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Compensation—Approach
Our compensation programs are designed to support our business strategy by rewarding behaviors that deliver results against business goals. The programs drive performance to meet the expectations of our internal and external stakeholders.
We use a total compensation approach in each of our respective global markets by incorporating base and variable pay, along with appropriate benefits. We ensure that our compensation meets or exceeds legal minimums and is in full compliance with all applicable laws in all jurisdictions in which we operate.
To attract, retain, and motivate our employees, we reward them at a level that is competitive within the relevant labor market. We target our compensation at the median of competitive industry standards and conduct annual compensation and benefits benchmarking in each of our labor markets to ensure we remain competitive. Through strong individual, team, or company performance, employees have the opportunity to earn above-target compensation.
We face several challenges in designing and executing our compensation approach:
- Growing competition in the market for leadership talent has resulted in more pressure to attract new talent and retain our existing leaders;
- New markets, such as Russia and China, have a more volatile compensation environment and require a more flexible approach to attract and retain top employees; and
- Rising benefit costs have led us to explore new ways of making our benefit programs effective for our employees while limiting long-term liability for Alcoa.
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