguish the functions of the Board and management. The separation of the Chairman and Chief Executive Officer positions allows our Chief Executive Officer to concentrate on operational and strategic issues while the Chairman focuses on governance and Board leadership.

Meetings of the Board, Committees, and Independent Directors

Carpenter Technology expects attendance and active participation by directors at Board and committee meetings. Each director attended at least 75% of the total number of meetings of the Board and the committees on which the director served during fiscal year 2023, with the exception of Colleen S. Pritchett, who joined the Board in June 2023.

 

   

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    Corporate Governance • Board Information    

 

 

As required by Carpenter Technology’s Corporate Governance Guidelines, the independent directors of the Board meet in an executive session at least twice per year to review the performance of the Chief Executive Officer and to address any other matters of concern. I. Martin Inglis, Chairman of the Board, presided over all executive sessions in fiscal year 2023.

 

 

Board/Committee

 

 

 

# Meetings Held

 

 

Full Board

 

   

 

5

 

 

 

Audit/Finance

 

   

 

10

 

 

 

Corporate Governance

 

   

 

5

 

 

 

Human Capital Management

 

   

 

6

 

 

 

Science, Technology and Sustainability

 

   

 

5

 

 

 

Strategy

 

   

 

5

 

 

 

Total Board and Committee Meetings

    36  

Executive Sessions

(Independent directors meet without management present)

    5  
Annual Meeting of Stockholders     1  
Average Director Attendance     100%  
All directors, with the exception of Colleen S. Pritchett, who joined the Board in June 2023, attended last year’s Annual Meeting, and all directors are expected to attend in 2023.    

 

 

 

 

 

Board Committees

The Board of Directors has three standing committees: Audit/Finance, Corporate Governance and Human Capital Management. The Board currently has two additional committees: Strategy and Science, Technology and Sustainability. The Board periodically establishes ad hoc committees, on an interim basis, to assist the Board with specific matters when prudent and advisable. The following summaries describe significant functions of each committee.

 

   

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    Corporate Governance • Board Information    

 

 

Significant Functions of the Committee

 

Audit/Finance Committee

 

  Assists the Board in its oversight of the integrity of Carpenter Technology’s financial statements:

 

   qualifications, independence and performance of Carpenter Technology’s independent registered public accounting firm;

 

   performance of Carpenter Technology’s internal audit personnel; and

 

   overall compliance with accounting, legal, regulatory, ethical and business conduct requirements.

 

  Selects the independent registered public accounting firm and provides a recommendation to the Board with respect to including the Company’s audited financial statements in the Annual Report on Form 10-K.

 

  Reviews and provides recommendations to the Board relating to major financial matters affecting the Company.

 

 

 

MEMBERS

 

Charles D. McLane, Jr., Chair

 

Kathy H. Hannan

 

A. John Hart

 

Ramin Younessi

 

  All members are independent

 

  All members are financially literate under NYSE standards

Corporate Governance Committee

 

  Functions as a nominating committee with respect to directors:

 

   assists the Board in identifying qualified individuals to become directors; and

 

   recommends the overall composition of the Board and its committees.

 

  Assists the Board in developing, implementing and monitoring a set of corporate governance principles for the Company, and overseeing processes to assess the performance and effectiveness of the Board, its committees and Carpenter Technology’s management.

 

  Ensures orderly succession at the Board and management levels.

 

  Leads the Environmental, Social and Governance program for the Board.

 

 

 

MEMBERS

 

Stephen M. Ward, Jr., Chair

 

Viola L. Acoff

 

Steven E. Karol

 

Kathleen Ligocki

 

Colleen S. Pritchett

 

  All members are independent

Human Capital Management Committee

 

  Establishes the philosophy for executive compensation.

 

  Designs and oversees administration of Carpenter Technology’s equity and incentive compensation plans.

 

  Reviews and approves compensation of Carpenter Technology’s executive officers.

 

  Reviews and approves annually the corporate goals and objectives relevant to compensation of the CEO and evaluates the CEO’s performance in light of those goals and objectives.

 

  Identifies and develops succession candidates for Carpenter Technology’s CEO and executive officers.

 

  Assists the Board with other human resource matters, including overseeing management’s work to promote organizational effectiveness, leadership development, diversity, equity, and inclusion, and the design and administration of employee benefits programs.

 

  Oversees the Social aspects of the Environmental, Social and Governance program.

 

 

 

MEMBERS

 

Kathleen Ligocki, Chair

 

Viola L. Acoff

 

Steven E. Karol

 

Colleen S. Pritchett

 

Stephen M. Ward, Jr.

 

  All members are independent

 

   

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    Corporate Governance Board of Directors’ Role in Risk Oversight    

 

 

Significant Functions of the Committee

 

 

Science, Technology and Sustainability Committee (formerly the Science and Technology Committee)

 

  Reviews and monitors major scientific or technological developments that could affect Carpenter Technology’s current business or operations or implicate significant strategic planning or considerations for the future.

 

  Makes periodic recommendations to the Board concerning major developments or potential business opportunities for Carpenter Technology with respect to scientific or technological matters.

 

  Oversees the Environmental aspects of the Environmental, Social and Governance program.

 

 

 

MEMBERS

 

Viola L. Acoff, Co-Chair

 

A. John Hart, Co-Chair

 

Stephen M. Ward, Jr.

 

Ramin Younessi

 

  All members are independent

Strategy Committee

 

  Ensures that Carpenter Technology has developed a relevant operative strategy for the Company’s industry and markets.

 

  Reviews and monitors implementation and maintenance of the corporate strategy.

 

  Reviews implementation of the corporate strategy through capital investments and corporate developments, including acquisitions, divestitures, joint ventures, strategic alliances and facility utilization.

 

 

MEMBERS

 

Steven E. Karol, Chair

 

Kathy H. Hannan

 

Kathleen Ligocki

 

Charles D. McLane, Jr.

 

Colleen S. Pritchett

 

Tony R. Thene

 

  All members are independent except Mr. Thene, Carpenter Technology’s President and CEO

 

Board of Directors’ Role in Risk Oversight

As a part of its oversight function, the Board monitors management’s processes for operating Carpenter Technology’s business, including risk management. The Board’s oversight of risk includes monitoring management’s work to identify risks and manage risk parameters, including those relating to enterprise, financial, operational, cybersecurity, business and reputation risks.

In addition to the formal compliance program, the Board encourages management to promote a corporate culture that understands and is committed to risk management and also incorporates business integrity into Carpenter Technology’s overall corporate strategy and day-to-day business operations.

Oversight of Carpenter Technology’s risk management processes is an important part of Board and committee work throughout the year.

 

   

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    Corporate Governance • Stockholder Engagement and Communication with the Board    

 

 

Risk Oversight Role and Responsibilities

 

 

Full Board

 

The full Board oversees management’s processes for managing significant strategic and business risks, such as those relating to our products, markets, capital investments, and cybersecurity.

 

 
                                                                     
         
                                                            

Audit/Finance Committee

 

    

Corporate Governance Committee

 

    

Human Capital Management Committee

    

Science, Technology and Sustainability Committee

    

Strategy Committee

Oversees management’s processes for managing business and operational risks that could have a financial impact, such as those relating to internal controls, liquidity or raw materials

    

Oversees management’s processes for managing the risks associated with governance issues, such as the independence of the Board and CEO succession

    

Sets incentive metrics and the mix of incentive pay for executive compensation plans and policies; strives to drive high performance while avoiding an inadvertent incentive to take risks beyond the established risk parameters

    

Oversees management’s processes for managing the risks associated with major scientific or technological developments that could affect business, operations or strategic planning

    

Oversees management’s processes for the continual development, implementation and maintenance of Carpenter Technology’s corporate strategy, and ensures that the annual business plan is aligned with and supports the corporate strategy

 

         
                                                                       
 
                               
 

Management

 

Carpenter Technology’s risk management processes include continuous work to assess and analyze the most likely areas of future risk and to address them in our long-term planning process and in our daily risk management activities.

 

Stockholder Engagement and Communication with the Board

Carpenter Technology has long supported a robust investor relations program to communicate regularly with investors about economic, financial, operational and strategic matters. As a result of institutional investors’ changing practices, the Board worked with management to establish further engagement with investors’ governance personnel to discuss leadership, compensation, social responsibility and other governance matters. James D. Dee, Carpenter Technology’s Senior Vice President, General Counsel and Chief Governance Officer, and John Huyette, Carpenter Technology’s Vice President of Corporate Development and Investor Relations, assist the Board in understanding stockholders’ priorities and views on an ongoing basis. Messrs. Dee’s and Huyette’s roles are to communicate with stockholders throughout the year about investor relations, governance, compensation and social responsibility developments; to solicit feedback from stockholders and disseminate that information to the Board and management; to keep the Board and others in management apprised of stockholder views and priorities; and to arrange appropriate direct interactions for stockholders with the CEO, management, and directors. The Board also requested that the Corporate Governance Committee regularly interact with the Chief Governance Officer, and that the Audit/Finance Committee regularly interact with the Chief Financial Officer (“CFO”) to help the Board stay well informed of stockholder views.

 

   

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    Corporate Governance • Transactions with Related Parties    

 

 

Any stockholder who wishes to interact with the Board directly should send a request to our Chief Governance Officer, who will work with the Corporate Governance Committee to arrange appropriate interactions. Stockholders can contact Mr. Dee at jdee@cartech.com or 610-208-3423. Also, stockholders can contact Mr. Huyette at JHuyette@cartech.com or 610-208-2061 regarding Investor Relations matters.

How to Communicate with our Board of Directors

Stockholders can communicate with the Board of Directors by sending a letter addressed to Carpenter Technology’s Board of Directors, c/o Corporate Secretary, 1735 Market Street, 15th Floor, Philadelphia, PA 19103. Carpenter Technology’s Corporate Secretary will review the correspondence and forward it to the Chairman of the Board or to the Chair of the appropriate Board committee or to any individual director or directors to whom the communication may be specifically directed. If the communication is unduly hostile, threatening or illegal, does not reasonably relate to Carpenter Technology or its business, or is similarly inappropriate, the Corporate Secretary will not forward the communication, and will notify the sender if and as appropriate. Stockholders and other interested parties may also communicate with the non-employee directors, the non-executive Chairman, or the Audit/Finance Committee by sending an email to boardauditcommittee@cartech.com.

Transactions with Related Parties

 

 

A “related party transaction” is a transaction with Carpenter Technology in an amount exceeding $120,000 in which a related person has a direct or indirect material interest. A related person includes an executive officer, director, or five percent stockholder of Carpenter Technology and any immediate family member of such a person. If Carpenter Technology’s management identifies a related party transaction, the transaction is brought to the attention of the Audit/Finance Committee for its approval, revision, or rejection after considering all the relevant facts and circumstances.

Any proposed transactions with executive officers, directors, substantial stockholders, or the family members or affiliates of any of those parties, require approval by the Audit/Finance Committee and will be disclosed as required by the SEC. Carpenter Technology’s Code of Business Conduct and Ethics requires that Carpenter Technology’s officers and directors avoid conflicts of interest, as well as the appearance of conflicts of interest, and disclose to Carpenter Technology’s General Counsel any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest between private interests and the interests of the Company. Carpenter Technology checks for any potential related party transactions primarily by circulating a Directors and Officers Questionnaire to each member of the Board of Directors and each NEO annually.

Fiscal Year 2023 Related Party Transactions

During fiscal year 2023, there were no related party transactions.

Compensation Committee Interlocks and Insider Participation

No member of the Human Capital Management Committee was a current or former officer or an employee of Carpenter Technology or any of its subsidiaries during fiscal year 2023, or had any relationship requiring disclosure by Carpenter Technology under the SEC’s proxy rules.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Carpenter Technology’s directors and executive officers, and persons that own more than 10% of Carpenter Technology common stock, to file with the SEC and the NYSE reports of ownership and changes in ownership. Directors, executive officers, and greater than 10% stockholders are required by SEC regulations to give Carpenter Technology copies of all Section 16(a) forms they file.

Based solely on the review of the reports furnished to Carpenter Technology and other company records or information otherwise provided, Carpenter Technology believes that all applicable Section 16(a) reports were timely filed by its directors, executive officers, and more than 10% stockholders during fiscal year 2023.

 

   

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Corporate Responsibility and Sustainability

Environmental, Social and Governance (“ESG”) Overview

Carpenter Technology’s Environmental, Social and Governance (ESG) Program is built upon our Vision and Core Values and aligns with our business strategy for growth. We will address the challenges ahead by relying upon our vision: to partner with our customers to solve their most challenging material problems. We aim to achieve our goals, as we always do, by living up to our Core Values.

Carpenter Technology’s sustainability strategy focuses on four areas of our operations: environmental stewardship; the health and safety of our employees and community; social responsibility; and corporate governance. Highlights of Carpenter Technology’s ESG efforts include the following:

 

 

Our material solutions play an important role in the global efforts to address climate change.

 

 

Our manufacturing operations are more environmentally sustainable than many other global metal manufacturers.

 

 

We are one of the safest industrial manufacturing companies in the United States with a TCIR of 1.7 in fiscal year 2023.

 

 

We are committed to creating an inclusive workplace for our employees and serving the communities in which we live and work.

Carpenter Technology’s Board of Directors maintains overall responsibility for ESG-related matters, including climate-related risks and opportunities. Our Board and its Committees oversee ESG-related aspects of our corporate strategy, plans of action, risk management policies, annual budgets, business plans and the Company’s performance objectives. The Board and its Committees work closely with management to ensure that the Company is properly addressing ESG considerations.

Management has implemented an ESG Steering Committee to ensure the Company’s sustainability strategy is aligned across the enterprise and to define annual and midterm targets that inform our public reporting. The Steering Committee meets quarterly and reports progress to the Company’s Leadership Team. The ESG Steering Committee, which reports to Carpenter Technology’s President and Chief Executive Officer, includes the Company’s Senior Vice President and General Counsel; the Senior Vice President and Chief Financial Officer; the Vice President and Chief Human Resources Officer; the Vice President of Corporate Environmental, Health & Safety; and the Vice President of Corporate Development and Investor Relations.

The latest information on our ESG Program is available at www.carpentertechnology.com/sustainability.

Environmental

Carpenter Technology is committed to protecting the environment and recognizes the need to minimize our impact through a managed sustainability program. The Environmental, Health and Safety (“EH&S”) team oversees our environmental management system with technical experts in all facilities where we operate. Like most organizations in our industry, we are subject to domestic and international environmental laws and regulations and consider the regulatory landscape a relevant factor when assessing climate-related risks and opportunities.

Through our ESG materiality assessment, Carpenter Technology has identified, evaluated and prioritized relevant climate-related risks and opportunities with potential meaningful impact on our business. We presently are addressing the areas identified below.

EH&S Management System

Our EH&S Management System includes mechanisms for regularly evaluating environmental compliance and managing changes in business operations while assessing actual and potential environmental impacts. In calendar year 2022, we received ISO 14001 Certification for our Reading, PA, Latrobe, PA, Athens, AL, and Liverpool, UK facilities.

Greenhouse Gas (“GHG”) Emissions & Energy Management

Carpenter Technology actively monitors and manages energy consumption and greenhouse gas emissions across all operating locations with the primary goal of maximizing efficiencies to reduce costs and minimize our impact on the environment.

 

   

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Table of Contents

 

    Corporate Responsibility and Sustainability • Environmental    

 

 

Our operations are more environmentally sustainable than many other global metal manufacturers.

 

 

Our specialty alloys do not require the coking or iron ore operations that are found in carbon steels, which require carbon-intensive inputs like coal;

 

 

We use Electric Arc Furnaces and Vacuum Induction Melting processes to melt alloys, as opposed to traditional blast furnaces;

 

 

We source carbon-free, nuclear energy to power our melting operations; and

 

 

We have a sustainable sourcing model, with more than 70% of our material inputs from reclaimed or recycled steel and alloys.

We have set the goal of reducing the intensity of Scope 1 and 2 CO2 emissions per ton of material by 30% by 2035. We are using 2019 CO2 emissions as our baseline year, as it was the last full year of operation before the COVID-19 pandemic. We intend to achieve this goal through four main activities:

 

 

recycling waste heat from our furnaces to improve efficiency of furnace operations;

 

 

converting natural gas fueled boilers and furnaces to electric;

 

 

increasing the share of carbon-free grid-electricity, using renewable and nuclear-based energy; and

 

 

improving our operational efficiencies.

We will actively pursue other initiatives that will help us to further reduce our CO2 emissions.

For more information about our energy management process and GHG emission reduction targets and progress, visit www.carpentertechnology.com/sustainability.

Air Emissions

We closely monitor and report air emissions from our major manufacturing sites. Emissions tracked include GHGs, nitrogen oxides, sulfur oxides, volatile organic compounds and hazardous air pollutants. We seek to have all of our manufacturing facilities strictly comply with applicable regulatory requirements regarding emissions limits and hold valid air permits where required. We have implemented many measures to reduce emissions, including capture and control systems for dust, mist, and fume pollution. Additionally, we continue to reduce air emissions through regular equipment repair and upgrades.

Waste Management

We are committed to reducing waste generated by our operations. Our waste management approach aims to reduce environmental risk and operational costs by prioritizing waste prevention in our manufacturing processes. We track the amounts and types of waste generated by each facility and regularly review third-party audits that inspect waste management partners. We are currently analyzing all nonhazardous waste produced to determine recyclability.

Water Management

To minimize the impact of our operations on local water supplies, we implement best practices in water use. For example, we have reduced the nitrates in the treated water discharge from our Reading, PA, facility by nearly 64% since 1997. And in 2021, we began installing new treatment systems at our largest facility in Reading, PA, that are estimated to reduce water consumption and discharge volume by up to 80% when fully implemented.

Sustainable Sourcing

Carpenter Technology utilizes as much recycled or reclaimed material as possible in the production of our products. We rely heavily on the use of reclaimed metal in our production of highly specialized metal alloys.

As a responsible participant in the metals supply chain, we take seriously our responsibility to ensure materials used in our products are sourced in an ethical manner and in compliance with applicable laws and regulations, including the SEC’s “Conflict Minerals” rules. Every year we audit our suppliers for Conflict Mineral Compliance to ensure the integrity of our supply chain. Our most recent Conflict Minerals Disclosure can be found on EDGAR, the SEC’s filing database, along with our most recent annual filings.

In addition, Carpenter Technology is an active member of the Responsible Minerals Initiative, an international organization that seeks to mitigate the social and environmental impacts of extraction and processing of conflict minerals in supply chains.

 

   

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Corporate Responsibility and Sustainability • Safety    

 

 

You can find additional environmental information and data at www.carpentertechnology.com/sustainability including: our Sustainability Accounting Standards Board (SASB) Index disclosure, the Task Force on Climate-related Financial Disclosures (TCFD) Report and our annual Sustainability Report.

Safety

Carpenter Technology’s Safety Vision

Above all else, the safety of our employees is Carpenter Technology’s top priority. It is our number one Core Value. We believe that every employee shares the responsibility to actively participate in all aspects of the safety program and to strive for our ultimate goal of a zero-injury workplace. The hallmarks of our safety program are:

 

 

Dedicated leadership, accountability, and employee engagement and empowerment;

 

 

Continual improvement plans (Plan-Do-Check-Act);

 

 

Tools, resources, and education to improve total workplace safety and health; and

 

 

A skilled, technology-driven workforce that proactively assesses risks, strives to eliminate hazards, and integrates learning from incidents and near-misses to prevent further occurrences.

Carpenter Technology tracks the Human Performance Rate (HPR) metric, a method of evaluating safety culture. This internal metric tracks implementation of proactive measures across a number of dimensions to help prevent injuries. We improved our score from 363.0 in fiscal year 2022 to 619.7 in fiscal year 2023, reflecting our increased focus on safety initiatives like our STOP program and employee engagement activities. We tracked this safety metric as a part of the Executive Incentive Bonus Compensation Plan for fiscal year 2023.

Social

Community Relations

We believe that part of being a responsible corporate citizen is improving the communities where our employees live and work. We aim to strengthen our communities through volunteer activities and donations made on behalf of Carpenter Technology. Through our Carpenter Cares Program and community partnerships, we encourage our employees to participate in volunteer opportunities that are meaningful to them and support their efforts.

Our annual “Impact Awards” provides a unique opportunity to celebrate performance and support our local communities. Each year, we recognize outstanding achievements of our employees in the course of their job. We then make donations on behalf of the winners to their selected charities. More than 60 nonprofits have benefitted from these donations. Past nonprofits that have received donations include United Way of Berks County, American Heart Association of Philadelphia, Children’s Hospital of Philadelphia, Animal Rescue League of Berks County, Still Serving Veterans, St. Jude Children’s Research Hospital, Center for the Developmentally Disabled North Central Alabama, Morgan County Child Advocacy Center, Autism Society of Berks, Wounded Warrior Project, Literacy Council of Reading-Berks, and Feeding Tampa Bay.

Diversity

Our Diversity Mission

Carpenter Technology has a culture that builds on the different backgrounds, experiences and perspectives from all employees. Our commitment to diversity, inclusion, and belonging is woven into our Core Value of dignity and respect. Our policies require that everyone be treated equally regardless of their race, age, religion, gender identity, different physical and mental abilities, military status, creed, or sexual orientation. By embracing our diverse perspectives, we accelerate the creation of innovative solutions that deliver value to our customers.

Diversity, Inclusion and Belonging Committee

Our Diversity, Inclusion and Belonging (“DIB”) Committee plays a critical role in advancing us to the next level of awareness and engagement. The team is comprised of volunteers from all levels and sites throughout the Company who are focused on further cultivating an environment where equality thrives. The team is empowered to foster a culture of belonging where every employee feels at home.

 

   

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    Corporate Responsibility and Sustainability • Governance Policies and Practices    

 

 

Since its inception, the DIB Committee has spearheaded several important Company initiatives. The DIB Committee continued its work this year by focusing on training employees on diversity topics to help better understand the power of diversity, equity, and inclusion in the workplace.

Human Rights

Carpenter Technology is committed to maintaining a culture rooted in respect for fundamental human rights, consistent with the Company’s Core Values. As such, Carpenter Technology seeks to conduct its business in accordance with the highest standards of ethical conduct and in compliance with all applicable laws, rules, and regulations. Our Human Rights Policy (the “Policy”) reflects Carpenter Technology’s approach to ensuring socially responsible business practices including the prohibition of human trafficking and forced labor, the health and safety of our employees and worksites and fair labor and working hours. The Policy is guided by principles embodied in the United Nations Global Compact, the United Nations Universal Declaration of Human Rights (UDHR), United Nations Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, and core International Labor Organization (ILO) conventions. All Carpenter Technology employees are required to adhere to the Policy, and we expect our suppliers, vendors and customers to act in accordance with the Policy. For more information about our human rights policy and approach, visit https://www.carpentertechnology.com/human-rights.

Governance Policies and Practices

Corporate Governance Guidelines and Charters

Carpenter Technology’s Corporate Governance Guidelines, as well as the charters for all the Board committees and our Code of Business Conduct and Ethics, are available on Carpenter Technology’s website at http://www.carpentertechnology.com/legal. Copies will be mailed to stockholders upon written request to the Corporate Secretary, Carpenter Technology Corporation, 1735 Market Street, 15th Floor, Philadelphia, PA 19103.

Code of Ethics

The Board of Directors has adopted a Code of Ethics for Carpenter Technology’s CEO and senior financial officers. There were no waivers of the Code of Ethics for fiscal year 2023 or through the date of this Proxy Statement.

 

 

Ethics Hotline: Carpenter Technology utilizes an independent web-based ethics hotline for both employees and non-employees to voice any concerns they may have in a confidential manner. A Board approved corporate staff member reviews any reports and, if necessary, involves the legal, finance, asset protection, human resources or other department, as applicable.

Annual Board Performance Self-Evaluation

The Board conducts an annual self-evaluation to determine whether the Board and its committees are functioning effectively. The Corporate Governance Committee oversees the self-evaluation process. Results of the self-evaluation process are discussed with the Board as soon as practicable. The Corporate Governance Committee also evaluates individual directors as each is considered for re-election to the Board.

Director Training and Education

We have an orientation process for new directors that involves meeting with senior management and visiting our manufacturing facilities. All directors are encouraged to attend outside educational seminars presented by accredited third-party organizations as well as internal programs organized by Carpenter Technology for the directors’ ongoing education.

Succession Planning

The Corporate Governance Committee is responsible for determining the process for evaluating our CEO succession planning. Carpenter Technology’s CEO presents an annual report to the Board on succession planning for the CEO position. The CEO also recommends, on a continuing basis, a suitable successor should the CEO be unexpectedly disabled or otherwise unavailable to perform the duties of that office.

The Human Capital Management Committee is responsible for monitoring succession planning and management development for positions other than that of the CEO.

 

   

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Security Ownership of

Principal Beneficial Owners

Principal Beneficial Owners

Listed below are the only individuals and entities known by Carpenter Technology (through their Section 13 filings) to own more than 5% of the Company’s outstanding common stock as of the record date of August 11, 2023. Except as noted below, these investment advisors and their investment vehicles have sole voting and investment power over these shares of Carpenter Technology stock.

 

Name and Address of Beneficial Owner     

Amount and Nature of

Beneficial Ownership

 

 

      
Percent
of Class(1)
 
 

BlackRock, Inc.

50 Hudson Yards

New York, NY 10001

     7,411,836 (2)         15.17%  

The Vanguard Group, Inc.

P.O. Box 2600

Valley Forge, PA 19482

     5,790,904 (3)         11.85%  

Dimensional Fund Advisors, L.P. (U.S.)

6300 Bee Cave Road

Building One

Austin, TX 78746

     3,644,410 (4)         7.46%  

State Street Corp.

One Lincoln Center

Boston, MA 02211

     2,778,611 (5)         5.69%  

 

(1)

The percentages are calculated on the basis of 48,847,966 shares of common stock outstanding as of August 11, 2023.

 

(2)

This information was based upon the BlackRock, Inc. Section 13 filing reflecting shares owned as of June 30, 2023. BlackRock is an investment advisor registered under the Investment Advisors Act of 1940. It furnishes investment advice to investment companies and serves as investment manager to certain other investment vehicles, including commingled group trusts. BlackRock reports sole voting power with respect to 7,411,836 shares of Carpenter Technology stock. The investment companies and investment vehicles own all these shares.

 

(3)

This information was based upon The Vanguard Group, Inc. Section 13 filing reflecting shares owned as of June 30, 2023. Vanguard is an investment advisor registered under the Investment Advisors Act of 1940. It furnishes investment advice to investment companies and serves as investment manager to certain other investment vehicles, including commingled group trusts. Vanguard reports sole voting power with respect to 0 shares of Carpenter Technology stock, and shared voting power with respect to 32,834 shares of Carpenter Technology stock. The investment companies and investment vehicles own all these shares of Carpenter Technology stock.

 

(4)

This information was based upon the Dimensional Fund Advisors, L.P. (U.S.) Section 13 filing reflecting shares owned as of June 30, 2023. Dimensional is an investment advisor registered under the Investment Advisors Act of 1940. It furnishes investment advice to investment companies and serves as investment manager to certain other investment vehicles, including commingled group trusts. Dimensional reports sole voting power with respect to 3,534,329 shares of Carpenter Technology stock. The investment companies and investment vehicles own all the shares. Dimensional disclaims beneficial ownership of these shares.

 

(5)

This information was based upon the State Street Corp. Section 13 filing reflecting shares owned as of June 30, 2023. State Street is an investment advisor registered under the Investment Advisors Act of 1940. It furnishes investment advice to investment companies and serves as investment manager to certain other investment vehicles, including commingled group trusts. State Street reports sole voting power with respect to 0 shares of Carpenter Technology stock, and shared voting power with respect to 2,342,593 shares of Carpenter Technology stock. The investment companies and investment vehicles own all these shares of Carpenter Technology stock.

 

   

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Table of Contents

Directors, Nominees and

Management Stock Ownership

The following table shows the ownership of Carpenter Technology common stock as of August 11, 2023, by each director or nominee, the executive officers during fiscal year 2023 who are considered to be named executive officers (“NEOs”) under applicable SEC regulations, and Carpenter Technology’s directors and executive officers as a group. Except as noted below, the directors and executive officers have sole voting and investment power over their respective shares of common stock.

 

Name   Number of Shares
Beneficially Owned(1)
    Employee
Restricted
Stock Units(2)
     Director Stock
Units(3)
     Shares and Units
Beneficially Owned(1)
    Percentage of
Outstanding
Shares(4)(5)
 

Acoff, V. L.

 

 

15,644

 

 

 

0

 

  

 

18,094

 

  

 

33,738

 

 

 

0.0

Hannan, K. A.

 

 

4,991

 

 

 

0

 

  

 

5,026

 

  

 

10,017

 

 

 

0.0

Hart, A. J.

 

 

15,644

 

 

 

0

 

  

 

18,094

 

  

 

33,738

 

 

 

0.0

Inglis, I. M.

 

 

35,082

 

 

 

0

 

  

 

66,996

 

  

 

102,078

(6) 

 

 

0.1

Karol, S. E.

 

 

481,452

(6)(7) 

 

 

0

 

  

 

37,115

 

  

 

518,567

(6)(7) 

 

 

1.0

Ligocki, K.

 

 

26,030

 

 

 

0

 

  

 

22,083

 

  

 

48,113

 

 

 

0.1

McLane, Jr., C. D.

 

 

13,326

 

 

 

0

 

  

 

19,462

 

  

 

32,788

 

 

 

0.0

Pritchett, C. S.

 

 

0

 

 

 

0

 

  

 

906

 

  

 

906

 

 

 

0.0

Ward, Jr., S. M.

 

 

47,854

(6) 

 

 

0

 

  

 

72,634

 

  

 

120,488

(6) 

 

 

0.1

Younessi, R.

 

 

6,826

 

 

 

0

 

  

 

7,227

 

  

 

14,053

 

 

 

0.0

Thene, T. R.

 

 

688,559

 

 

 

103,165

 

  

 

0

 

  

 

791,724

 

 

 

1.4

Lain, T.

 

 

105,827

 

 

 

24,723

 

  

 

0

 

  

 

130,550

 

 

 

0.2

Dee, J. D.

 

 

155,287

 

 

 

13,348

 

  

 

0

 

  

 

168,635

 

 

 

0.3

Malloy, B. J.

 

 

117,708

 

 

 

19,233

 

  

 

0

 

  

 

136,941

(6) 

 

 

0.2

Graf, D.

 

 

18,842

 

 

 

12,107

 

  

 

0

 

  

 

30,949

 

 

 

0.0

 

All directors and executive officers as a group (15 persons)

 

 

 

 

1,733,072

 

(6)(7) 

 

 

 

 

172,576

 

 

  

 

 

 

267,637

 

 

  

 

 

 

2,173,285

 

(6)(7) 

 

 

 

 

3.4

 

 

(1)

The amounts include the following shares of common stock that the individuals have the right to acquire by exercising outstanding stock options within 60 days after August 11, 2023:

 

Acoff, V. L.

 

 

15,644

 

  

Ligocki, K.

 

 

17,530

 

  

Thene, T. R.

  

 

454,983

 

Hannan, K. A.

 

 

4,991

 

  

McLane, Jr., C. D.

 

 

13,326

 

  

Lain, T.

  

 

61,925

 

Hart, A. J.

 

 

15,644

 

  

Pritchett, C. S.

 

 

0

 

  

Dee, J. D.

  

 

103,445

 

Inglis, I. M.

 

 

31,482

 

  

Ward, Jr., S. M.

 

 

26,326

 

  

Malloy, B. J.

  

 

85,390

 

Karol, S. E.

 

 

26,326

 

  

Younessi, R.

 

 

6,826

 

  

Graf, D.

  

 

6,586

 

 

  

All directors and executive officers as a group (15 persons): 870,424

 

(2)

These stock units convert to an equivalent number of shares of common stock when they become vested as per the terms of the relative agreement(s) and the plan. The stock unit values are equivalent to Carpenter Technology’s common stock values, but the units have no voting rights.

 

(3)

These stock units convert to an equivalent number of shares of common stock upon the director’s termination of service as allowed under the plan. The stock unit values are equivalent to Carpenter Technology’s common stock values, but the units have no voting rights.

 

(4)

Ownership is rounded to the nearest 0.1% and is 0% when less than 0.1%.

 

(5)

The percentages are calculated based on the number of shares of common stock outstanding plus the number of shares of common stock that would be outstanding if the individual’s options were exercised, but does not include any shares issuable upon the conversion of stock units.

 

   

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    Directors, Nominees and Management Stock Ownership    

 

 

(6)

Voting and investment power is shared with respect to the following shares of common stock:

 

    

 

Inglis, I. M.

  

 

400

 

 

Karol, S. E.

  

 

10,000

 

 

Malloy, B. J.

  

 

10,780

 

 

Ward, Jr., S. M.

  

 

21,528

 

 

(7)

The amount includes shares held by the following institutions, of which Mr. Karol is an affiliate:

 

    

 

SEK Limited

  

 

228,626

 

 

HMK Enterprises Inc.

  

 

36,500

 

 

   

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Table of Contents

Director Compensation

The Board regularly reviews director compensation with the assistance of its outside advisor to ensure that it is appropriate and competitive in light of market circumstances and prevailing “best practices” for corporate governance. The compensation elements reflect the Board’s view that compensation to the non-employee directors should consist of an appropriate mix of cash and equity awards. Our director compensation approach provides for quarterly vesting of equity awards and allows elective deferral of the delivery of earned shares and cash.

Elements of Annual Director Compensation

 

Pay Element    Board Year 2023 Compensation     

Annual Retainer (50% Cash/50% Stock Units)

   Board Members:   $130,000 Cash/Stock Units  

 

At least 50% of the annual retainer is paid in stock units,

which aligns the directors’ personal interests with those of our stockholders.

   Board Chair*:   $200,000 Cash/Stock Units
   *The roles of Chairman and CEO are separate, and the Chairman attends Board and committee meetings.

Committee Chair Retainers (Cash)

   Audit/Finance Committee:   $25,000

 

   Human Capital Management Committee:   $17,500
 

 

   Corporate Governance, Strategy and Science, Technology and Sustainability Committees:   $12,500

Stock Options (Equity)

   Directors receive an annual stock option award subject to the conditions stated below.

Non-Retainer Stock Units (Equity)

   Directors receive additional awards of stock units subject to the conditions stated below.

Stock Options and Stock Units

We compensate our non-employee directors with equity-based compensation under our Stock-Based Compensation Plan for Non-Employee Directors (“Director Stock Plan”).

Initial Grant: Directors receive up to 4,000 stock options upon joining the Board.

Annual Stock Option Grant: In addition to any initial grant of stock options, each director is granted a number of stock options annually, on or about the date of Carpenter Technology’s Annual Meeting of Stockholders or on another date as the Board may determine. These options will have a fair value on the grant date, in combination with the annual non-retainer stock units described below, if any, of up to $90,000 (or such different number as determined by the Board).

Annual Non-Retainer Stock Units Grant: In addition to the grant of options or an award of retainer stock units, each director is granted an additional award of stock units annually having a fair value on the grant date, in combination with the annual stock option grant described above, if any, of up to $90,000 (or such different number as determined by the Board).

Grant Date: The grant date for the awards described above will be on or about the date of the Annual Meeting of Stockholders (or such other date as determined by the Board). The number of units and options is based on the last sale price of Carpenter Technology’s common stock on the date of grant.

Vesting: Subject generally to the director’s continued service, the stock options or stock units vest in full on the first anniversary of the grant date. If a director’s service terminates prior to the first anniversary of the grant date for reasons other than Cause, a Change in Control, Death or Disability (each as defined in the Director Stock Plan), one-quarter of the stock options or stock units will vest for every three months of service following the grant date. Terminations for Cause result in the forfeiture of all outstanding stock options and all stock units. All stock options have ten-year terms. Notwithstanding the foregoing, if a director elects to have more than 50% of his or her annual retainer paid in the form of stock units, the stock units representing the excess (e.g., 60% would be a 10% excess) are fully vested and nonforfeitable as of the grant date.

 

   

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    Director Compensation • Director Stock Ownership Policy    

 

 

Upon a Change in Control: In the event of a Change in Control (as defined in the Director Stock Plan), all stock units vest immediately and are payable in shares of common stock, and stock options become immediately exercisable. A director may exercise vested options at any time during the original term.

 

Upon Death or Disability: In the event of separation from service due to Death or Disability (as defined in the Director Stock Plan), all stock units and stock options vest immediately.

 

Deferral Policy: Directors may elect under the Director Stock Plan to have distribution of all or a portion of their stock units deferred until the later of their separation from service or a specific date/event. Carpenter Technology distributes a participating director’s deferred units, based on the director’s advance election, in a lump sum or in any number of annual installments up to a maximum of 15, beginning within 30 days following the later of the director’s separation from service or the date/event elected.

Dividend Equivalents on Stock Units: In the event that the Company pays dividends on outstanding common stock, dividend equivalents are credited to each director who has outstanding stock units. Dividend equivalents are reinvested in the form of additional stock units, with the number of units credited determined by dividing the dividend dollar amount by the closing price of Carpenter Technology common stock on the NYSE on the dividend equivalent payment date. Stock units that are attributable to dividend equivalents vest on the same basis as the underlying stock unit award. No dividend equivalent rights are granted on shares underlying stock option awards.

Director Stock Ownership Policy

It is our policy that non-employee directors must maintain a reasonable equity interest in order to provide them with a proprietary interest in Carpenter Technology’s growth and performance, to generate an increased incentive to contribute to the Company’s future success and prosperity by their personal efforts, and generally to enhance the community of interest between directors and our stockholders.

The current policy requires each director to hold equity in Carpenter Technology with an aggregate fair market value equal to at least six times the annual cash retainer. There is a five-year phase-in period for satisfying the minimum equity holding requirements, and a director is expected to retain the equity for the duration of Board service. All current non-employee directors satisfy the minimum equity holding requirements or are on track to satisfy such requirements in the stated phase-in period.

Compensation for Non-Employee Directors

Directors have three options with respect to payment of the cash portion of their annual retainer and 100% of committee chair fees:

 

 

Receive cash currently;

 

 

Defer all or a portion until a future date/event and then receive cash under Carpenter Technology’s Deferred Compensation Plan for Non-Management Directors (“Director Cash Deferral Plan”); or

 

 

Defer all or a portion until the later of their separation from service or a specific date/event and then receive common stock under the Director Stock Plan.

Under the Director Cash Deferral Plan, interest is credited semi-annually at Carpenter Technology’s “Five-Year Medium-Term Note Borrowing Rate,” a term defined in the Director Cash Deferral Plan. Carpenter Technology distributes a participating director’s deferred cash based on the director’s advance election, in a lump sum or in any number of annual installments up to a maximum of 15, beginning on a future date or upon the event elected.

 

   

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Table of Contents

 

    Director Compensation • Fiscal Year 2023 Director Compensation Table    

 

 

Fiscal Year 2023 Director Compensation Table

This table shows the compensation paid or awarded to each non-employee director during fiscal year 2023. Our CEO is not compensated for his Board service.

 

Name  

Fees Earned or

Paid in Cash
(includes Chair
Retainer)

($)

   

Stock   
Awards(1)

($)   

  

Option   
Awards(2)

($)   

  

Change in   
pension value   
and   
nonqualified   
deferred   
compensation   
earnings(3)

($)   

    

All Other   
Compensation(4)

($)   

  

Total   

($)

 

Acoff, Viola L.

    74,375       125,058           35,012           0           12,868           247,313  

Hannan, Kathy A.

    65,000       125,058        35,012        0           2,530           227,600  

Hart, A. John

    74,375       125,058        35,012        0           12,868           247,313  

Inglis, I. Martin

    100,000       210,019        60,007        0           50,573           420,599  

Karol, Steven E.

    77,500       125,058        35,012        0           27,916           265,486  

Ligocki, Kathleen

    82,500       125,058        35,012        0           16,024           258,594  

McLane, Jr., Charles D.

    90,000 (5)      125,058        35,012        0           13,093           263,163  

Pritchett, Colleen S.

    5,476       41,857        94,632        0           0           141,965  

Wadsworth, Jeffrey

    38,750       0        0        0           9,450           48,200  

Ward, Jr., Stephen M.

    77,500       125,058        35,012        1,235           56,015           294,820  

Younessi, Ramin

    65,000       125,058        35,012        1,174           4,272           230,516  

 

(1)

The grant date fair value of stock units granted to our directors in fiscal year 2023 was computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation – Stock Compensation. Assumptions made in this valuation are set forth in Note 15 to the financial statements contained in Carpenter Technology’s 2023 Annual Report on Form 10-K. Annual stock units granted and credited to each director’s account are subject to partial forfeiture if the director separates from Board service prior to the first anniversary of the grant date for any reason other than Death or Disability.

 

 

Each director, with the exception of Mr. Inglis and Ms. Pritchett, was credited with 3,646 stock units for fiscal year 2023 on October 11, 2022, representing a grant date fair value of $125,058. Retainer stock units credited to each director represent $65,033 of the annual retainer. The remaining stock units credited represent an annual award of additional stock units as described above with a grant date fair value of $60,025.

 

 

Mr. Inglis, who serves as Chairman, was credited with 6,123 stock units for fiscal year 2023 on October 11, 2022, representing a grant date fair value of $210,019. Retainer stock units credited represent $100,019 of his annual retainer. The remaining stock units credited represent an annual award of additional stock units as described above with a grant date fair value of $110,000.

 

 

Mr. Wadsworth retired from the Board on October 11, 2022, and did not receive a stock unit grant.

 

 

Ms. Pritchett joined the Board on June 1, 2023, and was credited with 906 stock units for fiscal year 2023 on that date, representing a grant date fair value of $41,857. Of this total number, 471 stock units represent $21,760 of her prorated annual retainer. The remaining stock units credited represent a prorated annual award of additional stock units with a grant date fair value of $20,097.

 

 

The total number of stock units credited to each director under the Director Stock Plan as of June 30, 2023, including stock units that were credited with respect to prior fiscal years and reinvested dividend equivalents, was: V. Acoff – 18,094; K. A. Hannan – 5,026; A. J. Hart – 18,094; I. M. Inglis – 66,996; S. Karol – 37,115; K. Ligocki – 22,083; C. McLane, Jr. – 19,462; C. Pritchett – 906; J. Wadsworth – 0; S. Ward, Jr. – 72,634; and R. Younessi – 7,227.

 

(2)

The grant date fair value of option awards granted to our directors in fiscal year 2023 was computed in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. Assumptions made in this valuation are set forth in Note 15 to the financial statements contained in Carpenter Technology’s 2023 Annual Report on Form 10-K.

 

 

Each director, with the exception of Mr. Inglis and Ms. Pritchett, received an annual award of 2,408 stock options for fiscal year 2023 on October 11, 2022, representing a grant date fair value of $35,012. Mr. Inglis received an annual award of 4,127 stock options for fiscal year 2023 on October 11, 2022, representing a grant date fair value of $60,007. Mr. Wadsworth retired from the Board on October 11, 2022, and did not receive a stock option grant.

 

 

Ms. Pritchett joined the Board on June 1, 2023, and was credited with 565 stock options for fiscal year 2023 on that date representing a grant date fair value of $11,712. She also received an additional award of 4,000 stock options upon joining the Board, representing a grant date fair value of $82,920.

 

 

The total number of shares subject to stock options credited to each director under the Director Stock Plan that remains outstanding as of June 30, 2023, including stock options that were granted in prior fiscal years, was: V. Acoff –18,052; K. H. Hannan – 7,399; A. J. Hart – 18,052; I. M. Inglis – 35,609; S. Karol – 28,734; K. Ligocki – 19,938; C. McLane, Jr. – 15,734; C. Pritchett – 4,565; J. Wadsworth – 26,326; S. Ward, Jr. – 28,734; and R. Younessi – 9,234.

 

(3)

Reflects above-market earnings equal to 49% above 120% of the Applicable Federal Rate (AFR) Long-Term Rate on compensation deferred that is not tax qualified.

 

   

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    Director Compensation • Fiscal Year 2023 Director Compensation Table    

 

 

(4)

Includes the aggregate dollar amount of dividend equivalents paid in fiscal year 2023 on the stock unit balance credited to each director’s account with respect to dividends paid on outstanding common stock during fiscal year 2023. Dividend equivalents are reinvested in the form of additional stock units, with the number of units credited being determined by dividing the dividend dollar amount by the closing price on the NYSE on the dividend equivalent payment date.

 

(5)

Includes fees deferred in the form of stock units pursuant to an advance deferral election for compensation earned in calendar year 2023.

 

   

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Table of Contents

Proposal 2:

Ratification of Appointment of Independent

Registered Public Accounting Firm

The Audit/Finance Committee has selected PricewaterhouseCoopers LLP (“PwC”) to serve as Carpenter Technology’s independent registered public accounting firm for fiscal year 2024. The Board proposes that the Company’s stockholders ratify this appointment. PwC, or one of its predecessor firms, has served as Carpenter Technology’s independent registered public accounting firm since 1918. The Audit/Finance Committee and the Board of Directors believe PwC is well qualified to act in this capacity. A representative of PwC is expected to attend the Annual Meeting of Stockholders and be available to respond to appropriate questions from stockholders.

Vote Required for Ratification

The affirmative vote of a majority of the shares in person or represented by proxy at the meeting and entitled to vote is required to ratify the appointment of PwC as the Company’s independent registered public accounting firm.

Audit Fees

The aggregate fees billed by PwC for professional services rendered for the annual audit of Carpenter Technology’s consolidated financial statements and internal controls over financial reporting for fiscal year 2023, the reviews of the financial statements included in Carpenter Technology’s quarterly reports on Form 10-Q, audit and attestation services related to statutory or regulatory filings required by certain foreign locations, issuance of comfort letters, and review of registration statements, were $2,085,000 in fiscal year 2023 as compared to $2,060,000 in fiscal year 2022.

Audit-Related Fees

PwC billed $10,000 in audit-related fees in fiscal year 2023, the same as those in fiscal year 2022. The fees in both fiscal year 2023 and 2022 were related to agreed-upon procedures related to Carpenter Technology’s compliance with certain federal and state environmental reporting requirements.

Tax Fees

The aggregate fees billed by PwC for tax services were $590,000 for fiscal year 2023, compared to $410,000 in fiscal year 2022. Fees in both fiscal years were primarily for domestic and international tax compliance services and other tax projects.

All Other Fees

The aggregate fees billed by PwC for all other services were $3,000 in fiscal year 2023, compared to $4,000 in fiscal year 2022. The fiscal year 2023 and 2022 fees are for subscriptions to certain PwC reference tools.

Pre-Approval Policies and Procedures for Audit and Non-Audit Services

Policy Statement

The Audit/Finance Committee is required to specifically pre-approve the audit and non-audit services performed by the independent auditor to ensure that such services do not impair the auditor’s independence.

Delegation

The Chairman of the Audit/Finance Committee has the Committee’s delegated authority to pre-approve requests for services that were not approved at a scheduled meeting. The Chairman reports any pre-approval decisions to the Audit/Finance Committee at its next scheduled meeting. All services, regardless of fee amounts, are subject to restrictions to ensure the services will not impair the independence of the auditor. In addition, all fees are subject to ongoing monitoring by the Audit/Finance Committee.

Audit Services

The annual audit services engagement terms and fees are subject to the specific pre-approval of the Audit/Finance Committee. The Committee must approve any changes in terms, conditions and fees resulting from changes in audit scope. In addition to the annual audit services engagement, the Audit/Finance Committee may grant pre-approval for other audit services, which are those services that only the independent auditor reasonably can provide.

 

   

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    Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm    

 

 

Audit-Related Services

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of Carpenter Technology’s financial statements as traditionally performed by its independent auditor. The Audit/Finance Committee believes the performance of audit-related services does not impair the independence of the auditor. All PwC audit-related fees for fiscal year 2023 were pre-approved by the Audit/Finance Committee.

Tax Services

The Audit/Finance Committee believes the independent auditor can provide tax services to the Company, such as domestic and international tax consulting and compliance services, without impairing the auditor’s independence. All PwC fees for tax services during fiscal year 2023 were pre-approved by the Audit/Finance Committee.

All Other Services

The Audit/Finance Committee may grant pre-approval of those permissible non-audit services classified as “all other services” that it believes are routine and recurring services that will not impair the independence of the auditor. All PwC fees for other services during fiscal year 2023 were pre-approved by the Audit/Finance Committee.

 

 

 

 

 

 

 

 

LOGO

 

 

 

 

 

 

 

 

 

 

 

 

FOR

  

 

 

The Board of Directors recommends that you vote FOR the ratification of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal year 2024.

 

 

 

   

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Audit/Finance Committee Report

The Audit/Finance Committee consists of four members, each of whom has been determined by the Board to be an independent director under applicable rules or other requirements of the NYSE and the SEC with respect to qualification of members of an audit committee. Each member is financially literate as required by NYSE standards, and each of Mr. McLane and Dr. Hannan qualifies as an “audit committee financial expert” under applicable SEC standards. The Audit/Finance Committee functions pursuant to a written charter that was adopted and is reviewed annually by the Board. A copy of the charter is posted on Carpenter Technology’s website at http://www.carpentertechnology.com/legal.

 

 

The Audit/Finance Committee’s primary responsibilities include appointing the independent registered public accounting firm to be retained to audit Carpenter Technology’s consolidated financial statements and recommending to the Board the inclusion of these financial statements in the Annual Report on Form 10-K. The Audit/Finance Committee is also responsible for approving any non-audit services to be provided by the independent registered public accounting firm. Additionally, the Audit/Finance Committee reviews the adequacy of Carpenter Technology’s financial reporting and internal controls over financial reporting, the integrity of Carpenter Technology’s financial statements, and the independence and performance of Carpenter Technology’s independent registered public accounting firm.

 

Management is primarily responsible for the preparation, presentation and integrity of Carpenter Technology’s financial statements; establishing, maintaining and evaluating the effectiveness of disclosure controls and procedures; establishing, maintaining and evaluating the effectiveness of internal controls over financial reporting; and evaluating any change in internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

 

The independent registered public accounting firm is responsible for performing an independent audit of Carpenter Technology’s financial statements in accordance with standards established by the Public Company Accounting Oversight Board (“PCAOB”) and expressing an opinion on whether those financial statements conform to U.S. generally accepted accounting principles, as well as expressing an opinion on the effectiveness of Carpenter Technology’s internal control over financial reporting.

 

 

The Audit/Finance Committee reviewed and discussed with management and Carpenter Technology’s independent registered public accounting firm, PwC, Carpenter Technology’s audited financial statements and schedule for fiscal year 2023 and the report of PwC. The Committee also discussed other matters with PwC, such as the quality (in addition to acceptability), clarity, consistency and completeness of Carpenter Technology’s financial reporting and the matters required to be discussed by the applicable requirements of PCAOB and the SEC.

The Audit/Finance Committee met with management periodically during fiscal year 2023 to consider the adequacy of Carpenter Technology’s internal controls and discussed these matters and the overall scope and plans for the audit with PwC. The Audit/Finance Committee also discussed with management and PwC Carpenter Technology’s disclosure controls and procedures and the certifications by Carpenter Technology’s CEO and CFO. In particular, the Audit/Finance Committee was kept apprised by management of the progress of the evaluation of Carpenter Technology’s system of internal control over financial reporting and provided oversight and advice to management during the process. In connection with this oversight, the Audit/Finance Committee received periodic updates provided by senior management and PwC at several meetings during the fiscal year. At the conclusion of the process, management provided the Audit/Finance Committee with, and the Audit/Finance Committee reviewed, a report on the effectiveness of Carpenter Technology’s internal control over financial reporting. The Audit/Finance Committee also reviewed PwC’s report on Carpenter Technology’s internal control over financial reporting.

The Audit/Finance Committee has considered whether the independent registered public accounting firm can maintain independence while also providing non-audit services, and has received from PwC written disclosures and a letter concerning the firm’s independence from Carpenter Technology, as required by applicable requirements of the PCAOB. These disclosures have been reviewed by the Audit/Finance Committee and discussed with PwC.

 

   

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    Audit/Finance Committee Report    

 

 

Based on the reviews and discussions described in this report, the Audit/Finance Committee has recommended to the Board that Carpenter Technology’s audited consolidated financial statements be included in Carpenter Technology’s 2023 Annual Report on Form 10-K for filing with the SEC.

Submitted by the Audit/Finance Committee of the Board of Directors,

CHAIR: Charles D. McLane, Jr.

Members:

Dr. Kathy A. Hannan

Dr. A. John Hart

Ramin Younessi

 

   

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Proposal 3:

Advisory Vote to Approve the Compensation

of Our Named Executive Officers

Each year since 2012, we have asked our stockholders to vote to approve, on an advisory basis, the compensation of our named executive officers (“NEOs”) as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis (“CD&A”), the Compensation Tables, and any related material as required pursuant to Section 14A of the Securities Exchange Act of 1934. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our NEO compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. We expect to continue conducting the say-on-pay vote annually.

The say-on-pay vote is advisory, and therefore not binding on the Company, the Human Capital Management Committee or the Board of Directors. However, the Board of Directors and the Human Capital Management Committee value our stockholders’ opinions. If there is a significant vote against the NEO compensation, the Human Capital Management Committee will evaluate whether any actions are necessary to address stockholder concerns.

 

 

Our Pay-for-Performance Compensation

 

Our executive compensation programs are designed to provide compensation levels benchmarked to attract, motivate and retain exceptional managerial talent for the present and future, to reward executives for achieving financial and strategic company goals, and to align their interests with the interests of stockholders.

 

We believe the compensation of our NEOs is reasonable, competitive and strongly focused on pay-for-performance principles. We emphasize compensation opportunities that appropriately reward executives for delivering financial results that meet or exceed pre-established goals, and executive compensation varies depending upon the achievement of those goals.

 

Through stock ownership requirements and equity incentives, we believe we have aligned the interests of our NEOs with those of our stockholders and the long-term interests of the Company.

 

 

We believe that the compensation policies and procedures articulated in this Proxy Statement are effective in achieving Carpenter Technology’s goals, and that the executive compensation reported was appropriate and aligned with fiscal year 2023 results. Before voting, we encourage you to read the CD&A and “Executive Compensation” sections of this Proxy Statement for details about our executive compensation programs and NEO compensation in fiscal year 2023.

The Human Capital Management Committee continually reviews the compensation programs for our NEOs to ensure that they achieve the desired goal of offering total compensation consisting of base salary competitive with an identified peer group of companies and incentive opportunities that are performance-oriented and linked to the interests of stockholders. We are asking stockholders to indicate their support for our NEO compensation as described in this Proxy Statement by voting on the following resolution:

“RESOLVED, that the stockholders hereby approve, on an advisory basis, the compensation paid to the named executive officers of Carpenter Technology Corporation, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules (which disclosures shall include the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure).

We expect that we will hold a say-on-pay vote again at next year’s annual meeting.

 

 

 

 

 

LOGO

 

 

 

 

 

 

 

 

FOR

  

 

 

The Board of Directors recommends that you vote FOR Proposal 3 to approve the compensation of the NEOs as disclosed in this Proxy Statement on an advisory basis.

 

 

 

   

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Proposal 4:

Advisory Vote on Whether the Advisory Vote to Approve the Compensation of our Named Executive Officers Should Occur Every One, Two or Three Years

As discussed in Proposal No. 3, the Board of Directors values the input of stockholders regarding Carpenter Technology’s executive compensation practices. As contemplated by the Dodd-Frank Act, stockholders are also invited to express their views, on an advisory basis, on how frequently advisory votes on the compensation of our NEOs, such as Proposal No. 3, will occur. This proposal, commonly known as a “say-on-pay frequency” proposal, provides stockholders with an opportunity to indicate whether they would prefer an advisory vote on NEO compensation once every year, every two years, or every three years.

After careful consideration of this Proposal No. 4, our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is still the most appropriate choice at this time. Therefore, our Board of Directors recommends that you vote for a one-year interval for the advisory vote on executive compensation.

In formulating its recommendation, our Board of Directors considered that, while our executive compensation policies are designed to promote a long-term connection between pay and performance, executive compensation disclosures are made annually. An annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies and practices every year. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.

You may cast your advisory vote on your preferred voting frequency by choosing the option of one year, two years, or three years, or abstaining from voting. You are being asked to vote on the following resolution:

“RESOLVED, that the option of once every one year, two years, or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the Securities and Exchange Commission’s compensation disclosure rules (which disclosure shall include the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure).

Because this vote is advisory and not binding on the Board of Directors or Carpenter, the Board may decide it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders, and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to our compensation programs. A vote on a “say-on-pay frequency” proposal like this will occur at least once every six years.

Vote required for approval. The frequency that receives the highest number of votes will be considered by the Board to be the stockholders’ preference, as expressed on an advisory basis.

 

 

 

 

 

LOGO

 

 

 

 

 

 

 

 

FOR

  

 

 

The Board of Directors recommends that you vote FOR a frequency of once every year for the frequency of stockholder advisory votes on executive compensation.

 

 

 

   

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Human Capital Management Committee Report

The Human Capital Management Committee (“Committee”) consists of five members, each of whom has been determined by the Board to meet the NYSE and SEC requirements for compensation committee members. The Committee functions pursuant to a written charter that was adopted and is reviewed annually by the Board. A copy of the charter is posted on Carpenter Technology’s website at http://www.carpentertechnology.com/legal.

The Committee has reviewed and discussed the CD&A (as defined below) with management, legal counsel, and its independent compensation consultant. The Committee also considered the results of prior say-on-pay votes and input from stockholder engagement during the last fiscal year when reviewing the CD&A.

Based on such review and discussion, the Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference into our 2023 Annual Report on Form 10-K.

Submitted by the members of the Committee,

Chair: Kathleen Ligocki

Members:

Dr. Viola L. Acoff

Steven E. Karol

Colleen S. Pritchett

Stephen M. Ward, Jr.

 

   

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy and the key criteria the Committee uses to set compensation levels, determine actual compensation, and establish future compensation opportunities for our executives. In implementing the fiscal year 2023 executive compensation program, the Committee considered prior say-on-pay votes, stockholder feedback, and advice from the Committee’s independent compensation consultant.

 

Our Named Executive Officers

 

Our Named Executive Officers (“NEOs”) for fiscal year 2023 are:

Tony R. Thene,

 

President and Chief Executive Officer

 

Timothy Lain,

 

Senior Vice President and Chief Financial Officer

  

James D. Dee,

 

Senior Vice President, General Counsel and Secretary

 

Brian J. Malloy,

 

Senior Vice President and Group President – Specialty Alloys Operations (SAO)

 

David Graf,

 

Vice President and Group President – Performance Engineered Products (PEP)

 

Table of Contents

Executive Summary

    44  

Stockholder Engagement

    46  

Incentive Program – Changes Made to Fiscal Year 2023

    46  

Executive Compensation Philosophy and Framework

    46  

Elements of our Fiscal Year 2023 Compensation Program

    49  

Annual Compensation

    51  

Omnibus Stock Plan

    53  

Compensation Program Risk Assessment

    56  

Fiscal Year 2023 NEO Compensation

    57  

Executive Compensation Practices

    59  

Tax Policies

    65  

 

   

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Executive Summary

The Committee is committed to ensuring the Carpenter Technology executive compensation program promotes the alignment of executives’ and stockholders’ interests. We have designed the program to attract and retain outstanding leaders, to motivate and reward them for achieving specified business and financial goals, and to support the creation of sustainable stockholder value. The Committee believes the fiscal year 2023 executive compensation decisions reward Carpenter Technology executives appropriately for their performance during the fiscal year and encourage them to focus on long-term value creation.

In fiscal year 2021, the Committee adjusted the long-term incentive (“LTI”) design to use a three-year average measurement period, with individual year’s targets established at the beginning of each fiscal year, rather than a three-year cumulative period with targets set at the beginning of the measurement period, as it had done in prior years. While the Company has seen a significant improvement in most end-use markets since the onset of the COVID-19 pandemic, certain end-use markets are still in the process of recovering from the impacts of the pandemic. As a result, the Committee continued with this modified long-term incentive design for fiscal year 2023 described above (individual year’s targets set at the beginning of each fiscal year and using a three-year average measurement period as opposed to a three-year cumulative measurement period). The Committee will evaluate this LTI structure annually. A detailed description of our fiscal year 2023 executive compensation program can be found below under “Executive Compensation Philosophy and Framework,” “Elements of our Fiscal Year 2023 Compensation Program,” and “Annual Compensation.”

Summary of Fiscal Year 2023 Performance

Fiscal year 2023 was an important milestone in Carpenter Technology’s recovery from the pandemic, marking a waypoint on our growth trajectory to doubling our operating income by fiscal year 2027. More than a year ago, we set out the goal to return to pre-pandemic, fiscal year 2019, profitability on a run-rate basis by the end of fiscal year 2023. We not only achieved that goal, but exceeded it. With increased productivity, improved product mix and the realization of higher sales prices, we demonstrated accelerating momentum on that growth trajectory. As we head into fiscal year 2024, we continue to have strong market conditions and significant momentum towards our long-term goals.

Operating income in fiscal year 2023 was $133.1 million. Operating loss was $24.9 million in fiscal year 2022, or $34.0 million when adjusted to exclude COVID-19 costs, the release of an acquisition related contingent liability, COVID-19 related employee retention credits, and a historical environmental site charge. Adjusted free cash flow was negative $67.6 million as compared to negative $83.1 million for the same period a year prior. Operating cash flow in the current fiscal year reflects the impact of higher earnings after non-cash adjustments to net income, offset by increases in inventory compared to the year prior.

We have meaningfully expanded and strengthened key customer relationships and have worked closely with our customers to address their changing material needs and production schedules, which has allowed us to realize significant price gains. We have demonstrated that Carpenter Technology is both a critical solution provider as well as a valued business partner. Our manufacturing teams also continue to implement the Carpenter Technology Operating Model across the entire organization to enhance production efficiencies.

Carpenter Technology is, and we believe will remain, a trusted solutions provider of critical applications. Both production improvements and continued positive macro trends in the end-use markets we serve have positioned our material solutions for both near-term and long-term growth. While maintaining our focus on our core business, we also continued to strengthen our growing leadership position in emerging areas such as electrification and additive manufacturing.

 

   

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    Compensation Discussion and Analysis    

 

 

Financial and Safety Metrics

 

 

LOGO

 

*

Fiscal year 2022 excludes impact of special items ($5.9 million of COVID-19 costs; $2.4 million for a historical environmental charge; $30.0 million of Reading press outage/COVID-19 production impacts; $12.7 million benefit for employee retention credits; $4.7 million benefit for release of acquisition-related contingent liability).

**

Fiscal year 2022 excludes $5.9 million of COVID-19 costs and $47.2 million of IRS tax refunds. Historically, Adjusted Free Cash Flow included cash used for dividends paid on outstanding common stock and participating securities. The definition was updated in fiscal year 2023 to exclude dividends paid. Fiscal year 2022 has been updated to conform to the current definition.

***

Fiscal year 2022 excludes impact of special items from operating income.

There were no special items in fiscal year 2023.

 

   

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    Compensation Discussion and Analysis • Stockholder Engagement    

 

 

Stockholder Engagement

Stockholder Engagement on Compensation and Advisory Vote on Executive Compensation (“Say-on-Pay”) and Advisory Vote on How Frequently Advisory Votes on the Compensation of our NEOs occurs (“Say-on-Pay Frequency”)

Carpenter Technology has provided stockholders with an annual say-on-pay advisory vote on the compensation of its NEOs since 2012. Additionally, we have an active stockholder outreach program, and the Board has tasked the General Counsel and Chief Governance Officer and Vice President of Corporate Development and Investor Relations with communicating with stockholders throughout the year about governance and compensation matters. They also solicit feedback from stockholders throughout the year and disseminate that information to the Committee and management to keep them apprised of stockholder views and to arrange direct interactions between stockholders and the CEO, management and directors. The Committee considers the results of the annual say-on-pay advisory vote, as well as input received from stockholders, when designing our executive compensation program.

At the 2022 Annual Meeting of Stockholders, approximately 99% of the votes cast were in favor of the say-on-pay advisory vote to approve the executive compensation program. In light of the stockholder feedback received, and in consideration of prior say-on-pay advisory vote results, the Committee made relatively few changes, including adding ESG-based goals for performance-based RSUs, to the Company’s compensation programs for fiscal year 2023.

At the 2023 Annual Meeting of Stockholders, Carpenter Technology will again hold an annual advisory vote to approve executive compensation. We will also hold an advisory vote on whether the say-on-pay advisory vote to approve NEO compensation should occur every one, two or three years. We will continue to engage with our stockholders throughout the year and consider the results from this year’s and future advisory say-on-pay votes on executive compensation, as well as feedback from our stockholders, when designing our executive compensation program.

Incentive Program – Changes Made to Fiscal Year 2023

As described in the “Summary of Fiscal Year 2023 Performance” section, the Committee continued with the adjusted long-term incentive design implemented during the COVID-19 pandemic. Specifically, as previously disclosed during fiscal years 2020, 2021 and 2022, we modified the measurement of all outstanding performance-based RSUs by switching from a three-year cumulative measurement period to a three-year average measurement period. This was done without adjusting any of the already achieved attainment for the past fiscal years. The metrics for each new fiscal year are established at the beginning of that fiscal year. The average of the attainment over a three-year period is used to determine the total payout percentage. We buttressed this approach by applying a 100% cap on the fiscal year 2020 awards such that the performance share attainment average percentage for a given three-year period did not exceed 100%. For the fiscal year 2023, 2022 and 2021 performance-based restricted stock unit awards, we continued to use a three-year average measurement period but did not apply the 100% cap. Thus, the 100% cap was in place for awards that were previously three-year awards that were modified to move to awards with targets set each fiscal year. The 100% cap was not applied to any new awards. More details on this approach are in the “Goals for Performance-Based RSUs” section.

For fiscal year 2023, the metrics for performance-based RSU awards were changed to add ESG-based goals to reinforce the commitment the Company has made to these initiatives. More details can be found in the “Elements of our Fiscal Year 2023 Compensation Program” section.

Executive Compensation Philosophy and Framework

Our Guiding Principles

The overarching goal of our executive compensation program is to drive long-term high performance and stockholder value creation through our pay programs. As a result, there are strong ties to performance in many aspects of the compensation program, including pay levels, incentive payouts and pay opportunities.

The Committee structures the executive compensation program to reward our NEOs when performance achieves or exceeds goals. A significant component of our incentive structure is weighted towards overall leadership team

 

   

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    Compensation Discussion and Analysis • Executive Compensation Philosophy and Framework    

 

 

performance against targeted goals (rather than individual performance), so that if they meet or exceed our goals, the team earns target or above awards. Conversely, if the team fails to meet the minimum thresholds, components of performance-based compensation will not be awarded.

In general, the Committee targets total NEO compensation at the median of market practices.

Goals

We design our compensation program to achieve the following:

 


    

  

 

1

 

Motivate and reward our executives to achieve or exceed Carpenter Technology’s financial and operating performance objectives.

 

 

  

  

 

2

 

Propel our business forward through a focus on operational excellence and execution of our business strategy.

 

  

  

 

3

 

Link executives’ compensation with specific business objectives that are designed to drive stockholder value in both the short- and long-term.

      

 

              
    

 

4

 

Link executives’ compensation with the interests of our stockholders by tying a significant portion of total compensation opportunity to the value of our stock.

 

 

    

 

5

 

Reward individual performance and accomplishments while reinforcing accountability and collaboration.

    

 

6

 

Ensure we retain a deep and talented leadership team that can successfully drive and implement our growth and operational excellence strategies.

   

Our Compensation Policies and Practices

Our executive compensation program reflects the Board’s strong commitment to good governance practices with respect to executive compensation. During fiscal year 2023, we continued with the practices described below.

 

       

What We Do

       

Balanced portfolio: The Committee ensures a balanced mix of cash and equity, annual and long-term incentives, and performance metrics, including operating income, adjusted free cash flow, safety, ESG-Based Goals, Adjusted ROIC, Adjusted EBITDA and Total Stockholder Return (“TSR”).

 

Double-trigger benefits: We have a double-trigger for change-in-control separation benefits. This means that a Change in Control of Carpenter Technology alone does not trigger any severance obligations to our NEOs under our Change-in-Control Severance Plan or vesting of awards.

 

Clawback policy: We have a clawback policy that applies to both annual cash bonuses and short- and long-term cash incentives, as well as equity awards for NEOs and other senior executives.

 

Key practices: The Committee analyzes performance against robust and diversified performance metrics, ensures substantial equity ownership guidelines, annually reviews compensation peer groups, and provides and oversees limited perquisites.

 

    

Equity ownership guidelines: We maintain equity ownership guidelines that require Corporate Vice Presidents and above to achieve an equity ownership level, over a five-year period, equal to a certain multiple of base salary. For the CEO, the level is 5x base salary; for Senior Vice Presidents, 3x base salary; and for Corporate Vice Presidents, 2x base salary.

 

Independent compensation consultants: We engage independent compensation consultants who provide information to support the Committee’s work, including a peer group analysis, market compensation data, and an analysis of various compensation instruments and metrics.

 

Risk assessment: The Committee reviews an annual assessment by an independent compensation consultant to confirm that metrics and goals are appropriate to drive high performance without encouraging risk-taking beyond established risk parameters.

 

  

 

   

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    Compensation Discussion and Analysis • Executive Compensation Philosophy and Framework    

 

 

       

What We Don’t Do

       

Excise tax gross-ups: The compensation program does not include any change-in-control tax gross-ups to our executives.

 

Dividend payments or accruals on unearned restricted stock units (RSUs): We do not pay or accrue dividends on unearned RSUs. Dividend equivalents will only be paid on time-based RSU awards upon satisfaction of the terms and conditions applicable to the underlying RSUs. Additionally, no dividend equivalent rights are granted on shares underlying stock options.

 

Excessive perquisites: We do not provide excessive perquisites to our NEOs. Those offered are primarily financial and tax counseling, tax preparation, medical examinations, individual disability income protection plans, relocation expenses and parking fees at our Philadelphia headquarters.

 

    

Hedging/pledging of Company stock: Our policy prohibits hedging or pledging of Carpenter Technology stock by NEOs.

 

Option repricing: Our long-term incentive program does not permit repricing of stock options without stockholder approval. Additionally, the program does not permit Carpenter Technology to offer a cash buyout of underwater options.

 

Employment contracts: We do not provide any employment contracts to our NEOs.

  

 

   

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    Compensation Discussion and Analysis • Elements of our Fiscal Year 2023 Compensation Program    

 

 

Elements of our Fiscal Year 2023 Compensation Program

Our compensation program is designed to be competitive and to align the interests of our executive officers and other senior leaders with Company performance and stockholder returns. For our NEOs, this is accomplished through a mix of base salary and time- and performance-based rewards, including cash incentives and equity awards. We also provide minimal perquisites, retirement plans, and post-employment benefits that are not intended to be the focus of the program. Performance-based compensation (annual and long-term) continues to constitute a significant portion of total compensation. A brief overview of each element of compensation is provided in the chart below, with further details provided later in this CD&A.

Overview of Key Compensation Elements

 

      Compensation Element

 

  

Description

 

  

Rationale

 

  LOGO     

 

Base Salary

  

 

  Fixed component of pay targeted at the median of the market.

 

  

 

  Provides fixed compensation for executive to perform job functions.

 

  

 

Annual Cash Incentive

  

 

  Delivered in cash annually.

 

   Tied to achievement of financial and operational goals (operating income, adjusted free cash flow and safety metrics).

 

   Executives can earn 0-200% of their target award based on achievement of pre-established targets.

 

  

 

   Rewards achievement of key drivers of our annual operating plan.

 

   Provides tangible, achievable goals and reinforces key priorities of the organization.

  LOGO  

  

 

Adjusted ROIC-Based

Restricted Stock Units

 

(22.5% of LTI)

  

 

   Executives can earn 0-200% of their target award based upon Adjusted ROIC achieved vs. target over a three-year period with a TSR modifier of +/- 20%.

 

   Vests at the end of the three-year period, if earned.

 

   Dividend equivalents are not accrued or paid on these RSUs.

 

  

 

   Critical to incent management to invest and manage assets to deliver the greatest return.

 

   Vesting period is consistent with market practice and assists with retention.

  

 

Adjusted EBITDA-Based

Restricted Stock Units

 

(22.5% of LTI)

  

 

   Executives can earn 0-200% of their target award based upon Adjusted EBITDA achieved vs. target over a three-year period with a TSR modifier of +/- 20%.

 

   Vests at the end of the three-year period, if earned.

 

   Dividend equivalents are not accrued or paid on these RSUs.

 

  

 

   Focuses executives on achievement of our Adjusted EBITDA goal, which is strongly tied to stockholder value creation.

 

   Provides tangible, achievable goal as senior leaders have the greatest ability to drive Adjusted EBITDA.

 

   Vesting period is consistent with market practice and assists with retention.

 

  

 

ESG-Based Incentives

 

(5% of LTI)

 

  

 

   Executives can earn 0-200% of their target award based upon achievement of ESG-based goals vs. target over a three-year period with a TSR modifier of +/- 20%.

 

   Vests at the end of the three-year period, if earned.

 

   Dividend equivalents are not accrued or paid on these RSUs.

 

  

 

   Focuses executives on achievement of ESG- based goals and reinforces the commitment the Company has made to these initiatives, which include a programmatic approach to reducing energy and water usage across sites.

 

  

 

Time-Based Restricted Stock

Units

 

(50% of LTI)

  

 

   Vests in one-third annual increments over three years, subject to continued employment on the vesting date.

 

   Dividend equivalents are accrued on awards granted on or after October 8, 2019, and will only be paid upon satisfaction of the terms and conditions applicable to the underlying RSUs.

 

  

 

   Vesting period is consistent with market practice and assists with retention.

 

   

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    Compensation Discussion and Analysis • Elements of our Fiscal Year 2023 Compensation Program    

 

 

Target Compensation Strategy and Pay Mix

The Committee developed fiscal year 2023 compensation levels through a framework that aligns the long-term interests of our leadership with those of our stockholders. The Committee benchmarked against the Comparator Group and survey data.

NEO pay is generally targeted to be within a competitive range around market median.

Pay Mix

A substantial portion of target total compensation is delivered through variable performance-based incentives that are at risk. Variable performance-based incentives constitute 51% of our CEO compensation mix and 44% of our compensation mix for our other NEOs.

Target Direct Compensation Mix - CEO

 

LOGO

Target Direct Compensation Mix - NEOs*

 

LOGO

 

*

Represents target pay mix for Messrs. Dee, Graf, Lain and Malloy.

CEO Target Total Direct Compensation

The Committee targets CEO total direct compensation (salary plus target annual incentive and target LTI) at the market median. The Committee sets pay by taking into account a number of factors, such as experience in the position, Company performance, individual performance and future potential.

In setting target total direct compensation for the CEO, the Committee considers peer group data and supplements this information with CEO pay data from compensation surveys using revenue and industry comparators appropriate for Carpenter Technology. The Committee believes the blend of proxy data with survey data more accurately reflects CEO market pay levels.

The Committee took the following actions regarding Mr. Thene’s pay in fiscal year 2023, which the Committee determined to be within the competitive range of the market:

 

 

Base salary was increased 5.4% based on market data and performance;

 

 

Annual bonus under the Executive Incentive Bonus Compensation Plan was increased from 100% to 115% at target. The annual bonus was paid at 137.1% of target, consistent with operating results and other executives; and

 

 

Annual long-term incentive award was increased by 15.2%. The annual long-term incentive award was denominated 50% in time-based RSUs, 22.5% in Adjusted ROIC-based RSUs, 22.5% in Adjusted EBITDA-based RSUs and 5% in ESG-based RSUs. This is consistent with other executives and balances the goals of driving retention, absolute operational performance, relative stock price performance, and alignment with stockholders.

Target Total Direct Compensation

The Committee believes that a compensation program that targets market median positioning, but delivers a significant portion of that compensation through performance-based compensation elements, ensures proper alignment with our stockholders and ties the ultimate value delivered to NEOs (above/below target) to Company performance.

The Committee may further differentiate the compensation of individual NEOs through multiple mechanisms. The Committee retains discretion to adjust performance-based cash and performance-based equity payouts, in appropriate circumstances.

 

   

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    Compensation Discussion and Analysis • Annual Compensation    

 

 

Annual Compensation

Base Salaries

The Committee reviews base salaries annually and may also do so in connection with a promotion or other major change in responsibilities. In performing such a review, the Committee usually considers, among other factors, the person’s job duties, critical skills, performance and achievements, and the level of pay relative to comparable individuals at relevant companies reviewed by the Committee. This review includes our Comparator Group.

Executive Incentive Bonus Compensation Plan

Carpenter Technology maintains an Executive Incentive Bonus Compensation Plan (“EIBCP”) because we believe that a significant portion of our NEOs’ potential compensation should be contingent on Company business results and successful leadership of our business. This is what will ultimately drive long-term value for our stockholders. The Committee oversees the EIBCP and establishes the metrics that will be used each year, with input from management and outside compensation consultants. For fiscal year 2023, the metrics, the respective weightings, and the rationale for the selection of each metric for the NEOs are detailed in the following table.

Executive Bonus Compensation Plan Metrics Summary

 

Metric    Definition    Rationale

Operating Income

Weighting: 60%

 

 

LOGO

  

Net Sales minus Operating Expenses

 

includes:

 

  cost of sales, and selling, general and administrative expenses.

  

  Focuses management on driving top line growth and managing expenses.

 

  Drives tangible goal achievement and focuses on factors most in the organization’s control.

 

  When considered in conjunction with Adjusted EBITDA (used for LTI), focuses management on the overall profitability of the organization.

 

Adjusted Free Cash

Flow Weighting: 30%

 

 

LOGO

  

Cash flows provided from operating activities,

 

less:

 

  cash paid for purchases of property, plant, equipment and software, and acquisitions of businesses;

 

plus:

 

  cash received from the disposal of property, plant and equipment.

  

  Focuses management on achievement of positive free cash flow through increased earnings and management of working capital levels and capital expenditures.

Safety Metrics

Weighting: 10%

 

 

LOGO

  

  Measured using a Human Performance Rate metric*

  

  Emphasizes that our employees’ safety is our top priority.

 

*

Human Performance Rate (HPR) metric is comprised of closed Bradley Actions and STOPS per 100 full-time workers during a one-year period. Bradley Actions are discrete activities employees do to drive from reactive (i.e., the lowest stage of safety culture) to interdependence behaviors (i.e., the highest stage of safety culture). STOP Actions empower employees to STOP work at any time following our OOPPPS (Outside of Procedures, Parameters, Process, or the Situation as expected? STOP and Seek Help) model to prevent injury or harm.

 

   

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    Compensation Discussion and Analysis • Annual Compensation    

 

 

Executive Incentive Bonus Compensation Plan Opportunity

The Committee sets performance goals for each metric at threshold, target and maximum levels. The NEOs’ potential annual incentive awards for overall achievement toward these goals are expressed as a percentage of their respective base salaries, as follows:

 

 

LOGO

 

The overall attainment is based on the total weighted attainment of all of the individual metrics.

In order to verify EIBCP awards, the Audit/Finance Committee reviews the performance data relative to Carpenter Technology’s operating results for financial reporting purposes. The Committee then makes its award determinations.

Executive Incentive Bonus Compensation Plan Metrics and Attainment

The primary objective for setting the fiscal year 2023 annual incentive metrics was to encourage cash flow generation and optimize operating performance as we recovered from the challenges of the pandemic. The Committee selected these specific targets after an in-depth review of our operating plan and the industries within which Carpenter Technology operates, including certain external analysis as well as peer company practices. After reviewing all available information and analysis, the Committee applied judgment to define appropriate targets to align the relationship between pay and performance.

Targets are based on Carpenter Technology’s fiscal year 2023 annual operating plan, and the annual operating plan is set each year based on certain assumptions. The following assumptions were considered in developing the fiscal year 2023 annual operating plan:

 

 

A bottoms-up assessment of the timing and speed of market growth recovery from the impacts of the pandemic was considered for each end-use market. Targets were provided for each market related to expectations for price increases, net share gains, and new product sales. As a result of the overall assessment, net sales were expected to increase 33% in fiscal year 2023 compared to actual fiscal year 2022 results.

 

 

Operating cost savings were targeted both as a result of specific portfolio restructuring and cost savings initiatives undertaken by the Company as well aggressive deployment of the Carpenter Operating Model to increase efficiency and productivity and drive capacity enhancements.

 

 

An increase in adjusted free cash flow in fiscal year 2023 resulting from higher earnings.

 

   

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    Compensation Discussion and Analysis • Omnibus Stock Plan    

 

 

For fiscal year 2023, the achievement targets for the Operating Income, Adjusted Free Cash Flow, and Safety metrics, and actual year-end attainment adjusted as described below, were as follows:

 

 

EIBCP Metrics and Attainment

 

LOGO

 

 

The overall attainment of 137.1% for fiscal year 2023 reflects maximum attainment of safety performance and above target attainment for operating income. Adjusted free cash flow performance lagged primarily as a result of an inventory build to support the growing demand conditions. Historically, Adjusted Free Cash Flow included cash used for dividends paid on outstanding common stock and participating securities. The definition was updated in fiscal year 2023 to exclude dividends paid.

Omnibus Stock Plan

Long-Term Equity Incentives

We use the Carpenter Technology Corporation Stock-Based Incentive Compensation Plan for Officers and Key Employees (“Omnibus Plan”) to provide equity compensation to NEOs and other key personnel. The Omnibus Plan uses a combination of time-based and performance-based equity vehicles to attract and retain executives who can drive our performance and to create alignment between our executives and our stockholders. The Committee believes such awards focus executives on Carpenter Technology’s longer-term interests and strategic business decisions and encourage retention.

To determine the mix of equity vehicles for the long-term incentive program, the Committee considered current industry trends, practice among our Comparator Group, and the behaviors the awards are intended to promote. The overall mix of incentive vehicles under the Omnibus Plan for fiscal year 2023 is shown below:

Fiscal Year 2023 NEO Target LTI Opportunities

For fiscal year 2023, the Committee relied on benchmarking and each executive’s contributions toward corporate goals to determine the following target values of incentives under the LTI program:

 

NEO    Total LTI
Opportunity
($)
     Time-Based RSU
50% of LTI
($)
     3-Year Performance-
Based RSU
(Adjusted ROIC)
22.5% of LTI
($)
     3-Year Performance-
Based RSU
(Adjusted EBITDA)
22.5% of LTI
($)
     3-Year Performance-
Based RSU
(ESG-Based)
5% of LTI
($)
 

Tony R. Thene

     3,785,000        1,892,500        851,625        851,625        189,250  

Timothy Lain

     850,000        425,000        191,250        191,250        42,500  

James D. Dee

     450,000        225,000        101,250        101,250        22,500  

Brian J. Malloy

     750,000        375,000        168,750        168,750        37,500  

David Graf

     450,000        225,000        101,250        101,250        22,500  

Values shown above may differ slightly from values shown on the SCT Table due to method of rounding to full shares.

 

   

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    Compensation Discussion and Analysis • Omnibus Stock Plan    

 

 

Goals for Performance-Based RSUs

We have three types of performance-based RSUs: those tied to achievement of Adjusted ROIC goals over a three-year performance period, those tied to achievement of Adjusted EBITDA goals over a three-year performance period, and those tied to achievement of ESG-based goals over a three-year performance period. The performance-based RSUs include a TSR modifier. The number of shares to be awarded under the Adjusted ROIC, Adjusted EBITDA and ESG-based measures may be modified up to 20% either positively or negatively depending on Carpenter Technology’s TSR performance relative to the Russell RSCC Materials & Processing Growth Index over the three-year performance period. TSR is used as a modifier to continue to promote alignment with stockholder value. The goals and attainment results for these fiscal year 2023 awards will conclude at the end of fiscal year 2025.

Before modifications approved by the Committee in fiscal year 2021, the Adjusted ROIC targets for our historical performance-based RSUs were based on the cumulative three-year Adjusted EBITDA noted hereafter with no changes in long-term debt or capital structure. Moreover, the Adjusted EBITDA targets for our historical performance-based RSUs were based on a cumulative three-year compound annual growth rate based on a bottoms-up assessment of market growth potential for each end-use market over a three-year period, which included expected price increases, net share gains, and new product sales.

Due to difficulties in setting three-year performance goals during the COVID-19 pandemic, the continued market disruption and volatility, and the need to motivate our executives with attainable goals that would reward them as the pandemic subsided and stability returned to our industry sectors, we modified the measurement of performance-based RSUs to drive high performance and, in the process, better align executive compensation with the interests of our stockholders. While the Company has seen a significant improvement in most end-use markets since the onset of the COVID-19 pandemic, certain end-use markets are still in the process of recovering from the impacts of the pandemic. As a result, instead of measuring RSUs for fiscal years 2021, 2022 and 2023 on a three-year cumulative basis, we measured the awards one year at a time with individual year’s targets set at the beginning of each fiscal year and measured the average over three years for a total payout percentage. The Committee will evaluate this LTI structure annually.

We believe these modifications to performance-based RSUs that were made in fiscal year 2020 allowed this compensation to be calibrated more accurately with the volatility of our industry sector while still encouraging strong, focused performance within reasonably attainable levels. This is consistent with our overarching goal of rewarding executives for achieving corporate growth, aligns executives’ interests with those of stockholders, and fulfills our compensation philosophy.

 

   

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    Compensation Discussion and Analysis • Omnibus Stock Plan    

 

 

Results of the Fiscal Year 2021-2023 Program

The goals and attainment results for the three-year performance-based RSU awards granted in fiscal year 2021, with a three-year performance cycle concluding at the end of fiscal year 2023, are detailed below. The targets for each fiscal year were established at the beginning of the respective fiscal year, factoring into the analysis the impact of the pandemic. In addition, actual results for fiscal years 2021 and 2022 were adjusted for attainment purposes consistent with the adjustments approved for the annual EIBCP. The attainment results for fiscal years 2021, 2022 and 2023 were averaged to determine the attainment for the three-year performance period.

The three-year performance-based RSU metrics resulted in an average payout of 121.5% of target for these awards with a cycle concluding in fiscal year 2023. Each of the equity awards carries performance-based criteria, and payouts were commensurate with financial performance. We believe the performance periods are appropriate to motivate longer-term thinking while not so remote as to stagnate performance incentives in the immediate term.

 

                 

Adjusted

ROIC

       30%   50%   100%   200%   Result     Attainment    

Total

Attainment

 

FY21-23

 

Attainment
FY21-23

After TSR

Modifier

  FY21   (3.3%)   (2.9%)   (2.0%)   0.0%   (3.3%)   30%   103%

 

  124%

 

  FY22   (0.9%)   (0.6%)   0.2%   0.9%   (0.1%)   79%
 

FY23

 

 

1.9%

 

 

2.3%

 

 

3.3%

 

 

4.7%

 

 

4.7%

 

 

200%

 

                 
               

Adjusted

EBITDA

($ in millions)

       30%   50%   100%   200%   Result     Attainment    

Total

Attainment
FY21-23

 

 

Attainment
FY21-23

After TSR

Modifier

 

  FY21   $23   $37   $72   $142   $24   31%   99%

 

  119%

 

  FY22   $115   $126   $152   $173   $138   74%
 

FY23

 

 

$196

 

 

$208

 

 

$237

 

 

$277

 

 

$274

 

 

193%

 

 

   

CARPENTER TECHNOLOGY 2023 PROXY STATEMENT

 

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Table of Contents

 

    Compensation Discussion and Analysis • Compensation Program Risk Assessment    

 

 

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